Merrill Lynch
Xxxxxxx
Xxxxx
This
FORBEARANCE
AGREEMENT
(the
“Forbearance
Agreement”)
is
entered into as of July 17, 2006 and will serve to confirm certain agreements
of
XXXXXXX
XXXXX BUSINESS FINANCIAL SERVICES INC.
(“MLBFS”),
Aspect
Systems, Inc, (“Customer”),
DND
Technologies, Inc. (“DND”),
and
Xxxxxxx X. Xxxxx (“Xxxxx”)
with
respect to the following:
| i) |
A
certain Term
LOAN AND SECURITY AGREEMENT No. 912852522
dated as of May 14, 2004 between MLBFS and Customer, as thereafter
supplemented, renewed, extended and/or amended including but not
limited
to that certain Letter
Agreement dated as of May 17, 2006
(the “Loan
Agreement”);
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| ii) |
A
certain UNCONDITIONAL
GUARANTY
dated as of May 14, 2004 respectively, and given to MLBFS by Xxxxx
(the
“Personal
Guaranty”);
|
| iii) |
A
certain UNCONDITIONAL
GUARANTY
dated as of November 4, 2005 respectively, and given to MLBFS by
DND
respectively (the “Business
Guaranty);
|
| iv) |
All
other agreements between MLBFS and Customer, Xxxxx, and DND or any
other
party who at any time has guaranteed or provided collateral, or will
hereinafter guarantee or provide collateral (a “Guarantor”,
or, if plural, “Guarantors”),
for Customer’s
obligations to MLBFS in connection therewith (the “Additional
Agreements”).
|
For
purposes of this Forbearance Agreement, (i) Customer, Xxxxx, DND, and
Guarantor(s) are collectively referred to as the “Obligors”,
and
(ii) the Loan Agreement, the Letter Agreement, the Personal Guaranty, the
Business Guaranty and Additional Agreements are collectively referred to as
the
“Loan
Documents.”
Capitalized terms used herein and not defined herein shall have the meaning
set
forth in the Loan Documents.
RECITALS
1.
On
June 15, 2006 the Letter Agreement extending the termination date expired on
its
own terms and conditions. Upon maturity of the Loan Agreement the entire
indebtedness became immediately due and payable in full.
2.
Obligors and MLBFS have had ongoing negotiations regarding the repayment of
the
Obligations, and such negotiations have not, prior to the date hereof, resulted
in any written or executed agreements.
3.
Obligors represented to MLBFS that they are unable to fully repay the
Obligations at this time and have thereupon requested (i) that MLBFS forbear
from exercising its rights and remedies under the Loan Documents, and (ii)
that
MLBFS defer the full collection of the Obligations while Obligors seek
alternative financing to fully repay the Obligations owed to MLBFS.
4.
As a
result of their inability to fully repay the Obligations at this time, and
to
allow Obligors time to seek alternative financing, MLBFS has agreed (i) to
forbear from exercising its rights and remedies under the Loan Documents
pursuant to the terms and conditions hereof, and (ii) to defer the full
collection of the Obligations until the Termination Date (as hereinafter
defined), subject to Obligors’
full and
complete compliance with all of the terms set forth in this Forbearance
Agreement.
AGREEMENT
Accordingly,
in consideration of the premises and of the mutual covenants herein, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree
as
follows:
1.
Recitals.
The
Recitals are true, accurate and complete, are not misleading in any material
respect, constitute a material part of this Forbearance Agreement, and are
incorporated by reference as if fully set forth herein.
2.
Acknowledgment
of Defaults and Events of Default.
Obligors
acknowledge and agree: (i) that one ore more Events of Default have occurred
and
are continuing under the Loan Documents; (ii) that Obligors have waived (and
hereby waive) any requirement that MLBFS provide further written notice that
any
Default or Event of Default has occurred under the Loan Documents; (iii) that
the Events of Default are continuing without timely cure; (iv) that all amounts
outstanding under the Loan Documents have been accelerated and are immediately
due and payable in full, and (v) that MLBFS has not waived any of the Events
of
Default, or any of MLBFS’
rights
and remedies with respect to the Events of Default, in any respect.
3.
Exercise
of Remedies.
Obligors
acknowledge that (i) since the occurrence of the Events of Default, MLBFS has
had and continues to have the right to exercise any remedies it may have under
the Loan Documents, including, without limitation, the right to declare the
principal of and interest on the WCMA Loan Balance and all Obligations and
all
other amounts owed to MLBFS to be forthwith due and payable; and (ii)
MLBFS’
exercise
of any remedies under the Loan Documents or applicable law, should they be
pursued by MLBFS, would be in all respects adequate and proper.
4.
Indebtedness.
