Exhibit 10.1

 

FOURTH LOAN MODIFICATION AGREEMENT

 

This Fourth Loan Modification Agreement (this “Loan Modification Agreement”) is
entered into as of March 26, 2005, but effective as of May 4, 2005, by and
between SILICON VALLEY BANK, a California-chartered bank, with its principal
place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a
loan production office located at One Newton Executive Park, Suite 200, 2221
Washington Street, Newton, Massachusetts 02462 (“Bank”) and BOTTOMLINE
TECHNOLOGIES (de), Inc., a Delaware corporation with its chief executive office
located at 325 Corporate Drive, Portsmouth, New Hampshire 03801(“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 December 28, 2001,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of December 28, 2001, between Borrower and Bank, as amended by a certain
First Loan Modification Agreement dated as of December 31, 2002, between
Borrower and Bank, and as further amended by a certain Second Loan Modification
Agreement dated January 19, 2004, between Borrower and Bank, and as further
amended by a certain Third Loan Modification Agreement dated February 4, 2005,
between Borrower and Bank (as amended, the “Loan Agreement”). Capitalized terms
used but not otherwise defined herein shall have the same meaning as in the Loan
Agreement.

 

Hereinafter, all indebtedness and obligations owing by Borrower to Bank shall be
referred to as the “Obligations”.

 

2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations 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 Obligations shall be referred to as the “Existing
Loan Documents”.

 

3. DESCRIPTION OF CHANGE IN TERMS.

 

  A. Modifications to Loan Agreement.

 

  1. The Loan Agreement shall be amended by deleting the following, appearing as
Section 2.1.1(a) thereof, in its entirety:

 

“(a) Availability. Bank shall make Advances not exceeding (i) the lesser of (A)
the Committed Revolving Line or (B) the Borrowing Base minus (ii) the amount of
all outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit), minus (iii) the FX Reserve, and minus (iv) the aggregate outstanding
Advances hereunder (including any Cash Management Services). Amounts borrowed
under this Section may be repaid and reborrowed during the term of this
Agreement.”

 

and insert in lieu thereof the following:

 

“(a) Availability. Bank shall make Advances not exceeding (i) the Committed
Revolving Line minus (ii) the amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit), minus (iii) the FX
Reserve, and minus (iv) the aggregate outstanding Advances hereunder (including
any Cash Management Services). Amounts borrowed under this Section may be repaid
and reborrowed during the term of this Agreement.”

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  2. The Loan Agreement shall be amended by deleting the following, appearing as
Section 2.1.2(a) thereof, in its entirety:

 

“(a) Bank shall issue or have issued Letters of Credit for Borrower’s account
not exceeding (i) the lesser of the Committed Revolving Line or the Borrowing
Base minus (ii) the outstanding principal balance of any Advances (including any
Cash Management Services), minus (iii) the amount of all Letters of Credit
(including drawn but unreimbursed Letters of Credit), minus (iv) the FX Reserve,
plus an amount equal to any Letter of Credit Reserves. The face amount of
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit and any Letter of Credit Reserve) may not exceed Two Million Dollars
($2,000,000.00). Each Letter of Credit shall have an expiry date no later than
180 days after the Revolving Maturity Date provided Borrower’s Letter of Credit
reimbursement obligation shall be secured by cash on terms acceptable to Bank on
and after (i) the Maturity Date of the Committed Revolving Line if the Maturity
Date of the Committed Revolving Line is not extended by Bank, or (ii) the
occurrence of an Event of Default hereunder. 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. Borrower agrees to execute any further documentation
in connection with the Letters of Credit as Bank may reasonably request.”

