Exhibit 99.1
FORBEARANCE AGREEMENT
This FORBEARANCE AGREEMENT (this "AGREEMENT") dated as of July 5,
2007 is entered into by and among BlueCrest Capital Finance, L.P., a Delaware
limited partnership ("LENDER"), and SWMX, Inc., a Delaware corporation, and
SoftWave Media Exchange, Inc., a Delaware corporation (jointly and severally,
"BORROWER").
RECITALS
A. Borrower and Lender are parties to the Loan and Security
Agreement (No. V07106) dated as of March 23, 2007 (the "LOAN AGREEMENT"),
pursuant to which Lender has agreed to provide certain financial accommodations
to or for the benefit of Borrower upon the terms and conditions contained
therein. Capitalized terms used but not defined herein shall have the meaning
ascribed to such terms in the Loan Agreement.
B. In a letter dated July 2, 2007 (the "Default Letter"), Borrower
has informed Lender that an Event of Default (the "EXISTING DEFAULT") has
occurred and is continuing under Section 8.1(o) of the Loan Agreement as a
result of Borrower's failure to raise net proceeds of $10,000,000 in new equity,
on commercially reasonable terms and conditions, on or before July 1, 2007.
C. Borrower has requested that Lender forbear from exercising its
rights and remedies as a result of the Existing Default, and Lender is willing
to do so on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the continued performance by
Borrower of its promises and obligations under the Loan Agreement and the Other
Agreements, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender hereby agree
as follows:
1. RATIFICATION AND INCORPORATION OF LOAN AGREEMENT AND OTHER
AGREEMENTS. Except as expressly modified by this Agreement, (a) Borrower hereby
acknowledges, confirms and ratifies all of the terms and conditions set forth
in, and all of its obligations under, the Loan Agreement and the Other
Agreements, and (b) all of the terms and conditions set forth in the Loan
Agreement and the Other Agreements are incorporated herein by this reference as
if set forth in full herein. Without limiting the generality of the foregoing,
Borrower acknowledges and agrees that as of July 5, 2007, the aggregate
outstanding principal amount of the Term Loan was $3,000,000, accrued but unpaid
interest in respect of the Term Loan was $27,100.00, no Revolving Advances are
outstanding and the Revolving Commitment under the Loan Agreement was terminated
effective July 2, 2007 pursuant to the Default Letter. Borrower represents that
it has no offset, defense, counterclaim, dispute or disagreement of any kind or
nature whatsoever with respect to the amount of such indebtedness.
2. FORBEARANCE IN RESPECT OF EXISTING DEFAULT.
2.1 ACKNOWLEDGMENT. Borrower hereby acknowledges and agrees that
the Existing Default has occurred and is continuing, and that the Existing
Default entitles Lender to exercise its rights and remedies under the Loan
Agreement and applicable law, and Borrower further represents and warrants that
as of the date hereof no other Defaults or Events of Default have occurred and
are continuing. Lender has not waived, presently does not intend to waive and
may never waive the Existing Default, and nothing contained herein or in the
transactions contemplated hereby shall be deemed to constitute any such waiver.
Borrower hereby acknowledges and agrees that Lender has the presently
exercisable right to declare the Borrower's Liabilities to be immediately due
and payable under the terms of the Loan Agreement but that Lender has agreed to
forbear from exercising such rights in accordance with the terms and conditions
of this Agreement.
2.2 FORBEARANCE.
(a) In reliance upon the representations, warranties and
covenants of Borrower contained in this Agreement, and subject to the terms and
conditions of this Agreement and any documents or instruments executed in
connection herewith, Lender agrees, during the period (the "FORBEARANCE Term")
beginning as of the date hereof and ending on the earlier of:
(i) the occurrence of any Default or Event of Default
other than the Existing Default;
(ii) the receipt by Lender of notice pursuant to Section
5.1 below; and
(ii) 5 p.m. Eastern time on August 1, 2007,
to forbear from exercising its rights and remedies under the Loan Agreement and
Other Agreements in respect of or arising out of the Existing Default, subject
to the conditions, amendments and modifications contained herein.
(b) Upon the termination of the Forbearance Term, the
agreement of Lender to forbear shall automatically and without further action
terminate and be of no force and effect, it being expressly agreed that the
effect of such termination will be for Lender to have the right in its sole
discretion to exercise such rights and remedies immediately, without any further
notice, passage of time or forbearance of any kind.
