EXHIBIT 10.1
FOURTH LOAN MODIFICATION
AGREEMENT
This Fourth Loan Modification Agreement (this
“Loan Modification Agreement”) is entered into as of
July 2, 2009, by and among (a) SILICON VALLEY BANK , a
California corporation, with its principal place of business at
3003 Tasman Drive, Santa Clara, California 95054 and with a loan
production office located at One Newton Executive Park,
Suite’ 00, 2221 Washington Street, Newton, Massachusetts
02462 (“Bank”) and (b) PARADIGM HOLDINGS, INC. ,
a Wyoming corporation, with offices at 9715 Key West Avenue,
Rockville, Maryland 20850 (“Holdings”), PARADIGM
SOLUTIONS CORPORATION , a Maryland corporation, with offices at
9715 Key West Avenue, Rockville, Maryland 20850
(“Solutions”), CALDWELL TECHNOLOGY SOLUTIONS LLC
, a Maryland limited liability company, with offices at 17001
Science Drive, Suite 100, Bowie, Maryland 20715
(“Caldwell”) and TRINITY INFORMATION MANAGEMENT
SERVICES , a Nevada corporation, with offices at 9715 Key West
Avenue, Rockville, Maryland 20850 (“Trinity”)
(hereinafter, Holdings, Solutions, Caldwell 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 further amend by a certain Second
Loan Modification Agreement dated as of March 18, 2009, and as
further amended by a certain Third Loan Modification Agreement
dated as of May 4, 2009 (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 Caldwell (the “Caldwell 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 .
A.
Modifications to Loan Agreement.
1 The Loan
Agreement shall be amended by deleting the following text appearing
in Section 2.2.4 thereof:
“Borrower
will pay to Bank a collateral handling fee equal to (a) 0.125% per
month of the Financed Receivable Balance for each Financed
Receivable outstanding based upon Federal Agency Accounts,
Subcontractor Accounts and Unbilled Accounts based upon a 360 day
year, and (b) 0.25% per month of the Financed Receivable Balance
for Financed Receivables outstanding based upon HUD Accounts based
upon a 360 day year (the “Collateral Handling
Fee”).”
and inserting
in lieu thereof the following:
“Borrower
will pay to Bank a collateral handling fee equal to (a) 0.20% per
month of the Financed Receivable Balance for each Financed
Receivable outstanding based upon Federal Agency Accounts and
Subcontractor Accounts based upon a 360 day year, and (b) 0.25% per
month of the Financed Receivable Balance for Financed Receivables
outstanding based upon Unbilled Accounts based upon a 360 day year
(the “Collateral Handling Fee”).”
2 The Loan
Agreement shall be amended by deleting the following text appearing
in Section 5.3 thereof:
“ (f)
There are no defenses, offsets, counterclaims or agreements
for which the Account Debtor may claim any deduction or
discount;”
and inserting
in lieu thereof the following:
“ (f)
There are no defenses, offsets, counterclaims or agreements
for which the Account Debtor may claim any deduction or discount
other than certain “prompt payment” discounts set forth
in certain customer contracts;”
3 The
Loan Agreement shall be amended by deleting the following text
appearing in Section 5.4 thereof:
“In
addition, Borrower represents and warrants that there are no
discounts, offsets or other rights of any Account Debtor under any
Unbilled Account.”
and inserting
in lieu thereof the following:
“In
addition, Borrower represents and warrants that there are no
discounts, offsets or other rights of any Account Debtor under any
Unbilled Account other than certain “prompt payment”
discounts set forth in certain customer
contracts.”
4 The Loan
Agreement shall be amended by deleting the following, appearing as
Section 5.6 thereof:
“ 5.6
Litigation . There are no actions or proceedings
pending or, to the knowledge of Borrower’s Responsible
Officers or legal counsel, threatened by or against Borrower or any
Subsidiary in which an adverse decision could reasonably be
expected to cause a Material Adverse Change.”
and inserting
in lieu thereof the following:
“ 5.6
Litigation . Except as set forth on the Perfection
Certificate, there are no actions or proceedings pending or, to the
knowledge of Borrower’s Responsible Officers or legal
counsel, threatened by or against Borrower or any Subsidiary in
which an adverse decision could reasonably be expected to cause a
Material Adverse Change.”
5 The Loan
Agreement shall be amended by deleting the following text appearing
in Section 5.9 thereof:
“Borrower
and each Subsidiary have timely filed all required tax returns and
paid, or made adequate provision to pay, all material taxes, except
those being contested in good faith with adequate reserves under
GAAP.”
and inserting
in lieu thereof the following:
“Borrower
and each Subsidiary have timely filed all required material tax
returns and paid, or made adequate provision to pay, all material
taxes, except those being contested in good faith with adequate
reserves under GAAP.”
6 The Loan
Agreement shall be amended by deleting the following text appearing
in Section 6.2(c) thereof:
“The
charge to Borrower for the foregoing inspections and audits shall
be $750 per person per day (or such higher amount as shall
represent Bank’s then-current standard charge for the same),
plus reasonable out-of-pocket expenses.”
and inserting
in lieu thereof the following:
“The
charge to Borrower for the foregoing inspections and audits shall
be $850 per person per day (or such higher amount as shall
represent Bank’s then-current standard charge for the same),
plus reasonable out-of-pocket expenses.”
7 The Loan
Agreement shall be amended by deleting the following, appearing as
Section 6.7 thereof:
“
6.7
Financial Covenants .
Borrower shall maintain at all times, to be
tested as of the last day of each month, unless otherwise noted, on
a consolidated basis with respect to Borrower and its
Subsidiaries:
(a) EBITDA Loss.
EBITDA minus unfunded capital expenditures loss as of and for the
three month period (or periods) ending on (i) January 31, 2007 and
February 28, 2007 of not more than $1,000,000, and (ii) August 31,
2008 of not more than $50,000.
(b) EBITDA Gain.
EBITDA minus unfunded capital expenditures as of and for the three
month period (or periods) ending on (i) March 31, 2007, April 30,
2007 and May 31, 2007, of at least $1.00, (ii) June 30, 2007, July
31, 2007, August 31, 2007, September 30, 2007, October 31, 2007 and
November 30, 2007, of at least $250,000.00, (iii) December 31,
2007, January 31, 2008, February 29, 2008, March 31, 2008, April
30, 2008, May 31, 2008, June 30, 2008 and July 31, 2008, of at
least $500,000.00, (iv) September 30, 2008, of at least $75,000,
(v) October 31, 2008, of at least $150,000, (vi) November 30, 2008,
of at least $250,000, (vii) December 31, 2008, of at least
$400,000, and (viii) January 31, 2009 and as of and for the three
month period ending of the last day of each month thereafter, of at
least $500,000.00.
Notwithstanding the foregoing, (a) EBITDA Losses
incurred from January 1, 2007 through February 28, 2007 will be
excluded from the EBITDA calculation with respect to the three
month periods ending on February 28, 2007 and March 31, 2007, and
(b) EBITDA Losses incurred from February 1, 2007 through February
28, 2007 will be excluded from the EBITDA calculation with respect
to the three month period ending on April 30, 2007. A
