EXHIBIT 10.11
FORBEARANCE
AGREEMENT
OLD NATIONAL BANK , a national banking association (the
“Bank”), OBSIDIAN LEASING COMPANY, INC. , an
Indiana corporation with an address of 1ll Monument Circle,
Indianapolis, Indiana, 46204 (the “Borrower”),
OBSIDIAN ENTERPRISES, INC., PYRAMID COACH, INC., TIMOTHY S.
DURHAM, TERRY WHITESELL, and JULIA WHITESELL
(collectively, the “Guarantors”) (the Borrower and the
Guarantors may from time to time hereinafter be referred to as, the
“Obsidian Parties”) enter into this Forbearance
Agreement (the “Agreement”) effective as of December 1,
2004.
RECITALS
A.
The Bank and the Obsidian Parties are parties to, among others, the
agreements and documents as more particularly identified on
Exhibit A attached hereto (the “Schedule of
Documents”). All of the documents referenced on the Schedule
of Documents and any other documents, agreements, and promissory
notes between the Bank and Obsidian Parties, as amended, modified,
extended, and renewed from time to time, including as amended by
this Agreement, are referred to collectively as, the “Loan
Documents.”
B.
Exhibit B attached hereto and incorporated by
reference indicates the principal amounts owing to the Bank under
the Loan Documents as of March 25, 2005 in connection with the Term
Loan Note dated October 31, 2002 and the Term Loan Note dated
October 31, 2002 each executed by the Borrower (collectively, the
“Notes”), which amounts do not include costs and
attorneys’ fees reimbursable to the Bank pursuant to the Loan
Documents, obligations for which the Obsidian Parties are liable,
and other obligations provided for in the Loan Documents (the
“Obligations”).
C.
The Obsidian Parties acknowledge that (i) the Obligations are due
the Bank without setoff, defense, or counterclaim, in law or in
equity, of any kind or nature whatsoever; and (ii) the Obligations
are secured by valid, perfected, first priority liens and security
interests in favor of the Bank in certain of the Obsidian
Parties’ present and future personal property as more
particularly identified in the Loan Documents (collectively, the
“Collateral.”)
D.
The Obsidian Parties reaffirm, ratify, and confirm the obligations
and duties under the Loan Documents.
E.
The Obsidian Parties acknowledge that they are in default under the
Loan Documents for, among other reasons, the defaults under the
Loan Documents enumerated in Exhibit C attached
hereto (the “Defaults”).
F.
The Obsidian Parties also acknowledge that based on the Defaults,
the Bank has the right, without further notice, to take all
available legal action to enforce its rights under the Loan
Documents. Further, if the Bank took such action, the Obsidian
Parties acknowledge that the Bank’s actions would be
reasonable and within the rights and remedies reserved and
available to the Bank under the Loan Documents.
G.
The Obsidian Parties acknowledge that the Bank has duly performed
all of its obligations under the Loan Documents and that the Bank
has no obligation to continue to lend to the Obsidian Parties or
forbear from enforcing its available rights and
remedies.
H.
The Obsidian Parties acknowledge that the actions taken by the Bank
in furtherance of the Loan Documents and this Agreement are
reasonable and appropriate under the circumstances, are within the
Bank’s rights under the Loan Documents and applicable law,
and do not constitute interference with or control over the
Obsidian Parties’ business operations.
I.
The Obsidian Parties have requested that the Bank forbear from
enforcing its rights and remedies under the Loan Documents and
applicable law to afford the Obsidian Parties an opportunity to
reorganize their business affairs.
J.
The Bank, as a condition precedent to forbearing from enforcing its
rights and remedies under the Loan Documents and applicable law,
has required certain agreements and accommodations as set forth in
this Agreement.
K.
Subject to the terms and conditions of this Agreement, the Bank has
agreed to forbear from enforcing its rights and
remedies.
L.
