FORBEARANCE AGREEMENT
Exhibit
10.11
FORBEARANCE
AGREEMENT
This
Forbearance Agreement ("Forbearance
Agreement") is made and entered into as of this 3 day of January,
2008 by and
between LASALLE BANK NATIONAL ASSOCIATION ("Lender"), and THE
EXPERIENTIAL AGENCY,
INC., an Illinois corporation (the "Borrower").
A.
Lender extended a certain
loan
facility to the Borrower pursuant to that certainBusiness
Loan Agreement dated August 27,
2007 ("Loan Agreement") as evidenced by thatcertain
Promissory Note dated August 27,
2007 in the original principal amount of $867,000.
B.
Borrower's obligations under
the
Loan Agreement and Promissory Note aresecured
by a lien in favor of Lender on
all assets of Borrower as provided for in that certain Commercial
Security Agreement dated
September 28, 2004 ("Security Agreement").
C.
Borrower's obligations under
the
Loan Agreement, Promissory Note and SecurityAgreement
(collectively, "Loan
Documents") are guaranteed by XA Inc., the parent corporationof
Borrower, pursuant to that certain
Commercial Guaranty dated August 27, 2007
("Guaranty").
D.
In connection with certain
financial accommodations entered into between Parentand
certain Junior Lenders (as
referenced on Schedule
1attached hereto) ("Junior
Lenders"),Borrower
granted a security interest in
its assets to the Junior Lenders to secure the Parent'sobligations
to the Junior Lenders
arising from such financial accommodations ("Parent FinancialAccommodations").
E.
In consideration for Lender
consenting to the Borrower's grant of securityinterests in its assets to the
Junior Lenders in connection with the Parent Financial
Accommodations,
each Junior Lender, for
the benefit of Lender, entered into the SubordinationAgreements
referenced on Schedule
1attached hereto.
(''Subordination Agreements").
F.
All outstanding principal
and
accrued interest owed under the Promissory Notewas
due and payable on December 1, 2007,
and remains unpaid.
G.
Borrower has certain financial
covenants under the Loan Documents, andBorrower
has not satisfied such
financial covenants.
H.
Borrower is in default under the Loan Documents and certain Events of Default
have occurred and are
continuing under the Loan Documents;
I.
Borrower has requested that Lender forbear from exercising its rights and
remedies under the
Loan
Documents; and
J.
Bank is willing to forbear until June 1, 2008 ("Forbearance Period") to enforce
its rights and remedies
under the Loan Documents, conditioned upon the prompt and full performance of the
terms and conditions
set forth herein.
NOW
THEREFORE, Lender reserves at its
sole option and discretion all rights and remedies available
to it under the Loan
Documents, and applicable law, including but not limitedto
its rights to foreclose on any
collateral (the "Collateral") securing the Note. Without waiving any such
rights
and remedies, however, and without waiving any defaults, Lender is willing
to
forbear from exercising
certain of its rights and remedies, but only upon terms and conditions
described below. All
terms
not defined herein shall have the same meaning as they have in the Loan
Documents.
1.
Borrower shall pay to Bank
upon
execution of this Forbearance Agreement,$100,000
in readily available funds
which will reduce the amount of principal on the Note to $738,000.00.
2.
Borrower shall enter into
a new
note in the amount of $738,000.00 as set forth inExhibit
"B"
hereto.
3.
Bank acknowledges that Junior
Lenders may loan to Borrower the $100,000.00referenced
in Paragraph 1. hereinabove
and may loan additional funds to Borrower from time totime
("Junior
Loans"). The Junior Lenders and Borrower acknowledge and agree
that theseJunior
Loans remain subordinate to the
Bank's Senior Debt as set forth in the existingSubordination
Agreements among Bank,
Borrower and the Junior Lenders.
4.
Borrower shall provide to
Bank
weekly Accounts Receivable Aging Reports inform
and substance reasonably
satisfactory to Bank.
5.
Interest on the $738,000.00
Note
shall continue to accrue monthly on the existingprincipal
balance as set forth in the
note,
6.
