LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement (this "Loan Modification Agreement") is
entered into as of January 31, 2005, by and between 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 Newton Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, doing business under the name "Silicon Valley East"
("Bank") and MOLDFLOW CORPORATION, a Delaware corporation with its chief
executive office located at 000 Xxxxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000
("Borrower").
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of November 13, 2001,
evidenced by, among other documents, a certain Loan Agreement dated as of
November 13, 2001, between Borrower and Bank, as amended by certain Loan
Modification Agreements dated June 11, 2001, June 26, 2001, December 6, 2002,
June 25, 2003, January 15, 2004, November ___, 2004 (as amended, the "Loan
Agreement"). Capitalized terms used but not otherwise defined herein shall have
the same meaning as in the Loan Agreement.
Hereinafter, the Loan Agreement, together with all other documents
evidencing the Obligations shall be referred to as the "Existing Loan
Documents".
2. DESCRIPTION OF CHANGE IN TERMS.
A. Modifications to Loan Agreement.
1. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 13.1 thereof:
""MATURITY DATE" means February 2, 2005."
and inserting in lieu thereof the following:
""MATURITY DATE" means February 2, 2007."
2. The Loan Agreement is amended by deleting the following text
appearing in Section 5.2(a) thereof:
"(a) Borrower shall deliver to Bank: (i) no later
than thirty (30) days after the last day of each
quarter, and if there are Advances outstanding then no
later than thirty (30) days after the last day of each
month, a company prepared consolidated balance sheet and
income statement covering Borrower's consolidated
operations during the period certified by a Responsible
Officer and in a form acceptable to Bank;"
and inserting in lieu thereof the following:
"(a) Borrower shall deliver to Bank: (i) no later
than forty-five (45) days after the last day of each
quarter, and if there are Advances outstanding then no
later than forty-five (45) days after the last day of
each month, a company prepared consolidated balance
sheet and income statement covering Borrower's
consolidated operations during the period certified by a
Responsible Officer and in a form acceptable to Bank;"
3. The Loan Agreement shall be amended by deleting the following
provision appearing as Section 5.2(b) thereof:
"(b) Borrower shall deliver to Bank a Borrowing
Base Certificate signed by a Responsible Officer in the
form of EXHIBIT C, with aged listing of accounts
receivable (by invoice date): (i) within twenty-five
(25) days of the last day of each month in which
Advances were outstanding, and (ii) within forty-five
(45) days of the last day of each quarter in which
Credit Extensions (other than Advances) were
outstanding."
and inserting in lieu thereof the following:
"(b) Borrower shall deliver to Bank a Borrowing
Base Certificate signed by a Responsible Officer in the
form of EXHIBIT C, with aged listing of accounts
receivable (by invoice date): (i) within forty-five (45)
days of the last day of each month in which Advances
were outstanding, and (ii) within forty-five (45) days
of the last day of each quarter."
4. The Loan Agreement shall be amended by deleting the following
provision appearing as Section 5.2(c) thereof:
"(c) Within thirty (30) days after the last day of
each quarter, Borrower shall deliver to Bank with the
quarterly financial statements a Compliance Certificate
signed by a Responsible Officer in the form of EXHIBIT
C."
and inserting in lieu thereof the following:
"(c) (i) within forty-five (45) days of the last
day of each month in which Advances were outstanding,
and (ii) within forty-five (45) days of the last day of
each quarter, Borrower shall deliver to Bank a
Compliance Certificate signed by a Responsible Officer
in the form of EXHIBIT C."
5. The Loan Agreement shall be amended by deleting the following
provision appearing in Section 5.3 entitled "Inventory;
Return":
"5.3 INVENTORY; RETURNS. Returns and allowances
between Borrower and its account debtors shall follow
Borrower's customary practices as they exist at the
Closing Date. Borrower must promptly notify Bank of all
returns, recoveries, disputes and claims that involve
more than One Hundred Thousand Dollars ($100,000.00)."
and inserting in lieu thereof the following:
"5.3 INVENTORY; RETURNS. Returns and allowances
between Borrower and its account debtors shall follow
Borrower's customary practices as they exist at the
Closing Date. Borrower must promptly notify Bank of all
returns, recoveries, disputes and claims that involve
more than Three Hundred Thousand Dollars ($300,000.00)."
6. The Loan Agreement shall be amended by deleting the following
provision appearing as Section 6.3 entitled "Mergers or
Acquisitions":
"6.3 MERGERS OR ACQUISITIONS. Merge or
consolidate, or permit any of its Subsidiaries to merge
or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of
another Person other than (i) mergers, consolidations,
capital contributions, acquisitions, or other like
transactions
between Parent and any Subsidiary or between
Subsidiaries, (ii) acquisitions by Borrower of all or
substantially all of the capital stock or property of
another Person (each instance of the above defined as a
"Transaction"); provided, however, that (A) each
Transaction does not decrease Borrower's cash and cash
equivalents by more than Fourteen Million Dollars
($14,000,000.00); (B) the aggregate Transactions in any
fiscal year do not decrease Borrower's cash and cash
equivalents by more than Twenty Million Dollars
($20,000,000.00); (C) each Transaction will not result,
whether solely as a result of the passage of time, or
otherwise, in the occurrence of an Event of Default; and
(D) Borrower is the surviving entity."
