**EXHIBIT10.1**

 

**FORBEARANCE AGREEMENT**

 

THISFORBEARANCE AGREEMENT (this “Agreement”) is dated as of July 31, 2009 (the“Effective Date”), by and among HERCULES TECHNOLOGY GROWTH CAPITAL, INC., aMaryland corporation (“Lender”), and InfoLogix, Inc., a Delaware corporation (“Infologix”), InfologixSystems Corporation, a Delaware corporation (“ISC”), Embedded Technologies,LLC, a Delaware limited liability company (“Embedded”), Opt Acquisition, LLC, aPennsylvania limited liability company (“Opt”) and InfoLogix — DDMS, Inc.,a Delaware limited liability company (“DDMS”, and together with Infologix, ISC,Embedded and Opt, collectively hereinafter referred to as “Borrower”).

 

**RECITALS**

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A.            Lender andBorrower entered into that certain Loan and Security Agreement dated as of May 1,2008 (as amended, restated, modified and in effect from time to time, the “LoanAgreement”), pursuant to which Lender, among other things, made loans toBorrower (the “Loans”), which are evidenced by (a) a Secured RevolverPromissory Note dated as of May 31, 2009 in the stated principal amount ofNine Million US Dollars ($9,000,000) and (b) a Secured Term PromissoryNote dated as of May 31, 2009 in the stated principal amount of ElevenMillion Four Hundred Thousand US Dollars ($11,400,000) (together, the “Notes”).

 

B.            In order tosecure the prompt payment and performance of all obligations owing by Borrowerto Lender under the Loan Agreement, Borrower granted Lender a first-priority,perfected security interest in and lien (the “First Priority Lien”) uponsubstantially all of Borrower’s assets, including, without limitation, allaccounts, chattel paper, deposit accounts, documents, equipment, generalintangibles, instruments, inventory, investment property, letters of credit,letter-of-credit rights, tort claims, and any proceeds thereof (collectively,the “Collateral”) subject only to Permitted Liens.  The First Priority Lien has been validlyperfected and extends to all the cash proceeds of the Collateral, including,but not limited to, all of Borrower’s cash on hand (the “Cash Collateral”).

 

C.            To the extentnot otherwise defined herein, all capitalized terms shall have the meaningsattributed to them under the Loan Agreement.

 

D.            Pursuant to Section 7.24 of the Loan Agreement, theFundamental Event Closing was to have occurred on or before July 31,2009.  The Fundamental Event Closing hasnot occurred by such date and, as a result, an Event of Default hasoccurred and is continuing under Section 9.2 of the Loan Agreement (the “SpecifiedDefault”).

 

E.             Lender iswilling to forbear from exercising its remedies under the Loan Agreement as aresult of the Specified Default, subject to the terms and conditions, and forthe period specified in this Agreement.

 

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**AGREEMENT**

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NOW, THEREFORE, in consideration of theforegoing and the mutual undertaking set forth below, the parties agree asfollows:

 

1.             Forbearance. Absent the occurrence of any failure by Borrower to perform itsobligations set forth in this Agreement, Lender agrees to forbear from exercisingany remedies available to it under the Loan Agreement, any of the other LoanDocuments or Article 9 of the Uniform Commercial Code, including withoutlimitation any right of set-off, from the date of this Agreement through andincluding the earlier of (i) September 30, 2009 and (ii) theoccurrence of a Forbearance Termination Event (as defined below) (such period,the “Forbearance Period”).

 

2.             Forbearance Termination Events. The occurrence of any one or more of the following events after the datehereof shall constitute a “Forbearance Termination Event” under this Agreement:

 

(i)       Borrower fails to pay whendue and payable principal, interest, and any other applicable fees under and inaccordance with the Loan Agreement (including, without limitation, the paymentof interest of $267,058.75 and $267,702.23 on August 3(1), 2009 and September 1,2009, respectively);

 

(ii)      Borrower fails to provideLender evidence that the events listed on Schedule A to this Agreement haveoccurred on the dates set forth therein;

 

(iii)     the failure after the datehereof of any Borrower to comply with any of the terms or undertakings of thisAgreement;

 

(iv)     the date that any Borroweror any Affiliate thereof or any Person or entity claiming by or through anyBorrower joins in, assists, cooperates or participates as an adverse party inany suit or other proceeding against Lender or any of its Affiliates relatingto the indebtedness referred to as the Secured Obligations or any amounts owinghereunder in connection with or related to any of the transactions contemplatedby the Loan Documents, this Agreement or any documents, agreements orinstruments executed in connection with any of the foregoing; or

 

(v)      an Event of Default (otherthan the Specified Default) occurs pursuant to the Loan Documents; providedthat, (a) Borrowers shall not be in default under Section 7.20(c) ofthe Loan Agreement so long as they have unrestricted cash of no less than 

 

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(1) FirstBusiness Day of the month.

