EX-99.2 4 g94003exv99w2.txt EX-99.2 AMENDMENT TO LOAN DOCUMENTS (EXIM PROGRAM) Exhibit 99.2 SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS (EXIM PROGRAM) BORROWER: VERSO TECHNOLOGIES, INC. PROVO PREPAID (DELAWARE) CORP. TELEMATE.NET SOFTWARE, INC. DATE: MARCH 15, 2005 THIS AMENDMENT TO LOAN DOCUMENTS (EXIM PROGRAM) is entered into between Silicon Valley Bank ("Silicon") and the borrower named above ("Borrower"). The Parties agree to amend the Loan and Security Agreement (Exim Program) between them, dated February 12, 2003 (as otherwise amended, if at all, the "Loan Agreement"), as follows, effective as of the date hereof; provided, however, that prior to any of the following modifications going into effect, Silicon must obtain the finalized, written approval from Exim Bank regarding such modifications. (Capitalized terms used but not defined in this Amendment shall have the meanings set forth in the Loan Agreement.) 1. MODIFIED CREDIT LIMIT. Section 1 of the Schedule to Loan and Security Agreement (Exim Program) is hereby amended in its entirety to read as follows: 1. CREDIT LIMIT (Section 1.1): An amount not to exceed the lesser of a total of $10,000,000 at any one time outstanding (the "Maximum Credit Limit"); or the sum of (a) and (b) below: (a) 85% (an "Advance Rate") of the amount of Eligible Receivables (as defined in Section 8 above), plus (b) 65% (an "Advance Rate") of the value of Borrower's Eligible Inventory (as defined in Section 8 above).
-1- SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS (EXIM) Notwithstanding the foregoing, the Maximum Credit Limit shall be $7,500,000; provided, however, if at September 30, 2005, the Borrower achieves actual year to date net income on a consolidated basis equal to at least 95% of the projected amount of year to date net income on a consolidated basis for such period as set forth in the Borrower's Fiscal Year 2005 projections (a copy of which has previously been provided to Silicon) (the "YTD Net Income Requirement"), then in such instance the Maximum Credit Limit shall increase to $10,000,000. Notwithstanding the foregoing, the total outstanding Obligations under this Loan Agreement and under the Non-Exim Agreement (as defined below) shall not at any time exceed $10,000,000 (the "Overall Credit Limit"); provided, however, until the Borrower has satisfied the YTD Net Income Requirement, if ever, the Overall Credit Limit shall be $7,500,000. Moreover, Borrower shall at all times ensure that the outstanding principal balance of the Credit Accommodations (as defined in the Exim Borrower Agreement, as defined below) that is supported by Export-Related Inventory does not exceed sixty percent (60%) of the sum of the total outstanding principal balance of the Disbursements (as defined in the Exim Borrower Agreement) and the undrawn face amount of all outstanding Commercial Letters of Credit (as defined in the Exim Borrower Agreement). Additionally, Loans made pursuant to subclause (b) above will be made based upon Borrower's export sales as a percentage of its total sales, which percentage will be updated by Borrower on a monthly basis, as determined by Borrower's sales during the preceding six months. Silicon will conduct quarterly examinations, at a minimum, of Borrower's books and
-2- SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS (EXIM) records to verify Borrower's reporting of its export sales as a percentage of total sales. Borrower shall provide Silicon with a copy of the applicable sales contract/purchase order in support of each Loan being requested prior to each Loan, if any, being made hereunder. Silicon may, from time to time, modify the Advance Rates, in its good faith business judgment, upon notice to the Borrower, based on changes in collection experience with respect to Receivables, its evaluation of the Inventory or other issues or factors relating to the Receivables, Inventory or other Collateral. Loans will be made to each Borrower based on the Eligible Receivables and Eligible Inventory of each Borrower, subject to the Maximum Credit Limit set forth above for all Loans to all Borrowers combined. LETTER OF CREDIT SUBLIMIT (Section 1.5): $2,500,000; provided, however, that the total Letter of Credit Sublimit and the Foreign Exchange Contract Sublimit shall not, at any time, exceed $2,500,000 in the aggregate under this Agreement and the Non-Exim Agreement. FOREIGN EXCHANGE CONTRACT SUBLIMIT $1,000,000; provided, however, that the total Letter of Credit Sublimit and Foreign Exchange Contract Sublimit shall not, at any time, exceed $1,000,000 in the aggregate under this Agreement and the Non-Exim Agreement. Borrower may enter into foreign exchange forward contracts with Silicon, on its standard forms, under which Borrower commits to purchase from or sell to Silicon a set amount of foreign currency more than one business day after the contract date (the "FX Forward Contracts"); provided that (1)
