EXHIBIT 10.25
LOAN MODIFICATION AND FORBEARANCE AGREEMENT
This Loan Modification and Forbearance Agreement is entered into as of
July 9, 2003, by and between EpicEdge, 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, a Loan and Security Agreement, dated November 6, 2002, as may be
amended from time to time (the "Loan Agreement"). The Loan Agreement provided
for, among other things, a Committed Revolving Line in the original principal
amount of One Million Dollars ($1,000,000) and a Term Loan in the original
principal amount of Four Hundred Thousand Dollars ($400,000). The Loan Agreement
has been modified pursuant to, among other documents, a Loan Modification
Agreement dated January 9, 2003, pursuant to which, among other things, the
Committed Revolving Line was increased to One Million Three Hundred Thousand
($1,300,000), subject to the terms of such Loan Modification 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. Additionally, a
specific amount of the Obligations is guaranteed by Edgewater Private Equity
Fund III, L.P. (the "Guarantor") pursuant to the terms and conditions of that
certain Unconditional Guaranty agreement (the "Guaranty"). 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 forbear from exercising its rights and remedies
under the Existing Loan Documents and at law ("Default Rights") until the
earlier of (a) October 7, 2003, or (b) 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 Tangible Net Worth covenant set forth in Section 6.7 of the Loan
Agreement, through the day of this Loan Modification and Forbearance 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) any
default occurs (other than the Existing Defaults) under the Existing Loan
Documents, or (c) 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 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 stated in
Section 2.4 entitled "Term Loan", any and all
proceeds Borrower receives related to the HHSC
retainage payment shall be applied toward prepaying
the Term Loan Payments due August 5, 2003 and
September 5, 2003, up to the amounts due under such
Term Loan Payments. Such prepayments shall not be
subject to a Prepayment Fee.
2. Section 2.8 entitled "Limitation of Credit Extension"
is hereby deleted and replaced with the term,
"Intentionally Omitted".
3. Section 6.7 entitled "Financial Covenants" is hereby
amended to read as follows:
Borrower shall maintain at all times, unless
otherwise noted:
Tangible Net Worth. A Tangible Net Worth plus
Subordinated Debt, the Nour-Omid Debt and the Rose
Debt of at least ($1,200,000).
4. The following defined term under Section 13.1
entitled "Definitions" is hereby amended to read as
follows:
"Committed Revolving Line" is a Credit Extension of
up to $1,300,000 through the Revolving Maturity Date.
B. Modification(s) to Guaranty.
1. The first paragraph in the Guaranty is hereby amended
to read as follows:
In consideration of SILICON VALLEY BANK'S ("Bank")
loan to EpicEdge, Inc., a Texas corporation
("Borrower"), under the Loan and Security Agreement
with an Effective Date (as defined therein) of
November 6, 2002 (the "Agreement"), Edgewater Private
Equity Fund III, L.P., a Delaware limited partnership
("Guarantor") unconditionally and irrevocably
guarantees payment of all amounts Borrower owes Bank
and Borrower's performance of the Agreement and any
other agreements between Borrower and Bank entered
into in connection with the Agreement, as amended
from time to time (collectively the "Agreements"),
according to their terms; provided, however, that the
maximum liability of Guarantor under this guaranty
(this "Guaranty") shall not exceed at any one time
the sum of (a) principal indebtedness equal to
$1,300,000 (the "Principal Indebtedness"), plus (b)
all interest accrued and unpaid on such indebtedness
pursuant to the terms of the Agreement, plus (c) all
of Bank's costs, expenses and reasonable attorneys'
fees incurred in connection with or relating to the
enforcement of this Guaranty. Attorneys' fees
include, without limitation, attorneys' fees whether
or not there is a lawsuit, and if there is a lawsuit,
any fees and costs for trial and appeals.
2. The terms and conditions stated in the Guaranty
notwithstanding, if Borrower files a petition for
reorganization, or seeks other relief under the
United States
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Bankruptcy Code, or any involuntary proceeding is
instituted with respect to Borrower under the United
States Bankruptcy Code, then within 30 days of such
filing, Guarantor shall either (at the Bank's
option) (i) purchase the Bank's loan at par,
together with all accrued and unpaid interest,
collection costs and attorney's fees, or (ii) pay
all amounts owing under the guaranty. The foregoing
provision is intended to be supplemental to all
other obligations of Guarantor pursuant to the
Guaranty and Guarantor hereby ratifies and confirms
the same as supplemented by the provisions hereof.
5. CONSISTENT CHANGES. The Loan Documents are hereby amended wherever necessary
to reflect the changes described above.
6. PAYMENT OF LOAN FEE. Borrower shall pay to Bank a fee in the amount of Five
Thousand Dollars ($5,000) (the "Loan Fee") plus all out-of-pocket expenses.,
including, but not limited to fees and expenses of Bank's counsel.
7. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) 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.
8. WAIVER AND RELEASE OF CLAIMS. (a) Borrower and each Guarantor 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 (and each Guarantor signing below) 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
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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. CONDITIONS. The effectiveness of this Loan Modification and Forbearance
Agreement is conditioned upon Borrower's payment of the Loan Fee.
12. 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 Texas. 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.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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This Loan Modification and Forbearance Agreement is executed as of the
date first written above.
BORROWER: BANK:
EPICEDGE, INC. SILICON VALLEY BANK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By:
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name:
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Title: COO/CFO Title:
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The undersigned hereby consents to the modifications to the Obligations pursuant
to this Loan Modification Agreement, hereby ratifies all the provisions of the
Guaranty, as amended herein, and confirms that all provisions of that document
are in full force and effect.
GUARANTOR:
EDGEWATER PRIVATE EQUITY FUND III, L.P.
By: EDGEWATER III MANAGEMENT, L.P.,
its General Partner
By: ▇▇▇▇▇▇ Management, Inc.
its sole General Partner
By: Date:
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Name:
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Title:
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This Loan Modification and Forbearance Agreement is executed as of the
date first written above.
BORROWER: BANK:
EPICEDGE, INC. SILICON VALLEY BANK
By: By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: Name: ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Title: Vice President
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The undersigned hereby consents to the modifications to the Obligations pursuant
to this Loan Modification Agreement, hereby ratifies all the provisions of the
Guaranty, as amended herein, and confirms that all provisions of that document
are in full force and effect.
GUARANTOR:
EDGEWATER PRIVATE EQUITY FUND III, L.P.
By: EDGEWATER III MANAGEMENT, L.P.,
its General Partner
By: ▇▇▇▇▇▇ Management, Inc.
its sole General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Date: July 16, 2003
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title: VP
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