Amendment and Extension Agreement to Loan and Security Agreement between Pilot Network Services, Inc. and Greyrock Capital

Summary

This agreement, dated October 26, 2000, is between Pilot Network Services, Inc. and Greyrock Capital (a division of Banc of America Commercial Finance Corporation). It amends their existing Loan and Security Agreement and Secured Promissory Note by extending the loan maturity date to January 31, 2001, and adding new financial covenants. Pilot Network Services must meet specific net loss limits and maintain minimum cash balances at set dates. Greyrock gains expanded audit rights, and the borrower must establish lockbox agreements with its banks. Any breach of these new covenants is an immediate default.

EX-10.2 2 0002.txt Amendment and Extension Agreement Borrower: Pilot Network Services, Inc. Address: 1030 Marina Village Parkway Alameda, California 94501 Date: October 26, 2000 THIS AMENDMENT AND EXTENSION AGREEMENT is entered into between GREYROCK CAPITAL, a Division of Banc of America Commercial Finance Corporation ("Greyrock"), whose address is 10880 Wilshire Blvd., Suite 1850, Los Angeles. CA 90024 and the borrower named above ("Borrower"). The Parties agree to amend the Loan and Security Agreement between them, dated November 9, 1999 (the "Loan Agreement") and the Secured Promissory Note made by Borrower to the order of Greyrock dated November 9, 1999 in the original principal amount of $3,000,000 (the "Note"), as follows. (This Amendment, the Loan Agreement, the Note any prior written amendments to the foregoing, signed by Greyrock and the Borrower, and all other written documents and agreements between Greyrock and the borrower are referred to herein collectively as the "Loan Documents". Capitalized terms used but not defined in this Amendment, shall have the meanings set forth in the Loan Agreement.) 1. Extension, The Maturity Date is extended to January 31. 2001, and the provisions for automatic extension of the Maturity Date set forth in Section 6.1 of the Loan Agreement are deleted, so that Section 6.1 of the Loan Agreement will read in its entirety as follows: "6.1 Maturity Date. This Agreement shall continue in effect until January 31. 2001 (the 'Maturity Date')." 2. Note Extension. The date "October 31, 2000" in the first paragraph of the Note is amended to read "January 31,2001". 3. Additional Covenants. The following new Section 8 is hereby added to the Schedule to the Loan Agreement. "8. Additional Covenants. The Borrower covenants as follows: --------------------- (1) Net Income. Borrower shall have net income or loss ----------- (computed on the basis of generally accepted accounting principles) in each of the following months in the following amounts: October 2000 Maximum net loss of $2,750,000 -1- Greyrock Capital Amendment and Extension Agreement __________________________________________________________ November 2000 Maximum net loss of $2,750,000 December 2000 Maximum net loss of $1,750,000 January 2001 Maximum net loss of $1,500,000 (2) Cash on Hand, Borrower shall maintain cash on hand of not ------------- less than the following amounts at the following dates, and shall provide evidence of the same to Greyrock, reasonably satisfactory to Greyrock, by the said dates: at 10/31/00: $4,250,000 at 11/17/00: $4,500,000 at 11/30/00: $4,500,000 at 12/15/00: $4,500,000 at 12/31/00: $3,750,000 at 01/12/01: $4,000,000 at 01/31/01: $3,500,000. (3) Audits. Without limiting any of the provisions of Section ------ 5.3 of the Loan Agreement, Greyrock shall have the right, once every 30 days, to conduct inspections and audits on Borrower's premises, to inspect the Collateral and to audit and copy Borrower's books and records, and the charge therefor shall be $600 per person per day (or such higher amount as shall represent Greyrock's then current standard charge for the same), plus reasonable out of pocket expenses. The limitations on the cost and number of such audits in Section 5.3 of the Loan Agreement shall not apply to audits hereunder. (4) Lockbox Agreements. Borrower shall enter into, and shall ------------------ cause its banks to enter into, lockbox and/or restricted account agreements, on terms acceptable to Greyrock in its good faith business judgment, no later than November 15, 2000. Any breach of any of the foregoing covenants in this Section 8 shall Constitute an immediate Event of Default, and the same shall not be subject to any cure period provided in Section 7.1 of the Loan Agreement." 4. Representations True. Borrower represents and warrants to Greyrock that all representations and warranties set forth in the Loan Agreement, as amended hereby, are true and correct. -2- Greyrock Capital Amendment and Extension Agreement __________________________________________________________ 5. General Provisions, This Amendment, the Loan Agreement, the Note, and the other Loan Documents set forth in full all of the 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. Nothing herein constitutes a waiver of any default or Event of Default, known or unknown which may exist. Except as herein expressly amended, all of the terms and provisions of the Loan Agreement, the Note and the other Loan Documents shall continue in full force and effect and the same are hereby ratified and confirmed. Borrower: /S/ Marketta Silvera Greyrock: PILOT NETWORK SERVICES, INC. GREYROCK CAPITAL, a Division of Banc of America Commercial Finance Corporation President or Vice President By /S/ --------------------------------- By /S/ Stephanie Wail --------------------------------- Title VP ----------------------------- By --------------------------------- Secretary or Ass't Secretary -3-