EXHIBIT 10.01
FORBEARANCE AGREEMENT
23
CREDIT ADMINISTRATION
3800 Xxxxxx Xxxxxx
Parkway
XXXXX 54733-034 MAC
FARGO FORBEARANCE AGREEMENT Xxx Xxxxx, XX 00000
This FORBEARANCE AGREEMENT, is entered into as of the __9__ day of
April, 2001, between Xxxx-Son Gaming Supplies, a Nevada corporation ("Borrower")
and Xxxxx Fargo Bank Nevada, N.A., successor-in-interest to Norwest Bank Nevada,
N.A. (hereinafter collectively referred to as "Lender").
WITNESSETH
A. On or about November 14, 1997, Lender extended to Borrower a
loan (Loan No. 5965582834-18) in the original principal amount of One Million
Eight Hundred Thousand and No/100 Dollars ($1,800,000.00) ("Credit Facility 1").
Credit Facility 1 is evidenced by a Promissory Note dated November 14, 1997 in
the original principal amount of One Million Eight Hundred Thousand And No/100
Dollars ($1,800,000.00) ("Note 1"), and is secured, in part, by a Deed of Trust
dated November 14, 1997, and recorded on November 20, 1997 as Instrument No.
00156 in Book 971120 of the official records of the County Recorder of Xxxxx
County, Nevada. Note 1 is also secured, in part, by that certain Continuing
Security Agreement dated November 14, 1997, executed by Borrower in favor of
Bank ("Security Agreement").
B. On or about or October 23, 1998, a second loan (Loan No.
5965582834-26) was extended to Borrower in the original principal amount of Five
Hundred Thousand and No/100 Dollars ($500,000.00) ("Credit Facility 2"). Credit
Facility 2 is evidenced by a Promissory Note dated October 23, 1998 in the
original principal amount of Five Hundred Thousand and No/100 Dollars
($500,000.00) ("Note 2"), and is secured, in part, by a Deed of Trust dated
October 23, 1998, and recorded in the Xxxxx County Recorder's office on November
4, 1998 as Instrument No. 103 in Book No. 981104.
C. The terms of the loans evidenced by Notes 1 and 2 are further
governed by various documents, including, but not limited to, that certain
Letter Loan Agreement dated November 14, 1997 (the "Loan Agreement"), as amended
and a forebearance agreement dated June 2000. The Notes, the referenced Deeds of
Trusts, the Loan Agreement, and the Continuing Security Agreement, and the other
documents executed in connection therewith are collectively referred to
hereinafter as the "Loan Documents."
D. As of April 9, 2001, there was outstanding under Credit
Facility 1 the principal amount of $345,670.68. Interest at the non-default rate
stated in Note 1 has accrued and remains unpaid as of April 9, 2001 in the
amount of $3,071.22.
E. As of April 9, 2001, there was outstanding under Credit
Facility 2 the principal amount of $97,222.19. Interest at the non-default rate
stated in Note 2 has accrued and remains unpaid as of April 9, 2001 in the
amount of $433.06.
F. As of the end of Borrower's fiscal year on May 31, 2000,
Borrower is in
default under the terms of the Loan Documents as Borrower is in violation of
certain financial covenants (specifically the "profitability covenant") set
forth in the Loan Agreement.
G. Notwithstanding that Borrower is in default under the Loan
Documents, Borrower has requested that Lender forbear from enforcing its rights
under the terms of the Loan Documents for a period of time, and Lender has
agreed to forbear from exercising such rights according to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. The parties agree and acknowledge that under the terms of the
Loan Documents governing Credit Facility 1 that there is presently due and owing
the outstanding principal amount of $345,670.68, plus accrued and unpaid
interest at the non-default rate stated in the Note as of April 9, 2001 in the
amount of $3,071.22. The parties further agree that there are no offsets or
defenses to the terms of the Note 1 or the other Loan Documents with respect to
the foregoing amounts owing under Credit Facility 1.
2. The parties agree and acknowledge that under the terms of the
Loan Documents governing Credit Facility 2 that there is presently due and owing
the outstanding principal amount of $97,222.19, plus accrued and unpaid interest
at the non-default rate stated in the Note as of April 9, 2001 in the amount of
$433.06. The parties further agree that there are no offsets or defenses to the
terms of the Note 2 or the other Loan Documents with respect to the foregoing
amounts owing under Credit Facility 2.
3. IN ADDITION TO THE AMOUNTS REQUIRED TO BE PAID TO LENDER UNDER
THE TERMS OF NOTES 1 AND 2 (AND THE REMAINING LOAN DOCUMENTS), beginning on
April 15, 2001 and continuing on or before the fifteenth (15th) day of each
succeeding month Borrower shall pay to Lender the amount of Fifty Thousand and
No/100 Dollars ($50,000) to be applied to reduce the outstanding principal
balance of Credit Facility 1 until the earlier of the "Maturity Date" of Note 1
or the date that all amounts owing under Note 1 have been paid in full.
4. Provided that Borrower makes all payments set forth in No. 3
above, and performs all of the remaining obligations set forth in the Loan
Documents, Lender will forbear through the "Maturity Date(s)" of Notes 1 and 2
from enforcing its rights under the terms of the Loan Documents relating to all
the financial covenants. In the event that all of the obligations set forth
herein (and in the Loan Documents, unless limited hereby) are not timely
performed by Borrower, Lender may immediately enforce all of its rights and
remedies under the Loan Documents. Borrower and Lender agree that time is of the
essence with respect to all of the obligations of Borrower arising hereunder and
under the Loan Documents.
5. Borrower does fully release, acquit and forever discharge
Lender, its parent and affiliated corporations, and all of its officers,
directors, shareholders, agents,
employees, insurers, successors, and assigns (all of the foregoing being
hereinafter included within the term "Lender"), of and from all known and
unknown claims, actions, causes of action and suits for damages, at law or in
equity, including loss of compensation, or ANY other claims of any kind or
nature relating to the Notes 1 and 2, the Loan Agreement or any of the other
Loan Documents and accruing in favor of Borrower (if any) prior to the date of
the execution of this Agreement.
6. Borrower and Lender hereby confirm and agree that present or
future rights, remedies, benefits or powers belonging to Lender, whether arising
under Notes 1 or 2, the Loan Agreement or under any other Loan Document, shall
not be affected, prejudiced or restricted by this Agreement, unless specifically
set forth herein.
7. The provisions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
8. The laws of the State of Nevada shall govern the validity,
construction, performance and effect of this Agreement.
9. This Agreement may be executed in counterparts, all of which
when considered together shall constitute an original document.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date first above written.
BORROWER: LENDER:
Xxxx-Son Gaming Supplies, Xxxxx Fargo Bank Nevada, N.A.
a Nevada corporation
By: /s/ Xxxx X. Xxxx By: /s/ Xxxxx Xxxx
--------------------------- -----------------------------------
Xxxx X. Xxxx Xxxxx Xxxx
Its: President Its: Assistant Vice President
