DEBT FORGIVENESS AGREEMENT
Execution
Version
This Debt Forgiveness Agreement (the
“Agreement”) is entered
into and effective as of September 30, 2009 (the “Effective Date”) by and
between ForgeHouse Inc., a Nevada corporation (the “Borrower”), and Xxxx
Xxxxxxxxxx-Steel, a resident of the State of Georgia, in his individual capacity
(“Guarantor”), and
Xxxxx Xxxxxx, a resident of the United Kingdom, in his individual capacity
(“Irving”) and Xxx
Xxxx, a resident of the United Kingdom, in his individual capacity (“Morl”, collectively with
Irving the “Debt
Holders”) and Insurance Medical Group Limited f/k/a/ After All Limited, a
United Kingdom limited company (“After All” together with
Irving and Morl, in their capacity as members of After All the “Lender”), in reference to the
following:
WHEREAS,
Borrower is indebted to Arngrove Group Holdings, a United Kingdom limited
company (“AGH”), for an
amount equal to U.S. $1,200,000 plus accrued interest and penalties, if any (the
“Original
Debt”);
WHEREAS,
Debt Holders have agreed to acquire the Original Debt from AGH;
WHEREAS,
Borrower is indebted to Lender for an amount equal to approximately U.S.
$200,000 plus accrued interest (the “After All Debt” and
collectively with the Original Debt, the “Debt”);
WHEREAS,
Debt Holders, Lender and Borrower desire to enter into a new agreement regarding
the Original Debt and the After All Debt;
WHEREAS, Debt
Holders have agreed to forgive U.S. $785,000 of the Original Debt plus all
accrued interest thereon and penalties in respect thereof, if any (the “Forgiven Original
Debt”);
WHEREAS,
Lender has agreed to forgive the entire After All Debt in the amount of U.S.
$200,000 plus accrued interest thereon and penalties in respect thereof, if any
(the “Forgiven After All
Debt” and together with the Forgiven Original Debt the “Forgiven Debt”);
WHEREAS,
Borrower will remain obligated to satisfy the unforgiven portion of the Original
Debt and such portion equals U.S. $415,000 (the “Remaining
Debt”);
WHEREAS,
as inducement to Debt Holders and Lender to forgive the Forgiven Debt, Guarantor
will guarantee the Remaining Debt pursuant to a guarantee in favor of the Debt
Holders in the amount of U.S. $125,000 U.S. (the “Guarantee”), of which U.S.
$100,000 U.S. will be deposited into escrow (the “Escrow Funds”) with counsel
for the Debt Holders as of the Effective Date;
WHEREAS,
subject to certain conditions contained herein, Debt Holders and Lender have
determined to forgive the Forgiven Debt in its entirety and release Borrower
from any further obligation regarding the Forgiven Debt;
WHEREAS,
subject to certain conditions contained herein, Borrower has agreed to be
obligated and responsible for the Remaining Debt.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Acquisition of Original
Debt. Debt Holders hereby agree to purchase the Original Debt
from AGH as of the Effective Date. Further, Debt Holders agree to
take any and all necessary actions to approve, authorize and facilitate the
acquisition of the Original Debt from AGH. The Debt Holders further
agree to take any and all actions necessary to extinguish any rights or claims
that AGH may have against the Borrower related to such Original Debt, including,
but not limited to, obtaining a release of Borrower by AGH.
2. Escrow
Funds.
(a) Guarantor
hereby agrees to deposit the Escrow Funds in immediately available funds by wire
transfer to Xxxxxx Xxxxxx Xxxxxxx LLP (“AGG”), counsel for the Debt
Holders, as of the Effective Date.
