Exhibit 10.20


 


THIRD LOAN MODIFICATION AGREEMENT


 


This
Third Loan Modification Agreement (this “Loan
Modification Agreement”) is entered
into as of January 26, 2009 and is effective as of the Third Loan
Modification Effective Date, by and between 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 IBASIS, INC., a Delaware corporation with
offices at 20 Second Avenue, Burlington, Massachusetts 01803 (“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 2, 2007, evidenced by, among
other documents, a certain Second Amended and Restated Loan and Security
Agreement dated as of October 2, 2007, between Borrower and Bank, as
modified by a certain First Loan Modification Agreement dated as of April 28,
2008, and as further modified by a certain Second Loan Modification Agreement,
dated as of October 9, 2008 (as amended, the “Loan Agreement”). Capitalized
terms used but not otherwise defined herein shall have the same meaning given
such terms in the Loan Agreement.


 


2.                                       DESCRIPTION OF COLLATERAL.
Repayment of the Obligations is secured by the Collateral as described in the
Loan Agreement and the Intellectual Property Security Agreement dated December 30,
2002 granted by Borrower in favor of Bank, as amended and ratified (as so
amended and ratified, the “IP Agreement”).


 


Hereinafter,
the Loan Agreement and the IP Agreement, 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.


 


I.                      The Loan Agreement shall be amended by
deleting the following definitions appearing in Section 13.1 thereof:


 


““KGCS” means KPN Global Carrier Services, B.V., a private limited liability
company organized under the laws of The Netherlands.


 


“LIBOR Rate” means, for each Interest Period in respect of LIBOR Advances comprising
part of the same Advances, an interest rate per annum (rounded upward to the nearest 1/100th of one percent (0.01%)) equal to
LIBOR for such Interest Period divided by one
(1) minus
the Reserve Requirement for
such Interest Period.


 


“Liquidity” is, on any date of measurement, Borrower’s unrestricted cash at Bank plus the Availability Amount.


 


“Prime Rate” is Bank’s most recently announced “prime rate”, even if it is not Bank’s
lowest rate.


 


“Revolving Line” is an Advance or Advances in an aggregate amount
of up to $50,000,000 outstanding at any time.


 


“Revolving Line Maturity Date” is October 1, 2009.” 


 


and
inserting in lieu thereof the following:


 

















 


““KPN, B.V.” means KPN Global Carrier Services, B.V., a private limited liability
company organized under the laws of The Netherlands.


 


“LIBOR Rate” means, for each Interest Period in respect of LIBOR Advances comprising
part of the same Advances, an interest rate per
annum (rounded upward to the nearest 1/100th of one percent (0.01%))
equal to the greater of (i) LIBOR for such Interest Period divided by one (1) minus the Reserve Requirement for such
Interest Period; and (ii) two percent (2.00%).


 


“Liquidity” is, on any date of measurement, Borrower’s unrestricted cash at Bank plus
the Availability Amount minus the First Loan Modification Advance
Amount.


 


“Prime Rate” is the greater of (i) four and one-quarter of one percent (4.25%)
or (ii) Bank’s most recently announced “prime rate”, even if it is not
Bank’s lowest rate.


 


“Revolving Line” is an Advance or Advances in an aggregate
amount of up to $35,000,000 outstanding at any time.


 


“Revolving Line Maturity Date” is September 30, 2010.”


 


II.                  The Loan Agreement shall be amended by
inserting the following definitions in the appropriate alphabetical order in Section 13.1
thereof:


 


“Capital Expenditure” and “Capital
Expenditures” are, for any period, with respect to any Person, the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability) by such Person and its Subsidiaries during such period
for the acquisition or leasing (pursuant to a capital lease) of fixed or
capital assets or additions to equipment (including replacements, capitalized
repairs and improvements during such period) that, in conformity with GAAP, are
included in “additions to property, plant or equipment” or comparable items
reflected in the consolidated financial statements of such Person and its
Subsidiaries.


 


“Third Loan Modification Agreement” is that certain Third Loan Modification
Agreement, by and between Borrower and Bank, executed as of the Third Loan
Modification Effective Date.


 


“Third Loan Modification Effective Date” is the date indicated on the signature page to
the Third Loan Modification Agreement.”


 


III.              The
Loan Agreement shall be amended by deleting the following definitions appearing
in Section 13.1 thereof:


 


““LTM EBITDA” means, for any Person as
of any date of measurement,
EBITDA for the prior 12 consecutive
months ending on such date of measurement; provided, that for any month prior
to the Effective Date used in calculating LTM EBITDA of the Borrower, LTM
EBITDA of the Borrower shall be calculated for each such month as the EBITDA of
the Borrower and its Subsidiaries, on a consolidated basis plus the
EBITDA of KGCS for such month.


 


“Total Funded Debt” means, at any date of measurement, the
outstanding aggregate principal amount of all Advances to Borrower.


 

















 


“Total Funded Debt Ratio” means, at any date of measurement, the ratio of Total Funded Debt on
such date to LTM EBITDA on such date.”


