EXHIBIT 10.1
F O R B E A R A N C E A G R E E M E N T
By and Between
FLEET NATIONAL BANK
successor in interest to
SUMMIT BANK
and
eGAMES, INC.
Index of Schedules and exhibits
Schedule A - Loan Documents
Schedule B - Principal Payments
Schedule C - EBITDA Covenant Requirements
Schedule D - Litigation
Exhibit 6(f)(ii) - Form of Monthly Cash Flow Forecast
FORBEARANCE AGREEMENT
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THIS FORBEARANCE AGREEMENT ("Agreement") made this 31st day
of October, 2001, by and between FLEET NATIONAL BANK, successor in interest to
Summit Bank, a state banking corporation (the "Lender"), and eGAMES, INC., a
Pennsylvania corporation ("eGames" or the "Borrower").
W I T N E S S E T H:
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WHEREAS, on or about August 9, 2000, the Lender extended a
credit facility (the "Loan") to the Borrower in the total commitment amount of
$2,000,000; and
WHEREAS, the present outstanding principal balance of the
Loan is $1,400,000, together with all interest and other sums accrued in
accordance with the loan documents.
WHEREAS, in connection with the Loan, the Borrower executed
and delivered to the Lender the documents listed on Schedule A annexed hereto
(said documents, together with any and all other documents, instruments and
agreements executed and/or delivered by the Borrower or any other persons in any
way related to and/or in connection with the Loan, individually and collectively
referred to as the "Loan Documents");
WHEREAS, any and all capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Loan Documents.
WHEREAS, pursuant to the Loan Documents, the Lender has
a valid and perfected first priority lien upon all of the personal property
described in the Loan Documents (the "Collateral") as security for the
obligations of the Borrower to the Lender under the Loan Documents;
WHEREAS, the Loan is in material default and Events of Default
under the Loan Documents have occurred, which include but are not limited to
the following:
1. Violation of Section 3.1.9 of the Loan Agreement for failure
to timely file the Borrower's Form 10-KSB with the Securities and
Exchange Commission within 90 days after the end of the fiscal
year ended June 30, 2001;
2. Violation of Section 3.1.9 of the Loan Agreement for the
occurrence of a material adverse change in the financial
condition of the Corporation's business;
3. Violation of Section 3.1.10 of the Loan Agreement for failure
to provide to the Lender financial statements in compliance with
GAAP;
4. Violation of Section 4.1.6.1 of the Loan Agreement for failure
to furnish the Lender with annual financial statements prepared
in accordance with the requirements set forth therein within 90
days of the end of the fiscal year ended June 30, 2001;
5. Violation of Section 4.1.6.2 of the Loan Agreement for failure
to furnish to Lender the Borrower's annual 10-KSB report within
90 days after the fiscal year ended June 30, 2001;
6. Violation of Section 4.1.7 of the Loan Agreement for failure
to file the Borrower's Form 10-KSB with the Securities and
Exchange Commission within 90 days after the end of the fiscal
year ended June 30, 2001;
7. Violation of Section 5 of the Loan Agreement for failure to
comply with the financial covenants contained in Sections 5.1.1.,
5.1.2. and 5.1.3. and anticipated continued failure to attain the
financial covenants set forth in Sections 5.1.2 and 5.1.3 of the
Loan Agreement;
8. Violation of Sections 6.1.2, 6.1.3, 6.1.11 and 6.1.13 of the
Loan Agreement for failure to comply with the representations,
warranties and covenants described above; and
WHEREAS, the foregoing events of default (the "Existing
Defaults") constitute material defaults under the Loan and entitle the Lender to
accelerate the Loan and demand immediate and full payment of all principal,
interest and other sums due under the Loan Documents;
WHEREAS, on or about July 27, 2001, by virtue of the
aforesaid occurrence of said Existing Defaults, the Lender advised the Borrower,
that the Existing Defaults had occurred, and advised the Borrower that the
Lender reserved its right to assess interest at the Default Rate (as defined in
the Loan Documents) and accelerate and demand payment of the Loan;
WHEREAS, the occurrence of said Existing Defaults permits
the Lender to exercise the remedies provided in the Loan Documents and under
applicable law;
WHEREAS, the Borrower acknowledges that (1) it is in default
under the Loan Documents; (2) the Existing Defaults are material "Events of
Default" which have occurred and exist under the aforesaid Loan Documents as of
the date hereof; (3) any and all cure and rehabilitation periods as set forth in
the aforesaid Loan Documents have expired; and (4) by virtue thereof Borrower is
presently obligated to pay all of the obligations due to the Lender under the
Loan Documents all without setoff, defenses or counterclaim;
WHEREAS, the Borrower requested that the Lender forbear from
exercising the Lender's rights and remedies under the Loan Documents and
applicable law and commence negotiations for an arrangement under which its
obligations to the Lender under the Loan Documents would be satisfied;
WHEREAS, the Lender agreed to forbear from exercising and
enforcing its rights and remedies in order to provide the Borrower with
sufficient opportunity for payment and/or satisfaction of its obligations under
the Loan Documents to the Lender;
WHEREAS, over the course of several months, in accordance
with the request of the Borrower and without prejudice to the rights of the
Lender, the parties have been negotiating concerning the obligations owed to the
Lender by the Borrower and various courses of action that the parties believed
might be in their mutual interests;
WHEREAS, the Lender has not taken action to collect all
obligations due the Lender under the Loan Documents, and the Borrower has
continued to operate its business and conduct its financial affairs in its sole
discretion, all without any disruption or interference whatsoever by the Lender
and/or any of its affiliates, representatives, officers, employees and/or
agents;
WHEREAS, the Borrower submitted a proposal to the Lender,
supported by financial statements, various business projections and cash flow
projections prepared and submitted by the Borrower, which the Borrower
represents will result in the payment and satisfaction of all obligations due to
the Lender under the Loan Documents pursuant to the terms of this Agreement and
which proposal has served as the basis for this Agreement;
WHEREAS, the Borrower represented to the Lender that it will
be able to continue to operate its business and satisfy its obligations to the
Lender, without the need for further financing or extension of credit from the
Lender and without the current need for any financial reorganization;
WHEREAS, the Lender has agreed to cooperate with the
Borrower to allow it to rehabilitate its business and pay the obligations due
the Lender, provided that the Borrower performs in accordance with this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises, terms
and provisions contained herein, the parties, intending to be legally bound,
hereby agree as follows:
1. RECITALS. The parties agree that the recitals set forth hereinabove are
incorporated by reference as if fully set forth herein and are hereby made a
part of this Agreement.
