FORBEARANCE AGREEMENTForbearance Agreement |
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DND TECHNOLOGIES INC | MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC | ASPECT SYSTEMS, INC.. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Merrill Lynch
FORBEARANCE AGREEMENT
This FORBEARANCE AGREEMENT (the “Forbearance Agreement”) is entered into as of July 17, 2006 and will serve to confirm certain agreements of MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC. (“MLBFS”), Aspect Systems, Inc, (“Customer”), DND Technologies, Inc. (“DND”), and Douglas N. Dixon (“Dixon”) with respect to the following:
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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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A certain UNCONDITIONAL GUARANTY dated as of May 14, 2004 respectively, and given to MLBFS by Dixon (the “Personal Guaranty”); |
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A certain UNCONDITIONAL GUARANTY dated as of November 4, 2005 respectively, and given to MLBFS by DND respectively (the “Business Guaranty); |
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All other agreements between MLBFS and Customer, Dixon, 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, Dixon, 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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(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. |
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 375 East Elliot Road, Suite 6, Chandler, AZ 85225.
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) Merrill Lynch Business Financial Services, Inc., 222 North LaSalle Street, 17th Floor, Chicago, IL 60601 Attention: Martin Aguilera, or (ii) 2356 Collections Center Drive, Chicago IL 60693. 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.
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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:
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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. |
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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. |
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 (bot






