EXHIBIT 10.10
TEMPORARY FOREBEARANCE AGREEMENT
This Temporary Forbearance Agreement is entered into as of September 13,
2004 between Silicon Valley Bank ("Silicon"), and First Virtual Communications,
Inc ("First Virtual") and Cuseeme Networks, Inc. ("Cuseeme") (First Virtual and
Cuseeme being referred to herein jointly and severally as "Borrower"), with
reference to the following facts:
A. Silicon and the Borrower are parties to that certain Loan and
Security Agreement dated April 3, 2003 (as amended, the "Loan Agreement").
(Capitalized terms used in this Agreement, which are not defined herein, shall
have the meanings set forth in the Loan Agreement. The Loan Agreement and all
other present and future documents, instruments and agreements relating thereto
are referred to herein collectively as the "Loan Documents".)
B. Material Events of Default have occurred and are continuing under the
Loan Documents. Said material Events of Default include without limitation the
following (the "Existing Defaults"): (i) Borrower is in breach of the liquidity
covenant set forth in Section 5(B) of the Schedule to the Loan Agreement; (ii)
Borrower is not generally paying its debts as they become due; and (iii)
Material Adverse Changes have occurred and are continuing.
E. Borrower and Silicon are discussing a longer-term forbearance and
restructuring agreement, and Borrower has requested that Silicon agree to a
short-term forbearance, to enable those discussions to continue.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Forbearance.
1.1. Forbearance. Silicon agrees to forbear from exercising its rights
and remedies against the Borrower, as a result of the Existing Defaults, until
the earlier of the following dates (the "Forbearance Period"): (i) September 21,
2004, or (ii) the date any Additional Default shall occur. In agreeing to
forbear from exercising its rights and remedies, Silicon is not waiving the
Existing Defaults or any rights or remedies in connection therewith, all of
which are expressly reserved. Upon the expiration of the Forbearance Period,
Silicon may, at its option, exercise any and all rights or remedies in
connection with the Existing Defaults, without further notice.
1.2. "Additional Default." As used in this Agreement, "Additional
Default" means any of the following (but not including the Existing Defaults):
(i) any present or future Default or Event of Default under any Loan Document
(including, without limitation, any breach of any term or provision of this
Agreement, and any Default or Event of Default under any other Loan Document
which has occurred as of this date, but of which Silicon does not have actual
knowledge on this date), (ii) any event which, with notice or passage of time or
both, would constitute a Default or Event of Default under any Loan Document,
(iii) any breach of any representation or warranty in this Agreement or any
other Loan Document. Without limiting any other provision of this Agreement,
Silicon may, in its sole and absolute discretion, waive an Additional Default,
but only in a specific written waiver signed by Silicon, and no such waiver
shall imply or constitute an agreement on the part of Silicon to waive any other
Additional Defaults, whether or not similar to the Additional Default waived.
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1.3. Rights and Remedies. Borrower agrees that the exercise by Silicon
of any and all rights or remedies in connection with the Existing Defaults and
(if applicable) any Additional Default, upon the expiration of the Forbearance
Period, or the occurrence of any Additional Default, shall not be affected by
reason of this Agreement, and the Borrower shall not assert as a defense thereto
the passage of time, estoppel, laches or any statute of limitations.
1.4. No Commitment as to Further Forbearance. Borrower acknowledges that
Silicon, by entering into this Agreement and discussing further forbearance
and/or restructuring with respect to the Loan Agreement, is not agreeing or
committing to any further forbearance and/or restructuring with respect to the
Loan Agreement, and no such agreement or commitment shall be effective against
Silicon unless set forth in a specific written agreement signed by Silicon.