(c) Notwithstanding anything to the contrary, the parties
expressly acknowledge that the Revolving Commitment and any obligations of
Lender to make Revolving Advances thereunder are terminated.
2.3 NO OTHER WAIVERS; RESERVATION OF RIGHTS.
(a) Lender has not waived, is not by this Agreement waiving,
and has no intention of waiving, any Defaults or Events of Default that may be
continuing on the date hereof (including the Existing Default) or any Defaults
or Events of Default that may occur after the date hereof (whether similar to
the Existing Default or otherwise), and Lender has not agreed to forbear with
respect to any of its rights or remedies concerning any Defaults or Events of
Default (other than, during the Forbearance Term, the Existing Default to the
extent expressly set forth herein), that may have occurred or are continuing as
of the date hereof or that may occur after the date hereof.
(b) Subject to Section 2.2 above (solely with respect to the
Existing Default), Lender reserves the right, in its sole discretion, to
exercise any or all of its rights and remedies under the Loan Agreement and the
Other Agreements as a result of any Defaults or Events of Default that may be
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continuing on the date hereof or any Defaults or Event of Default that may occur
after the date hereof, and Lender has not waived any of such rights or remedies,
and nothing in this Agreement, and no delay on its part in exercising any such
rights or remedies, should be construed as a waiver of any such rights or
remedies.
3. AMENDMENTS TO LOAN AGREEMENT.
3.1 Section 5.1 of the Loan Agreement is hereby amended to delete the
following language in clause (ii) of the penultimate paragraph of such section:
or (ii) any of Borrower's now owned or hereafter acquired Intellectual
Property (other than a security interest in the Proceeds from the sale,
transfer or other disposition of Intellectual Property); PROVIDED,
HOWEVER, that software, firmware and operating systems that cannot be
removed from the Collateral without rendering the Collateral inoperable
shall be deemed to be part of the "Collateral" unless such construction is
prohibited by or inconsistent with any relevant license or other agreement
respecting such software, firmware or operating system.
3.2 The Loan Agreement is hereby amended to include the Security
Agreement (Intellectual Property) of even date herewith (the "IP SECURITY
AGREEMENT"), by and between Borrower and Lender in the form attached hereto as
Exhibit A as an "OTHER AGREEMENT" and to amend the definition of Collateral to
include the collateral described in IP Security Agreement.
4. FORBEARANCE FEE. Borrower shall pay to Lender a fee (the
"FORBEARANCE FEE") in the amount of $5,000.
5. COVENANTS.
5.1 NOTICE REQUIREMENT. Borrower covenants and agrees to
immediately notify Lender if Borrower believes there is a reasonable likelihood
that it will not be able to raise net proceeds of $10,000,000 in new equity, on
commercially reasonable terms and conditions, on or before August 1, 2007.
5.2 INTEREST RATE PROVISIONS. Notwithstanding anything set forth
in this Agreement, Borrower covenants and agrees that the Borrower's Liabilities
shall bear interest at the Default Rate in accordance with the Loan Agreement
from and including July 2, 2007.
6. CONDITIONS TO EFFECTIVENESS.
The effectiveness of this Agreement shall be subject to satisfaction
of each of the following conditions:
6.1 Receipt by Lender of a copy of this Agreement duly authorized,
executed and delivered by Borrower;
6.2 The absence of any Default or Events of Default, other than
the Existing Default;
6.3 Receipt by Lender of the IP Security Agreement duly
authorized, executed and delivered by Borrower;
6.4 Appropriate documents for filing with the United States Patent
and Trademark Office, the United States Copyright Office and all other filings
necessary to perfect the security interests granted to the Lender by the IP
Security Agreement, all appropriately completed and duly executed by the
Borrower;
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6.5 Receipt by Lender of the Forbearance Fee;
7. REPRESENTATIONS AND WARRANTIES. In order to induce the Lender to
enter into this Agreement, forbear with respect to the Existing Default in the
manner provided in this Agreement and amend the Loan Agreement in the manner
provided in this Agreement, the Borrower represents and warrants to the Lender
as follows:
7.1 POWER AND AUTHORITY. The Borrower has all requisite corporate
power and authority to enter into this Agreement and the IP Security Agreement
(collectively, the "FORBEARANCE AGREEMENTS") and to carry out the transactions
contemplated by, and perform its obligations under, the Loan Agreement as
amended by this Agreement (hereafter referred to as the "AMENDED LOAN
AGREEMENT").