 


IV.              The Loan Agreement shall be amended by
deleting the following, appearing in Section 2.4(b) thereof, in its
entirety:


 


“(b)                           Performance Pricing. Each of the Prime Rate Margin and the LIBOR Rate
Margin shall be adjusted quarterly and shall be applied on and after the first
day of each such fiscal quarter as follows: for any fiscal quarter, as of the
first day of each such fiscal quarter: (i) if the Total Funded Debt Ratio
for the immediately preceding fiscal quarter is less than 1.50:1.00, then the
Prime Rate Margin for such fiscal quarter shall be 1.00% and the LIBOR Rate
Margin for such fiscal quarter shall be 3.25%, and (ii) if the Total
Funded Debt Ratio for the immediately preceding fiscal quarter is equal to or
greater than 1.50:1.00, then the Prime Rate Margin for such fiscal quarter
shall be 1.50% and the LIBOR Rate Margin for such fiscal quarter shall be
3.75%; provided, however, that for the fiscal quarter
beginning on April 1, 2009 and thereafter, for any fiscal quarter in which
Borrower maintains Liquidity equal to or greater than $20,000,000 for the
entire fiscal quarter, the above-listed Prime Rate Margins and LIBOR Margins
shall each be reduced by 0.50%.”


 


and
inserting in lieu thereof the following:


 


“(b)                           Performance Pricing. The margin applicable to the Prime Rate (the
“Prime Rate
Margin”)  and the margin applicable to the LIBOR Rate
(the “LIBOR
Rate Margin”)  shall be adjusted quarterly and shall he
applied on and after the first day of each such fiscal quarter as follows: for
any fiscal quarter, as of the first day of each such fiscal quarter: (i) if
the Borrower’s EBITDA minus Capital Expenditures for the immediately
preceding fiscal quarter is less than Five Million Dollars ($5,000,000), then
the Prime Rate Margin for such fiscal quarter shall be 1.50% and the LIBOR Rate
Margin for such fiscal quarter shall be 3.75%, and (ii) if the Borrower’s
EBITDA minus Capital Expenditures for the immediately preceding fiscal
quarter is greater than or equal to Five Million Dollars ($5,000,000), then the
Prime Rate Margin for such fiscal quarter shall be 1.00% and the LIBOR Rate
Margin for such fiscal quarter shall be 3.25%. Performance Pricing in effect as
of January 1, 2009 will be in accordance with clause (i) hereof.”


 


V.                  The Loan Modification Agreement shall be
amended by deleting the following, appearing in Section 2.5(d) thereof,
in its entirety:


 


“(d)                           Unused Revolving Line Facility Fee. A fee (the “Unused Revolving Line Facility Fee”),  which fee shall be paid quarterly, in arrears, on the last day of each
fiscal quarter, calculated as follows: (i) if the Total Funded Debt Ratio
for the fiscal quarter for which the Unused Revolving Line Facility Fee is due
is less than 1.50:1.00, the Unused Revolving Line Facility Fee for such fiscal
quarter shall be 0.375% per annum of the average unused portion of the
Revolving Line for such quarter, as determined by Bank; and (ii) if the
Total Funded Debt Ratio for the fiscal quarter for which the Unused Revolving
Line Facility Fee is due is greater than or equal to 1.50:1.00, the Unused
Revolving Line Facility Fee for such fiscal quarter shall be 0.625% per annum
of the average unused portion of the Revolving Line for such quarter, as
determined by Bank. Borrower shall not be entitled to any credit, rebate or
repayment of any Unused Revolving Line Facility Fee previously earned by Bank
pursuant to this Section 2.5(d) notwithstanding any suspension or
termination of Bank’s obligation to make Advances hereunder; and”


 

















 


and
inserting in lieu thereof the following:


 


“(d)                           Unused Revolving Line Facility Fee. A fee (the “Unused
Revoving Line Facility Fee”), which fee shall be paid quarterly, in
arrears, on the last day of each fiscal quarter, calculated as follows: (i) if
the Borrower’s EBITDA minus Capital Expenditures for the for the fiscal quarter
in which the Unused Revolving Line Facility Fee is due is less than Five
Million Dollars ($5,000,000), the Unused Revolving Line Facility Fee for such
fiscal quarter shall be 0.625% per annum of the average unused portion of the
Revolving Line for such quarter, as determined by Bank; and (ii) if the
Borrower’s EBITDA minus Capital Expenditures for the for the fiscal
quarter in which the Unused Revolving Line Facility Fee is due is greater than
or equal to Five Million Dollars ($5,000,000), the Unused Revolving Line
Facility Fee for such fiscal quarter shall be 0.375% per annum of the average
unused portion of the Revolving Line for such quarter, as determined by Bank.
Borrower shall not be entitled to any credit, rebate or repayment of any Unused
Revolving Line Facility Fee previously earned by Bank pursuant to this Section 2.5(d) notwithstanding
any suspension or termination of Bank’s obligation to make Advances hereunder;
and”


 


VI.              The Loan Modification Agreement shall be
amended by deleting the following, appearing in Section 4.1(c) thereof, in its
entirety:


 


“If
such termination is at Borrower’s election or at Bank’s election due to the
occurrence and continuance of an Event of Default, Borrower shall pay to Bank,
in addition to the payment of any other expenses or fees then-owing, a
termination fee in an amount equal to (i) for any termination within six (6) months
of the Effective Date, one percent (1%) of $50,000,000, and (ii) for any
termination during the period from six (6) months after the Effective Date
up to but not including the first anniversary of the Effective Date, one-half
of one percent (0.50%) of $50,000,000, provided that no termination fee shall be
charged if (i) the credit facility hereunder is replaced with a new
facility from Silicon Valley Bank, (ii) the credit facility hereunder is
terminated for any reason after the first anniversary of the Effective Date, or
(iii) the credit facility hereunder is terminated by Borrower solely as a
result of Bank’s determination to no longer offer LIBOR Advances pursuant to
the provisions of Sections 3.6(b) or 3.7(d).”


 


and
inserting in lieu thereof the following:


 


“If
such termination is at Borrower’s election or at Bank’s election due to the
occurrence and continuance of an Event of Default any time prior to the first
anniversary of the Third Loan Modification Effective Date, Borrower shall pay
to Bank, in addition to the payment of any other expenses or fees then-owing, a
termination fee in an amount equal to one percent (1.00%) of $35,000,000;
provided that no termination fee shall be charged if (i) the credit
facility hereunder is replaced with a new facility from Bank or its successors
or assigns, (ii) the credit facility hereunder is terminated for any
reason on or after the first anniversary of the Effective Date, or (iii) the
credit facility hereunder is terminated by Borrower solely as a result of Bank’s
determination to no longer offer LIBOR Advances pursuant to the provisions of
Sections 3.6(b) or 3.7(d).”


 


VII.          The Loan Modification Agreement shall be
amended by deleting the following, appearing in Section 6.2(a)(iii) thereof, in
its entirety:


 

















 


“(iii) within
five (5) days after the filing of quarterly financial statements with the
SEC, a Compliance Certificate signed by a Responsible
Officer, certifying that as of the end of such quarter, Borrower was in full
compliance with all of the terms and conditions of this Agreement, and setting
forth calculations showing compliance with the financial covenants set forth in
this Agreement and such other information as Bank shall reasonably request,
including, without limitation, a statement that at the end of such quarter
there were no held checks;”


 


and
inserting in lieu thereof the following:


 


“(iii) (A)
within five (5) days after the filing of quarterly financial statements
with the SEC and (B) within twenty five (25) days after the end of each
month that is not the last month of any fiscal quarter of the Borrower, a
Compliance Certificate signed by a Responsible Officer, certifying that as of
the end of such month or quarter, as applicable, Borrower was in full
compliance with all of the terms and conditions of this Agreement, and setting
forth calculations showing compliance with the financial covenants set forth in
this Agreement, as applicable and such other information as Bank shall
reasonably request, including, without limitation, a statement that at the end
of such month or quarter, as applicable there were no held checks;”


 


VIII.      The Loan
Modification Agreement shall be amended by deleting the following, appearing in
Section 6.2(a)(iv) thereof, in its entirety:


 


“(iv) as
soon as available, and in any event within forty-five (45) days after the end
of each fiscal quarter of Borrower and its Subsidiaries (including, without
limitation, each fiscal quarter ending December 31 of each fiscal year),
consolidated and consolidating quarterly unaudited financial statements of the
Borrower and its Subsidiaries;”


 


and
inserting in lieu thereof the following:


 


“(iv) as
soon as available, and in any event within the earlier to occur of (A) forty-five
(45) days after the end of each fiscal quarter of Borrower and its Subsidiaries
(including, without limitation, each fiscal quarter ending December 31 of
each fiscal year), and (B) five (5) days after filing with the SEC,
consolidated and consolidating quarterly unaudited financial statements of the
Borrower and its Subsidiaries;”


 


IX.             The Loan Modification Agreement shall he
amended by deleting the following, appearing in Section 6.2(a)(vi) thereof,
in its entirety:


 


“(vi) within
sixty (60) days after the end of each fiscal year of Borrower, annual operating
budgets (including income statements, balance sheets and cash flow statements,
by month) for the upcoming fiscal year of Borrower, as approved by Borrower’s
board of directors, together with any related business forecasts used in the
preparation of such annual financial projections;”


 


and
inserting in lieu thereof the following:


 


“(vi) within
sixty (60) days after the end of each fiscal year of Borrower, and promptly
upon any revisions or updates thereof, annual operating budgets (including
income statements, balance sheets and cash flow statements, by month) for the
upcoming fiscal year of Borrower, as approved by Borrower’s


 

















 


board
of directors, together with any related business forecasts used in the
preparation of such annual financial projections;”


 


X.                 The Loan Modification Agreement shall be
amended by deleting the following, appearing in Section 6.2(a)(ix) thereof,
in its entirety:


 


“(ix) Notwithstanding
anything in this clause (a) to the contrary, if Borrower’s unrestricted
cash and Cash Equivalents at Bank and/or the Availability Amount under the
Revolving Line is less than $15,000,000 at any time, Bank shall have the right,
but not the obligation, to require accounts receivable aging reports and
unbilled revenue reports as of the 15th and the 30th of each month.”