 

and inserting in lieu thereof the following:

 

“(a) Bank shall issue or have issued Letters of Credit for Borrower’s account
not exceeding (i) the Committed Revolving Line minus (ii) the outstanding
principal balance of any Advances (including any Cash Management Services),
minus (iii) the amount of all Letters of Credit (including drawn but
unreimbursed Letters of Credit), minus (iv) the FX Reserve, plus an amount equal
to any Letter of Credit Reserves. The face amount of outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve) may not exceed Three Million Dollars ($3,000,000.00). Each
Letter of Credit shall have an expiry date no later than 180 days after the
Revolving Maturity Date provided Borrower’s Letter of Credit reimbursement
obligation shall be secured by cash on terms acceptable to Bank on and after (i)
the Maturity Date of the Committed Revolving Line if the Maturity Date of the
Committed Revolving Line is not extended by Bank, or (ii) the occurrence of an
Event of Default hereunder. 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. Borrower agrees to execute any further documentation in connection
with the Letters of Credit as Bank may reasonably request.”

 

  3. The Loan Agreement shall be amended by deleting the following, appearing as
Section 2.1.3 thereof, in its entirety :

 

“2.1.3 Foreign Exchange Sublimit. If there is availability under the Revolving
Line and the Borrowing Base, then Borrower may enter in foreign exchange forward
contracts with the Bank under which Borrower commits to purchase from or sell to
Bank a set amount of foreign currency more than one business day after the
contract date (the “FX Forward Contract”). Bank shall subtract 10% of each
outstanding FX Forward Contract from the foreign exchange sublimit, which
sublimit is a maximum of Five Hundred Thousand Dollars (the “FX Reserve”). The
total FX Forward Contracts at any one time

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may not exceed 10 times the amount of the FX Reserve. Bank may terminate the FX
Forward Contracts if an Event of Default occurs.”

 

and insert in lieu thereof the following:

 

“2.1.3. Foreign Exchange Sublimit. Borrower may enter into foreign exchange
forward contracts with Bank under which Borrower commits to purchase from or
sell to Bank a set amount of foreign currency more than one (1) Business Day
after the contract date (the “FX Forward Contract”). Bank shall subtract 10% of
each outstanding FX Forward Contract (the “FX Reserve”) from the foreign
exchange sublimit, which sublimit is a maximum of Three Million Dollars
($3,000,000.00). The total FX Forward Contracts at any one time may not exceed
ten (10) times the amount of the FX Reserve. Bank may terminate the FX Forward
Contracts if an Event of Default occurs. The Obligations of Borrower relating to
this Section may not exceed Revolving Line Availability.”

 

  4. The Loan Agreement shall be amended by deleting the following, appearing as
Section 2.1.4 thereof, in its entirety :

 

“2.1.4 Cash Management Services Sublimit. Borrower may use up to Two Hundred
Fifty Thousand Dollars ($250,000.00) for the Bank’s Cash Management Services,
which may include merchant services, direct deposit of payroll, business credit
card, and check cashing services identified in the various cash management
services agreements related to such Cash Management Services (the “Cash
Management Services”). Such aggregate amounts utilized under the Cash Management
Services Sublimit shall at all times reduce the amount otherwise available for
Credit Extensions under the Revolving Line. Any amounts Bank pays on behalf of
Borrower or any amounts that are not paid by Borrower for any Cash Management
Services will be treated as Advances under the Revolving Line and will accrue
interest at the interest rate applicable to Advances.”

 

and inserting in lieu thereof the following:

 

“2.1.4 Cash Management Services Sublimit. Borrower may use up to Three Million
Dollars ($3,000,000.00) for the Bank’s Cash Management Services, which may
include merchant services, direct deposit of payroll, business credit card, and
check cashing services identified in the various cash management services
agreements related to such Cash Management Services (the “Cash Management
Services”). Such aggregate amounts utilized under the Cash Management Services
Sublimit shall at all times reduce the amount otherwise available for Credit
Extensions under the Revolving Line. Any amounts Bank pays on behalf of Borrower
or any amounts that are not paid by Borrower for any Cash Management Services
will be treated as Advances under the Revolving Line and will accrue interest at
the interest rate applicable to Advances.”

