**EXHIBIT 10.2**

 

**LOAN MODIFICATION AGREEMENT**

 

This LoanModification Agreement is entered into as of June 27, 2002, effective as ofMarch 30, 2002, by and between SENTO CORPORATION, and SENTO TECHNICAL SERVICESCORPORATION (jointly and severally the “Borrower”) and Silicon Valley Bank(“Bank”).

 

1.             DESCRIPTION OFEXISTING INDEBTEDNESS: Among other indebtedness which may be owing byBorrower to Bank, Borrower is indebted to Bank pursuant to, among otherdocuments, an Amended and Restated Loan and Security Agreement, dated December22, 1999, as may be amended from time to time, (the “Loan Agreement”).  The Loan Agreement provided for, among otherthings, a Committed Revolving Line in the original principal amount of Two MillionDollars ($2,000,000) and a Committed Equipment Line in the original principalamount of One Hundred Thousand Dollars ($100,000).  Pursuant to a Loan Modification Agreement dated April 28, 2000,the Committed Revolving Line was increased to Three Million Dollars($3,000,000) and a Term Loan Commitment was incorporated, in the originalprincipal amount of Five Hundred Thousand Dollars ($500,000). Additionally,pursuant to a Loan Modification Agreement dated November 7, 2000, the Term LoanCommitment was increased to Two Million Dollars ($2,000,000). Defined termsused but not otherwise defined herein shall have the same meanings as set forthin the Loan Agreement.

 

Hereinafter, all indebtednessowing by Borrower to Bank shall be referred to as the “Indebtedness.”

 

2.             DESCRIPTION OFCOLLATERAL. Repayment of the Indebtedness is secured by the Collateral asdescribed in the Loan Agreement.

 

Hereinafter, theabove-described security documents and guaranties, together with all otherdocuments securing repayment of the Indebtedness shall be referred to as the“Security Documents”. Hereinafter, the Security Documents, together with allother documents evidencing or securing the Indebtedness shall be referred to asthe “Existing Loan Documents”.

 

3.             DESCRIPTION OF CHANGE IN TERMS.

 

A.            Modification(s)to Loan Agreement.

 

1.                                       Section6.6 entitled “Financial Covenants” is hereby amended in part to read asfollows:

 

Borrower will maintain as of the last day of each month (unlessotherwise noted):

 

(i)                                  Adjusted Quick Ratio.Effective as of the month ended March 30, 2002 through the month ending July31, 2002, a ratio of Quick Assets to Current Liabilities minus Deferred Revenueand debentures of at least 1.50 to 1.00; for the month ending August 31, 2002,and thereafter, Borrower will maintain a ratio of Quick Assets to CurrentLiabilities minus Deferred Revenue of at least 1.50 to 1.00.

 

2.                                       Thefollowing defined term under Section 13.1 entitled “Definitions” is herebyincorporated to read as follows:

 

“Current Liabilities” are the aggregate amount of Borrower’s TotalLiabilities which mature within one (1) year.

 

4.             CONSISTENT CHANGES.  The Existing  Loan  Documents are herebyamended wherever necessary to reflect the changes described above.

 

5.             NO DEFENSES OF BORROWER. Borroweragrees that, as of the date hereof, it has no defenses against the obligationsto pay any amounts under the Indebtedness.

 

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6.            CONTINUING VALIDITY. Borrower understands and agrees that in  modifying the existing Indebtedness,Bank is relying upon Borrower’s representations, warranties, and agreements, asset forth in the Existing Loan Documents. Except as expressly modified pursuantto this Loan Modification Agreement, the terms of the Existing Loan Documentsremain unchanged and in full force and effect. Bank’s agreement to modificationsto the existing Indebtedness pursuant to this Loan Modification Agreement in noway shall obligate Bank to make any future modifications to the Indebtedness.Nothing in this Loan Modification Agreement shall constitute a satisfaction ofthe Indebtedness.  It is the intentionof Bank and Borrower to retain as liable parties all makers and endorsers ofExisting Loan Documents, unless the party is expressly released by Bank inwriting. Unless expressly released herein, no maker, endorser, or guarantor willbe released by virtue of this Loan Modification Agreement. The terms of thisparagraph apply not only to this Loan Modification Agreement, but also to allsubsequent loan modification agreements. 

 

This LoanModification Agreement is executed as of the date first written above.

** **
| **BORROWER:**         | **BANK:**               |
|-----------------------|-------------------------|
|                  |                    |
| **SENTO CORPORATION** | **SILICON VALLEY BANK** |
|                  |                    |   |
| By:                   |                    |   | By: |   |   |   |
| Name:                 |                    |   | Name: |   |   |
| Title:                |                    |   | Title: |   |   |
|                       |                         |  |  |  |  |  |  |  |  |  |  |  |  |  |

** **

** **

**SENTOTECHNICAL SERVICES CORPORATION**

 
| By:    |   |   |
|--------|--------|--------|
| Name:  |   |   |
| Title: |   |   |
|        |        |        |  |  |

 

 

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**SILICON VALLEY BANK**

 

**PRO FORMA INVOICE FOR LOAN CHARGES**

** **

|              |   |                                     |   |
|-------------------|--------|------------------------------------------|--------|
| **BORROWER:**     |   | **SENTO CORPORATION**                    |   |
|              |   | **SENTO TECHNICAL SERVICES CORPORATION** |
|              |   |                                     |   |
| **LOAN OFFICER:** |   | **Ron C. Sherman**                       |   |
|              |   |                                     |   |
| **DATE:**         |   | **June 27, 2002**                        |   |

 

|   |   | **Documentation Fee** | **$**  | **250.00** |   |
|--------|--------|-----------------------|--------|------------|--------|
|   |   |                  |   |       |   |
|   |   | **TOTAL FEE DUE**     | **$**  | **250.00** |   |

 

Please indicate the method ofpayment:

 

{ }  A check for the totalamount is attached.

