**EXHIBIT 10.25**
**FIRST LOAN MODIFICATION AGREEMENT**
     This First Loan Modification Agreement (this “Loan Modification Agreement”) is entered into asof April 14, 2005, by and between **SILICON VALLEY BANK**, a California-chartered bank, with itsprincipal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loanproduction office located at One Newton Executive Park, Suite 200, 2221 Washington Street, Newton,Massachusetts 02462 (“Bank”) and **APPLIX, INC.**, a Massachusetts corporation with its chief executiveoffice located at 289 Turnpike Road, Westboro, Massachusetts 01581 (“Borrower”).
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness andobligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loanarrangement dated as of March 19, 2004, evidenced by, among other documents, a certain Loan andSecurity Agreement dated as of March 19, 2004, between Borrower and Bank (as amended, the “LoanAgreement”). Capitalized terms used but not otherwise defined herein shall have the same meaningas in the Loan Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral asdescribed 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 theObligations 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 followingprovision appearing as subsection (c) of Section 2.1.1 thereof:
“(c) Interest Rate. The principal amounts outstandingunder the Revolving Line shall accrue interest at a per annumrate equal to the Prime Rate plus one percent (1.0%).”
    and inserting in lieu thereof the following:
“(c) Interest Rate. The principalamounts outstanding under the Revolving Line shallaccrue interest at a per annum rate equal to thePrime Rate.”
 2.  The Loan Agreement shall be amended by deleting the following,appearing as Section 2.1.2(a) thereof, in its entirety:
“2.1.2 Letters of Credit Sublimit.
     (a) Bank shall issue or have issued Letters of Credit forBorrower’s account not exceeding (i) the lesser of the Revolving Lineor the Borrowing Base minus (ii) the outstanding principal balance ofany Advances (including any Cash Management Services), minus (iii)the amount of all Letters of Credit (including drawn but unreimbursedLetters of Credit) which are not otherwise separately cash secured,in form and substance acceptable to Bank, plus an amount equal to anyLetter of Credit Reserves. The face amount of
 

 

outstanding Letters of Credit (including drawn but unreimbursedLetters of Credit and any Letter of Credit Reserve) may not exceedTwo Million Dollars ($2,000,000.00). Each Letter of Credit shallhave an expiry date no later than 364 days after the RevolvingMaturity Date provided Borrower’s Letter of Credit reimbursementobligation shall be secured by cash or cash equivalents on termsacceptable to Bank on and after (i) the Maturity Date of theRevolving Line if the Maturity Date of the Revolving Line is notextended by Bank, or (ii) the occurrence of an Event of Defaulthereunder. All Letters of Credit shall be, in form and substance,acceptable to Bank in its sole discretion and shall be subject to theterms and conditions of Bank’s form of standard Application andLetter of Credit Agreement. Borrower agrees to execute any furtherdocumentation in connection with the Letters of Credit as Bank mayreasonably request.”
    and inserting in lieu thereof the following:
“2.1.2 Letters of Credit Sublimit.
     (a) Bank shall issue or have issued Letters of Credit forBorrower’s account not exceeding (i) the lesser of the Revolving Lineor the Borrowing Base minus (ii) the outstanding principal balance ofany Advances (including any Cash Management Services), minus (iii)the amount of all Letters of Credit (including drawn but unreimbursedLetters of Credit) which are not otherwise separately cash secured,in form and substance acceptable to Bank, plus an amount equal to anyLetter of Credit Reserves. The face amount of outstanding Letters ofCredit (including drawn but unreimbursed Letters of Credit and anyLetter of Credit Reserve) may not exceed Three Million Dollars($3,000,000.00). Each Letter of Credit shall have an expiry date nolater than 364 days after the Revolving Maturity Date providedBorrower’s Letter of Credit reimbursement obligation shall be securedby cash or cash equivalents on terms acceptable to Bank on and after(i) the Maturity Date of the Revolving Line if the Maturity Date ofthe Revolving Line is not extended by Bank, or (ii) the occurrence ofan Event of Default hereunder. All Letters of Credit shall be, inform and substance, acceptable to Bank in its sole discretion andshall be subject to the terms and conditions of Bank’s form ofstandard Application and Letter of Credit Agreement. Borrower agreesto execute any further documentation in connection with the Lettersof 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 theRevolving Line and the Borrowing Base, then Borrower may enter into foreign exchangeforward contracts with the Bank under which Borrower commits to purchase from orsell to Bank a set amount of foreign currency more than one business day after thecontract date (the “FX Forward Contract”). Bank shall subtract 10% of eachoutstanding FX Forward Contract from the foreign exchange sublimit, which sublimitis a maximum of Two Million Dollars ($2,000,000.00) (the “FX Reserve”). The totalFX Forward Contracts at any one time may not exceed 10 times the amount of the FXReserve. Bank may terminate the FX Forward Contracts if an Event of Defaultoccurs.”
    and inserting in lieu thereof the following:
 