 

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$1,500,000 at any time during the Forbearance Period,(2) and (b) Borrower’sentry into this Agreement and Borrower’s taking the actions contemplated inthis Agreement including without limitation the Schedule A hereto shall notconstitute an Event of Default under the Loan Documents.

 

3.             Lender’s Rights and Remedies. Upon the termination of the Forbearance Period, the agreements of theLender to forbear from exercising its rights and remedies in respect of theSpecified Default shall automatically, without the requirement of any notice toBorrower, terminate and the Lender shall be free in its sole and absolutediscretion to proceed to enforce any or all of its rights and remedies setforth in this Agreement, the Loan Agreement, the other Loan Documents andapplicable law, including, without limitation, the right to demand theimmediate repayment of the Loans and the right to immediate repayment of allother Secured Obligations in full

 

Any deficiency which existsafter disposition of the Collateral will be paid immediately by Borrower to Lender.  Any excess will be returned, without interestand subject to the rights of third parties, to Borrower by Lender.

 

Lender’s rights and remedies under this Agreementshall be cumulative and in addition to Lender’s rights and remedies under theLoan Documents and any other agreement between Lender and Borrower.  Lender shall have all other rights andremedies not inconsistent herewith as provided by applicable law. No exerciseby Lender of one right or remedy shall be deemed an election, and no waiver byLender of any default on Borrower’s part shall be deemed a continuingwaiver.  No delay by Lender shallconstitute a waiver, election or acquiescence by Lender.

 

4.             ForbearanceFee. Borrower shall pay to Lender a forbearance fee of $412,171.41 equal totwo percent (2%) of the Existing Indebtedness (as defined in Section 6below). Such forbearance fee shall be due and payable on August 3, 2009.

 

5.             Release. In consideration of the foregoing, Borrower andits successors, assigns, agents, and subsidiaries (collectively, the “Releasors”),as applicable, release and forever discharge Lender, and its parents,subsidiaries, affiliates, officers, directors, employees, agents, attorneys,predecessors, successors and assigns, both present and former (collectively, togetherwith Lender, the “Releasees”), of and from any and all manner of actionand actions, causes of action, suits, debts, controversies, damages, judgments,executions, claims and demands arising out of the Loan Agreement, asserted orunasserted, in law or in equity, against any of the Releasees which anyReleasor ever had or now has on the date hereof, upon or by reason of anymanner, cause, causes or thing whatsoever, whether presently existing,suspected, known, unknown, contemplated or anticipated.  Releasors specifically agree, represent, andwarrant that the matters released herein are not limited to matters which areknown or disclosed, and Releasors hereby waive any and all rights and benefitswhich Releasors now have, or in the future 

 

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(2) This will allow payment offorbearance fee and interest due during Forbearance Period without violating7.21(c).

 

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may have, conferred upon Releasors byvirtue of the provisions of Section 1542 of the Civil Code of the State ofCalifornia which provides as follows:

 

A GENERAL RELEASE DOES NOTEXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS ORHER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER,MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

 

6.             Affirmation. The recitals above are herebyincorporated by reference as though fully set forth herein.  Without limiting the generality of theforegoing:

 

a)     Borrower acknowledges that, as of theEffective Date, the total principal amount due Lender, including capitalizedinterest payments paid in kind and added to the principal amount of the TermLoan, is $20,608,570,57 (the “Existing Indebtedness”);

 

b)    Borrower irrevocably and unconditionallyaffirms that the Credit Documents are in full force and effect and constitutethe valid, legal, and binding obligations of Borrower.  In connection therewith, Borrower furtheraffirms that the Lender holds a valid and enforceable lien and that said lienhas been validly perfected and extends upon all Collateral.

 

c)     Borrower further acknowledges that theSpecified Default has occurred.