Inaddition
to making monthly initial
payments and meeting its other obligations,Borrower
shall make principal payments
under the Note as follows:
a.
$10,000 on March 1,
2008
b.
$10,000 on April 1,
2008
c.
$10,000 on May 1,
2008
7.
Borrower, Guarantors and Junior
Lenders will execute a General Release as setforth
in Exhibit
"A"hereto as an additional
inducement to Bank.
8.
Borrower acknowledges, agrees,
warrants and represents that:
a. As
of January 3, 2008, the current balance on the Note (not including attorneys fees, expenses
and other
charges) was as follows:
|
Principal
|
$837,904.00
|
|
Interest
to January 3,
2008
|
$6,674.14
|
|
Late
Charges
|
$1,582.71
|
|
Costs
and
Expenses
|
$0
|
|
$846,160.85
|
b.
The Note is valid, binding
and an
enforceable obligation of Borrower toBank.
Borrower has no claims,
counterclaims, rights of setoff or defenses with respect to
theNote,
to any of its obligations under
the Loan Documents (the "Obligations"), or to the Bank'sexercise
of any right or remedy
available to it under the terms of the Loan Documents, thisForbearance
Agreement or applicable
law.
c.
The security interests and
pledges
that Borrower granted to Bank in theLoan
Documents to secure the Note are
valid, binding, and enforceable, remain first and validsecurity
interests in the Property and
other respective collateral, and are hereby
reaffirmed.
d.
The Event of Defaults under
the
Loan Documents have occurred and arematerial.
No notice or cure periods
apply to the Defaults.
e.
The Bank is entitled to demand
immediate payment of the Note, and immediate performance of
the Obligations under the Loan Documents, without setoff,
counterclaim
or
defense.
f.
The Bank has not waived any:
of
the Defaults which may occur in thefuture,
or any of its rights to payment
of the Note or Borrower's performance of the Obligations.
Nothing
herein shall be construed as any
such waiver.
g.
All of Borrower's and Guarantors' agreements, acknowledgments,warranties
and representations contained
in this Forbearance Agreement are material to Bank'swillingness
to enter into this
Forbearance Agreement.
9.
As an inducement to Bank to
enter
into this Forbearance Agreement, Borrower,Guarantors
and Junior Lenders agree to
execute the General Release, a copy of which is attachedhereto
as Exhibit
"A".In addition, Borrower
and Guarantors waive and affirmatively agree notto
allege, assert or otherwise pursue
any claim, defense, affirmative defense, counterclaim causeof
action, setoff or other right that
they may have, as of the date hereof, against Bank, whetherknown
or unknown, including but not
limited to any contest of (i) the existence and materialityof
the Defaults, (ii) the
enforceability, applicability or validity of any provisions of the
LoanDocuments,
or the enforcement or
validity of the terms and provisions set forth herein, (iii)Bank's
right to demand immediate payment
of the Notes, and performance of the Obligations inthe
event of borrower's default of the
Forbearance Agreement, (iv) Bank's right to all rents, issues, profits, products and proceeds from the Property, (v) the existence, validity,enforceability
or perfection of security
interests granted to Bank in the Loan Documents or hereunder
in any of the collateral, whether real
or personal property, tangible or intangible property,
or any right or other
interest, now or hereafter arising, (vi) the conduct of the Bank in
administering
the financial arrangements between
Borrower and Bank, or (vii) any legal fees and expenses
incurred by Bank and charged to
Borrower under this Forbearance Agreement and/or the
Loan
Documents.
10.
Borrower shall pay all reasonable
legal fees and expenses incurred by the Bank in connection
with the Defaults and this Forbearance
Agreement, including those relating to drafting
and negotiating this Forbearance
Agreement, and the costs of judgment, tax lien, U.C.C., title and other searches
conducted by
the Bank or its agents in Illinois. Borrower shall pay these fees and expenses within
10 business
days of Bank's demand. If not timely paid, such fees and expenses shall be added
to and
constitute a part of the Note.