Obligors
acknowledge that the total sum owed to MLBFS, as of the open of business on
July
16, 2006, is as to the Loan Agreement; (a) $689,602.03,
consisting of $582,162.31
in
principal, $19,157.65
in
accrued and unpaid interest with respect to the Term Loan, $9,349.53
in
accrued and unpaid late fees, $70,626.84
in
accrued and unpaid legal expenses, $8,117.68
in
accrued and unpaid Appraisal Expenses, $188.02
in other
fees; plus
(b)
additional interest that has accrued or will accrue after July 16, 2006, and
(c)
all costs and attorneys’
fees
incurred by MLBFS in connection with its efforts to collect the amounts owed
by
Obligors under the Loan Documents and (d) all costs and attorneys’
fees
incurred by MLBFS in connection with its efforts to collect the amounts owed
by
Obligors under the Loan Documents (collectively referred to the “Term
Obligations”
or the
“Debt”).
Obligors further acknowledge and agree that the Debt remains outstanding and
unpaid, is due and payable in full without offset, deduction or counterclaim
of
any kind, and is subject to increase or adjustment as a result of any interest,
fees and other charges of any kind, including, without limitation,
attorneys’
fees and
costs of collection. Obligors further agree that the Debt and all interest
imposed under the Loan Documents through the date of this Forbearance Agreement,
and all fees and other charges that have been collected from or imposed with
respect to the Loan Documents, including, without limitation,
attorney’s
fees
and costs of collection, were and are agreed to, and have been properly
computed.
4.
Loan
Documents.
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(a)
Obligors acknowledge and agree (i) that the Loan Documents are legal,
valid and binding obligations of Obligors and are enforceable in
accordance with their terms by MLBFS, and (ii) that Obligors have
no
defenses, counterclaims or rights of set-off which would affect
MLBFS’
ability to enforce the Loan Documents. If Obligors have any such
defenses,
counterclaims or rights of setoff, Obligors, through their execution
of
this Forbearance Agreement, hereby waive such defenses, counterclaims
or
rights of setoff. Furthermore, Obligors acknowledge and agree that
Obligors were notified that the Term Loan was with all respects terminated
and all amounts outstanding thereon were duly accelerated and were
then
immediately due and payable; and the Obligors affirm and agree that
such
Debt remains and continues to be due and payable. Except as expressly
amended hereby, the Loan Documents shall continue in full force and
effect
upon all of their terms and conditions.
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2
|
(b)
No offsets. Obligors acknowledge and agree (i) that the Debt has
been
accelerated and is just, true and unpaid; (ii) that Obligors are
jointly
and severally obligated to pay the Debt in full; (iii) that all payments,
credits and set offs have been applied against the Debt; (iv) that
there
are no offsets, defenses or counterclaims with respect to the Debt;
(v)
that there are no claims or defenses in the abatement or reduction
of the
Debt; (vi) that Obligors have no other claims whatsoever against
MLBFS;
(vii) that MLBFS has performed fully all obligations that it had,
may have
had, or now has under the Loan Documents, and (viii) that MLBFS has
no
obligation to make any additional loans or extensions of credit to
or for
the benefit of any of the Obligors, except as expressly set forth
in this
Letter Agreement.
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6.
Representations
of Obligors.
In
addition to any representations set forth in the Loan Documents, all of which
are hereby ratified and confirmed in all respects, each of the Obligors
represent that: (i) Customer is a Limited Liability Company that is organized,
validly existing, and in good standing under the laws of the State of Arizona;
(ii) MLBFS has a first lien and security interest in the Collateral, (iii)
none
of the Collateral is subject to any lien, encumbrance or security interest
other
than the liens and security interests of MLBFS; (iv) no litigation, arbitration,
administrative or governmental proceedings are pending or, to the knowledge
of
Obligors, threatened against any Obligor, which would, if adversely determined,
materially and adversely affect the liens and security interests of MLBFS
hereunder or under any of the Loan Documents, the financial condition of any
Obligor or the continued operations of any Obligor; and (v) Customer’s
principal place of business is 000 Xxxx Xxxxxx Xxxx, Xxxxx 0, Xxxxxxxx, XX
00000.
7.
Obligations
of Obligors.
In
exchange for MLBFS’
agreement to forbear from exercising its rights and remedies under the Loan
Documents and applicable law until the Termination Date, the Obligors hereby
represent, warrant and agree as follows:
7.1
Payments.
In
exchange for MLBFS’
agreement to forbear, Obligors hereby promise and agree to pay to the order
of
MLBFS, at the times and in the manner set forth below, the following
payments:
(i)
On or
before August
1, 2006,
and on
or before the First (1st)
calendar day of each calendar month thereafter through and including until
March
1st,
2007,
a
payment in amount equal to the sum of; (i) accrued interest at the Interest
Rate, and (ii) $24,957.95.
