EXHIBIT 10.31

 

FOURTH AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

 

THIS FOURTH AMENDMENT to Loan and Security Agreement (this “Amendment”) is
entered into as of the 30th day of October, 2005, by and between Silicon Valley
Bank (“Bank”) and eCollege.com, a Delaware corporation (“eCollege”), whose
address is One North LaSalle Street, Suite 1800, Chicago, Illinois 60602, and
DataMark Inc., a Delaware corporation (“DataMark”), whose address is 2305
President’s Drive, Salt Lake City, UT 84120 (hereinafter eCollege and DataMark
shall be referred to collectively as the “Borrowers” and individually as a
“Borrower”).

 

RECITALS

 

A.                                    Bank and Borrowers have entered into that
certain Loan and Security Agreement dated as of October 30, 2003, as amended as
of December 29, 2003, April 1, 2004 and December 28, 2004 (as the same may from
time to time be further amended, modified, supplemented or restated, the “Loan
Agreement”).

 

B.                                    Bank has extended credit to Borrowers for
the purposes permitted in the Loan Agreement.

 

C.                                    Borrowers have requested that Bank amend
the Loan Agreement to (i) increase the amount available to be borrowed under the
Committed Revolving Line, (ii) extend the Revolving Maturity Date, (iii) lower
the interest rate payable on the Advances, and (iv) make certain other revisions
to the Loan Agreement as more fully set forth herein.

 

D.                                    Bank has agreed to so amend certain
provisions of the Loan Agreement, but only to the extent, in accordance with the
terms, subject to the conditions and in reliance upon the representations and
warranties set forth below.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

 

1.                                      Definitions. Capitalized terms used but
not defined in this Amendment shall have the meanings given to them in the Loan
Agreement.

 

2.                                      Amendments to Loan Agreement.

 

2.1                               Sections 2.1.2, 2.1.3, 2.1.4 and 2.2
(Sublimits). The figure “$3,500,000” contained in each of Sections 2.1.2, 2.1.3
and 2.1.4 and in the last paragraph of Section 2.2 is amended and replaced with
the figure “$5,000,000”.

 

2.2                               Section 2.3 (Interest Rate, Payments). The
first sentence of Section 2.3(a) is amended in its entirety and replaced with
the following:

 

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(a)                                  Interest Rate. (i) Advances accrue interest
on the outstanding principal balance at a per annum rate equal to the Prime
Rate.

 

2.3                               Section 2.4 (Fees). Section 2.4(b) and
Section 2.4(c) are amended in their entirety and replaced with the following:

 

(b)                                 Non-utilization Fee. A quarterly
non-utilization fee equal to 12.5 basis points (0.125%) times the average daily,
unused amount available under the Committed Revolving Line (being the difference
between the amount of the Committed Revolving Line and the average outstanding
daily balance of Advances and Letters of Credit and amounts utilized for Cash
Management Services and FX Reserves) during the prior quarter, payable in
arrears twenty (20) days after each quarter-end.

 

(c)                                  Early Termination
Fee.                         A fully earned, non-refundable early termination
fee of $150,000.00 if, at Borrowers’ option, the Committed Revolving Line is
terminated and the Advances are paid in full on or prior to October 30, 2006,
and such a fee of $75,000.00 if such events occur after October 30, 2006 but
prior to October 30, 2007.

 

2.4                               Section 6.2 (Financial Statements, Reports,
Certificates.)  Section 6.2 is amended in its entirety and replaced with the
following:

 

6.2                                 Financial Statements, Reports, Certificates.

 

(a)                                  Borrowers will deliver to Bank:  (i) as
soon as available, but no later than 45 days after the last day of each fiscal
quarter, company prepared consolidated and consolidating balance sheets and
income statements covering the operations of eCollege and its Subsidiaries
during the period certified by a Responsible Officer of eCollege and in a
form acceptable to Bank; (ii) within 5 days of filing, copies of all statements,
reports and notices made available to eCollege’s security holders or to any
holders of Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K filed
with the Securities and Exchange Commission; (iii) a prompt report of any legal
actions pending or threatened against either Borrower or any Subsidiary that
could result in damages or costs to either Borrower or any Subsidiary of
$250,000 or more; (iv) budgets, sales projections, operating plans or other
financial information Bank reasonably requests; and (v) prompt notice of any
material change in the composition of the Intellectual Property, including any
subsequent ownership right of either Borrower in or to any Copyright, Patent or
Trademark not shown in any intellectual property security agreement between
either Borrower and Bank or knowledge of an event that materially adversely
affects the value of the Intellectual Property.

 

(b)                                 Within 45 days after the last day of each
quarter (or within 30 days after the last day of each month if outstanding
Advances in excess of $5,000,000 exist, excluding Quarter-End Advances and
outstanding Letters of Credit), Borrowers will deliver to Bank a Borrowing Base
Certificate signed by a Responsible Officer of eCollege in the form of
Exhibit C, with aged listings of accounts receivable and accounts payable.

