EXHIBIT 10.42
FOURTH LOAN MODIFICATION AGREEMENT
This Fourth Loan Modification Agreement is entered into as of December
1, 1999 by and between BLUESTONE SOFTWARE, INC., a Delaware corporation with its
principal place of business at 0000 Xxxxxx Xxxx, Xxxxx Xxxxxx, Xxx Xxxxxx
00000-0000 ("Borrower") and SILICON VALLEY BANK, a California-chartered bank
("Bank"), with its principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx
Xxxxx, XX 00000 and with a loan production office located at 0 Xxxxxx Xxxxxxxxx
Xxxxxx, Xxxxx 000, 000 Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxx 00000.
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 by a Second Loan Modification Agreement
dated as of January 21, 1999, and as amended by a Third Loan Modification
Agreement dated as of March 30, 1999 (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 "Committed Revolving Line"), and (ii) an
equipment line of credit in the maximum principal amount of Two Million Dollars
($2,000,000.00) (the "1998 Committed 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. 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. All references to "Committed Equipment Line" in the
Loan Agreement shall mean and refer to the "1998
Committed Equipment Line".
2. The Loan Agreement shall be amended by deleting the
following definition appearing in Section 1.1
thereof:
""Committed Revolving Line" shall mean a
credit extension of up to One Million Seven
Hundred Fifty Thousand Dollars
($1,750,000.00)."
and inserting in lieu thereof the following:
""Committed Revolving Line" shall mean an
Advance or Advances of up to Three Million
Dollars ($3,000,000.00)."
3. The Loan Agreement shall be amended by deleting the
following definition appearing in Section 1.1
thereof:
""Credit Extension" means each Advance,
Equipment Advance or any other extension of
credit by Bank for the benefit of Borrower
hereunder."
and inserting in lieu thereof the following:
""Credit Extension" means each Advance,
Equipment Advance, Letter of Credit or any
other extension of credit by Bank for the
benefit of Borrower hereunder."
4. The Loan Agreement shall be amended by deleting the
following definition appearing in Section 1.1
thereof:
""Equipment Advance" has the meaning set
forth in Section 2.1.1."
and inserting in lieu thereof the following:
""Equipment Advance" or "Equipment Advances"
shall mean any advance made pursuant to
Sections 2.1.2, 2.1.2.A or 2.1.2.B hereof."
5. The Loan Agreement shall be amended by deleting the
following definition appearing in Section 1.1
thereof:
""Maturity Date" means the later of the
Second Equipment Maturity Date or the
Revolving Maturity Date."
and inserting in lieu thereof the following:
""Maturity Date" means, as applicable, (i)
the Revolving Maturity Date for Advances
pursuant to Section 2.1.1; (ii) the
Equipment Maturity Date for Equipment
Advances pursuant to Section 2.1.2; (iii)
the Second Equipment Maturity Date for
Equipment Advances pursuant to Section
2.1.2.A; and (iv) the 1999 Equipment
Maturity Date No. 1 and 1999 Equipment
Maturity Date No. 2 for Equipment Advances
pursuant to Section 2.1.2.B."
6. The Loan Agreement shall be amended by deleting the
following definition appearing in Section 1.1
thereof:
""Obligations" means all debt, principal,
interest, Bank Expenses and other amounts
owed to Bank by Borrower pursuant to this
Agreement or any other agreement, whether
absolute or contingent, due or to become
due, now existing or hereafter arising,
including any interest that accrues after
the commencement of an Insolvency Proceeding
and including any debt, liability, or
obligation owing from Borrower to others
that Bank may have obtained by assignment or
otherwise."
and inserting in lieu thereof the following:
""Obligations" means all debt, principal,
interest, Bank Expenses and other amounts
owed to Bank by Borrower pursuant to this
Agreement or any other agreement, including,
without limitation, all Obligations under
the EXIM Agreement, whether absolute or
contingent, due or to become due, now
existing or hereafter arising, including any
interest that accrues after
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the commencement of an Insolvency Proceeding
and including any debt, liability, or
obligation owing from Borrower to others
that Bank may have obtained by assignment or
otherwise."