(b) AGG
will hold such Escrow Funds, as escrow agent, until the earlier of:
(i) the
date on which Guarantor is required to deposit such Escrow Funds (thereafter
with all accrued interest thereon, if any, the “Deposited Funds”) with the
Private Bank of Buckhead, or such other bank as may be selected by Guarantor
(the “Bank”), in
connection with Guarantor’s, Borrower’s or any subsidiary of Borrower’s
application for a loan (“Loan
Application”) at which time, upon written notice (accompanied by any form
of evidence of such Loan Application, including, but not limited to, a term
sheet or copy of such Loan Application) from Guarantor to AGG of said Loan
Application, AGG will transmit the Escrow Funds within one (1) business day of
receipt of such notice to the Guarantor and Guarantor shall deposit such Escrow
Funds within one (1) Business Day with the Bank, or
(ii) December
31, 2009, if Borrower has not closed a Loan pursuant to a Loan Application by
such date, in which case AGG will release the Escrow Funds to the Debt Holders
within two (2) business days thereafter and Guarantor’s Guarantee shall
automatically be reduced by a corresponding amount.
3. Loan
Consummation.
(a) If
a Loan Application is approved, Borrower will within one (1) business day of the
closing of the Loan (the “Loan
Closing”) pay to AGG, for the benefit of the Debt Holders, U.S. $75,000
(the “Initial
Payment”), and as and when permitted under the terms of the Loan, but in
no event later than ten (10) business days after the Loan Closing, pay to the
Debt Holders U.S. $140,000 (the “Second Payment”), in
immediately available funds as a principal payment on the Remaining Debt and
Guarantor’s Guarantee shall automatically be reduced by the corresponding amount
of such Initial Payment and upon payment of the Second Payment the entire
obligation of Guarantor’s Guarantee shall be satisfied and Debt Holders shall
have no further rights or claims against Guarantor under such
Guarantee.
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(b) In
connection only with any payments made under this Section 3, Borrower
shall further pay to the Debt Holders the remaining balance of U.S. $200,000 on
the Remaining Debt, without interest, in ten (10) monthly installments of U.S.
$20,000 as principal payments against the Remaining Debt, beginning on the 90th
day after the Loan Closing.
(c) The
payments made under Section 3(a) and
Section 3(b) of
this Agreement shall constitute complete and absolute satisfaction of the
Remaining Debt and no other payments under any other provisions of this
Agreement shall be required by Guarantor or Borrower.
4. Loan Application
Expiration.
(a) In
the event a Loan Closing has not occurred by December 31, 2009, the Deposited
Funds shall be returned to the Guarantor by the Bank and Guarantor shall pay
such Deposited Funds to AGG, for the benefit of the Debt Holders, within
two (2) business days of Guarantor's receiving such Deposited Funds from
the Bank and Guarantor’s Guarantee shall automatically be reduced by a
corresponding amount. Notwithstanding the foregoing, in the event
that on or before December 31, 2009, Borrower or Guarantor receives written
confirmation (the “Denial
Notice”) from the Bank that the Loan Application will not be approved
(the “Loan Denial”), it
shall provide prompt written notice of the Denial Notice to AGG and Debt Holders
and shall pay the Deposited Funds to AGG, for the benefit of the Debt Holders,
within two (2) business days of Guarantor’s or Borrower’s receipt of the Denial
Notice. Such Deposited Funds shall then be re-classified as Escrow
Funds pursuant to Section
2(b).
(b) In
addition to any payment made under Section 2(b)(ii) or
Section 4(a) of
this Agreement, upon demand under the Guarantee, Guarantor shall pay the
remaining balance of U.S. $25,000 of the Guarantee with respect to the Remaining
Debt to the Debt Holders in eleven (11) monthly installments of U.S. $2,083 and
one (1) installment of U.S. $2,087 beginning on the thirtieth (30th) day
after December 31, 2009 (the “Final Guarantee
Payments”). Upon payment of the Final Guarantee Payments the
entire obligation of Guarantor’s Guarantee shall be satisfied and Debt Holders
shall have no further rights or claims against Guarantor under such
Guarantee.
(c) In
connection only with any payments made under this Section 4, Borrower
shall further pay to the Debt Holders the remaining balance of U.S. $290,000 on
the Remaining Debt, without interest, in three (3) monthly installments of U.S.
$30,000 each beginning on March 31, 2010 and ten (10) monthly installments of
U.S. $20,000 each thereafter, as principal payments against the Remaining
Debt.