 

  5. The Loan Agreement shall be amended by deleting the Section 2.2 thereof,
entitled “Overadvances” in its entirety.

 

  6. The Loan Agreement shall be amended by deleting the following, appearing as
Section 2.3(a) thereof, in its entirety:

 

“(a) Interest Rate. Advances accrue interest on the outstanding principal
balance at a per annum rate equal to the aggregate of the Bank’s Prime Rate, and
one-half of one percent (0.50%). After an Event of Default, Obligations shall
bear interest at four

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percent (4.0%) above the rate effective immediately before the Event of Default.
The interest rate shall increase or decrease when the Prime Rate changes.
Interest is computed on the basis of a 360 day year for the actual number of
days elapsed.”

 

and inserting in lieu thereof the following:

 

“(a) Interest Rate. Advances accrue interest on the outstanding principal
balance at a per annum rate equal to the Prime Rate. After an Event of Default,
Obligations shall bear interest at four percent (4.0%) above the rate effective
immediately before the Event of Default. The interest rate shall increase or
decrease when the Prime Rate changes. Interest is computed on the basis of a 360
day year for the actual number of days elapsed.”

 

  7. The Loan Agreement shall be amended by deleting the following, appearing as
Section 2.4(b) thereof, in its entirety:

 

“(b) Unused Facility Fee. As compensation for Bank’s maintenance of sufficient
funds available for such purpose, Bank shall have earned a Unused Facility Fee
(so referred to herein), which fee shall be paid in full quarterly in arrears,
in an amount equal to (i) 0.50% of the unused portion of the available proceeds
of the Committed Revolving Line minus that portion of the Committed Revolving
Line which is available to be used to issue Letters of Credit and (ii) 0.40% of
the unused portion of the available proceeds of the Committed Revolving Line
which are available to be used to issue Letters of Credit, which shall be
calculated based on the average daily availability during each such quarter. The
Borrower shall not be entitled to any credit, rebate or repayment of any Unused
Facility Fee previously earned by the Bank pursuant to this Section
notwithstanding any termination of the within Agreement, or suspension or
termination of the Bank’s obligation to make loans and advances hereunder; and”

 

and inserting in lieu thereof the following:

 

“(b) Unused Facility Fee. As compensation for Bank’s maintenance of sufficient
funds available for such purpose, Bank shall have earned a Unused Facility Fee
(so referred to herein), which fee shall be paid in full quarterly in arrears,
in an amount equal to (i) 0.50% of the unused portion of the available proceeds
of the Committed Revolving Line minus that portion of the Committed Revolving
Line which is available to be used to issue Letters of Credit and (ii) 0.40% of
the unused portion of the available proceeds of the Committed Revolving Line
which are available to be used to issue Letters of Credit, which shall be
calculated based on the average daily availability during each such quarter.
Notwithstanding the foregoing, commencing April 1, 2005, as compensation for
Bank’s maintenance of sufficient funds available for such purpose, Bank shall
have earned a Unused Facility Fee, which fee shall be paid quarterly, in
arrears, on a calendar year basis, in an amount equal to one-quarter of one
percent (0.25%) per annum of the average unused portion of the Committed
Revolving Line, as determined by Bank. Borrower shall not be entitled to any
credit, rebate or repayment of any Unused Facility Fee previously earned by the
Bank pursuant to this Section notwithstanding any termination of the within
Agreement, or suspension or termination of the Bank’s obligation to make loans
and advances hereunder; and”

 

  8. The Loan Agreement shall be amended by deleting Section 6.2 entitled
“Financial Statements, Reports, Certificates” in its entirety, and inserting in
lieu thereof the following:

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“6.2. Financial Statements, Reports, Certificates.