2. Acknowledgment of Default. Borrower acknowledges that: (i) material Events of
Default have occurred and presently exist under the Loan Documents, (ii) the
unpaid principal balance of the Obligations is $3,000,000, as of September 13,
2004, plus interest accruing after August 31, 2004, plus reasonable costs
and attorneys fees as set forth in the Loan Documents; (iii) the Obligations are
due and owing from Borrower to Silicon without any defense, offset or
counterclaim of any kind; (iv) pursuant to the Loan Documents, Silicon has a
valid perfected first priority security interest in all of the Borrower's
present and future accounts, general intangibles, inventory, equipment,
documents, instruments, and all other property and assets of the Borrower and
the proceeds and products thereof (collectively, the "Collateral"), subject to
Permitted Liens; and (v) Silicon is not obligated to make any additional Loans
to the Borrower, under the Loan Documents or otherwise.
3. Fee. In consideration for Silicon entering into this Agreement, Borrower
shall concurrently pay Silicon a fee in the amount of $5,000, which shall be in
addition to all other fees and charges and all interest, is fully-earned on the
date hereof, and is non-refundable. Silicon is authorized to charge said fee to
any of the Deposit Accounts maintained by Borrower with Silicon.
4. General Release.
4.1. General Release. In consideration for Silicon entering into this
Agreement, the Borrower hereby irrevocably releases and forever discharges
Silicon, and its successors, assigns, agents, shareholders, directors, officers,
employees, agents, attorneys, parent corporations, subsidiary corporations,
affiliated corporations, affiliates, participants, and each of them, from any
and all claims, debts, liabilities, demands, obligations, costs, expenses,
actions and causes of action, of every nature and description, known and
unknown, which Borrower now has or at any time may hold, by reason of any
matter, cause or thing occurred, done, omitted or suffered to be done prior to
the date of this Agreement (collectively, the "Released Claims"). Borrower
hereby irrevocably waives the benefits of California Civil Code Section 1542
which provides: "A general release does not extend to claims which the creditor
does not know or suspect 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." This release is fully effective on the date hereof.
4.2. Additional Waivers. Borrower irrevocably waives and affirmatively
agrees not to allege or otherwise pursue any and all defenses, affirmative
defenses, counterclaims, claims, causes of action, set-offs or other rights that
they may have relating to the Obligations or the Loan Documents, including (but
not limited to) any right to contest any Events of Default which
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have been declared or could have been declared by Silicon at the date hereof,
any provision of any of the Loan Documents, Silicon's lien and security interest
under the Loan Documents, and any acts or omissions of Silicon in connection
with the Loan Documents. Borrower acknowledges and agrees to the continuing
authenticity and enforceability of the Loan Documents and ratifies and confirms
the Loan Documents in their entirety, and agrees that the Loan Documents shall
remain in full force and effect until all Obligations have been paid and
performed in full (except that no further loans will be made to the Borrower
under the Loan Documents, except as set forth in this Agreement).
4.3. No Prior Assignments.Borrower represents and warrants that it has
not assigned to any person, partnership, corporation, or other entity any
Released Claim. In the event that the foregoing representation and warranty is,
or is purported to be, untrue, then the Borrower agrees to indemnify and hold
harmless Silicon against, and to pay, any and all actions, demands, obligations,
causes of action, decrees, awards, claims, liabilities, losses and costs,
including but not limited to reasonable expenses of investigation, attorneys'
fees of counsel of Silicon's choice and costs, which Silicon may sustain or
incur as a result of the breach or purported breach of the foregoing
representation and warranty.
5. General Provisions.
5.1. Integration; Amendment. This Agreement and the other Loan Documents
set forth in full the terms of agreement between the parties and are intended as
the full, complete and exclusive contract governing the relationship between the
parties. This Agreement and the other Loan Documents supersede all other
discussions, promises, representations, warranties, agreements and
understandings between the parties. All of the Obligations, and all of the Loan
Documents and all terms and provisions thereof shall continue in full force and
effect and the same are hereby ratified and confirmed. This Agreement may not be
modified or amended, nor may any rights hereunder be waived, except in a writing
signed by the party against whom enforcement of the modification, amendment or
waiver is sought. Nothing herein limits any of the covenants, agreements,
representations or warranties in the Loan Agreement or any of the other Loan
Documents.
