EXHIBIT 10.14
LOAN MODIFICATION AGREEMENT
BETWEEN: ANALOGY, INC., an Oregon corporation ("Borrower"), whose
address is 0000 X.X. Xxxxxx Xxxxx, Xxxxxxxxx, XX 00000;
AND: Silicon Valley Bank ("Silicon"), whose address is 0000 Xxxxxx
Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000;
DATE: June 30, 1998
This Loan Modification Agreement is entered into on the above date by
Borrower and Silicon.
1. BACKGROUND. Borrower entered into a Loan and Security Agreement
with Silicon in March, 1997, and a Loan Modification Agreement in March, 1998
(as amended and modified from time to time, the "Loan Agreement").
Capitalized terms used in this Loan Modification Agreement shall, unless
otherwise defined in this Agreement, have the meaning given to such terms in
the Loan Agreement.
Silicon and Borrower are entering into this Agreement to state the
terms and conditions of certain modifications to the Loan Agreement and the
Schedule, as amended prior to the date of this Agreement.
2. MODIFICATIONS TO LOAN AGREEMENT AND SCHEDULE.
2.1. The Schedule to the Loan Agreement is hereby deleted
and replaced by the Amended and Restated Schedule to Loan and Security
Agreement attached to this Agreement.
2.2. Borrower acknowledges and agrees that all Obligations,
including without limitation Borrower's obligation to repay amounts advanced
by Silicon to Borrower on the terms of the Loan Agreement and Schedule as
modified by this Loan Modification Agreement, are secured by all liens and
security interests granted by Borrower to Silicon in the Loan Agreement.
3. CONDITIONS PRECEDENT. This Loan Modification Agreement shall
not take effect until Borrower delivers to Silicon a Certified Resolution of
Borrower and such other documents as Silicon shall reasonably require to give
effect to the terms of this Loan Modification Agreement.
4. NO OTHER MODIFICATIONS. Except as expressly modified by this
Loan Modification Agreement, the terms of the Loan Agreement, as amended
prior to the date of this Loan Modification Agreement, shall remain unchanged
and in full force and effect. Silicon's agreement to modify the Loan
Agreement pursuant to this Loan Modification Agreement shall not obligate
Silicon to make any future modifications to the Loan Agreement or any other
loan document. Nothing in this Loan Modification Agreement shall constitute a
satisfaction of any indebtedness of any Borrower to Silicon. It is the
intention of Silicon and Borrower to retain as liable parties all makers and
endorsers of the Loan Agreement or any other loan document. Except as provided
in the Amended and Restated Schedule to Loan and Security Agreement attached
to this Agreement, no maker, endorser, or guarantor shall be released by
virtue of this Loan Modification Agreement. The terms of this paragraph shall
apply not only to this Loan Modification Agreement, but also to all subsequent
loan modification agreements.
Page 1 - LOAN MODIFICATION AGREEMENT
5. REPRESENTATIONS AND WARRANTIES.
5.1. The Borrower represents and warrants to Silicon that
the execution, delivery and performance of this Agreement are within the
Borrower's corporate powers, and have been duly authorized and are not in
contravention of law or the terms of the Borrower's articles of
incorporation, bylaws or of any undertaking to which the Borrower is a party
or by which it is bound.
5.2. The Borrower understands and agrees that in entering
into this Agreement, Silicon is relying upon the Borrower's representations,
warranties and agreements as set forth in the Loan Agreement and other loan
documents. Borrower hereby reaffirms all representations and warranties in
the Loan Agreement, all of which are true as of the date of this Agreement.
BORROWER:
ANALOGY, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------
Title: Vice President
-----------------------
SILICON:
SILICON VALLEY BANK
By: /s/ Xxxxx Xxxxxxx
--------------------------
Title: Vice President
-----------------------
Page 2 - LOAN MODIFICATION AGREEMENT
AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
BORROWER: Analogy, Inc.
SECURED ACCOUNTS RECEIVABLE LINE OF CREDIT
CREDIT LIMIT: An amount not to exceed the lesser of: (i) $5,000,000 at
any one time outstanding, minus the Cash Management
Services Sublimit; or (ii) the amount of the "Borrowing
Base", as defined below. For purposes of this Schedule,
the "Borrowing Base" shall mean the sum of 80% of the Net
Amount of Borrower's eligible accounts receivable. With
respect to Borrower's accounts, "Net Amount" means the
gross amount of the account, minus all applicable sales,
use, excise and other similar taxes and minus all
discounts, credits and allowances of any nature granted or
claimed. The amount of all letters of credit and foreign
exchange contracts issued by Silicon at the request of
Borrower shall reduce, dollar for dollar, the amount
otherwise available to be borrowed under the formula
described in this paragraph.