 


and
inserting in lieu thereof the following:


 


“(ix)                          Notwithstanding anything in this clause (a) to
the contrary, (i) if Borrower’s unrestricted cash and Cash Equivalents at
Bank plus the Availability Amount under the Revolving Line minus the
First Loan Modification Advance Amount is less than $20,000,000, Borrower shall
provide Bank with mid-month accounts receivable aging reports, unbilled revenue
reports and cash receipt journals, and (ii) in any event, at any time,
Borrower shall provide Bank the foregoing reports described in clause (i) hereof
and such other reports as may be required by Bank, in its sole discretion.”


 


XI.             The Loan Agreement shall be amended by
deleting the following, appearing in Section 6.3(c) thereof, in its
entirety:


 


“(c)                            Collection of Accounts. Borrower shall have the right to collect all Accounts,
unless and until a Default or an Event of Default has occurred and is
continuing. Accounts shall be deposited by Borrower into a lockbox account, or
such other “blocked account” as Bank may specify, pursuant to a blocked account
agreement in such form as Bank may specify in its good faith business judgment.
Whether or not an Event of Default has occurred and is continuing, Borrower
shall hold all Payments on, and proceeds of, Accounts in trust for Bank, and
Borrower shall immediately deliver all such payments and proceeds to Bank in
their original form, duly endorsed, to be applied to the Obligations pursuant
to the terms of Section 9.4 hereof; provided, however, in the event
no Default or Event of Default has occurred and is continuing, (a) through
and including the fiscal quarter of the Borrower ending March 31, 2009,
all Payments on and proceeds of, Accounts shall be transferred by Bank to an
operating account of Borrower maintained at Bank; and (b) for the period
beginning on April 1, 2009 and thereafter, at any time in which Borrower
maintains unrestricted cash and Cash Equivalents at Bank plus the Availability
Amount under the Revolving Line of no less than $20,000,000, then all Payments
on, and proceeds of, Accounts shall be transferred by Bank to an operating
account of Borrower maintained at Bank.”


 


and
inserting in lieu thereof the following:


 


“(c)                            Collection of Accounts. Borrower shall have the right to collect all Accounts,
unless and until a Default or an Event of Default has occurred and is
continuing. All payments on, and proceeds of, Accounts shall be deposited
directly by the applicable Account Debtor into a lockbox account, or such other
“blocked account” as Bank may specify, pursuant to a blocked account agreement
as Bank may specify in its good faith business judgment. Whether or not an
Event of Default has occurred and is continuing, Borrower shall hold all
Payments on, and proceeds of, Accounts in trust for Bank, and Borrower shall


 

















 


immediately
deliver all such Payments and proceeds to Bank in their original form, duly
endorsed, to be applied, at Bank’s sole discretion, to the Obligations pursuant
to the terms of Section 9.4 hereof; provided, however, in the event
no Default or Event of Default has occurred and is continuing, at any time in
which the sum of (i) Borrower’s unrestricted cash and Cash Equivalents at
Bank plus (ii) the Availability Amount under the Revolving Line minus
(iii) the First Loan Modification Advance Amount is equal to or greater
than than $20,000,000, then all Payments on, and proceeds of, Accounts shall be
transferred by Bank to an operating account of Borrower maintained at Bank.”


 


XII.         The
Loan Agreement shall be amended by deleting the following, appearing as Section 6.6
thereof, in its entirety:


 


“6.6 Access to Collateral; Books and Records; Field Exam. At reasonable times, on three (3) Business
Day’s notice (provided no notice is required if an Event of Default has
occurred and is continuing), Bank, or its agents, shall have the right to
inspect the Collateral and the right to audit and copy Borrower’s Books. The
foregoing inspections and audits shall be at Borrower’s expense, and the charge
therefor shall be $750 per person per day (or such higher amount as shall
represent Bank’s then-current standard charge for the same), plus reasonable
out-of-pocket expenses, but the total amount of any such audit shall not exceed
$7,500 plus reasonable out-of-pocket expenses. Absent the occurrence of an
Event of Default, no more than one such inspection or audit may occur in any
fiscal quarter. In the event Borrower and Bank schedule an audit more than ten (10) days
in advance, and Borrower cancels or seeks to reschedule the audit with less
than ten (10) days written notice to Bank, then (without limiting any of
Bank’s rights or remedies), Borrower shall pay Bank a fee of $1,000 plus any out-of-pocket
expenses incurred by Bank to compensate Bank for the anticipated costs and
expenses of the cancellation or rescheduling. The first such inspection and
audit shall be scheduled to occur with sixty (60) days of the Effective Date.”