-3- SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS (EXIM) at the time the FX Forward Contract is entered into Borrower has Loans available to it under this Agreement in an amount at least equal to 10% of the amount of the FX Forward Contract; and (2) the total FX Forward Contracts at any one time outstanding may not exceed 10 times the amount of the Foreign Exchange Contract Sublimit set forth above; and (3) the total Letter of Credit Sublimit and the Foreign Exchange Contract Sublimit shall not, at any time, exceed $1,000,000. Silicon shall have the right to withhold, from the Loans otherwise available to Borrower under this Agreement, a reserve (which shall be in addition to all other reserves) in an amount equal to 10% of the total FX Forward Contracts from time to time outstanding, and in the event at any time there are insufficient Loans available to Borrower for such reserve, Borrower shall deposit and maintain with Silicon cash collateral in an amount at all times equal to such deficiency, which shall be held as Collateral for all purposes of this Agreement. Silicon may, in its discretion, terminate the FX Forward Contracts at any time that an Event of Default occurs and is continuing. Borrower shall execute all standard form applications and agreements of Silicon in connection with the FX Forward Contracts, and without limiting any of the terms of such applications and agreements, Borrower shall pay all standard fees and charges of Silicon in connection with the FX Forward Contracts.
2. MODIFIED INTEREST RATE. The Interest Rate set forth in Section 2 of the Schedule to the Loan Agreement (Exim Program) is hereby amended in its entirety to read as follows: INTEREST RATE (Section 1.2): A rate equal to the "Prime Rate" in effect from time to time, plus 2.0% per annum; provided, however, that the foregoing interest rate shall be reduced to a rate equal to the "Prime Rate" in effect from time to time, plus 1.50% per annum as set forth below if Borrower achieves EBITDA (as
-4- SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS (EXIM) defined below) in excess of $0.00 for two consecutive fiscal quarters ending after the date of this Agreement and for so long as Borrower maintains EBITDA in excess of $0.00 for each fiscal quarter ending thereafter. If Borrower does not maintain EBITDA in excess of $0.00, the interest rate will be increased to a rate equal to the "Prime Rate" in effect from time to time plus 2.0% per annum. For purposes hereof, "EBITDA" means, on a consolidated basis, Borrower's earnings before interest, taxes, depreciation and other non-cash amortization expenses and other non-cash expenses, determined in accordance with generally accepted accounting principles, consistently applied. Changes in the interest rate based on the Borrower's EBITDA as provided above shall go into effect as of the first day of the month following the month in which Borrower's financial statements are received, reviewed and approved by Silicon. If, based on the Borrower's EBITDA as shown in Borrower's financial statements there is to be an increase in the interest rate, the interest rate increase may be put into effect by Silicon as of the first day of the month closest to the date on which the financial statements are due, even if the delivery of the financial statements is delayed. Notwithstanding the foregoing, in no event shall an interest rate reduction go into effect if, at the date it is to go into effect, a Default or Event of Default has occurred and is continuing. Interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed. "Prime Rate" means the rate announced from time to time by Silicon as its "prime rate;" provided that the "Prime Rate" in effect on any day shall not be less than 4.25% per annum; it is a base rate upon which other rates charged by Silicon are based, and it is not necessarily the best rate available at Silicon. The interest rate
-5- SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS (EXIM) applicable to the Obligations shall change on each date there is a change in the Prime Rate.
3. MODIFIED COLLATERAL MONITORING FEE. The Collateral Monitoring Fee set forth in Section 3 of the Schedule to the Loan Agreement (Exim Program) is hereby amended in its entirety to read as follows: Collateral Monitoring Fee: $1,000, per month, payable in arrears (prorated for any partial month at the beginning and at termination of this Agreement).
