Exhibit 10.22
SECOND LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement is entered into as of
January 21, 1999, by and between BLUESTONE SOFTWARE, INC., a Delaware
corporation with its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Borrower") and SILICON VALLEY BANK, a
California-chartered bank ("Bank"), 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 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 between
Borrower and Bank, as amended by a First Loan Modification Agreement dated as of
August 16, 1998 (as amended, 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 Two Million Dollars ($2,000,000.00) (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. No further Advances shall be made under the Committed
Revolving Line. The outstanding principal balance of
Advances made under the Committed Revolving Line, as
of January 12, 1999, is Four Hundred Seventy-Three
Thousand Three Hundred Sixty-Five and 53/100 Dollars
($473,365.53).
2. No further Equipment Advances shall be made under
Section 2.1.2.A. The outstanding principal balance of
all Equipment Advances made pursuant to Section
2.1.2.A, as of January 12, 1999, is Nine Hundred
Fifty-Nine Thousand Eighty-Five Dollars
($959,085.00).
All Equipment Advances currently amortizing under
Section 2.1.2 shall continue to be repaid as provided
in Section 2.1.2. The outstanding principal balance
of all Equipment Advances made pursuant to Section
2.1.2, as of January 12, 1999, is One Hundred
Ninety-One Thousand Four Hundred Fifteen and 88/100
Dollars ($191,415.88).
3. The Loan Agreement shall be amended by deleting the
following definition appearing in Section 1.1
thereof:
""Borrowing Base" means an amount equal to
(i) Eighty percent (80%) of Eligible
Accounts as determined by Bank with
reference to the most recent Borrowing Base
Certificate delivered by Borrower, plus (ii)
an amount equal to One Hundred percent
(100.0%) of any Certificate of Deposit
maintained at the Bank, and specifically
pledged to Bank, up to $400,000.00."
and inserting in lieu thereof the following:
""Borrowing Base" means an amount equal to
Eighty percent (80%) of Eligible Accounts,
as determined by Bank with reference to the
most recent Borrowing Base Certificate
delivered by Borrower."
4. The Loan Agreement shall be amended by deleting the
following definition appearing in Section 1.1
thereof:
""Revolving Maturity Date" shall mean one
day prior to the date which is one year from
the Closing Date."
and inserting in lieu thereof the following:
""Revolving Maturity Date" shall mean
February 7, 1999."
5. The Loan Agreement shall be amended by inserting the
following new definition after the definition of
"Subordinated Debt" appearing in Section 1.1 thereof:
""Subordinated Loan" means a loan between
the Borrower and investors acceptable to the
Bank, which loan shall be expressly
subordinate to the Bank with respect to
amount and security interest and shall be on
terms and conditions acceptable to the Bank
in its sole and absolute discretion."
6. The Bank hereby waives: (i) Borrower's existing
Default under the Loan Agreement by virtue of
Borrower's failure to comply with the Tangible Net
Worth covenant in Section 6.8 thereof as of the
months ending October 31, 1998, November 30, 1998,
and December 31, 1998, and (ii) Borrower's existing
Default under the Loan Agreement by virtue of
Borrower's failure to comply with the Adjusted Quick
Ratio covenant in Section 6.9 thereof as of the
months ending October 31, 1998, November 30, 1998,
and December 31, 1998. Bank's waiver of Borrower's
compliance of said covenants shall apply only to the
foregoing periods. NOTWITHSTANDING THE FOREGOING, THE
BANK'S WAIVER OF BORROWER'S COMPLIANCE OF THE
FOREGOING COVENANTS SHALL BE EFFECTIVE ONLY IF: (i)
THE SUBORDINATED LOAN CLOSES ON OR BEFORE JANUARY 15,
1999, AND (ii) THE AGGREGATE AMOUNT OF THE ---
SUBORDINATED LOAN IS NO LESS THAN FOUR MILLION FIVE
HUNDRED THOUSAND DOLLARS ($4,500,000.00).
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7. The aggregate amount of the Subordinated Loan which
remains undrawn by the Borrower shall be considered
"cash" for purposes of the Tangible Net Worth
covenant appearing in Section 6.8 and the Adjusted
Quick Ratio covenant appearing in Section 6.9.
8. The Loan Agreement shall be amended by deleting the
following text appearing as Section 6.10 thereof:
"6.10 FURTHER ASSURANCES. At any time and
from time to time Borrower shall execute and
deliver such further instruments and take
such further action as may reasonably be
requested by Bank to effect the purposes of
this Agreement."
and inserting in lieu thereof the following:
"6.10 SUBORDINATE FINANCING. The Borrower
shall enter into the Subordinated Loan on
terms and with investors acceptable to the
Bank on or before January 15, 1999 in the
minimum aggregate amount of Four Million
Five Hundred Thousand Dollars
($4,500,000.00).
6.11 FURTHER ASSURANCES. At any time and
from time to time Borrower shall execute and
deliver such further instruments and take
such further action as may reasonably be
requested by Bank to effect the purposes of
this Agreement."
9. The Loan Agreement shall be amended by deleting the
following text appearing as paragraph (a) of Section
8.2 entitled "Covenant Default":
"(a) If Borrower fails to perform any
obligation under Sections 6.3, 6.6, 6.7,
6.8, or 6.9 or violates any of the covenants
contained in Article 7 of this Agreement,"
and inserting in lieu thereof the following:
"(a) If Borrower fails to perform any
obligation under Sections 6.3, 6.6, 6.7,
6.8, 6.9, or 6.10 or violates any of the
covenants contained in Article 7 of this
Agreement,"
10. The Borrower shall within thirty (30) days of the
date of this Second Loan Modification Agreement
deliver to the Bank the certificate referred to in
Section 2.7 of that certain Warrant to Purchase Stock
issued on November 24, 1997 by the Borrower to the
Bank.
11. The Borrower ratifies, confirms and reaffirms, all
and singular, the terms and conditions of a certain
Negative Pledge Agreement dated August 16, 1998
between Borrower and Bank, and acknowledges, confirms
and agrees that said Negative Pledge Agreement shall
remain in full force and effect.
12. The Compliance Certificate appearing as EXHIBIT D to
the Loan Agreement is hereby replaced with the
Compliance Certificate attached as EXHIBIT A hereto.
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4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
5. 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.
6. 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.
7. 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 virtue of this Loan
Modification Agreement.
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 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 ▇▇▇▇▇ County, California.
9. 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).
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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/ ▇. ▇. ▇▇▇▇▇▇▇▇ By: /s/ Ash Lilani
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Name: ▇. ▇. ▇▇▇▇▇▇▇▇ Name: Ash Lilani
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Title: Chief Financial Officer Title:
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SILICON VALLEY BANK
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title:
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(signed in Santa ▇▇▇▇▇ County,
California)
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