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(d) Subject
to Section 5(f)
and Section
5(g), the payments made under Section 4(a), Section 4(b) and
Section 4(c) of
this Agreement shall constitute complete and absolute satisfaction of the
Remaining Debt and no other payments under any other provisions of this
Agreement shall be required by Guarantor or Borrower.
5. Original Debt Forgiveness
and Release of Borrower by Debt Holders; Mandatory Prepayment; Interest on Late
Payments.
(a) Debt
Holders hereby expressly forgive the Forgiven Debt, plus all accrued interest
and/or penalties due or that may become due, with respect to the Forgiven Debt
and all accrued but unpaid interest and/or penalties on the Remaining Debt to
and through the Effective Date and agree that from and after the Effective Date
no additional interest shall accrue on the Remaining Debt in consideration of
the Guarantee and deposit of the Escrow Funds by Guarantor.
(b) Debt
Holders hereby expressly acknowledge and understand that Debt Holders will
surrender any and all promissory notes or other evidence of the Original Debt,
as of the Effective Date, and such promissory notes or other evidence will be
marked as cancelled.
(c) Debt
Holders hereby expressly acknowledge and understand that as of the Effective
Date, Debt Holders release Borrower from any and all obligations related to the
Original Debt, including payment of any interest and/or penalties due thereon or
which may become due in the future.
(d) Borrower
hereby expressly acknowledges and understands that upon cancelling the Original
Debt, it will issue to the Debt Holders, as of the Effective Date, a promissory
note, attached hereto as Exhibit A,
representing the Remaining Debt in the amount of U.S. $415,000.
(e) Upon
the consummation on or before November 30, 2009 of one or more debt or equity
financings, excluding the financing arranged pursuant to a Loan Application, by
Borrower that exceeds U.S. $1,250,000 (such financing or financings, the “Additional Financing”),
Borrower shall be required to make mandatory prepayments of the Remaining Debt
from the proceeds of such Additional Financing that exceed $1,250,000 until the
Remaining Debt is paid in full. Upon the consummation of an
Additional Financing after November 30, 2009, excluding the financing arranged
pursuant to a Loan Application, Borrower shall be required to apply the proceeds
from such Additional Financing first to make mandatory prepayments of the
Remaining Debt until the Remaining Debt is paid in full.
(f) Interest
shall accrue on the amounts payable by Borrower to Debt Holders under this
Agreement at the rate of ten percent (10%) simple interest per annum commencing
on the due date thereof for all payments due from Borrower to Debt Holders that
are not paid on the date due (unless such due date is a bank holiday, in which
case interest shall commence accruing on the next business day). In
no event, shall the Borrower be responsible for interest due, if any, on amounts
payable by Guarantor to Debt Holders in accordance with Section 5(g) of this
Agreement.
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(g) Interest
shall accrue on the Final Guarantee Payments payable by Guarantor to Debt
Holders under this Agreement at the rate of ten percent (10%) simple interest
per annum commencing on the due date thereof for all payments due from Guarantor
to Debt Holders that are not paid on the date due (unless such due date is a
bank holiday, in which case interest shall commence accruing on the next
business day). In no event, shall the Guarantor be responsible for
interest due, if any, on amounts payable by the Borrower to Debt Holders in
accordance with Section 5(f) of this
Agreement.
6. After All Debt Forgiveness
and Release of Borrower by Lender.
(a) Lender
hereby expressly forgives U.S. $200,000, plus accrued interest and/or penalties
due or that may become due, of the After All Debt in consideration of the
Personal Guaranty and deposit of the Escrow Funds by Guarantor.
(b) Lender
hereby expressly acknowledges and understands that Lender will surrender any and
all promissory notes or other evidence of the After All Debt, as of the
Effective Date, and such promissory notes or other evidence will be marked as
cancelled.
(c) Lender
hereby expressly acknowledges and understands that as of the Effective Date,
Lender releases Borrower from any and all obligations related to the After All
Debt, including payment of any interest and/or penalties due thereon or which
may become due in the future.
