FORBEARANCE AGREEMENT
Exhibit
4.14
THIS
FORBEARANCE AGREEMENT (this “Forbearance
Agreement”)
is made
and entered into as of April 2, 2008 by and between Brendan Technologies,
Inc., a Nevada corporation (the “Company”),
Brendan Technologies, Inc., a Michigan corporation (the “Guarantor”),
and
Little Bear Investments, LLC (the “Agent”).
RECITALS
WHEREAS,
pursuant to that certain (a) Loan and Security Agreement (the “Loan
Agreement”),
dated
as of July 10, 2007, by and among certain lenders of the Company (each, a
“Lender”,
and collectively,
the “Lenders”),
the
Agent and the Company, the Company issued to the Lenders (i) secured promissory
notes, each dated July 10, 2007, in the aggregate principal amount of $600,000
(the “Notes”),
and
(ii) warrants to purchase an aggregate of 600,000 shares (the “Shares”)
of
common stock of the Company (the “Common
Stock”),
each
dated July 10, 2007.
WHEREAS,
pursuant to that certain Subsidiary Guarantee dated July 10, 2007, delivered
by
the Guarantor,
in favor of each Lender, the Guarantor has guaranteed the Company’s obligations
to the Lenders under the Notes (the “Guarantee”).
WHEREAS,
pursuant to Section 4(a)(i) of the Notes, if the company fails to pay to the
Lenders any principal or interest when due an Event of Default (as defined
in
the Notes) shall have occurred.
WHEREAS,
the Company has failed to pay interest to the Lenders and such failure has
remained ongoing as of February 1, 2008 (the “Default
Date”)
and
therefore Event of Default has occurred.
WHEREAS,
as of the Default Date, interest on the Notes have been accruing at 22% per
annum (the “Default
Rate”)
in
accordance with the terms of the Note.
WEREAS,
pursuant to Section 4(b) of the Notes, upon the occurrence of an Event of
Default the full principal amount of the Notes together with all accrued
interest thereon shall become immediately due and payable (the “Right
of Acceleration”).
WHEREAS,
the stated maturity date of the Notes is April 10, 2008 (the “Maturity
Date”).
WHEREAS,
the Company requests that the Agent waive the Right of Acceleration and extend
the Maturity Date until June 9, 2008.
WHEREAS,
the Agent, as to and on behalf of all Lenders agrees to (i) waive the Right
of
Acceleration until June 9, 2008 only in connection with the failure by the
Company to pay any interest when due and (ii) extend the Maturity Date of the
Notes until June 9, 2008 in consideration for the offer by the Company to each
Lender to (i) issue to the Lenders shares of the Company’s Common Stock in
accordance with Schedule
I
attached
hereto.
WHEREAS,
pursuant to the Loan Agreement and the Notes, the Agent may waive an Event
of
Default on behalf of all the Lenders.
NOW,
THEREFORE, in consideration of the foregoing and the mutual promises and
covenants set forth herein, the parties hereby agree as follows:
AGREEMENT
A. The
Company agrees
that,
as of
the close of business on April 1, 2008, the Company was indebted to the Lenders
in respect of the loans and advances under the Notes in the aggregate principal
amount of $600,000. All such loans, together with interest accrued and accruing
thereon, and costs, expenses, fees (including attorneys’ fees and legal
expenses) and all other charges or amounts now or hereafter payable by the
Company to the Lenders (collectively, the “Obligations”)
are
unconditionally owing by the Company to the Lenders without offset, defense,
reduction or counterclaim of any kind or nature. The Guarantor hereby
acknowledges, confirms and agrees that its obligations, liabilities and
indebtedness to the Lenders for the payment and performance of the Obligations
are unconditionally owing to the Lenders without offset, defense reduction
or
counterclaim of any kind or nature, that the terms of the Guarantee shall remain
in full force and effect and that nothing herein shall constitute a waiver
of
any of Lenders’ rights or remedies contained in the Guarantee.
1
B. The
Company and the Guarantor hereby acknowledge, confirm and agree that the Lenders
have and shall continue to have valid, enforceable and perfected liens upon
and
security interests in the assets and properties of the Company and the Guarantor
pursuant to the Loan Agreement and the Guarantee.
C. In
reliance upon the representations, warranties and covenants of the Company
and
the Guarantor contained in this Forbearance Agreement, and subject to the terms
and conditions of this Forbearance Agreement, the Agent, on behalf of each
Lender, hereby agrees to (i) waive the Right of Acceleration under Section
4(b)
of the Notes until June 9, 2008 only in connection with the failure by the
Company to pay any interest when due and (ii) extend the maturity date of the
Notes until June 9, 2008; provided
that: (a)
immediately upon receipt by the Company of the Acknowledgement (as defined
herein) from a Lender the Company shall issue to such Lender that number of
shares of Common Stock of the Company set forth on Schedule
I
attached
hereto (b) the Company acknowledges that as of the Default Date, interest on
the
Notes have been accruing at 22% per annum in accordance with the terms of the
Notes and (c) interest on the Notes shall continue to accrued at the Default
Rate until the Notes are paid back in full.
