EXHIBIT 10.21
AGREEMENT FOR CONVEYANCE IN LIEU OF FORECLOSURE
AND OTHER MATTERS
THIS AGREEMENT FOR CONVEYANCE IN LIEU OF FORECLOSURE AND OTHER MATTERS
("Agreement"), made this 28th day of September, 2001, by and between CYNTERGY
CORPORATION, a Delaware corporation ("Borrower") and TECHTEAM CYNTERGY, LLC, a
Michigan limited liability company ("Lender"), and XXXXXX X. XXXXXX and XXXX
XXXXXX.
RECITALS:
A. On or about January 29, 1999, Bank of America, N.A. (the "Bank")
and Borrower entered into a certain Financing and Security Agreement (the
"Financing Agreement") under which the Bank agreed to make available to Borrower
a line of credit for term loans in the maximum aggregate amount of $1,500,000
(the "Equipment Loan") and a revolving credit facility in the maximum principal
amount of $6,000,000 (the "Revolving Loan"). The Bank subsequently made a term
loan to Borrower in the amount of $169,876 (the "Term Loan"). The Revolving Loan
is evidenced by a Revolving Promissory Note dated January 29, 1999 (the
"Revolving Note"). The Equipment Loan is evidenced by seven separate notes (the
"Equipment Notes") of various dates. The Term Loan is evidenced by a Promissory
Note dated February 5, 1999 (the "Term Note"). The Revolving Note, the Equipment
Notes and the Term Note are jointly referred to herein as the "Notes".
B. The obligations of Borrower under the Financing Agreement and
the Notes are secured by the collateral described in the Financing Agreement
(the "Collateral").
C. The obligations of Borrower under the Financing Agreement and
the Notes are guaranteed by the Guaranty of Payment Agreement executed by Xxxxxx
X. Xxxxxx dated January 29, 1999 and a Limited Recourse Guaranty of Payment
Agreement dated the same date executed by Xxxx Xxxxxx (collectively the
"Guaranty"). Xxxxxx X. Xxxxxx and Xxxx Xxxxxx are jointly referred to herein as
"Guarantor".
D. Collectively, the Notes, the Financing Agreement, and the
Guaranty, and any other documents executed in connection therewith, shall be
referred to herein as the "Loan Documents."
E. The Bank informed the Borrower that it was in default of the
Financing Agreement and the Notes on or about March 1, 2000. The Bank and
Borrower entered into an agreement on June 29, 2000 pursuant to which the
parties agreed to amend certain provisions of the Loan Documents and the Bank
agreed to temporarily forebear from exercising its rights and remedies under the
Loan Documents. On December 31, 2000, the Revolving Note matured and has not
been repaid. As a result, Borrower is in default of its obligations under the
Notes and all sums outstanding under the Notes are now due in full without
further demand or notice.
-1-
F. Borrower and Guarantors acknowledge that they are in default
under the Loan Documents and are unable to meet their obligations thereunder
(the "Obligations").
G. Pursuant to the terms of an Assignment of Credit Facilities and
Financing Documents dated September 28, 2001, Lender has purchased the Notes and
has taken an assignment of all of the Bank's rights under the Guaranty and the
Financing Agreement.
H. The parties wish to resolve the default by Borrower's conveyance
of substantially all of its assets constituting the Collateral to Lender in
exchange for the partial discharge of Borrower's debt evidenced by the Notes and
the Financing Agreement (collectively the "Loan Documents").
NOW, THEREFORE, the parties hereto agree as follows:
1. Recitals. The recitals set forth above are expressly
incorporated herein and the parties admit the truth and accuracy thereof.
Capitalized terms not defined herein have the meanings given such terms in the
Loan Documents.
2. Acknowledgment of Defaults. Borrower and Guarantor acknowledge
that they are in default of the Obligations to Lender, that such defaults
constitute Events of Default under the Loan Documents and that Lender is
entitled to exercise its rights and remedies under the Loan Documents by virtue
of such defaults, including the right to repossess and foreclose the Collateral,
dispose of the Collateral at private or public sale, retain the Collateral in
full or partial satisfaction of the Obligations, xxx upon the Guaranty and to
otherwise enforce rights in the Collateral by any manner permitted by law. It is
agreed that Lender shall not be deemed to have waived or released any such
default or any of its rights by entering into this Agreement except as
specifically set forth herein. Borrower and Guarantor admit that neither of them
have any defense, setoff or counterclaim against Lender or with respect to the
Loan Documents.