2. RELATED DOCUMENTS. In this Agreement, the term "Related Documents" shall
mean and include any and all agreements, letters, powers of attorney, pleadings,
deeds, assignments, documents and instruments referred to in this Agreement, or
executed and/or delivered in accordance with, pursuant to, or in connection with
this Agreement, or which are necessary or proper to carry out the transactions
required or contemplated under this Agreement.
3. LOAN DOCUMENTS STILL IN FORCE.
(a) Notwithstanding any other provisions of this Agreement or any
claims of the parties to the contrary, the Loan Documents shall and do hereby
remain in full force and effect, and nothing in this Agreement shall change or
affect the terms, provisions or conditions of the Loan Documents which are
hereby ratified and confirmed, except as expressly and specifically modified by
this Agreement and/or by the Related Documents.
(b) This Agreement is intended to supplement the Loan Documents and is
not intended to modify, amend or replace the Loan Documents other than as
specifically and expressly set forth herein and in the Related Documents.
(c) In the event any provision of this Agreement or in any Related
Document in any way appears to conflicts with or creates any ambiguity with
respect to any term or provisions of any of the Loan Documents, the terms and
provisions of this Agreement and such Related Document shall prevail.
(d) Except as expressly and specifically modified by this Agreement
and/or the Related Documents, all parties shall perform and continue to perform
all of their respective obligations under the Loan Documents and shall continue
to be bound by all of the terms and provisions of the Loan Documents.
4. COLLATERAL DOCUMENTS. It is hereby expressly acknowledged, ratified,
confirmed and agreed that the Loan Documents secure the Obligations (as defined
in Section 5 hereof), notwithstanding any claims of any of the parties to the
contrary. The Borrower acknowledges and agrees that the security interests in
Borrower's personal property granted to the Lender by the Borrower under the
Loan Documents remain valid, perfected, first priority security interests
therein, and the Borrower represents and warrants that, as of the date of this
Agreement, there are no claims, setoffs or defenses to the Lender's exercise of
any rights or remedies available to the Lender under the terms and provisions of
the Loan Documents.
5. DEBT AND DEFAULT ACKNOWLEDGMENT. The Borrower acknowledges and agrees as
to the Loan as follows:
(a) As of October 31, 2001, the sum of $1,400,233.33 is immediately
due and owing in full under the Loan Documents, which amount is calculated as
follows:
(i) Principal: $1,400,000.00
(ii) Interest to October 31, 2001: $233.33
(b) As hereinafter used in this Agreement, the term "Obligations"
shall mean and include a sum of money equal to the following:
(i) The sum of $1,400,233.33, which is the total, as of October
31, 2001 of the obligations due and owing the Lender under the Loan Documents;
plus
ii) All interest accruing under the Loan Documents after October
31, 2001; plus
(iii) All other costs, expenses (including, but not limited to
reasonable attorneys' fees and costs incurred by the Lender), claims, default
rate interest, if applicable, and charges to which the Lender is entitled under
the Loan Documents either due as of or accruing after October 31, 2001; plus
(iv) Any and all advances made by the Lender under the Loan
Documents, this Agreement, or Related Documents from and after October 31, 2001
and interest on all such amounts advanced; plus
(v) Service charges and loan administration expenses incurred
prior to October 31, 2001 in the amount of $15,000 (payable in accordance with
Section 6(i)) and after October 31, 2001, including, but not limited to,
reasonable fees and expenses paid or incurred to counsel to the Lender; plus
(vi) Any and all liabilities and obligations of the Borrower
under this Agreement and/or any Related Documents;
(c) As of the date hereof, any and all notice provisions contained in
the Loan Documents have been satisfied;
(d) As of the date hereof, any and all grace periods contained in the
Loan Documents have expired;
(e) The Borrower acknowledges that the Borrower is in default in
performance of the Obligations;
(f) The Obligations are the valid obligations of the Borrower, and the
Borrower is liable for immediate payment to the Lender of the Obligations;
(g) As of the date hereof, there are no claims, setoffs, defenses,
counterclaims, or objections to the payment of the Obligations by the Borrower;
and
(h) The Lender has the absolute right to pursue its remedies and
enforce the payment of the Obligations as set forth in the Loan Documents.