(ii)
On
or before March
31, 2007,
the
Obligors will be required to make a final payment in an amount equal to the
then
outstanding Debt, plus any of MLBFS’
out of
pocket fees, interest and costs, including but not limited to
attorneys’
fees.
All
of
the payments set forth in Paragraph 7.1 are due on the date specified with
a
five-day
(5) grace period,
and
shall be sent to either: (i) Xxxxxxx Xxxxx Business Financial Services, Inc.,
000 Xxxxx XxXxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, XX 00000 Attention: Xxxxxx
Xxxxxxxx, or (ii) 0000 Xxxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxx XX 00000. Each payment
received hereunder shall be applied first
to any
fees and expenses of MLBFS payable by Customer under the terms of the Loan
Agreement (including, without limitation, late charges), next
to
accrued interest at the Interest Rate, with
the
balance applied on account of the unpaid principal hereof, or in such other
manner as the holder hereof may hereinafter determine from time to time for
the
allocation of such payments thereof.
7.2
Interest
Rate.
Obligors
acknowledge, understand and agree that the Interest Rate on the Debt shall
mean
a variable per annum rate equal to the sum of (i) 4% plus (ii) the rate from
time to time published in the “Money
Rates”
section
of The
Wall Street Journal
as being
the “Prime
Rate”
(or, if
more than one rate is published as the Prime Rate, then the highest of the
such
rates). The Interest Rate will change as of the date of publication in
The
Wall Street Journal
of a
Prime Rate that is different from that published on the preceding Business
Day.
In the event that The
Wall Street Journal
shall,
for any reason, fail or cease to publish the Prime Rate, MLBFS will choose
a
reasonably comparable index or source to use as the basis for the Interest
Rate.
7.3
Default
Interest Rate.
Obligors
acknowledge, understand and agree that the term “Default
Interest Rate”
shall
mean a rate equal to the sum of (a) Eight percent (8%) per annum, and (b) the
Interest Rate. Upon the occurrence and during the continuance of a Default
Event, Default or Event of Default, the Interest Rate may be increased to the
“Default
Interest Rate”,
as
herein provided.
3
7.4
Additional
Financial Requirements.
Pursuant
to the terms of the Loan Documents regarding the financial statements and
information and other general or business information and statements to be
furnished to MLBFS in accordance with Loan Documents, Obligors shall provide
or
cause to be provided upon execution of this Forbearance Agreement to MLBFS,
with
the following financial information at the following dates and time, all of
which shall be in reasonable detail and certified by Customer’s
chief
financial officer or chief executive:
| A. |
Monthly
A/P Aging. Within fifteen (15) days after the close of each fiscal
quarter
of Customer, a copy of the Accounts Payable Aging of
Customer.
|
| B. |
Deposit
Reports: Within fifteen (15) days after the close of each fiscal
month of
Customer a copy of the Customer’s
deposit report. Said report will indicate any and all deposits which
have
been made by the Customer’s
clients for purchase orders.
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7.5
Collateral
Appraisal and Inspection.
Obligors
shall agree that MLBFS shall retain the right, but not the obligation, to
inspect the Collateral and/or retain the services of a third party firm (said
third party firm(s) shall be selected by MLBFS in its sole and absolute
discretion) for the purpose of conducting a field examination/asset based audit
and/or an appraisal of the Collateral. Obligors understand and unconditionally
agree that any such inspection, field examination, or appraisal of the
Collateral shall be for the sole benefit of MLBFS, and MLBFS shall not be
obligated to provide the Obligors with any information regarding said
inspections, field examinations, or appraisals. Furthermore, the Obligors agree
and understand that the Obligors shall be solely responsible for the cost of
conducting said field examination/asset based audit and/or appraisal of the
Collateral (the “Appraisal
Expense”).
The
Obligors agree to immediately reimburse MLBFS for the Appraisal Expense. The
Obligors shall agree that MLBFS (and/or its authorized representatives) shall
be
given full access to the Customer’s
properties (both real and personal), operations, Location(s) of Tangible
Collateral.
7.6
Subordination
of Notes Payable to Xxxxxxx X. Xxxxx.
Any
notes payable (or amounts, or accrued salary) to Xxxxxxx X. Xxxxx (“Xxxxx”)
shall
be subordinated to MLBFS, until such time that MLBFS is paid in full. Provided
that the Customer (or the Obligors) is not in default under the terms of this
Forbearance Agreement, MLBFS will allow monthly principal payments in the amount
of $6,250.00. Additional payments for interest will not be allowed. Payments
shall be made on the 30th
of each
calendar month. In the event of default, the Customer and Xxxxxxx X. Xxxxx
agree
that upon notice by MLBFS the Customer shall cease making any payments on
account of the note payable to Xxxxxxx X. Xxxxx. As of the Customer’s
March
31, 2006 Interim Financials the aggregate amount due to Xxxxxxx X. Xxxxx is
$490,936.00.
