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EXHIBIT 10.09
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SILICON VALLEY BANK
EAST COAST EQUIPMENT LOAN
LOAN AND SECURITY AGREEMENT
Borrower: Silknet Software, Inc. Address: The Gateway Building
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Date: March 5, 1997
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK, a California state chartered bank ("Silicon"), whose
address is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and with a loan
production office located at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
doing business under the name "Silicon Valley East" and the borrower named
above, (jointly and severally, the "Borrower"), whose chief executive office is
located at the above address ("Borrower's Address").
1. LOANS. Silicon will make loans to Borrower (the "Loans") in amounts
determined by Silicon in its reasonable business judgment up to the amount (the
"Credit Limit") shown on the Schedule to this Agreement (the "Schedule"),
provided no Event of Default and no event which, with notice or passage of time
or both, would constitute an Event of Default has occurred. All Loans and other
monetary Obligations will bear interest at the rate shown on the Schedule.
Interest will be payable monthly, on the date shown on the monthly billing from
Silicon. Silicon may, in its discretion, charge interest to Borrower's deposit
accounts maintained with Silicon.
2. SECURITY INTERESTS. As security for all present and future indebtedness,
guarantees, liabilities, and other obligations, of Borrower to Silicon
(collectively, the "Obligations"). Borrower hereby grants Silicon a continuing
security interest in all of Borrower's interest in the following types of
property, whether now owned or hereafter acquired, and wherever located
(collectively, the "Collateral"): All "accounts," "general intangibles,"
"chattel paper," "documents," "letters of credit," "instruments," "deposit
accounts," "inventory," "farm products," "fixtures" and "equipment," as such
terms are defined in the Massachusetts Uniform Commercial Code in effect on the
date hereof, and all products, proceeds and insurance proceeds of the foregoing.
3. REPRESENTATIONS AND AGREEMENTS OF BORROWER. Borrower represents to Silicon
as follows, and Borrower agrees that the following representations will continue
to be true, and that Borrower will comply with all of the following agreements
throughout the term of this Agreement.
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3.1 CORPORATE EXISTENCE AND AUTHORITY. Borrower, if a corporation, is
and will continue to be, duly authorized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. The execution, delivery
and performance by Borrower of this Agreement, and all other documents
contemplated hereby have been duly and validly authorized, and do not violate
any law or any provision of, and are not grounds for acceleration under, any
agreement or instrument which is binding upon Borrower.
3.2 NAME; PLACES OF BUSINESS. The name of Borrower set forth in this
Agreement is its correct name. Borrower shall give Silicon 15 days' prior
written notice before changing its name. The address set forth in the heading to
this Agreement is Borrower's chief executive office. In addition, Borrower has
places of business and Collateral is located only at the locations set forth on
the Schedule. Borrower will give Silicon at least 15 days prior written notice
before changing its chief executive office or locating the Collateral at any
other location.
3.3 COLLATERAL. Silicon has and will at all times continue to have a
first-priority perfected security interest in all of the Collateral other than
specific equipment. Borrower will immediately advise Silicon in writing of any
material loss or damage to the Collateral.
3.4 FINANCIAL CONDITION AND STATEMENTS. All financial statements now or
in the future delivered to Silicon have been, and will be, prepared in
conformity with generally accepted accounting principles. Since the last date
covered by any such statement, there has been no material adverse change in the
financial condition or business of Borrower. Borrower will provide Silicon: (i)
within 25 days after the end of each month, a monthly financial statement
prepared by Borrower, a compliance certificate and such information as Silicon
shall reasonably request: (ii) within 90 days following the end of Borrower's
fiscal year, beginning with fiscal year ending June 30, 1997, complete annual
financial statements, certified by independent certified public accountants
acceptable to Silicon and accompanied by the unqualified report thereon by said
independent certified public accountants: and (iii) other financial information
reasonably requested by Silicon from time to time.
3.5 TAXES; COMPLIANCE WITH LAW. Borrower has filed, and will file, when
due, all tax returns and reports required by applicable law, and Borrower has
paid, and will pay, when due, all taxes, assessments, deposits and contributions
now or in the future owed by Borrower. Borrower has complied, and will comply,
in all material respects, with all applicable laws, rules and regulations.
3.6 INSURANCE. Borrower shall at all times insure all of the tangible
personal property Collateral and carry such other business insurance as is
customary in Borrower's industry.
