FORBEARANCE TO LOAN AND SECURITY AGREEMENT
Exhibit 10.3
FORBEARANCE
TO
LOAN AND SECURITY AGREEMENT
TO
LOAN AND SECURITY AGREEMENT
This FORBEARANCE to Loan and Security Agreement (this “Forbearance”) is entered into this
11th day of June, 2010, by and between Silicon Valley Bank (“Bank”) and Comarco, Inc., a
California corporation and Comarco Wireless Technologies, Inc. a Delaware corporation (jointly and
severally, “Borrower”) whose address is 00000 Xxxxxxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxxx, XX 00000.
Recitals
A. Bank and Borrower have entered into that certain Loan and Security Agreement dated as of
February 12, 2009, as amended by that certain First Amendment to Loan and Security Agreement by and
between Bank and Borrower dated as of February 8, 2010 (as the same may from time to time be
amended, modified, supplemented or restated, the “Loan Agreement”). Bank has extended credit to
Borrower for the purposes permitted in the Loan Agreement.
B. Borrower is currently in default of the Loan Agreement for failing to comply with the
covenant set forth in Section 6.9(a) of the Loan Agreement for the months ended April 30, 2010 and
May 31, 2010, (the “Existing Default”).
C. Borrower has requested that Bank forbear from exercising its rights and remedies against
Borrower from the date hereof through July 15, 2010 (the “Forbearance Period”). Although Bank is
under no obligation to do so, Bank is willing to forbear from exercising its rights and remedies
against Borrower through the Forbearance Period on the terms and conditions set forth in this
Forbearance, so long as Borrower complies with the terms, covenants and conditions set forth in
this Forbearance in a timely manner.
Agreement
Now, Therefore, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to
be legally bound, the parties hereto agree as follows:
1. Definitions. Capitalized terms used but not defined in this Forbearance shall have the
meanings given to them in the Loan Agreement.
2. Forbearance.
2.1 Forbearance Period. So long as no Event of Default, other than the Existing Default,
occurs, subject to the terms and conditions set forth herein, Bank shall forbear from filing any
legal action or instituting or enforcing any rights and remedies it may have against Borrower
through the Forbearance Period. Except as expressly provided herein, this Forbearance does not
constitute a waiver or release by Bank of any Obligations or of any existing Event of Default other
than the Existing Default or Event of Default which may arise in the future after the date of
execution of
this Forbearance. If Borrower does not comply with the terms of this Forbearance, Bank shall
have no further obligations under this Forbearance and shall be permitted to exercise at such time
any rights and remedies against Borrower as it deems appropriate in its sole and absolute
discretion. Borrower understands that Bank has made no commitment and is under no obligation
whatsoever to grant any additional extensions of time at the end of the Forbearance Period.
2.2 Forbearance Terms. Repayment and performance of all obligations of Borrower to Bank under
the Loan Agreement and this Forbearance shall be secured by the Collateral.
3. Limitation of Forbearance.
3.1 This Forbearance is effective for the purposes set forth herein and shall be limited
precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or
modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any
right or remedy which Bank may now have or may have in the future under or in connection with any
Loan Document.
3.2 This Forbearance shall be construed in connection with and as part of the Loan Documents
and all terms, conditions, representations, warranties, covenants and agreements set forth in the
Loan Documents are hereby ratified and confirmed and shall remain in full force and effect.
4. Representations and Warranties. To induce Bank to enter into this Forbearance, Borrower
hereby represents and warrants to Bank as follows:
4.1 Immediately after giving effect to this Forbearance (a) the representations and warranties
contained in the Loan Documents are true, accurate and complete in all material respects as of the
date hereof (except to the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (b) no Event of Default other than the
Existing Default has occurred and is continuing;
4.2 Borrower has the power and authority to execute and deliver this Forbearance and to
perform its obligations under the Loan Agreement;
4.3 The organizational documents of Borrower delivered to Bank on February 12, 2009 remain
true, accurate and complete and have not been amended, supplemented or restated and are and
continue to be in full force and effect;
4.4 The execution and delivery by Borrower of this Forbearance and the performance by Borrower
of its obligations under the Loan Agreement have been duly authorized by all necessary action on
the part of Borrower;
4.5 The execution and delivery by Borrower of this Forbearance and the performance by Borrower
of its obligations under the Loan Agreement do not and will not contravene (a) any law or
regulation binding on or affecting Borrower, (b) any
contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree
of any court or other governmental or public body or authority, or subdivision thereof, binding on
Borrower, or (d) the organizational documents of Borrower;
4.6 The execution and delivery by Borrower of this Forbearance and the performance by Borrower
of its obligations under the Loan Agreement do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or exemption by any
governmental or public body or authority, or subdivision thereof, binding on either Borrower,
except as already has been obtained or will be made; and
4.7 This Forbearance has been duly executed and delivered by Borrower and is the binding
obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to or affecting
creditors’ rights.
5. Prior Agreement. The Loan Documents are hereby ratified and reaffirmed and shall remain in
full force and effect. This Forbearance is not a novation and the terms and conditions of this
Forbearance shall be in addition to and supplemental to all terms and conditions set forth in the
Loan Documents. In the event of any conflict or inconsistency between this Forbearance and the
terms of such documents, the terms of this Forbearance shall be controlling, but such document
shall not otherwise be affected or the rights therein impaired.