7. The Loan Agreement shall be amended by deleting the
following definition appearing in Section 1.1
thereof:
""Payment Date" means the first calendar day
of each month commencing on the first such
date after the Closing Date and ending on
the Revolving Maturity Date."
and inserting in lieu thereof the following:
""Payment Date" means the first calendar day
of each month commencing on the first such
date after the Closing Date and ending on
the Maturity Date."
8. The Loan Agreement shall be amended by deleting the
following definition appearing in Section 1.1
thereof:
""Revolving Maturity Date" shall mean April
1, 2000."
and inserting in lieu thereof the following:
""Revolving Maturity Date" shall mean
December 1, 2000."
9. The Loan Agreement shall be amended by incorporating
into Section 1.1 thereof the following new
definitions:
"EXIM Agreement" is that certain
Export-Import Bank Loan and Security
Agreement dated as of December 1, 1999 by
and between the Borrower and the Bank and
all documents, instruments and agreements
executed in conjunction therewith.
"Letter of Credit" means a letter of credit
or similar undertaking issued by Bank
pursuant to Section 2.1.3.
"Letter of Credit Reserve" has the meaning
set forth in Section 2.1.3.
"1999 Committed Equipment Line" shall mean
an Equipment Advance or Equipment Advances
of up to Five Hundred Thousand Dollars
($500,000.00).
"1999 Equipment Availability End Date No. 1"
has the meaning set forth in Section 2.1.2.
B.
"1999 Equipment Availability End Date No. 2"
has the meaning set forth in Section 2.1.2.
B.
"1999 Equipment Maturity Date No. 1" means
that date which is thirty-six (36) months
following the 1999 Equipment Availability
End Date No. 1.
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"1999 Equipment Maturity Date No. 2" means
that date which is thirty-six (36) months
following the 1999 Equipment Availability
End Date No. 2.
10. The Loan Agreement shall be amended by deleting the
following text appearing as the first sentence of
paragraph (a) of Section 2.1.1 entitled "Credit
Extensions":
"Subject to and upon the terms and
conditions of this Agreement, Bank agrees to
make Advances to Borrower in an aggregate
outstanding amount not to exceed the
Committed Revolving Line or the Borrowing
Base, whichever is less."
and inserting in lieu thereof the following:
"Subject to and upon the terms and
conditions of this Agreement, Bank agrees to
make Advances to Borrower in an aggregate
outstanding amount not to exceed: (i) the
Committed Revolving Line or the Borrowing
Base, whichever is less, minus (ii) the face
amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of
Credit)."
11. No further Equipment Advances shall be made under
Sections 2.1.2 and 2.1.2.A. All Equipment Advances
currently amortizing under Sections 2.1.2 and 2.1.2.A
shall continue to be repaid as provided in Sections
2.1.2 and 2.1.2.A.
12. The Loan Agreement shall be amended by inserting
after Section 2.1.2.A thereof entitled "1998-1999
Equipment Advances" the following new section:
"2.1.2.B. 1999 EQUIPMENT ADVANCES.
(a) Subject to and upon the terms and
conditions of this Agreement, Bank agrees to
make advances (each an "Equipment Advance"
and collectively, the "Equipment Advances")
to Borrower under this Section 2.1.2.B in an
aggregate amount not to exceed the 1999
Committed Equipment Line in the following
manner: (i) at any time through June 1, 2000
(the "1999 Equipment Availability End Date
No. 1") in an aggregate amount not greater
than the 1999 Committed Equipment Line (the
"1999 Equipment Line No. 1"), and (ii) at
any time from the 1999 Equipment
Availability End Date No. 1 through that
date which is six (6) months following the
1999 Equipment Availability End Date No. 1
(the "1999 Equipment Availability End Date
No. 2"), in an aggregate amount not to
exceed the 1999 Committed Equipment Line,
less the outstanding principal amounts
advanced pursuant to 1999 Equipment Line No.
1 (the "1999 Equipment Line No. 2"). 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 under this
Section 2.1.2.B shall be used only to
purchase Equipment 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 shall be limited to
twenty-five percent (25.0%) of aggregate
Equipment Advances under this Section
2.1.2.B.
