Exhibit 10.5
BORROWER FORBEARANCE FEE PAYMENT AGREEMENT
BORROWER FORBEARANCE FEE PAYMENT AGREEMENT (the "Agreement"), made as of the
22nd day of December, 2000 by and between FORT ORANGE PAPER COMPANY, INC., a New
York business corporation, with an address for the receipt of mail at 0000 Xxxxx
Xxxx, Xxxxxxxxx-xx-Xxxxxx, Xxx Xxxx 00000, formerly known as Fort Orange
Acquisition Co., Inc. (the "Borrower") and RELM WIRELESS CORPORATION, a Nevada
corporation with an address for the receipt of mail at 0000 Xxxxxxxxxx Xxxxx,
Xxxx Xxxxxxxxx, Xxxxxxx 00000 (the "Lender").
RECITALS
1. Borrower is indebted to Lender in the amount of $1,600,000.00 as
evidenced by that certain promissory note dated as of June 16, 1997
(the "Existing Note").
2. Borrower and Lender have agreed to modify the terms of the Existing
Note pursuant to the terms of that certain Loan Modification Agreement
dated of even date herewith. In accordance with the Loan Modification
Agreement, the Borrower has agreed to reduce the outstanding principal
amount of the Existing Note by $700,000.00 and has remitted to Lender
all accrued and unpaid interest due under the Existing Note.
3. In consideration for this payment and the terms and provisions of this
Agreement, the Lender has agreed to substitute, amend and restate the
Existing Note and in exchange therefor accept two substitute promissory
notes. One in the face amount of $300,000.00 (the "$300K Note") and one
in the face amount of $600,000.00 (the "$600K Note").
4. In further consideration of the Lender's agreement to accept the $300K
Note and the $600K Note in exchange for the remaining obligations under
the Existing Note and the Lender's willingness to forebear from
enforcing its rights under the Existing Note and the Guaranty, the
Borrower has agreed to provide the Lender with certain Forbearance
Payments in the event the $300K Note and the $600K Note are not paid in
full by the dates designated, all as set forth in this Agreement.
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency
of which are hereby acknowledged, the Borrower and the Lender do each hereby
agree as follows:
DEFINITIONS
The following terms used in this Agreement shall have that meaning ascribed to
such term as set forth below:
"Control" with respect to the Borrower or any Successor Entity means Xxxx X.
Xxx, Xx.'s ownership (or in the case of Permitted Family Transfers, control), of
more than fifty percent
(50%) of the voting Equity Interest of that Person on a fully diluted basis
calculated assuming the exercise of all options and warrants and assuming the
conversion of any Equity Interest convertible into voting Equity Interest which
as of the date in question have an exercise price equal to or less than the fair
market value of such interest to be acquired.
"Equity Interest" means capital stock, warrants, options, convertible securities
or notes, other rights to acquire capital stock, stock appreciation rights,
phantom stock rights, profit participation rights (other than reasonable
employee bonuses based upon profitability), and other rights and interest in any
share of the equity of an entity, of any kind.
"Payment Due Date" means the date upon which a Sale of the Borrower has been
completed.
"Permitted Family Transfers" means transfers of Equity Interests by Xxxx X. Xxx,
Xx. to members of his immediate family, or to trusts for the beneficial interest
of Xxxx X. Xxx, Xx. or members of his immediate family, or to entities or
partnerships the sole owners and beneficiaries of which are Xxxx X. Xxx, Xx. and
members of his immediate family, provided, however, that in each case Xxxx X.
Xxx, Xx. at all times retains full and unencumbered voting control with respect
to such transferred Equity Interests.
"Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint stock company, trust,
unincorporated organization or government or any agency or political
subdivision.
"Sale of the Borrower" means (i) the consolidation or merger of the Borrower or
any Successor Entity into any Person not under the Control of Xxxx X. Xxx, Xx.
and/or one or more Permitted Family Transferees, (ii) the voluntary sale or
transfer of all or substantially all of the assets of Borrower or any Successor
Entity in one or more related transactions to, any Person, other than Xxxx X.
Xxx, Xx. and/or one or more Permitted Family Transferees or (iii) any voluntary
change in Control of the Borrower or any Successor Entity.
