Exhibit 10.6
FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT ("Forbearance Agreement") made as of this 6th
day of January, 2007, between SUPERIOR GALLERIES, INC., a Delaware corporation
(the "Borrower") and STANFORD INTERNATIONAL BANK LTD., a company organized under
the laws of Antigua (the "Lender").
W I T N E S S E T H :
WHEREAS, pursuant to a Commercial Loan and Security Agreement originally
dated October 1, 2003, as amended as of March 29, 2005 and as further amended on
April 7, 2006, Stanford Financial Group Company ("SFG") has provided certain
credit facilities to Borrower (the "Loan Agreement"). On November 30, 2004, the
Lender was assigned all of SFG's right, title and interest in the Loan Agreement
and the promissory note issued thereunder.
WHEREAS, pursuant to the Loan Agreement, Borrower has executed that certain
Commercial Note originally dated March 29, 2005 in the principal amount of
$10,850,000 (as the same now exists or may hereafter be amended, restated,
replaced, renewed, extended, supplemented, substituted or otherwise modified,
collectively, the "Note"); and
WHEREAS, the Borrower hereby acknowledges, confirms and agrees that it is
in default of its obligations under the Loan Agreement and the Note and it
continues to be unable to perform its obligations thereunder, which defaults
continue to exist and which Lender has suffered to exist (the "Existing
Defaults"), and as a result of the Existing Defaults, the Lender is entitled, as
of the date hereof, to exercise any and all of its rights and remedies under the
Loan Agreement, the Note, applicable law or otherwise to realize upon certain
collateral (the "Collateral") and to collect the obligations owing to Lender
under the Loan Agreement and the Note; and
WHEREAS, in connection with the transactions contemplated by that certain
Amended and Restated Agreement and Plan of Merger and Reorganization, of even
date herewith, by and among DGSE Companies, Inc., a Nevada corporation, DGSE
Merger Corp., a Delaware corporation, the Borrower and the Lender, as
stockholder agent (the "Merger Agreement"), the Borrower has requested that the
Lender forbear for a limited period of time from exercising its rights and
remedies under the Loan Agreement and the Note; and
WHEREAS, the Lender has advised the Borrower that the Lender will not waive
the Existing Defaults and desires to preserve the rights and remedies arising
under the Loan Agreement and the Note as a result of the existence and
continuance of the Existing Defaults; and
WHEREAS, subject to the terms and conditions set forth herein, Lender has
agreed to accommodate the request of the Borrower to forbear from exercising the
rights and remedies of the Lender under the Loan Agreement and the Note for a
limited period of time.
NOW THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree that the foregoing preliminary
statements are true and correct and further agree as follows:
AGREEMENT
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1. Recitals. Each party hereto agrees that the foregoing recitals are true
and correct and are hereby incorporated herein by this reference.
2. Acknowledgment of Outstanding Obligations. Borrower hereby acknowledges,
confirms and agrees that as of the date hereof, the Borrower is indebted to the
Lender in the aggregate principal amount of $8,732,987.96, plus accrued and
unpaid interest and plus all costs, fees, commissions, expenses and other sums
and charges due and owing to the Lender under the Note, including, without
limitation, all costs and expenses (including attorneys' fees and expenses)
incurred by Lender (all of the foregoing is collectively referred to as the
"Existing Debt"). The Borrower hereby acknowledges, confirms and agrees that as
of the date hereof, the Existing Debt is due and owing by the Borrower to the
Lender without offset, defense or counterclaim of any kind, nature or
description whatsoever.
3. Binding Effect of Note. The Borrower hereby acknowledges, confirms and
agrees that: (a) the Loan Agreement, the Note and each of the loan documents to
which Borrower is a party has been duly executed and delivered to the Lender,
and is in full force and effect as of the date hereof; (b) the covenants,
agreements and obligations of Borrower contained in or incurred under the Loan
Agreement, the Note and each of the loan documents constitutes the legal, valid
and binding obligations of Borrower, are enforceable against Borrower, in
accordance with the respective terms and conditions thereof, and Borrower has no
valid offset, defense or counterclaim to the enforcement of such obligations;
and (c) Lender is and shall be entitled to the rights, remedies and benefits
provided for in the Loan Agreement, the Note and each of the loan documents
pursuant to applicable law, subject to the terms and conditions of this
Forbearance Agreement.
4. Acknowledgment of Liens and Security Interests. The Borrower hereby
ratifies and confirms its grant to the Lender of the liens upon and security
interests in the Collateral (as such term is defined in the Loan Agreement)
heretofore pledged, granted or assigned to Lender as security for its
obligations under the Loan Agreement and the Note, and acknowledges and confirms
that such liens and security interests secure and shall continue to secure the
obligations of the Borrower to the Lender under the Loan Agreement and the Note.
5. Release. In consideration of the agreement of the Lender to forbear from
exercising its rights and remedies arising in connection with the Existing
Defaults, the Borrower forever releases and discharges the Lender, and its
successors and assigns from any and all actions, causes of action, suits, debts,
dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, extents, executions, claims and demands whatsoever, in law or equity,
which the Borrower, or any of its respective successors or assigns, ever had,
now or hereafter can, shall or may, have for, upon, or by reason of any matter,
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cause or thing whatsoever, against the Lender, to the date of this Forbearance
Agreement arising under or in any way connected with the Loan Agreement, the
Note or this Forbearance Agreement.