6. SETTLEMENT OF OBLIGATIONS.
(a) Payment and Performance.
(i) The Obligations shall be paid and satisfied and the parties
hereto shall perform in accordance with all the terms and provisions of the Loan
Documents as modified, amended, supplemented and extended by this Agreement and
the Related Documents.
(ii) Future administration of the financing arrangements between
Borrower and Lender shall continue to be governed by all of the terms and
conditions of the Loan Documents, except to the extent that the same have been
amended and supplemented by this Agreement. To the extent that any provision of
this Agreement and the Related Documents conflicts with any term or condition
set forth in the Loan Documents, the provisions of this Agreement shall
supersede and control.
(b) Term. The term of the Loan (the "Term") shall be extended to July
31, 2003, at which time all principal, interest and other sums, claims and
charges due under the Loan shall be fully paid and satisfied. Thus, the
Obligations will be fully due and payable on July 31, 2003 (the "Payoff Date").
(c) Interest Rate. The principal sum outstanding from time to time
under the Loan shall bear interest at a floating rate equal to the Prime Rate
(as defined in the Loan Documents) plus 3%. The interest rate shall change
automatically as of the effective date of each change in the Prime Rate.
(d) Commitment. The commitment of the Lender under the Loan is hereby
permanently reduced to ONE MILLION FOUR HUNDRED THOUSAND DOLLARS ($1,400,000).
The Borrower may no longer borrow, repay and re-borrow sums under the Loan.
(e) Payments to Lender.
(i) The Borrower shall make monthly payments of interest on the
Loan, at the interest rate set forth herein, on the first day of each month
during the Term.
(ii) The Borrower shall make monthly payments of principal as set
forth on Schedule B annexed hereto and incorporated herein.
(iii) The Borrower shall perform in all respects in accordance
with all terms and provisions of the Loan Documents as modified herein, this
Agreement and Related Documents, and all Obligations shall be fully paid and
satisfied on or before the Payoff Date.
(f) Additional Covenants. The Borrower hereby agrees to perform in
accordance with the following covenants which are in addition to, and not in
lieu of, all covenants contained in the Loan Documents:
(i) The Borrower shall deliver to the Lender, in form and
substance satisfactory to the Lender, on or before the fifteenth (15th) of each
month for the preceding month the following:
(1) a management prepared profit and loss statement and
balance sheet, using the Borrower's historically applied revenue recognition
policy that records revenue based upon the shipment date of its products;
(2) accounts receivable agings; and
(3) accounts payable agings;
(ii) The Borrower shall deliver to the Lender on or before the
twentieth day of each month a monthly cash flow forecast for the succeeding
month substantially in the form attached hereto as Exhibit 6(f)(ii) and
incorporated herein.
(iii) The Borrower shall cooperate with the performance of a
collateral audit for the period ending December 31, 2001 and following each
six-month period thereafter for the Term of this Agreement.
(iv) The Borrower shall deliver to the Lender within five (5)
days of filing with the Securities and Exchange Commission each quarterly 10-QSB
Report and Annual 10-KSB Report.
(v) The Borrower shall deliver to the Lender within five (5) days
of filing with the Internal Revenue Service each Corporate Tax Return.
(vi) The Borrower covenants and agrees, from and after the date
hereof, maintain the accumulating monthly EBITDA levels as set forth on Schedule
C annexed hereto and incorporated herein, based on the application of a revenue
recognition policy that records revenues based upon the shipment of products,
notwithstanding the Borrower's adoption of a revenue recognition policy that
records revenues based on product sell-through.
(g) Warrants. The Borrower shall grant to Lender warrants for the
purchase of 750,000 shares of common stock of the Borrower. Said warrants shall
have the demand registration rights and terms as set forth in the Warrants and
Registration Rights Agreement between the Borrower and Lender to be executed
simultaneously with this Agreement.
(h) Removal of Liens. The Borrower shall have the financing statements
of Sovereign Bank currently of record with the Department of State and Bucks
County Prothonotary removed of record within thirty (30) days of the date of
Closing.
(i) Restructuring Fee. A restructuring fee of $15,000 shall be due to
Lender at Closing with $5,000 payable at the time of Closing (as defined herein)
and the remaining $10,000 payable on December 31, 2001.
7. FORBEARANCE BY THE LENDER.
(a) Provided that there has not been an Event of Default under this
Agreement by the Borrower, the Lender shall refrain from exercising its rights
and remedies under the Loan Documents, Related Documents, this Agreement, and
under applicable law, including, without limitation, refraining from exercising
rights and remedies available to the Lender under the Loan Documents as a result
of the Existing Defaults, charging the Default Rate (as defined in the Secured
Line of Credit Note) and taking any and all available actions to collect the
Obligations until such time (the "Forbearance Termination Date") as either (i)
there is an occurrence of an Event of Default hereunder or (ii) such time as the
Loan shall mature without the Borrower paying the Obligations and all other sums
required to be made under this Agreement, the Loan Documents (as modified by the
terms of this Agreement) or Related Documents.