 


and
inserting in lieu thereof
the following:


 


“6.6 Access to Collateral; Books and Records; Field Exam. At reasonable times, on three (3) Business
Day’s notice (provided no notice is required if an Event of Default has
occurred and is continuing), Bank, or its agents, shall have the right, up to
three (3) times annually (or, after an Event of Default, more frequently,
as Bank shall determine necessary, in its sole discretion) to inspect the
Collateral and the right to audit and copy Borrower’s Books. The foregoing inspections
and audits shall be at Borrower’s expense, and the charge therefor shall be
$750 per person per day (or such higher amount as shall represent Bank’s
then-current standard charge for the same), plus reasonable out-of-pocket
expenses, but the total amount of any such audit shall not exceed $7,500 per
audit plus out-of-pocket expenses. In the event Borrower and Bank schedule an
audit more than ten (10) days in advance, and Borrower cancels or seeks to
reschedule the audit with less than ten (10) days written notice to Bank,
then (without limiting any of Bank’s rights or remedies), Borrower shall pay
Bank a fee of $1,000 plus any out-of-pocket expenses incurred by Bank to
compensate Bank for the anticipated costs and expenses of the cancellation or
rescheduling. The first such inspection and audit shall be scheduled to occur
with sixty (60) days of the Effective Date.”


 


XIII.     The Loan Agreement shall be amended by deleting
the following, appearing as Section 6.8(a) thereof, in its entirety:


 

















 


“(a)                            Maintain its and its Domestic Subsidiaries’
primary depository, operating accounts and securities accounts with Bank and
Bank’s affiliates with all excess funds maintained at or invested through Bank
or an affiliate of Bank. Any Guarantor shall maintain all depository, operating
and securities accounts with Bank, or with an Affiliate of Bank, provided,
however, KPN International Network Services, Inc. shall have three (3) months
from the Effective Date to close, transfer or provide a Control Agreement
satisfactory to Bank with respect to any of its accounts that are not
maintained with Bank as of the Effective Date.”


 


and
inserting in lieu thereof the following:


 


“(a)                            Maintain all of its and its Domestic
Subsidiaries’ depository, operating accounts and securities accounts with Bank
and Bank’s affiliates, with all excess funds maintained at or invested through
Bank or an affiliate of Bank. Any Guarantor shall maintain all depository,
operating and securities accounts with Bank, or with an Affiliate of Bank. In
addition, without limiting the foregoing, Borrower and its Subsidiaries shall
maintain no less than forty percent (40%) of all consolidated funds, including,
without limitation, cash, Cash Equivalents and all other investments, in
Borrower’s name located at Bank or with an Affiliate of Bank.”


 


XIV.     The Loan
Agreement shall be amended by deleting the following, appearing as Section 6.9(i) thereof,
in its entirety:


 


“(i)                               Adjusted Quick Ratio. On a consolidated basis, a ratio of Quick
Assets to Current Liabilities minus Deferred Revenue of not less than the
following:


 




	
  Period

  	
   

  	
  Minimum Adjusted Quick Ratio

  
	
   

  	
   

  	
   

  
	
  Effective
  Date through February 28, 2009

  	
   

  	
  0.80:1.00

  
	
   

  	
   

  	
   

  
	
  March 1, 2009
  and thereafter

  	
   

  	
  0.85:1.00”

  






 


and
inserting in lieu thereof the following:


 


“(i)                               Adjusted Quick Ratio. On a consolidated basis, a ratio of Quick
Assets to Current Liabilities minus Deferred Revenue of not less than the
following:


 




	
  Period

  	
   

  	
  Minimum Adjusted Quick Ratio

  
	
   

  	
   

  	
   

  
	
  Beginning
  with the fiscal quarter ended December 31, 2008 and as of the end of
  each  fiscal quarter
  thereafter 

  	
   

  	
  0.80:1.00

  






 


XV.         The Loan Agreement shall be amended by
deleting the following, appearing as Section 6.9(ii), in its entirety:


 


“(ii)                            Consolidated EBITDA. Maintain, calculated on a consolidated basis
with each of its Subsidiaries, measured as of the end of each fiscal quarter,
EBITDA of at least (a) $7,500,000, with respect to the fiscal quarters
ending March 31, 2008 and June 30, 2008, (b) $7,000,000, with
respect to the fiscal quarter ending September 30, 2008, and (c) $10,000,000,
with respect to the


 














 


fiscal
quarter ending December 31, 2008 and with respect to each fiscal quarter
thereafter.”


 


and
inserting in lieu thereof the following:


 


“(ii)                               Consolidated EBITDA minus Capital Expenditures. Maintain, calculated on a consolidated
basis with each of its Subsidiaries, measured as of the end of each fiscal
quarter, EBITDA minus Capital Expenditures for such fiscal quarter, of
at least (a) ($1,000,000) with respect to the fiscal quarters ending December 31,
2008 and March 31, 2009; (b) $1.00 with respect to the fiscal quarter
ending June 30, 2009; (c) $1,750,000 with respect to the fiscal
quarter ending September 30, 2009, and (d) $3,500,000, with respect
to the fiscal quarter ending December 31, 2009 and with respect to each
fiscal quarter thereafter.”