3. Assignment and Conveyance in Lieu of Foreclosure; Payment by
Guarantor. Borrower hereby transfers, assigns and conveys to Lender absolutely
and free and clear of any right of redemption or other right or interest of
Borrower or anyone claiming through or under Borrower, including Guarantor, good
and indefeasible title in and to the Collateral, including but not limited to
the name "Cyntergy Corporation" or variants thereof, service marks, trademarks,
patents, copyrights and other similar rights, franchises or agreements,
fixtures, furniture and equipment, warranties, causes of action, accounts
receivable, all records and evidences of title pertaining to the Collateral, and
insurance proceeds; PROVIDED, HOWEVER, that Lender does not accept the transfer
or assignment of, and Borrower does not hereby transfer or assign the assets
identified on EXHIBIT E (the term "Collateral" shall hereinafter mean the
Collateral less the items set forth on Exhibit E). Guarantor shall pay Lender
$250,000 concurrently with the execution of this Agreement. Guarantors shall, as
a material condition of this Agreement, jointly enter into a Guaranty of Payment
Agreement in the form of EXHIBIT A (the "New Guaranty"). Upon delivery of this
Agreement and the New Guaranty and after receipt of the $250,000 by Lender, the
Guaranty (but not the New Guaranty) shall be deemed terminated, and Lender shall
-2-
take those steps necessary to remove the Confession of Judgment of record
against Guarantors (but Lender shall have no obligation to remove the Confession
of Judgment against Cyntergy).
4. Title. The conveyance of Borrower 's interest in and to the
Collateral shall be by a Xxxx of Sale in form of EXHIBIT B.
5. Covenants of Lender. Lender hereby covenants and agrees, subject
to the provisions of this Agreement, that:
a. Lender does hereby accept the Collateral in partial
satisfaction of the Obligations, in accordance with this Agreement.
Lender does hereby acquire the Collateral in lieu of foreclosure, and
does hereby credit against the Obligations $ 4,500,000, resulting from
this in lieu foreclosure. However, the interest conveyed in the
Collateral shall not be deemed to have merged with the Liens, and
nothing shall preclude Lender from further foreclosure of Lender's
interest in the Collateral.
b. Lender reserves the right to name Borrower in any suit
or proceeding to foreclose the Liens. In no event shall the agreement of
Lender to forebear from the exercise of any further rights and remedies
pursuant to this Agreement or applicable law constitute an admission,
waiver or release by Lender of any claim and shall in no event
constitute a waiver by Lender of any acceleration of maturity, or of any
default claimed by Lender, however denominated under the Loan Documents
or this Agreement.
6. Representations, Warranties and Covenants of Borrower. Borrower
does hereby represent and warrant to Lender as follows, and Guarantor hereby
joins in such representations and warranties:
a. Except as disclosed in EXHIBIT C, Borrower has received
no written notice of any, nor is there any pending litigation or
administrative proceeding involving in any manner the Collateral or the
ownership, leasing, operation, management, use, or maintenance thereof.
b. Borrower has received no written notice from any
federal, state, or local taxing authority asserting any, nor is there
any, tax, lien, or assessment against the Collateral, which is due and
which has not been paid.
c. Borrower is a Delaware corporation, duly organized,
validly existing and in good standing and qualified to do business in
each state in which such qualification is required for Borrower to
conduct its business.
d. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action by Borrower, and this
Agreement constitutes the legal, valid and binding obligation of
Borrower and Guarantor, enforceable against Borrower and Guarantor in
accordance with its terms, except as such terms may be limited by
bankruptcy,
-3-
insolvency, reorganization, moratorium or other similar laws or by legal
or equitable principles relating to or limiting creditors' rights
generally. All persons who have executed this Agreement on behalf of
Borrower have been duly authorized to do so by all necessary action on
behalf of Borrower. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
will (i) violate any provision of Borrower's organizational documents or
governing instruments of Borrower, (ii) violate any judgment, order,
ruling, injunction, decree, or award of any court, administrative agency
or governmental body against, or binding upon Borrower, or (iii) to the
best of Borrower's knowledge, constitute a violation by Borrower of any
law or regulation of any jurisdiction as such law or regulation relates
to or affects Borrower.