 

“2.1.3 Foreign Exchange Sublimit. If there is availability under theRevolving Line and the Borrowing Base, then Borrower may enter into foreign exchangeforward contracts with the Bank under which Borrower commits to purchase from orsell to Bank a set amount of foreign currency more than one business day after thecontract date (the “FX Forward Contract”). Bank shall subtract 10% of eachoutstanding FX Forward Contract from the foreign exchange sublimit, which sublimitis a maximum of Three Million Dollars ($3,000,000.00) (the “FX Reserve”). The totalFX Forward Contracts at any one time may not exceed 10 times the amount of the FXReserve. Bank may terminate the FX Forward Contracts if an Event of Defaultoccurs.”
 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 allocate up toTwo Million Dollars ($2,000,000.00) for the Bank’s Cash Management Services, whichmay include merchant services, direct deposit of payroll, business credit card, andcheck cashing services identified in the various cash management services agreementsrelated to such Cash Management Services (the “Cash Management Services”). Suchaggregate amounts utilized under the Cash Management Services Sublimit shall at alltimes reduce the amount otherwise available for Credit Extensions under theRevolving Line. Any amounts Bank pays on behalf of Borrower or any amounts that arenot paid by Borrower for any Cash Management Services will be treated as Advancesunder the Revolving Line and will accrue interest at the interest rate applicable toAdvances. It is further agreed that Borrower may use Cash Management Services fromother institutions in the event that Borrower shall determine that Bank’s fees andexpenses therefore are not competitive.”
    and inserting in lieu thereof the following:
“2.1.4  Cash Management Services Sublimit. Borrower may allocate up to Three MillionDollars ($3,000,000.00) for the Bank’s Cash Management Services, which may include merchantservices, direct deposit of payroll, business credit card, and check cashing services identified inthe various cash management services agreements related to such Cash Management Services (the “CashManagement Services”). Such aggregate amounts utilized under the Cash Management ServicesSublimit shall at all times reduce the amount otherwise available for Credit Extensions under theRevolving Line. Any amounts Bank pays on behalf of Borrower or any amounts that are not paid byBorrower for any Cash Management Services will be treated as Advances under the Revolving Line andwill accrue interest at the interest rate applicable to Advances. It is further agreed thatBorrower may use Cash Management Services from other institutions in the event that Borrower shalldetermine that Bank’s fees and expenses therefore are not competitive.”
 5.  The Loan Agreement shall be amended by deleting the followingprovision appearing as subsection (b) of Section 6.7 thereof:
“(b) EBITDA. Borrower shall have: (i) Quarterly EBITDA losses not to exceed: (A) TwoMillion Five Hundred Thousand Dollars ($2,500,000.00) for the quarter which ended December 31,2003, and (B) Three Hundred Fifty Thousand Dollars ($350,000.00) for the quarter ending March 31,2004; and (ii) quarterly positive EBITDA of at least: (A) One Hundred Thousand Dollars($100,000.00) for the quarters ending June 30, 2004 and September 30, 2004; (B) Two Hundred FiftyThousand Dollars ($250,000.00) for the quarter ending
 

 