3.7 ACCESS TO COLLATERAL AND BOOKS AND RECORDS. At reasonable times, on
one business day notice, Silicon, or its agents, shall have the right to inspect
the Collateral, and the right to audit and copy Borrower's books and records.
3.8 OPERATING ACCOUNTS. Borrower shall maintain its primary
operating accounts with Bank.
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3.9 FINANCIAL COVENANTS. Borrower shall at all times comply with the
financial covenants set forth in the Schedule to this Agreement.
3.10 ADDITIONAL AGREEMENTS. Borrower shall not, without Silicon's prior
written consent, do any of the following: (i) enter into any transaction outside
the ordinary course of business except for the sale of capital stock to venture
investors, provided that Borrower promptly delivers written notification to
Silicon of any such sale; (ii) sell or transfer any Collateral, except for the
sale of finished inventory or non-exclusive software licenses in the ordinary
course of Borrower's business, and the sale of obsolete or unneeded equipment in
the ordinary course of business; (iii) pay or declare any dividends on
Borrower's stock (except for dividends payable solely in stock of Borrower); or
(iv) redeem, retire, purchase or otherwise acquire, directly or indirectly, any
of Borrower's stock other than the repurchase of up to five percent (5%) of
Borrower's then issued stock in any fiscal year from Borrower's employees or
directors pursuant to written agreement with Borrower.
4. TERM. This Agreement shall continue in effect until the maturity date set
forth on the Schedule (the "Maturity Date"). This Agreement may be terminated,
without penalty, prior to the Maturity Date as follows: (i) by Borrower,
effective three business days after written notice of termination is given to
Silicon; or (ii) by silicon at any time after the occurrence of an Event of
Default, without notice, effective immediately. On the Maturity Date or on any
earlier effective date of termination, Borrower shall pay all Obligations in
full, whether or not such Obligations are otherwise then due and payable. No
termination shall in any way affect or impair any security interest or other
right or remedy of Silicon, nor shall any such termination relieve Borrower of
any Obligation to Silicon, until all of the Obligations have been paid and
performed in full.
5. EVENTS OF DEFAULT AND REMEDIES. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement: (a) Any
representation, statement, report or certificate given to Silicon by Borrower of
any of its officers, employees or agents, now or in the future, is untrue or
misleading in a material respect; or (b) Borrower fails to pay when due any Loan
or any interest thereon or any other monetary Obligation; or (c) the total
Obligations outstanding at any time exceed the Credit Limit; or (d) Borrower
fails to perform any other non-monetary Obligation, which failure is not cured
within 5 business days after the date due; or (e) Dissolution, termination of
existence, insolvency or business failure of Borrower; or appointment of a
receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceeding by or against Borrower under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect; or (f) a material
change in the ownership of Borrower, without the prior written consent of
Silicon except for the sale of capital stock to venture investors, provided that
Borrower promptly delivers written notification to Silicon of any such sale; or
(g) a material adverse change in the business, operations, or financial or other
condition of Borrower. If an Event of Default occurs, Silicon, shall have the
right to accelerate and declare all of the Obligations to be immediately due and
payable, increase the interest rate by an additional four percent per annum, and
exercise all rights and remedies accorded it by applicable law.
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6. GENERAL. If any provision of this Agreement is held to be unenforceable, the
remainder of this Agreement shall still continue in full force and effect. This
Agreement and any other written agreements, documents and instruments executed
in connection herewith are the complete agreement between Borrower and Silicon
and supersede all prior and contemporaneous negotiations and oral
representations and agreements, all of which are merged and integrated in this
Agreement. There are no oral understandings, representations or agreements
between the parties which are not in this Agreement or in other written
agreements signed by the parties in connection this Agreement. The failure of
Silicon at any time to require Borrower to comply strictly with any of the
provisions of this Agreement shall not waive Silicon's right later to demand and
receive strict compliance. Any waiver of a default shall not waiver any other
default. None of the provisions of this Agreement may be waived except by a
specific written waiver signed by an officer of Silicon and delivered to
Borrower. The provisions of this Agreement may not be amended, except in a
writing signed by Borrower and Silicon. Borrower shall reimburse Silicon for all
reasonable attorneys' fees and all other reasonable costs incurred by Silicon,
in connection with this Agreement (whether or not a lawsuit is filed). If
Silicon or Borrower files any lawsuit against the other predicated on a breach
of this Agreement, the prevailing party shall be entitled to recover its
reasonable costs and attorneys' fees from the non-prevailing party. Borrower may
not assign any rights under this Agreement without Silicon's prior written
consent. This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts.