Without limiting the fact that the determination of which
accounts are eligible for borrowing is a matter of Silicon's
discretion, the following shall not be deemed eligible for
borrowing: accounts outstanding for more than 90 days from
the invoice date and accounts subject to any contingencies.
In addition, if more than 50% of the accounts owing from an
account debtor are outstanding more than 90 days from the
invoice date or are otherwise not eligible accounts, then all
accounts owing from that account debtor shall be deemed
ineligible for borrowing. In addition, foreign accounts
receivable, inter-company accounts receivable, government
accounts, and contra accounts shall all be ineligible.
Finally, any account which alone exceeds 25% of total
accounts receivable will be ineligible to the extent said
account exceeds 25% of total accounts without prior written
approval from Bank. Itochu has been pre-approved by Silicon
as an eligible debtor.
INTEREST RATE: The interest rate applicable to this Loan shall be a rate
equal to the "Prime Rate" in effect from time to time, plus
0.50% per annum. Interest calculations shall be made on the
basis of a 360-day year and 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.
COMMITMENT FEE: $2,000, which is fully earned and payable at closing of
this Loan Modification.
MATURITY DATE: March 4, 1999, at which time all unpaid principal and
accrued but unpaid interest shall be due and payable.
Page 1 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
LETTERS OF CREDIT: Subject to the terms of this Agreement, as amended from
time to time, Silicon shall issue or cause to be issued under
the Credit Limit standby and commercial letters of credit for
the account of Borrower in an aggregate face amount not to
exceed the Credit Limit. Each such standby letter of credit
shall have an expiry date of no later than the Maturity Date.
All such letters of credit shall be, in form and substance,
acceptable to Silicon in its sole discretion and shall be
subject to the terms and conditions of Silicon's form
application and letter of credit agreement.
CASH MANAGEMENT
SERVICES SUBLIMIT: Borrower may utilize up to an aggregate amount not to
exceed $75,000 for Cash Management Services provided by
Silicon, which services will include business credit card
through MBNA America Bank as defined in certain cash
management service agreements provided to Borrower from time
to time in connection herewith (a "Cash Management Service"
or the "Cash Management Services"). All amounts actually
paid by Silicon in respect of a Cash Management Service or
Cash Management Services shall, when paid, constitute an
advance under the Secured Accounts Receivable Line of Credit.
FOREIGN EXCHANGE
SUBLIMIT: Borrower may utilize up to the Credit Limit for spot and
future foreign exchange contracts (the "Exchange Contracts").
All Exchange Contracts must provide for delivery of
settlement on or before the Maturity Date. The limit
available at any time shall be reduced by the following
amounts (the "Foreign Exchange Reserve") on each day (the
"Determination date"): (i) on all outstanding Exchange
Contracts on which delivery is to be effected or settlement
allowed more than two business days from the determination
Date, 20% of the gross amount of the Exchange Contracts; plus
(ii) on all outstanding Exchange Contracts on which delivery
is to be effected or settlement allowed within two business
days after the Determination Date, 100% of the gross amount
of the Exchange Contract, the Borrower may request that
Silicon debit the Borrower's bank account with Silicon for
such amount, provided Borrower has immediately available
funds in such amounts in its bank account.
Whenever Borrower desires an advance, Borrower will notify
Silicon by facsimile transmission or by telephone not later
than 11:00 a.m. California time, two business days before
the advance is to be made. Each such notification shall be
promptly confirmed by a borrowing base certificate. Silicon
shall be entitled to rely on any such telephone notice given
by any person who Silicon reasonably believes to be an
officer of Borrower, and Borrower shall indemnify and hold
Silicon harmless for any damages or loss suffered by Silicon
as a result of such reliance.
