EXHIBIT 10.1
FORBEARANCE AGREEMENT
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Whereas, Winfield Capital Corp. is a Small Business Investment Company
("SBIC") licensed and regulated by the U.S. Small Business Administration
("SBA") in accordance with the Small Business Investment Act of 1958, as
amended, (the "Act") and the regulations promulgated thereunder;
Whereas, as of March 23, 2005, Winfield Capital Corp. ("Winfield") is
indebted to SBA, in the approximate amount of $4,997,111.73, plus interest which
continues to accrue after March 23, 2005;
Whereas, Winfield has violated SBA's regulations with respect to
capital impairment and acknowledges that SBA is entitled to a judgment and to be
appointed Receiver pursuant to the Act;
Whereas, SBA agrees to temporarily forebear on seeking the above
mentioned remedies, based on the conditions set forth in this agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. As of March 23, 2005, Winfield is indebted to SBA in the
approximate amount of $4,997,111.73, plus interest which continues to accrue
after March 23, 2005 ("the Indebtedness"). Winfield shall pay the Indebtedness
to SBA by June 30, 2005 (the "final maturity date"). The parties acknowledge and
agree that the foregoing Indebtedness is being reviewed by SBA in order to
satisfy the parties that all interest has been applied properly in conformity
with SBA guidelines. SBA will determine the correct amount of the Indebtedness
and the parties will agree on that final amount within thirty days.
2. If any one or more of the following events listed below ("events
of default") shall occur and remain uncured for a period of fifteen (15) days
after the date of the letter from SBA to Winfield stating the event of default,
the entire unpaid balance of the principal and interest of the outstanding
indebtedness shall become immediately due and payable and without the necessity
of any demand, presentment, protest or notice upon Winfield, all of which are
expressly waived by Winfield. In addition, SBA may file and enforce the Consent
to Receivership, which is to be executed by Winfield simultaneously with the
execution of this Agreement, and apply to the U.S. District Court for the
appointment of SBA as Receiver and for a money judgment.
(a) Failure by Winfield to make payment of the Indebtedness
pursuant to the terms of this Agreement;
(b) Any violation of SBA's Act or Regulations by Winfield
that SBA is not currently aware of;
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EXHIBIT 10.1
(c) Material Adverse Change in the financial condition of
Winfield's operations including but not limited to, any
material reduction, other than the disposition of assets
(even below their carrying value) to repay SBA
indebtedness, in the value of Winfield's remaining
assets or any act of Winfield which in the reasonable
opinion of SBA imperils the prospect of full performance
or satisfaction of Winfield's obligations herein. For
purposes of this subsection, a material adverse change
shall mean a 50% decline in the value of the equity of
the remaining assets (above SBA's debt);
(d) The rendering of any judgment against Winfield or the
occurrence of any attachment of any of its properties
involving in excess of $50,000 which shall not be paid,
stayed on appeal, discharged, bonded, or dismissed for a
period of thirty (30) days or more;
(e) Dissolution of the licensee;
(f) Indictment or conviction of any of the directors or
officers of the Licensee for any unlawful act other than
minor traffic and similar offenses.
3. Remedies for Events of Default
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In the event of any event of default by Winfield:
(a) require Winfield to prepare a final accounting of the
remaining assets to be submitted to SBA;
(b) entitle SBA to file the stipulated settlement and
consent to receivership and judgment;
(c) execute and provide SBA with a copy of such
documentation as shall be reasonably necessary to
demonstrate to SBA that Winfield shall no longer operate
as an SBIC licensed by SBA and will no longer continue
to hold itself out as such.
The above listed remedies shall in no event affect SBA's rights and
remedies available to it pursuant to the Act, including but not limited to,
obtaining a receivership of Winfield in the event Winfield engages in any acts
or practices which constitute a violation of the Act or regulations which SBA is
not aware of at this time.
4. Surrender of License
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Within 90 days of complete repayment to SBA of all Indebtedness owed by
Winfield to SBA, Winfield shall surrender its SBIC operating license and present
to SBA evidence of a corporate resolution amending its Articles of Incorporation
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EXHIBIT 10.1
and bylaws, to eliminate all references to SBA and the SBIC program; provide SBA
with an affirmation, signed by an appropriate senior officer of the Licensee and
subject to the approval of SBA, to the effect that Winfield will no longer hold
itself out as an SBIC.
5. Miscellaneous
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(a) All notices, requests and other communications pursuant
to the Agreement must be in writing and transmitted by
one of the following: (i) hand delivery; (ii) facsimile
or e-mail with the original thereof being sent within 24
hours thereafter by regular mail; (iii) certified mail
return receipt requested; or (iv) overnight courier
service;
(b) All notices as described above shall be addressed as
follows:
(i) to SBA:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Financial Analyst
Account Resolution Branch
Office of Liquidation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
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Fax ▇▇▇-▇▇▇▇
▇▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇
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(ii) to ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Capital Corp.
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▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
914 949-2600
Fax ▇▇▇-▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
▇▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇
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(iii) copies to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
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Fax ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇
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AND
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EXHIBIT 10.1
U.S. Small Business Administration
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
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Fax ▇▇▇-▇▇▇-▇▇▇▇
(c) No failure or delay on the part of SBA in the exercise
of any right, power or privilege hereunder shall operate
as a waiver of any such right, power or privilege, nor
shall any such failure or delay preclude any other or
further exercise thereof;
(d) No modification or waiver of any provision of the
Agreement shall be effective unless in writing and
signed by the parties hereto:
(e) The rights and obligations of Winfield under this loan
agreement shall not be assignable without the prior
written consent of SBA;
(f) Winfield hereby waives trial by jury in any litigation
with respect to, in connection with, or arising out of
the Agreement, and Winfield hereby waives the right to
interpose any set-off, counterclaim, cross-claim in
connection with any such litigation by SBA unless such
set-off, counterclaim, cross-claim arises out of the
Agreement.;
(g) If any provision of the Agreement is declared invalid,
such action shall not invalidate any other provision;
(h) This Agreement is to be construed and enforced in
accordance with federal law;
WITNESS WHEREOF, the parties have caused this agreement to be duly executed on
the 6th day of April 2005.
Winfield Capital Corp.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
United States Small Business Administration
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Director, Office of Liquidation
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