and inserting in lieu thereof the following:
"6.3 MERGERS OR ACQUISITIONS. Merge or
consolidate, or permit any of its Subsidiaries to merge
or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of
another Person other than (i) mergers, consolidations,
capital contributions, acquisitions, or other like
transactions between Parent and any Subsidiary or
between Subsidiaries, (ii) acquisitions by Borrower of
all or substantially all of the capital stock or
property of another Person (each instance of the above
defined as a "Transaction"); provided, however, that (A)
the aggregate Transactions in any fiscal year do not
decrease Borrower's cash and cash equivalents by more
than Twenty Million Dollars ($20,000,000.00); (B) each
Transaction will not result, whether solely as a result
of the passage of time, or otherwise, in the occurrence
of an Event of Default; and (C) Borrower, or its
Subsidiary, is the surviving entity (provided, however,
that in the event Borrower's Subsidiary is the surviving
entity, at Bank's option, such Subsidiary shall assume
all obligations under this Agreement pursuant to
documentation acceptable to Bank, in Bank's sole
discretion, prior to, or simultaneous with, the closing
of such Transaction)."
7. The Loan Agreement shall be amended by deleting the following
provision appearing as Section 6.2 entitled "Changes in
Business, Management or Business Locations":
"6.2 CHANGES IN BUSINESS, MANAGEMENT OR BUSINESS
LOCATIONS. Engage in or permit any of its Subsidiaries
to engage in any business other than the businesses
currently engaged in by Borrower or have a material
change in the management of the Borrower."
and inserting in lieu thereof the following:
"6.2 CHANGES IN BUSINESS, MANAGEMENT OR BUSINESS
LOCATIONS. Engage in or permit any of its Subsidiaries
to engage in any business other than the businesses
currently engaged in by Borrower or have a material
change in the management of the Borrower. Borrower's
providing of software, systems and other services for
purposes unrelated to plastics does not represent a
change of business."
8. The Compliance Certificate appearing as EXHIBIT C to the Loan
Agreement is hereby replaced with the Compliance Certificate
attached as EXHIBIT A hereto.
3. FEES. Borrower shall pay to Bank a modification fee equal to Twenty-Five
Thousand Dollars ($25,000.00), which fee shall be due on the date hereof and
payable as follows: (i) Twelve Thousand Five Hundred Dollars ($12,500.00) upon
the execution of this Loan Modification Agreement, and (ii) Twelve Thousand Five
Hundred Dollars ($12,500.00) on the sooner to occur of (x) an Event of Default,
(y) the early termination of Loan
Agreement, or January 31, 2006. The Borrower shall also reimburse Bank for all
legal fees and expenses incurred in connection with this amendment to the
Existing Loan Documents.
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 the Existing Loan Documents, and confirms
that the indebtedness includes, without limitation, the Obligations.
6. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with
respect to the Obligations, or otherwise, and that if Borrower now has, or ever
did have, any offsets, defenses, claims, or counterclaims against Bank, whether
known or unknown, at law or in equity, all of them are hereby expressly WAIVED
and Borrower hereby RELEASES Bank from any liability thereunder.
7. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, 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 Obligations pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Obligations. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Obligations. 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.
8. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank .
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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:
MOLDFLOW CORPORATION SILICON VALLEY BANK
By: /s/ A. Rolard Xxxxxx By: /s/
------------------------ -----------------------------------------
Name: A. Rolard Xxxxxx Name: ___________________________________
------------------------
Title: President Title: __________________________________
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EXHIBIT A
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: MOLDFLOW CORPORATION
The undersigned authorized officer of Moldflow Corporation certifies that
under the terms and conditions of the Loan 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 in the Agreement are true and correct in all
material respects on this date. Attached are the required documents supporting
the certification. The Officer certifies that these are prepared in accordance
with Generally Accepted Accounting Principles (GAAP) consistently applied from
one period to the next except as explained in an accompanying letter or
footnotes. The Officer acknowledges that no borrowings may be requested at any
time or date of determination that Borrower is not in compliance with any of the
terms of the Agreement, and that 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
Interim financial statements with CC Quarterly within 45 days* Yes No
Annual (CPA Audited) FYE within 120 days Yes No
BBC with A/R Agings Quarterly within 45 days* Yes No
*Monthly w/in 45 days if Advances outstanding.
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
Maintain on a Quarterly Basis:
Minimum Liquidity $30,000,000.00 $__________ Yes No
Maximum Net Loss: * $__________ Yes No
*(i) ($500,000.00) for the Borrower's fiscal quarter ending 12/27/03 and for
each quarter thereafter.
COMMENTS REGARDING EXCEPTIONS: See Attached. BANK USE ONLY
Sincerely, RECEIVED BY:__________
_______________________ Date:_______ DATE:_______________________
SIGNATURE REVIEWED BY:__________
_______________________ COMPLIANCE STATUS: YES / NO
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