e. Except as disclosed on EXHIBIT D, Borrower has no
knowledge of any liens which have been filed against the Collateral.
f. No representation or warranty by Borrower or Guarantor,
written or oral, (whether or not contained in this Agreement or in any
other instrument executed in connection herewith), contains any untrue
statement of any material fact or omits any material fact or statement
necessary to make the facts or statements contained herein or therein
not false or misleading.
g. All information and documents furnished to Lender
pursuant to this Agreement are true, accurate and complete in all
material respects.
h. Borrower is conveying the Collateral to Lender or its
designee in lieu of the exercise of Lender's remedies pursuant to the
Loan Documents, and Borrower and Guarantor have throughout the
negotiation, preparation, and execution of this Agreement been
represented by competent legal counsel of its own choosing. This
Agreement was reviewed by Borrower and Guarantor and their counsel, and
Borrower and Guarantor acknowledge and agree that they (i) understand
fully the terms of this Agreement and the consequences of the issuance
hereof and thereof, and (ii) have entered into this Agreement of their
own free will and accord, without threat or duress and pursuant to
arms-length negotiations.
i. Borrower has complied with all applicable laws,
ordinances, regulations, statutes, rules and restrictions (collectively,
"Laws") related to the Collateral.
7. Assignment of Leases. In addition to the Collateral conveyed to
Lender, Borrower shall assign to Lender such leases of equipment or premises as
Lender may specify; provided however that Lender does not assume and agree to
pay any such leases except pursuant to any agreements Lender may enter into with
the respective Lessors.
8. No Assumption by Lender or Designee. Unless specifically assumed
herein or by separate action, neither Lender nor any designee of Lender assumes
any obligations owed by Borrower to any person or entity.
-4-
9. Absolute Conveyance. Borrower and Guarantor agree that the
conveyance of the Collateral to Lender, or its designee, according to the terms
of this Agreement is an absolute conveyance of all of its right, title, and
interest in and to the Collateral in fact as well as form and was not and is not
now intended as a mortgage, trust conveyance, deed of trust, or security
instrument of any kind; that the consideration for such conveyance is as exactly
as recited herein and that Borrower has no further interest (including rights of
redemption) or claims in and to the Collateral or to the proceeds and profits
which may be derived thereof, of any kind whatsoever. Borrower further agrees
that the conveyance of the Collateral to Lender was not occasioned by duress or
undue influence. The priority of the Liens is intended to be and shall remain in
full force and effect and nothing herein or in any instruments executed in
connection herewith shall be construed to subordinate the priority of the Liens
to any other liens or encumbrances whatsoever. If the conveyance of the
Collateral from Borrower to Lender or its designee pursuant to the Closing
Documents is voided, avoided, or set aside for any reason whatsoever, then (i)
if the Liens shall have been previously released, in whole or in part, the same
shall be automatically revived and reinstated; (ii) Lender shall have the right
to foreclose the Liens and take such other action permitted thereby or pursuant
to the other Loan Documents to enforce the Liens; and (iii) all costs of Lender
incurred in connection with the enforcement of the Liens shall be deemed a part
of the indebtedness secured by the Liens, which indebtedness is nonrecourse to
Borrower and its partners.
10. Release of Lender. Borrower and Guarantor hereby release Lender
and Lender's directors, officers, shareholders and any other related parties,
employees or agents from and against any and all claims, demands, injuries,
liability, actions, causes of action, setoffs, claims or deductions or
recoupment of any kind whatsoever, past, present, known or unknown, direct or
derivative, liquidated or contingent, and contract, tort, at law or in equity
that it may have had at any time prior to and including the date of this
Agreement.
11. Lender Remedies. Should Borrower or Guarantor breach any of
their obligations under this Agreement, Borrower and Guarantor both agree that
Lender shall not have an adequate remedy at law and, therefore, Borrower and
Lender consent to, in such order as Lender may elect:
a. Mandatory injunctive relief.
b. Appointment of a receiver.
c. Such other equitable remedies as are necessary to
require Borrower or Guarantor to perform its obligations under this
Agreement.
