LOAN MODIFICATION AND FORBEARANCE AGREEMENT
This Loan Modification and Forbearance Agreement (this "Agreement") is
entered into as of August 3, 2001, by and between Tanisys Technology, Inc.
("Borrower") and Silicon Valley Bank ("Bank").
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents, an Accounts Receivable Financing Agreement, dated May 30, 2001, as
may be amended from time to time (the "Loan Agreement"). Defined terms used but
not otherwise defined herein shall have the same meanings as in the Loan
Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness".
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is
secured by the Collateral described in the Loan Agreement. Hereinafter, the
above-described security documents and guaranties, together with all other
documents securing repayment of the Indebtedness shall be referred to as the
"Security Documents". Hereinafter, the Security Documents, together with all
other documents evidencing or securing the Indebtedness shall be referred to as
the "Existing Loan Documents".
3. FORBEARANCE. Bank agrees to forebear from exercising its rights and remedies
under the Existing Loan Documents and law ("Default Rights") until the earlier
of (a) August 31, 2001, (b) the close of a new equity round of the Borrower, or
(c) the occurrence of a Default under this Agreement (the "Forbearance Period"),
notwithstanding Borrower's existing default under the Loan Agreement as a result
of Borrower's failure to comply with the maximum loss covenant for the period
ending 6/30/01 as described in Section 6.2 entitled "Affirmative Covenants" of
the Loan Agreement (the foregoing being referred to as "Existing Defaults").
Hereinafter, the Existing Loan Documents, as modified by this Loan Modification
and Forbearance Agreement are hereinafter collectively called the "Loan
Documents".
By signing below, Borrower acknowledges that it is currently in default and
as a result of the Existing Defaults, Bank is entitled to exercise its remedies
as provided in the Existing Loan Documents and as provided under applicable law.
The Forbearance Period shall be immediately terminated, without notice, if (a)
Borrower breaches of any of the terms set forth in this Agreement, (b) the
occurrence of any default (other than the Existing Defaults) under the Existing
Loan Documents, or (c) if any recital, representation or warranty made herein,
in any document executed and delivered in connection herewith, or in any report,
certificate, financial statement or other instrument or document previously, now
or hereafter furnished by or on behalf of the Borrower in connection with this
Agreement or any other document executed and delivered in connection with this
Agreement, shall prove to have been false, incomplete or misleading in any
material respect on the date as of which it was made (collectively, a
"Default"), whereupon Bank, at its option, without any notice to Borrower, may
immediately cease making any further Advances and may immediately exercise any
Default Rights.
Bank's agreement to forbear from enforcing its Default Rights under the
Existing Loan Documents until the end of the Forbearance Period (a) in no way
shall be deemed an agreement by Bank to waive Borrower's compliance with all
other terms of the Existing Loan Documents, as modified by this Loan
Modification and Forbearance Agreement and (b) shall not limit or impair Bank's
right to demand strict performance of all other terms and covenants as of any
date. Nothing in this Loan Modification and Forbearance Agreement in any way
shall constitute Bank's waiver of the Existing Defaults. Borrower further agrees
that the exercise of any Default Rights by Bank upon termination of the
Forbearance Period shall not be affected by reason of this Agreement, and the
Borrower shall not assert as a defense thereto the passage of time, estoppel,
laches or any statute of limitations to the extent that the exercise of any
Default Rights was precluded by this Agreement.
4. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Loan Agreement.
1. Notwithstanding the terms and conditions contained in Section 2
entitled "Financing of Accounts Receivable", from the date of
this Agreement until such time Bank receives executed copies of
final documents pertaining to the new equity investment, Borrower
shall no longer be entitled for further Advances.
5. CONSISTENT CHANGES. The Loan Documents are hereby amended wherever necessary
to reflect the changes described above.
6. NO DEFENSES OF BORROWER. Borrower agrees that, as of the date hereof, it has
no defenses against the obligations to pay any amounts under the Indebtedness.
The Borrower acknowledges and warrants that Bank has acted in good faith and has
conducted in a commercially reasonable manner its relationships with Borrower in
connection with this Agreement and in connection with the Loan Documents,
including the Loan Agreement and the Indebtedness, the Borrower hereby waives
and releases any claims to the contrary.