(b) Upon the Forbearance Termination Date, the Lender shall be
permitted, at its option and in its sole and absolute discretion, to declare the
Obligations to be immediately due and payable, all without demand, presentment
or other notice of any kind, all of which are hereby expressly waived.
(c) Upon the Forbearance Termination Date, the Lender shall be
entitled to immediately exercise any and/or all rights and remedies and take any
and all actions against the Borrower available to the Lender under this
Agreement, the Loan Documents, the Related Documents, and under any applicable
law, which actions shall not be opposed by the Borrower and shall include, but
not be limited to:
(i) Commencing and completing legal action and the entry of
monetary judgments against the Borrower;
(ii) The immediate appointment of a statutory receiver or any
other type of receiver for the Borrower;
(iii) Obtaining an order from the Court for the immediate turnover
of all personal property in which the Lender was granted a security interest
pursuant to the Loan Documents and Related Documents for immediate liquidation
by the Lender under the Uniform Commercial Code as in effect in Pennsylvania
(the "UCC") or other applicable law; and
(iv) Commencing and/or completing execution on any monetary
judgments obtained against the Borrower and its property and all other actions
related thereto to collect the entire Obligations.
(d) Effectuating Orders and Consent to Relief.
(i) The parties agree that to compensate the Lender for any loss
of time it has suffered in collecting the Obligations by virtue of the
forbearance and compromise granted to the Borrower hereunder, the Borrower
hereby consents to the entry of any order by a court of competent jurisdiction
which may be necessary, in the Lender's sole opinion, to effectuate and carry
out the terms and provisions of this Agreement and to give the Lender the relief
afforded the Lender under this Agreement upon the occurrence of the Forbearance
Termination Date.
(ii) This Agreement shall serve as conclusive evidence of the
consent of the Borrower to the entry of any order to which the Lender is
entitled under this Agreement and to such further orders as may be required or
necessary to effectuate the terms and provisions of this Agreement.
iii) The Borrower hereby consents to and agrees not to oppose the
taking or exercising of any and all of the rights and remedies of the Lender
under this Agreement, including, but not limited to, all of the actions
specified in Section 10(a). The Borrower hereby authorizes the Lender to affix a
copy of this Agreement to any pleadings or orders submitted to the Court or
otherwise submit a copy of this Agreement to the Court to evidence the
Borrower's consent to the granting by the Court of all such relief sought.
8. CLOSING. Execution and delivery of all documentation and the
consummation of all transactions contemplated hereby ("Closing") shall take
place at the offices of Lender's counsel located at Princeton Pike Corporate
Center, 000 Xxxxx Xxxxx, Xxxxxxxx 0, Xxxxxxxxxxxxx, Xxx Xxxxxx on October 31,
2001 at 10:00 a.m., or at such place and time as mutually agreed to by the
parties. It is understood and agreed that time is of the essence with regard to
Closing. If Closing does not occur on or before 5:00 p.m. October 31, 2001, the
Lender shall have no obligations hereunder, and all transactions contemplated
hereunder automatically, without notice or demand of any kind whatsoever, shall
be void and of no force and effect whatsoever.
9. EVENTS OF DEFAULT. An "Event of Default" shall mean the occurrence or
existence of any one or more of the following events or conditions (whatever the
reason therefore and whether voluntary, involuntary or effected by operation of
law):
(a) Failure by the Borrower to make a payment when due pursuant to
this Agreement, the Loan Documents (as modified by the terms of this Agreement)
or the Related Documents, including, without limitation, failure to timely pay
the Obligations on or before the Payoff Date;
(b) The Borrower breaches or fails to perform, observe or meet any
of the covenants, terms, provisions or conditions of this Agreement, the Loan
Documents (as modified by the terms of this Agreement) or the Related Documents;
(c) Any default or event of default under, and as said quoted term is
defined in, any of the Loan Documents (as modified by the terms of this
Agreement) or the Related Documents, or the Borrower shall breach or fail to
perform, observe or meet any covenant, term, provision or condition made in any
of the Loan Documents (as modified by the terms of this Agreement) or the
Related Documents, and such default, event of default, breach or failure shall
not have been cured prior to the expiration of any applicable cure period
expressly provided in any of the Loan Documents or the Related Documents;
(d) Any of the following shall occur:
(i) a petition in bankruptcy or for reorganization or for
arrangement under any bankruptcy or insolvency law is filed by the Borrower;
(ii) a petition in bankruptcy or for reorganization or for an
arrangement under any bankruptcy or insolvency law or for a receiver or trustee
of any of the property of the Borrower is filed against it which is not
dismissed within sixty (60) calendar days;
(iii) a receiver or trustee of any property of the Borrower
is appointed and not discharged within sixty (60) calendar days;
(iv) the Borrower makes an assignment for the benefit of creditors
or admits in writing its inability to pay its debts, other than disclosures
required or deemed reasonably necessary in any federal or state securities
filings made by the Borrower after the date hereof;
(v) the Borrower is adjudged insolvent by any state or
federal court of competent jurisdiction; or
(vi) an attachment or execution is levied against a substantial
portion of the property of the Borrower which is not discharged within sixty
(60) calendar days;
(e) At any time any representation, warranty or agreement made by
the Borrower in this Agreement, any of the Loan Documents (as modified by the
terms of this Agreement) or the Related Documents, or in any documents submitted
to the Lender by any of them prior to the entry of this Agreement shall be
incorrect or misleading in any material respect; and
(f) The occurrence of any "default" or "Event of Default" which is
mentioned or set forth in any Section of this Agreement. It is hereby agreed
that the occurrence of any default or Event of Default under this Agreement
shall constitute a default or "Event of Default" under each of the Loan
Documents and Related Documents.