 

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(c)                                  Within 45 days after the last day of each
fiscal quarter, Borrowers will deliver to Bank with the quarterly financial
statements a Compliance Certificate signed by a Responsible Officer of eCollege
in the form of Exhibit D.

 

(d)                                 Borrowers will allow Bank to audit
Borrowers’ Collateral at Borrowers’ expense during normal business hours upon
reasonable notice. Audits of each Borrower will be conducted no more often than
annually, unless an Event of Default has occurred and is continuing.

 

2.5                               Section 6.7  (Financial Covenants.) 
Section 6.7 is amended in its entirety and replaced with the following:

 

6.7                 Financial Covenants.

 

eCollege will have or maintain as of the last day of each month (unless
otherwise provided) and on a consolidated basis:

 

(i)                                     Quick Ratio (Adjusted). A ratio of Quick
Assets to Current Liabilities minus Deferred Revenue and any Quarter-End Advance
of at least 1.50 to 1.00 at each fiscal quarter-end, tested quarterly.

 

(ii)                                  EBITDA. An EBITDA for each fiscal quarter
of not less than those amounts set forth next to the corresponding fiscal
quarter set forth on Exhibit E, tested quarterly commencing with the quarter
ending June 30, 2005.

 

2.6                               Section 7.3 (Mergers or Acquisitions.) 
Section 7.3 is amended in its entirety and replaced with the following:

 

7.3                                 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,
except, as long as no Event of Default has occurred and is continuing or would
result from such action during the term of this Agreement, (a) a Subsidiary
may merge or consolidate into another Subsidiary or into such Borrower and
DataMark may merge into eCollege, and (b) cash acquisitions with a cost not
exceeding 30% of Tangible Net Worth and non-cash acquisitions with a cost not
exceeding 49% of Tangible Net Worth (or a combination of both).

 

2.7                               Section 13 (Definitions). The following terms
and their respective definitions set forth in Section 13.1 are amended in their
entirety and replaced with the following:

 

“Committed Revolving Line” is $15,000,000.00.

 

“Revolving Maturity Date” is October 30, 2007.

 

2.8                               Exhibits D and E. Exhibits D and E attached
hereto are substituted for those attached to the Loan Agreement

 

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3.                                      Limitation of Amendments.

 

3.1                               The amendments set forth in Section 2, above,
are effective for the purposes set forth herein and shall be limited precisely
as written and shall not be deemed to (a) be a consent to any amendment, waiver
or modification of any other term or condition of any Loan Document, or
(b) otherwise prejudice any right or remedy which Bank may now have or may have
in the future under or in connection with any Loan Document.

 

3.2                               This Amendment shall be construed in
connection with and as part of the Loan Documents and all terms, conditions,
representations, warranties, covenants and agreements set forth in the Loan
Documents, except as herein amended, are hereby ratified and confirmed and shall
remain in full force and effect.

 

4.                                      Representations and Warranties. To
induce Bank to enter into this Amendment, each Borrower hereby represents and
warrants to Bank as follows:

 

4.1                               Immediately after giving effect to this
Amendment (a) the representations and warranties contained in the Loan Documents
are true, accurate and complete in all material respects as of the date hereof
(except to the extent such representations and warranties relate to an earlier
date, in which case they are true and correct as of such date), and (b) no Event
of Default has occurred and is continuing;

 

4.2                               Each Borrower has the power and authority to
execute and deliver this Amendment and to perform its obligations under the Loan
Agreement, as amended by this Amendment;

 

4.3                               The organizational documents of each Borrower
delivered to Bank on or about October 30, 2003 remain true, accurate and
complete and have not been amended, supplemented or restated and are and
continue to be in full force and effect;

 

4.4                               The execution and delivery by each Borrower of
this Amendment and the performance by such Borrower of its obligations under the
Loan Agreement, as amended by this Amendment, have been duly authorized;

 

4.5                               The execution and delivery by each Borrower of
this Amendment and the performance by such Borrower of its obligations under the
Loan Agreement, as amended by this Amendment, do not and will not contravene
(a) any law or regulation binding on or affecting such Borrower, (b) any
contractual restriction with a Person binding on such Borrower, (c) any order,
judgment or decree of any court or other governmental or public body or
authority, or subdivision thereof, binding on such Borrower, or (d) the
organizational documents of such Borrower;

 

4.6                               The execution and delivery by each Borrower of
this Amendment and the performance by such Borrower of its obligations under the
Loan Agreement, as amended by this Amendment, do not require any order, consent,
approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by any governmental or public body or authority,
or subdivision thereof, binding on either Borrower, except as already has been
obtained or made; and

 

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4.7                               This Amendment has been duly executed and
delivered by each Borrower and is the binding obligation of such Borrower,
enforceable against Borrower in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
liquidation, moratorium or other similar laws of general application and
equitable principles relating to or affecting creditors’ rights.

