LOAN DOCUMENT MODIFICATION AGREEMENT
(No. 6; dated as of September 2, 1998)
LOAN DOCUMENT MODIFICATION AGREEMENT (this "Agreement"), dated as of
September 2, 1998, by and among EIS INTERNATIONAL, INC., a Delaware corporation
with its principal place of business at 000 Xxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxx
00000 ("EIS"), EIS INTERNATIONAL SERVICES CORP., a Virginia corporation with its
principal place of business at 000 Xxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxx 00000
("ISC" and together with EIS, the "Borrowers"), and SILICON VALLEY BANK, a
California-chartered bank with its principal place of business at 0000 Xxxxxx
Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a loan production office located
at One Central Plaza, 00000 Xxxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxx
00000, doing business under the name "Silicon Valley East" (the "Bank").
1. Reference to Existing Loan Documents.
Reference is hereby made to that certain Amended and Restated Commitment
Letter (the "Commitment Letter"), dated as of May 19, 1994, between EIS and the
Bank, as amended by a Joinder and Assumption Agreement ("Amendment No. 1"),
dated as of October 28, 1994, among EIS, ISC and the Bank, as further amended by
a Loan Modification Agreement ("Amendment No. 2"), dated as of October 4, 1995,
among EIS, ISC and the Bank, and as further amended by a Loan Document
Modification Agreement ("Amendment No. 3"), dated as of December 27, 1995, among
EIS, ISC and the Bank, a Loan Document Modification Agreement ("Amendment No.
4"), dated as of April 15, 1996, among EIS, ISC and the Bank and a Loan
Document Modification Agreement ("Amendment No. 5"), dated as of September 3,
1997, among EIS, ISC and the Bank. The Commitment Letter, together with the
schedules and exhibits attached thereto, as amended by Amendment No. 1,
Amendment Xx. 0, Xxxxxxxxx Xx. 0, Xxxxxxxxx Xx. 0 and Amendment No. 5 is herein
after referred to as the "Credit Agreement." Reference is also hereby made to
the Loan Documents referred to in the Credit Agreement, including without
limitation that certain Fourth Amended and Restated Promissory Note of the
Borrowers, dated September 3, 1997, as amended and restated of even date
herewith, in the principal amount of $7,000,000 (the "Note") and that certain
Amended and Restated Security Agreement, dated as of September 3, 1997, by and
between EIS and the Bank and that certain Amended and Restated Security
Agreement, dated as of September 3, 1997, by and between ISC and the Bank
(collectively, the "Security Agreements"). Unless otherwise defined herein,
capitalized terms used in this Agreement shall have the same respective meanings
herein as are set forth in the Credit Agreement.
2. Effective Date.
This Agreement shall be deemed effective as of September 2, 1998 (the
"Effective Date"), provided that the Bank shall have received the following on
or before October 23, 1998 and provided further, however, that in no event
shall this Agreement become effective until signed by an officer of the Bank in
California:
a. two copies of this Agreement, duly executed by each of the
Borrowers;
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b. a fifth amended and restated promissory note in the principal
amount of $7,000,000 payable to the order of the Bank in the form enclosed
herewith (the "Amended Note"), duly executed by each of the Borrowers;
c. a certificate of the secretary or assistant secretary of each of
the Borrowers, attesting to the continuing validity of the certificate of
incorporation and by-laws of each of the Borrowers, the incumbency and
signatures of any officers executing this Agreement and the Loan Documents and
the approval by the Board of Directors of each of the Borrowers of this
Agreement and the Amended Note; and
By the signature of their respective authorized officers below, each
Borrower is hereby representing that, except as modified in Schedule A attached
hereto, the representations of such Borrower set forth in the Loan Documents
(including those contained in the Credit Agreement, as amended by this
Agreement) are true and correct as of the Effective Date as if made on and as of
such date. The Borrowers jointly and severally agree to pay on or before the
Effective Date a nonrefundable facility fee in connection herewith in the
aggregate amount of $17,500. In order to effectuate the foregoing, EIS confirms
its authorization as to the debiting of its account with the Bank in such amount
in order to pay the Bank the facility fee for the period up to and including the
extended Expiry Date. Finally, each Borrower agrees that, as of the Effective
Date, it has no defenses against its obligations to pay any amounts and perform
any of its obligations under the Credit Agreement and the other Loan Documents.