"Successor Entity" means Xxxx X. Xxx, Xx. and/or any Person under the control of
Xxxx X. Xxx, Xx. and/or one or more Permitted Family Transferees which have (i)
consolidated with or into which the Borrower has been merged and (ii) purchased
all or substantially all of the assets of Borrower in one or more related
transactions.
All capitalized terms used herein and not otherwise defined herein shall have
the meaning given said terms in the Loan Modification Agreement, and/or the
documents referenced therein.
I. PAYMENT OBLIGATION. If the $300K Note and the $600K Note are not paid
in full:
(i) On or before December 31, 2002 but are paid in full in 2003,
then on the Payment Due Date, the Borrower shall remit to the
Lender a Forbearance Fee in the sum of One Hundred Fifty
Thousand Dollars ($150,000.00);
(ii) On or before December 31, 2003 but are paid in full in 2004,
then on the Payment Due Date, the Borrower shall remit to the
Lender a Forbearance Fee in the sum of Three Hundred Thousand
Dollars ($300,000.00); or
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(iii) On or before December 31, 2004, then on the Payment Due Date,
the Borrower shall remit to the Lender a Forbearance Fee in
the sum of Four Hundred Fifty Thousand Dollars ($450,000.00).
II. SUCCESSORS. In connection with any Sale of the Borrower to a Successor
Entity, the Successor Entity shall execute and deliver to the Lender, in such
form as the Lender may reasonably request, an acknowledgment by the Successor
Entity of its assumption of the obligations of the Borrower hereunder.
III. GENERAL TERMS AND PROVISIONS. (i) Borrower and/or any Successor Entity
shall make all payments to Lender at the address of Lender as set forth on the
first page of this Agreement or to such other place or places as Lender, from
time to time, shall designate in writing to Borrower and/or any Successor
Entity. (ii) the Borrower's obligations under this Agreement may be paid at any
time. (iii) Interest shall not accrue on nor shall the Borrower be obligated to
make any payment of interest with respect to any payment under section I,
hereof. (iv) The Lender's right to receive payments hereunder shall be subject
to the terms and conditions of that certain Standby Creditor's Agreement dated
as of December 22, 2000 by and among New York Business Development Corporation
("NYBDC"), the Borrower, Lender and others (the "Standby Agreement"). The NYBDC
shall be a third party beneficiary of this limitation as if it were a party
hereto. (v) Nothing contained in this Agreement shall or shall be deemed to
modify the terms and provisions of the $300K Note and/or the $600K Note. (vi)
Subject to the terms and provisions of the Standby Agreement, the Borrower shall
pay all Forbearance Fees due on the Payment Due Date hereunder prior to the
payment of any sums due and owing on that date under the $300K Note and the
$600K Note. (vi) Borrower shall reimburse Lender for the fees and expenses of
its counsel in connection with the preparation, review, execution and delivery
of this Agreement, the Loan Modification Agreement and the agreements and
transactions contemplated by or executed and delivered in connection with the
Loan Modification Agreement.
IV. MISCELLANEOUS PROVISIONS. (i) This Agreement and all questions relating to
its validity, interpretation or performance and enforcement (other than matters
concerning choice of law) shall be governed by and construed in accordance with
the laws of the State of New York. (ii) This Agreement shall be binding upon
Borrower and any Successor Entity and shall inure to the benefit of Lender, and
its successors and assigns. (iii) This Agreement may not be modified or amended
other than by an agreement in writing signed by Borrower and Lender. (iv) The
right of the Lender to the Forbearance Fees due under section 1, hereof, is non
negotiable. The Lender may not assign its rights to receive such payments to any
third party. (v) The parties shall execute and deliver to each other any
documents reasonably requested to carry out the purposes of this Agreement. (vi)
The provisions of this Agreement shall inure and be binding upon the parties
hereto and their respective successors and permitted assigns. (vii) This
Agreement and all other agreements executed in consummation of the transactions
contemplated hereby, may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Borrower Forbearance
Fee Payment Agreement as of the date and year written above.
"BORROWER"
THE FORT ORANGE PAPER COMPANY, INC.
By: /s/ XXXX X. XXX, XX., PRESIDENT
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Xxxx X. Xxx, Xx., President
"Lender"
RELM WIRELESS CORPORATION
By: /s/ XXXXXX XXXXXXX
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Its: Chairman
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