Upon a default under this Agreement, the Bank will be entitled to
immediately pursue all available legal remedies against the
Obsidian Parties and to obtain a judgment therein.
BASED
ON THE FOREGOING RECITALS (which are incorporated as
representations, warranties and covenants of the respective
parties, as the case may be), the parties hereto agree as
follows:
TERMS AND
CONDITIONS
1.
Forbearance . The Bank agrees to forbear from enforcing its
rights and remedies based on the Defaults through 5:00 P.M.
(Danville, Illinois time) on April 30, 2005 (the “Forbearance
Period”) subject to the following conditions:
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(a)
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There are no
further or additional defaults under the Loan Documents and the
Obsidian Parties comply with all terms and conditions of this
Agreement;
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(b)
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All payments
due under the Loan Documents are timely made.
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2.
Defaults . In addition to any other defaults provided for in
the Loan Documents, the following shall constitute a default under
this Agreement and under all of the Loan Documents of which this
Agreement is a part:
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(a)
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The Obsidian
Parties fail to comply with any terms or conditions in this
Agreement or the Loan Documents; or
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(b)
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The Obsidian
Parties fail to make future payments under this Agreement to the
Bank when due as set forth in the Loan Documents.
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3.
Conditions Precedent . This Agreement shall become and be
deemed effective in accordance with its terms immediately upon the
Bank receiving:
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(a)
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Two (2) copies
of this Agreement duly executed by the Obsidian Parties and the
Bank;
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(b)
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The Obsidian
Parties shall effect the reissuance of the shares of stock
currently held under the name of J2 Communications which have been
pledged to the Bank to secure the Obligations;
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(c)
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Payment of the
fees specified in Section 9 hereof; and
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(d)
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Such other
documents and items as the Bank may reasonably request.
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4.
Representations and Warranties of the Obsidian Parties . The
Obsidian Parties hereby represent and warrant, in addition to any
other representations and warranties contained herein, in the Loan
Documents or any other document, writing, or statement delivered or
mailed to the Bank or its agent by the Obsidian Parties, as
follows:
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(a)
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This Agreement
constitutes a legal, valid, and binding obligation of the Obsidian
Parties enforceable in accordance with its terms. The Obsidian
Parties have taken all necessary and appropriate action for the
approval of this Agreement and the authorization of the execution,
delivery, and performance thereof.
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(b)
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The Obsidian
Parties hereby specifically confirm and ratify the obligations,
waivers, and consents under each of the Loan Documents.
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(c)
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Except as
specifically amended herein, all representations, warranties, and
other assertions of fact contained in the Loan Documents continue
to be true, accurate, and complete.
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(d)
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The Obsidian
Parties acknowledge that the definition “Loan
Documents” shall include this Agreement and all the documents
executed contemporaneously herewith.
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5.
Affirmative Covenants . By entering into this Agreement, the
Obsidian Parties further specifically undertake to comply with the
obligations, terms, and covenants as contained in this Agreement
and the Loan Documents and agree to comply therewith as such relate
to the credit facilities and accommodations as provided to the
Obsidian Parties pursuant to the terms of this
Agreement.
6.
Remedies . Upon the occurrence of a default, the Bank shall
have all remedies provided in the Loan Documents and/or otherwise
available under applicable law.
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7.
Due Date/No Further Forbearance Implied . THE OBSIDIAN
PARTIES ACKNOWLEDGE THAT NOTWITHSTANDING ANYTHING IN THE LOAN
DOCUMENTS TO THE CONTRARY, AND WITHOUT FURTHER DEMAND OR ACTION BY
THE BANK, ALL OF THE OBLIGATIONS WILL BE DUE AND PAYABLE ON THE
EARLIER OF A DEFAULT OR 5:00 P.M. (DANVILLE, ILLINOIS TIME) ON
APRIL 30, 2005. The Obsidian Parties also acknowledge that the
Bank has no obligation to extend