7.2 AUTHORIZATION OF AGREEMENTS. The execution and delivery of the
Forbearance Agreements by the Borrower and the performance of the Forbearance
Agreements and the Amended Loan Agreement by the Borrower have been duly
authorized by all necessary action, and this Agreement has been duly executed
and delivered by the Borrower.
7.3 ENFORCEABILITY. Each of the Forbearance Agreements and the
Amended Loan Agreement constitutes the legal, valid and binding obligation of
the Borrower enforceable against the Borrower in accordance with its terms.
7.4 NO CONFLICT. The execution and delivery by the Borrower of the
Forbearance Agreements and the performance by the Borrower of each of the
Forbearance Agreements and the Amended Loan Agreement do not and will not (i)
contravene, in any material respect, any provision of any law, regulation,
decree, ruling, judgment or order that is applicable to the Borrower or its
properties or other assets, (ii) result in a breach of or constitute a default
under the charter, bylaws or other organizational documents of the Borrower or
any material agreement, indenture, lease or instrument binding upon the Borrower
or its properties or other assets or (iii) result in the creation or imposition
of any liens on its properties other than liens in favor of the Lender granted
by the Forbearance Agreements.
7.5 GOVERNMENTAL CONSENTS. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
the Borrower of the Forbearance Agreements.
7.6 REPRESENTATIONS AND WARRANTIES IN THE LOAN AGREEMENT. The
Borrower confirms that as of the date hereof the representations and warranties
contained in the Loan Agreement and the Other Agreements are (before and after
giving effect to this Agreement) true and correct (except to the extent any such
representation and warranty is expressly stated to have been made as of a
specific date, in which case it shall be true and correct as of such specific
date) and that no Default or Event of Default has occurred and is continuing
(other than the Existing Default).
8. MISCELLANEOUS.
8.1 EFFECT OF THIS AGREEMENT. Except as modified pursuant hereto,
no other changes or modifications to the Loan Agreement or Other Agreements are
intended or implied and in all other respects the Loan Agreement and Other
Agreements are hereby specifically ratified, restated and confirmed by all
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parties hereto as of the effective date hereof. To the extent of conflict
between the terms of this Agreement and the Loan Agreement or Other Agreements,
the terms of this Agreement shall control. The Loan Agreement and this Agreement
shall be read and construed as one agreement.
8.2 COSTS AND EXPENSES. Borrower absolutely and unconditionally
agrees to pay to Lender, on demand by Lender at any time and as often as the
occasion therefor may require, whether or not all or any of the transactions
contemplated by this Agreement are consummated: all fees and disbursements of
any counsel to Lender in connection with the preparation, negotiation,
execution, or delivery of this Agreement and any agreements delivered in
connection with the transactions contemplated hereby and expenses which shall at
any time be incurred or sustained by Lender or any participant of Lender or any
of their respective directors, officers, employees or agents as a consequence of
or in any way in connection with the preparation, negotiation, execution, or
delivery of this Agreement, the IP Security Agreement and any agreements
prepared, negotiated, executed or delivered in connection with the transactions
contemplated hereby, including any fees payable in connection with filings
necessary to perfect the security interests granted to the Lender by the IP
Security Agreement.
8.3 FURTHER ASSURANCES. The parties hereto shall execute and
deliver such additional documents and take such additional action as may be
necessary or desirable to effectuate the provisions and purposes of this
Agreement.
8.4 BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors and
assigns.
8.5 RELEASE.
(a) In consideration of the agreements of Lender contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower, on behalf of itself and
its successors, assigns, and other legal representatives, hereby absolutely,
unconditionally and irrevocably releases, remises and forever discharges Lender
and its successors and assigns, and its present and former shareholders,
affiliates, subsidiaries, divisions, predecessors, directors, officers,
attorneys, employees, agents and other representatives (Lender and all such
other Persons being hereinafter referred to collectively as the "RELEASEES" and
individually as a "RELEASEE"), of and from all demands, actions, causes of
action, suits, covenants, contracts, controversies, agreements, promises, sums
of money, accounts, bills, reckonings, damages and any and all other claims,
counterclaims, defenses, rights of set-off, demands and liabilities whatsoever
(individually, a "CLAIM" and collectively, "Claims") of every name and nature,
known or unknown, suspected or unsuspected, both at law and in equity, which
Borrower or any of its successors, assigns, or other legal representatives may
now or hereafter own, hold, have or claim to have against the Releasees or any
of them for, upon, or by reason of any circumstance, action, cause or thing
whatsoever which arises at any time on or prior to the day and date of this
Amendment, including for or on account of, or in relation to, or in any way in
connection with any of the Loan Agreement, or any of the Other Agreements or
transactions thereunder or related thereto.