6. Release by Borrower.
6.1 FOR GOOD AND VALUABLE CONSIDERATION, Borrower hereby forever relieves, releases, and
discharges Bank and its present or former employees, officers, directors, agents, representatives,
attorneys, and each of them, from any and all claims, debts, liabilities, demands, obligations,
promises, acts, agreements, costs and expenses, actions and causes of action, of every type, kind,
nature, description or character whatsoever, whether known or unknown, suspected or unsuspected,
absolute or contingent, arising out of or in any manner whatsoever connected with or related to
facts, circumstances, issues, controversies or claims existing or arising from the beginning of
time through and including the date of execution of this Forbearance (collectively “Released
Claims”). Without limiting the foregoing, the Released Claims shall include any and all
liabilities or claims arising out of or in any manner whatsoever connected with or related to the
Loan Documents, the Recitals hereto, any instruments, agreements or documents executed in
connection with any of the foregoing or the origination, negotiation, administration, servicing
and/or enforcement of any of the foregoing.
6.2 In furtherance of this release, Borrower expressly acknowledges and waives any and all
rights under Section 1542 of the California Civil Code, which provides as follows:
“A general release does not extend to claims which the creditor
does not know or expect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor.”
6.3 By entering into this release, Borrower recognizes that no facts or representations are
ever absolutely certain and it may hereafter discover facts in addition to or different from those
which it presently knows or believes to be true, but that it is the intention of Borrower hereby to
fully, finally and forever settle and release all matters, disputes and differences, known or
unknown, suspected or unsuspected; accordingly, if Borrower should subsequently discover that any
fact that it relied upon in entering into this release was untrue, or that any understanding of the
facts was incorrect, Borrower shall not be entitled to set aside this release by reason thereof,
regardless of any claim of mistake of fact or law or any other circumstances whatsoever. Borrower
acknowledges that it is not relying upon and has not relied upon any representation or statement
made by Bank with respect to the facts underlying this release or with regard to any of such
party’s rights or asserted rights.
6.4 This release may be pleaded as a full and complete defense and/or as a cross-complaint or
counterclaim against any action, suit, or other proceeding that may be instituted, prosecuted or
attempted in breach of this release. Borrower acknowledges that the release contained herein
constitutes a material inducement to Bank to enter into this Forbearance, and that Bank would not
have done so but for Bank’s expectation that such release is valid and enforceable in all events.
6.5 Borrower hereby represents and warrants to Bank, and Bank is relying thereon, as follows:
(a) Except as expressly stated in this Forbearance, neither Bank nor any agent, employee or
representative of Bank has made any statement or representation to Borrower regarding any fact
relied upon by Borrower in entering into this Forbearance.
(b) Borrower has made such investigation of the facts pertaining to this Forbearance and all
of the matters appertaining thereto, as it deems necessary.
(c) The terms of this Forbearance are contractual and not a mere recital.
(d) This Forbearance has been carefully read by Borrower, the contents hereof are known and
understood by Borrower, and this Forbearance is signed freely, and without duress, by Borrower.
(e) Borrower represents and warrants that it is the sole and lawful owner of all right, title
and interest in and to every claim and every other matter which it releases herein, and that it has
not heretofore assigned or transferred, or purported to assign or transfer, to any person, firm or
entity any claims or other matters
herein released. Borrower shall indemnify Bank, defend and hold it harmless from and against
all claims based upon or arising in connection with prior assignments or purported assignments or
transfers of any claims or matters released herein.
7. Integration. This Forbearance and the Loan Documents represent the entire agreement about
this subject matter and supersede prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the parties about the subject
matter of this Forbearance and the Loan Documents merge into this Forbearance and the Loan
Documents
8. Counterparts. This Forbearance may be executed in any number of counterparts and all of
such counterparts taken together shall be deemed to constitute one and the same instrument.
9. Effectiveness This Forbearance shall be deemed effective upon the due execution and
delivery to Bank of this Forbearance by each party hereto.
10. Governing Law. This Forbearance and the rights and obligations of the parties hereto
shall be governed by and construed in accordance with the laws of the State of California.
[Signature page follows.]
In Witness Whereof, the parties hereto have caused this Forbearance to be duly
executed and delivered as of the date first written above.
| BANK | BORROWER | |||||||||||||
| Silicon Valley Bank | Comarco, Inc. | |||||||||||||
| By: | /s/ Xxxxx Xxxxx | By: | /s/ Xxx X. Xxxxx, III | |||||||||||
| Name: | Xxxxx Xxxxx | Name: | Xxx X. Xxxxx | |||||||||||
| Title: | Relationship Manager | Title: | Chief Executive Officer | |||||||||||
| BORROWER | ||||||||||||||
| Comarco Wireless Technologies, Inc. | ||||||||||||||
| By: | /s/ Xxx X. Xxxxx, III | |||||||||||||
| Name: | Xxx X. Xxxxx | |||||||||||||
| Title: | Chief Executive Officer | |||||||||||||
