SECOND LOAN MODIFICATION AGREEMENT
SECOND
LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement
(this “Loan Modification Agreement”) is entered into as of March 18, 2009, by
and among (a) SILICON VALLEY
BANK, a California corporation, with its principal place of business at
0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a loan production
office located at One Newton Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000 (“Bank”) and (b) PARADIGM HOLDINGS, INC., a
Wyoming corporation, with offices at 0000 Xxx Xxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx 00000 (“Holdings”), PARADIGM SOLUTIONS
CORPORATION, a Maryland corporation, with offices at 0000 Xxx Xxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000 (“Solutions”), XXXXXXXX TECHNOLOGY SOLUTIONS
LLC, a Maryland limited liability company, with offices at 00000 Xxxxxxx
Xxxxx, Xxxxx 000, Xxxxx, Xxxxxxxx 00000 (“Xxxxxxxx”) and TRINITY INFORMATION MANAGEMENT
SERVICES, a Nevada corporation, with offices at 0000 Xxx Xxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000 (“Trinity”) (hereinafter, Holdings, Solutions,
Xxxxxxxx and Trinity 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 March 13, 2007, evidenced by, among other
documents, a certain Loan and Security Agreement (working capital line of
credit) dated as of March 13, 2007, among Borrower and Bank, as amended by a
certain First Loan Modification Agreement dated as of August 11, 2008 (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 (a) the
Collateral as described in the Loan Agreement, (b) the Intellectual Property
Collateral as described in a certain Intellectual Property Security Agreement
dated as of March 13, 2007 between Bank and Holdings (the “Holdings IP Security
Agreement”), (c) the Intellectual Property Collateral as described in a certain
Intellectual Property Security Agreement dated as of March 13, 2007 between Bank
and Solutions (the “Solutions IP Security Agreement”), (d) the Intellectual
Property Collateral as described in a certain Intellectual Property Security
Agreement dated as of July 5, 2007 between Bank and Xxxxxxxx (the “Xxxxxxxx IP
Security Agreement”), and (e) the Intellectual Property Collateral as described
in a certain Intellectual Property Security Agreement dated as of September 5,
2007 between Bank and Trinity (the “Trinity 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.
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A.
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Modifications
to Loan Agreement.
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1
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The
Loan Agreement shall be amended by deleting the following, appearing as
Section 2.1.1(b)(i):
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“ (i) The
aggregate face amount of all Financed Receivables outstanding at any time based
upon Federal Agency Accounts, Subcontractor Accounts and Unbilled Accounts may
not exceed the Facility Amount. In addition, the aggregate amount of
all Federal Agency Account Advances, Subcontractor Account Advances, and
Unbilled Account Advances outstanding at any time may not exceed Ten Million
Dollars ($10,000,000.00).”
and
inserting in lieu thereof the following:
“ (i) The
aggregate face amount of all Financed Receivables outstanding at any time based
upon Federal Agency Accounts, Subcontractor Accounts and Unbilled Accounts may
not exceed the Facility Amount. In addition and notwithstanding the
foregoing, the aggregate amount of all Federal Agency Account Advances,
Subcontractor Account Advances, and Unbilled Account Advances outstanding at any
time may not exceed Four Million Five Hundred Thousand Dollars
($4,500,000.00).”
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2
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The
Loan Agreement shall be amended by deleting the following, appearing as
Section 2.1.1(b)(iii):
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“ (iii) The
aggregate amount of all Unbilled Account Advances outstanding at any time may
not exceed Two Million Dollars ($2,000,000.00), provided, however, such amount
shall be Three Million Dollars ($3,000,000.00) at such time as when all HUD
Account Advances are repaid and Borrower has no ability to request that Bank
make any additional HUD Account Advances hereunder.”
and
inserting in lieu thereof the following:
“ (iii) The
aggregate amount of all Unbilled Account Advances outstanding at any time may
not exceed Two Million Dollars ($2,000,000.00).”
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3
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The
Loan Agreement shall be amended by deleting the following, appearing as
Section 2.1.1(b)(iv):
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“ (iv)
The aggregate amount of all Federal Agency Account Advances, Subcontractor
Account Advances, Unbilled Account Advances, and HUD Account Advances
outstanding at any time may not exceed Twelve Million Dollars
($12,000,000.00).”
and
inserting in lieu thereof the following:
“ (iv)
Intentionally omitted.”
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4
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The
Loan Agreement shall be amended by deleting the following text appearing
in Section 6.2(c):
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“Allow
Bank to audit Borrower’s Collateral, including, but not limited to, Borrower’s
Accounts at Borrower’s expense, upon reasonable notice to Borrower; provided,
however, prior to the occurrence of an Event of Default, Borrower shall be
obligated to pay for not more than one (1) audit per year.”
and
inserting in lieu thereof the following:
“Allow
Bank to audit Borrower’s Collateral, including, but not limited to, Borrower’s
Accounts at Borrower’s expense, upon reasonable notice to Borrower; provided,
however, prior to the occurrence of an Event of Default, Borrower shall be
obligated to pay for not more than two (2) audits per year.”
