EXHIBIT 10.46
FORBEARANCE AGREEMENT
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THIS FORBEARANCE AGREEMENT (the "Agreement") is made as of March 12,
2003, by and among Integral Systems, Inc. ("Integral") and SSP Solutions, Inc.
("SSP"), retroactive to September 1, 2002.
WHEREAS, on December 21, 2001, SSP executed a promissory note (the
"Note") in favor of Integral, in the principal amount of $389,610.
WHEREAS, SSP did not make the payments due under the Note in March,
2002.
WHEREAS, on April 9, 2002, Integral gave written notice to SSP that SSP
was in default.
WHEREAS, the Note permits Integral to accelerate all amounts due under
the Note in the event of default and to confess judgment against SSP for unpaid
principal and the costs of enforcing and collecting the Note, including
reasonable attorneys' fees (collectively, "Costs").
WHEREAS, SSP acknowledges that it is in default of its obligations
under the Note.
WHEREAS, on May 17, 2002 Integral obtained a judgment against SSP in
the Circuit Court for ▇▇▇▇▇▇▇▇▇▇ County, Maryland, Case No. 232706 (the
"Maryland Judgment").
WHEREAS, the amount owed under the Maryland Judgment as of August 31,
2002 was $339,184.99.
WHEREAS, interest continues to accrue on the Maryland Judgment at the
statutory rate of 10% per annum.
WHEREAS, Integral's Costs from May 18, 2002 through December 31, 2002,
are $ 30,046.44.
WHEREAS, the Maryland Judgment does not include Costs incurred by
Integral after May 17, 2002.
WHEREAS, Integral has domesticated the Maryland Judgment in the
Superior Court for Orange County, California, Case No. 02CC12742 (the
"California Judgment").
WHEREAS, the "Note Obligation," as used herein, shall be deemed to
include the amount due under the Maryland Judgment, together with post-judgment
interest accrued and accruing, and Costs incurred by Integral after May 17,
2002, which have not yet been reduced to judgment.
WHEREAS, SSP acknowledges the accuracy of the amounts due as set forth
above, and acknowledges its obligation to pay the Note Obligation.
NOW, THEREFORE, in consideration of the mutual covenants herein and
benefits derived herefrom and other consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties, intending to be legally bound,
agree as follows:
1. RECITALS. The forgoing recitals are incorporated into and made a
part of this Agreement. The Parties acknowledge the truth and accuracy of the
statements and recitals herein.
2. PAYMENTS. SSP shall make payments to Integral in the total amount of
$400,000 (the "Cash Obligation") as follows:
2.1. Payments totaling $130,000 have been made to Integral
between August 23, 2002 and the date of this Agreement, receipt of which is
hereby acknowledged by Integral.
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2.2. The remaining $270,000 shall be paid in 13 monthly
installments of $20,000 each on the first day of each month commencing March 1,
2003, and a final installment of $10,000 on April 1, 2004.
3. ACCELERATION OF PAYMENTS. In the event SSP raises new capital,
either debt or equity, payments due under this Agreement shall be accelerated,
as follows.
3.1. SSP shall provide written notice to Integral five days
before the closing of any transaction providing new capital to SSP.
3.2. A portion of the proceeds from such capital shall be paid
to Integral to satisfy the Cash Obligation. For each $1 million in capital
raised, SSP shall pay to Integral $50,000 within five days of receipt of funds
from the closing on such transaction.
3.3. SSP will be entitled to a credit against the Cash
Obligation for amounts paid pursuant to this paragraph. The parties acknowledge
that the $400,000 amount referred to in Section 2 which represents the Cash
Obligation was calculated to include an interest component through April 1,
2004. If SSP makes any prepayments of the Cash Obligation, the Cash Obligation
amount shall be recomputed in accordance with Schedule A. If the prepayment is
only a partial prepayment, SSP shall continue to make the monthly payments set
forth in Section 2.2, with the consequence that the number of payments shall be
reduced..
4. STOCK WARRANTS. Concurrently with the execution of this Agreement,
SSP shall issue a Warrant to Purchase Common Stock in the form attached hereto
as EXHIBIT A. The Warrant to Purchase Common Stock is incorporated into this
Agreement as if set forth fully herein.
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5. THE COLLATERAL. If the Cash Obligation has not been paid in full by
June 30, 2003, SSP shall issue to Wachovia Bank, NA a stock certificate in the
name of Integral representing 400,000 shares of SSP common stock to secure the
obligations under this Agreement. SSP shall also execute an Escrow Agreement and
a Registration Rights Agreement in the forms attached hereto as EXHIBITS B AND
C. The Escrow Agreement and the Registration Rights Agreement are incorporated
into this Agreement as if set forth fully herein.
6. ACKNOWLEDGEMENT AS TO INTEGRAL'S COSTS. Concurrently with the
execution of this Agreement, SSP shall execute an Acknowledgement as to the
amount and reasonableness of Integral's Costs in the form attached hereto as
EXHIBIT D.