 

5.                                      Counterparts. This Amendment may be
executed in any number of counterparts and all of such counterparts taken
together shall be deemed to constitute one and the same instrument.

 

6.                                      Effectiveness. This Amendment shall be
deemed effective upon (a) the due execution and delivery to Bank of this
Amendment by each party hereto, and (b) Borrowers’ payment of an amendment fee
in an amount equal to $15,000.00.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

 

 

BANK

BORROWER

 

 

Silicon Valley Bank

eCollege.com

 

 

 

 

By:

/s/ Frank Amoroso

 

By:

/s/ Reid Simpson

 

Name:

Frank Amoroso

 

Name:

Reid Simpson

 

Title:

Vice President

 

Title:

Chief Financial Officer

 

 

 

 

 

 

BORROWER

 

 

 

DataMark Inc.

 

 

 

By:

/s/ Reid Simpson

 

 

Name:

Reid Simpson

 

 

Title:

Chief Financial Officer

 

 

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EXHIBIT D

 

COMPLIANCE CERTIFICATE

 

TO:

SILICON VALLEY BANK

 

3003 Tasman Drive

 

Santa Clara, CA 95054

 

 

FROM:

ECOLLEGE.COM

 

The undersigned authorized officer of eCollege.com certifies that under the
terms and conditions of the Loan and Security Agreement between eCollege,com and
DataMark, Inc. (“Borrowers”)  and Bank (the “Agreement”), (i) Borrowers are 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.
Such 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. Such
officer acknowledges that no borrowings may be requested at any time or date of
determination that Borrowers are 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

 

 

 

 

 

 

 

Quarterly financial statements + CC

 

Quarterly within 45 days

 

Yes

 

No

Annual (Audited)

 

FYE within 95 days

 

Yes

 

No

A/R & A/P Agings

 

Monthly within 30 days*

 

Yes

 

No

Borrowing Base Certificate

 

Monthly within 30 days*

 

Yes

 

No

A/R Audit

 

Annual

 

Yes

 

No

 

Financial Covenant

 

Required

 

Actual

 

Complies

 

 

 

 

 

 

 

 

 

Maintain on a Quarterly Basis:

 

 

 

 

 

 

 

 

Minimum Quick Ratio (Adjusted) (quarterly)

 

1.50:1.00 at each FQE

 

          :1.00

 

Yes

 

No

 

 

 

 

 

 

 

 

 

Minimum EBITDA (quarterly)

 

See Exhibit E

 

$

 

 

Yes

 

No

 

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*Quarterly within 45 days if no outstanding Advances exceeding $5,000,000 exist
other than Quarter-End Advances and outstanding Letters of Credit.

 

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Have there been updates to Borrowers’ intellectual property, if appropriate?

Yes / No

 

Comments Regarding Exceptions: See Attached.

BANK USE ONLY

 

 

 

 

Sincerely,

Received by:

 

 

 

 

AUTHORIZED SIGNER

 

 

eCollege.com

Date:

 

 

 

 

By:

 

 

Verified:

 

 

TITLE:

 

 

 

AUTHORIZED SIGNER

 

 

 

Date:

 

 

 

 

DATE:

 

 

Compliance Status:

Yes

No

 

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EXHIBIT E

 

Fiscal quarter ended

 

Minimum EBITDA

 

 

 

 

 

June 30, 2005

 

$

3,000,000

 

September 30, 2005

 

$

3,000,000

 

December 31, 2005

 

$

3,500,000

 

March 31, 2006

 

$

3,500,000

 

June 30, 2006

 

$

3,500,000

 

September 30, 2006

 

$

3,500,000

 

December 31, 2006

 

$

4,000,000

 

March 31, 2007

 

$

4,000,000

 

June 30, 2007

 

$

4,000,000

 

September 30, 2007

 

$

4,000,000

 

 

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SILICON VALLEY BANK

 

PRO FORMA INVOICE FOR LOAN CHARGES

 

BORROWER:

 

eCollege.com and DataMark Inc.

 

 

 

 

 

 

 

LOAN OFFICER:

 

Frank Amoroso

 

 

 

 

 

 

 

 

 

DATE:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan Fee

 

$

15,000.00

 

 

 

Documentation Fee

 

$

 

 

 

 

 

 

 

 

 

TOTAL FEES DUE

 

$

 

 

{   }  A check for the total amount is attached.

 

{   }  Debit DDA #                                      for the total amount.

 

 

BORROWER:

 

ECollege.com

 

 

 

 

 

 

 

Authorized Signer

(Date)

 

 

DataMark Inc.

 

 

 

 

 

 

Authorized Signer

(Date)

 

 

 

 

BANK;

 

SILICON VALLEY BANK

 

 

 

 

 

 

 

Loan Officer Signature

(Date)

 

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