7.7
Subordination
of Notes Payable to Xxxx Xxxxxx.
Any
notes payable (or earnouts, or accrued salary) to Xxxx Xxxxxx (“Xxxxxx”)
shall
be subordinated to MLBFS, until such time that MLBFS is paid in full. MLBFS
will
allow interest payments, provided that any such payments, shall not in the
aggregate, exceed payments to MLBFS. In the event of default, all payments
to
Xxxx Xxxxxx shall cease. As of the Customer’s
March
31, 2006 Interim Financials, the principal amount due to Xxxx Xxxxxx is
$225,000.00.
7.8
Minimum
Collateral Floor.
So long
as there are Obligations outstanding under the Loan Documents, then the sum
of:
(a) 80% of Customer’s
Eligible Accounts Receivable, and (b) 100% of Customer’s
Eligible Cash Balances, shall not at any time be less than $650,000.00. For
purposes of this covenant, the term “Eligible
Cash Balances”
shall
mean any financial assets/instruments held in the Customer’s
name at
MLPF&S, XX Xxxxxx Chase Bank, N.A. (but specifically maintained in
commercial checking account No. 000-000-023-956-267) and Bank of America, N.A.
(but specifically maintained in commercial checking account No. 0047-7456-8780),
but excluding the following: (a) any funds held as retirement assets or pension
accounts, (b) any funds held in an annuity, (c) any funds subject to margin
debt. The term “Eligible
Accounts Receivables”
shall
have the meaning as set forth in the attached Exhibit “A”.
4
7.9
Perfection
of Security Interest in Depository Accounts.
Customer
agrees and understands that it shall furnish or cause to be furnished to MLBFS
within 30 days from the Effective Date (as hereinafter defined) all of the
following items:
| (i) |
A
Financial Assets Security Agreement (the “FASA”)
and
|
|
(ii)
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A
Deposit Account Control Agreement, giving MLBFS a first position
security
lien on any depository account(s) held in the name of the Customer
that is
held outside of MLPF&S, including but not limited to XX Xxxxxx Xxxxx
Bank, N.A. (commercial checking account No. 000-000-023-956-267)
and Bank
of America, N.A. (checking account No. 0047-7456-8780). Both XX Xxxxxx
Chase Bank, N.A. and Bank of America, N.A. will be required to sign
a
Deposit Account Control Agreement that is in a form and substance
acceptable to MLBFS in its sole and absolute discretion.
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7.10
Line
Fee.
The
Obligors agree, concurrent with their execution of this Forbearance to pay
MLBFS
a Line Fee in the amount of $4,104.58
for the
Forbearance Period beginning June 15, 2006 and ending March
31, 2007
(the
“Forbearance
Period”).
The
Customer agrees that the Forbearance Fee will be fully non-refundable once
it
has been paid. Obligors further agree that additional forbearance fees will
become due and owing to MLBFS for any extensions to this Forbearance
Agreement.
8.
Obligations of MLBFS.
If there
are no Events of Default under this Forbearance Agreement, and no other Events
of Default, other than the existing Events of Default referenced in this
Forbearance Agreement, occurs under the Loan Documents between the date of
this
Forbearance Agreement MLBFS will agree to forbear from exercising its legal
rights and remedies as a secured creditor under the Loan Documents or under
common or statutory law until the Termination Date.
9.
Release
of MLBFS.
Obligor(s), for itself and by its employees, agents, servants and
representatives, completely release and forever discharge MLBFS and its parents,
affiliates, subsidiaries, and divisions, and each such entity’s
officers, directors, shareholders, employees, owners, partners, agents,
successors, and assigns, of and from any and all causes of action, claims,
or
demands whatsoever, in law or in equity, whether now known or hereafter
discovered, including but not limited to those that in any way pertain to the
Loan Documents or arise from the conduct of MLBFS, its parents, affiliates,
subsidiaries, and divisions.
10.
No
Distributions, Loans and Transfers.
Except
upon the prior written consent of MLBFS, neither Customer nor any other Obligor
shall (a) directly or indirectly pay any dividends or make any other
distributions on account of its stock to its shareholders, (b) directly or
indirectly lend any money to, or guaranty the Obligations of, any shareholder
or
other affiliated person or entity, or (c) directly or indirectly lend any money,
or transfer any assets or property, to any other person or entity other than
arms length transfers for fair consideration in the ordinary course of
business.
11.
Term
of Agreement.
This
Forbearance Agreement shall terminate (the “Termination
Date”)
upon
the earlier of (A) an Event of Default under this Forbearance Agreement or
the
Loan Documents or (B) March
31, 2007.