Silicon may, in its discretion, terminate the Exchange
Contracts at any time (a) that an Event of Default occurs or
(b) that there is no sufficient availability under the
Credit Limit and Borrower does not have available funds in
its bank account to satisfy the Foreign Exchange Reserve. If
Silicon terminates the Exchange Contracts, and without
limitation of the FX Indemnity Provisions (as
Page 2 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
referred to below), Borrower agrees to reimburse Silicon for
any and all fees, costs and expenses relating thereto or
arising in connection therewith.
Borrower shall not permit the total gross amount of all
Exchange Contracts on which delivery is to be effected and
settlement allowed in any two business day period to be
more than the Credit Limit, nor shall Borrower permit the
total gross amount of all Exchange Contracts to which
Borrower is a party, outstanding at any one time, to exceed
the Credit Limit.
The Borrower shall execute all standard form applications and
agreements of Silicon in connection with the Exchange
Contracts, and without limiting any of the terms of such
applications and agreements the Borrower will pay all
standard fees and charges of Silicon in connection with the
Exchange Contracts.
Without limiting any of the other terms of this Agreement or
any such standard form applications and agreement of
Silicon, Borrower agrees to indemnify Silicon and hold it
harmless, from and against any and all claims, debts,
liabilities, demands, obligations, actions, costs and
expenses (including, without limitation, attorneys fees of
counsel of Silicon's choice), of every nature and
description which it may sustain or incur, based upon,
arising out of, or in any way relating to any of the
Exchange Contracts or any transactions relating thereto or
contemplated thereby (collectively referred to as the "FX
Indemnity Provisions").
PRIOR NAMES OF
BORROWER: See attached Exhibit B
TRADE NAMES OF
BORROWER: See attached Exhibit B
TRADEMARKS OF
BORROWER: See attached Exhibit B
OTHER LOCATIONS
AND ADDRESSES: See attached Exhibit B
MATERIAL ADVERSE
LITIGATION: See attached Exhibit B
FINANCIAL
COVENANTS: The Borrower shall at all times comply with all of the
following covenants, all of which shall be determined and
measured on a quarterly basis, except for the Quick Ratio
covenant, in accordance with generally accepted accounting
principles, on a consolidated basis with any subsidiary of
Borrower, except as otherwise stated below:
Page 3 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
TANGIBLE NET
WORTH: Borrower shall at all times maintain a Tangible Net Worth of
not less than zero.
PROFITABILITY: There will be no limitation on Borrower's net loss (as
defined below) for the quarter ending June 30, 1998.
However, Borrower shall not incur a quarterly loss in excess
of $1,000,000 for the quarter ending September 30, 1998, and
shall not incur any loss for the quarter ending December 31,
1998, and in all subsequent periods. For purposes of this
paragraph, "loss" means net income after taxes of less than
$1.00 on Borrower's financial statements.
QUICK RATIO: Borrower shall maintain monthly ratio of Quick Assets
(defined below) to current liabilities less deferred revenue
of not less than 1.75:1.00 for the periods ending June 30,
1998, September 30, 1998, and December 31, 1998 and the
minimum Quick Ratio shall be 1.50:1.00 for all other monthly
periods.
DEFINITIONS: "Quick Assets" means cash on hand or on deposit in banks,
readily marketable securities issued by the United States,
readily marketable commercial paper rated "A-1" by Standard
& Poor's Corporation (or a similar rating by a similar
rating organization), certificates of deposit and banker's
acceptances, and accounts receivable (net of allowance for
doubtful accounts).
"Tangible Net Worth" means stockholders' equity plus debt,
if any, that has been subordinated to the Loans in a written
subordination agreement on terms satisfactory to Silicon,
and accrued interest thereon, less goodwill, patents,
capitalized software costs, deferred organizational costs,
tradenames, trademarks, and all other assets which would be
classified as intangible assets under generally accepted
accounting principles.
OTHER COVENANTS: Borrower shall at all times comply with all of the following
additional covenants:
BANKING RELATIONSHIP. Borrower shall at all times maintain
its primary domestic banking relationship with Silicon,
unless it obtains Silicon's prior written consent.