6. Preservation of Existing Defaults. The Borrower hereby acknowledges,
confirms and agrees that (a) the Existing Defaults are preserved and shall
continue to exist after the execution and delivery of this Forbearance
Agreement; and (b) subject to the conditions set forth in this Forbearance
Agreement, the rights and remedies of the Lender arising by reason of the
Existing Defaults are preserved in all respects without prejudice to the Lender.
7. Forbearance.
(a) Each of the Lender and the Borrower agrees that, during the
Forbearance Period (as defined below), the Lender will forbear from exercising
any of its rights and/or remedies arising by reason of the Existing Defaults to
realize upon the Collateral, or any part thereof, and/or to commence any action
against the Borrower to collect the obligations owing by the Borrower to the
Lender. For the purposes of this Forbearance Agreement, the term "Forbearance
Period" shall mean that period commencing on the date hereof and ending on the
earlier to occur of (i) six months from the date that the Form S-4 is initially
filed with the Securities and Exchange Commission by DGSE Companies, Inc.
pursuant to the terms of the Merger Agreement, and (ii) immediately upon notice
by Lender to the Borrower following the date of occurrence of an Additional
Default (as defined below).
(b) Upon the termination of the Forbearance Period, the agreement of
the Lender to forbear shall automatically and without further action or notice
terminate and be of no further force or effect, it being expressly agreed that
the effect of such termination of the Forbearance Period will be to permit the
Lender, without notice, demand or advertisement (all of which are expressly
waived by the Borrower), to exercise its rights and remedies arising by reason
of the Existing Defaults or applicable law with respect to the Collateral and
the obligations owing by the Borrower, all without further notice, passage of
time or forbearance of any kind, or nature.
(c) In addition to the foregoing agreements, during the Forbearance
Period and provided no Additional Default has occurred, the Lender shall: (i)
continue to make advances under the Loan Agreement (subject to the terms and
conditions thereof); (ii) not demand any repayment of principal under the Loan
Agreement or the Note; and (iii) continue to charge the Borrower interest on the
outstanding principal amount under the Loan Agreement at the non-default
interest rate set forth therein.
8. Additional Defaults; Remedies.
(a) The occurrence of any one or more of the following shall constitute
an "Additional Default" under this Forbearance Agreement:
(i) the breach of any representations, warranties, covenants or
agreements contained in this Forbearance Agreement;
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(ii) the occurrence of an additional default under the Loan
Agreement, the Note and each of the loan documents, other than any of the
Existing Events of Default; or
(b) Upon the occurrence of any Additional Default hereunder, and
notwithstanding anything to the contrary contained in this Forbearance
Agreement, the Lender may thereupon, and at any time and from time to time
thereafter, in full or in part, exercise any and all of its rights and remedies
under this Forbearance Agreement, the Loan Agreement, the Note, applicable law
or otherwise, all of which rights and remedies shall be non-exclusive and
cumulative and exercisable in whatever order or manner as the Lender, in its
sole discretion, may deem appropriate.
9. General Provisions.
(a) Upon the request of the Lender, the Borrower shall execute and
deliver to Lender, or cause to be executed and delivered, all such additional
documents, instruments and agreements as the Lender, may determine, in its sole
discretion, is necessary or desirable to effectuate the purposes and intent of
this Forbearance Agreement.
(b) This Forbearance Agreement shall be binding upon the Borrower and
its successors and assigns.
(c) The validity of this Forbearance Agreement, its construction,
interpretation and enforcement, shall be determined under and according to the
laws of the State of Florida, without any reference to its principles of
conflicts of law.
(d) THE BORROWER HEREBY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING UNDER, ARISING OUT OF OR RELATED TO THIS FORBEARANCE AGREEMENT.
(e) The unenforceability or invalidity of any one or more provisions
hereof shall not render any other provisions herein contained unenforceable or
invalid.
(f) This Forbearance Agreement sets forth the entire understanding of
the parties with respect to the matters set forth herein and supersedes in their
entirety any and all understandings and agreements, whether written or oral, of
the parties with respect to the foregoing. Except as expressly amended or
otherwise modified hereby (including, without limitation, the preservation of
the Existing Defaults), the Loan Agreement and the Note remain in full force and
effect in accordance with their respective terms and provisions as of the date
hereof, except that, in the event of any conflict between any term or provision
of this Forbearance Agreement and any term or provision of the Loan Agreement or
the Note, the term or provision of this Forbearance Agreement shall control.
This Forbearance Agreement cannot be changed, modified, amended, waived or
terminated in any respect, except by a writing executed by the party to be
charged.
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(g) This Forbearance Agreement may be executed in one or more
counterparts, each of which shall constitute but one and the same Forbearance
Agreement.
(h) Executed copies of this Forbearance Agreement may be delivered by
facsimile transmission or other electronic means.
[Signatures Begin on Following Page]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Forbearance
Agreement as of the date first written above.
Superior Galleries, Inc.
By: /s/ Xxxxxxx XxXxxxxx
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Xxxxxxx XxXxxxxx
Chief Executive Officer
Stanford International Bank Ltd.
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Chief Financial Officer
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