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EXHIBIT 10.16
FOURTH LOAN MODIFICATION AGREEMENT
This Fourth Loan Modification Agreement is entered into as of October
15, 1999, by and between T/R Systems, Inc., a Georgia corporation ("Borrower")
whose address 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxx 00000, and Silicon Valley
Bank ("Lender") whose address is 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, XX 00000
(hereinafter the "Loan Modification Agreement"), with a loan production office
at 0000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000.
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents, a Loan and Security Agreement, dated October 17, 1997, as amended by
a Loan Modification Agreement dated as of March 31, 1998 between Borrower and
Bank, a Second Loan Modification Agreement dated as of October 16, 1998 between
Borrower and Bank, a Third Loan Modification Agreement dated as of January 18,
1999 between Borrower and Bank, and as may be further amended from time to time
(the "Loan Agreement"). The Loan Agreement provides for, among other things, a
Committed Revolving Line in the original principal amount of Two Million Dollars
($2,000,000) (the "Committed Revolving Line") and a Committed Equipment Line in
the original principal amount of Two Hundred Fifty Thousand Dollars ($250,000)
(the "Committed Equipment Line"). Defined terms used herein without definition
shall have the same meaning ascribed thereto in the Loan Agreement. The purpose
of this Loan Modification Agreement is to make certain modifications to the
Committed Revolving Line.
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Committed
Revolving Line and Committed Equipment Line is secured by the Collateral as
described in the Loan Agreement. Hereinafter, the above-described security
documents, together with all other documents securing repayment of the Committed
Revolving Line and Committed Equipment Line shall be referred to as the
"Security Documents". Hereinafter, the Loan Agreement, the Security Documents,
together with all other documents evidencing or securing the Committed Revolving
Line, shall be referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
(a) Modifications to Revolving Facility.
The purpose of this Loan Modification Agreement is to renew the
Committed Revolving Line and to further modify the Existing Loan
Documents as follows:
(1) The amount of the Committed Revolving Line is increased to Three
Million and No/100ths Dollars ($3,000,000.00); provided, however,
that the face amount of outstanding Letters of Credit shall not
exceed Two Hundred Thousand and No/l00ths Dollars ($200,000.00);
(2) The term of the Committed Revolving Line is extended from October
15, 1999 to October 14, 2000; and
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(3) Except as set forth in Section 2.3(b) of the Loan Agreement, any
Credit Extensions shall bear interest, on the average daily
balance thereof, at a per annum rate equal to three-quarters of
one percentage point (.75%) above the Prime Rate.
(b) Modification(s) to Loan Agreement.
(1) In the Loan Agreement, the definition of "Committed Revolving
Line" is deleted and replaced with the following:
"Committed Revolving Line" means a credit extension of up to
Three Million and No/100ths Dollars ($3,000,000.00).
(2) In the Loan Agreement, the definition of "Revolving Maturity
Date" is deleted and replaced with the following:
"Revolving Maturity Date" means October 14, 2000.
(3) Subparagraph (a) of Section 2.1.2 of the Loan Agreement is
deleted in its entirety and replaced with the following:
"(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 lesser of 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 TWO HUNDRED THOUSAND AND NO/100THS
DOLLARS ($200,000.00). Each letter of Credit shall have any
expiry date no later than one hundred eighty (180) days after
the Revolving 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 Revolving 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."
(4) Subparagraph (a) of Section 2.3 of the Loan Agreement is deleted
in its entirety and replaced with the following:
"(a) Interest Rate. Except as set forth in Section 2.3(b), any
Credit Extensions shall bear interest, on the average daily
balance thereof, at a per annum rate equal to three-quarters of
one percentage point (.75%) above the Prime Rate."
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(5) Subparagraph (f) of Section 6.3 of the Loan Agreement is deleted
in its entirety and replaced with the following:
"(f) within thirty (30) days after the 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."
(6) The Borrowing Base Certificate of Borrower attached as Exhibit
"C" to the Loan Agreement is deleted and replaced with the
Borrowing Base Certificate attached hereto as Schedule 1.
