EXHIBIT 10.2
AMENDED AND RESTATED FORBEARANCE AGREEMENT
THIS AMENDED AND RESTATED FORBEARANCE AGREEMENT (this "AGREEMENT") is
entered into as of September 24, 2009 between Ivivi Technologies, Inc., a New
Jersey corporation (the "COMPANY"), and Emigrant Capital Corp, a Delaware
corporation (the "LENDER"). All capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to such terms in the Loan Agreement
dated as of April 7, 2009 between the Company and the Lender (the "LOAN
AGREEMENT").
RECITALS
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A. The Company and the Lender have entered into the Loan Agreement.
B. An Event of Default has occurred (or shall occur) (i) under Section
9.1(i) of the Loan Agreement as a result of the Company's failure to repay the
principal of the Loans on the Maturity Date, (ii) under Section 9.1(c) of the
Loan Agreement as a result of the Company's failure to deliver to the Lender
within the time period specified in Section 8.1(c)(ii)of the Loan Agreement the
quarterly financial information required by such Section 8.1(c)(ii) for the
fiscal quarter ended June 30, 2009, (iii) under Section 9.1(c) of the Loan
Agreement as a result of the Company's failure to deliver to the Lender within
the time period specified in Section 8.1(c)(iii) of the Loan Agreement the
monthly financial information required by such Section 8.1(c)(iii) for July 2009
(and an Event of Default will occur under Section 9.1(c) of the Loan Agreement
as a result of the Company's expected failure to deliver to the Lender within
the time period specified in Section 8.1(c)(iii) of the Loan Agreement the
monthly financial information required by such Section 8.1(c)(iii) for August
and September 2009) and (iv) under Section 9.1(b) of the Loan Agreement as a
result of the Company's failure to file its quarterly report on Form 10-Q within
the time period specified by applicable law, as required by Section 8.1(f) of
the Loan Agreement (the Events of Default described in the foregoing clauses
(i), (ii), (iii) and (iv) are hereinafter referred to collectively as the
"SPECIFIED DEFAULTS").
C. The Company and the Lender have heretofore entered into a
Forbearance Agreement, dated as of August 31, 2009 (as amended by that certain
letter agreement, dated September 9, 2009, that certain letter agreement, dated
September 14, 2009, and that certain letter agreement, dated September 16, 2009,
the "ORIGINAL FORBEARANCE AGREEMENT").
D. The Company, Ivivi Technologies, LLC and Ajax Capital LLC are,
contemporaneously with the execution of this Agreement, entering into an Asset
Purchase Agreement, dated as of even date hereof (the "PURCHASE Agreement").
E. In connection with the entry by the Company into the Purchase
Agreement, the Company has requested that the Original Forbearance Agreement be
amended and restated to provide that, among other things, the Lender agrees to
forbear for the period of time set forth below from exercising its rights and
remedies arising solely in connection with the Specified Defaults.
F. The Lender has agreed to do so, but only pursuant to the terms and
conditions set forth herein.
AGREEMENT
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NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree that the
Original Forbearance Agreement be, and hereby is, amended and restated in its
entirety as herein set forth:
1. ESTOPPEL, ACKNOWLEDGEMENT AND REAFFIRMATION. The Company hereby
acknowledges and agrees that (i) the Specified Defaults currently exist and have
not been waived by the Lender, (ii) the Company is indebted and liable to the
Lender in the aggregate principal amount of $2,500,000.00 in respect of the
Loans, plus interest, fees, expenses (including but not limited to attorneys'
and financial advisors' fees that are reimbursable under the Loan Agreement),
charges and all other obligations incurred in connection therewith as provided
in the Loan Agreement or any Loan Document, and (iii) such amounts outstanding
under the Loan Agreement constitute valid and subsisting obligations of the
Company to the Lender that are not subject to any credits, offsets, defenses,
claims, counterclaims or adjustments of any kind. The Company hereby (i)
acknowledges and affirms its obligations under the Loan Documents to which it is
a party, (ii) acknowledges and affirms the Liens created and granted by the
Company in the Loan Documents and (iii) agrees that this Agreement shall in no
manner adversely affect or impair such Liens.
