Amendment and Extension Agreement between Pilot Network Services, Inc. and Greyrock Capital (Banc of America Commercial Finance Corp.)

Summary

This agreement, dated February 14, 2001, is between Pilot Network Services, Inc. and Greyrock Capital, a division of Banc of America Commercial Finance Corporation. It extends the maturity date of an existing $3,000,000 loan to April 30, 2001, and adds new financial covenants, including limits on monthly net losses, minimum cash balances, and required loan payments on specific dates. The agreement also requires progress on a related transaction. Any breach of these new terms is considered an immediate default. All other terms of the original loan remain in effect.

EX-10.4 4 0004.txt Amendment and Extension Agreement Borrower: Pilot Network Services, Inc. Address: 1030 Marina Village Parkway Alameda, California 94501 Date: February 14, 2001 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 April 30. 2001 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 April 30. 2001 (the 'Maturity Date')." 2. Note Extension. The date "January 31, 2001" in the first paragraph of the Note is amended to read "April 30, 2001". 3. Additional Covenants. The following new Section 9 is hereby added to the Schedule to the Loan Agreement. "9. Additional Covenants. The Borrower covenants as follows: --------------------- (1) Maximum Net Loss. Borrower's net loss (computed on the ----------------- basis of generally accepted accounting principles) for each of the following months shall not exceed the following amounts: -1- Greyrock Capital Amendment and Extension Agreement __________________________________________________________ February 2001 Maximum net loss of $2,500,000 March 2001 Maximum net loss of $2,500,000 April 2001 Maximum net loss of $2,500,000 (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 2/16/01: $1,750,000 at 2/28/01: $1,750,000 at 3/16/01: $1,750,000 at 3/31/01 $2,500,000 at 4/13/01: $1,750,000 at 4/30/01: $5,500,000 (3) Payments on Note. In addition to any other payments due ---------------- under loan documents, Borrower shall make the following dates and shall provide evidence of the same to Greyrock, reasonably satisfactory to Greyrock, by the said dates: at 2/28/01: $ 250,000 at 3/16/01: $ 150,000 at 3/31/01: $ 600,000 at 4/13/01 $ 500,000 at 4/31/01: $1,500,000 (3) Transaction Progress. There shall be continued progress, ------------------- satisfactory to Greyrock in its reasonable discretion, in the transactions outlined in the February 14, 2001 letter of intent, a copy of which was provided to Greyrock. Any breach of any of the foregoing covenants in this Section 9 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. 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 -2- Greyrock Capital Amendment and Extension Agreement __________________________________________________________ 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: Greyrock: PILOT NETWORK SERVICES, INC. GREYROCK CAPITAL, a Division of Banc of America Commercial Finance Corporation By /S/ Marketta Silvera --------------------------------- President or Vice President By /S/ Stephanie Wail --------------------------------- By /S/ Title VP --------------------------------- --------------------------------- Secretary or Ass't Secretary -3-