3. Description of Change in Terms.
As of the Effective Date, the Credit Agreement is modified in the
following respects:
a. Section 2 of the Credit Agreement is hereby amended by deleting the
date "September 2, 1998" from the first line thereof and replacing it with the
date "September 2, 1999."
b. The first sentence of Section 3 of the Credit Agreement is hereby
deleted in its entirety and replaced with the following sentence:
"Advances under the Commitment shall bear interest at a fluctuating rate
per annum equal to the Bank's Prime Rate (as defined below) plus one-half
of one percent (0.50%)."
c. The first sentence of Section 4 of the Credit Agreement is hereby
deleted in its entirety and replaced with following:
"The Borrowers jointly and severally agree to pay to the Bank a facility
fee for the period from September 2, 1998 through the Expiry Date in the
amount of Seventeen Thousand Five Hundred Dollars ($17,500)."
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d. Subsection 4(a) of Schedule II to the Credit Agreement is hereby deleted
in its entirety and replaced with the following:
"(a) within forty-five (45) days after the end of each quarter
(including the last quarter of the fiscal year), the unaudited
consolidated balance sheet and income statement of the Borrowers and their
Subsidiaries on a consolidated basis as at the end of, and for, such
quarter, accompanied by a certificate of the vice president of finance or
chief financial officer of each of the Borrowers, which certificate shall
state that said consolidated financial statements fairly present the
consolidated financial condition and results of operations of the
Borrowers and their Subsidiaries in accordance with GAAP (except for the
absence of footnotes) consistently applied, as at the end of, and for,
such quarter (subject to normal year-end audit adjustments);"
e. Subsection 4(c) of Schedule II to the Credit Agreement is hereby
deleted in its entirety and replaced with the following:
"(c) at the time of the delivery of the quarterly and yearly financial
statements required by Paragraphs 4(a) and 4(b), a Compliance Certificate
of the chief financial officer of each of the Borrowers in the form
attached to this Schedule II as Exhibit A;"
f. Subsection 4(g) of Schedule II to the Credit Agreement is hereby
deleted in its entirety and replaced with the following:
"(g) only when borrowing, within thirty (30) days after the end of
each fiscal month of the Borrowers, (i) a list of the accounts receivable
aging for the Borrowers and their Subsidiaries on a consolidated basis as
of the end of such month in such form as is reasonably acceptable to the
Bank, all in reasonable detail and (ii) a Borrowing Base Certificate
signed by the chief financial officer of each of the Borrowers in the form
attached to this Schedule II as Exhibit B. The Bank will require audits no
more than once during each fiscal year of the Borrowers; provided,
however, that the Borrowers shall not receive any further advances under
the Commitment unless and until an agent of the Bank has conducted and the
Bank has received an audit of the Borrowers' accounts receivable, with the
costs thereof to be borne by the Borrowers;"
g. Sections 23 and 24 of Schedule II to the Credit Agreement are
hereby deleted in their entirety and replaced with the following:
"23. Quick Ratio. The Borrowers will not permit the Quick Ratio to
be less than 1.75 to 1 at the end of any fiscal quarter.
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24. Minimum Tangible Net Worth. The Borrowers will not permit
Tangible Net Worth at the end of the fiscal quarter ending September
30, 1998 to be less than Thirty-One Million Dollars ($31,000,000); and
will not permit Tangible Net Worth at the end of each subsequent
fiscal quarter to be less than an amount equal to the minimum Tangible
Net Worth for the previous fiscal quarter, as determined in accordance
with the terms hereof, plus 50% of Net Income (and not taking into
account any Net Loss) for the previous quarter."
h. Schedule II to the Credit Agreement is hereby further amended by
restating in its entirety Exhibit A thereto in the form of Exhibit A hereto.
i. The definition of "Tangible Net Worth" set forth in Schedule III to
the Credit Agreement is hereby deleted in its entirety and replaced with the
following:
"`Tangible Net Worth' means at any time, the consolidated
stockholders' equity of EIS International, Inc. and its Subsidiaries
at such time determined in accordance with GAAP (including all then
outstanding Preferred Stock), plus all then outstanding Subordinated
Debt, less all assets that are reflected on the consolidated balance
sheet of EIS International, Inc. and its Subsidiaries at such time
that would be treated as intangibles under GAAP (including, but not
limited to, goodwill, capitalized software and excess purchase
costs)."