 

(a) Borrower shall deliver to Bank: (i) as soon as available, but no later than
thirty (30) days after the last day of each quarter, a company prepared
consolidated and consolidating balance sheet and income statement covering
Borrower’s consolidated operations and Borrower’s U.S. operations during the
period certified by a Responsible Officer and in a form acceptable to Bank; (ii)
within five (5) days of filing, Borrower shall provide Bank copies of or
electronic notice of links to all statements, reports and notices made available
to Borrower’s security holders or to any holders of Subordinated Debt and all
reports on Form 10-K filed with the Securities and Exchange Commission; (iii) a
prompt report of any legal actions pending or threatened against Borrower or any
Subsidiary that could result in damages or costs to Borrower or any Subsidiary
of Three Hundred Thousand Dollars ($300,000.00) or more; (iv) annual financial
projections, as approved by the Borrower’s Board of Directors and (v) other
financial information reasonably requested by Bank.

 

(b) Borrower shall deliver to Bank, with the quarterly financial statements, a
Compliance Certificate signed by a Responsible Officer in the form of Exhibit C.

 

  9. The Loan Agreement shall be amended by deleting Section 6.7 entitled
“Financial Covenants” in its entirety, and inserting in lieu thereof the
following:

 

“6.7 Financial Covenants.

 

Borrower shall maintain at all times, to be tested as of the last day of each
quarter, unless otherwise notes:

 

(a) Adjusted Quick Ratio. As of the last day of each month, Borrower shall
maintain a ratio of Quick Assets to Current Liabilities minus Deferred Revenue
of at least 2.0 to 1.0. Commencing on April 1, 2005, and as of the last day of
each quarter thereafter, Borrower shall maintain a ratio of Quick Assets to
Current Liabilities of at least 2.0 to 1.0.

 

(b) Maximum Net Loss/Minimum Net Profit. Commencing on April 1, 2005, Borrower
(together with its subsidiaries on a consolidated basis) shall have (i) Net Loss
not to exceed (A) Five Hundred Thousand Dollars ($500,000.00) as of the quarter
ended December 31, 2004, (B) One Million Dollars ($1,000,000.00) as of the
quarters ending March 31, 2005 and June 30, 2005, (C) Five Hundred Thousand
Dollars ($500,000.00) as of the quarter ending September 30, 2005; and (ii) net
profit of (A) Five Hundred Thousand Dollars ($500,000.00) as of the quarter
ending December 31, 2005, and (B) the greater of either (i) Five Hundred
Thousand Dollars ($500,000.00) or (ii) fifty (50.0%) percent of the Borrower’s
board of director’s approved operating plan for Borrower for the quarter ending
March 31, 2006 ,and as of the last day of each quarter thereafter.”

 

  10. The Loan Agreement shall be amended by deleting the definitions of
“Borrowing Base” and “Eligible Accounts” appearing in Section 13.1 thereof.

 

  11. The Loan Agreement shall be amended by inserting the following definition
to appear alphabetically in Section 13.1 thereof:

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“Total Liabilities” is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower’s consolidated balance sheet, including
all Indebtedness, and current portion of Subordinated Debt permitted by Bank to
be paid by Borrower, but excluding all other Subordinated Debt.”

 

  12. The Loan Agreement shall be amended by deleting the following definitions
appearing in Section 13.1 thereof:

 

““Committed Revolving Line” is Five Million Dollars ($5,000,000.00).”

 

““Quick Assets” is, on any date, the Borrower’s consolidated, unrestricted cash
held by Bank, cash equivalents held by Bank, net billed accounts receivable and
investments with maturities of fewer than 12 months held by Bank, determined
according to GAAP; provided that until March 1, 2002, unrestricted cash or cash
equivalents on deposit by Borrower with Fleet National Bank shall be included as
Quick Assets herein.”

 

““Revolving Maturity Date” means March 26, 2005.”

 

and inserting in lieu thereof the following:

 

““Committed Revolving Line” is Three Million Dollars ($3,000,000.00).”

