Exhibit 10.1
Prepared By and Return to:
Xxxx X. Xxxxxx, Esq.
Xxxxx & Xxxxxxx
X.X. Xxx 0000
Xxxxx, Xxxxxxx 00000
SECOND FORBEARANCE AND MODIFICATION AGREEMENT
THIS SECOND FORBEARANCE AND MODIFICATION AGREEMENT (the "Forbearance
Agreement") is made effective the 31st day of July, 2000, (the "Effective Date")
by and between Bank of America, N.A., d/b/a NationsBank, N.A., successor to
NationsBank, N.A., f/k/a NationsBank, N.A. (South), as successor in interest to
NationsBank of Florida, N.A. (the "Bank"); and Elcotel, Inc., a Delaware
corporation ("Elcotel"); Elcotel Direct, Inc., a Delaware corporation;
Technology Service Group, Inc., successor by merger with Elcotel Hospitality
Services, Inc., a Delaware corporation; and all subsidiaries of any of them
(collectively, the "Borrower"), jointly and severally.
RECITALS
WHEREAS, pursuant to a Restated Loan Agreement, the Borrower is indebted
to the Bank pursuant to a Consolidation Promissory Note (the "Consolidated
Note"), dated November 25, 1997, in the original principal amount of
$15,000,000.00, which Consolidated Note consolidated and renewed prior
indebtedness from the Borrower to the Bank;
WHEREAS, the Consolidated Note was secured by certain personal property
more particularly described in that certain Restated Security Agreement of even
date therewith;
WHEREAS, the Restated Loan Agreement was modified by that certain First
Amendment to Loan Agreement and Security Agreement dated March 29, 1999 (as
modified, the "Loan Agreement");
WHEREAS, Borrower is indebted to the Bank pursuant to a First Replacement
Promissory Note ("Note 1") in the original principal amount of $10,000,000.00,
dated March 29, 1999, which renewed and replaced a portion of the Consolidated
Note;
WHEREAS, Borrower is indebted to the Bank pursuant to a Promissory Note
("Note 2") in the original principal amount of $1,500,000.00, dated March 29,
1999;
WHEREAS, Borrower is indebted to the Bank pursuant to a Second Replacement
Promissory Note ("Note 3") in the original principal amount of $4,000,000.00,
dated March 29, 1999, which renewed and replaced a portion of the Consolidated
Note;
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WHEREAS, Elcotel is indebted to the Bank pursuant to a Consolidated
Promissory Note ("Note 4") in the original principal amount of $1,920,000.00,
dated November 25, 1997;
WHEREAS, Note 4 is secured by that certain Mortgage (as modified, the
"Mortgage") by Elcotel in favor of Xxxx X. Xxxxxxxxxx, as Trustee encumbering
certain real property located in Manatee County, Florida, as more particularly
described on Exhibit A (the "Mortgaged Property") recorded in Official Records
Book 1416, beginning at Page 5745, which was assigned to the Bank by an
assignment recorded in Official Records Book 1435, beginning at Page 4451, and
which was modified by instruments recorded in Official Records Book 1425,
beginning at Page 6814, Official Records Book 1435, beginning at Page 4456,
Official Records Book 1468, beginning at Page 2483, Official Records Book 1537,
beginning at Page 2935, all of the public records of Manatee County, Florida;
WHEREAS, the Notes went into default by virtue of a breach of the
covenants contained in the Loan Agreement, more specifically, breach of the debt
service coverage ratio required by the Loan Agreement (the "Existing Default");
WHEREAS, as a result of the Existing Default, Borrower requested a
forbearance and modification of the terms and conditions of the Notes, which the
Bank agreed to in a Forbearance and Modification Agreement dated April 12, 2000
(the "First Modification");
WHEREAS, pursuant to the First Modification, the Bank's forbearance
expired and all sums due under the Notes became due and payable in full on July
31, 2000; and,
WHEREAS, Borrower again desires to modify the terms of the Notes and other
Loan Documents (the Notes, the Mortgage, the Consolidated Note, the Loan
Agreement, First Modification, and all other documents executed in connection
with the Notes and the loans evidenced thereby are collectively referred to as
the "Loan Documents") and to have the Bank forbear enforcement of the Loan
Documents and, notwithstanding the existing default, the Bank is willing to
forbear enforcement and modify the Loan Documents, but only under the terms and
conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follows:
1. Recitals. The foregoing recitals are true and correct and
incorporated herein by reference.
