EXHIBIT 10.1
FORBEARANCE AGREEMENT
This Forbearance Agreement (this "Agreement") is entered into this 22nd
day of October, 2004, by and between CINEMA RIDE, INC., a Delaware
corporation ("Lessee") and FINOVA CAPITAL CORPORATION, a Delaware corporation
("FINOVA"), successor in interest to FINOVA Technology Finance, Inc., with
reference to the following:
RECITALS
A. On or about December 12, 1996, FINOVA and Lessee entered into a Master
Equipment Lease Agreement S619001 and Rental Schedule No. 1 dated December
26, 1996 (collectively the "Lease"; capitalized terms used herein shall have
the meanings given in the Lease unless otherwise defined).
B. Following defaults arising under the Lease, Lessee and FINOVA entered
into a (i) First Modification Agreement and Waiver of Defaults dated March
10, 1999; (ii) Second Modification Agreement and Waiver of Defaults dated
June 25, 2001 (the "Second Modification"); and (iii) Third Modification
Agreement and Waiver of Defaults dated April 17, 2002 (collectively, with the
Lease and Security Agreement between Lessee and FINOVA dated December 12,
1996, the "Lease Documents").
C. Lessee has defaulted under the terms of the Lease Documents by failing
to pay FINOVA amounts owing thereunder when due (the "Lease Document
Defaults"). As a result of the Lease Document Defaults, Lessee may resort to
rights and remedies available under the Lease Documents.
D. Lessee has requested FINOVA to forbear from exercising its rights and
remedies to allow Lessee the opportunity to satisfy its obligations owing
under the Lease Documents pursuant to the terms of this Agreement.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, FINOVA and Lessee each agree as follows:
1. Acknowledgment of Factual Recitals. The parties acknowledge the truth,
accuracy and validity of the foregoing factual recitals and incorporate
the same into this Agreement.
2. Acknowledgment of Validity and Enforceability of Lease Documents.
Lessee acknowledges and agrees that the Lease Documents executed in
connection therewith are valid and enforceable according to their terms.
Lessee further acknowledges that it has no legal right or theory on which
to invoke or obtain any legal or equitable relief to xxxxx, postpone or
terminate FINOVA's enforcement of its rights under the Lease Documents and
specifically waives and relinquishes any such right to legal or equitable
relief to cause any abatement, postponement or termination of any
enforcement proceedings commenced by FINOVA.
3. Acknowledgment of Outstanding Lease Obligation Amount. Lessee
acknowledges that, as of October 1, 2004, $956,438.96 remains outstanding
and owing under the Lease Documents, consisting of unpaid rent, interest
and accrued and unpaid late charges (the "Outstanding Indebtedness").
4. Reaffirmation of Lease Documents. Lessee hereby reaffirms, restates and
ratifies the terms of the Lease Documents in all respects. Except as
specifically provided herein, Lessee acknowledges that nothing in this
Agreement shall be construed to limit or restrict FINOVA from exercising
its rights and remedies under the Lease Documents with respect to any
default by Lessee in the performance of its obligations thereunder.
5. Forbearance Period. Provided Lessee performs all terms and conditions
-1-
in this Agreement, and no defaults occur under this Agreement or the Lease
Documents, as amended hereby, on the Effective Date (defined below) FINOVA
shall forbear from exercising its rights and remedies under the Lease
Documents until December 1, 2006 (the "Forbearance Termination Date").
Upon the earlier of the Forbearance Termination Date or a Forbearance
Default, FINOVA may resort to all rights and remedies available under the
Lease Documents without further notice or demand to Lessee.
6. Forbearance Terms. On the Effective Date (defined below), the
following terms shall apply:
(a) Discounted Repayment. Lessee shall repay FINOVA an amount of the
Outstanding Indebtedness equal to $175,000 (the "Discounted Amount"),
together with interest thereon accruing at the per annum rate of 7.5%,
as follows: (i) commencing November 1, 2004, and on the first day of
each consecutive month, payments of $3,000.00 each, to be applied
first against interest accruing for the prior month and then, to the
extent available, as a reduction to the Discounted Amount; (ii) on
December 1, 2006, the unpaid balance of the Discounted Amount, plus
accrued and unpaid interest, shall be fully due and payable; and (iii)
the Discounted Amount and any unpaid accrued interest, may be paid by
Lessee at any time prior to December 1, 2006.
(b) Remaining Indebtedness. The amount representing the difference between
the Outstanding Indebtedness amount and the Discounted Amount,
$781,438.96 (the "Remaining Indebtedness"), shall bear interest at an
annual rate of 16.64%. On the earlier of (i) a Forbearance Default, or
(ii) December 1, 2006, the Remaining Indebtedness amount, plus all
unpaid accrued interest shall be fully due and payable without further
demand by FINOVA; provided, if the Discounted Amount and accrued
interest owing thereon are fully and completely repaid in accordance
with the terms of Section 6(a) of this Agreement, on the date of such
full and complete repayment the Remaining Indebtedness and all
interest accruing thereon shall be deemed fully satisfied and FINOVA
shall file release of lien documents and issue an acknowledgment of
payment in full of the Lease Obligation.
(c) Release of Collateral. Provided no Forbearance Default exists and is
continuing, FINOVA shall release its security interest against
Lessee's equipment and film library in connection with Lessee's sale
of the same, provided FINOVA receives $20,000 of the sale proceeds
concurrent with such release, which proceeds, when received, shall be
applied as a reduction to the Discounted Amount balance. Any payment
received by FINOVA pursuant to this Section 6(c) shall be in addition
to, and not in lieu of, the monthly installment payments required in
Section 6(a) of this Agreement.