 

““Quick Assets” is, on any date, the Borrower’s consolidated, unrestricted cash
held by Bank, cash equivalents held by Bank, net billed accounts receivable and
investments with maturities of fewer than 12 months held by Bank, determined
according to GAAP; provided that until March 1, 2002, unrestricted cash or cash
equivalents on deposit by Borrower with Fleet National Bank shall be included as
Quick Assets herein. Notwithstanding the foregoing, commencing on April 1, 2005,
“Quick Assets” shall be defined as, on any date, Borrower’s unrestricted cash,
and investments maintained at Bank, plus accounts receivable determined
according to GAAP.”

 

““Revolving Maturity Date” means March 26, 2007”.

 

  13. The Borrowing Base Certificate appearing as Exhibit C to the Loan
Agreement is hereby deleted in its entirety.

 

  14. The Compliance Certificate appearing as Exhibit D to the Loan Agreement is
hereby replaced with the Compliance Certificate attached as Exhibit A hereto.

 

4. FEES. Borrower shall pay to Bank a fully earned, non-refundable modification
fee equal to Twenty-Five Thousand Dollars and 00/100 ($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) on the date hereof, 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 the Loan Agreement, or (z) March 26, 2006. The
Borrower shall also reimburse Bank for all legal fees and expenses incurred in
connection with this amendment to the Existing Loan Documents.

 

5.

RATIFICATION OF NEGATIVE PLEDGE AGREEMENT. Borrower hereby ratifies, confirms
and reaffirms, all and singular, the terms and conditions of a certain Negative
Pledge/Intellectual Property

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Security Agreement dated as of December 28, 2001, between Borrower and Bank, and
acknowledges, confirms and agrees that said Negative Pledge Agreement shall
remain in full force and effect.

 

6. RATIFICATION OF PERFECTION CERTIFICATE. Borrower acknowledges, confirms and
agrees that the disclosures and information about Borrower provided to Bank in
the Perfection Certificate dated January 9, 2004, is accurate in all material
respects, as of the date thereof.

 

7. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.

 

8. 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 Obligations.

 

9. NO DEFENSES OF BORROWER. Borrower agrees that, as of this date, it has no
defenses against the obligations to pay any amounts under the Obligations.

 

10. 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.

 

11. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank.

 

[The remainder of this page is intentionally left blank]

 

 

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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:

 

BOTTOMLINE TECHNOLOGIES (de), Inc.

 

BANK:

 

SILICON VALLEY BANK

By:  

/s/ ROBERT EBERLE

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By:

 

/s/ IRINA CASE

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Name:  

Robert Eberle

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  Name:  

Irina Case

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Title:  

President & COO

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  Title:  

SVP

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56120/510

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EXHIBIT A

 

COMPLIANCE CERTIFICATE

 

TO: SILICON VALLEY BANK

 

FROM: BOTTOMLINE TECHNOLOGIES (de), INC.

 

The undersigned authorized officer of BOTTOMLINE TECHNOLOGIES (de), INC.
certifies that under 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 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

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Required

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   Complies

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Quarterly financial statements with CC

   Quarterly within 30 days    Yes    No

10-K

   Within 5 days after filing with SEC    Yes    No

Financial Projections

   Annually, as approved by Borrower’s BOD    Yes    No

Financial Covenant

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Required

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Actual

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   Complies

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Maintain on a Quarterly Basis:

                   

Minimum Adjusted Quick Ratio

   2.0:1.0    _____:1.0    Yes    No

Profitability(net loss/min profit)

   $________*    $________    Yes    No

 

*As set forth in Section 6.7(b) of the Agreement.

 

                    BANK USE ONLY

 

Received by:                                                      

                        AUTHORIZED SIGNER

 

Date:                                                                  

 

Verified:                                                            

                        AUTHORIZED SIGNER

 

Date:                                                                  

Compliance Status: Yes No

3

 

Comments Regarding Exceptions: See Attached.

 

Sincerely,

 

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SIGNATURE

 

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TITLE

 

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DATE

 

872128.2