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(b) Interest shall accrue from the date
of each Equipment Advance under this Section
2.1.2.B at the per annum rate equal to the
aggregate of the Prime Rate PLUS Three
Quarters of One percent (0.75%), and shall
be payable monthly on the Payment Date of
each month. Any Equipment Advances made
pursuant to the 1999 Equipment Line No. 1
that are outstanding on the 1999 Equipment
Availability End Date No. 1 will be payable
in Thirty-Six (36) equal monthly
installments of principal, plus all accrued
interest, beginning on the Payment Date of
the month following the 1999 Equipment
Availability End Date No. 1 and ending on
the 1999 Equipment Maturity Date No. 1. Any
Equipment Advances made pursuant to the 1999
Equipment Line No. 2 that are outstanding on
the 1999 Equipment Availability End Date No.
2 will be payable in Thirty-Six (36) equal
monthly installments of principal, plus all
accrued interest, beginning on the Payment
Date of the month following the 1999
Equipment Availability End Date No. 2 and
ending on the 1999 Equipment Maturity Date
No. 2. Equipment Advances, once repaid, may
not be reborrowed. Equipment Advances may be
prepaid at any time in whole or in part
without penalty or premium.
(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. Eastern 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."
13. The Loan Agreement shall be amended by inserting
after Section 2.1.2.B thereof the following new
section:
"2.1.3 LETTERS OF CREDIT.
(a) Subject to the terms and conditions
of this Agreement, Bank agrees to issue or
cause to be issued Letters of Credit for the
account of Borrower in an aggregate
outstanding face amount not to exceed (i)
the Committed Revolving Line or the
Borrowing Base, whichever is less, minus
(ii) the then outstanding principal balance
of the Advances; PROVIDED that the face
amount of outstanding Letters of Credit
(including drawn but unreimbursed Letters of
Credit and any Letter of Credit Reserve)
shall not in any case exceed One Million
Dollars ($1,000,000.00). Each Letter of
Credit shall have an expiry date no later
than one hundred eighty (180) days after the
Maturity Date provided that Borrower's
Letter of Credit reimbursement obligation
shall be secured by cash on terms acceptable
to Bank at any time after the Maturity Date
if the term of this Agreement is not
extended by Bank. All Letters of Credit
shall be, in form and substance, acceptable
to Bank in its sole discretion and shall be
subject to the terms and conditions of
Bank's form of standard Application and
Letter of Credit Agreement.
(b) The obligation of Borrower to
reimburse Bank within two (2) business days
of notice by Bank for drawings made under
Letters of Credit shall be absolute,
unconditional and irrevocable, and shall be
performed strictly in
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accordance with the terms of this Agreement
and such Letters of Credit, under all
circumstances whatsoever. Borrower shall
indemnify, defend, protect, and hold Bank
harmless from any loss, cost, expense or
liability, including, without limitation,
reasonable attorneys' fees, arising out of
or in connection with any Letters of Credit,
except for losses, costs, expenses or
liability resulting from gross negligence or
willful misconduct of Bank.
(c) Borrower may request that Bank
issue a Letter of Credit payable in a
currency other than United States Dollars.
If a demand for payment is made under any
such Letter of Credit, Bank shall treat such
demand as an Advance to Borrower of the
equivalent of the amount thereof (plus cable
charges) in United States currency at the
then prevailing rate of exchange in San
Francisco, California, for sales of that
other currency for cable transfer to the
country of which it is the currency.
(d) Upon the issuance of any letter of
credit payable in a currency other than
United States Dollars, Bank shall create a
reserve (the "Letter of Credit Reserve")
under the Committed Revolving Line for
letters of credit against fluctuations in
currency exchange rates, in an amount equal
to ten percent (10%) of the face amount of
such letter of credit. The amount of such
reserve may be amended by Bank from time to
time to account for fluctuations in the
exchange rate. The availability of funds
under the Committed Revolving Line shall be
reduced by the amount of such reserve for so
long as such letter of credit remains
outstanding."