7. CONCERNING REVISED ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE. The Borrower
affirms and reaffirms that notwithstanding the terms of the Security Documents
to the contrary, (i) that the definition of "Code", "UCC" or "Uniform Commercial
Code" as set forth in the Security Documents shall be deemed to mean and refer
to "the Uniform Commercial Code as adopted by the State of Texas, as may be
amended and in effect from time to time and (ii) the Collateral is all assets of
the Borrower. In connection therewith, the Collateral shall include, without
limitation, the following categories of assets as defined in the Code: goods
(including inventory, equipment and any accessions thereto), instruments
(including promissory notes), documents, accounts (including
health-care-insurance receivables, and license fees), chattel paper (whether
tangible or electronic), deposit accounts, letter-of-credit rights (whether or
not the letter of credit is evidenced by a writing), commercial tort claims,
securities and all other investment property, general intangibles (including
payment intangibles and software), supporting obligations and any and all
proceeds of any thereof, wherever located, whether now owned or hereafter
acquired.
8. WAIVER AND RELEASE OF CLAIMS. (a) Borrower signing below (each of the
foregoing being a "Releasing Party") hereby releases, acquits, and discharges
Bank and Bank's employees, agents, representative, consultants, attorneys,
fiduciaries, servants, officers, directors, partners, predecessors, successors
and assigns, subsidiary corporations, parent corporations, and related corporate
divisions (all of the foregoing hereinafter called the "Released Parties"), from
all actions and causes of action, judgments, executions, suits, debts, claims,
demands, liabilities, obligations, damages, and expenses of any and every
character, known or unknown, direct and/or indirect, at law or in equity, of
whatsoever kind or nature, whether heretofore or hereafter arising, for or
because of any matter or things done, omitted or suffered to be done by any of
the Released Parties prior to and including the date of execution hereof, and in
any way directly or indirectly arising out of or in any way connect to this Loan
Modification and Forbearance Agreement and the Existing Loan Documents,
including, but not limited to, claims relating to any settlement negotiation
(all of the foregoing hereinafter called the "Released Matters"). Each Releasing
Party acknowledges that the agreements in this section are intended to be in
full satisfaction of all or any alleged injuries or damages arising in
connection with the Released Matters.
(b) Each Releasing Party acknowledges that it has not relied, in executing
the release set forth in this section, upon any representations, warranties, or
conditions by Bank or any other entity except as are specifically set forth in
this Loan Modification and Forbearance Agreement.
(c) Nothing contained herein shall be construed at any time as an admission
by Bank of any liability to Borrower or any other entity.
(d) Each Releasing Party warrants to Bank that it has not purported to
transfer, assign, or otherwise convey any right, title or interest of such
Releasing Party in any Released Matter to any other entity, and that the
foregoing constitutes a full and complete release of all Released Matters.
9. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Indebtedness, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Loan Documents. Except as
expressly modified pursuant to this Loan Modification and Forbearance Agreement,
the terms of the Loan Documents remain unchanged and in full force and effect.
Bank's agreement to modifications to the existing Indebtedness pursuant to this
Loan Modification and Forbearance Agreement in no way shall obligate Bank to
make any future modifications to the Indebtedness. Nothing in this Loan
Modification and Forbearance Agreement shall constitute a satisfaction of the
Indebtedness. It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of the Loan Documents, unless the party is
expressly released by Bank in writing. No maker, endorser, or guarantor will be
released by virtue of this Loan Modification and Forbearance Agreement. The
terms of this Paragraph apply not only to this Loan Modification and Forbearance
Agreement, but also to all subsequent loan modification agreements.
10. INTEGRATION. This Loan Modification and Forbearance Agreement, together with
the Loan Documents, constitutes the entire agreement and understanding among the
parties relating to the subject matter hereof, and supersedes all prior and
contemporaneous proposals, negotiations, agreements, and understandings relating
to the subject matter. In entering into this Loan Modification and Forbearance
Agreement, Borrower acknowledges that it is relying on no statement,
representation, warranty, covenant, or agreement of any kind made by the Bank or
any employee or agent of Bank, except for the agreements of Bank set forth
herein. No modification, rescission, waiver, release, or amendment of any
provision of this Loan Modification and Forbearance Agreement shall be made,
except by a written agreement signed by Bank and Borrower.
11. GOVERNING LAW, HEADINGS. This Loan Modification and Forbearance Agreement is
one of the Loan Documents defined in the Loan Agreement and shall be governed
and construed in accordance with the laws of the State of California. The
headings and captions in this Loan Modification and Forbearance Agreement are
for the convenience of the parties only and are not a part of this Loan
Modification and Forbearance Agreement.
This Loan Modification and Forbearance Agreement is executed as of the date
first written above.
BORROWER: SILICON:
Tanisys Technology, Inc. SILICON VALLEY BANK
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxx Xxxxxxx
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Name: Xxxxx X. Xxxxxxxx Name: Xxx Xxxxxxx
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Title: Vice President and Title: Senior Vice President
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Chief Financial Officer
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