 


XVI.              The Loan Agreement shall be amended by
deleting the following, appearing as Section 6.9(iii), in its entirety:


 


“(iii)                            Liquidity. Maintain, measured as of the last day of each fiscal month, Liquidity
of at least (a) for the fiscal month ended September 30, 2008 through
and including February 28, 2009, $10,000,000, and (b) for the fiscal
month ending March 31, 2009 and each fiscal month thereafter, $15,000,000.”


 


and
inserting in lieu thereof the following:


 


“(iii)                              Liquidity. Maintain at all times, to be measured as of the last day of each
month, Liquidity of at least (a) for the fiscal month ended December 31,
2008 through and including August 31, 2009, $17,500,000, and (b) for
the fiscal month ending September 30, 2009 and each fiscal month
thereafter, $20,000,000.”


 


XVII.          The
Compliance Certificate appearing as Exhibit C to the Loan Agreement
is hereby replaced with the Compliance Certificate attached as Exhibit A
hereto.


 


4.                                       CONSENT TO KPN. B.V. PAYMENTS.  Bank
hereby consents to Borrower making regularly scheduled payments when due to
KPN, B.V., a private limited liability company organized under the laws of the
Netherlands (“Creditor”), due
in March, 2009 and in June, 2009, as described in a certain Loan Agreement,
dated as of April 9, 2007 by and between Borrower and Creditor; provided
that (a) no Event of Default exists at the time such payment is made or
would exist after giving effect to such payment; and (b) Borrower provides
to Bank, no more than ten (10) days prior to making any such payment, evidence
satisfactory to Bank, in its sole discretion, that Borrower is in compliance
with the financial covenants contained in Section 6.9 of the Loan
Agreement or the requirements of Section 6.8(a) of the Loan
Agreement, and Borrower will be in pro-forma compliance with such Section 6.9
and Section 6.8(a) after giving effect to such payment.


 


5.                                       FEES. Borrower shall pay to Bank (i) a Revolving Line renewal fee equal
to One Hundred Seventy Five Thousand Dollars ($175,000) and (ii) a
modification fee equal to Fifty Two Thousand Five Hundred Dollars ($52,500),
which shall be due on or before the date hereof and shall be deemed fully
earned as of the date hereof. Borrower shall also reimburse Bank for all legal
fees and expenses incurred in connection with this modification to the Loan
Agreement.


 


6.                                       ADDITIONAL COVENANTS: RATIFICATION OF
PERFECTION CERTIFICATE.
Borrower is not a party to, nor is bound by, any license or other agreement
with respect to which Borrower is the licensee (a) that prohibits or
otherwise restricts Borrower from granting a security interest in Borrower’s
interest in such license or agreement or any other property, or (b) for which a default under or termination of could interfere with the
Bank’s right to sell any Collateral. Borrower shall provide written notice to
Bank within ten (10) days of entering or


 

















 


becoming
bound by any such license or agreement (other than over-the-counter software
that is commercially available to the public). Borrower shall take such steps
as Bank requests to obtain the consent of, or waiver by, any person whose
consent or waiver is necessary for (x) all such licenses or contract
rights to be deemed “Collateral” and for Bank to have a security interest in it
that might otherwise be restricted or prohibited by law or by the terms of any
such license or agreement (such consent or authorization may include a licensor’s
agreement to a contingent assignment of the license to Bank if Bank determines
that is necessary in its good faith judgment), whether now existing or entered
into in the future, and (y) Bank to have the ability in the event of a
liquidation of any Collateral to dispose of such Collateral in accordance with
Bank’s rights and remedies under the Loan Agreement and the other Loan
Documents. In addition, the Borrower hereby certifies that no Collateral is in
the possession of any third party bailee (such as at a warehouse). In the event
that Borrower, after the date hereof, intends to store or otherwise deliver the
Collateral to such a bailee, then Borrower shall first receive, the prior
written consent of Bank and such bailee must acknowledge in writing that the
bailee is holding such Collateral for the benefit of Bank. Borrower hereby
ratifies, confirms and reaffirms, all and singular, the terms and disclosures
contained in a certain Perfection Certificate dated as of October 2, 2007
and acknowledges, confirms and agrees the disclosures and information above
Borrower provided to Bank in the Perfection Certificate remain true and correct
in all material respects as of the date hereof.


 


7.                                            CONSISTENT CHANGES. The Existing Loan Documents are hereby
amended wherever necessary to reflect the changes described above. Without
limiting the foregoing, from and after the Third Loan Modification Execution
Date, each reference to the phrase “Agreement” in the Loan Agreement or “Loan
Agreement” in any of the other Loan Documents shall mean the Loan Agreement as
modified by this Loan Modification Agreement.


 


8.                                            RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all Existing Loan Documents and all
security or other Collateral granted to the Bank, and confirms that the
indebtedness secured thereby includes, without limitation, the Obligations.


 


9.                                            NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that
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.


 


I0.                                   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 make 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.