10. REMEDIES UPON DEFAULT. Upon the occurrence of an Event of Default, the
Lender shall have the following rights and remedies, any or all of which the
Lender may exercise at any time, at its option in its sole and absolute
discretion:
(a) The Lender may declare the full and entire amount of all of the
Obligations then outstanding to be immediately due and payable, all without
demand, presentment or other notice of any kind, all of which are hereby
expressly waived;
(b) The Lender may exercise any or all of those rights and remedies
set forth in Section 10 of this Agreement;
(c) The Lender may immediately exercise any or all rights and
remedies available to it under this Agreement, the Loan Documents, any Related
Documents, the UCC and under other applicable federal or state law; and
(d) The Lender may obtain an order of a court of competent
jurisdiction that provides relief required to enforce the terms and provisions
of this Agreement, without opposition of the Borrower, whose consent thereto
shall be deemed and shall be conclusively evidenced by this Agreement.
11. RIGHTS AND REMEDIES CUMULATIVE.
(a) The Events of Default, rights, remedies, warranties,
representations, covenants and provisions set forth in this Agreement, the Loan
Documents and the Related Documents or as provided by applicable law, shall be
cumulative and not alternative or exclusive, and the Lender's rights and
remedies under this Agreement, the Loan Documents and the Related Documents or
applicable law may be exercised by the Lender at such time or times, in such
order of preference, as the Lender, in its sole and absolute discretion, may
determine.
(b)The Lender shall be under no duty or obligation to:
(i) preserve, protect or marshal any of its Collateral;
(ii) preserve or protect the rights of the Borrower against any
person claiming an interest in any of the Collateral adverse to that of the
Borrower;
(iii) realize upon the Collateral in any particular order or
manner or seek repayment of the Obligations, from any particular source; or
(iv) permit any substitution or exchange of all or any part of
any of the Collateral or release any part of any of the Collateral from any
lien, even if that substitution or release would leave the Lender inadequately
secured.
12. NO WAIVERS, AMENDMENTS.
(a) No course of dealing or negotiations between the parties or
actions taken or not taken prior to the entry of this Agreement (including, but
not limited to, the Lender's receipt of any payments from the Borrower at any
time after the occurrence of any of the Existing Defaults), shall constitute a
waiver of any of the Lender's rights or remedies by virtue of the occurrence of
any or all of the Existing Defaults or of the Lender's rights under the Loan
Documents (all of which rights and remedies are reserved unto the Lender and
remain in full force and effect). The delay or failure of the Lender to exercise
in one or more instances, any right, power, remedy, privilege or option given
under this Agreement, the Related Documents, or under the Loan Documents, either
before or after the entry of this Agreement, shall not be construed as a waiver
or relinquishment of such right or option, nor shall any single or partial
exercise thereof or any discontinuance of steps to enforce such right, power,
remedy, privilege or option preclude any further exercise thereof or any other
right, power, remedy, privilege or option. Except as otherwise specifically
provided in this Agreement, the Lender does not hereby waive any rights or
remedies which it has or may now or hereafter have under the Loan Documents or
under any other existing agreements by and between the undersigned parties to
this Agreement, and all terms and provisions of such agreements and instruments
shall remain in full force and effect.
(b) Any waiver, permit, consent, modification or approval of any
kind or character on the part of the Lender of any breach or default under this
Agreement, the Loan Documents, and the Related Documents or any such waiver of
any provisions or condition of the aforementioned must be in writing signed by
the Lender and shall be effective only to the extent specifically set forth in
such writing.
13. NO FURTHER FINANCING, PRIOR UNDERSTANDINGS.
(a) There is no agreement or expectation on the part of the
Borrower that the Lender will agree to any additional workout or forbearance or
to any further extension of the Loan if an Event of Default occurs or the Loan
shall mature without the payment by the Borrower of the Obligations. The Lender
shall not be obligated to provide any further loans or financing to the Borrower
and makes absolutely no commitment or promises to provide any further loans or
financing to the Borrower.
(b) The Borrower hereby acknowledges and agrees that this Agreement
and any other Related Documents contain the entire agreement between the Lender
and the Borrower concerning the subject matter hereof and supersede any prior or
contemporaneous representations or agreements concerning the subject matter
hereof not contained herein or therein.
14. RELEASE OF THE LENDER.
(a) The Borrower does hereby release, waive, and forever discharge any
and all claims, rights, demands, and causes of action, known or unknown, fixed
or contingent, which it has or may have, or claim to have against the Lender
and/or any of its affiliates and/or any of their employees, officers, directors,
agents, or representatives, (hereinafter collectively referred to as
"Releasees") arising at any time from the beginning of the world to the date of
this Agreement, with respect to (i) the Loan; (ii) any or all of the Loan
Documents; (iii) the administration and enforcement of the Loan; (iv) the
conduct of the Lender or any or all of the Releasees with respect to the Loan;
and (v) the lending and/or business relationship between the Borrower and any
and/or all of the Releases.
