FORBEARANCE AGREEMENT
Exhibit
10.2
This
FORBEARANCE AGREEMENT, dated as of June 11, 2009 (this “Agreement”), is
entered into by and among Applied Solar, Inc. (f/k/a Open Energy Corporation), a
Nevada corporation (the “Borrower”) and The
Quercus Trust, in its capacity as lender under the Loan and Security Agreement
dated May 18, 2009 (“May 2009 LSA”), the
Loan and Security Agreement dated April 29, 2008 (“April 2008 LSA”), and
holder of the Series B Convertible Note dated September 19, 2007 (the
“Series B
Note”) (in such capacities, the “Lender”).
W
I T N E S S E T H:
WHEREAS,
the Borrower and the Lender are parties to the May 2009 LSA, the April 2008 LSA
and the Series B Note, including all annexes, exhibits and schedules thereto (as
the same may from time to time have been amended, restated, supplemented or
otherwise modified as of the date hereof, the “Loan
Agreements”);
WHEREAS,
the Specified Defaults (as hereinafter defined) have occurred and are continuing
as of the date hereof;
WHEREAS,
Borrower has requested that Lender forbear from the exercise of its rights and
remedies under the Loan Agreements and other instruments and agreements executed
and delivered to the Lender in connection therewith (collectively with the Loan
Agreements, the “Loan
Documents”) notwithstanding the occurrence of one or more Specified
Defaults; and
WHEREAS,
subject to the terms and conditions hereof, Lender has agreed to forbear from
the exercise of certain of its rights under the Loan Documents;
NOW,
THEREFORE, in consideration of the mutual covenants set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by all parties hereto, the parties hereto hereby agree as
follows:
1. Defined
Terms. Each capitalized term used herein and not otherwise
defined herein shall have the meaning attributed to such term in the applicable
Loan Agreement. Each of the following capitalized terms shall have
the meaning set forth below:
(a) “Forbearance Default”
means the occurrence of any Default or Event of Default, other than the
Specified Defaults.
(b) “Forbearance Period”
means the period beginning on the date hereof and ending on the Forbearance
Termination Date.
(c) “Forbearance Termination
Date” means the earliest to occur of (i) 5:00 p.m. (pacific daylight
time) on July 1, 2009, (ii) the date upon which a Forbearance Default occurs, or
(iii) the breach by any Borrower of any representation, warranty, covenant, or
agreement contained herein.
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(d) “Specified Defaults”
means the following Defaults and/or Events of Default under the Loan
Agreements:
(i) Borrower’s
breach of Section 8.2 of the Series B Note;
(ii) Borrower’s
breach of Sections 8.1, 8.2 and 8.8 (by reason of Borrower’s violation of the
covenant in Section 7.10(vi) of the April 2008 LSA) of the April 2008 LSA;
and
(iii) Borrower’s
breach of Section 4(a)(vi) of the Series B Note.
2. Representations,
Warranties, Confirmations, and Agreements by Borrower with respect to Specified
Defaults and Obligations.
(a) The
Borrower represents and warrants to Lender that (i) the Specified Defaults have
occurred and are continuing; and (ii) no Defaults or Events of Defaults other
than the Specified Defaults have occurred and are continuing as of the date
hereof or, as of the date hereof, are expected to occur prior to the expiration
of the Forbearance Period.
(b) The
Borrower acknowledges and agrees that as of the date hereof, the principal
balances of the outstanding Obligations under the Loan Agreements (which amount
does not include interest (other than interest which has been capitalized and
added to the principal balances of the Loans), fees, expenses and other amounts
which are chargeable or otherwise reimbursable under the Loan Agreements) are as
follows:
|
Loan
Agreement
|
Principal
Balance of Outstanding Obligations
|
|
May
2009 LSA
|
At
least $698,000
|
|
April
2008 LSA
|
At
least $3,216,848
|
|
Series
B Note
|
At
least $20,000,000
|
|
TOTAL
|
At
least $23,914,848
|
The
Borrower confirms, acknowledges, and agrees that all of the Obligations,
including those set forth above, are valid and outstanding, and the Borrower
does not have any rights of offset, defenses, claims or counterclaims with
respect to any of the Obligations, and the Borrower hereby indemnifies, holds
harmless, and forever releases the Lender from any and all liens, claims,
interests and causes of action of any kind or nature that the Borrower or any
other party now has or may hereafter have against the Lender that relate to the
Loan Agreements or other Loan Documents based on facts existing on or before the
date hereof or that are related to or arise in connection with this Agreement,
other than a breach hereof by the Lender.