FINANCIAL STATEMENTS AND REPORTS. The Borrower shall
provide Silicon: (a) within 50 days after the end of each
quarter, a quarterly financial statement (consisting of a
income statement and a balance sheet) prepared by the
Borrower in accordance with generally accepted accounting
principles; (b) within 30 days after the end of each
month, a monthly financial statement (consisting of an
income statement and a balance sheet) prepared by the
Borrower in accordance with generally accepted accounting
principles; (c) within 20 days after the end of each
month, an accounts receivable aging report, in such form
as Silicon shall reasonably specify; (d) within 30 days
after the end of each month, a Borrowing Base Certificate
in the form attached to this Agreement as Exhibit A, as
Silicon may reasonably modify such Certificate from time
to time, signed by the Chief Financial Officer of the
Borrower; (e) within 50 days after the end of each
quarter, a Compliance Certificate in such form as Silicon
shall reasonably specify, signed by the Chief Financial
Officer of the Borrower, setting forth calculations
showing compliance (at the end of each such calendar
quarter) with
Page 4 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
the financial covenants set forth on the Schedule, and
certifying that throughout such quarter the Borrower was in
full compliance with all other terms and conditions of this
Agreement and the Schedule, and providing such other
information as Silicon shall reasonably request; (f)
within 5 days after filing, any 10K or 10Q filed by Borrower
with the Securities and Exchange Commission; and (g) within
95 days following the end of the Borrower's fiscal year,
complete annual CPA-audited financial statements, such audit
being conducted by independent certified public accountants
reasonably acceptable to Silicon, together with an
unqualified opinion of such accountants.
CONDITIONS TO
CLOSING: Without in any way limiting the discretionary nature of
advances under this Agreement, before requesting any such
advance, the Borrower shall satisfy each of the following
conditions:
1. LOAN DOCUMENTS:
Silicon shall have received this Agreement, the Schedule,
and such other loan documents as Silicon shall require, each
duly executed and delivered by the parties thereto.
2. DOCUMENTS RELATING
TO AUTHORITY, ETC.:
Silicon shall have received each of the following in form
and substance satisfactory to it:
(a) Certified Copies of the Articles of Incorporation
and Bylaws of the Borrower;
(b) A Certificate of Good Standing issued by the
Secretary of State of the Borrower's state of incorporation
and such other states as Silicon may reasonably request with
respect to the Borrower;
(c) A certified copy of a Resolution adopted by the
Board of Directors of the Borrower authorizing the
execution, delivery and performance of this Agreement, and
any other documents or certificates to be executed by the
Borrower in connection with this transaction; and
(d) Incumbency Certificates describing the office and
identifying the specimen signatures of the individuals
signing all such loan documents on behalf of the Borrower.
3. PERFECTION AND
PRIORITY OF SECURITY:
Silicon shall have received evidence satisfactory to it
that its security interest in the Collateral has been duly
perfected and that such security interest is prior to all
other liens, charges, security interests, encumbrances and
adverse claims in or to the Collateral other than Permitted
Liens, which evidence shall include,
Page 5 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
without limitation, a certificate from the appropriate state
agencies showing the due filing and first priority of the
UCC Financing Statements to be signed by the Borrower
covering the Collateral, and evidence of the due filing of
any Security Agreement in Copyrighted Works with the U.S.
Copyright Office or other security documents required by
Silicon.
4. INSURANCE: Silicon shall have received evidence satisfactory to it
that all insurance required by this Agreement is in full
force and effect, with loss payee designations and additional
insured designations as required by this Agreement.
5. OTHER INFORMATION:
Silicon shall have received such other statements, opinions,
certificates, documents and information with respect to
matters contemplated by this Agreement as it may reasonably
request, all of which must be acceptable to Silicon.
Silicon shall have conducted an examination of the Borrower's
books, records, ledgers, journals, and registers, as Silicon
may deem necessary, and shall be satisfied with the results
of such examination in its sole discretion.
Silicon and the Borrower agree that the terms of this Schedule
supplement the Loan and Security Agreement between Silicon and the Borrower
and agree to be bound by the terms of this Schedule.
BORROWER:
ANALOGY, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------
Title: Vice President
-----------------------
SILICON:
SILICON VALLEY BANK
By: /s/ Xxxxx Xxxxxxx
--------------------------
Title: Vice President
-----------------------
Page 6 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
EXHIBIT A
[INSERT BORROWING BASE CERTIFICATE]
Page 7 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
EXHIBIT B
TRADENAMES
PRIOR NAMES
TRADEMARKS
OTHER LOCATIONS AND ADDRESSES*
MATERIAL ADVERSE LITIGATION
[OTHER DISLCOSURES]
Page 8 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