(b) Borrower understands, acknowledges and agrees that the
release set forth above may be pleaded as a full and complete defense and may be
used as a basis for an injunction against any action, suit or other proceeding
which may be instituted, prosecuted or attempted in breach of the provisions of
such release.
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Borrower agrees that no fact, event, circumstance, evidence or transaction which
could now be asserted or which may hereafter be discovered shall affect in any
manner the final, absolute and unconditional nature of the release set forth
above.
8.6 COVENANT NOT TO XXX. Borrower, on behalf of itself and its
successors, assigns, and other legal representatives, hereby absolutely,
unconditionally and irrevocably, covenants and agrees with and in favor of each
Releasee that it will not xxx (at law, in equity, in any regulatory proceeding
or otherwise) any Releasee on the basis of any Claim released, remised and
discharged by Borrower pursuant to Section 8.5 hereof. If Borrower or any of its
successors, assigns or other legal representations violates the foregoing
covenant, Borrower, for itself and its successors, assigns and legal
representatives, agrees to pay, in addition to such other damages as any
Releasee may sustain as a result of such violation, all attorneys' fees and
costs incurred by any Releasee as a result of such violation.
8.7 SEVERABILITY. Any provision of this Agreement held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement.
8.8 REVIEWED BY ATTORNEYS. Borrower represents and warrants to
Lender that it (a) understands fully the terms of this Agreement and the
consequences of the execution and delivery of this Agreement, (b) has been
afforded an opportunity to have this Agreement reviewed by, and to discuss this
Agreement and document executed in connection herewith with, such attorneys and
other persons as Borrower may wish, and (c) has entered into this Agreement and
executed and delivered all documents in connection herewith of its own free will
and accord and without threat, duress or other coercion of any kind by any
Person. The parties hereto acknowledge and agree that neither this Agreement nor
the other documents executed pursuant hereto shall be construed more favorably
in favor of one than the other based upon which party drafted the same, it being
acknowledged that all parties hereto contributed substantially to the
negotiation and preparation of this Agreement and the other documents executed
pursuant hereto or in connection herewith.
8.9 GOVERNING LAW: CONSENT TO JURISDICTION AND VENUE. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THE LOAN AGREEMENT OR ANY OF THE OTHER
AGREEMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS AND
DECISIONS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF
LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. BORROWER HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED WITHIN THE COUNTY
OF XXXX, STATE OF ILLINOIS, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS
AGREEMENT, THE LOAN AGREEMENT OR ANY OF THE OTHER AGREEMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE LOAN AGREEMENT OR ANY OF THE
OTHER AGREEMENTS; PROVIDED, THAT LENDER AND BORROWER ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF SAN
FRANCISCO COUNTY; AND PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE
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DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF LENDER. BORROWER EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN
THE LOAN AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR THREE DAYS AFTER DEPOSIT IN THE
UNITED STATES MAILS, PROPER POSTAGE PREPAID.
8.10 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
DISPUTES ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE APPLYING
SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG LENDER AND BORROWER
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED IN CONNECTION WITH, THIS AGREEMENT OR THE TRANSACTIONS RELATED
HERETO.
8.11 COUNTERPARTS. This Agreement may be executed in identical
counterpart copies, each of which shall be an original, but all of which shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart thereof.
8.12 HEADINGS. Section headings used herein are for convenience of
reference only, are not part of this Agreement, and are not to be taken into
consideration in interpreting this Agreement.
8.13 RECITALS. The recitals set forth at the beginning of this
Agreement are true and correct, and such recitals are incorporated into and are
a part of this Agreement.
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IN WITNESS WHEREOF, this Agreement is executed and delivered as of the day
and year first above written.
"BORROWER" "LENDER"
SWMX, INC. BLUECREST CAPITAL FINANCE, L.P.
By: /s/ Xxx Xxxx By: BLUECREST CAPITAL FINANCE GP, LLC,
-------------------------------- Its: General Partner
Name: Xxx Xxxx
------------------------------ By: /s/ Xxxx Xxxx
Title: CFO -----------------------------------
----------------------------- Name: Xxxx Xxxx
Title: Managing Director
SOFTWAVE MEDIA EXCHANGE, INC.
By: /s/ Xxx Xxxx
--------------------------------
Name: Xxx Xxxx
------------------------------
Title: CFO
-----------------------------
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