14. The Loan Agreement shall be amended by deleting the
following text appearing as Section 2.2 entitled
"Overadvances":
"2.2 OVERADVANCES. If, at any time or
for any reason, the amount of Obligations
owed by Borrower to Bank pursuant to Section
2.1.1 of this Agreement is greater than the
lesser of (i) the Committed Revolving Line
or (ii) the Borrowing Base, Borrower shall
immediately pay to Bank, in cash, the amount
of such excess."
and inserting in lieu thereof the following:
"2.2 OVERADVANCES. If, at any time or
for any reason, the amount of Obligations
owed by Borrower to Bank pursuant to Section
2.1.1 and 2.1.3 of this Agreement is greater
than: (i) the lesser of the Committed
Revolving Line or the Borrowing Base, minus
(ii) the face amount of all outstanding
Letters of Credit (including drawn but
unreimbursed Letters of Credit), Borrower
shall immediately pay to Bank, in cash, the
amount of such excess."
15. 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 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. Notwithstanding the foregoing, if the
Borrower fails to achieve the Net Revenue
Requirement
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for ANY fiscal quarter, any Advances shall
bear interest (except as set forth in
Section 2.3(b)), on an average daily balance
thereof, effective as of the first day of
the month following the quarter end in which
Borrower failed to achieve such Net Revenue
Requirement, at a per annum rate equal to
the aggregate of the Prime Rate, PLUS One
and One-Quarter percent (1.25%). The
effective interest rate shall not decrease
as a result of the compliance by the
Borrower with the Net Revenue Requirement
for subsequent periods."
and inserting in lieu thereof the following:
"(a) INTEREST RATE. Except as set forth
in Section 2.3(b): (i) any Advances made
pursuant to Section 2.1.1 shall bear
interest, effective as of December 1, 1999,
on the average daily balance thereof, at a
per annum rate equal to the aggregate of the
Prime Rate PLUS One Half of One percent
(0.50%), (ii) any Equipment Advances made
pursuant to Section 2.1.2 shall bear
interest in accordance with terms of Section
2.1.2, (iii) any Equipment Advances made
pursuant to Section 2.1.2.A shall bear
interest in accordance with terms of Section
2.1.2.A, and (iv) any Equipment Advances
made pursuant to Section 2.1.2.B shall bear
interest in accordance with terms of Section
2.1.2.B."
16. The Loan Agreement shall be amended by incorporating
into Section 4.1 entitled "Grant of Security
Interest" the following text to appear as the last
sentence in Section 4.1:
"Notwithstanding the foregoing, it is
expressly acknowledged and agreed that the
security interest created in this Agreement
only with respect to EXIM Eligible Foreign
Accounts (as such term is defined in the
EXIM Agreement) is subject to and
subordinate to the security interest granted
to the Bank in the EXIM Agreement with
respect to such EXIM Eligible Foreign
Accounts, but only to the extent any
advances are actually made to the Borrower
under the EXIM Agreement based upon such
EXIM Eligible Foreign Accounts."
17. 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":
"(a) as soon as available, but in any
event within twenty-five (25) days after the
end of each month, a company prepared
consolidated balance sheet and income
statement covering Borrower's consolidated
operations during such period, in a form and
certified by an officer of Borrower
reasonably acceptable to Bank;"
and inserting in lieu thereof the following:
"(a) as soon as available, but in any
event within thirty (30) days after the end
of each month, a company prepared
consolidated balance sheet and income
statement covering Borrower's consolidated
operations during such period, in a form and
certified by an officer of Borrower
reasonably acceptable to Bank;"
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18. The Loan Agreement shall be amended by deleting the
following text appearing as the second paragraph of
Section 6.3 entitled "Financial Statements, Reports,
Certificates":
"Borrower shall deliver to Bank, on a
semi-monthly basis within seven (7) business
days of the fifteenth (15th) and last day of
each month, a Borrowing Base Certificate
signed by a Responsible Officer in
substantially the form of EXHIBIT C hereto,
together with aged listings of accounts
receivable. Notwithstanding the foregoing,
if at any time during the preceding month
the outstanding principal balance under the
Committed Revolving Line is no greater than
$1,000,000.00, the Borrowing Base
Certificate and the aged listings of
accounts receivable shall be delivered by
Borrower to Bank within fifteen (15) days of
the last day of each such month."
and inserting in lieu thereof the following:
"Within thirty (30) days after the last day
of each month, Borrower shall deliver to
Bank a Borrowing Base Certificate signed by
a Responsible Officer in substantially the
form of EXHIBIT C hereto, together with aged
listings of accounts receivable."
