Document:

exv10w18

 

Exhibit 10.18

FIFTH LOAN MODIFICATION AGREEMENT

     This Fifth Loan Modification Agreement (this “Loan Modification Agreement”) is entered into as
of October 15, 2004, by and between SILICON VALLEY BANK, a California-chartered bank, 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, doing business under the name “Silicon Valley East” (“Bank”) and NSI SOFTWARE,
INC., successor by merger with NETWORK SPECIALISTS, INCORPORATED, a Delaware corporation, with
offices at Two Hudson Place, Suite 700, Hoboken, New Jersey 07030 (“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 16, 2003, evidenced by, among other documents, a certain Loan and
Security Agreement dated as of October 16, 2003 between Borrower and Bank, as amended (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.

	 	 	 	Modification to Loan Agreement.

	 	A.	 	Section 1(A)(i) of the Schedule to the Loan Agreement is hereby
amended by deleting the following text appearing therein :
	 
	 	 	 	“(i) $4,500,000.00 at any time outstanding (the “Maximum Credit Limit”);
minus”
	 
	 	 	 	and substituting the following text therefor:
	 
	 	 	 	“(i) $4,750,000.00 at any time outstanding (the “Maximum Credit Limit”);
minus”
	 
	 	B.	 	Section 1(B)(i) of the Schedule to the Loan Agreement is hereby
amended by deleting the following text appearing therein:
	 
	 	 	 	“(i) 75% of the amount of the Borrower’s Eligible Receivables; minus”
	 
	 	 	 	and substituting the following text therefor:

 

 

	 	 	 	“(i) 75% of the amount of the Borrower’s Eligible Receivables, exclusive of
Deferred Revenue Offsets and rebate accruals; provided, however, in the
event that Borrower has an Adjusted Quick Ratio (to be tested on a monthly
basis, as of the end of each month) of at least 1.25 to 1.0, then Silicon
will not exclude such Deferred Revenue Offsets or rebate accruals; minus”
	 
	 	C.	 	Section 2 of the Schedule to the Loan Agreement is hereby
amended to delete the text “$5,000.00” appearing in the Minimum Monthly
Interest section and substituting the text “Not applicable” therefor.
	 
	 	D.	 	Section 3 of the Schedule to the Loan Agreement is hereby
amended to delete the following text appearing therein:
	 
	 	 	 	“Unused Line Fee: (Intentionally omitted).”
	 
	 	 	 	and substituting the following text therefor:
	 
	 	 	 	“Unused Line Fee: In the event, in any calendar month (or portion thereof at
the beginning and end of the term hereof), the average daily principal
balance of the Loans outstanding during the month is less than the amount of
the Maximum Credit Limit, Borrower shall pay Silicon an unused line fee in
an amount equal to 0.50%% per annum on the difference between the amount of
the Maximum Credit Limit and the average daily principal balance of the
Loans outstanding during the month, which unused line fee shall be computed
and paid monthly, in arrears, on the last day of each month.”
	 
	 	E.	 	Section 4 of the Schedule to the Loan Agreement is hereby
amended by deleting same in its entirety and substituting the following
therefor:

	 	“4. 	 	 Maturity Date
	 
	 	 	 	(Section 6.1) October 14, 2005.”

	 	F.	 	Section 5a.(i)(n) of the Schedule to the Loan Agreement and
Section 5a.(ii) is hereby amended by deleting same its entirety and
substituting the following therefor:

	 	“(n) 	 	($1,600,000) at September 30, 2004;
	 
	 	(o)	 	$1,600,000 at October 31, 2004;
	 
	 	(p)	 	$600,000 at November 30, 2004;
	 
	 	(q)	 	$2,300,000.00 at December 31, 2004
	 
	 	(r)	 	$700,000 at January 31, 2005;
	 
	 	(s)	 	($300,000) at February 28, 2005;
	 
	 	(t)	 	$600,000 at March 31, 2005;
	 
	 	(u)	 	($600,000) at April 30, 2005;
	 
	 	(v)	 	($1,650,000) at May 31, 2005;

 

 

	 	(w)	 	($400,000) at June 30, 2005;
	 
	 	(x)	 	($1,800,000) at July 31, 2005;
	 
	 	(y)	 	($3,000,000) at August 31, 2005;
	 
	 	(z)	 	($1,800,000) at September 30, 2005;
	 
	 	(aa)	 	($2,500,000) at October 31, 2005;

plus

	 	(ii)	 	80% of all consideration received after October 8, 2004 from proceeds
from the issuance of any equity securities of the Borrower and/or
subordinated debt incurred by the Borrower.”
	 
	 	G.	 	Section 5b. of the Schedule to the Loan Agreement is hereby
amended by deleting the text “$750,000.00” appearing in the Minimum Cash or
Excess Availability covenant and substituting the text “$300,000.00” therefor.
	 
	 	H.	 	Section 8(4) of the Schedule to the Loan Agreement is hereby
amended by deleting subsection (c) of the definition of “Intellectual Property
Granting Event” set forth therein.
	 