 

{ } DebitDDA#                        forthe total amount.

 

{ } Loan proceeds

 

|     |   |
|----------|--------|
| Borrower | (Date) |
|          |        |  |

 

 

|                              |   |
|-----------------------------------|--------|
| Silicon  Valley Bank              | (Date) |
| Account  Officer’s Signature |   |
|                                   |        |  |

 

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**COMPLIANCE CERTIFICATE**

 
| TO:    |   | SILICON VALLEY BANK                   |   |
|--------|--------|---------------------------------------|--------|
|   |   | 3003 Tasman Drive                     |   |
|   |   | Santa Clara, CA 95054                 |   |
|   |   |                                  |   |
| FROM:  |   | SENTO  CORPORATION                    |   |
|   |   | SENTO TECHNICAL SERVICES  CORPORATION |   |

 

 

The undersigned authorized officer of SENTO CORPORATION, and SENTOTECHNICAL SERVICES CORPORATION (jointly and severally the “Borrower”) certifiesthat under the terms and conditions of the Loan and Security Agreement betweenBorrower and Bank (the “Agreement”), (i) Borrower is in complete compliance forthe period ending                           withall required covenants except as noted below and (ii) all representations andwarranties in the Agreement are true and correct in all material respects onthis date. Attached are the required documents supporting the certification.The Officer certifies that these are prepared in accordance with GenerallyAccepted Accounting Principles (GAAP) consistently applied from one period tothe next except as explained in an accompanying letter or footnotes. TheOfficer acknowledges that no borrowings may be requested at any time or date ofdetermination that Borrower is not in compliance with any of the terms of theAgreement, and that compliance is determined not just at the date thiscertificate is delivered.

 

**Please indicate compliance status by circling Yes/Nounder “Complies” column.**

 
| **Reporting  Covenant**                        |   | **Required**                        |      |       |   | **Complies** |
|------------------------------------------------|--------|-------------------------------------|-----------|------------|--------|--------------|
| Interim consolidated financial statements + CC |   | Monthly within 30 days              |      |       |   | Yes          | No |
| 10-Q, 10-K                                     |   | Within 5 days after filing with SEC |      |       |   | Yes          | No |
| A/R, A/P & BBC                             |   | Monthly within 20 days              |      |       |   | Yes          | No |
| A/R Audit                                      |   | Annually                            |      |       |   | Yes          | No |
|                                           |   |                                |      |       |   |         |   |
| **Financial  Covenant**                        |   | **Required**                        |      | **Actual** |   | **Complies** |
| Maintain on a Monthly Basis:                   |   |                                |      |       |   |         |   |
| Minimum Quick Ratio (Adjusted)*                |   | 1.50:1.00                           |      |       | :1.00  |         | Yes | No |
| Profitability                                  |   | $                                   | 0         | *          |   | $            |   | Yes | No |
| Minimum Tangible Net Worth                     |   | $                                   | 4,500,000 | ***        |   | $            |   | Yes | No |
|                                           |   |                                |      |       |   |         |   |
| Maintain on a Quarterly Basis:                 |   |                                |      |       |   |         |   |
| Debt Service Coverage Ratio****                |   | 1.50:1.00                           |      |       | :1.00  |         | Yes | No |

 

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*Effectiveas of the month ended March 30, 2002 through the month ending July 31, 2002, aratio of Quick Assets to Current Liabilities monus Deferred Revenue anddebentures of at least 1.50 to 1.00; for the month ending August 31, 2002, andthereafter, Borrower will maintain a ratio of Quick Assets to CurrentLiabilities minus Deferred  Revenue of atleast 1.50 to 1.00.

**Borrowershall not incur a loss for any two consecutive months, and shall not incur anaggregate loss for any fiscal quarter, provided, however, the Profitabilitycovenant shall not be tested for the month ending April 30, 2002 through themonth ending June 30, 2002, For purposes of this covenant, “loss” shall meannet income after taxes of less than $0.00, as reported on Borrower’sconsolidated financial statements.

***Tangible Net Worth to betested for the months ending April 30, 2002 through August 31, 2002.

****TheDebt Service Coverage covenant shall not be tested for the quarter ending June30, 2002.  

Borroweronly has deposit accounts located at the followinginstitutions:                                         

** **

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| **Comments  Regarding Exceptions:**See  Attached. | **BANK USE ONLY**   |
|---------------------------------------------------|---------------------|
|                                              | Received by:        |   |
| Sincerely,                                        |                | AUTHORIZED SIGNER |
|                                              | Date:               |   |
|                                              |                |   |
| **BORROWER:**                                     | Verified:           |   |
|                                              |                | AUTHORIZED SIGNER |
| **SENTO  CORPORATION**                            | Date:               |   |
|                                              |                |   |
|                                              | Complaince  Status: | Yes     No |
|                                              | By:                 |   |   |   |
|                                              | Name:               |   |   |   |
|                                              | Title:              |   |   |   |
|                                                   |                     |  |  |  |  |  |  |  |  |  |

 

**SENTO TECHNICAL SERVICES CORPORATION**

 
| By:    |   |   |
|--------|--------|--------|
| Name:  |   |   |
| Title: |   |   |
|   |   |   |
|   |   |   |
| Date:  |   |   |
|   |   |   |
|        |        |        |  |  |

 

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