19. The Loan Agreement shall be amended by deleting the
following text appearing as the third paragraph of
Section 6.3 entitled "Financial Statements, Reports,
Certificates":
"Within twenty-five (25) days after the last
day of each month, Borrower shall deliver to
Bank with the monthly financial statements a
Compliance Certificate signed by a
Responsible Officer in substantially the
form of EXHIBIT D hereto."
and inserting in lieu thereof the following:
"Within thirty (30) days after the last day
of each month, Borrower shall deliver to
Bank with the monthly financial statements a
Compliance Certificate signed by a
Responsible Officer in substantially the
form of EXHIBIT D hereto."
20. The Loan Agreement shall be amended by deleting the
following text appearing as Section 6.8 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: (i) One Million Seven Hundred
Fifty Thousand Dollars ($1,750,000.00) for
each month through the month ending May 31,
1999, (ii) Three Million Dollars
($3,000,000.00) for the months ending June
30, 1999, July 31, 1999 and August 31, 1999,
and (iii) Four Million Five Hundred Thousand
Dollars ($4,500,000.00) for each month
thereafter. The Bank hereby reserves the
right, in its sole and absolute discretion,
to reset such Tangible Net Worth covenant
upon a public offering of stock by the
Borrower. For purposes hereof, Tangible Net
Worth shall be defined as Borrower's equity
plus Subordinated Debt less intangible
assets."
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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 plus
Subordinated Debt of not less than the
aggregate of (i) Eight Million Dollars
($8,000,000.00), PLUS (ii) fifty percent
(50.0%) of the amount of cash received by
Borrower from any new equity issued by
Borrower (except for issuances pursuant to
employee or director stock option plans of
Borrower)."
21. The Loan Agreement shall be amended by deleting the
following text appearing as paragraph (a) of Section
9.1 entitled "Rights and Remedies":
"(a) Declare all Obligations, whether
evidenced by this Agreement, by any of the
other Loan Documents, or otherwise,
immediately due and payable (provided that
upon the occurrence of an Event of Default
described in Section 8.5 all Obligations
shall become immediately due and payable
without any action by Bank);"
and inserting in lieu thereof the following:
"(a) Declare all Obligations (including,
without limitation, all obligations under
the EXIM Agreement), whether evidenced by
this Agreement, by any of the other Loan
Documents, or otherwise, immediately due and
payable (provided that upon the occurrence
of an Event of Default described in Section
8.5 all Obligations shall become immediately
due and payable without any action by
Bank);"
22. The Loan Agreement shall be amended in Section 9.1
entitled "Rights and Remedies" by incorporating
therein immediately after paragraph (i) the following
new paragraph:
"(j) Demand that Borrower (i) deposit
cash with Bank in an amount equal to the
amount of any Letters of Credit remaining
undrawn, as collateral security for the
repayment of any future drawings under such
Letters of Credit, and Borrower shall
forthwith deposit and pay such amounts, and
(ii) pay in advance all Letters of Credit
fees scheduled to be paid or payable over
the remaining term of the Letters of
Credit."
23. An Event of Default under the EXIM Agreement shall be
an Event of Default under the Loan Agreement, as
amended hereby.
24. The Borrower hereby ratifies, confirms and reaffirms,
all and singular, the terms and conditions of a
certain Negative Pledge Agreement dated as of August
16, 1998 between Borrower and Bank, and acknowledges,
confirms and agrees that said Negative Pledge
Agreement shall remain in full force and effect.
25. The Borrowing Base Certificate appearing as EXHIBIT C
to the Loan Agreement is hereby replaced with the
Borrowing Base Certificate attached as EXHIBIT A
hereto.