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2. Maturity Date. The Maturity Date of this Forbearance Agreement, Note
1, Note 2, Note 3, and Note 4, is September 30, 2000,
notwithstanding anything to the contrary contained in the Loan
Documents.
3. Forbearance. Provided that no event of default occurs under this
Forbearance Agreement, the Bank shall forbear from enforcing its
rights and remedies under the Loan Documents up to and including the
Maturity Date. In the event of a default under this Forbearance
Agreement, the Bank shall charge and Borrower shall pay interest at
a default rate from the date of such default, but not prior to that
date. The Existing Default shall not be considered a default under
this Forbearance Agreement for the purposes of this paragraph.
4. Overadvance. The Bank will not require a cure of any overadvance up
to a limit of $2,800,000 beyond the amount permitted by the
Borrowing Base formula set forth in the Loan Documents, from the
Effective Date of this Forbearance Agreement through the Maturity
Date. Borrower shall not be entitled to future advances while
exceeding the Borrowing Base formula limit.
5. Financial Conditions. For purposes of calculating the consolidated
ratio of Current Assets to Current Liabilities (as defined in the
Loan Documents), the balance of Note 3 and Note 4 shall not be
included as Current Liabilities.
6. Interest Rate.
a. Note 1 and Note 2 shall accrue, and Borrower shall pay,
interest at a fluctuating rate equal to the "Prime Rate" of
the Bank plus 3.0% per annum from the Effective Date up to and
including payment in full or the occurrence of an event of
default other then the Existing Default. The "Prime Rate" is
the fluctuating rate of interest established by Bank from time
to time, at its discretion, whether or not such rate shall be
otherwise published. The Prime Rate is established by Bank as
an index and may or may not at any time be the best or lowest
rate charged by Bank on any loan.
b. Note 3 and Note 4 shall accrue, and Borrower shall pay,
interest at a fixed rate equal to the "Prime Rate" of the Bank
as of the Effective Date plus 3.0% per annum from the
Effective Date up to and including payment in full or the
occurrence of an event of default other than the Existing
Default.
c If an event of default occurs under this Forbearance
Agreement, the Notes shall accrue, and Borrower and Guarantors
shall pay, interest at the maximum rate permitted by Florida
law.
7. Extension Fee. Concurrent with the execution of this Forbearance
Agreement, Borrower shall pay to the Bank a commitment fee equal to
one-fourth of one percent (0.25%) of the combined outstanding
balance of the Notes. On the
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Maturity Date, Borrower shall pay an additional commitment fee equal
to one-quarter of one percent (0.25%) of the combined outstanding
balance of the Notes as of the Maturity Date.
8. Expenses. Borrower shall pay all costs and expenses incurred by the
Bank in connection with the Existing Default, negotiating, drafting
and closing this Forbearance Agreement and related documents,
including, but not limited to, documentary stamp taxes, intangibles
taxes, any other transactional taxes, recording fees, the Bank's
attorneys fees, and title insurance premiums and search costs. All
such expenses shall be due and payable at the time of the closing of
this Forbearance Agreement, and shall be secured by the collateral
of the Notes.