12. Option. Guarantor shall have the option to purchase from Lender
two promissory notes from Technology Facility Management PLC, each in the amount
of $325,000, for a total exercise price of $250,000. This option must be
exercised by delivery of written notice of intent to exercise and the payment to
Lender of good funds in US Dollars no later than June 2, 2002.
13. Notices. All notices to be given hereunder shall be personally
delivered or sent registered or certified mail, return receipt requested, with
postage prepaid, to the parties at the
-5-
following addresses (or to such other or further addresses as the parties may
hereafter designate by like notice similarly sent):
TO BORROWER: CYNTERGY CORPORATION
OR GUARANTOR 00000 Xxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
with a copy to: Xxxxx, Xxxxxxx
0000 Xxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxx, Esq.
TO LENDER: TECHTEAM CYNTERGY, LLC
00000 Xxxx 00 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
with a copy to: Jaffe, Raitt, Heuer & Xxxxx
Xxx Xxxxxxxx Xxxxxx - Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxx X. Xxxxxxx, Esq.
All notices sent by mail as set forth above shall be deemed effectively given on
the date two (2) business days after the date of mailing. All notices personally
delivered shall be deemed effectively given on the date of such delivery.
14. Entire Agreement This Agreement contains the entire agreement
between the parties relating to the transaction contemplated hereby. All prior
or contemporaneous agreements, understandings, representations and statements,
whether written or oral, are merged herein.
15. No Waiver. No delay on the part of Lender or Borrower in
exercising any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any waiver of any right, power or privilege hereunder operate
as a waiver of any other right, power or privilege hereunder, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof, or the exercise of any other right, power
or privilege hereunder. All rights and remedies herein provided are cumulative
and are not exclusive of any rights or remedies which the parties hereto may
otherwise have at law or in equity, except as expressly limited in this
Agreement. Lender shall have the right to waive any of the conditions precedent
to its obligations under this Agreement. No such waiver, modification, discharge
or amendment of this Agreement, will be valid in the absence of the written and
signed consent of the party against which enforcement of such is sought, except
as otherwise provided herein.
16. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. No assignment of
-6-
this Agreement or the rights hereunder may be made by Borrower or Guarantor
without the written consent of Lender. No assignment of this Agreement or of any
rights hereunder by Borrower shall relieve such assigning party of any of its
obligations or liabilities hereunder.
17. Exhibits. All exhibits annexed hereto and all schedules referred
to herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein.
18. Further Assurance. The parties hereto shall execute and deliver
such other documents and instruments and perform such further acts necessary to
effectuate the transactions contemplated hereby.
19. No Joint Venture. The relationship between Lender and Borrower
is solely that of lender and borrower. Lender has no fiduciary or special
relationship with Borrower. Nothing contained in this Agreement is intended to
create any partnership, joint venture, or association between Lender and
Borrower.
20. Brokers. Each party represents to the others that no broker has
been involved in this transaction. It is agreed that if any claims for brokerage
commissions or fees are ever made against Borrower or Lender in connection with
this transaction, all such claims shall be handled and paid by the party whose
actions or alleged commitments form the basis of such claim and the party
against whom the claim is made shall indemnify and hold harmless the other from
and against any and all such claims or demands, including without limitation,
reasonable attorneys' fees, with respect to any brokerage fees or agents'
commissions or other compensation asserted by any person, firm or corporation in
connection with the Agreement or the transactions contemplated hereby.
21. Final Agreement. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF.
22. Captions. The captions, section numbers, and article numbers
appearing in this Agreement are inserted only as a matter of convenience and do
not define, limit, construe, or describe the scope or intent of such paragraphs
or articles of this Agreement nor in any way affect this Agreement.
23. Time of Essence; Choice of Law. All parties hereto agree that
time is of the essence in this transaction and that this Agreement shall be
governed by and interpreted in accordance with the laws of the State of
Michigan. This Agreement is performable in Michigan and venue for any action in
connection herewith shall be proper in Oakland County, Michigan.
24. Designee. Lender does hereby reserve the right to appoint a
designee or designees to accept title to the Collateral at the time of the
Closing. Such designee or designees may take
-7-
the form of a trust, corporation, or a partnership, whether a general
partnership or a limited partnership, or both. Borrower and Guarantor hereby
agree that all representations, warranties, covenants, and indemnifications
shall inure to the benefit of Lender and such designee or designees and their
respective successors and assigns.