7. ASSET LOCATION. Concurrently with the execution of this Agreement
SSP shall provide full and complete responses to the Interrogatories and
Requests for Production of Documents attached hereto as EXHIBITS E AND F.
Integral agrees that any information provided in response to the referenced
interrogatories is confidential and shall not be used for any purpose or be
disclosed to any third party, except to the extent necessary to collect on the
Note Obligation.
8. WAIVER OF DEFENSES, COUNTERCLAIMS OR RIGHTS OF OFFSET.
8.1. SSP shall withdraw its August 1, 2002 Motion to Open or
Modify Confessed Judgment filed in the Circuit Court for ▇▇▇▇▇▇▇▇▇▇ County,
Maryland.
8.2. SSP (a) acknowledges and agrees that, as of the execution
of this Agreement, there are no defenses, counterclaims or offsets relating to
the Note, the Maryland Judgment, or the California Judgment, or the enforcement
or exercise by Integral of any of its rights, powers or remedies under or in
respect to the Note, the Maryland Judgment, or the California Judgment, or,
alternatively (b) irrevocably waives and unconditionally releases any and all
defenses counterclaims or offsets relating to the Note, the Maryland Judgment,
the California Judgment, and any Judgments that may hereafter be entered in any
court based on or arising out of the Note, the Maryland Judgment, or the
California Judgment, including, without limitation, defenses counterclaims, or
offsets that are unknown, unsuspected, unanticipated or undisclosed.
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8.3. SSP shall irrevocably and unconditionally release,
acquit, exonerate and forever discharge Integral from any and all claims,
obligations and causes of action of any sort that SSP had, now has, or could
have brought from the beginning of time until the execution of this Agreement,
including but not limited to, any claim arising out of or relating in any way to
the Note, the Maryland Judgment, or the California Judgment.
9. FORBEARANCE. In consideration of the execution and delivery of this
Agreement and SSP's compliance with the terms and conditions of this Agreement,
Integral shall forbear from taking any further legal action to collect on the
Note, the Maryland Judgment, and the California Judgment.
10. SATISFACTION OF JUDGMENTS AND CANCELLATION OF NOTE. Upon SSP's full
payment of the Cash Obligation, the Final Payment, and full and complete
compliance with all other terms of this Agreement, Integral shall execute and
file a Satisfaction of Judgment in the appropriate courts reflecting that the
Maryland and California Judgments have been paid in full. Integral shall also
return the original Note to SSP.
11. EVENTS OF DEFAULT. If any breach by SSP of any provision in this
Agreement, the Warrant to Purchase Common Stock, the Escrow Agreement, or the
Registration Rights Agreement remains incurred after thirty (30) days' written
notice and opportunity to cure, or such longer period so Integral may agree in
writing, such failure to cure shall constitute an Event of Default.
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12. INTEGRAL'S RIGHTS IN THE EVENT OF DEFAULT. If an Event of Default
occurs, Integral shall have the following remedies.
12.1. Integral's obligations under Paragraphs 9 and 10 of this
Agreement shall terminate immediately and without notice to SSP.
12.2. Integral may sell, convey, or transfer the Collateral in
accordance with the terms of the Escrow Agreement and apply the proceeds towards
the Note Obligation or, if greater, any amounts due under this Agreement at the
time of default.
12.3. In addition to the remedies set forth herein, Integral
shall continue to have all remedies available to it under the Note, the Maryland
Judgment, and the California Judgment. Such remedies include, but are not
limited to, filing a new action for confessed judgment for Costs incurred by
Integral after May 17, 2002.
13. SSP'S RIGHTS IN THE EVENT OF DEFAULT. If an Event of Default
occurs, SSP shall have the following rights.
13.1. SSP's obligations under Paragraphs 2 through 3 of this
Agreement shall terminate.
13.2. SSP shall be entitled to a credit against the Note
Obligation as follows: (a) SSP shall receive a credit for all amounts obtained
by Integral through the sale, conveyance, or transfer of the Collateral, less
the costs required by Integral to sell convey, or transfer the Collateral; and
(b) SSP shall receive a credit for all payments made to Integral pursuant to
Paragraphs 2 and 3 of this Agreement.
13.3. SSP shall be entitled to a portion of proceeds from the
sale, conveyance, or transfer of Collateral or a portion of the Collateral as
follows: (a) to the extent that proceeds received from the sale, conveyance, or
transfer of the Collateral exceed the Note Obligation, any excess shall be paid
to SSP; and (b) in the event that Integral is not required to sell, convey, or
transfer all of the Collateral to satisfy the Note Obligation, any excess
Collateral shall be returned to SSP.
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14. BANKRUPTCY PROVISIONS. SSP acknowledges and agrees that the
forbearance by Integral described herein is good and valuable consideration, and
that if SSP should file a petition under any chapter of title 11 of the United
States Code, the stay imposed by 11 U.S.C. ss. 362(a) (the "Stay") is waived as
to any and all actions by Integral on the Note, the Maryland Judgment, the
California Judgment, or the Collateral. Should a court of competent jurisdiction
determine that the foregoing sentence is not enforceable, SSP waives the right
to defend against a motion for relief from the Stay filed by Integral and agrees
to consent to any motion of Integral seeking relief from the Stay. The
provisions of this paragraph shall be binding on SSP and survive the termination
of this Agreement.