7. MUTUAL WAIVER OF JURY TRIAL. BORROWER AND SILICON EACH HEREBY WAIVE THE RIGHT
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN
ANY WAY RELATING TO, THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF SILICON
OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR
AFFILIATES.
This Agreement is executed as of the date first written above.
Borrower:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ - Vice President
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President or Vice President
Silicon:
SILICON VALLEY BANK
By:
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Title:--------------------------------
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SCHEDULE TO EAST COAST EQUIPMENT LOAN
LOAN AND SECURITY AGREEMENT
BORROWER: Silknet Software, Inc.
DATE: March 5, 1997
This Schedule is an integral part of the Loan and Security Agreement
between Silicon Valley Bank, a California state chartered bank ("Silicon") and
the above-named borrower ("Borrower") of even date.
Credit Limit (Equipment) $300,000.00 (such amount to be funded under the
(Section 1): aggregate Credit Limit). Equipment Advances will
be made only on or prior to March 31, 1997 (the
"Last Advance Date") and only for the purpose of
purchasing equipment reasonably acceptable to
Silicon. Advances shall not exceed 80% of the
invoice value. Advances for software and leasehold
improvements may, however, comprise up to 50% of
the total Equipment Advances. Borrower must
provide invoices for the equipment, dated
subsequent to October 1, 1996, to Silicon on or
before the Last Advance Date.
Interest Rate (Section 1): A rate equal to the "Prime Rate" in effect from
time to time, plus 2% per annum. Interest shall be
calculated on the basis of a 360-day year for the
actual number of days elapsed. "Prime Rate" means
the rate announced from time to time by Silicon as
its "prime rate;" it is a base rate upon which
other rates charged by Silicon are based, and it
is not necessarily the best rate available at
Silicon. The interest rate applicable to the
Obligations shall change on each date there is a
change in the Prime Rate.
Financial Covenants Borrower shall comply with all of the following
(Section 3.9): covenants. Compliance shall be determined as of
the end of each month, except as otherwise
provided below:
Tangible Net Worth. Borrower shall maintain a minimum Tangible Net
Worth of $450,000.00.
Liquidity. Borrower shall maintain a minimum Cash
plus 50% of A/R equal to 1.5x outstandings on the
line of credit.
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Equity Investment. Borrower must raise a minimum
equity investment of $2,000,000.00 by May 15,
1997.
Definitions. "Tangible Net Worth" means the excess of total
assets over total liabilities, determined in
accordance with GAAP, excluding however all assets
which would be classified as intangible assets
under GAAP, including, without limitation
goodwill, licenses, patents, trademarks, trade
names, copyrights, capitalized software and
organizational costs, licenses and franchises.
Maturity Date (Section 4): After the Last Advance
Date, the unpaid principal balance of the
Equipment Advances shall be repaid in 24 equal
monthly installments of principal plus interest
commencing on April 30, 1997 and continuing on the
same day of each month thereafter until the entire
unpaid principal balance and all accrued unpaid
interest of the Equipment Advances have been paid
(subject to Silicon's right to accelerate the
Equipment Advances on an Event of Default).
Borrower: Silicon:
SILKNET SOFTWARE, INC. SILICON VALLEY BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By:
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President or Vice President Title
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LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of December 1,
1997, by and between Silknet Software, Inc. ("Borrower") whose address is The
Gateway Building, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and Silicon
Valley Bank, a California-chartered bank ("Silicon"), with its principal place
of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and with a loan
production office located at Wellesley Office Park, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, doing business under the name "Silicon Valley East".
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Silicon, Borrower is indebted to Silicon pursuant to, among
other documents, an East Coast Equipment Loan and Security agreement (and
Schedule thereto) dated March 5, 1997, as may be amended from time to time, (the
"Loan Agreement"). The Loan Agreement provided for, among other things, an
Equipment Facility with a Credit Limit in the amount of Three Hundred Thousand
and 00/100 dollars ($300,000.00) (the "Equipment Facility #1"). With this
Agreement, an equipment facility in the amount of Four Hundred Thousand and
00/100 Dollars ($400,000.00) (the "Equipment Facility #2) shall be provided to
Borrower for the purchase of equipment. 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 Silicon shall be referred
to as the "Indebtedness."
2. DESCRIPTION OF COLLATERAL: Repayment of the Indebtedness is secured by the
Collateral as described in the Loan Agreement.
