FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT (this "AGREEMENT") is made and entered into as
of February 13, 2003, between EVOLVE SOFTWARE, INC., a Delaware corporation
(herein called "BORROWER"), and COMERICA BANK-CALIFORNIA ("BANK").
RECITALS
A. Borrower and Bank entered into that certain Amended and Restated
Loan Agreement dated as of November 13, 2001, as amended by that certain First
Amendment to Amended and Restated Loan Agreement and Limited Waiver, dated as
of April 19, 2002, as further amended by that Second Amendment to Amended and
Restated Loan Agreement, dated as of September 30, 2002 (as the same may from
time to time be further modified, amended, supplemented, restated or superseded,
the "LOAN AGREEMENT"), pursuant to which Bank agreed to extend and maintain
loans available to Borrower upon the terms and conditions contained therein.
Unless otherwise defined herein, all terms defined in the Loan Agreement have
the same meaning when used herein.
B. Borrower is presently in violation of the financial covenant set
forth in Section 8(h) of the Loan Agreement that Borrower maintain minimum
revenues of at least $5,000,000 during the quarter ending December 31, 2002,
which violation constitutes an Event of Default under Section 10.2 of the Loan
Agreement.
C. Borrower has requested that Bank waive the Event of Default set
forth in Recital B above and Bank is willing to do so, but only to the extent,
in accordance with the terms, subject to the conditions, and in reliance upon
the representations and warranties set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants herein set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound, and to induce Bank to enter into this Agreement, Borrower and
Bank hereby agree as follows:
1. BORROWER'S ACKNOWLEDGMENT OF EXISTING EVENT OF DEFAULT. Borrower
acknowledges that it is presently in violation of the financial covenant set
forth in Section 8(h) of the Loan Agreement for the quarter ending December 31,
2002 (the "APPLICABLE DEFAULT").
2. BANK'S AGREEMENT TO FORBEAR ACTION BASED ON APPLICABLE DEFAULT.
Bank hereby agrees to forbear, until March 15, 2003, from exercising any
remedies arising from the occurrence of any default or Event of Default that is
caused solely by the Applicable Default; provided, however, that Bank, in its
sole and absolute discretion, may terminate such forbearance without any notice
or demand of any kind whatsoever if any default or Event of Default, other than
the Applicable Default, occurs under the Loan Agreement or this Agreement. The
forbearance set forth in this Section 2 shall not constitute a waiver by Bank of
the existence of
FORBEARANCE AGREEMENT
the Applicable Default. Bank shall not be under any obligation to waive the
Applicable Default or to grant any further forbearances with respect thereto.
This Agreement shall not constitute a waiver or agreement to forbear with
respect to any other default or Event of Default that might now exist or
hereafter arise under the Loan Agreement or this Agreement, whether of the same
or a different nature.
3. CONDITIONS PRECEDENT. The legal effectiveness of this Agreement is
subject to the satisfaction of all of the following conditions precedent:
3.1 EXECUTED AGREEMENT Bank shall have received this Agreement
duly executed and delivered by Borrower and the same shall have become
effective.
3.2 FINANCIAL CONDITION. There shall have occurred no material
adverse change in the financial condition or prospects of Borrower as shown on
the most recent financial statements submitted to Bank or disclosed to Bank,
respectively, and relied upon by Bank in entering into this Agreement.
3.3 DEFAULT. Other than Applicable Default, no Event of Default
has occurred that remains uncured and is continuing or will result from the
consummation of the transactions contemplated by this Agreement that would
constitute an Event of Default.
3.4 PAYMENT OF FEES. Bank shall have received reimbursement from
Borrower of its costs and expenses incurred (including, without limitation, its
attorneys' fees and expenses) in connection with this Agreement and the
transactions contemplated hereby.
3.5 OTHER DOCUMENTS. Bank shall have received such other
documents, information and items from Borrower as it shall reasonably request to
effectuate the transactions contemplated hereby.
4. REAFFIRMATION AND ACKNOWLEDGEMENT. Borrower hereby reaffirms its
obligations under the Loan Documents and ratifies and reaffirms the validity and
enforceability of all of the liens and security interests heretofore granted to
Bank pursuant to the Loan Documents, as collateral security for the obligations
of Borrower under the Loan Agreement and the other Loan Documents, and
acknowledges that all of such liens and security interests, and all Collateral
heretofore pledged as security for such obligations, continues to be and remain
collateral for such obligations from and after the date hereof.
5. REPRESENTATIONS AND WARRANTIES. In order to induce Bank to enter
into this Agreement, Borrower hereby represents and warrants to Bank as follows:
5.1 Immediately after giving effect to this Agreement (i) the
representations and warranties contained in the Loan Documents (other than those
which expressly relate to a different date) are true, accurate and complete in
all material respects as of the date hereof and (ii) no Default or Event of
Default has occurred and is continuing;
FORBEARANCE AGREEMENT
5.2 Borrower has the power and authority to execute and deliver
this Agreement and to perform its obligations under the Loan Agreement, as
amended by this Agreement, and each of the other Loan Documents to which it is a
party; and
5.3 The execution and delivery by Borrower of this Agreement and
the performance by Borrower of its obligations under the Loan Agreement, and
each of the other Loan Documents to which it is a party have been duly
authorized by all necessary corporate action on the part of Borrower.
6. FULL FORCE AND EFFECT; ENTIRE AGREEMENT. Except to the extent
expressly provided in this Agreement, the terms and conditions of the Loan
Agreement and the other Loan Documents shall remain in full force and effect.
This Agreement and the other Loan Documents constitute and contain the entire
agreement of the parties hereto and supersede any and all prior agreements,
negotiations, correspondence, understandings and communications between the
parties, whether written or oral, respecting the subject matter hereof. The
parties hereto further agree that the Loan Documents comprise the entire
agreement of the parties thereto and supersede any and all prior agreements,
negotiations, correspondence, understandings and other communications between
the parties thereto, whether written or oral respecting the extension of credit
by Bank to Borrower and/or its affiliates.
7. COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed in any
number of counterparts, each of which when so delivered shall be deemed an
original, but all such counterparts taken together shall constitute but one and
the same instrument. Each such agreement shall become effective upon the
execution of a counterpart hereof or thereof by each of the parties hereto and
telephonic notification that such executed counterparts has been received by
Borrower and Bank.
FORBEARANCE AGREEMENT
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed and delivered by its duly authorized officer as of the date first
written above.
BANK: BORROWER:
COMERICA BANK-CALIFORNIA EVOLVE SOFTWARE, INC.,
a Delaware corporation
By: /S/ Xxxxxx Xxxxxx By: /S/ Xxxxxx X. Xxxxxx
------------------ ----------------------
Name: Xxxxxx Xxxxxx Name: Xxxxxx X. Xxxxxx
Title: Assistant Vice President Title: Vice President, CFO
FORBEARANCE AGREEMENT