25. Non-Business Day. Whenever under the terms and provisions of
this Agreement the time for performance of a condition or the giving of a notice
falls upon a Saturday, Sunday, or holiday, such time for performance or for the
giving of notice shall be extended to the next business day.
26. Contracts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
27. Jury Waiver. BORROWER, GUARANTOR AND LENDER DO EACH KNOWINGLY,
VOLUNTARILY AND INTELLIGENTLY WAIVE THEIR CONSTITUTIONAL RIGHT TO A TRIAL BY
JURY WITH RESPECT TO ANY CLAIM, DISPUTE, CONFLICT OR CONTENTION, IF ANY, AS MAY
ARISE UNDER THIS AGREEMENT AND AGREE THAT ANY LITIGATION BETWEEN THE PARTIES
CONCERNING THIS AGREEMENT SHALL BE HEARD BY A COURT OF COMPETENT JURISDICTION
SITTING WITHOUT A JURY. BORROWER AND LENDER HEREBY CONFIRM TO EACH OTHER THAT
THEY HAVE REVIEWED THE EFFECT OF THIS WAIVER OF JURY TRIAL WITH COMPETENT LEGAL
COUNSEL OF THEIR CHOICE, OR HAVE BEEN AFFORDED THE OPPORTUNITY TO DO SO PRIOR TO
SIGNING THIS AGREEMENT.
28. No Third Parties. This Agreement is for the benefit of Borrower
and Lender only and not for the benefit of any third party, and no third party
may derive any benefit herefrom. However, this Agreement shall be binding upon
the successors of each of the parties hereto.
29. Counterparts. This Agreement may be executed in any number of
counterparts and when each party has executed at least one counterpart, this
instrument shall constitute a completed, binding agreement.
-8-
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date and year first above written.
"BORROWER"
CYNTERGY CORPORATION
By:
-------------------------------------
Its:
------------------------------------
"GUARANTOR"
----------------------------------------
Xxxxxx X. Xxxxxx
----------------------------------------
Xxxx Xxxxxx
"LENDER"
TECHTEAM CYNTERGY, LLC
By:
-------------------------------------
[print name]
Its: Manager
-9-
LIST OF EXHIBITS
Exhibit A - Guaranty of Payment Agreement
Exhibit B - Xxxx of Sale
Exhibit C - Covenant Deed
Exhibit D - Permitted Encumbrances
Exhibit E - Excluded Assets
-10-
EXHIBIT A
GUARANTY OF PAYMENT AGREEMENT
-11-
EXHIBIT B
XXXX OF SALE
For Ten and No/100 Dollars ($10.00), in hand paid, and other good and
valuable consideration set forth in the Agreement for Conveyance in Lieu of
Foreclosure and Other Matters (the "Agreement") to which this Xxxx of Sale is an
Exhibit, the receipt and adequacy of which is hereby acknowledged, CYNTERGY
CORPORATION, does hereby sell, assign, transfer and convey unto TechTeam
Cyntergy, LLC, all of its right, title and interest in and to the Collateral, as
that term is described in the Agreement, but excluding the assets described on
Exhibit E to the Agreement.
Executed as of September 28, 2001
CYNTERGY CORPORATION
By:
------------------------------
Its:
-----------------------------
-12-
EXHIBIT C
PENDING LITIGATION
-13-
EXHIBIT D
LIENS
-14-
EXHIBIT E
EXCLUDED ASSETS
CYNTERCORP, INC. COMMON STOCK OWNED BY XXXXXX XXXXXX (600 SHARES) AND XXXX XXXXX
(400 SHARES) AND PLEDGED TO BANK OF AMERICA
ALL SHARES OF COMMON STOCK IN CYNTERGY EMEA, LTD. (A DELAWARE CORPORATION) OWNED
BY XXXXXX XXXXXX AND XXXX XXXXXX AND PLEDGED TO THE BANK OF AMERICA
ALL CUSTOMER CONTRACTS OF CYNTERGY CORPORATION WHICH ARE NOT SPECIFICALLY
ACQUIRED BY TECHTEAM CYNTERGY, L.L.C. THROUGH A SUPPLEMENT TO THIS AGREEMENT
-15-