 


11.                                 RIGHT OF SET-OFF. In consideration of Bank’s agreement to enter
into this Loan Modification Agreement, Borrower hereby reaffirms and hereby
grants to Bank, a lien, security interest and right of set off as security for
all Obligations to Bank, whether now existing or hereafter arising upon and
against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under the
control of Bank (including a Bank
subsidiary) or in transit to any
of them. At any time after the occurrence and during the
continuance of an Event of Default, without demand or notice, Bank may set off
the same or any part thereof and apply the same to any liability or obligation
of Borrower even though unmatured and regardless of the adequacy of any other
collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO
EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH
SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT
TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED.


 

















 


12.                                      CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER AND
JUDICIAL REFERENCE. The
provisions of Section 11 of the Loan Agreement are hereby incorporated
herein in their entirety.


 


13.                                      COUNTERSIGNATURE. This Loan Modification Agreement shall
become effective only when it shall have been executed by Borrower and Bank.


 


[The remainder of this page is intentionally left
blank]


 

















 


This
Loan Modification Agreement is executed as a sealed instrument under the laws
of the Commonwealth of Massachusetts as of the Third Loan Modification
Effective Date.


 


	
  BORROWER:

  	
   

  	
  BANK:

  
	
   

  	
   

  	
   

  
	
  IBASIS,
  INC.

  	
   

  	
  SILICON
  VALLEY BANK

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Richard Tennant

  	
   

  	
  By:

  	
  /s/ Michael J. Tramack

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Richard Tennant

  	
   

  	
  Name:

  	
  Michael J. Tramack

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief Financial Officer

  	
   

  	
  Title:

  	
  Senior Vice President

  



 


Third Loan Modification Effective Date: December 30, 2008


 


Each
of the undersigned hereby ratifies, confirms and reaffirms, all and singular,
the terms and conditions of each of its Unconditional Guaranty, Security
Agreement, IP Security Agreement (if applicable) and Perfection Certificate, in
each case executed in connection with the Loan Agreement, and each
acknowledges, confirms and agrees that each such document shall remain in full
force and effect and in no way be limited by the execution of this Loan
Modification Agreement, or any other documents. instruments and/or agreements
executed and/or delivered in connection herewith.


 


	
  IBASIS
  GLOBAL, INC.

  	
   

  	
  IBASIS
  RETAIL, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  IBASIS
  SECURITIES CORPORATION

  	
   

  	
  KPN
  INTERNATIONAL NETWORK

  SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  



 

















 


EXHIBIT A


 


COMPLIANCE CERTIFICATE


 


	
  TO:

  	
  SILICON
  VALLEY BANK

  	
  Date:

  	
   

  
	
  FROM:
  

  	
  IBASIS,
  INC.

  	
   

  



 


The
undersigned authorized officer of IBASIS, INC. (“Borrower”) certifies that under the terms and conditions
of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance
for the period ending
                
with all required covenants except as noted below, (2) there are no Events
of Default, (3) all representations and warranties in the Agreement are
true and correct in all material respects on this date except as noted below;
provided, however, that such materiality qualifier shall not be applicable to
any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, (4) Borrower,
and each of its Subsidiaries, has timely filed all required tax returns and
reports, and Borrower has timely paid all foreign, federal, state and local
taxes, assessments, deposits and contributions owed by Borrower except as
otherwise permitted pursuant to the terms of Section 5.9 of the Agreement,
and (5) no Liens have been levied or claims made against Borrower or any
of its Subsidiaries, if any, relating to unpaid employee payroll or benefits of
which Borrower has not previously provided written notification to Bank.
Attached are the required documents supporting the certification. The
undersigned certifies that these are prepared in accordance with GAAP
consistently applied from one period to the next except as explained in an accompanying
letter or footnotes. The undersigned acknowledges that no borrowings may be
requested at any time or date of determination 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 is delivered. Capitalized
terms used but not otherwise defined herein shall have the meanings given them
in the Agreement.


 


Please
indicate compliance status by circling Yes/No under “Complies” column.


 


	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly
  consolidated and consolidating financial statements with Compliance
  Certificate

  	
   

  	
  The
  earlier of (i) quarterly,  within 45 days and (ii) within 5 days after filing with the SEC

  	
   

  	
  Yes   No

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Compliance
  Certificate

  	
   

  	
  Monthly
  within 25 days for each month that is not a quarter-end

  	
   

  	
  Yes   No

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annual
  financial statement (CPA Audited) + CC

  	
   

  	
  FYE
  within 120 days

  	
   

  	
  Yes   No

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10-Q,
  10-K and 8-K

  	
   

  	
  Within
  5 days after filing with SEC

  	
   

  	
  Yes   No

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A/R &
  A/P Agings, Borrowing Base and Transaction Reports

  	
   

  	
  Monthly
  within 15 days*

  	
   

  	
  Yes   No

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other
  filings with the SEC or any other regulatory agency

  	
   

  	
  Within
  10 days after filing

  	
   

  	
  Yes   No

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Projections

  	
   

  	
  Annually
  within FYE and when amended

  	
   

  	
   

  



 