9. Waiver and Release. To induce the Bank to enter into this
Forbearance Agreement, Borrower, for themselves, and their agents,
attorneys, successors and assigns, do hereby release the Bank and
its predecessors, successors, assigns, officers, managers,
directors, shareholders, employees, agents, attorneys,
representatives, parent corporations, subsidiaries, and affiliates
(collectively referred to as "Affiliates"), jointly and severally
from any and all claims, counterclaims, demands, damages, debts,
agreements, covenants, suits, contracts, obligations, liabilities,
accounts, offsets, rights, actions and causes of action for
contribution and indemnity, whether arising at law or in equity
(including without limitation, claims of fraud, duress, mistake,
tortious interference, usury, or control), whether presently
possessed or possessed in the future, whether known or unknown,
whether liability be direct or indirect, liquidated or unliquidated,
whether presently accrued or to accrue hereafter, whether absolute
or contingent, foreseen or unforeseen, and whether or not heretofore
asserted, for or because of or as a result of any act, omission,
communication, transaction, occurrence, representation, promise,
damage, breach of contract, fraud, violation of any statute or law,
commission or of any tort, or any other matter whatsoever or thing
done, omitted or suffered to be done by Lender or any of its
Affiliates, insofar as the same arise out of or relate to the Loans,
the Loan Documents, the collateral securing the Loans, the
debtor-creditor relationship between the parties, and all
communications or contacts between the parties related to any of the
foregoing, including this Forbearance Agreement, which has occurred
in whole or in part, or was initiated at any time from the beginning
of time up to and immediately preceding the moment of the execution
of this Agreement. The rights and defenses being waived and released
hereunder include without limitation any claim or defense based on
the Bank having charged or collected interest at a rate greater than
that allowed to be contracted for by applicable law as changed from
time to time; provided, however, in no event shall such waiver and
release be deemed to change or modify the terms of the Loan
Documents or the Loans which provide that sums paid or received in
excess of the maximum rate of
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interest allowed to be contracted for by applicable law, as changed
from time to time, reduce the principal sum due, said provision to
be in full force and effect.
12. Acknowledgement of Default. Borrower acknowledges that the Notes are
currently in default because of the Existing Default. Nothing
contained herein or in any document executed concurrently herewith
shall constitute or be construed as a waiver of such default. Except
to the extent specifically set forth herein, the Bank retains all of
its rights and remedies with respect to the Notes and the Loan
Documents.
11. WAIVER OF JURY TRIAL. THE PARTIES HERETO KNOWINGLY, IRREVOCABLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY CLAIM, DEFENSE, DISPUTE OR
LITIGATION BETWEEN OR AMONG ANY OF THE PARTIES HERETO. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO
THIS DOCUMENT.
12. Modification of Loan Documents. The terms of the Loan Documents are
hereby modified to incorporate and reflect the terms and conditions
of this Forbearance Agreement. In the event of any conflict between
this Forbearance Agreement and the Loan Documents, the terms of this
Forbearance Agreement shall prevail.
13. Ratification of Loan Documents. Borrower hereby ratifies and
confirms all of the terms, warranties, representations, covenants
and conditions set forth in the Loan Documents and this Forbearance
Agreement and hereby acknowledges the Loan Documents as modified
constitute valid and binding obligations of Borrower. Without
limiting the foregoing, Borrower hereby ratifies and confirms the
grant and conveyance to the Bank of the collateral set forth in the
Loan Documents as security for the repayment of the Notes and all
mortgages, security agreements, and financing statements, wherever
filed, or unfiled. Borrower further acknowledges and agrees the Loan
Documents as modified are enforceable in accordance with their terms
and free from claims of defense, setoff or recoupment against the
Bank or any other party. Without in any way limiting the
applicability of the foregoing, Borrower hereby agrees, confirms and
ratifies that all collateral securing any of the Notes shall serve
as collateral for each of the Notes, and to the extent necessary to
do so, hereby re-assigns all collateral to the Bank as security for
each of the Notes.
14. Events of Default and Remedies. The failure to pay any sum required
hereunder when due, the breach of any representation or warranty
contained herein or in any of the Loan Documents, and the breach of
any of the Loan Documents, other than the Existing Default, shall
constitute an event of default under this Forbearance Agreement, and
the Bank shall be immediately entitled,
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without notice or demand, to enforce its rights and remedies under
the Loan Documents, this Forbearance Agreement, and law. An event of
default under this Forbearance Agreement shall constitute an event
of default under each of the Notes; an event of default under any of
the Notes shall constitute an event of default under the other Notes
and under this Forbearance Agreement.
15. Indemnity. Borrower hereby agrees to indemnify and hold harmless
(including payment of attorneys fees and costs) the Bank from and
against any loss, cost or expense resulting from any claim by
Florida taxing authorities regarding the Loans or this Forbearance
Agreement. This obligation to indemnify the Bank shall survive
payment of the Notes, and the satisfaction of any Loan Document,
this Forbearance Agreement or other instrument securing the Loans.