7. Representations and
Warranties of Lender. Lender hereby represents and warrants to
Borrower as follows:
(a) After
All is a limited company, duly organized, validly existing and in good standing
under the laws of the United Kingdom.
(b) After
All has all requisite power and authority to carry on its business as
conducted.
(c) After
All has the requisite legal capacity and authority to execute and deliver this
agreement and to consummate the transactions contemplated herein.
(d) Xxxx
X’Xxxxx’x execution of this Agreement and consummation of the transactions
contemplated herein, on behalf of After All and its equity and debt holders,
have been duly authorized by all requisite actions on the part of After
All.
(e) This
Agreement constitutes the legal, valid and binding obligation of After All and
its equity and debt holders and is enforceable in accordance with its
terms.
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(f) There
are (i) no legal actions, suits, arbitration or other legal proceedings pending
or contemplated against Lender; and (ii) no orders, injunctions or decrees of
any court, arbitrator or governmental authority, or any government
investigations pending or contemplated against After All; that will or could
prevent the enforcement of this Agreement.
8. Representations and
Warranties of Debt Holders. Debt Holders, jointly and
severally together and in their individual capacity, hereby represent and
warrant to Borrower as follows:
(a) Each
of the Debt Holders is a natural person, and is a citizen and resident of the
United Kingdom.
(b) Each
of the Debt Holders has requisite power and authority to enter into this
Agreement.
(c) Each
of the Debt Holders is not disabled or suffering under any impairment, mental
defect or any other condition that might interfere with enforcement of this
Agreement.
(d) Each
of the Debt Holders has the requisite legal capacity and authority to execute
and deliver this agreement and to consummate the transactions contemplated
herein.
(e) As
of the Effective Date, Debt Holders have completed the transactions reference in
Section
1.
(f) This
Agreement constitutes the legal, valid and binding obligation of each of the
Debt Holders and is enforceable, against either or both of the Debt Holders, in
accordance with its terms.
(g) There
are (i) no legal actions, suits, arbitration or other legal proceedings pending
or contemplated against either of the Debt Holders; and (ii) no orders,
injunctions or decrees of any court, arbitrator or governmental authority, or
any government investigations pending or contemplated against either of the Debt
Holders; that will or could prevent the enforcement of this
Agreement.
9. Representations and
Warranties of Guarantor. Guarantor hereby represents and
warrants to the Debt Holders and Lender as follows:
(a) Guarantor
is a natural person, a citizen of the United Kingdom and resident of the State
of Georgia in the United States of America.
(b) Guarantor
has the requisite power and authority to enter into this agreement.
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(c) Guarantor
is not disabled or suffering under any impairment, mental defect or any other
condition that might interfere with enforcement of this Agreement.
(d) Guarantor
has the requisite legal capacity and authority to execute and deliver this
Agreement and to consummate the transactions contemplated herein.
(e) This
Agreement constitutes the legal, valid and binding obligation of the Guarantor
and is enforceable, against Guarantor, in accordance with its
terms.
(f) There
are (i) no legal actions, suits, arbitration or other legal proceedings pending
or contemplated against Guarantor; and (ii) no orders, injunctions or decrees of
any court, arbitrator or governmental authority, or any government
investigations pending or contemplated against Guarantor; that will or could
prevent the enforcement of this Agreement.
10. Representations and
Warranties of Borrower. Borrower hereby represents and
warrants to Debt Holders and Lender as follows:
(a) Borrower
is a corporation, duly organized, validly existing and in good standing under
the laws of the State of Nevada.
(b) Borrower
has all requisite power and authority to carry on its business as
conducted.
(c) Borrower
has the requisite legal capacity and authority to execute and deliver this
Agreement and to consummate the transactions contemplated herein.
(d) Borrower’s
execution of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all requisite actions on the
part of Borrower.
(e) This
Agreement constitutes the legal, valid and binding obligation of the Borrower
and is enforceable in accordance with its terms.
(f) There
are (i) no legal actions, suits, arbitration or other legal proceedings pending
or contemplated against Borrower; and (ii) no orders, injunctions or decrees of
any court, arbitrator or governmental authority, or any government
investigations pending or contemplated against Borrower; that will or could
prevent the enforcement of this Agreement.