(7) The Compliance Certificate of Borrower attached as Exhibit "D" to
the Loan Agreement is deleted and replaced with the Compliance
Certificate attached hereto as Schedule 2.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
5. PAYMENT OF LOAN FEE. Borrower shall pay to Lender a Facility Fee equal to
one-half of one percentage point (.5%) of $2,000,000.00 of the Committed
Revolving Line (i.e., $10,000.00), which shall be due at the time of execution
of the documentation of this Loan Modification Agreement, and an additional
Facility Fee of one-half of one percentage point (.5%) on the remaining
$1,000,000.00 of the Committed Revolving Line (i.e., $5,000.00) if the aggregate
Credit Extensions ever exceed $2,000,000.00, to be paid on the date such
aggregate Credit Extensions exceed $2,000,000.00. All such Facility Fees shall
be fully earned and nonrefundable when paid. In addition, Borrower shall pay all
out of pocket expenses, including legal fees and expenses.
6. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants to
Bank as follows:
(a) Borrower has adequate corporate power and authority to execute and
deliver this Loan Modification Agreement and the other documents executed and/or
delivered in connection herewith (collectively, the "Modification Documents")
and to perform its respective obligations hereunder and thereunder, and under
the Existing Loan Documents, as amended hereby. Each of this Loan Modification
Agreement and the other Modification Documents has been duly authorized,
executed and delivered by Borrower, and does not contravene any law, rule or
regulation applicable to Borrower or any of the terms of its Articles of
Incorporation or bylaws, or any other indenture, agreement or undertaking to
which Borrower is a party. This Loan Modification Agreement and the other
Modification Documents effectively amend the Existing Loan Documents in
accordance with the terms hereof and thereof. Borrower's obligations hereunder
and under the other Modification Documents, and under the Loan Agreement and the
other Existing Loan Documents, each as amended hereby and thereby, constitute
legally valid and binding obligations of Borrower enforceable against Borrower
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting the rights of creditors generally and by equitable principles.
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(b) All of the representations and warranties made by Borrower in the Loan
Agreement and the other Existing Loan Documents are true and correct on the date
hereof as if made on and as of the date hereof and are so repeated herein,
except that representations and warranties of financial statements or conditions
as of an earlier date relate solely to such earlier date.
(c) Upon the execution and delivery of this Loan Modification Agreement
and the satisfaction of the conditions precedent set forth in Section 7 hereof,
no Event of Default shall exist and be continuing.
7. CONDITIONS PRECEDENT.
(a) The agreements contained herein and the amendments contemplated
hereby shall not be effective unless each of the following conditions precedent
is satisfied:
(1) All of the representations and warranties made by Borrower in Section
6 hereof shall be true and correct;
(2) Bank shall receive in form and substance reasonably satisfactory to
Bank, a Certificate of the President of Borrower as to the
satisfaction of the condition specified in clause (1) of this Section
7(a);
(3) Bank shall receive the Loan Fee;
(4) Borrower shall execute and deliver a Renewal Promissory Note;
(5) Bank shall have received, in form and substance reasonably
satisfactory to Bank, such other documents as Bank shall deem
necessary and/or appropriate; and
(6) Bank shall receive have received a Certificate of Good Standing for
Borrower from the State of Georgia.
Upon satisfaction of each of the conditions precedent set forth in this Section
7(a), the agreements contained herein and the amendments contemplated hereby
shall be deemed effective as of the date hereof.
(b) From and after the satisfaction of the conditions precedent set forth in
Section 7(a) hereof, Bank's obligations to make any Advances to Borrower under
the Loan Agreement and the other Loan Documents shall be subject to the
additional conditions that (i) all of the representations and warranties made by
Borrower herein, whether directly or incorporated herein by reference, shall be
true and correct immediately prior to the time of the proposed Advance as if
made at and as of such time, except that representations and warranties of
financial statements or conditions as of an earlier date relate solely to such
earlier date, and (ii) no Event of Default, or event or condition which, with
notice or lapse of time, or both, would constitute an Event of Default, would
occur after giving effect to the making of such Advance. From and after the
satisfaction of the conditions precedent set forth in Section 7(a) hereof, each
request by Borrower for an Advance under the Loan Agreement and the other Loan
Documents shall be
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deemed to be a representation and warranty by Borrower that all of the
conditions precedent in this Section 7(b) have been met.
8. NO DEFENSES OF BORROWER. Borrower agrees that it has no defenses against the
obligations to pay any amounts under the Indebtedness.
9. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
Existing Loan Documents, 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 modification of the Existing Loan Documents pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
amendments or modifications to the Existing Loan Documents. Nothing in this Loan
Modification Agreement shall constitute a novation or satisfaction of the
Borrower's Obligations to Bank. 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. The
terms of this paragraph apply not only to this Loan Modification Agreement, but
also to all subsequent loan modification agreements.