16. Anti-Novation. It is the intent of the parties that this instrument
shall not constitute a novation and shall in no way adversely affect
the lien priority of the Loan Documents referred to above.
17. Future Cooperation. Borrower agrees to cooperate with the Bank in
giving effect to the purposes and terms of this Forbearance
Agreement, including, but not limited to, the execution of
additional documents deemed necessary or desirable by the Bank to
document or perfect the Bank's rights under the Loan Documents and
this Forbearance Agreement.
18. Representations. Borrower acknowledges, represents, warrants, and
confirms the following:
a. Review of Agreement. Borrower has carefully read and
understands the effect of this Forbearance Agreement. Borrower
has had the assistance or the opportunity to seek the
assistance of separate legal counsel in carefully reviewing,
discussing and considering all terms of this Forbearance
Agreement;
b. Reliance Only on Representations Herein. The execution of this
Forbearance Agreement by Borrower is not based upon reliance
upon any representation, understanding or agreement not
expressly set forth herein. The Bank has not made any
representations to Borrower not expressly set forth herein;
c. Residency. Borrower is subject to the personal jurisdiction of
courts of the State of Florida;
d. Authority and Compliance. Borrower has full power and
authority to execute and deliver the Loan Documents and to
incur and perform the obligations provided for therein, all of
which have been duly authorized by all proper and necessary
action of the appropriate governing body of each. Each of
Borrower are corporations in good standing in the State
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of Delaware and authorized to do business in Florida. Each of
Borrower shall provide a current incumbency certificate and
corporate resolution authorizing the entry into this
Forbearance Agreement. No additional consent or approval of
any court, public authority or other third party is required
as a condition to the validity of any Loan Document, and
Borrower is in compliance with all laws and regulatory
requirements to which each is subject;
e. Litigation. There is no proceeding against Borrower pending
or, to the knowledge of each, threatened before any court or
governmental authority, agency or arbitration authority,
except as disclosed to the Bank in writing and acknowledged by
the Bank prior to the date of this Forbearance Agreement;
f. Ownership of Assets. Borrower has good title to their
respective assets, and such assets are free and clear of
liens, except those granted to the Bank, except for purchase
money security interests in chattels, including leases, and as
disclosed to the Bank in writing prior to the date of this
Forbearance Agreement;
g. Taxes. All taxes and assessments due and payable by Borrower
have been paid or are being contested in good faith by
appropriate proceedings, and each has filed all tax returns
which it is required to file;
h. Voluntary Act. Borrower executes this Forbearance Agreement as
a free and voluntary act, without any duress, coercion or
undue influence exerted by or on behalf of the Bank or any
other party;
i. Representations True and Correct. All of the warranties and
representations made in this Forbearance Agreement and all
other Loan Documents, are materially true and correct as of
the date hereof and that Borrower is not in default of any of
the foregoing nor aware of any default with respect thereto;
j. Ownership of Claims. Borrower is the sole owner of the claims
or causes of action being released herein and has not conveyed
or assigned any interest in any such claims or causes of
action to any person or entity not a party hereto; and
k. Binding Agreement. This Forbearance Agreement does not violate
any law, rule, regulation, contract or agreement otherwise
enforceable by or against Borrower.
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19. Miscellaneous.
a. Paragraph headings used herein are for convenience only and
shall not be construed as controlling the scope of any
provision hereof.
b. This Forbearance Agreement shall be governed by and construed
in accordance with the laws of the State of Florida and of the
United States of America and the rules and regulations
promulgated under the authority thereof. The parties hereto
acknowledge that this Forbearance Agreement affects interstate
commerce.
c. Time is of the essence of this Forbearance Agreement.
d. As used herein, the neuter gender shall include the masculine
and feminine genders, and vice versa, and the singular the
plural, and vice versa, as the context demands.
e. All costs incurred by the Bank in enforcing this Forbearance
Agreement and in collection of sums due the Bank from
Borrower, to include, without limitation, reasonable
attorney's fees through all mediation and arbitration
proceedings, trials, appeals and proceedings, to include,
without limitation, any proceedings pursuant to the bankruptcy
laws of the United States, shall be paid by Borrower.
f. This Forbearance Agreement shall inure to the benefit of and
be binding upon the parties hereto as well as their successors
and assigns, heirs and personal representatives.