(b) Without limiting the generality of the foregoing paragraph, the
Borrower hereby waives and affirmatively agrees not to allege or otherwise
pursue any or all defenses, affirmative defenses, counterclaims, claims, causes
of action, setoffs or other rights that it may have, as of the date hereof, to
contest (i) the Existing Defaults and/or any other defaults or events of default
under any or all of the Loan Documents which could be declared by the Lender as
of the date hereof; (ii) any provision of the Loan Documents, this Agreement, or
the Related Documents; (iii) the right of the Lender to exercise any and all of
its rights and remedies; (iv) the right of the Lender to receive full and
immediate payment of the Loan; (v) the security interest of the Lender in the
personal property of the Borrower, whether tangible or intangible, now existing
or hereafter arising; or (vi) the conduct of the Lender in administering or
enforcing the Loan, the Loan Documents, the Related Documents and/or the
financing arrangements by and between the Borrower and the Lender.
15. RESERVATION OF RIGHTS AS TO OTHER OBLIGATIONS.
(a) The Borrower acknowledges and agrees that to the extent it has
loans or obligations to the Lender, other than the Obligations which are the
subject of this Agreement (hereinafter, the "Other Obligations"), such Other
Obligations are in no way affected by this Agreement and remain fully due,
payable and enforceable in accordance with their own terms and provisions.
(b) The Borrower hereby agrees that the Lender, by entering this
Agreement, in no way waives, discharges, releases, or compromises any claims,
causes of action, or rights it has or may have with respect to such Other
Obligations and may proceed to enforce such rights and remedies as if this
Agreement were never negotiated or entered.
16. REPRESENTATIONS AND WARRANTIES.
(a) As a material inducement to the Lender to enter into this
Agreement, the Borrower hereby represents and warrants to the Lender that:
(i) The Borrower is a corporation of the Commonwealth of
Pennsylvania duly organized, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania;
(ii) The Borrower has all the power and authority to execute,
deliver and perform this Agreement and the Related Documents and has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement and the Related Documents;
(iii) Except as set forth in Schedule D annexed hereto and
incorporated herein, there is no action, suit, or proceeding pending, or to the
best of the Borrower's knowledge threatened against or affecting the Borrower in
any court or before or by any governmental instrumentality, whether federal,
state, county or municipal;
(iv) The consummation of the transactions herein contemplated
and the performance or observance of the Borrower's obligations under the Loan
Documents, this Agreement, and the Related Documents, or the transactions
required or contemplated herein and therein to which the Borrower is a party:
(1) have been duly authorized by all necessary action on
the part of the Borrower;
(2) will not conflict with or result in a breach of or
default under any injunction, or decree of any court or governmental
instrumentality, or any agreement or instrument to which the Borrower is now a
party or is subject; and
(3) will not (except to the extent provided in this
Agreement) result in the creation or imposition of any lien, charge, or
encumbrance of any nature whatsoever upon any of the property or assets of the
Borrower pursuant to the terms of any such agreement or instrument; and
(v) To the extent any consent, approval, order, or
authorization or registration, declaration, or filing with any governmental
authority or other person or legal entity is required in connection with the
valid execution and delivery of this Agreement or any of the Related Documents,
or the carrying out or performance of any of the transactions required or
contemplated herein or therein, all such consents, approvals, orders or
authorizations shall have been obtained or all such registrations, declaration,
or filings shall have been accomplished prior to the entry of this Agreement.
(b) If any of the foregoing representations and warranties should be
false or misleading in any way, same shall constitute an Event of Default under
this Agreement.
17. FINANCIAL STATEMENTS AND PROJECTIONS, TRUE AND COMPLETE STATEMENTS AND
REPRESENTATIONS.
(a) As a material inducement to the Lender to enter into this
Agreement, the Borrower has provided the Lender with financial statements,
business projections and cash flow projections that have been prepared by or on
behalf of the Borrower (hereinafter referred to as the "Financial Documents").
The Lender, in agreeing to enter into this Agreement and the Related Documents
and granting the forbearances herein provided, has relied on the Financial
Document, and upon the Borrower's additional representation that, with the
considerations provided to the Borrower under this Agreement, the Borrower will
be able to operate its business and derive revenues from which it will be able
to perform all of its obligations under this Agreement.
(b) The Borrower represents and warrants that all of the statements
herein and in the Financial Documents heretofore, concurrently, or hereafter
delivered by or on behalf of the Borrower to the Lender, including, but not
limited to any business projections, cash flow projections, and financial
statements, are and shall be true, complete and correct in all material respects
as of the date each such Financial Document was prepared (provided, that, with
regard to projections provided to Lender, they are true, complete and correct to
the best of Borrower's knowledge and belief), and the Borrower has not omitted
from its disclosures any facts necessary in order to keep the statements made or
delivered by the Borrowers from being misleading.
18. ADVICE FROM INDEPENDENT COUNSEL. The Borrower understands that this is
a legally binding agreement that may affect its rights. The Borrower has
consulted in-house counsel about the meaning and import of this Agreement and
Related Documents and represents to the Lender that it received legal advice
from such counsel with respect to the negotiation of and entry into this
Agreement and the Related Documents.
