Exhibit 10.1
FORBEARANCE
TO
LOAN AND SECURITY AGREEMENT
This FORBEARANCE to Loan and Security Agreement (this "Forbearance") is
entered into this 11th day of August, 2006, by and between SILICON VALLEY BANK
("Bank") and CONCURRENT COMPUTER CORPORATION, a Delaware corporation
("Borrower") whose address is 0000 Xxxxx Xxxxx Xxxxxxx, Xxxxxx, Xxxxxxx 00000.
RECITALS
WHEREAS, Bank and Borrower have entered into that certain Loan and Security
Agreement dated as of December 23, 2004 (as the same has been or may from time
to time be amended, modified, supplemented or restated, the "Loan Agreement")
pursuant to which Bank has extended credit to Borrower for the purposes
permitted in the Loan Agreement; and
WHEREAS, Borrower is currently in default of the Loan Agreement for failing
to comply with the covenant set forth in Section 6.2(c) of the Loan Agreement as
of June 30, 2006 (the "Existing Default"); and
WHEREAS, Borrower has requested that Bank forbear from exercising its
rights and remedies against Borrower from the date hereof through September 15,
2006 (the "Forbearance Period") in order to allow the parties sufficient time to
negotiate an amendment to the Loan Agreement to restructure the financial
covenants on mutually acceptable terms, which amendment is expected to include a
waiver with respect to the Existing Default; and
WHEREAS, 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;
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, irrespective of whether
an amendment to the Loan Agreement has been entered into prior to the end of the
Forbearance Period.
2.2 FORBEARANCE TERMS. During the Forbearance Period, Borrower
agrees to deliver to Bank, on or before September 1, 2006, a revised operating
budget (including income statements, balance sheets and cash flow statements, by
quarter) for the remainder of Borrower's 2007 fiscal year. Borrower agrees that
the failure to deliver such revised budget by such date shall constitute an
immediate Event of Default and shall entitled Bank to terminate the Forbearance
Period without notice to Borrower.
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 excluding therefrom the
effect of the Existing Default), 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 the
Closing Date 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 made; and
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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." (Emphasis added.)
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
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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. 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.
8. EFFECTIVENESS. This Forbearance shall be deemed effective upon (a)
the due execution and delivery to Bank of this Forbearance by each party hereto,
(b) Borrower's payment of a forbearance fee in an amount equal to $3,500, and
(c) Bank's receipt of the Acknowledgment of Forbearance and Reaffirmation of
Guarantors substantially in the form attached hereto as Schedule 1, duly
executed and delivered by each Guarantor,.
9. 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 Georgia.
[Signature page follows.]
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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 CONCURRENT COMPUTER COPRORATION
By: By:
Name: Name:
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Title: Title:
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Schedule 1
ACKNOWLEDGMENT OF FORBEARANCE
AND REAFFIRMATION OF GUARANTY
SECTION 1. Each Guarantor hereby acknowledges and confirms that it has
reviewed and approved the terms and conditions of the Forbearance to Loan and
Security Agreement dated as of even date herewith (the "Forbearance").
SECTION 2. Each Guarantor hereby consents to the Forbearance and agrees
that the Guaranty dated as of April 6, 2006 (the "Guaranty") relating to the
Obligations of Borrower under the Loan Agreement shall continue in full force
and effect, shall be valid and enforceable and shall not be impaired or
otherwise affected by the execution of the Forbearance or any other document or
instrument delivered in connection herewith.
SECTION 3. Each Guarantor hereby agrees that the Security Agreement
dated as of April 6, 2006 (the "Security Agreement") securing the Obligations of
Borrower under the Loan Agreement and the obligations of the Guarantors under
the Guaranty shall continue in full force and effect, shall be valid and
enforceable and shall not be impaired or otherwise affected by the execution of
the Forbearance or any other document or instrument delivered in connection
herewith.
SECTION 4. Each Guarantor represents and warrants that, after giving
effect to the Forbearance, all representations and warranties contained in the
Guaranty and the Security Agreement are true, accurate and complete as if made
the date hereof.
Dated as of August 11, 2006
GUARANTOR EVERSTREAM HOLDINGS, INC.
By:
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Name:
Title:
[CORPORATE SEAL]
EVERSTREAM, INC.
By:
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Name:
Title:
[CORPORATE SEAL]
EHI PATENT CO. LLC
By:
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Name:
Title:
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