4. MODIFIED MATURITY DATE. Section 4 of the Schedule to Loan and Security Agreement (Exim Program) is hereby amended to read as follows: 4. MATURITY DATE (Section 6.1): March ____, 2006 [364 days from the date of this Amendment].
5. CONSENTS. Silicon previously executed, under the Non-Exim Agreement, the following consents: (i) Consent dated February 4, 2005 with respect to the Securities Transaction as defined therein and (ii) Limited Waiver and Amendment to Loan Documents dated February 23, 2005 with respect to the Jacksonville Technology Associates, Inc. Purchase Transaction as defined therein (collectively, the "Consents"). Silicon hereby consents, under the Loan Agreement, to the aforementioned transactions on the terms provided for in the Consents. 6. PROVO PREPAID (DELAWARE) CORP. AND NEEDHAM (DELAWARE) CORP. Borrower represents and warrants that each of Provo Prepaid (Delaware) Corp. and Needham (Delaware) Corp. is (i) a wholly-owned subsidiary of Verso Technologies, Inc., and (ii) is and will remain throughout the term of the Loan Agreement, inactive with assets having an aggregate value of no more than $0.00. Borrower covenants and agrees that while the Loan Agreement is in effect, Borrower shall not transfer any assets or Collateral to either Provo Prepaid (Delaware) Corp. or Needham (Delaware) Corp. 7. FEES. In consideration for Silicon entering into this Agreement, Borrower shall pay Silicon a fee in the amount of $100,000 as follows: (i) $75,000, payable concurrently herewith and (ii) $25,000, payable if and when the Borrower satisfies the YTD Net Income Requirement, which fees shall be non-refundable and in addition to all interest and other fees payable to Silicon under the Loan Documents. Silicon is authorized to charge said fees to Borrower's loan account. 8. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon that all representations and warranties set forth in the Loan Agreement, as amended hereby, are true and correct. 9. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior written amendments to the Loan Agreement signed by Silicon and Borrower, and the other written documents and agreements between Silicon and Borrower set forth in full all of the -6- SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS (EXIM) representations and agreements of the parties with respect to the subject matter hereof and supersede all prior discussions, representations, agreements and understandings between the parties with respect to the subject hereof. Except as herein expressly amended, all of the terms and provisions of the Loan Agreement, and all other documents and agreements between Silicon and Borrower shall continue in full force and effect and the same are hereby ratified and confirmed. BORROWER: SILICON: VERSO TECHNOLOGIES, INC. SILICON VALLEY BANK BY /s/ Juliet M. Reising BY /s/ Peter Bendolis ---------------------------------- ------------------------------------- PRESIDENT OR VICE PRESIDENT TITLE Relationship Manager ---------------------------------- BY /s/ David Ryan ---------------------------------- SECRETARY OR ASS'T SECRETARY BORROWER: BORROWER: PROVO PREPAID (DELAWARE) CORP. (FKA TELEMATE.NET SOFTWARE, INC. NACT TELECOMMUNICATIONS, INC.) BY /s/ Juliet M. Reising BY /s/ Juliet M. Reising ---------------------------------- ------------------------------------- PRESIDENT OR VICE PRESIDENT PRESIDENT OR VICE PRESIDENT BY /s/ David Ryan BY /s/ David Ryan ---------------------------------- ------------------------------------- SECRETARY OR ASS'T SECRETARY SECRETARY OR ASS'T SECRETARY -7- SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS (EXIM) CONSENT The undersigned acknowledges that its consent to the foregoing Agreement is not required, but the undersigned nevertheless does hereby consent to the foregoing Agreement and to the documents and agreements referred to therein and to all future modifications and amendments thereto, and any termination thereof, and to any and all other present and future documents and agreements between or among the foregoing parties. Nothing herein shall in any way limit any of the terms or provisions of the Cross-Corporate Continuing Guaranty of the undersigned, all of which are hereby ratified and affirmed. CLARENT CANADA LTD. NEEDHAM (DELAWARE) CORP. (FKA MCK COMMUNICATIONS, INC.) BY /s/ Juliet M. Reising BY /s/ Juliet M. Reising ---------------------------------- ------------------------------------- TITLE Director TITLE Director ------------------------------- ---------------------------------- -8-