December 15, 1997 Mr. Stan Berney Berney Properties, Inc. 18750 Hale Ave. Irvine, CA 92714 Dear Stan: In consideration for your forgiveness of certain debts, as defined below, owed by Applied Data Communications, Inc. (the "Company") to Palais Group,...
EXHIBIT 10.48
ADC Applied Data Communications
December 15, 1997
▇▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Properties, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇▇:
In consideration for your forgiveness of certain debts, as defined below, owed
by Applied Data Communications, Inc. (the "Company") to Palais Group, Inc.
("Palais"), the Company hereby proposes (the "Agreement") to exchange shares
(the "Shares") of the Company's Preferred Stock, Series B convertible into
Common Stock for such debt at an exchange rate equivalent to $1.00 of debt
forgiveness per share of Common Stock. All debts owed to you by the Company
aggregate approximately $1,029,411. By accepting this Agreement, you hereby
acknowledge that the $1,029,411 of debts described hereinabove, constitute the
entire amount of debt owed to you by the Company as of the date of this
Agreement. The debts owed to you by the Company that you hereby forever forgive
and discharge in consideration of the Company's delivery to you of the Preferred
Stock (as described below) evidenced by an appropriate stock certificate, and
registered in the name of Palais Group, are as follows:
(i) all past due rent, accrued but unpaid by the Company to Palais, relating to
the Company's occupancy of that office and warehouse facility located at ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇, ▇▇, owned by Palais, such unpaid rents totaling an
aggregate of approximately $310,000 in principal amount excluding accrued
interest on such amount, totaling an aggregate of approximately $106,289 as of
December 31, 1997, for a combined total of $416,289, and
(ii) all property and assets that you gave up through foreclosure initiated by
the mortgage holder on such property, such foreclosure necessitated by failure
of the Company to make the aforesaid rent payments on a timely basis. The fair
market value of such property and assets, net of applicable mortgage, has been
determined to aggregate approximately $429,000, excluding accrued interest on
the fair market value (net) of such property and assets, totaling an aggregate
of approximately $128,003 as of December 31, 1997, for a combined total of
$557,003, and
(iii) various legal expenses related to the seizure of said property by the
mortgage holder, the National Bank of Southern California, billed by ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇, to Palais Group, and paid on their behalf by Palais,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ Properties, totaling $56,118.82 plus $10,082.00 in
interest for a total of $66,200.82.
Pursuant to this Agreement, the Company will exchange these debts owed totaling
an aggregate of $1,039,493, exchangeable at the rate of $1.00 per share of
Common Stock, for 10,395 shares of the Company's Series B Preferred Stock
("Preferred Stock"), equivalent to 1,029,411 shares of common stock. A summary
legal description of the Shares is included in the attached private placement
memorandum. This document is being used in conjunction with ADC's current
private placement offering to potential investors in the Company, and is
provided to you for your information.
In exchange therefore, Palais shall release ("Release") ADC from all debts
heretofore incurred by ADC from Palais. The Release shall be effective upon both
the execution and delivery of this document and delivery of the Shares
identified in paragraph 1 above. The Release shall continue to be effective
despite the possible discovery of facts different from or in addition to those
that the parties to this agreement now know or believe to be true with respect
to the matters herein released. Palais and ADC acknowledge that they have been
informed by their respective attorneys of the import of Section 1542 of the
Civil Code of the State of California. Section 1542 provides as follows:
"A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor."
Palais and ADC do hereby waive and relinquish all rights and benefits that each
of them may have under Section 1542 of the Civil Code.
Please sign below to indicate your acceptance of this Agreement for Exchange of
Debt.
APPLIED DATA COMMUNICATIONS, INC.
Date: 12-15-97 By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------- -----------------------------
▇▇▇▇▇▇ ▇. ("▇▇▇") ▇▇▇▇
Chief Executive Officer
AGREED AND ACCEPTED:
PALAIS GROUP
Date: 12-30-97 By: ▇▇▇▇▇▇ Properties, Inc.
-------- General Partner
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Treasurer
Date: 12-30-97 By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------- -------------------------
▇▇▇▇▇▇ ▇. "▇▇▇" ▇▇▇▇
General Partner
Applied Data Communications, Inc.