11.
Subject to the terms and
conditions of the Loan Documents and this Forbearance
Agreement
and in the absence of any additional
default, Bank will forbear from exercising only those
rights and remedies under the Loan
Documents which it has not already exercised and which
are triggered exclusively by Events of
Default/Acceleration, and only for the period from the
date of this Forbearance Agreement
through the Forbearance Period. The Forbearance
Period
will terminate, and all liabilities
under the Note will become immediately due and payable to
the Bank (if not already so due), and
after the Forbearance Period Bank has no obligation of(a)
providing additional forbearance to
Borrower beyond that described herein (b) renewing the loan
Documents, or (c) offering Borrower any
new credit facility after the Forbearance Period.
12.
This Forbearance Agreement
shall
not be considered accepted and agreed to by Borrower
or binding upon Bank, unless and until
Borrower and Guarantors have executed this Agreement
and returned it to Bank as described
below.
13.
Borrower and Guarantors agree
to
execute such other agreements, instruments and
documents as Bank may reasonably
request to perfect or continue the perfection of the security
interests granted in the Loan Documents
or hereunder.
14.
This Forbearance Agreement
may be
executed in multiple counterparts, all of which,
when taken together, shall constitute
one document.
15.
BORROWER AND GUARANTORS ACKNOWLEDGE, CONSENT AND
AGREE THAT LASALLE BANK
NATIONAL ASSOCIATION UNDER THE LOAN
DOCUMENTS,
GUARANTY AND SUBORDINATION
AGREEMENTS.
16.
BORROWER, GUARANTORS AND JUNIOR LENDERS AFTER
CONSULTING
OR HAVING HAD OPPORTUNITY TO CONSULT
WITH COUNSEL KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LITIGATION
BASED ON OR ARISING OUT OF THIS FORBEARANCE AGREEMENT, THE LOAN AGREEMENT, ANY OF THE
TRANSACTIONS
CONTEMPLATED BY THE FORBEARANCE
AGREEMENT OR THE LOAN
DOCUMENTS, OR ANY COURSE OF CONDUCT,
DEALING, STATEMENTS OR ACTIONS
BETWEEN THEM AND BANK (COLLECTIVELY,
"CLAIMS"). BORROWER AND
GUARANTORS SHALL NOT SEEK TO
CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE,
ANY ACTION IN WHICH A JURY TRIAL HAS
BEEN WAIVED WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN WAIVED.
17.
IN ANY LITIGATION CONCERNING CLAIMS, BORROWER AND
GUARANTORS
AGREE AND CONSENT TO VENUE IN, AND
VOLUNTARILY AND INTENTIONALLY WAIVE THEIR RIGHT
TO HAVE THE VENUE FOR SUCH
LITIGATION IN
ANY COURT OTHER
THAN, THE CIRCUIT COURT OF XXXX
COUNTY,
ILLINOIS OR THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS, EASTERN DIVISION (COLLECTIVELY, THE "AGREED VENUES"). BORROWER
AND
GUARANTORS AGREE THAT, IN THE EVENT THEY COMMENCE
ANY LITIGATION
AGAINST BANK CONCERNING THE CLAIMS, THEY WILL ONLY
COMMENCE SUCH
LITIGATION IN THE AGREED VENUES, AND THAT, TO
THE EXTENT THEY
COMMENCE SUCH LITIGATION IN A DIFFERENT VENUE, THEY
WILL CONSENT TO
(AND THEY WAIVE ANY OBJECTIONS TO) A MOTION
BY BANK TO
CHANGE VENUE TO THE AGREED VENUES. FURTHER, BORROWER
AND GUARANTORS
WAIVE ANY RIGHT THEY MAY
HAVE TO FILE A MOTION TO CHANGE VENUE FROM THE AGREED VENUES IN THE EVENT THAT LITIGATION
CONCERNING
THE CLAIMS IS PENDING IN EITHER OF THE AGREED
VENUES.
18.