December 31, 2004; (C) One Hundred Thousand Dollars ($100,000.00) for the quarter ending March31, 2005; and (D) eighty-five (85%) percent of the Borrower’s board of director’s approvedoperating plan for Borrower for each quarter thereafter.”
    and inserting in lieu thereof the following:
“(b) EBITDA. Borrower shall have: (i) quarterly EBITDA losses not to exceed: (A) FiveHundred Thousand Dollars ($500,000.00) for the quarter ending March 31, 2005, and (B) One HundredThousand Dollars ($100,000.00) for the quarter ending June 30, 2005; and (ii) quarterly positiveEBITDA of at least: (A) Two Hundred Fifty Thousand Dollars ($250,000.00) for the quarter endingSeptember 30, 2005, and (B) Two Million Dollars ($2,000,000.00) for the quarter ending December 31,2005; and (C) the greater of either (i) One Dollar ($1.00) or (ii) fifty (50.0%) percent of theBorrower’s board of director’s approved operating plan for Borrower for the quarter ending March31, 2006 and as of the last day of each quarter thereafter.”
 6.  The Loan Agreement shall be amended by deleting the followingdefinitions appearing in Section 13.1 thereof:
““**Revolving Line**” is an Advance or Advances of up to Two Million Dollars ($2,000,000.00).”
““**Revolving Maturity Date**” is March 18, 2005.”
    and inserting in lieu thereof:
““**Revolving Line**” is Advance or Advances of up to Three Million Dollars ($3,000,000.00).”
““**Revolving Maturity Date**” is March 18, 2007.”
 7.  The Borrower hereby acknowledges, confirms and agrees that noadditional Equipment Advances shall be made to the Borrower under the EquipmentLine.  8.  Notwithstanding Section 6.2(d) of the Loan Agreement, the Bankhereby agrees to waive the requirement of an annual Audit of Borrower’sAccounts; provided no Event of Default has occurred and is continuing.
4. FEES. Borrower shall pay to Bank a modification fee equal to Thirty Thousand Dollars($30,000.00), which fee shall be due on the date hereof and payable as follows: (i) FifteenThousand Dollars ($15,000.00) upon the execution of this Loan Modification Agreement, and (ii)Fifteen Thousand Dollars ($15,000.00) on the sooner to occur of (x) an Event of Default, (y) theearly termination of Loan Agreement, or (z) April 14, 2006 (One year from the date of this LoanModification Agreement). Borrower shall also reimburse Bank for all legal fees and expensesincurred in connection with this amendment to the Existing Loan Documents.
5. RATIFICATION OF NEGATIVE PLEDGE/. Borrower hereby ratifies, confirms and reaffirms, alland singular, the terms and conditions of a certain Negative Pledge Agreement dated as of March 19,2004, between Borrower and Bank, and acknowledges, confirms and agrees that said Negative PledgeAgreement shall remain in full force and effect.
6. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessaryto reflect the changes described above.
 

 

7. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms allterms and conditions of all security or other collateral granted to the Bank, and confirms that theindebtedness secured thereby includes, without limitation, the Obligations.
8. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existingObligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as setforth in the Existing Loan Documents. Except as expressly modified pursuant to this LoanModification Agreement, the terms of the Existing Loan Documents remain unchanged and in full forceand effect. Bank’s agreement to modifications to the existing Obligations pursuant to this LoanModification Agreement in no way shall obligate Bank to make any future modifications to theObligations. Nothing in this Loan Modification Agreement shall constitute a satisfaction of theObligations. It is the intention of Bank and Borrower to retain as liable parties all makers ofExisting Loan Documents, unless the party is expressly released by Bank in writing. No maker willbe released by virtue of this Loan Modification Agreement.
9. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective only when itshall 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 theCommonwealth of Massachusetts as of the date first written above.   **BORROWER:** **BANK:**   **APPLIX, INC.** **SILICON VALLEY BANK**   By:_/s/_Milton A. Alpern                                          By:_/s/ Jacqueline Le                                           Name:_Milton A. Alpern                                          Name:_Jacqueline Le                                            Title:_Chief Financial Officer                                          Title:_Operations Supervisor