2. FORBEARANCE. Subject to the terms and conditions set forth herein,
the Lender hereby agrees that, during the period commencing on the date hereof
to (but excluding) the earlier of (a) November 30, 2009 and (b) the date that a
Forbearance Termination Event occurs (such period, the "FORBEARANCE PERIOD"),
the Lender shall forbear from (i) declaring the Loans, all interest thereon and
all other amounts payable under the Loan Documents to be due and payable as a
result of the occurrence of the Specified Defaults and (ii) instituting any
judicial or non-judicial action or proceeding to enforce or obtain payment of
the Loans or to enforce the Lender's Liens as a result of the Specified
Defaults. The Borrower agrees that, during the Forbearance Period, the
outstanding principal amount of the Note shall bear interest at a rate per annum
equal to the lesser of (i) 18% and (ii) the maximum rate permitted by law.
Nothing set forth herein or contemplated hereby is intended to constitute an
agreement by the Lender to forbear from exercising any of the rights or remedies
available to it under the Loan Documents or under applicable law (all of which
rights and remedies are hereby expressly reserved by the Lender) with respect to
the Specified Defaults upon or after the termination of the Forbearance Period.
In addition, nothing herein shall be construed to constitute an agreement by the
Lender to forbear from exercising any rights and remedies available to it under
the Loan Documents as a result of any Default or Event of Default that may exist
on or after the date hereof, other than the Specified Defaults. Except as
expressly set forth in this Agreement, this Agreement shall not operate as a
waiver, amendment or modification of any Loan Document.
3. FORBEARANCE TERMINATION EVENTS. As used herein, a "FORBEARANCE
TERMINATION EVENT" shall mean the occurrence of any of the following: (i) any
failure by the Company to comply with any of the terms of this Agreement, (ii)
the exercise of any remedies by any lender (or the administrative or collateral
agent on behalf of such lender) with respect to any other Indebtedness for
borrowed money of the Company, (iii) the entry of any final judgment or
settlement of any lawsuit or proceeding by or on behalf of a holder or holders
of any other Indebtedness for borrowed money of the Company against the Company
to receive payments in connection with such Indebtedness, (iv) the making of any
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payment made by the Company or any of its subsidiaries (a) in cash in respect of
any Indebtedness for borrowed money of the Company other than the Loans or (b)
of an extraordinary nature to members of the Company's management, including,
without limitation, bonuses or other forms of additional cash compensation, (v)
the Closing (as defined in the Purchase Agreement) of the transactions
contemplated by the Purchase Agreement, (vi) the Company failing to consummate
the Closing (as defined in the Purchase Agreement) within three business days
following the receipt of the Company Shareholder Approval (as defined in the
Purchase Agreement), or (vii) the termination or abandonment of the Purchase
Agreement by any party thereto (whether pursuant to Article VIII of the Purchase
Agreement or otherwise).
4. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants to the Lender that:
(a) Upon giving effect to this Agreement (a) no Default or Event
of Default exists (other than the Specified Defaults), (b) all of the
representations and warranties set forth in the Security Documents or
in Sections 5.1, 5.4, 5.5, 5.7 and 5.27 of the Loan Agreement are true
and correct in all material respects as of the date hereof (except for
those that expressly state that they are made as of an earlier date, in
which case they are true and correct as of such earlier date), and (c)
all of the representations and warranties of the Company set forth in
the Purchase Agreement are true and correct in all respects as of the
date hereof (except to the extent any such representation or warranty
speaks as of a specific date, in which case it shall continue to be
true and correct as of such date); and
(b) The execution, delivery and performance by the Company of this
Agreement has been duly authorized by all necessary corporate or other
organizational action, and do not and will not: (a) contravene the
terms of any of its organizational documents; (b) conflict with or
result in any breach or contravention of, or result in or require the
creation of any Lien under, or require any payment to be made under (x)
any contractual obligation to which the Company is a party or affecting
the Company or its properties or (y) any order, injunction, writ or
decree of any Governmental Authority or any arbitral award to which the
Company or its property is subject; or (c) violate any applicable law.