D. Except
for the express waiver contained in Section C of this Forbearance Agreement,
the
Agent has not waived, is not by this Forbearance Agreement waiving, has no
intention of waiving and may never waive, any Events of Default which may have
occurred or are continuing on the date hereof or any Events of Default which
may
occur after the date hereof and nothing contained herein or the transactions
contemplated hereby shall be deemed to constitute any such waiver.
E. The
Company and the Guarantor hereby represent and warrant to the Lenders as
follows:
(i)
The
execution, delivery and performance of this Forbearance Agreement by the Company
and the Guarantor have been duly authorized by all necessary corporate
action.
(ii) This
Forbearance Agreement constitutes a valid and legally binding agreement
enforceable against the Company and the Guarantor in accordance with its
terms.
(iii) All
of
the Obligations under the Loan Agreement, the, the Guarantee and
the
Notes (collectively, the “Loan
Documents”)
constitute valid and legally binding obligations of the Company and/or the
Guarantor, as applicable, enforceable against the Company and/or the Guarantor
in accordance with the terms thereof.
(iv)
Except
as
set forth herein, the Loan Documents shall continue to be and shall remain
unchanged and in full force and effect in accordance with their
terms.
(v) Except
as
described in this Forbearance Agreement, no Event of Default has occurred under
the Loan Documents and no event has occurred which with notice or lapse of
time
or both would become an Event of Default under the Loan Documents.
(vi) The
execution and delivery and performance of this Forbearance Agreement by the
Company and the Guarantor will not violate any agreement, instrument or
undertaking by which such party is bound, will not result in, or require, the
creation or imposition of any lien, charge, security interest or other
encumbrance on any of such parties properties or assets, and does not contravene
any law, rule or regulation applicable to such party.
2
F. Nothing
herein shall be deemed to establish a course of dealing or operate as a waiver
of any rights in the Loan Documents except as expressly set forth herein and
the
execution and delivery of this Forbearance Agreement shall not create any
obligation on behalf of the Agent to waive any provisions under the Loan
Documents at any time in the future, such rights being expressly reserved
hereunder.
G. In
the
event of any default by the Company under this Forbearance Agreement, all
outstanding Obligations payable by Company under the Notes shall automatically
be immediately due and payable without presentment, demand, protest or any
other
notice of any kind, all of which are hereby expressly waived.
H. Each
party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Forbearance
Agreement.
I. The
provisions of this Forbearance Agreement are intended to be severable. If any
provisions of this Forbearance Agreement shall be held invalid or unenforceable
in whole or in part in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or enforceability
without in any manner affecting the validity or enforceability of such provision
in any other jurisdiction or the remaining provisions of this Forbearance
Agreement in any jurisdiction.
J. This
Forbearance Agreement shall be governed by, and construed and interpreted in
accordance with, the law of the State of Nevada, without giving effect to the
choice of law principles thereof.
K. This
Forbearance Agreement may be executed in one or two counterparts, each of which
shall be deemed an original and all of which taken together shall constitute
one
and the same agreement. Any signature delivered by a party by facsimile
transmission shall be deemed to be an original signature hereto.
L. Prior
to
the issuance to the Lenders of the Common Stock in the amounts as set forth
on
SCHEDULE
I,
the
Company shall send to each Lender for his acknowledgment the statement on
SCHEDULE
II
hereto
(the “Acknowledgment”).
Immediately upon receipt by the Company of the Acknowledgement from a Lender,
the Company shall issue the amount of Common Stock as set forth on SCHEDULE
I to
such Lender. The Company shall send the Acknowledgment to each Lender within
1
business day after the execution of this Forbearance Agreement via overnight
courier.
[SIGNATURE
PAGE TO FOLLOW]
3
IN
WITNESS WHEREOF, this Forbearance Agreement has been duly executed as of the
date first above written.
|
COMPANY
|
||
|
BRENDAN
TECHNOLOGIES, INC., a Nevada corporation
|
||
|
|
||
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
||
|
GUARANTOR
|
||
|
BRENDAN
TECHNOLOGIES, INC., a Michigan corporation
|
||
|
By:
|
|
|
|
Name:
|
||
|
Title:
|
||
|
AGENT
|
||
|
LITTLE
BEAR INVESTMENTS, LLC,
as agent for the Lenders
|
||
|
|
||
|
|
||
|
By:
|
|
|
|
Name:
|
||
|
Title:
|
||
4
