Exhibit
10.1
FORBEARANCE AGREEMENT
THIS
FORBEARANCE AGREEMENT (this “Agreement”) is
entered into as of November 12, 2007 (the “Closing
Date”), by and between
SOLUTION TECHNOLOGY INTERNATIONAL, INC.
, a corporation organized and in good standing in the State of
Delaware (the “Borrower”), whose address is Garrett
Information Enterprise Center, 685 Mosser Road, Suite 11, McHenry,
Maryland 21541 and
CROSSHILL GEORGETOWN CAPITAL, L.P.
, whose
address is 201 North Union Street, Suite 300, Alexandria, Virginia
22314 (the “Lender”).
RECITALS
A.
The
Lender provided the Borrower with a secured line of credit in
the original maximum principal amount of Seven Hundred Fifty
Thousand Dollars ($750,000) (the “Loan”) pursuant
to the terms of that certain Loan and Security Agreement dated
January 10, 2003 between the Borrower and Lender (the Loan and
Security Agreement, as thereafter amended from time to time,
is hereinafter called the “Loan
Agreement”).
B.
The
Obligations under the Loan are secured by the Collateral
described in the Loan Agreement.
C.
The
Loan matured on April 30, 2007 and the Borrower has not repaid
all of the Obligations on the Revolving Maturity Date as
required under the Loan Documents. The failure to pay the
Obligations in full on the Revolving Maturity Date constitutes
an Event of Default (the “Existing Default”) under
the Loan Documents.
D.
The
Borrower has requested
that the Lender forbear from exercising its rights and
remedies as a result of the Existing Default and the Lender
has agreed to forbear as provided in this
Agreement.
AGREEMENTS
NOW
THEREFORE, in consideration of the premises, the mutual
agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower and the Lender hereby agree as
follows:
1.
RECITALS AND DEFINITIONS .
The Borrower and the Lender agree that the Recitals above are a
part of this Agreement and are correct in all material respects.
Unless otherwise expressly defined in this Agreement, terms defined
in the Loan Agreement shall have the same meaning under this
Agreement.
2.
OUTSTANDING LOAN AMOUNTS .
The Borrower agrees that as of October 25, 2007, the outstanding
principal balance under the Loan is $640,000.00, interest has been
paid through October 1, 2007. The Borrower acknowledges and agrees
that all principal and interest are due without offset or defense
of any kind or nature and that as of the Closing Date, the Borrower
is unable to pay the Obligations in full. The unpaid Obligations
continue to accrue interest at the fixed rate of twelve percent
(12%) per annum (the “Interest Rate”) of which seven
and a half percent (7.50%) represent regular interest and four and
a half percent (4.50%) penalty interest.
3.
NO FURTHER ADVANCES. From
and after the Closing Date, no further Advances will be permitted,
or requested, by Borrower, under the Loan Agreement.
4.
REPAYMENT .
During and after the Forbearance Period (as hereinafter defined),
the Borrower shall continue to make payments of interest and
principal as follows:
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Principal and Interest
Payment:
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Payable:
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Estimated Payment
Periods:
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$140,000
plus regular interest due
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When
the Borrower receives the initial $500,000 in equity
investment including regular interest due as part of a $3M
equity investment under negotiation.
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On
or about November 15, 2007
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$300,000
plus regular interest due
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When
the Borrower receives a subsequent $1,000,000 investment as
part of a $3M equity investment currently under
negotiation.
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On
or about December 31, 2007
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$200,000
plus regular and penalty interest, and applicable forbearance
fees
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When
the Borrower receives the final $1,500,000 investment as part
of a $3M equity investment under negotiation.
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On
or about March 31, 2008
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Alternative Payment Scenario:
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$640,000
plus regular & penalty interest and forbearance
fees
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If
Borrower receives the entire $3M equity investment as a single
investment then the Borrower will pay the entire outstanding
principal amount, regular and penalty interest, and
forbearance fees
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On
or before December 31, 2007
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All
unpaid Obligations, including, without limitation, all accrued
and unpaid interest, principal and all unpaid Forbearance Fees
shall be due and payable on the termination of the Forbearance
Period.
5.
FORBEARANCE FEE .
In
addition to all other fees payable by the Borrower under this
Agreement, in consideration of the Lender’s willingness to
enter into this Agreement, the Borrower shall pay to the Lender a
non refundable fee in an amount equal to two percent (2.0%) of the
highest unpaid balance of the Obligations during any calendar month
or any portion of a calendar month (the “
Forbearance Fee ”).
The Forbearance Fee shall be calculated on the first day of each
month for the immediately preceding calendar month and shall be
added to the unpaid principal balance of the Obligations. The
Forbearance Fee is considered earned on the first day of each month
and is not refundable. The Forbearance Fee shall be paid in full on
the termination of the Forbearance Period.
6.
FORBEARANCE PERIOD .
During the period from the Closing Date until the earlier of (the
“
Forbearance Period ”)
(a) March 31, 2008 or (b) the occurrence of a Forbearance Default
(as hereinafter defined), the Lender agrees that it will not take
any further action against Borrower or exercise or enforce any
right or remedy provided for in the Loan Documents or otherwise
available to it, at law or in equity (including taking any action
against any property in which Borrower has any interest). All
unpaid Obligations shall be due and payable in full on the
termination of the Forbearance Period.
7.
ADDITIONAL FEES .
The Borrower shall pay the Lender all out-of-pocket costs, fees and
expenses incurred by or on behalf of the Lender in connection with
the preparation, negotiation, execution and delivery of this
Agreement and any and all of the other documents related hereto,
including, without limitation, the Lender’s legal fees and
expenses.
8.
CONSISTENT CHANGES .
The Loan Documents are hereby amended wherever necessary to reflect
the changes described above.
9.
CONTINUING VALIDITY .
The Borrower understands and agrees that in entering into this
Agreement, Lender is relying upon Borrower’s representations,
warranties, and agreements, as set forth in the Loan Documents.
Except as expressly modified pursuant to this Agreement, the terms
of the Loan Documents remain unchanged and in full force and
effect. The Lender’s agreement to modifications to the
existing Obligations pursuant to this Agreement in no way shall
obligate Lender to make any future modifications to the
Obligations. Nothing in this Agreement shall constitute a
satisfaction of the Obligations. It is the intention of Lender and
the Borrower to retain as liable parties all makers and endorsers
of Loan Documents, unless the party is expressly released by Lender
in writing. No maker, endorser, or guarantor will be released by
virtue of this Agreement. The terms of this paragraph apply not
only to this Agreement, but also to
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