Failure of Borrower to have executed and delivered to Bank a copy of this
Forbearance Agreement,
by
12:00 p.m. on January 7, 2008, will be deemed a rejection of this offer and
refusal to comply with the terms and conditions set forth above. In that
event,
Bank may immediately
commence and exercise all rights and remedies available to it and applicable
law against Borrower
and
the Collateral.
IN
WITNESS WHEREOF, the parties have
signed, sealed and delivered this Agreement as of the day and year first
above
written.
Borrower
acknowledges and agrees to the
terms and conditions set forth herein.
| LASALLE BANK NATIONAL ASSOCIATION |
THE
EXPERIENTIAL AGENCY,
INC.
|
|
By:
/s/
Xxxxxxx X.
Xxxxx
Title: SVP
& Reg.
Rep.
Its:____________________
Name: Xxxxxxx
X. Xxxxx
|
By:
/s/
Xxxxxx
Xxxxxx
Title: CEO
Its:__________________
Name: Xxxxxx
Xxxxxx
|
GUARANTOR
Agreed
and consented to this Forbearance
Agreement by the undersigned as guarantor, and it hereby ratifies and confirms its obligations
to LaSalle
Bank National Association under the Commercial Guaranty dated August 27,
2007.
XA
INC.
By:/s/
Xxxxxx
Xxxxxx
Name:
Xxxxxx
Xxxxxx
Title:
CEO
JUNIOR
LENDERS:
Agrees
and consented to this Forbearance
Agreement by the undersigned as Junior Lenders, and we ratify and confirm our obligations
to LaSalle
Bank National Association under our respective Subordination
Agreements
SANDS
BROTHERS VENTURE CAPITAL, LLC
By:
/s/
Xxxxx Xxxxx
Name:
Xxxxx
Xxxxx
Title:COO
SANDS
BROTHERS VENTURE CAPITAL II,
LLC
By:
/s/
Xxxxx Xxxxx
Name:
Xxxxx
Xxxxx
Title:COO
SANDS
BROTHERS VENTURE CAPITAL III,
LLC
By:
/s/
Xxxxx Xxxxx
Name:
Xxxxx
Xxxxx
Title:COO
SANDS
BROTHERS VENTURE CAPITAL IV,
LLC
By:
/s/
Xxxxx Xxxxx
Name:
Xxxxx
Xxxxx
Title:COO
XXXX & XXXX BRIDGE PARTNERS, L.P.
By:
/s/
Xxxxx Xxxxx
Name:
Xxxxx
Xxxxx
Title:COO
VISION
OPPORTUNITY MASTER FUND,
LTD.
By:
/s/
Xxxx Xxxxxxxx
Name:
Xxxx
Xxxxxxxx
Title:
CEO
/s/
G. Xxxxx
Xxxxxxxx
G.
Xxxxx Xxxxxxxx
/s/
Xxxx X.
Xxxxxx
Xxxx
X. Xxxxxx
GENERAL
RELEASE
KNOW
ALL MEN BY THESE PRESENTS, THAT the
Undersigned, (the "Releasor"), for good and valuable
consideration, the
receipt and sufficiency of which are hereby acknowledged, for:
(i) themselves, (ii)
any parent, affiliate or subsidiary thereof, (iii) any partnership or joint
venture of which
any person or entity comprising any of the Releasors (or any parent, affiliate
or subsidiary thereof) is a partner, (iv) any person or entity owning the
beneficial interest in the trust, any parent, affiliate or subsidiary thereof
or
any partnership or joint
venture of which such person or entity (or any parent, affiliate or subsidiary
thereof), is a partner, and
(v) the respective partners, officers, directors, shareholders, heirs, legal
representatives, legatees,
successors and assigns of all of the foregoing persons and entities,
hereby release and
forever
discharge LaSalle Bank National Association ("Bank"), its past, present and future
shareholders,
successors, assigns, officers, directors, agents, attorneys and employees
together with their respective heirs, legal representatives, legatees,
successors, and assigns, of
and from all actions, claims demands, damages, debts, losses, liabilities,
indebtedness, causes of
action either at law or in equity and obligations of whatever kind or nature,
whether known or unknown,
direct or indirect, new or existing, by reason of any matter, cause or thing
whatsoever from the
beginning of the world to the date of this General Release arising out of
or
relating to any matter
or
thing whatsoever, including without limitation, the claims asserted or
which could have been
asserted by the Releasors in connection with loans to
Borrower.