19. NOTICES. All notices, requests, demands or other communications given
to or to be made upon any party hereto shall be in writing either by letter
(delivered by hand or commercial messenger service, sent certified mail, return
receipt requested or delivered by nationally recognized overnight courier
service) or telegram or telecopy, addressed as follows:
If to Borrower:
---------------
eGames, Inc.
0000 Xxxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx, CFO
With a copy to:
---------------
Xxxxx Xxxxxx Xxxxx, Esq.
0000 Xxxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000-0000
If to the Lender:
-----------------
Fleet National Bank
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx, VP
with copy to:
-------------
Fox Rothschild O'Brien & Xxxxxxx
000 Xxxxx Xxxxx, Xxxx. 0
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
or, at such other address as shall be designated by such party in a written
notice to the other parties complying as to delivery to the terms of this
Section. Any notices hereunder shall be deemed to have been given (a) three (3)
days after its deposit in the mails, postage prepaid; (b) twelve noon local time
on the first business day following timely deposit thereof with a nationally
recognized overnight courier service with effective instructions to such courier
to make delivery on the next business day; or (c) in all other cases upon
receipt by the party to whom such notice is directed.
20. AMBIGUITIES CONSTRUED. This Agreement and the Related Documents shall
be given a fair and reasonable construction in accordance with the intentions of
the parties and without regard to or aid of any maxim or principle of contract
interpretation that would require construction against the drafter. The parties
acknowledge that they have had equal bargaining power with respect to the review
and revision of the various provisions of this Agreement and the Related
Documents and hereby knowingly waive the maxim of contract interpretation which
would require a disputed provision to be construed against the party drafting
same.
21. CONSENT TO FORUM, WAIVER OF JURY TRIAL. THE BORROWER HEREBY IRREVOCABLY
CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF
PENNSYLVANIA AND THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF
PENNSYLVANIA, AND WAIVES PERSONAL SERVICE OF ANY AND ALL SERVICE OF PROCESS UPON
IT AND CONSENTS, TO THE EXTENT THE BORROWER MAY LAWFULLY DO SO, TO SERVICE OF
PROCESS BY MAILING A COPY OF THE SUMMONS TO THE BORROWER BY CERTIFIED OR
REGISTERED MAIL, AT THE ADDRESS SPECIFIED HEREIN, AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. THE BORROWER HEREBY WAIVES
ANY OBJECTIONS TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AND
AGREES NOT TO ASSERT OR INTERPOSE ANY CLAIM, DEFENSE, OBJECTION, OFFSET OR
COUNTERCLAIM OF ANY KIND OR NATURE OTHER THAN A DEFENSE OF PAYMENT OF THE
OBLIGATIONS IN ANY ACTION OR LEGAL PROCEEDINGS BETWEEN OR AMONG THE LENDER OR
ANY OF ITS AFFILIATES AND ANY OTHER PARTY OR PARTIES HERETO ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR ANY OR ALL OF THE LOAN DOCUMENTS OR OTHER RELATED
DOCUMENTS AND ANY TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, OR ANY RIGHT OR
REMEDY THE LENDER MAY EXERCISE HEREUNDER OR THEREUNDER OR PERMITTED BY LAW. THE
BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE LOAN
DOCUMENTS, AND RELATED DOCUMENTS OR THE COLLATERAL TO THE FULL EXTENT PERMITTED
BY LAW.
______
(Borrower Initial)
22. WARRANT OF ATTORNEY FOR CONFESSION OF JUDGMENT. BORROWER HEREBY
IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR ANY CLERK OF ANY COURT OF
RECORD UPON THE OCCURRENCE OF AN EVENT OF DEFAULT TO APPEAR FOR AND CONFESS
JUDGMENT AGAINST BORROWER (A) FOR SUCH OF THE OBLIGATIONS AS ARE DUE AND OWING
AND/OR MAY BECOME DUE AND OWING AND/OR (B) IN ANY ACTION OF REPLEVIN INSTITUTED
BY LENDER TO OBTAIN POSSESSION OF ANY COLLATERAL SECURING ANY OF THE
OBLIGATIONS, IN EITHER CASE WITH OR WITHOUT DECLARATION, WITH COSTS OF SUIT,
WITHOUT STAY OF EXECUTION AND WITH REASONABLE ATTORNEYS' FEES ACTUALLY INCURRED.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER: (1) WAIVES THE RIGHT OF
INQUISITION ON ANY REAL ESTATE LEVIED ON, VOLUNTARILY CONDEMN THE SAME,
AUTHORIZE THE PROTHONOTARY OR CLERK TO ENTER UPON THE WRIT OF EXECUTION SAID
VOLUNTARY CONDEMNATION AND AGREE THAT SAID REAL ESTATE MAY BE SOLD ON A WRIT OF
EXECUTION; (2) WAIVES AND RELEASES ALL RELIEF FROM ANY AND ALL APPRAISEMENT,
STAY, EXEMPTION OR APPEALS LAWS OF ANY STATE NOW IN FORCE OR HEREAFTER ENACTED;
AND (3) RELEASES ALL ERRORS IN SUCH PROCEEDINGS. IF A COPY OF THIS AGREEMENT,
VERIFIED BY AFFIDAVIT BY OR ON BEHALF OF THE LENDER, SHALL HAVE BEEN FILED IN
SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL OF THIS AGREEMENT AS
A WARRANT OF ATTORNEY. THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT
AGAINST THE BORROWER SHALL NOT BE EXHAUSTED BY THE INITIAL EXERCISE THEREOF, AND
THE SAME MAY BE EXERCISED FROM TIME TO TIME, AS OFTEN AS LENDER SHALL DEEM
NECESSARY AND DESIRABLE, AND THIS AGREEMENT SHALL BE A SUFFICIENT WARRANT
THEREFORE. TO THE EXTENT PERMITTED BY APPLICABLE LAW, LENDER MAY ENTER ONE OR
MORE JUDGMENTS IN THE SAME OR DIFFERENT COUNTIES FOR ALL OR ANY PART OF THE
OBLIGATIONS WITHOUT REGARD TO WHETHER JUDGMENT ENTERED AGAINST BORROWER
HEREUNDER IS STRICKEN OR OPENED UPON APPLICATION BY OR ON BORROWER'S BEHALF FOR
ANY SUBSEQUENT ENTRY OR ENTRIES OF JUDGMENT BY BANK MAY ONLY BE DONE TO CURE ANY
ERRORS IN PRIOR PROCEEDINGS, ONLY AND TO THE EXTENT THAT SUCH ERRORS ARE SUBJECT
TO CURE IN LATER PROCEEDINGS.