15. EXERCISE OF RIGHTS. No Failure by Integral to exercise any right,
remedy, privilege or option under this Agreement, the Note, or the Maryland or
California Judgments, or as otherwise provided by law, nor any delay by Integral
in exercising the same, shall operate as a waiver thereof; and no waiver by
Integral shall be effective unless it is in writing, and then only to the extent
specifically stated therein. Neither Integral nor any party acting as attorney
for Integral shall be liable for any acts or omissions or for any error of
judgment or mistake of fact or law, including (without limitation) any act,
omission, error or mistake resulting in the loss of or damage to any collateral
in its possession, whether before or after an Event of Default, other than as a
result of such person's willful misconduct. Integral's rights and remedies under
this Agreement shall be cumulative and not exclusive of any other right or
remedy which Integral may have.
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16. Notices.
16.1. All notices, demands and other communications made in
respect of this Agreement shall be made to the following addresses by hand
delivery, first-class mail or overnight delivery to:
If to Integral:
Mr. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, Baetjer & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to SSP:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
16.2. Except as otherwise specifically provided herein,
notices shall be deemed made and correspondence received as follows: (a) By mail
- the sooner of actual receipt or three business days following deposit in the
United States mail, postage prepaid; (b) By overnight delivery - next business
day; and (c) Rejection or refusal to accept delivery and inability to deliver
because of a changed address for which no notice was given shall be deemed
received when sent.
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17. AMENDMENTS. No term or provision of this Agreement may be varied,
changed or modified other than by an instrument in writing signed by all of the
Parties.
18. VOLUNTARILY ENTERED INTO AGREEMENT. The Parties represent that they
have carefully read this Agreement, have had the benefit of advice from their
own legal counsel, know the contents hereof, and sign the same of their own free
will, act and deed. This Agreement constitutes the entire agreement concerning
the forbearance herein and supercedes any prior or contemporaneous
representations or agreements not contained herein concerning any forbearance of
rights under the Note, the Maryland Judgment, or the California Judgment.
19. GOVERNING LAW, CONSENT TO VENUE AND JURISDICTION. This Agreement
shall be deemed to have been made in Maryland and shall be governed by the laws
of Maryland. All terms used in this Agreement which are defined in the Uniform
Commercial Code as in effect in Maryland shall have the same meanings herein as
said terms have therein, unless this Agreement, Note, the Maryland Judgment or
the California Judgment shall otherwise specifically provide. SSP consents to
the jurisdiction and venue of the courts of Maryland and to the jurisdiction and
venue of the United States District Court for the District of Maryland.
20. TIME IS OF THE ESSENCE. Time is of the essence as to the dates for
performance of all obligations set forth in this Agreement.
21. COUNTERPARTS. This Agreement may be signed in one or more
counterparts each of which shall be an original and all of which taken together
shall constitute one Agreement. Facsimile copies of these signatures may be
exchanged among the Parties and shall be treated as originals.
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22. SURVIVAL. Unless otherwise specifically provided, all
representations, warranties, covenants and agreements by SSP shall survive
termination or expiration of this Agreement.
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as of the ____th day of March 2003.
SSP SOLUTIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name:
Title:CFO
INTEGRAL SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name:
Title: EVP/CFO
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STATE OF CALIFORNIA )
) ss.
CITY/COUNTY OF Orange)
I HEREBY CERTIFY that on this 12th day of March, 2003, before me,
the undersigned, a Notary Public in and for the State aforesaid, personally
appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, who acknowledged herself/himself to be the Chief
Financial Officer of SSP SOLUTIONS, INC., personally known to me (or
satisfactorily proven) to be the person whose name is subscribed to the within
instrument and acknowledged to me that she/he executed the same for the purposes
therein contained as the duly authorized Officer of said corporation by signing,
in my presence, the name of the corporation by herself/himself as
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
WITNESS my hand and official seal.
/s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
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Notary Public
My commission expires: ______________
STATE OF ____________________)
) ss.
CITY/COUNTY OF )
I HEREBY CERTIFY that on this ___ day of ___________, 2003, before me,
the undersigned, a Notary Public in and for the State aforesaid, personally
appeared ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, who acknowledged herself to be the CHIEF FINANCIAL
OFFICER OF INTEGRAL SYSTEMS, INC., personally known to me (or satisfactorily
proven) to be the person whose name is subscribed to the within instrument and
acknowledged to me that she/he executed the same for the purposes therein
contained as the duly authorized Officer of said corporation by signing, in my
presence, the name of the corporation by herself as the Chief Financial Officer.
WITNESS my hand and official seal.
----------------------------------
Notary Public
My commission expires: ______________
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