**EXHIBIT 10.67**

 

**FIRST LOAN MODIFICATION AGREEMENT**

 

This First Loan Modification Agreement (this “LoanModification Agreement”) is entered into as of January 27, 2005, by andbetween **SILICON VALLEY BANK**, aCalifornia-chartered bank, with its principal place of business at3003 Tasman Drive, Santa Clara, California 95054 and with a loanproduction office located at 400 Madison Avenue, Suite 15A, New York, New York10017 (“Bank”) and **AXS-ONE INC.**, aDelaware corporation with its chief executive office located at 301 Route 17North, Rutherford, New Jersey 07070 (“Borrower”).

 

# 1.             DESCRIPTIONOF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness andobligations which may be owing by Borrower to Bank, Borrower is indebted toBank pursuant to a loan arrangement dated as of August 11, 2004, evidencedby, among other documents, a certain Loan and Security Agreement dated as of August 11,2004, between Borrower and Bank (as amended, the “Loan Agreement”). Capitalizedterms used but not otherwise defined herein shall have the same meaning as inthe Loan Agreement.

 

2.             DESCRIPTION OFCOLLATERAL.  Repayment of theObligations is secured by the Collateral as described in the Loan Agreement(together with any other collateral security granted to Bank, the “SecurityDocuments”).

 

Hereinafter,the Security Documents, together with all other documents evidencing orsecuring the Obligations shall be referred to as the “Existing Loan Documents”.

 

3.             DESCRIPTION OFCHANGE IN TERMS.

 

## A.            Modificationsto Loan Agreement.

##  

### 1              TheLoan Agreement shall be amended by deleting the following text appearing as subsection (b)(i)(B) of Section 6.6 thereof, entitled “EBITDA”:

###  

“(B)($100,000.00), for the six (6) month period ending December 31, 2004,”

 

andinserting in lieu thereof the following:

 

“(B)($3,400,000.00), for the six (6) month period ending December 31, 2004,”

 

### 2              TheCompliance Certificate appearing as Exhibit D to the Loan Agreement ishereby replaced with the Compliance Certificate attached as Exhibit Ahereto.

###  

## B.            Waivers.

##  

### 1              Bankhereby waives Borrower’s existing default under the Loan Agreement by virtue ofBorrower’s failure to comply with the financial covenant set forth in Section 6.6(b)(i)(A) thereof as of the quarter ended September 30,2004. Bank’s waiver of Borrower’s compliance of said financial covenant shallapply only to the foregoing specific period.

###  

4.             FEES.  Borrower shall pay to Bank a modification feeequal to Ten Thousand Dollars ($10,000,000) (the “Modification Fee”), whichModification Fee shall be due on the date hereof and shall be deemed fullyearned as of the date hereof. Notwithstanding the foregoing, Bank will waivethe Modification Fee provided that Borrower transfer all of its cash managementbusiness and excess cash to Bank on or prior to February 1, 2005. TheBorrower shall also reimburse Bank for all legal fees and expenses incurred inconnection with this amendment to the Existing Loan Documents.

 

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5.             RATIFICATION OFPERFECTION CERTIFICATE.  Borrowerhereby ratifies, confirms and reaffirms, all and singular, the terms anddisclosures contained in a certain Perfection Certificate dated as of August 11,2004 between Borrower and Bank, and acknowledges, confirms and agrees thedisclosures and information above Borrower provided to Bank in the PerfectionCertificate has not changed, as of the date hereof.

 

6.             AUTHORIZATION TOFILE.  Borrower hereby authorizesBank to file financing statements without notice to Borrower, with allappropriate jurisdictions, as Bank deems appropriate, in order to furtherperfect or protect Bank’s interest in the Collateral, including a notice thatany disposition of the Collateral, by either the Borrower or any other Person,shall be deemed to violate the rights of the Bank under the Code.

 

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

 

8.             RATIFICATION OFLOAN DOCUMENTS.  Borrower herebyratifies, confirms, and reaffirms all terms and conditions ofall security or other collateral granted to the Bank, and confirms thatthe indebtedness secured thereby includes, without limitation, the Obligations.

 

9.             NO DEFENSES OFBORROWER.  Borrower herebyacknowledges and agrees that Borrower has no offsets, defenses, claims, orcounterclaims against Bank with respect to the Obligations, or otherwise, andthat if Borrower now has, or ever did have, any offsets, defenses, claims, orcounterclaims against Bank, whether known or unknown, at law or in equity, allof them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from anyliability thereunder.

 

10.           CONTINUING VALIDITY.  Borrower understands and agrees that inmodifying the existing Obligations, Bank is relying upon Borrower’srepresentations, warranties, and agreements, as set forth in the Existing LoanDocuments.  Except as expressly modifiedpursuant to this Loan Modification Agreement, the terms of the Existing LoanDocuments remain unchanged and in full force and effect.  Bank’s agreement to modifications to theexisting Obligations pursuant to this Loan Modification Agreement in no wayshall obligate Bank to make any future modifications to the Obligations.  Nothing in this Loan Modification Agreementshall constitute a satisfaction of the Obligations.  It is the intention of Bank and Borrower toretain as liable parties all makers of Existing Loan Documents, unless theparty 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 becomeeffective only when it shall have been executed by Borrower and Bank.