After
the Termination Date, MLBFS shall have no further obligation to Obligors to
forbear from exercising its legal rights and remedies under the Loan Documents
or under applicable law, or to perform any other act hereunder.
12.
No
Insolvency.
None of
the Obligors: (i) will be rendered Insolvent as a result of executing and
performing under this Forbearance Agreement or any other document or agreement
executed and/or delivered to MLBFS in connection with this Forbearance
Agreement, and (ii) will be left with remaining property that constitutes
unreasonably small capital or property the value of which was unreasonably
small
in relation to their businesses. For purposes of this Forbearance Agreement,
the
word “Insolvent”
means
that the present fair saleable value (i.e. the amount that would be arrived
at
by a willing seller and a willing buyer under no compulsion to make a sale)
of
Obligors’
assets
is less than the amount that will be required to pay the probable liability
on
existing debts (including, without limitation, any legal liability, whether
matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent)
as they become absolute and matured.
5
13.
Event
of Default.
The
occurrence of any of the following events shall constitute an “Event
of
Default”
under
this Forbearance Agreement: (i) Obligors shall fail to pay when any amounts
owed
under this Forbearance Agreement; (ii) Obligors shall default in the performance
or observance of any covenant or provision to be performed or observed under
this Forbearance Agreement, any other agreement entered into by the parties
pursuant to this Forbearance Agreement, or any of the Loan Documents; (iii)
any
representation or warranty made by Obligors contained in this Forbearance
Agreement, any other agreement entered into by the parties pursuant to this
Forbearance Agreement, or any of the Loan Documents shall at any time prove
to
have been incorrect in any material respect when made; (iv) a proceeding under
any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt
or
receivership law or statute shall be filed or consented to by any or all of
the
Obligors, or any such proceeding shall be filed against any or all of the
Obligors, or any or all of the Obligors shall make a general assignment for
the
benefit of creditors, or any or all of the Obligors shall generally fail to
pay
or admit in writing its inability to pay their debts as they become due, or
any
or all of the Obligors shall be adjudicated as bankrupt or insolvent; (v) the
cessation of Customer’s
operations; (vi) the death of Guarantor; or (vii) any Event of Default shall
occur under any of the Loan Documents or any event which, with the giving
notice, passage of time, or both, would constitute an Event of Default, shall
occur.
14.
Remedies.
Upon the
occurrence of an Event of Default, MLBFS shall have all rights hereunder and
under law and equity and all rights and remedies contained within the Loan
Documents, including but not limited to the following rights:
(i)
MLBFS
may obtain a replevin order by consent in a replevin action in favor of MLBFS
and against any Obligors, jointly and severally, with respect to all Collateral.
This replevin may be filed in Illinois. The Obligors agree to not contest the
entry of a consent replevin order should it be pursued by MLBFS.
(ii)
MLBFS may demand and obtain from Obligors any and all Collateral without the
need for judicial process. MLBFS may, at any time, take possession of any
portion or all of the Collateral and keep it on the premises of Customer or
any
Obligor, at no cost to MLBFS, or remove any part of it to such other location
or
place as MLBFS may desire; or Customer or any Obligor shall, upon demand of
MLBFS, at the sole cost of Customer or such Obligor, assemble the Collateral
and
make it available to MLBFS at a place reasonably convenient to
MLBFS.
(iii)
MLBFS may file a lawsuit against any or all of the Obligors, jointly and
severally, for the sole purpose of having a trial court enter judgment in favor
of MLBFS against Obligors for all amounts owed by them. Obligors agree to not
contest the entry of said judgment.
(iv)
MLBFS shall have any and all default rights and remedies of a secured party
under the Uniform Commercial Code.
(v)
Obligors hereby consent to the appointment of a receiver by MLBFS or any court
of competent jurisdiction in any action initiated by MLBFS pursuant to this
Forbearance Agreement or the Loan Documents, and each Obligor hereby waives
notice and the posting of a bond in connection therewith. Such receiver so
appointed may be MLBFS. Such appointment shall be without regard to the value
of
the Collateral at such time, and without bond being required of the applicant.
Such appointment may be without notice and without regard to the solvency or
insolvency at the time of application for such receiver of the person or
persons, if any, liable for the payment of the Debt.
(vi)
MLBFS may sell and deliver any Collateral at public or private sales, for cash,
upon credit or otherwise, at such prices and upon such terms as MLBFS deems
advisable, at MLBFS’
discretion. MLBFS may, if MLBFS deems it reasonable, postpone or adjourn any
sale of the Collateral by an announcement at the time and place of sale or
of
such postponed or adjourned sale without giving a new notice of
sale.
(vii)
Obligors agree that MLBFS has no obligation to preserve rights to the Collateral
or marshal any assets, including the Collateral, for the benefit of any
person.