The Company is in compliance with all contractual obligations referred
to in clause (b)(x) above, except to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect. No
approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other
person is necessary or required in connection with the execution,
delivery or performance by, or enforcement against the Company of this
Agreement.
5. COVENANTS. The Company hereby covenants and agrees that:
(a) The Company will take all actions necessary to satisfy all of
the conditions to the Closing (as defined in the Purchase Agreement)
which are conditions to Ivivi Technologies, LLC's obligation to close
as soon as reasonably practicable following the date hereof;
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(b) The Company will take all actions necessary to obtain the
Company Shareholder Approval (as defined in the Purchase Agreement) as
soon as reasonably practicable following the date hereof;
(c) The Company will take all actions necessary to cause the
Closing (as defined in the Purchase Agreement) to occur within three
business days following the receipt of the Company Shareholder Approval
(as defined in the Purchase Agreement);
(d) The Company will comply with each of, and will not breach or
violate any of, the covenants and agreements of the Company set forth
in the Purchase Agreement;
(e) The Company will not amend, supplement, restate or otherwise
modify the Purchase Agreement in any manner, and will not consent to or
otherwise approve any of the foregoing, in each case, without the
Lender's prior written consent;
(f) The Company will not waive, surrender or abandon any of its
rights under the Purchase Agreement without the Lender's prior written
consent; and
(g) The Company will not terminate or abandon, and the Company
will not consent to or otherwise approve any termination or abandonment
of, the Purchase Agreement (whether pursuant to Article VIII of the
Purchase Agreement or otherwise). Notwithstanding the foregoing; this
clause (g) shall not restrict the ability of the Company to terminate
the Purchase Agreement pursuant to Section 8.1(c)(ii) of the Purchase
Agreement; provided that (i) the Company shall have provided to the
Lender a true and complete copy of the Superior Proposal (as such term
is defined in the Purchase Agreement) prior to its termination of the
Purchase Agreement pursuant to Section 8.1(c)(ii) of the Purchase
Agreement and (ii) the Lender shall be satisfied, in its sole
discretion, that (x) the closing of the transaction contemplated by the
Superior Proposal will occur prior to November 30, 2009, and (y) upon
the closing of the transaction contemplated by the Superior Proposal,
the Company will repay in cash in full the Loans, all interest thereon
and all other amounts due and payable pursuant to the Loan Documents
(the "PAYOFF AMOUNT"). In such event, the Superior Proposal shall be
substituted for the Purchase Agreement for purposes of this Agreement.
6. FORFEITURE AND CANCELLATION OF WARRANTS. In the event that (x) the
transactions contemplated by the Purchase Agreement shall close on or prior to
the expiration or termination of the Forbearance Period as amended from time to
time in accordance with this Agreement, if applicable, and (y) concurrently with
the closing of such transactions, the Lender shall receive repayment or payment,
as applicable, in full of all Loans, all interest thereon and all other amounts
due and payable pursuant to the Loan Documents, the Lender hereby acknowledges
and agrees that, effective concurrently with the repayment or payment, as
applicable, of the amounts specified in CLAUSE (Y) above, that certain Warrant
No. W-1, dated April 7, 2009, issued by the Company to the Lender, and all
rights of the Lender thereunder, shall be forfeited and cancelled.