11. Survival of Representations
and Warranties. The representations and warranties of the
Lender, Debt Holders, Guarantor and Borrower shall survive after the conclusion
of this Agreement.
12. Conditions on
Effectiveness. This Agreement shall become effective only upon
the Effective Date.
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13. Indemnification. Debt
Holders and Lender hereby agree to indemnify and hold Guarantor and Borrower and
its affiliates harmless against, in respect of, and shall on demand, reimburse
it for any and all loss, liability or damage suffered or incurred by Guarantor
and/or Borrower and any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including without limitation,
reasonable legal fees and expenses, incident to AGH’s interest or rights in or
related to the Original Debt.
14. Legal
Fees. Borrower hereby expressly acknowledges and agrees to pay
all reasonable legal fees exceeding U.S. $3,000, but in no event more than U.S.
$15,000 incurred by the Debt Holders, in connection with the acquisition of the
Original Debt, the holding of the Escrow Funds by AGG, forgiveness of the
Original Debt, forgiveness of the After All Debt, issuance of the New Debt or
the execution and closing of this Agreement.
15. Governing
Law. This agreement, the rights and obligations of the parties
under this agreement, and any claim or controversy directly or indirectly based
upon or arising out of this Agreement or any of the transactions contemplated by
this Agreement (whether based on contract, tort, or any other theory), including
all matters of construction, validity and performance, shall in all respects be
governed by and interpreted, construed and determined in accordance with, the
internal, substantive laws of the State of Georgia (without regard to any
conflicts of law provisions).
16. Entire
Agreement. This Agreement, on and as of the Effective Date,
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and all prior or contemporaneous understandings or
agreements, whether written or oral, among any of the parties hereto with
respect to such subject matter are hereby superseded in their
entireties.
17. Counterparts. This
Agreement may be executed in one or more counterparts, each of independently
shall be deemed to be an original and all of which together shall constitute one
and the same instrument; and signatures delivered by facsimile transmission or
by e-mail delivery of a “.pdf” format data file, shall be given the same legal
force and effect as original signatures.
18. Headings. The
headings in this Agreement are for the purpose of convenience only and shall not
limit or otherwise affect the interpretation of any terms hereof. The
terms “hereof”, “herein” and comparable terms refer to this
Agreement.
19. Invalidity. If
any of the provisions of this Agreement become invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired.
20. Drafting. The
parties expressly acknowledge and agree that this Agreement has been drafted by
each of them and that any authority holding that any provision of an agreement
shall be construed against the drafting party or in favor of the non-drafting
party shall not apply to the interpretation or enforcement of this
Agreement.
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21. Assignment. None
of the parties shall have the right to assign any rights or delegate any duties,
obligations or liabilities arising under or pursuant to this Agreement without
the prior written consent of any other party whose rights under this Agreement
could be affected by such assignment, which consent may be granted, denied or
conditioned in the sole discretion of such other party. This
Agreement is binding on the successors, assigns and legal representatives of the
parties hereto.
22. Attorney’s
Fees. Should any action be commenced among the parties hereto
concerning any provision of this Agreement or the rights or duties of any person
or entity hereunder, the prevailing party in such proceeding shall be entitled
to payment of its reasonable attorney's fees and expenses of counsel and court
costs incurred by reason of such action from the losing party.
[Signatures on Following
Page]
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IN WITNESS WHEREOF, the parties hereto
have signed and delivered this Agreement, all on the day and year first above
written.
BORROWER:
By:
_________________________________
Name:
_______________________________
Position:
_____________________________
LENDER:
INSURANCE MEDICAL GROUP
LIMITED
f/k/a/ AFTER
ALL LIMITED
on behalf of itself and all its equity
and debt holders
By:
___________________________________
Xxxx
X’Xxxxx
Director
and Secretary
DEBT HOLDERS:
___________________________________
Xxxxx Xxxxxx
___________________________________
Xxx Xxxx
GUARANTOR:
___________________________________
Xxxx Xxxxxxxxxx-Steel
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