(d) Additional Collateral. As consideration for FINOVA entering into this
Agreement, Lessee shall assign to FINOVA, as additional collateral,
Lessee's interest in that life insurance policy insuring Xxxxxxxx
Xxxxxxx (the "Key Man Policy"). FINOVA's security interest in the Key
Man Policy shall secure Lessee's Discounted Amount and Remaining
Indebtedness payment obligations.
-2-
(e) Key Man Policy Maintenance. Lessee shall provide FINOVA, within 5 days
of the date due, written proof of payment of all premiums necessary to
maintain the effectiveness of the Key Man Policy.
(f) Warrants. Nothing in this Agreement shall impair, alter or release the
stock warrant rights granted to FINOVA in connection with the Second
Modification, the grant and exercise are restated, reaffirmed and
confirmed by Lessee in all respects.
7. Effective Date. The effectiveness of this Agreement is expressly
conditioned on FINOVA receiving by October 29, 2004 (the date on which
such conditions are satisfied, referred to herein as the "Effective Date"):
(a) This Agreement duly executed by Lessee; and
(b) An assignment of the Key Man Policy, duly executed by Borrower, in
form and substance satisfactory to FINOVA.
8. Default. Failure by Lessee to comply with all terms and conditions of
this Agreement and the Lease Documents, as amended hereby, shall
constitute a default hereunder (a "Forbearance Default). Upon the
occurrence of a Forbearance Default under this Agreement or the Lease
Documents, FINOVA may, without further notice to Lessee, resort to all
rights and remedies available under the Lease Documents.
9. No Further Forbearance. Lessee acknowledges that FINOVA is not obligated
to grant further accommodations or modifications to the Lease Documents
other than as set forth in this Agreement and that no such commitment has
been communicated.
10.Release. Lessee, its officers, directors, representatives, employees,
predecessors, successors, agents and assigns (collectively, "Releasing
Parties"), each hereby release, remise and forever discharge FINOVA, and
its officers, directors, employees, predecessors, successors, agents and
assigns (collectively "Released Parties"), from any and all claims,
demands, actions, choses in action, cause or causes of action heretofore
arising out of, or connected with or incidental to the Lease Documents.
This general release is intended to be a full and complete release of any
such claims, demands, actions, choses in action, cause or causes of action
connected in any way to the Lease Documents, which have or may have
heretofore arisen.
Releasing Parties each acknowledge and agree that they are aware that they
may hereafter discover claims presently unknown or unsuspected, or facts
in addition to or different from those which they now know or believe to
be true. Nevertheless, it is the intention of the Releasing Parties, and
each of them, through this Agreement, to fully, finally and forever
release all such matters and claims relative thereto, which do now exist,
may exist, or heretofore have existed.
11.Miscellaneous.
(a) This Agreement, the Lease Documents constitute the entire agreement of
the parties hereto with respect to the subject matter hereof and
supercedes any prior oral or written agreements concerning the same.
(b) In the event any legal action is commenced to enforce or interpret any
provision of this Agreement, the prevailing party in such legal
action, as determined by a court of competent jurisdiction, shall be
entitled to receive from the other party the prevailing party's
reasonable attorneys' fees and court costs.
-3-
(c) This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which, when taken together, shall
constitute one and the same document. Any party hereto may execute and
deliver a counterpart of this Agreement by delivering by facsimile
transmission a signature page of this Agreement signed by such party,
and any such facsimile signature shall be treated in all respects as
having the same effect as an original signature. Any party delivering
by facsimile transmission a counterpart executed by it shall promptly
thereafter also deliver a manually signed counterpart of this
Agreement.
(d) The parties have retained, or have had the opportunity to retain,
counsel to represent them in the transactions contemplated in this
Agreement, have read and understand this Agreement and, therefore, the
principle of construction against draftsmen shall have no application
in the interpretation of this Agreement.
(e) GOVERNING LAW; WAIVERS. THIS AGREEMENT, INCLUDING WITHOUT LIMITATION
ENFORCEMENT OF THE OBLIGATIONS SET FORTH HEREIN, SHALL BE INTERPRETED
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE CONFLICT OF LAWS
RULES) OF THE STATE OF ARIZONA GOVERNING CONTRACTS TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE. LESSEE HEREBY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY
OF MARICOPA IN THE STATE OF ARIZONA OR, AT THE SOLE OPTION OF FINOVA,
IN ANY OTHER COURT IN WHICH FINOVA SHALL INITIATE LEGAL OR EQUITABLE
PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER
IN CONTROVERSY. LESSEE WAIVES ANY OBJECTION OF FORUM NON-CONVENIENS
AND VENUE. LESSEE FURTHER WAIVES ANY RIGHT IT MAY OTHERWISE HAVE TO
COLLATERALLY ATTACK ANY JUDGMENT ENTERED AGAINST IT.
(f) MUTUAL WAIVER OF RIGHT TO JURY TRIAL. FINOVA AND LESSEE EACH HEREBY
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT;
(II) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN
FINOVA OR LESSEE, OR (III) ANY CONDUCT, ACTS OR OMISSIONS OF FINOVA OR
LESSEE, OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH FINOVA OR LESSEE; IN
EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE.
-4-
WHEREFORE, the parties have entered into this Agreement on the date first
written above.
CINEMA RIDE, INC.,
a Delaware corporation
By /s/ XXXXXXXX X. XXXXXXX
-----------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: President
FINOVA CAPITAL CORPORATION,
a Delaware corporation
By /s/ XXXXXXX X. XXXXXXXX
-----------------------
Name: Xxxxxxx X. XxXxxxxx
Title: Vice President
-5-
