Forbearance Agreement and Fifth Amendment to the Loan and Security Agreement between the Company, FCC, LLC d/b/a First Capital, and Jack J. Walker, as Guarantor, effective as of April 29, 2010

 

3.           Temporary Forbearance.  Lender agrees to forbear until the Forbearance Termination Date (as defined below) from exercising its rights and remedies under the Loan Agreement and the other Loan Documents as a result of the Specified Defaults.  Lender reserves its rights and remedies at all times with respect to any Default under the Loan Agreement, the Guaranty, this Agreement or any other Loan Document other than a Specified Default, whether presently existing or occurring hereafter.  At any time on or after the Forbearance Termination Date, Lender may exercise any of its rights and remedies under or with respect to the Loan Agreement, the Guaranty, this Agreement and the ot her Loan Documents, whether relating to a Specified Default or otherwise, all without notice to Borrower, Guarantor or any other Person.  As used herein, “Forbearance Termination Date” means the earlier of (x) May 21, 2010, (y) the date of the occurrence of a Default other than (i) a Specified Default or (ii) a Default under any of the financial covenants set forth in Item 21 of the Schedule on or prior to April 30, 2010, and (z) the default or breach by any Obligor of any of the covenants, agreements, representations and warranties set forth in this Agreement.  Notwithstanding Lender’s agreement to forbear as set forth herein, Lender shall be entitled to exercise its right to issue Stoppage Notices under and as defined in the Subordination and Intercreditor Agreement among Lender, Borrower and First National Bank and to take such action as Lender deems appropriate to enforce the obligati ons of First National Bank and Borrower set forth therein.

 

4.           Acknowledgements of Obligors.  In order to induce Lender to enter into this Agreement and to grant the forbearance contemplated hereby, Borrower and Guarantor hereby acknowledge and agree with Lender as follows:

(a)

The facts set forth in the recitals to this Agreement are true and correct in all material respects.

“Permitted Liens” means (a) Liens or charges for current taxes, assessments or other governmental charges which are not delinquent or remain payable without any penalty, or the validity of which is contested in good faith by appropriate proceedings upon stay of execution of the enforcement thereof and for which appropriate reserves have been established in accordance with GAAP; (b) deposits or pledges to secure (i) statutory obligations, (ii) surety or appeal bonds, or (iii) bonds for release of attachment, stay of execution or injunction; (c) statutory Liens on property arising in the ordinary course of business which, in the aggregate, do not materially impair the use of such property or materially detract from the value of such property; (d) Liens exis ting on the Agreement Date and described on Item 3 of the Schedule; (e) Liens on Equipment securing all or part of the purchase price of such Equipment; provided, however, that (i) such Lien is created contemporaneously with the acquisition of such Equipment, (ii) such Lien attaches only to the specific items of Equipment so acquired, and (iii) such Lien secures only the indebtedness incurred to acquire such Equipment; (f) so long as the Investor Intercreditor Agreement is in full force and effect and no default, event of default or dispute exists thereunder, Liens in favor of GVC Capital LLC, as agent for the holders of the Investor Subordinated Debt, and (g) Liens in favor of Lender.

8.           Borrowing Base.  The Loan Agreement is amended by deleting Item 1 of the Schedule to the Loan Agreement and substituting the following in lieu thereof:

“Borrowing Base” means, at any time, an amount equal to:

 

(a)           the lesser of:

 

(i)           the Maximum Loan Amount, and

 

(ii)           the sum of:

 

(A)           85% of the dollar amount of Eligible Accounts; plus

 

(B)           the lesser of:

9.            Notification of Account Debtors.  Neither Lender’s agreement to forbear hereunder nor anything else contained in this Agreement shall limit the right of Lender to notify Customers to make payments directly to Lender with respect to Accounts.  Obligors hereby ratify the right of Lender to send such notifications to Customers and acknowledge that Lender has been and intends to continue sending such notifications to Customers.

10.           Investor Subordinated Debt.  Borrower hereby covenants and agrees in favor of Lender that (a) Borrower shall not incur the Investor Subordinated Debt unless and until Borrower has provided to Lender a fully executed original of the Investor Intercreditor Agreement, with all exhibits completed, and (b) Borrower shall cause the proceeds of the Investor Subordinated Debt to be paid to Lender for application to the Obligations to the extent necessary to cause Borrower to be in compliance with the borrowing limitations set forth in the Loan Agreement, including the amendments contained herein.

11.           Ratification of Loan Documents.  Borrower hereby restates, ratifies, and reaffirms each and every term, condition, representation and warranty heretofore made by it under or in connection with the execution and delivery of the Loan Agreement, as amended hereby, and the other Loan Documents, as fully as though such representations and warranties had been made on the date hereof and with specific reference to this Agreement and the Loan Documents.  Guarantor hereby acknowledges and agrees that the Guaranty, as amended hereby, remains in full force and effect, subject to no right of offset, claim or counterclaim, in each case both before and after giving effect to this Agreement.