10. MISCELLANEOUS. This Loan Modification Agreement shall be considered a "Loan
Document" under and as defined in the Loan Agreement. THE LOAN DOCUMENTS SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF GEORGIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OR ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THE BORROWER AND THE
BANK ALSO AGREE THAT ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ENFORCE ANY JUDGMENT OBTAINED
AGAINST THE BORROWER IN CONNECTION WITH THIS AGREEMENT OR SUCH OTHER LOAN
DOCUMENT, MAY BE BROUGHT BY THE BANK OR BORROWER IN ANY STATE OR FEDERAL COURT
SITTING IN THE COUNTY OF THE STATE IN WHICH BANK'S ADDRESS SHOWN IN SECTION 10
OF THE LOAN AGREEMENT IS LOCATED, OR BANK, IN ITS SOLE DISCRETION, MAY BRING
LEGAL ACTION AGAINST BORROWER IN ANY OTHER COURT TO THE JURISDICTION OF WHICH
SUCH BORROWER OR ANY OF ITS PROPERTY IS OR MAY BE SUBJECT. EACH OF THE BORROWER
AND THE BANK, AS APPLICABLE,
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IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE AFORE SAID STATE AND FEDERAL
COURTS, AND IRREVOCABLY WAIVES ANY PRESENT OR FUTURE OBJECTION TO VENUE IN ANY
SUCH COURT, AND ANY PRESENT OR FUTURE CLAIM THAT ANY SUCH COURT IS AN
INCONVENIENT FORUM, IN CONNECTION WITH ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
This Loan Modification Agreement is executed as of the date first
written above.
BORROWER: BANK:
T/R SYSTEMS, INC. SILICON VALLEY BANK, doing business
as SILICON VALLEY EAST
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxx Xxxx
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Name: Xxxx X. Xxxxxxx Name: Xxxxxx Xxxx
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Title: VP; CPO Title: Vice President
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SILICON VALLEY BANK
By: /s/
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Name:
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Title: AVP
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(signed in Santa Clara, CA)
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SCHEDULE 1
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: T/R Systems, Inc. Bank: Silicon Valley Bank
Commitment Amount: $3,000,000.00
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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. Ineligible 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% of #14) $________
BALANCES
16. Maximum Loan Amount $3,000,000.00
17. Total Funds Available (Lesser of #16 or #15) $________
18. Present balance owing on Line of Credit $________
19. Outstanding under Sublimits (L/C $200,000) $________
20. RESERVE POSITION (#17 minus #18 and #19) $________
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 dated as of October 17, 1997, and as may be amended from time
to time, between the undersigned and Silicon Valley Bank.
COMMENTS:
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BANK USE ONLY
RECEIVED BY: _______________
DATE: ______________________
REVIEWED BY: _______________
COMPLIANCE STATUS: YES / NO
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By:
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Authorized Signer
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SCHEDULE 2
EXHIBIT D
COMPLIANCE CERTIFICATE
To: SILICON VALLEY BANK ("Bank")
FROM: T/R SYSTEMS, INC. ("Borrower")
The undersigned authorized Responsible Officer of T/R Systems, Inc.
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement dated as of October 12, 1997 between Borrower and Bank,
as amended by that certain Modification Agreement dated March 31, 1998, that
certain Second Loan Modification Agreement dated October 16, 1998, that certain
Third Loan Modification Agreement dated January 18, 1999, and that certain
Fourth Modification Agreement dated October 15, 1999 by and between Borrower and
Bank and as may be amended from time to time (the "Agreement"), (i) Borrower is
in complete compliance for the period ending ______________________ with all
required covenants except as noted below, (ii) all representations and
warranties of Borrower stated in the Agreement are true and correct in all
material respects as of the date hereof, and (iii) no Event of Default, and no
event which with notice or lapse of time, or both, would constitute an Event of
Default, has occurred and is continuing. Attached herewith are the required
documents supporting the above certification. The Officer further certifies that
these are prepared in accordance with General 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
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Monthly financial statements Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 120 days Yes No
A/R Aging Monthly within 130 days Yes No
A/R Audit Annual Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Monthly Basis:
Minimum Quick Ratio 1.5:1.0 ________:1.0 Yes No
Minimum Tangible Net Worth $4,500,000 $__________ Yes No
COMMENTS REGARDING EXCEPTIONS: SEE ATTACHED
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BANK USE ONLY
RECEIVED BY: _______________
DATE: ______________________
VERIFIED: __________________
DATE: ______________________
COMPLIANCE STATUS: YES / NO
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T/R SYSTEMS, INC.
By:
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Name:
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Title:
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