6
(viii)
MLBFS is hereby granted a license or other right to use, without charge,
Obligators’
labels,
patents, copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, in completing production,
advertising or selling any Collateral and Obligors’
rights
under all licenses and all franchise agreements shall inure to MLBFS’s
benefit. Any requirement of reasonable notice shall be met if such notice is
mailed postage prepaid to Customer at its address set forth above in this
Forbearance Agreement at least five (5) days before sale or other disposition.
The proceeds of any sale shall be applied first to all attorney fees and other
expenses of sale, and second on account of the Debt in such order as MLBFS
shall
elect, in its sole discretion. MLBFS shall return any excess proceeds to
Customer, and Obligors shall remain jointly and severally liable for any
deficiency to the fullest extent permitted by law.
(ix)
Except as otherwise provided herein, MLBFS shall have the continuing and
exclusive right to apply or reverse and reapply any and all payments to any
portion of the Debt in such order and in such manner as MLBFS shall determine
in
its sole discretion. To the extent that Obligors make a payment or MLBFS
receives any payment or proceeds of the Collateral which is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
to
be repaid to a trustee, debtor-in-possession, receiver or any other party under
any bankruptcy law, common law or equitable cause, or otherwise, then to such
extent, the Debt or the part of the Debt that was intended to be satisfied
by
such payment shall be revived and continue as if such payment or proceeds had
not been received by MLBFS.
(x)
Obligors shall perform without objection any other act required or requested
by
MLBFS under any right or remedy given to it pursuant to the Loan Documents
or
under the law.
(xi)
Notification of Account Debtors. MLBFS may notify any Account Debtor that its
Account or Chattel Paper has been assigned to MLBFS and direct such Account
Debtor to make payment directly to MLBFS of all amounts due, or becoming due
with respect to such Account or Chattel Paper; and MLBFS may enforce payment
and
collect, by legal proceedings or otherwise; such Account or Chattel
Paper.
15.
Review
of Books and Records.
In
further consideration of MLBFS’
agreement to forbear from exercising its rights, Obligors will continue to
allow
MLBFS to have access to Obligors’
offices
so as to allow MLBFS to review and inspect each of such Obligor’s
books,
records and Collateral.
16.
Insurance.
Obligors
agree that Obligors shall maintain insurance on all Collateral under a policy
or
policies of physical damage insurance for the full replacement value thereof,
providing that losses will be payable to MLBFS as its interests appears pursuant
to the lender’s
or
mortgagee’s
long
form loss payable endorsement. Obligors shall further maintain a policy or
policies of commercial general liability. Obligors further agree that MLBFS
may
at its sole and absolute discretion, obtain, and maintain insurance on the
Collateral under a policy or policies of physical damage insurance for the
full
replacement value thereof and providing that losses will be payable to MLBFS.
Obligors agree to execute any and all documents necessary in order for MLBFS
to
obtain and maintain insurance on the Collateral.
17.
Sales
of Assets.
Without
the prior written consent of MLBFS, none of the Obligors shall sell, transfer
or
otherwise dispose of any of their respective assets or Collateral other than
in
the ordinary course of dealing. Additionally, in the event that any Obligor
should at any time find alternate financing (directly or indirectly) or raise
directly or indirectly any additional equity during the Forbearance period, such
Obligor shall remit said proceeds directly to MLBFS as a permanent pre-payment
of the Debt.
18.
Execution
of Documents.
Obligors
agree to execute all documents necessary to effectuate the terms and conditions
of this Forbearance Agreement.
19.
Course
of Dealing.
No
course of dealing on the part of Obligors or any delay or failure on the part
of
MLBFS to exercise any right shall operate as a waiver of such rights or
otherwise prejudice MLBFS’
rights,
powers or remedies.
20.
No
Further Advance.
Obligors
acknowledge and agree that, except as expressly provided for in this Forbearance
Agreement, MLBFS has no obligation to advance, provide or loan any further
or
additional monies or credit to Obligors. Obligors further acknowledge and agree
that, except as expressly provided for in this Forbearance Agreement, that
MLBFS
has no obligation to grant any further forbearance to Obligors or to extend
the
time for the repayment of the Debt beyond the Termination Date of this
Forbearance Agreement.
7
21.
Notices.
Any
notices required under this Forbearance Agreement shall be given in writing
and
shall be mailed via first class mail to the party at the address noted, postage
prepaid, or delivered personally:
If
to Xxxxxxx Xxxxx Business Financial Services Inc.
Xxxxxx
Xxxxxxxx
Xxxxxxx
Xxxxx Business Financial Services Inc.
000
X.
XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx,
XX 00000
If
to Obligors
Xx.
Xxxxxx Key
Aspect
Systems Inc.
000
Xxxx
Xxxxxx Xxxx
Xxxxx
0
Xxxxxxxx,
XX 00000
22.