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5
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The
Loan Agreement shall be amended by deleting the following definitions
appearing in Section 13.1 thereof:
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“ “Facility Amount” is Twelve
Million Five Hundred Thousand Dollars ($12,500,000.00).”
“ “Maturity Date” is two (2)
years from the Closing Date, subject to Section 12.11 hereunder.”
“ “Minimum Finance Charge” is an
amount equal to the amount of Finance Charges and Collateral Handling Fees Bank
would have earned in any Reconciliation Period if Borrower’s Federal Agency
Account Advances, Subcontractor Account Advances and Unbilled Account Advances
outstanding during such Reconciliation period averaged Four Million Dollars
($4,000,000.00).”
and
inserting in lieu thereof the following:
“ “Facility Amount” is Five
Million Six Hundred Twenty-Five Thousand Dollars ($5,625,000.00).”
“ “Maturity Date” is May 12,
2009.”
“ “Minimum Finance Charge” is an
amount equal to the amount of Finance Charges and Collateral Handling Fees Bank
would have earned in any Reconciliation Period if Borrower’s Federal Agency
Account Advances, Subcontractor Account Advances and Unbilled Account Advances
outstanding during such Reconciliation period averaged One Million Eight Hundred
Thousand Dollars ($1,800,000.00).”
4. FEES. Borrower
shall pay to Bank a modification fee equal to Nine Thousand Dollars ($9,000.00)
which fee shall be due on the date hereof and shall be deemed fully earned as of
the date hereof. Borrower shall also reimburse Bank for all
reasonable legal fees and expenses incurred in connection with this amendment to
the Existing Loan Documents.
5. RATIFICATION OF IP SECURITY
AGREEMENTS.
(a) Holdings
hereby ratifies, confirms and reaffirms, all and singular, the terms and
conditions of the Holdings IP Security Agreement and acknowledges, confirms and
agrees that the Holdings IP Security Agreement contains an accurate and complete
listing of all Intellectual Property Collateral as defined therein.
(b) Solutions
hereby ratifies, confirms and reaffirms, all and singular, the terms and
conditions of the Solutions IP Security Agreement and acknowledges, confirms and
agrees that the Solutions IP Security Agreement contains an accurate and
complete listing of all Intellectual Property Collateral as defined
therein.
(c) Xxxxxxxx
hereby ratifies, confirms and reaffirms, all and singular, the terms and
conditions of the Xxxxxxxx IP Security Agreement and acknowledges, confirms and
agrees that the Xxxxxxxx IP Security Agreement contains an accurate and complete
listing of all Intellectual Property Collateral as defined therein.
(d) Trinity
hereby ratifies, confirms and reaffirms, all and singular, the terms and
conditions of the Trinity IP Security Agreement and acknowledges, confirms and
agrees that the Trinity IP Security Agreement contains an accurate and complete
listing of all Intellectual Property Collateral as defined therein.
6. RATIFICATIONS OF PERFECTION
CERTIFICATES.
(a) Holdings
hereby ratifies, confirms and reaffirms, all and singular, the terms and
disclosures contained in a certain Perfection Certificate dated as of March 13,
2007 between Holdings and Bank, and acknowledges, confirms and agrees the
disclosures and information Holdings provided to Bank in the Perfection
Certificate have not changed, as of the date hereof.
(b) Solutions
hereby ratifies, confirms and reaffirms, all and singular, the terms and
disclosures contained in a certain Perfection Certificate dated as of March 13,
2007 between Solutions and Bank, and acknowledges, confirms and agrees the
disclosures and information Solutions provided to Bank in the Perfection
Certificate have not changed, as of the date hereof.
(c) Xxxxxxxx
hereby ratifies, confirms and reaffirms, all and singular, the terms and
disclosures contained in a certain Perfection Certificate dated as of July 5,
2007 between Xxxxxxxx and Bank, and acknowledges, confirms and agrees the
disclosures and information Xxxxxxxx provided to Bank in the Perfection
Certificate have not changed, as of the date hereof.
(d) Trinity
hereby ratifies, confirms and reaffirms, all and singular, the terms and
disclosures contained in a certain Perfection Certificate dated as of September
5, 2007 between Trinity and Bank, and acknowledges, confirms and agrees the
disclosures and information Trinity 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. 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]
This Loan Modification Agreement is
executed as of the date first written above.
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BORROWER:
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BANK:
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SILICON
VALLEY BANK
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By:____________________________________
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By:___________________________________
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Name:
Xxxxxxx Xxxxxxx
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Name:_________________________________
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Title:
SVP and CFO
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Title:__________________________________
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PARADIGM
SOLUTIONS CORPORATION
By:____________________________________
Name: Xxxxxxx
Xxxxxxx
Title: SVP
and CFO
XXXXXXXX
TECHNOLOGY SOLUTIONS LLC
By:____________________________________
Name: Xxxxxxx
Xxxxxxx
Title: SVP
and CFO
TRINITY
INFORMATION MANAGEMENT SERVICES
By:____________________________________
Name: Xxxxxxx
Xxxxxxx
Title: SVP
and CFO