4. Continuing Validity.
Upon the effectiveness hereof, each reference in each Loan Document to
"the Credit Agreement," "thereunder," "thereof," "therein," or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement, as amended hereby. Except as specifically set forth above, the
Credit Agreement shall remain in full force and effect and is hereby ratified
and confirmed. Except as set forth in Section 3 above and in the fifth amended
and restated Note, each of the other Loan Documents is in full force and effect
and is hereby ratified and confirmed. The amendments set forth above (i) do not
constitute a waiver or modification of any term, condition or covenant of the
Credit Agreement or any other Loan Document, other than as expressly set forth
herein, and (ii) shall not prejudice any rights which the Bank may now or
thereafter have under or in connection with the Credit Agreement, as modified
hereby, or the other Loan Documents and shall not obligate the Bank to assent to
any further modifications.
5. Miscellaneous.
a. This Agreement may be signed in one or more counterparts each of
which taken together shall constitute one and the same document.
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b. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
c. EACH OF THE BORROWERS 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 THE BANK CANNOT AVAIL ITSELF OF THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS, THEN VENUE SHALL LIE IN SANTA XXXXX COUNTY, CALIFORNIA.
d. The Borrowers jointly and severally agree to promptly pay on demand
all costs and expenses of the Bank in connection with the preparation,
reproduction, execution and delivery of this letter amendment and the other
instruments and documents to be delivered hereunder, including the reasonable
fees and out-of-pocket expenses of Xxxxxxxx & Worcester LLP, special counsel for
the Bank with respect thereto.
e. EIS shall pay no more than $5,000 in fees of Xxxxxxxx & Worcester
LLP, special counsel to the Bank, within 10 business days of the final execution
of this Agreement.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the Bank and the Borrowers have caused this Agreement
to be signed under seal by their respective duly authorized officers as of the
date set forth above.
SILICON VALLEY EAST, a Division
of Silicon Valley Bank, as the Bank
By: ___________________________
Xxxxx XxXxxxxx
Vice President
SILICON VALLEY BANK, as the Bank
By: ___________________________
Name:
Title:
(signed in Santa Clara, CA)
EIS INTERNATIONAL, INC.
By: /s/ Xxxxxxxxx X. Xxxxx
----------------------------
Xxxxxxxxx X. Xxxxx
Chief Financial Officer and Treasurer
EIS INTERNATIONAL SERVICES CORP.
By: /s/ Xxxxxxxxx X. Xxxxx
-----------------------------
Xxxxxxxxx X. Xxxxx
Senior Vice President-Finance and Treasurer
EXHIBIT A
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: EIS INTERNATIONAL, INC. and EIS INTERNATIONAL SERVICES CORP.
The undersigned authorized officers of EIS International, Inc. and EIS
International Services Corp. hereby certifies that in accordance with the terms
and conditions of the Credit Agreement, as amended, between Borrower and Bank
(the "Agreement"), (i) each Borrower is in complete compliance for the period
ending _________________ with all required covenants except as noted below and
(ii) all representations and warranties of each 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. Each
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 a
Borrower at any time or date of determination that such 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
------------------ -------- --------
Quarterly financial statements Quarterly within 45 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
A/R Agings When borrowing, within
30 days of month end Yes No
A/R Audit Initial and Annual Yes No
Financial Covenant Required Actual Compliance
------------------ -------- ------ ----------
Maintain on a Quarterly Basis:
Minimum Quick Ratio 1.75:1.0 ____:1.0 Yes No
Minimum Tangible Net Worth $31,000,000* $________ Yes No
Maximum Debt/Tangible Net Worth 0.75:1.0 ____:1.0 Yes No
*increasing by 50% of Net Income for the previous quarter.
Comments Regarding Exceptions: See Attached.
Sincerely,
EIS INTERNATIONAL, INC. EIS INTERNATIONAL SERVICES CORP.
______________________________ _______________________________
SIGNATURE SIGNATURE
TITLE TITLE
DATE DATE
Schedule A
Qualifications and Supplements to Disclosure
None