Mutual
Consent.
The
parties acknowledge that this Forbearance Agreement has been negotiated at
arms
length, that each has had the opportunity to consult with legal counsel if
so
desired, and that the parties have entered into this Forbearance Agreement
of
their own free will, without force, coercion or duress.
23.
Governing
Law.
This
Forbearance Agreement shall be governed in all respects by the laws of the
State
of Illinois.
24.
Binding
Agreement.
This
Forbearance Agreement shall be binding upon, and shall inure to the benefit
of
MLBFS, each of the Obligors and their respective successors and assigns. None
of
the Obligors shall assign any of their rights or delegate any of their
obligations under this Forbearance Agreement without the prior written consent
of MLBFS. Unless otherwise expressly agreed to in a writing signed by MLBFS,
no
such consent shall in any event relieve Obligors of any of their obligations
under this Forbearance Agreement.
25.
No
Release of Security.
Nothing
contained herein shall annul, release, vary, modify or affect the lien or
priority of lien securing the Debt, or any guaranty, lien, priority assignment
or security interest in favor of MLBFS, or any right, title, interest, claim,
lien or priority which MLBFS now has or may hereafter have in or to any property
securing the Debt, all of which shall continue in full force and effect. MLBFS
specifically reserves and shall have all rights and remedies available to it
under the provisions of the Loan Documents and in any agreement with respect
to
security for the repayment thereof.
26.
Not
a Novation.
This
Forbearance Agreement is not a novation, nor is it to be construed as a release
or modification of any of the terms, conditions, warranties, waivers or rights
set forth in the Loan Documents, except as expressly provided
herein.
27.
Headings.
Section
headings used in this Forbearance Agreement are for convenience only and shall
not affect the construction of this Forbearance Agreement.
28.
Neutral
Interpretation.
This
Forbearance Agreement constitutes the product of negotiation of the parties
hereto and in the enforcement hereof shall be interpreted in a neutral manner,
and not more strongly for or against any party based upon the source of the
draftsmanship hereof. Whenever the context so requires, the masculine gender
shall include the feminine or neuter, the singular shall include the plural,
and
vice versa.
8
29.
Review
by Legal Counsel.
Obligors
acknowledge that they have thoroughly read and reviewed the terms and provisions
of this Forbearance Agreement and are familiar with the terms hereof. Such
terms
and provisions are clearly understood and fully and unconditionally consented
to
by them. Obligors have had the full benefit and advice of counsel of their
own
choosing, or the opportunity to obtain the benefit and advice of counsel of
their own choosing to understand the terms, meanings and effect of this
Forbearance Agreement. Obligors’
execution of this Forbearance Agreement and the delivery of the documents is
done freely, voluntarily, with full knowledge and without duress, force or
coercion, and that in executing this Agreement none of Obligors have relied
on
any other representations, either written or oral, express or implied, made
to
them by MLBFS or any party.
30.
Authority
to Execute.
The
parties to this Forbearance Agreement, and each of their representatives,
represent and warrant to the other parties that they have the full power and
authority to execute this Forbearance Agreement in the capacity in which they
are signing, that they have the full power and authority to execute and deliver
this Forbearance Agreement without the necessity or joinder of any other or
third party, that each of the parties and its undersigned representative is
legally competent to execute this Forbearance Agreement, and that each of the
parties has not assigned, transferred, sold, pledged or in any other manner
whatsoever conveyed any right, title, interest or claim of any portion of the
Loan Documents to any other party.
31.
Severability.
In the
event that any provision of this Forbearance Agreement is held to be
unenforceable or invalid, the remaining provisions hereof shall nevertheless
be
given full force and effect.
32.
Counterparts.
This
Forbearance Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed an original document, and all of which
counterparts, when taken together, shall constitute one and the same
agreement.
33.
No
Use of Xxxxxxx Xxxxx Name.
No
Obligor will directly or indirectly publish, disclose or otherwise use in any
advertising or promotional material, or press release or interview, the name,
logo or any trademark of MLBFS, Xxxxxxx Xxxxx Xxxxxx Xxxxxx & Xxxxx
Incorporated, Xxxxxxx Xxxxx and Co., Incorporated or any of their affiliates.
34.