	 	I.	 	Section 8 of the Loan Agreement is hereby amended to add the
following definitions of “Adjusted Quick Ratio” and “Deferred Revenue Offsets”
as they would appear therein alphabetically:
	 
	 	 	 	“”Adjusted Quick Ratio” is the ratio of (i) Quick Assets to (ii) Current
Liabilities minus Borrower’s Deferred Revenue liabilities.
	 
	 	 	 	“Deferred Revenue Offsets” is calculated by Silicon and is equal to either,
at Silicon’s discretion in each instance, (i) 35% of the total Deferred
Revenue liabilities of Borrower or (ii) the total amount of Deferred Revenue
liabilities for each specific Account Debtor related to specific Eligible
Receivables.”

4. FEES. Borrower shall pay to Bank on the date hereof a fully-earned, non-refundable
renewal fee of Twenty Three Thousand Seven Hundred Fifty Dollars ($23,750.00). Borrower shall
reimburse Bank for all legal fees and expenses incurred in connection with this amendment to the
Existing Loan Documents.

5. RATIFICATION OF PERFECTION CERTIFICATE. Borrower hereby ratifies, confirms, and
reaffirms, all and singular, the terms and disclosures contained in a certain Perfection
Certificate delivered to the Bank on or about October 16, 2003, and acknowledges, confirms and
agrees the disclosures and information provided therein has 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 Borrower has no
offsets, defenses, claims, or counterclaims against the 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 the Bank, whether known or unknown, at law or in equity, all of tem are
hereby expressly WAIVED and Borrower hereby RELEASES the Bank from any liability hereunder.

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.

 

 

     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:

NSI SOFTWARE, INC. , successor by merger with

NETWORK SPECIALISTS, INCORPORATED

	 	 	 	 	 
	By:

	 	/s/ S. Craig Huke
	 	 
	 

	 	 	 	 
	Name:

	 	S. Craig Huke	 	 
	Title:

	 	Chief Financial Officer	 	 

BANK:

SILICON VALLEY BANK, d/b/a

SILICON VALLEY EAST

	 	 	 	 	 
	By:

	 	/s/ John V. Atenasoff
	 	 
	 

	 	 	 	 
	Name:

	 	John V. Atenasoff	 	 
	Title:

	 	Senior Vice Presidentexv10w19

 

Exhibit 10.19

SEVENTH LOAN MODIFICATION AGREEMENT

     This Seventh Loan Modification Agreement (this “Loan Modification Agreement”) is entered into
as of January 1, 2006, 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, doing business under the name “Silicon Valley East” (“Bank”) and NSI SOFTWARE,
INC., successor by merger with NETWORK SPECIALISTS, INCORPORATED, a Delaware corporation with
offices at Two Hudson Place, Suite 700, Hoboken, New Jersey 07030 (“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
agreement dated as of October 16, 2003, evidenced by, among other documents, a certain Loan and
Security Agreement dated as of October 16, 2003 between Borrower and Bank, as amended (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.

	 	 	 	Modifications to Loan Agreement.

	 	A.	 	Section 4 of the Schedule to the Loan Agreement is hereby
amended by deleting same in its entirety and substituting the following text
therefor:

	 	“4. 	 	 Maturity Date
	 
	 	 	 	(Section 6.1) March 1, 2006.”

	 	B.	 	Section 1 of the Schedule to the Loan Agreement is hereby
amended by deleting the following text appearing therein:
	 
	 	 	 	“Letter of Credit/Foreign Exchange Contact/Cash Management Services Sublimit
	 
	 	 	 	(Section 1.5, 1.6): $1,000,000.00”
	 
	 	 	 	and substituting the following text therefor:

 

 

	 	 	 	“Letter of Credit/Foreign Exchange Contact/Cash Management Services Sublimit
	 
	 	 	 	(Section 1.5, 1.6): $2,500,000.00”

4. FEES. Borrower shall pay to Bank on the date hereof a fully-earned, non-refundable
renewal fee of Three Thousand Sixty Seven Dollars ($3,067.00). Borrower shall also reimburse Bank
for all legal fees and expenses incurred in connection with this amendment to the Existing Loan
Documents.

5. RATIFICATION OF PERFECTION CERTIFICATE. Borrower hereby ratifies, confirms, and
reaffirms, all and singular, the terms and disclosures contained in a certain Perfection
Certificate delivered to the Bank on or about October 16, 2003, and acknowledges, confirms and
agrees the disclosures and information provided therein has 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 Borrower has no
offsets, defenses, claims, or counterclaims against the 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 the Bank, whether known or unknown, at law or in equity, all of tem are
hereby expressly WAIVED and Borrower hereby RELEASES the 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.

 

 

     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:

NSI SOFTWARE, INC., successor by merger with

NETWORK SPECIALISTS, INCORPORATED

	 	 	 	 	 
	By:

	 	/s/ S. Craig Huke
	 	 
	 

	 	 	 	 
	Name:

	 	S. Craig Huke	 	 
	Title:

	 	Chief Financial Officer	 	 

BANK:

SILICON VALLEY BANK, d/b/a

SILICON VALLEY EAST

	 	 	 	 	 
	By:

	 	/s/ Michael Tramack
	 	 
	 

	 	 	 	 
	Name:

	 	Michael Tramack	 	 
	Title:

	 	Vice President

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