12.           No Other Changes.  Except as expressly modified as set forth herein, the Loan Agreement and the Guaranty shall be and remain in full force and effect as originally written, and shall constitute the legal, valid, binding and enforceable obligation of Borrower and Guarantor, as applicable, to Lender.

13.          Forbearance Fee and Expenses.  In consideration of the accommodations made by Lender hereunder, Borrower agrees to pay to Lender (a) on May 21, 2010, or, if earlier, the date on which the Obligations are repaid in full and the Loan Agreement is terminated, a forbearance fee of $500 per day (the “Forbearance Fee”), commencing on February 15, 2010 and continuing until such payment due date, and (b) on demand, all costs and expenses of Lender in connection with the preparation, execution, delivery and enforcement of this Agreement and the other Loan Documents and any other tran sactions contemplated hereby and thereby, including, without limitation, the reasonable fees and out-of-pocket expenses of legal counsel to Lender.  Each daily installment of the Forbearance Fee shall be fully earned at 1:00 p.m., Oklahoma City, Oklahoma time on each calendar day and shall not be subject to refund or rebate.  Without limiting anything contained in the Loan Agreement, Borrower hereby irrevocably authorizes Lender to make one or more revolving loans to Borrower in the amount of such Forbearance Fee and such costs and expenses as they become due and payable in order to pay such forbearance fee and such costs and expenses.

14.           No Other Default.  To induce Lender to enter into this Agreement, Borrower hereby represents and warrants that, to Borrower’s knowledge, as of the date hereof, and after giving effect to the terms hereof, other than the Specified Defaults, there exists no Default under the Loan Agreement or any of the other Loan Documents.

15.           Release.  To induce Lender to enter into this Agreement, each Obligor (a) acknowledges and agrees that no right of offset, defense, counterclaim, claim or objection exists in favor of such Obligor or against Lender arising out of or with respect to the Loan Agreement, the Guaranty, this Agreement, any other Loan Document, the Obligations, or any other arrangement or relationship between Lender and any Obligor, and (b) releases, acquits, remises and forever discharges Lender and its affiliates and all of their past, present and future officers, directors, employees, agents, attorneys, representatives, successors and assigns from any and all clai ms, demands, actions and causes of action, whether at law or in equity, whether now accrued or hereafter maturing, and whether known or unknown, which such Obligor now or hereafter may have by reason of any manner, cause or things to and including the date of this Agreement with respect to matters arising out of or with respect to the Loan Agreement, the Guaranty, this Agreement, the other Loan Documents, the Obligations, or any other arrangement or relationship between Lender and such Obligor.

16.           Lender Not Obligated for Further Amendments.  Each Obligor acknowledges that (a) except as expressly set forth herein, Lender has not agreed to (and has no obligation whatsoever to discuss, negotiate or agree to) any restructuring, modification, amendment, waiver or forbearance with respect to the Obligations or any of the terms of the Loan Documents, (b) no understanding with respect to any other restructuring, modification, amendment, waiver or forbearance with respect to the Obligations or any of the terms of the Loan Documents shall constitute a legally binding agreement or contract, or have any force or effect whatsoever, unless and until reduced to writing and signed by authorized repr esentatives of Borrower and Lender (and, if applicable, Guarantor), and (c) the execution and delivery of this Agreement has not established any course of dealing among the parties hereto or created any obligation or agreement of Lender with respect to any future restructuring, modification, amendment, waiver or forbearance with respect to the Obligations or any of the terms of the Loan Documents.

17.           This Agreement as a Loan Document.  Each Obligor acknowledges that this Agreement constitutes a Loan Document and that any breach of any representation, warranty, covenant or agreement of any Obligor set forth herein shall constitute a Default.

18.           Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument.  Delivery of an executed counterpart of this Agreement or any other Loan Document by facsimile or e-mail shall be equally as effective as delivery of an original executed counterpart of this Agreement or such other Loan Document.  Any party delivering an executed counterpart of this Agreement or any other Loan Document by facsimile or e-mail also shall deliver an or iginal executed counterpart of this Agreement or such other Loan Document, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement or such other Loan Document.  To the fullest extent permitted by applicable law, Borrower and Guarantor each waive notice of Lender’s acceptance of this Agreement and the other Loan Documents.

19.           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the successors and permitted assigns of the parties hereto.

20.           Choice of Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Oklahoma, other than its laws respecting choice of law.

The undersigned, a Validity Guarantor in respect of the indebtedness of Borrower to Lender, hereby (a) acknowledges receipt of the foregoing Forbearance Agreement and Fifth Amendment to Loan Documents; (b) consents to the terms and execution thereof; (c) acknowledges that the Obligations of Borrower under the Loan Agreement may have increased; (d) reaffirms his obligations to Lender pursuant to the terms of the Validity Agreement to which he is a party; and (e) acknowledge that Lender may amend, restate, extend, renew or otherwise modify the Loan Agreement and any indebtedness or agreement of Borrower, or enter into any agreement or extend additional or other credit accommodations, without notifying or obtaining the consent of the undersigned and without impairing the liability of the undersigned under any Validity Ag reement for all of Borrower’s present and future indebtedness to Lender.