Jurisdiction;
Waiver. THE OBLIGORS ACKNOWLEDGE THAT THIS FORBEARANCE AGREEMENT IS BEING
ACCEPTED BY MLBFS IN PARTIAL CONSIDERATION OF MLBFS’
RIGHT AND OPTION, IN ITS SOLE DISCRETION, TO ENFORCE THIS FORBEARANCE AGREEMENT
AND THE LOAN DOCUMENTS IN EITHER THE STATE OF ILLINOIS OR IN ANY OTHER
JURISDICTION WHERE THE OBLIGORS OR ANY COLLATERAL FOR THE OBLIGATIONS MAY BE
LOCATED. THE OBLIGORS CONSENT TO JURISDICTION IN THE STATE OF ILLINOIS AND
VENUE
IN ANY STATE OR FEDERAL COURT IN THE XXXX COUNTY FOR SUCH PURPOSES, AND THE
OBLIGORS WAIVE ANY AND ALL RIGHTS TO CONTEST SAID JURISDICTION AND VENUE. THE
OBLIGORS FURTHER WAIVE ANY RIGHTS TO COMMENCE ANY ACTION AGAINST MLBFS IN ANY
JURISDICTION EXCEPT IN XXXX COUNTY AND THE STATE OF ILLINOIS. MLBFS AND THE
OBLIGORS HEREBY EACH EXPRESSLY WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY
IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES AGAINST
THE OTHER PARTY WITH RESPECT TO ANY MATTER RELATING TO, ARISING OUT OF OR IN
ANY
WAY CONNECTED WITH THE DEBT, THIS FORBEARANCE AGREEMENT, ANY ADDITIONAL
AGREEMENTS RELATED HERETO, THE LOAN DOCUMENTS AND/OR ANY OF THE TRANSACTIONS
WHICH ARE THE SUBJECT MATTER OF THIS FORBEARANCE AGREEMENT, ANY ADDITIONAL
AGREEMENTS RELATED HERETO, OR THE LOAN DOCUMENTS.
35.
Integration.
THIS FORBEARANCE AGREEMENT, TOGETHER WITH THE LOAN DOCUMENTS AND ANY ADDITIONAL
AGREEMENTS RELATED HERETO, CONSTITUTES THE ENTIRE UNDERSTANDING AND REPRESENTS
THE FULL AND FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT
MATTER HEREOF, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR WRITTEN
AGREEMENTS OR PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENT OF THE PARTIES. NO AMENDMENT
OR
MODIFICATION OF THIS FORBEARANCE AGREEMENT OR ANY OF THE ADDITIONAL AGREEMENTS
TO WHICH ANY OF THE OBLIGORS ARE A PARTY SHALL BE EFFECTIVE UNLESS IN A WRITING
SIGNED BY MLBFS AND EACH OBLIGOR.
9
36.
Return
of Executed Documents.
Notwithstanding anything to the contrary contained herein, Obligors agree to
execute and return to MLBFS, in a form and manner acceptable to MLBFS, in its
sole and absolute discretion, opinion and judgment, the following documents
and
payments on or before 5:00 P.M. Central Standard Time on July
28, 2006.
| (a) |
This
Forbearance Agreement, fully
executed.
|
| (b) |
The
Subordination Agreements fully executed by Xxxxx and
Xxxxxx.
|
| (c) |
A
check made payable to MLBFS in the amount of $4,104.58, covering
the Line
Fee.
|
If
no
further Event of Default, or event which with the giving of notice, passage
of
time, or both, would constitute an Event of Default, shall then have occurred
and be continuing under the terms of the Loan Documents, then the amendments
and
agreements in this Forbearance Agreement will become effective on the date
(the
“Effective
Date”)
upon
which: (i) Obligors shall have executed and returned the original copy of this
Forbearance Agreement to MLBFS, along with any other documents reasonably
required by MLBFS, in its sole discretion, to effectuate the terms and
conditions of this Forbearance Agreement; and (ii) an officer of MLBFS shall
have reviewed and approved this Forbearance Agreement and all of the other
documents as being consistent in all respects with the original internal
authorization hereof. If Obligors do not return to MLBFS (a) the fully executed
original copy of this Forbearance Agreement; (and (b) any other documents
reasonably required by MLBFS, in its sole discretion, to effectuate the terms
of
this Forbearance Agreement all by July
28, 2006,
or if
for any other reason (other than the sole fault of MLBFS) the Effective Date
shall not occur by July
28, 2006,
then
this Forbearance Agreement and all of the terms contained herein may, at the
sole option of MLBFS, be declared to be null and void and be of no force and
effect.
10
IN
WITNESS WHEREOF,
the
parties have signed and delivered this Forbearance Agreement, on or about the
date stated above.
XXXXXXX
XXXXX BUSINESS FINANCIAL SERVICES INC.
By:
___________________________
Printed
Name: ___________________
Title:
__________________________
ASPECT
SYSTEMS, INC.
By:
/s/
X.
Xxxxxx Key
Printed
Name: X. Xxxxxx Key
Its:
President
DND
TECHNOLOGIES, INC.
By:
/s/
X.
Xxxxxx Key
Printed
Name: X. Xxxxxx Key
Its:
Chief Technical Officer
/s/
Xxxxxxx X. Xxxxx
XXXXXXX
X. XXXXX
11