5.2. Investigation. Each of the parties acknowledges that it and its
counsel have had an adequate opportunity to make whatever investigation or
inquiry they may deem necessary or desirable in connection with the subject
matter of this Agreement prior to the execution hereof and the delivery and
acceptance of the consideration specified herein. Each party acknowledges that
(i) each has been represented by independent counsel of its own choice
throughout all of the negotiations which preceded the execution of this
Agreement, (ii) each has executed this Agreement with the consent and on the
advice of such independent legal counsel, and (iii) each has executed this
Agreement voluntarily and knowingly.
5.3. Waivers. Any waiver of any condition in, or breach of, this
Agreement or any of the other Loan Documents in a particular instance shall be
only made by a specific written waiver signed by a duly authorized officer of
Silicon and Borrower, and any such waiver shall not operate as a waiver of other
or subsequent conditions or breaches of the same or a different kind. Silicon's
exercise or failure to exercise any rights under this Agreement or any of the
other Loan
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Documents in a particular instance shall not operate as a waiver of its right to
exercise the same or different rights in subsequent instances.
5.4. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns, provided, however, that Borrower may
not assign or transfer any rights hereunder without the prior written consent of
Silicon.
5.5. Costs and Expenses. Borrower shall reimburse Silicon for all of the
reasonable costs, fees and expenses (including without limitation reasonable
attorneys fees) which Silicon has incurred or hereafter incurs in connection
with the negotiation, drafting or enforcement of this Agreement, or otherwise in
connection with this Agreement or the other Loan Documents, whether or not there
is any litigation between the parties hereto.
5.6. Good Faith. Borrower acknowledges and agrees that Silicon has acted
in good faith and has conducted itself in a commercially reasonable manner its
relationships with Borrower and in connection with this Agreement and the Loan
Agreement and the other Loan Documents.
5.7. No Third Party Beneficiaries. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement.
5.8. Separability. If any provision of this Agreement is held by a court
of competent jurisdiction to be invalid, illegal or unenforceable, the remaining
provisions of this Agreement shall nevertheless remain in full force and effect.
5.9. Time of the Essence. Time is of the essence of each of the
obligations of the parties under, and each of the provisions of, this Agreement.
5.10. Headings; Counterparts. The headings in this Agreement are solely
for convenience and shall be given no effect in the construction or
interpretation of this Agreement. This Agreement may be executed in any number
of counterparts, which together shall constitute one and the same agreement.
5.11. Governing Law; Forum Selection. This Agreement is being entered
into in the State of California. This Agreement shall be governed by the laws of
the State of California. As a material part of the consideration to the parties
for entering into this Agreement, each party (1) agrees that, at the option of
Silicon, all actions and proceedings based upon, arising out of or relating in
any way directly or indirectly to, this Agreement shall be litigated exclusively
in courts located within Santa Xxxxx County, California, (2) consents to the
jurisdiction of any such court and consents to the service of process in any
such action or proceeding by personal delivery, first-class mail, or any other
method permitted by law, and (3) waives any and all rights to transfer or change
the venue of any such action or proceeding to any court located outside Santa
Xxxxx County, California.
5.12. MUTUAL WAIVER OF RIGHT TO JURY TRIAL. EACH PARTY TO THIS AGREEMENT
HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY
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RELATING TO: (i) THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; OR (ii) ANY
OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN OR AMONG THEM; OR (iii)
ANY CONDUCT, ACTS OR OMISSIONS OF ANY PARTY TO THIS AGREEMENT OR ANY OF THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS
AFFILIATED WITH THEM; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE.
"Silicon": "Borrower":
Silicon Valley Bank First Virtual Communications, Inc
By By /s/ XXXXXX XXXX
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Title Title VP/CFO
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By
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Title
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Cuseeme Networks, Inc.
By /s/ XXXXXX XXXX
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Title VP/CFO
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By
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Title
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