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7. EXCESS AMOUNT. In the event that the transactions contemplated by
the Purchase Agreement or any Superior Proposal shall be consummated and, in
connection therewith, the Company shall receive a purchase price in excess of
$3,150,000 (the amount by which such purchase price exceeds $3,150,000, the
"EXCESS AMOUNT"), the Company agrees to pay to the Lender, on the date of the
closing of the transactions contemplated by the Purchase Agreement or such
Superior Proposal, in addition to all amounts payable under, or in respect of,
the Loans, the Note and the other Loan Documents, an amount in cash equal to
lesser of (x) 20% of the Excess Amount or (y) $175,000 (such payment, the
"EXCESS AMOUNT PAYMENT"); provided, however, that, in the event that, pursuant
to the terms of the Purchase Agreement or such Superior Proposal, the Excess
Amount is payable to the Company in the form of stock or other equity interests
rather than in cash, then, so long as the Lender shall receive, on the date of
the closing of the transactions contemplated by the Purchase Agreement or such
Superior Proposal, an amount in cash equal to the Payoff Amount in full
satisfaction of the Company's obligations to the Lender in respect of the Loans
and all interest therein, the Company may make the Excess Amount Payment to the
Lender in respect thereof in the form of such stock or other equity interests
received by the Company or its shareholders (with such stock or other equity
interests being valued, and the calculation of the Excess Amount payable to the
Company in respect thereof being determined, in good faith by the Board of
Directors of the Company).
8. RELEASE. In partial consideration of the Lender's willingness to
enter into this Agreement, the Company hereby releases the Lender and its
officers, affiliates, employees, representatives, agents, financial advisors,
counsel and directors from any and all actions, causes of action, claims,
demands, damages and liabilities of whatever kind or nature, in law or in
equity, now known or unknown, suspected or unsuspected to the extent that any of
the foregoing arises from any action or failure to act in connection with the
Loan Documents on or prior to the date hereof.
9. EXPENSES. The Company agrees to pay, immediately upon demand or
invoice, all reasonable out-of-pocket costs and expenses incurred by the Lender
in connection with the preparation of this Agreement and any amendments,
modifications or waivers of the provisions of any Loan Document or incurred by
the Lender in connection with the enforcement or protection of its rights under
this Agreement, the Loan Agreement or any other Loan Document, including in each
case the fees and disbursements of any counsel acting on behalf of the Lender.
10. SUCCESSOR AND ASSIGNS. The provisions of this Agreement shall bind
and inure to the benefit of the respective successors, assigns, heirs, executors
and administrators of the parties hereto.
11. REMEDIES. The Company agrees that irreparable damage to the Lender
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or were otherwise breached. It
is accordingly agreed that the Lender shall be entitled to seek an injunction or
injunctions to prevent breaches of this Agreement and to seek to enforce
specifically the terms and provisions of this Agreement, such remedies being in
addition to any other remedy to which the Lender is entitled at law or in
equity. The Company hereby agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
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12. ENTIRETY. This Agreement and the other Loan Documents embody the
entire agreement between the parties and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof. This Agreement
represents the final agreement between the parties and may not be contradicted
by evidence of prior, contemporaneous or subsequent oral agreements of the
parties. There are no oral agreements between the parties.
13. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an original,
but all of which shall be one and the same document. This Agreement may be
executed by facsimile signatures or by delivery of an executed signature page
via electronic mail.
14. SECTION HEADINGS. The section headings are for the convenience of
the parties and in no way alter, modify, amend, limit, or restrict the
contractual obligations of the parties.
15. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
16. GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York, excluding
conflict of laws principles that would cause the application of laws of any
other jurisdiction.
17. LOAN DOCUMENT. This Agreement is a Loan Document for all purposes.
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IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Forbearance Agreement to be duly executed as of the date first above
written.
IVIVI TECHNOLOGIES, INC.
By: /s/ Andre' XxXxxx
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Name: Andre' XxXxxx
Title: Executive Vice President
EMIGRANT CAPITAL CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Senior Managing Director
[Signature Page to Amended and Restated Forbearance Agreement]
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