 

*[The remainder of this page isintentionally left blank]*

 

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This Loan Modification Agreement is executed as asealed instrument under the laws of the State of New York as of the date firstwritten above.

 
| **BORROWER:**    | **BANK:**               |
|------------------|-------------------------|
|             |                    |   |
| **AXS-ONE INC.** | **SILICON VALLEY BANK** |
|             |                    |   |   |
| By:              | /s/  William Lyons      |   | By: | /s/  Michael Moretti |   |
|             |                    |   |   |   |   |
| Name:            | W.P.  Lyons             |   | Name: | Michael  Moretti |   |
|             |                    |   |   |   |   |
| Title:           | CEO                     |   | Title: | SVP |   |
|                  |                         |  |  |  |  |  |  |  |  |  |  |

 

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**EXHIBIT A**

**COMPLIANCE CERTIFICATE**

 

TO:         SILICON VALLEY BANK

FROM:   AXS-ONE INC.

 

Theundersigned authorized officer of AXS-ONE INC. certifies that under the termsand conditions of the Loan and Security Agreement between Borrower and Bank(the “Agreement”), (i) Borrower is in compliance for the period ending                               with all required covenants except as noted below and (ii) there are no Eventsof Default, and all representations and warranties in the Agreement are trueand correct in all material respects on this date.  Attached are the required documentssupporting the certification.  The Officer certifies that these are preparedin accordance with Generally Accepted Accounting Principles (GAAP) consistentlyapplied from one period to the next except as explained in an accompanyingletter or footnotes.  The Officeracknowledges that no borrowings may be requested at any time or date ofdetermination 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 isdelivered.

 
| **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 |
| 10-Q, 10-K and 8-K                                                                           |   | Within 5 days after filing with SEC |   | Yes  No |
| BBC A/R Agings                                                                               |   | Quarterly within 45 days*           |   | Yes  No |

 

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*Monthly w/in 30 days whenborrowing.

 
| **Financial Covenant**                         | ** ** | **Required**                                                                                     | ** ** | **Actual**                                                                                        | ** ** | **Complies**      |
|------------------------------------------------|------------|--------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------|------------|-------------------|
| Minimum Adjusted Quick Ratio (quarterly*)      |       | 1.75:1.0                                                                                         |       |           :1.0                                  |       | Yes  No |
| Minimum EBITDA                                 |       |                  |       |                                                                                              |       |              |
| (quarterly - beginning  quarter ending6/30/05) |       | $1.00**                                                                                          |       | $                 |       | Yes  No |
| (cumulative - beginning quarter ending9/30/04) |       | ($500,000) 7/1/04 thru 9/30/04                                                                   |       | $                 |       | Yes  No |
|                                           |       | ($3,400,000) 7/1/04 thru 12/31/04                                                                |       | $                 |       | Yes  No |
|                                           |       | $500,0001/1/05 thru 3/31/05                                                                      |       | $                 |       | Yes  No |
|                                           |       | $1,000,000 1/1/05 thru 6/30/05                                                                   |       | $                 |       | Yes  No |
|                                           |       | $1,500,000 1/1/05 thru 9/30/05                                                                   |       | $                 |       | Yes  No |
|                                           |       | $2,000,000 1/1/05 thru 12/31/05                                                                  |       | $                 |       | Yes  No |
|                                           |       | $500,0001/1/06 thru 3/31/06                                                                      |       | $                 |       | Yes  No |
|                                           |       | $1,000,000 1/1/06 thru 6/30/06                                                                   |       | $                 |       | Yes  No |

 

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*Monthlywhen borrowing.

**exceptfor any 1 of the last 3 quarters in 2005 during which Borrower may sustain amaximum net EBITDA loss of no greater than $500,000.

 

 
|   | **BANK USE ONLY**                                |
|--------|--------------------------------------------------|
|   | **Comments Regarding Exceptions:** See Attached. | Received by: |   |   |
|   | Sincerely,                                       |   |   | AUTHORIZED SIGNER |   |
|   |                                             |   | Date: |   |   |
|   | SIGNATURE                                   |   |   |   |   |
|   |                                             |   |   |   |   |
|   |                                             |   | Verified: |   |   |
|   | TITLE                                       |   |   | AUTHORIZED SIGNER |   |
|   |                                             |   |   |   |   |
|   |                                             |   | Date: |   |   |
|   | DATE                                             |   |   |   |   |
|   |                                             |   | Compliance Status:              Yes         No |   |
|        |                                                  |  |  |  |  |  |

 

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