Hereinafter, the above-described security documents, together with all other
documents securing payment of the Indebtedness shall be referred to as the
"Security Document". Hereinafter, the Security Documents, together with all
other documents evidencing or securing the Indebtedness shall be referred to as
the "Existing Loan Document".
3. DESCRIPTION OF CHANGE IN TERMS.
A. MODIFICATION TO LOAN AGREEMENT AND SCHEDULE THERETO.
1. The following is hereby incorporated into the Schedule to
the Loan Agreement as follows:
EQUIPMENT FACILITY #2 (CREDIT LIMIT). Advances will be made
under Equipment facility #2 up to Four Hundred Thousand and
00/100 Dollars ($400,000.00).
EQUIPMENT FACILITY #2. Equipment Advances will be made only
on or prior to February 28, 1998 (the "Last Advance Date
#2") and only for the purpose of purchasing equipment
reasonably acceptable to Silicon. Advances shall not exceed
90% of the invoice value. Advances for
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software and leasehold improvements may, however, comprise
up to 25% of the total Equipment Facility #2.
Prior to the Last Advance Date #2, Borrower shall pay
regular monthly payments of all accrued unpaid interest
due as of each payment date beginning December 31, 1997
and all subsequent interest payments will be due on the
last day of each month thereafter. The outstanding
principal balance under the Equipment Facility as of the
Last Advance Date will be payable in thirty six (36) even
payments of principal plus interest due as of each payment
date, beginning March 31, 1998 and all subsequent payments
will be due on the last day of each month thereafter. The
final payment will be for all outstanding principal plus
all accrued interest not yet paid.
2. The paragraph entitled "Interest Rate" is hereby Amended
to incorporate the following:
Equipment Facility #2 Interest Rate. A rate equal to the
"Prime Rate" in effect from time to time, plus 1.00 per
annum.
3. The "Equity Investment" covenant as described in the
Section entitled "Financial Covenants" is hereby deleted
in its entirety.
4. The Liquidity covenant as described in the Section
entitled "Financial Covenants" is hereby amended as
follows:
Borrower shall maintain, as of the last day of each month,
a minimum cash (and cash equivalents) plus 50% of accounts
receivable equal to 2.00 times the outstandings under the
Equipment Facility #1 and Equipment Facility #2.
5. The Tangible Net Worth covenants as described in the
Section entitled "Financial Covenants" is hereby amended
as follows:
Borrower shall maintain, as of the last day of each month,
a minimum tangible net worth of $750,000.00.
4. PAYMENT OF LOAN FEE OR COMPENSATING BALANCES. Borrower shall pay Silicon a
fee in the amount of Three Thousand and 00/100 Dollars ($3,000.00) (the "Loan
Fee"), plus all out-of-pocket expenses. In the event Borrower maintains minimum
daily uncollected balances of not less than $500,000.00 in accounts maintained
with Silicon, Borrower shall not be required to pay the Loan Fee (the
"Compensating Balance Requirement").
5. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
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6. NO DEFENSES OR BORROWER. Borrower agrees that, as of this date, it has no
defenses against the obligations to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Indebtedness, Silicon 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.
Silicon's agreement to modifications to the existing Indebtedness pursuant to
this Loan Modification Agreement in no way shall obligate Silicon to make any
future modifications to the Indebtedness. Nothing in this Loan Modification
Agreement shall constitute a satisfaction or the Indebtedness. It is the
intention of Silicon and Borrower to retain as liable parties all makers and
endorsers of Existing Loan Documents, unless the party is expressly released by
Silicon in writing. No maker, endorser, or guarantor will be released by virtue
of this Loan Modification Agreement. The terms of this Paragraph apply not only
to this 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 arising out of or
by reason of this Loan Modification Agreement; provided, however, that if for
any reason Silicon cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall lie in Santa ▇▇▇▇▇ County, California.
9. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Silicon (provided,
however, in no event shall this Loan Modification Agreement become effective
until signed by an officer of Silicon in California).
10. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon payment of the Loan Fee or the maintenance of the Compensating
Balance Requirement.
This Loan Modification Agreement if executed as of the date first
written above.
BORROWER: SILICON
SILKNET SOFTWARE, INC. SILICON VALLEY BANK, doing business
as SILICON VALLEY EAST
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By:
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name:
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Title: CFO and Treasurer Title:
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SILICON VALLEY BANK
By:
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Name:
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Title
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(Signed at Santa ▇▇▇▇▇ County, CA)
