SECOND LOAN MODIFICATION AGREEMENT
Exhibit
10.6
SECOND
LOAN MODIFICATION AGREEMENT
This
Second Loan Modification Agreement (this “Loan Modification Agreement”) is
entered into as of ___April
3rd_____________,
2007, by
and among
(i)
SILICON
VALLEY BANK,
a
California corporation and with a loan production office located at One Xxxxxx
Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
(“Bank”), and (ii) TECHNEST
HOLDINGS, INC.,
a
Nevada corporation, with offices at 0 XxXxxxxx Xx., Xxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 (“Technest”), E-OIR
TECHNOLOGIES, INC.,
a
Virginia corporation, with offices at 00000 Xxxxxxxxxxxx Xxx., Xxxxx 000,
Xxxxxxxxxxxxxx, Xxxxxxxx 00000 (“EOIR”), and GENEX
TECHNOLOGIES INCORPORATED,
a
Maryland corporation, with offices at 00000 Xxxxx Xxxx Xxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxx 00000 (“Genex”) (hereinafter, Technest, EOIR and Genex are
jointly and severally, individually and collectively, referred to as
“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 August
4, 2006, evidenced by, among other documents, a certain Loan and Security
Agreement (Working Capital Line of Credit) dated as of August 4, 2006, between
Borrower and Bank, as amended by a certain First Loan Modification Agreement
dated as of February 14, 2007, between Borrower and Bank (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 and the Intellectual Property Collateral as described in a certain
Intellectual Property Security Agreement dated August 4, 2006 (the “IP Security
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.
| A. |
Modifications
to Loan Agreement.
|
| 1 |
The
Loan Agreement shall be amended by deleting the following definition,
appearing alphabetically in Section 13
thereof:
|
“ “Applicable
Rate”
is
a
per annum rate equal to the Prime Rate plus one-half of one percent
(0.50%).”
and
inserting in lieu thereof the following:
“ “Applicable
Rate”
is
a
per annum rate equal to the Prime Rate plus one percent (1.0%); provided,
however, if Borrower complies with each of the financial covenants listed in
Section 6.7 of the Term Loan Agreement as of the month ending May 31, 2007,
then
the Applicable Rate shall be a per annum rate equal to the Prime Rate plus
one-half of one percent (0.50%).”
4. FEES.
Borrower
shall pay to Bank a commitment fee equal to One Hundred Twenty Five Thousand
Dollars ($125,000.00), which fee shall be earned as of the date hereof and
shall
be due and payable as follows: (a) $20,000.00 on the date hereof; (b) $40,000.00
upon the earlier to occur of (i) April 15, 2007, (ii) the early termination
of
the Loan Agreement, and (iii) the occurrence of an Event of Default; and (c)
$65,000.00 upon the earlier to occur of (i) May 15, 2007, (ii) the early
termination of the Loan Agreement, and (iii) the occurrence of an Event of
Default; provided, however, if the Equity Event occurs prior to the date on
which the payment in (c) above is due and payable, then the amount due pursuant
to (c) shall be $40,000.00. As used in the immediately preceding sentence,
“Equity Event” shall mean the receipt by Borrower, from investors of Borrower,
after the date of this Loan Modification Agreement, of proceeds of equity or
Subordinated Debt, in form and substance acceptable to Bank in Bank’s sole and
absolute discretion, resulting in unrestricted net cash proceeds to Borrower
of
at least $2,000,000.00. Borrower shall also reimburse Bank for all reasonable
legal fees and expenses incurred in connection with this amendment to the
Existing Loan Documents.
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5. RATIFICATION
OF IP SECURITY AGREEMENT.
Except
as set forth on Exhibit
A
to the
First Loan Modification Agreement, Borrower hereby ratifies, confirms and
reaffirms, all and singular, the terms and conditions of the IP Security
Agreement and acknowledges, confirms and agrees that the IP Security Agreement
contains an accurate and complete listing of all Intellectual Property
Collateral as defined therein.
6. RATIFICATION
OF PERFECTION CERTIFICATES.
Except
as
set forth on Exhibit
A
to the
First Loan Modification Agreement, Technest
hereby ratifies, confirms and reaffirms, all and singular, the terms and
disclosures contained in a certain Perfection Certificate dated as of August
4,
2006 between Technest and Bank, and acknowledges, confirms and agrees the
disclosures and information Borrower provided to Bank in the Perfection
Certificate have not changed, as of the date hereof. Except
as
set forth on Exhibit
A
to the
First Loan Modification Agreement, EOIR
hereby ratifies, confirms and reaffirms, all and singular, the terms and
disclosures contained in a certain Perfection Certificate dated as of August
4,
2006 between EOIR and Bank, and acknowledges, confirms and agrees the
disclosures and information EOIR provided to Bank in the Perfection Certificate
have not changed, as of the date hereof. Except
as
set forth on Exhibit
A
to the
First Loan Modification Agreement, Genex
hereby ratifies, confirms and reaffirms, all and singular, the terms and
disclosures contained in a certain Perfection Certificate dated as of August
4,
2006 between Genex and Bank, and acknowledges, confirms and agrees the
disclosures and information Genex provided to Bank in the Perfection Certificate
have not changed, as of the date hereof.
7. CONSISTENT
CHANGES.
The
Existing Loan Documents are hereby amended wherever necessary to reflect the
changes described above.
8. 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.
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.
10. 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.
11. JURISDICTION/VENUE.
Borrower accepts for itself and in connection with its properties,
unconditionally, the exclusive jurisdiction of any state or federal court of
competent jurisdiction in the Commonwealth of Massachusetts in any action,
suit,
or proceeding of any kind against it which arises out of or by reason of this
Loan Modification Agreement; provided, however, that if for any reason Bank
cannot avail itself of the courts of the Commonwealth of Massachusetts, then
venue shall lie in Santa Xxxxx County, California. NOTWITHSTANDING THE
FOREGOING, THE BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION
WHICH THE BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE
COLLATERAL OR TO OTHERWISE ENFORCE THE BANK’S RIGHTS AGAINST THE BORROWER OR ITS
PROPERTY.
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12. 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]
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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: | BANK: |
| TECHNEST HOLDINGS, INC. | SILICON VALLEY BANK |
|
By: /s/ Xxxx
Xxxxxxx
Name: Xxxx
Xxxxxxx
Title: Chief
Financial
Officer
|
By: /s/ Gage
Xxxxxxx
Name: Gage
Xxxxxxx
Title: Vice
President
|
| E-OIR TECHNOLOGIES, INC. | |
|
By: /s/ Xxxx
Xxxxxxx
Name: Xxxx
Xxxxxxx
Title: Chief
Financial
Officer
|
|
| GENEX TECHNOLOGIES INCORPORATED | |
|
By: /s/ Xxxx
Xxxxxxx
Name: Xxxx
Xxxxxxx
Title: Chief
Financial
Officer
|
The
undersigned, XXXXXXXX TECHNOLOGIES, INC., ratifies, confirms and reaffirms,
all
and singular, the terms and conditions of: (a) a certain Unconditional Guaranty
dated as of August 4, 2006 (the “Guaranty”), and (b) a certain Stock Pledge
Agreement dated as of August 4, 2006 (the “Stock Pledge Agreement”) and
acknowledges, confirms and agrees that the Guaranty and Stock Pledge Agreement
each shall remain in full force and effect and shall 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.
| XXXXXXXX TECHNOLOGIES, INC. | |
|
By: /s/ Xxxx
Xxxxxxx
Name: Xxxx
Xxxxxxx
Title: Chief
Financial
Officer
|
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