Exhibit 10.1

 

SECOND LOAN MODIFICATION AGREEMENT

 

This Second Loan Modification Agreement (this “Loan Modification Agreement”) is
entered into as of  November 17, 2008, by and among (a) SILICON VALLEY BANK, a
California corporation, 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 (b) NETWORK ENGINES, INC., a Delaware
corporation, with offices at 25 Dan Road, Canton, Massachusetts 02021
(“Network”), and ALLIANCE SYSTEMS, INC., a Texas corporation with offices at
3501 East Plano Parkway, Suite 100, Plano, Texas 75074 (“Alliance”) (Network and
Alliance are individually and collectively, jointly and severally, “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 OCTOBER 11, 2007,
EVIDENCED BY, AMONG OTHER DOCUMENTS, A CERTAIN LOAN AND SECURITY AGREEMENT DATED
AS OF OCTOBER 11, 2007, BETWEEN BORROWER AND BANK, AS AMENDED BY A CERTAIN FIRST
LOAN MODIFICATION AGREEMENT DATED AS OF AUGUST 1, 2008, 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.

 

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 DEFINITION, APPEARING IN SECTION 13.1 THEREOF:

 

“              “EBITDA” shall mean (a) Net Income, plus (b) Interest Expense,
plus (c) to the extent deducted in the calculation of Net Income, depreciation
expense and amortization expense, plus (d) income tax expense.”

 

and inserting in lieu thereof the following:

 

“              “EBITDA” shall mean (a) Net Income, plus (b) Interest Expense,
plus (c) to the extent deducted in the calculation of Net Income, depreciation
expense and amortization expense, plus (d) income tax expense, plus (e) to the
extent deducted in the calculation of Net Income, non-cash stock compensation
and other one-time non-cash expenses approved by Bank in writing on a
case-by-case basis.”

 

4.             FEES.  BORROWER SHALL REIMBURSE BANK FOR ALL LEGAL FEES AND
EXPENSES INCURRED IN CONNECTION WITH THIS AMENDMENT TO THE EXISTING LOAN
DOCUMENTS.

 

5.             PERFECTION CERTIFICATES.

 

(A)           NETWORK HEREBY RATIFIES, CONFIRMS AND REAFFIRMS, ALL AND SINGULAR,
THE TERMS AND DISCLOSURES CONTAINED IN A CERTAIN PERFECTION CERTIFICATE DATED AS
OF AUGUST 1, 2008, BETWEEN NETWORK AND BANK, AND ACKNOWLEDGES, CONFIRMS AND
AGREES THE DISCLOSURES AND INFORMATION NETWORK PROVIDED TO BANK IN THE
PERFECTION CERTIFICATE HAVE NOT CHANGED, AS OF THE DATE HEREOF.

 

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(B)           ALLIANCE HEREBY RATIFIES, CONFIRMS AND REAFFIRMS, ALL AND
SINGULAR, THE TERMS AND DISCLOSURES CONTAINED IN A CERTAIN PERFECTION
CERTIFICATE DATED AS OF OCTOBER 11, 2007, BETWEEN ALLIANCE AND BANK, AND
ACKNOWLEDGES, CONFIRMS AND AGREES THE DISCLOSURES AND INFORMATION ALLIANCE
PROVIDED TO BANK IN THE PERFECTION CERTIFICATE HAVE NOT CHANGED, AS OF THE DATE
HEREOF.

 

6.             CONSISTENT CHANGES.  THE EXISTING LOAN DOCUMENTS ARE HEREBY
AMENDED WHEREVER NECESSARY TO REFLECT THE CHANGES DESCRIBED ABOVE.

 

7.             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.

 

8.             NO DEFENSES OF BORROWER.  BORROWER HEREBY ACKNOWLEDGES AND AGREES
THAT, AS OF THE DATE OF THIS LOAN MODIFICATION AGREEMENT, 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.

 

9.             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.

 

10.           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:

 

 

 

NETWORK ENGINES, INC.

 

SILICON VALLEY BANK

 

 

 

By:

/s/ Douglas G. Bryant

 

By:

/s/ Michael J. Fell

 

 

 

 

 

Name:

Douglas G. Bryant

 

Name:

Michael J. Fell

 

 

 

 

 

Title:

CFO

 

Title:

Relationship Manager

 

 

 

 

 

 

 

 

ALLIANCE SYSTEMS, INC.

 

 

 

 

 

 

 

 

By:

/s/ Douglas G. Bryant

 

 

 

 

 

 

 

 

Name:

Douglas G. Bryant

 

 

 

 

 

 

 

 

Title:

CFO

 

 

 

 

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