Computation of Principal/Interest
Palais Group Rent
Principal Interest
Beginning Add Delete Ending Beginning Add Delete Ending
Balance Accrued, April 1, 1992 $102,000 $102,000 $ $
Additional Rent, FY93 $169,000 $169,000 $
Payments, FY93 $ $ $ $
Interest, FY93 7.70% $
Balance, March 31, 1993 $102,000 $169,000 $ $271,000 $ $ $ $
Balance Accrued, April 1, 1993 $271,000 $271,000 $ $
Additional Rent, FY94 $ 39,000 $ 39,000 $
Payments, FY94 $ $ $ $
Interest, FY94 (9 mo.) 7.70% $ $16,776 $ 16,776
Balance, March 31, 1994 $271,000 $39,000 $ $310,000 $ $16,776 $ $ 16,776
Balance Accrued, April 1, 1994 $310,000 $310,000 $ 16,776 $ 16,776
Additional Rent, FY95 $ $
Payments, FY95 $ $ $ $
Interest, FY95 7.70% $ $ 23,870 $ 23,870
Balance, March 31, 1995 $310,000 $ $ $310,000 $ 16,776 $23,870 $ $ 40,646
Balance Accrued, April 1, 1995 $310,000 $310,000 $ 40,646 $ 40,646
Additional Rent, FY96 $ $
Payments, FY96 $ $ $ $
Interest, FY96 7.70% $ $ 23,870 $ 23,870
Balance, March 31, 1996 $310,000 $ $ $310,000 $ 40,646 $23,870 $ $ 64,516
Balance Accrued, April 1, 1996 $310,000 $310,000 $ 64,516 $ 64,516
Additional Rent, FY97 $ $
Payments, FY97 $ $ $ $
Interest, FY97 7.70% $ $ 23,870 $ 23,870
Balance, March 31, 1997 $310,000 $ $ $310,000 $ 64,516 $23,870 $ $ 86,386
Balance Accrued, April 1, 1997 $310,000 $310,000 $ 86,386 $ 86,386
Additional Rent, FY98 $ $
Payments, FY98 $ $ $ $
Interest, FY98 (9 mo.) 7.70% $ $ 17,903 $ 17,903
Balance, December 31, 1997 $310,000 $ $ $310,000 $ 86,386 $17,903 $ $106,289
Applied Data Communications, Inc.
Computation of Principal/Interest
Palais Group Capital Loss
Principal Interest
Beginning Add Delete Ending Beginning Add Delete Ending
Balance Accrued, April 1, 1992 $ $ $ $
Additional Loss, FY93 $ $
Payments, FY93 $ $ $ $
Interest, FY93 7.70% $
Balance, March 31, 1993 $ $ $ $ $ $ $ $
Balance Accrued, April 1, 1993 $ $ $ $
R.E. Value 2300000 $ $ $
Debt Appl Mar 94 1000000 $ $ $ $
Palais % 33.00% $429,000 $429,000 $
Interest, FY94 (9 mo.) 7.70% $ $ 4,129 $ 4,129
Balance, March 31, 1994 $ $429,000 $ $429,000 $ $ 4,129 $ $ 4,129
Balance Accrued, April 1, 1994 $429,000 $429,000 $ 4,129 $ 4,129
Additional Loss, FY95 $ $
Payments, FY95 $ $ $ $
Interest, FY95 7.70% $ $33,033 $ 33,033
Balance, March 31, 1995 $429,000 $ $ $429,000 $ 4,129 $33,033 $ $ 37,162
Balance Accrued, April 1, 1995 $429,000 $429,000 $37,162 $ 37,162
Additional Loss, FY96 $ $
Payments, FY96 $ $ $ $
Interest, FY96 7.70% $ $33,033 $ 33,033
Balance, March 31, 1996 $429,000 $ $ $429,000 $37,162 $33,033 $ $ 70,195
Balance Accrued, April 1, 1996 $429,000 $429,000 $70,195 $ 70,195
Additional Loss, FY97 $ $
Payments, FY97 $ $ $ $
Interest, FY97 7.70% $ $33,033 $ 33,033
Balance, March 31, 1997 $429,000 $ $ $429,000 $70,195 $33,033 $ $103,228
Balance Accrued, April 1, 1997 $429,000 $429,000 $103,228 $103,228
Additional Loss, FY98 $ $
Payments, FY98 $ $ $ $
Interest, FY98 (9 mo.) 7.70% $ $24,775 $ 24,775
Balance, December 31, 1997 $429,000 $ $ $429,000 $103,228 $24,775 $ $128,003
Applied Data Communications, Inc.
Computation of Principal/Interest
Palais Group Legal
Principal Interest
Beginning Add Delete Ending Beginning Add Delete Ending
Balance Accrued, April 1, 1992 $ $ $ $
Additional Loss, FY93 $ $
Payments, FY93 $ $ $ $
Interest, FY93 7.70% $
Balance, March 31, 1993 $ $ $ $ $ $ $ $
Balance Accrued, April 1, 1993 $ $ $ $
$ $
$ $ $ $
$ $ $
$ $ $
Balance, March 31, 1994 $ $ $ $ $ $ $ $
Balance Accrued, April 1, 1994 $ $ $ $
$ $
$ $ $ $
7.70% $ $ $
Balance, March 31, 1995 $ $ $ $ $ $ $ $
Balance Accrued, April 1, 1995 $ $ $ $
Expense Incurred May $56,119 $56,119 $
Payments, FY96 $ $ $ $
Interest, FY96 7.70% $ $2,161 $2,161
Balance, March 31, 1996 $56,119 $56,119 $ $2,161 $2,161
Balance Accrued, April 1, 1996 $ $56,119 $56,119 $2,161 $2,161
Additional Loss, FY97 $ $
Payments, FY97 $ $ $ $
Interest, FY97 7.70% $ $4,321 $4,321
Balance, March 31, 1997 $56,119 $ $ $56,119 $2,161 $4,321 $ $6,482
Balance Accrued, April 1, 1997 $56,119 $56,119 $6,482 $6,482
Additional Loss, FY98 $ $
Payments, FY98 $ $ $ $
Interest, FY98 (9mo.) 7.70% $ $3,241 $3,241
Balance, December 31, 1997 $56,119 $ $ $56,119 $6,482 $3,241 $ $9,723