It
is acknowledged that Releasor has
read this General Release and consulted counsel before executing same;
that Releasor has
relied upon its own judgment and that of its counsel in executing this General
Release and have not relied on or been induced by any representation,
statement or act by
any
other party referenced to herein which is not referred to in this instrument; that the
Releasor enters
into this General, Release and Covenant voluntarily, with full knowledge of its significance;
and that
this General Release is in all respects complete and
final.
If
any term or provision of this General
Release or the application thereof to any person, entity or circumstance
shall, to any
extent, be held invalid and/or unenforceable by a court of competent jurisdiction,
the remainder of
this General Release, or the application of such term of provisions to persons,
entities or circumstances other than those as to which it is held invalid
or
unenforceable shall not be affected thereby, and each term and provision
of the
General Release shall be
valid and be enforced to the fullest extent permitted by
law.
Exhibit
A-1
IN
WITNESS WHEREOF, the Releasor has
caused this General Release to be executed on
December , 2007.
RELEASOR:
|
XA
INC., as
Guarantor
|
THE
EXPERIENTIAL AGENCY,
INC
|
|
By:
/s/
Xxxxxx Xxxxxx
Name: Xxxxxx
Xxxxxx
Its: CEO
|
By:
/s/
Xxxxxx Xxxxxx
Name: Xxxxxx
Xxxxxx
Its: CEO
|
Exhibit
A-2
SCHEDULE
1
SUBORDINATION
AGREEMENTS
SUBORDINATION
AGREEMENT dated as of
August ____ , 2006
(the "Subordination Agreement")
is executed by and among
Sands Brothers Venture Capital LLC, Sands Brothers Venture Capital II
LLC, Sands Brothers
Venture Capital III LLC, Sands Brothers Venture Capital IV LLC and
Katie & Xxxx
Bridge Partners, L.P. (each a "Junior Lender and collectively, the "Junior
Lenders"),
whose address is 00 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000,
LASALLE BANK
NATIONAL ASSOCIATION, a national banking association (the "Senior Lender'), whose
address is 000
Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, and THE EXPERIENTIAL AGENCY,
INC., an Illinois
corporation (the "Borrower"), whose address is 000 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000.
SUBORDINATION
AGREEMENT dated as of
October 17, 2006 (the "Subordination Agreement") is executed
by and among
VISION OPPORTUNITY MASTER FUND, LTD, (the "Junior Lender"), whose
address is 20
West 55* Street, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx, 00000-0000 and LASALLE BANK
NATIONAL
ASSOCIATION, a national banking association (the "Senior Lender'), whose
address is 000
Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, and THE EXPERIENTIAL AGENCY,
INC., an Illinois
corporation (the "Borrower"), whose address is 000 Xxxxx Xxxxxxxx Xxxxxx,
Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000.
SUBORDINATION
AGREEMENT DATED AS OF
October 17, 2006 ("the Subordination Agreement") is executed by and among
G.
XXXXX XXXXXXXX AND XXXX X. XXXXXX (collectively, "the
"Junior Lender"),
whose addresses are 000 Xxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx, 00000
and
000 Xxxxxxx Xx.,. Xxxxxxxxx, Xxx Xxxxxx 00000, LASALLE BANK NATIONAL ASSOCIATION,
a national
banking association (the "Senior Lender'), whose address is 000
Xxxxx XxXxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, and THE EXPERIENTIAL AGENCY, INC., an Illinois
corporation (the "Borrower"), whose address is 000 Xxxxx Xxxxxxxx Xxxxxx,
Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000.
Schedule
1