*Bank may, in its sole discretion, require
Borrower to provide mid-month accounts receivable aging reports, unbilled
revenue reports, cash receipt
journals and other reports as may
be required by Bank, in its sole discretion


 


The following Intellectual Property was
registered after the Effective Date and since the last Compliance Certificate
was provided to the Bank (if no registrations, state “None”)


 


	
  Financial
  Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  
	
  Maintain:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum
  Adjusted Quick Ratio (Quarterly)

  	
   

  	
  0.80:1.0

  	
   

  	
         :1.0

  	
   

  	
  Yes   No

  
	
  Minimum
  Consolidated EBITDA minus Capital Expenditures (Quarterly)

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
  Yes   No

  
	
  Minimum
  Liquidity (Monthly)

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
  Yes   No

  



 

















 


The
following financial covenant analyses and information set forth in Schedule I
attached hereto are true and accurate as of the date of this Certificate.


 


The
following are the exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions to note.”)


 


 


	
  IBASIS,
  INC.

  	
   

  	
  BANK USE
  ONLY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Received by:

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
  Name:

  	
   

  	
   

  	
  Date:

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Verified:

  	
   

  
	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance
  Status:

  	
  Yes

  	
  No

  
											



 

















 


Schedule 1 to Compliance Certificate


 


Financial Covenants of Borrower


 


Dated:


 


I.                      Adjusted Quick Ratio
(Section 6.9(i))


 


Required:
Maintain, on a consolidated basis, a ratio of Quick Assets to Current
Liabilities minus Deferred Revenue of not less than the following:


 


	
  Period

  	
   

  	
  Minimum Adjusted Quick Ratio

  
	
   

  	
   

  	
   

  
	
  Beginning
  with the fiscal quarter ended December 31, 2008 and as of the end of
  each  fiscal quarter
  thereafter 

  	
   

  	
  0.80:1.00

  



 


Actual:


 


	
  A.

  	
  Aggregate
  value of the unrestricted cash and cash equivalents of Borrower and its
  Subsidiaries at Bank

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
  Aggregate
  value of the net billed accounts receivable of Borrower and its Subsidiaries

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  C. 

  	
  Aggregate
  value of the Investments with maturities of fewer than 12 months  of Borrower and it Subsidiaries 

  	
   

  	
  $ 

  
	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
  Quick
  Assets (the sum of lines A through C)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
  Aggregate
  value of Obligations to Bank

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
  Aggregate
  value of liabilities of Borrower and its Subsidiaries (including all
  Indebtedness) that matures within one (1)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  G.

  	
  Current
  Liabilities (the sum of lines E and F)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
  Aggregate
  value of all amounts received or invoiced by Borrower in advance of
  performance under contracts and not yet recognized as revenue

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  I

  	
  Line
  G minus line H

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  J.

  	
  Adjusted
  Quick Ratio (line D divided by line I)

  	
   

  	
   

  



 


Is line J equal to or greater than          :1:00?


 


o   No, not in compliance                                                                       o   Yes, in compliance


 


II.                  Consolidated EBITDA of Borrower and its Subsidiaries (Section 6.9(ii))


 

















 


Required:
Maintain, calculated on a consolidated basis with each of its Subsidiaries,
measured as of the end of each fiscal quarter, EBITDA minus Capital
Expenditures for such fiscal quarter, of at least (a) ($1,000,000) with
respect to the fiscal quarter ending March 31, 2009; (b) $1.00 with
respect to the fiscal quarter ending June 30, 2009; (c) $1,750,000
with respect to the fiscal quarter ending September 30, 2009, and (d) $3,500,000,
with respect to the fiscal quarter ending December 31, 2009 and with
respect to each fiscal quarter thereafter.


 


Actual:


 


	
  A.

  	
  Net
  IncomeS

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
  Interest
  Expense

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
  Depreciation
  expense (to the extent deducted from Net Income)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
  Amortization
  expense (to the extent deducted from Net Income)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
  Income
  Tax Expense

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
  Consolidated
  EBITDA (line A plus line B plus line C plus line D plus line E)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  G

  	
  Capital
  Expenditures

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
  ADJUSTED
  EBITDA (line F minus line G)

  	
   

  	
   

  



 


Is line H equal to or greater than $                                                           ?


 


o    No, not in compliance                                                                       o  Yes, in compliance


 

















 


III.                                 LIQUIDITY of Borrower (Section 6.9(iii))


 


Required:   Maintain at all times, measured as of the
last day of each fiscal month, Liquidity of at least (a) for the fiscal
month ended December 31, 2008 through and including August 31, 2009,
$17,500,000, and (b) for the fiscal month ending September 30, 2009
and each fiscal month thereafter, $20,000,000.


 


Actual:


 


	
  A.

  	
  Unrestricted
  cash at Bank

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
  Availability
  Amount

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
  First
  Loan Modification Advance Amount

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
  LIQUIDITY
  (line A plus line B minus line C)

  	
   

  	
  $

  



 


Is line D equal to or greater than $                            


 


o  No, not in compliance                                                                       o  Yes, in compliance