20. Counterparts. This Forbearance Agreement may be executed in a number
of multiple identical counterparts which, when taken together, shall
constitute collectively one (1) agreement, but in making proof of
this agreement it shall not be necessary to produce or account for
more than one such counterpart executed by the party to be charged.
Facsimile signatures may be deemed originals for all purposes.
21. Final Agreement. THIS FORBEARANCE AGREEMENT REPRESENTS THE ENTIRE
AND FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT WRITTEN OR ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES. THIS FORBEARANCE AGREEMENT CONSTITUTES THE
FINAL AND COMPLETE RELEASE OF THE BANK AND ITS AFFILIATES OF THOSE
MATTERS SET FORTH HEREIN.
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IN WITNESS WHEREOF, the parties hereto have caused this Forbearance
Agreement to be executed the date first above written, effective as of the
Effective Date.
WITNESSES
ELCOTEL, INC., a Delaware corporation
________________________
Print Name:_____________
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Print Name: Xxxxxxx X. Xxxxxxxx
________________________ -------------------------
Print Name:_____________ Title: Senior Vice President
-----------------------------
ELCOTEL DIRECT, INC., a Delaware
_________________________ corporation
Print Name:______________
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
_________________________ Print Name: Xxxxxxx X. Xxxxxxxx
--------------------------
Print Name:______________ Title: Vice President
------------------------------
TECHNOLOGY SERVICE GROUP, INC.
successor by merger with Elcotel
Hospitality Services, Inc., a Delaware
_________________________ corporation
Print Name:______________
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
_________________________ Print Name: Xxxxxxx X. Xxxxxxxx
--------------------------
Print Name:______________ Title: Vice President
------------------------------
BANK OF AMERICA, N.A., d/b/a
NationsBank, N.A.
_________________________
Print Name:______________
By:______________________________
_________________________ Print Name:_______________________
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Print Name:______________________ Title:_____________________________
STATE OF _____________________
COUNTY OF ___________________
The foregoing Forbearance Agreement was acknowledged before me, the
undersigned authority, this ___ day of ___________, 2000, by
_______________________________ as ______________________________ of Elcotel,
Inc., a Delaware corporation, ___ who is personally known to me or ___ who
produced ____________________ as identification.
_______________________________________
Notary Public, State of _______________
Print Name:____________________________
My Commission Expires:_________________
[SEAL]
STATE OF _____________________
COUNTY OF ____________________
The foregoing Forbearance Agreement was acknowledged before me, the
undersigned authority, this ___ day of ___________, 2000, by
_______________________________ as ______________________________ of Elcotel
Direct, Inc., a Delaware corporation, ___ who is personally known to me or ___
who produced ____________________ as identification.
_______________________________________
Notary Public, State of _______________
Print Name:____________________________
My Commission Expires:_________________
[SEAL]
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STATE OF _____________________
COUNTY OF ___________________
The foregoing Forbearance Agreement was acknowledged before me, the
undersigned authority, this ___ day of _______, 2000, by
_______________________________ as ______________________________ of Technology
Service Group, Inc., successor by merger with Elcotel Hospitality Services,
Inc., a Delaware corporation, ___ who is personally known to me or ___ who
produced ____________________ as identification.
_______________________________________
Notary Public, State of _______________
Print Name:____________________________
My Commission Expires:_________________
[SEAL]
STATE OF _____________________
COUNTY OF ___________________
The foregoing Forbearance Agreement was acknowledged before me, the
undersigned authority, this ___ day of __________, 2000, by ____________________
as ______________ of Bank of America, N.A. d/b/a NationsBank, N.A., ___ who is
personally known to me or ___ who produced ____________________ as
identification.
_______________________________________
Notary Public, State of _______________
Print Name:____________________________
My Commission Expires:_________________
[SEAL]
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