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(c) The
Borrower confirms, acknowledges, and agrees that, with the exception of the
limited forbearance described in this Agreement that is subject to the terms and
conditions hereof, the Lender has now and will have the right to accelerate the
Obligations and exercise other rights and remedies based upon the occurrence and
continuance of any Specified Default that occurs, and that this Agreement and
the limited forbearance described herein is of substantial value to the
Borrower.
(d) The
Borrower agrees that it shall cooperate, and that it shall direct its advisors
and counsel to cooperate, with the Lender, in all respects during the
Forbearance Period.
(e) The
Borrower agrees that during the Forbearance Period it will pay all interest and
all other amounts due to the Lender under the Loan Agreements or other Loan
Documents in a timely manner.
3. Agreement to
Forbear.
(a) During
the Forbearance Period, the Lender hereby agrees to forbear from exercising its
rights and remedies against the Borrower that may exist by virtue of the
Specified Defaults under the Loan Agreements or any of the other Loan
Documents.
(b) Nothing
in this Agreement shall be construed as a waiver of or acquiescence to the
Specified Defaults, and the Specified Defaults shall continue in existence
notwithstanding the agreement of the Lender, as set forth herein, to forbear in
the exercise of rights and remedies against the Borrower on the terms and for
the period set forth herein. Except as expressly provided herein, the
execution and delivery of this Agreement shall not: (i) constitute an extension,
modification, or waiver of any term or aspect of the Loan Agreements or the
other Loan Documents; (ii) extend the terms of the Loan Agreements or the
due date of any of the Obligations; (iii) give rise to any obligation on the
part of the Lender to extend, amend, waive or otherwise modify any term or
condition of the Loan Agreements or any of the other Loan Documents; or (iv)
give rise to any defenses or counterclaims to the right of the Lender to compel
payment of the Obligations or to otherwise enforce their rights and remedies
under the Loan Agreements and the other Loan Documents. During the
Forbearance Period, the Lender may exercise all rights and remedies against the
Borrower that may exist by virtue of the occurrence and continuance of any
Forbearance Default. Following the Forbearance Period, the
Obligations shall accelerate and the Lender may exercise all other rights and
remedies against the Borrower that may exist by virtue of the occurrence and
continuance of any Specified Default or any Forbearance Default that
occurs. Except as expressly set forth in paragraph 3(a) above, the
Lender hereby expressly reserves all of its rights and remedies under the Loan
Documents and under applicable law with respect to the Specified Defaults and
otherwise.
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4. Conditions to
Effectiveness. The effectiveness of this Agreement is
expressly conditioned upon the Lender’s receipt of the following:
(a) a duly
executed counterpart of this Agreement from Borrower; and
(b) an
amendment fee in the amount of $10,000.00, which is intended to compensate
Lender for thecosts and expenses of Lender incurred in connection with the
preparation of this Agreement, including the costs and expenses of its
counsel.
5. Effect on the Loan
Agreements and Loan Documents. Except as expressly set forth
herein, all of the terms, conditions and covenants of the Loan Agreements and
the other Loan Documents shall remain unaltered and in full force and effect and
shall be binding upon the Borrower in all respects and are hereby ratified and
confirmed.
6. Costs and
Expenses. Without limiting any rights that exist under the
Loan Documents, except for the amendment fee set forth in Section 4(b) of this
Agreement, each party shall pay its own costs and expenses in connection with
the preparation of this Agreement.
7. Execution in
Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an
executed signature page to this Agreement by facsimile transmission or otherwise
transmitted or communicated by email shall be as effective as delivery of a
manually executed counterpart of this Agreement.
8. Governing
Law. This Agreement shall be governed by, construed and
enforced in accordance with California law, without regard to its conflict of
laws principles.
9. Binding
Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. No Person other than the parties hereto and the Lender not a
signatory hereto shall have any rights hereunder or be entitled to rely on this
Agreement, and all third-party beneficiary rights are hereby expressly
disclaimed.
10. Severability. Wherever
possible, each provision of this Agreement shall be interpreted in such a manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
[Signature
Pages Follow]
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IN WITNESS WHEREOF, this Agreement has
been duly executed as of the date first written above.
“Borrower”
Applied
Solar, Inc., a Nevada corporation
By: _________________________
Name:
Its:
“Lender”
The
Quercus Trust
By: __________________________
Name: Xxxxx
Xxxxxxx
Its: Trustee
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