 

7.             No Waiver. The forbearance granted herein is aconditional, limited, temporary forbearance relating solely to the SpecifiedDefault and shall be in effect only during the Forbearance Period. The powersconferred upon Lender by this Agreement are solely to protect its rightshereunder and under the Credit Documents and its interest in the Collateral andshall not impose any duty upon Lender to exercise any such powers.  Lender has not waived, and is not by thisAgreement waiving, any Event of Default that may exist or be continuing on theEffective Date or any Event of Default that may occur after the EffectiveDate.  No omission or delay by Lender atany time to enforce any right or remedy reserved to it shall be a waiver of anysuch right or remedy to which Lender is entitled, and shall not alter, modify,amend, or in any way affect any of the terms, conditions, obligations,covenants, or agreements contained in the Credit Documents, all of which areratified and affirmed in all respects and shall continue in full force andeffect.

 

8.             Entire Agreement. The terms and conditions of thisAgreement shall be incorporated by reference into the Loan Documents as thoughset forth in full therein.  In the eventof any inconsistency between the provisions of this Agreement and any provisionof any of the Loan Documents, the terms and provisions of this Agreement 

 

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shall govern and control.  Except to the extent specifically amended orsuperseded by the terms of this Agreement, all of the provisions of the LoanDocuments shall remain in full force and effect to the extent in effect on thedate hereof.  The Loan Documents, asmodified by this Agreement, constitute the complete agreement among the partiesand supersedes any prior written or oral agreements, writings, communications,or understandings of the parties with respect to the subject matterthereof.  Upon the Effective Date, eachreference in the Loan Documents to “this Agreement,” “hereunder,” “hereof,” orwords of like import, shall mean and be a reference to the Loan Documents asamended hereby. No modification, amendment, or waiver of any of the provisionsof this Agreement shall be effective unless in writing signed by both parties.

 

9.             Notices. All notices, reports, or other correspondenceor information to be transmitted to the parties pursuant to this Agreementshall be transmitted as set forth in the Loan Agreement.

 

10.           Successors and Assigns. The provisions of this Agreement and theLoan Documents shall inure to the benefit of and be binding on Borrower and itspermitted successor and assigns (if any). Borrower shall not assign its obligations under this Agreement or any ofthe Loan Documents without Lender’s express prior written consent, and any suchattempted assignment shall be void and of no effect.  Lender may assign, transfer, or endorse itsrights hereunder and under the Loan Documents without prior notice to Borrower,and all of such rights shall inure to the benefit of Lender’s successors andassigns.

 

11.           No Strict Construction. This Agreement is the result ofnegotiations between Borrower and Lender, has been reviewed by their respectivelegal counsel during all of the negotiations which preceded the execution ofthis Agreement, and is the product of the efforts of all parties.  Lender’s involvement in the preparation ofthis Agreement is for the convenience of all parties and the parties agree thatthe terms of this Agreement shall not be construed against Lender solely byvirtue of such preparation.

 

12.           Counterparts. This Agreement may be executed in anynumber of counterparts, any and all of which shall be deemed to be original.

 

13.           Due Authorization. Each person signing this Agreementhereby represents and warrants that he or she is authorized to so sign and thatthe execution, formation, and performance of this Agreement by the partieshereto is duly authorized.

 

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INWITNESS WHEREOF the parties have caused this Agreement to be duly executed asof the date and year first written above.

 
|   | HERCULES TECHNOLOGY GROWTH  CAPITAL, INC.   |
|--------|---------------------------------------------|
|   |                                        |
|   |                                        |
|   | By                                          | /s/ David T. Gulian |
|   | Name                                        | David T. Gulian |
|   | Title                                       | President |
|   |                                        |   |
|   |                                        |   |
|   | INFOLOGIX,  INC.                            |
|   |                                        |
|   |                                        |
|   | By:                                         | /s/  David T. Gulian |
|   | David Gulian, President                     |
|   |                                        |
|   | INFOLOGIX SYSTEMS CORPORATION               |
|   |                                        |
|   |                                        |
|   | By:                                         | /s/ David T. Gulian |
|   | David Gulian, President                     |
|   |                                        |
|   | OPT ACQUISITION LLC                         |
|   |                                        |
|   |                                        |
|   | By:                                         | /s/ David T. Gulian |
|   | David Gulian, President                     |
|   |                                        |
|   | EMBEDDED TECHNOLOGIES, LLC                  |
|   | By:  INFO LOGIX INC., its sole  Member |
|   |                                        |
|   |                                        |
|   | By:                                         | /s/ David T. Gulian |
|   | David Gulian, President                     |
|   |                                        |
|   | INFOLOGIX – DDMS, INC.                 |
|   |                                        |
|   |                                        |
|   | By:                                         | /s/ David T. Gulian |
|   | David Gulian, President                     |
|        |                                             |  |  |

 

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**Schedule A to ForbearanceAgreement**

 

Schedule Omitted for Filing

 

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