26. The Compliance Certificate appearing as EXHIBIT D to
the Loan Agreement is hereby replaced with the
Compliance Certificate attached as EXHIBIT B hereto.
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4. FEE. Borrower shall pay to Bank the following fully earned and
non-refundable modification fees: (i) a working capital line commitment fee
equal to Six Thousand Two Hundred Fifty Dollars ($6,250.00), which fee shall be
due on the date hereof, and (ii) an equipment line commitment fee equal to Two
Thousand Five Hundred Dollars ($2,500.00), which fee shall be due on 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. 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.
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 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.
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 Xxxxx 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).
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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: BANK:
BLUESTONE SOFTWARE, INC. SILICON VALLEY BANK
By:_______________________________________ By:__________________________________
Name:__________________________________ Name:________________________________
Title:_________________________________ Title:_______________________________
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EXHIBIT A
BORROWING BASE CERTIFICATE
Borrower: BLUESTONE SOFTWARE, INC. Bank: Silicon Valley Bank
Commitment Amount: $3,000,000.00
ACCOUNTS RECEIVABLE
1) Accounts Receivable Book Value as of______
$__________
2) Additions (please explain on reverse)
$__________
3) TOTAL ACCOUNTS RECEIVABLE
$__________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4) Amounts over 90 days due
$__________
5) Balance of 50% over 90 day accounts
$__________
6) Concentration Limits
$__________
7) Foreign Accounts
$__________
8) Governmental Accounts
$__________
9) Contra Accounts
$__________
10) Promotion or Demo Accounts
$__________
11) Intercompany/Employee Accounts
$__________
12) Other (please explain on reverse)
$__________
13) TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS
$__________
14) Eligible Accounts (#3 minus #13)
$__________
15) LOAN VALUE OF ACCOUNTS (80.0% of #14)
$__________
BALANCES
16) Maximum Loan Amount
$__________
17) Total Funds Available [Lesser of #16 or #15]
$__________
18) Present balance owing on Line of Credit
$__________
19) Outstanding under Sublimit (Letters of Credit)
$__________
20) RESERVE POSITION (#17 minus #18 and #19)
$__________
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THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE FOREGOING IS TRUE, COMPLETE AND
CORRECT, AND THAT THE INFORMATION REFLECTED IN THIS BORROWING BASE CERTIFICATE
COMPLIES WITH THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THE LOAN AND
SECURITY AGREEMENT BETWEEN THE UNDERSIGNED AND SILICON VALLEY BANK, INCLUDING,
WITHOUT LIMITATION, THOSE APPEARING IN SECTION 2.1.1 OF THE LOAN AND SECURITY
AGREEMENT, AS AMENDED.
COMMENTS:
___________________________
By: _______________________
Authorized Signer
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EXHIBIT B
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: BLUESTONE SOFTWARE, INC.
The undersigned authorized officer of BLUESTONE SOFTWARE, INC. hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending with all required covenants except
as noted below and (ii) all representations and warranties of Borrower stated in
the Agreement are true and correct in all material respects as of the date
hereof. Attached herewith are the required documents supporting the above
certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The Officer expressly acknowledges that no
borrowings may be requested by the Borrower at any time or date of determination
that Borrower is not in compliance with any of the terms of the Agreement, and
that such compliance is determined not just at the date this certificate is
delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER
"COMPLIES" COLUMN.
Reporting Covenant Required Complies
------------------ -------- --------
Monthly financial statements & CC Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 120 days Yes No
BBC & A/R Agings Monthly within 30 days Yes No
Financial Covenant Required Actual Complies
------------------ -------- ------ --------
Maintain on a Monthly Basis:
Minimum Adjusted Quick Ratio 1.50:1.0 ____:1.0 Yes No
Minimum Tangible Net Worth $8,000,000 plus 50% of $________ Yes No
new equity (except for
stock option plans)
COMMENTS REGARDING EXCEPTIONS:
Sincerely,
_______________________ Date:_______________
SIGNATURE
_______________________
TITLE
14