______
(Borrower Initial)
23. PAYMENT OF ATTORNEYS' FEES. At Closing, the Borrower will pay all
reasonable attorneys' fees and costs with respect to modifying the Loan,
including, without limitation, preparation of this Agreement and the Related
Documents.
24. ADDITIONAL DOCUMENTS. The parties hereto will at any time after the
date hereof sign, execute and deliver, or cause others to so sign, execute and
deliver, all such agreements, letters, powers of attorney, pleadings,
assignments, documents and instruments and do or cause to be done all such other
acts and things as may be reasonably necessary or proper to carry out the
transactions required or contemplated by this Agreement, and to effectuate the
purposes and intent of this Agreement.
25. SURVIVAL. This Agreement, and all of its terms and provisions, shall
and does hereby survive the closing and the consummation of any transactions
provided for herein.
26. WAIVER OF AUTOMATIC STAY. The Borrower hereby represents and warrants
that if it cannot perform in accordance with this Agreement, with the
forbearances and consideration afforded it under this Agreement, then it will
never be able to perform this Agreement, nor will it be able to reorganize under
Chapter 11 of the Bankruptcy Code or under any other law. Accordingly, in
consideration of the forbearances granted hereunder and the opportunity to
reorganize afforded thereby and under this Agreement, the Borrower agrees that
if a petition under title 11 of United States Code (the "Bankruptcy Code") is
filed by or against it, Borrower in its capacity as Debtor and
Debtor-in-Possession (where applicable) under the Bankruptcy Code, does hereby
agree to consent to the vacation of the Automatic Stay of 11 U.S.C. 362
("Stay"). The Borrower hereby waives the benefits of the Stay and its right to
oppose a motion to lift such Stay, and does hereby admit and agree that the
grounds to vacate the Stay to permit the Lender to enforce its rights and
remedies hereunder exist and shall continue to exist, which grounds include,
without limitation, the fact the Borrower hereby represents and admits that it,
as Debtor, has no equity in its property and such property is not necessary to
an effective reorganization.
27. MISCELLANEOUS.
(a) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns.
(b) Governing Law. This Agreement and the respective rights and
obligations of the parties hereto shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania without
regard to its conflict of laws principles.
(c) Assignment. The Borrower may not assign this Agreement or
any rights hereunder without the Lender's prior written consent, and any
prohibited assignment shall be absolutely void. No consent to an assignment
shall release the Borrower from its liabilities to the Lender. The Lender may
assign this Agreement and its rights and duties hereunder.
(d) Confidentiality Waiver. The Borrower hereby waives any
rights of confidentiality with respect to this Agreement, the Loan Documents and
the Lender's files and records regarding the Loan and consents to the Lender
permitting same to be inspected or copied by any persons or entities interested
in purchasing the Loan.
(e) Attorneys' Fees. In the event of any dispute hereunder, the
prevailing party(ies) shall be entitled to recover all costs and attorneys' fees
from the non-prevailing party(ies).
(f) Headings. Paragraph or section headings used herein are for
convenience only and shall not be used to interpret any term hereof.
(g) Counterparts and Facsimile Signatures. This Agreement may be
executed in any number of counterparts each of which when so executed and
delivered, shall be an original, and all such counterparts shall together
constitute one and the same instrument. This Agreement and the Related Documents
may be initially executed by facsimile signature and shall be effective and
binding upon execution by facsimile signature; provided that originally executed
copies are provided by the Borrower to the Lender within ten days of execution.
(h) Severability. The provisions of this Agreement are severable.
If any provision of this Agreement shall be held invalid or unenforceable in
whole or in part in any jurisdiction, such invalidity or unenforceability shall
not in any manner affect the validity or enforceability of such provision in any
other jurisdiction or any other provisions of this Agreement in any
jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed under seal as of the date first above written.
FLEET NATIONAL BANK
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxx Xxxxxx
Title: Assistant Vice President
ATTEST: eGames, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------ --------------------------------
Xxxxxx X. Xxxxxxxx, Controller Name: Xxxxxx X. Xxxxxx
Title: Vice President and Chief
Financial Officer
