**Exhibit****10.6**

 

**FIFTHAMENDMENT TO FORBEARANCE AGREEMENT**

 

**THIS FIFTH AMENDMENT TO FORBEARANCE AGREEMENT**(this “***Amendment***”) isentered into this 15th day of October, 2009, by and among **HERCULES TECHNOLOGY GROWTH CAPITAL, INC.**aMaryland corporation (“***Lender***”),and **INFOLOGIX, INC.,**a Delaware corporation(“***Infologix***”),Infologix Systems Corporation, a Delaware corporation (“***ISC***”),**EMBEDDED TECHNOLOGIES, LLC,**a Delawarelimited liability company (“***Embedded***”),**OPT ACQUISITION, LLC,**a Pennsylvanialimited liability company (“***OPT***”) andInfologix — DDMS, Inc. a limited liability company (“***DDMS***”,and collectively with Infologix, ISC, Embedded and Opt, “***Borrower***”).  Capitalized terms used herein withoutdefinition shall have the same meanings given them in the Forbearance Agreement(as defined below).

 

**RECITALS**

 

**A.****           **Borrower and Lender have entered into thatcertain Loan and Security Agreement dated as of May 1, 2008, as amended bythe Amendment No. 1 to the Loan and Security Agreement dated as of November 19,2008 and theAmendment No. 2 to the Loan and Security Agreement dated as ofMay 31, 2009 (as may be further amended, restated, or otherwise modified,the “***Loan Agreement***”),pursuant to which Lender has agreed to extend and make available to Borrowercertain advances of money.

 

**B.****           **Borrower and Lender have entered into thatcertain Forbearance Agreement dated as of July 31, 2009, as amended by theAmendment to Forbearance Agreement, dated as of August 14, 2009, theSecond Amendment to Forbearance Agreement dated as of August 20, 2009, theThird Amendment to Forbearance Agreement dated as of September 23, 2009,and the Fourth Amendment to Forbearance Agreement dated as of September 30,2009 (as so amended, the “***Forbearance Agreement***”),pursuant to which Lender agreed to forbear from exercising its remedies underthe Loan Agreement as a result of the Specified Default, subject to the termsand conditions, and for the period specified in the Forbearance Agreement.

 

**C.****           **Borrower and Lender have agreed to amend theForbearance Agreement upon the terms and conditions more fully set forthherein.

 

**AGREEMENT**

 

NOW,THEREFORE, in consideration of the foregoing Recitals and intending to belegally bound, the parties hereto agree as follows:

 

**1.****            ****AMENDMENTS**.

 

**Section 1.1****           ****Amendmentsto Recitals.** Recital D ofthe Forbearance Agreement is deleted in its entirety and replaced with thefollowing new Recital D:

 

Pursuant to Section 7.24of the Loan Agreement, the Fundamental Event Closing was to have occurred on orbefore July 31, 2009.  The FundamentalEvent Closing has not occurred by such date and, as a result an Event ofDefault has occurred and is continuing under Section 9.2 of the LoanAgreement.  Pursuant to Section 7.20(c) ofthe Loan Agreement, Borrower shall maintain at all times unrestricted Cash onhand of not less than $2,500,000 (as reduced during the Forbearance Periodpursuant to the Forbearance Agreement to $1,500,000).  

 

----

 

TheBorrower has failed to maintain at all times unrestricted Cash on hand of notless than $1,500,000 during the period of July 31, 2009 through October 9,2009 and, as a result an Event of Default has occurred and is continuing under Section 9.2of the Loan Agreement.  The foregoingEvents of Default are hereinafter referred to, collectively, as the “***Specified Covenant Default***”.  Pursuant to Section 7.23 of the LoanAgreement, Borrower was required to pay Lender the remaining balance of theRestructuring Fee in the amount of $160,000 on the earliest of (i) September 30,2009, (ii) the acceleration of the Secured Obligations and (iii) paymentin full of the Secured Obligations. Borrower has failed to make the required payment of $160,000 by suchdate and, as a result, an Event of Default has occurred and is continuing underSection 9.1 of the Loan Agreement (the “***SpecifiedPayment Default***” and, collectively with the Specified CovenantDefault, the “***Specified Default***”).

 

**Section 1.2 —Amendment to Forbearance. **Section 1of the Forbearance Agreement is deleted in its entirety and replaced with thefollowing:

 

“1.           Forbearance.  Absent the occurrence of any failure byBorrower to perform its obligations set forth in the Agreement, Lender agreesto forbear from exercising any remedies available to it under the LoanAgreement, any of the other Loan Documents or Article 9 of the UniformCommercial Code, including without limitation any right of set-off, from thedate of this Agreement through and including the earlier of (i) November 12,2009 and (ii) the occurrence of a Forbearance Termination Event (asdefined below) (such period, the “Forbearance Period”).”

 

**Section 1.3 —Amendment to Forbearance Termination Events**.  Section 2 of theForbearance Agreement is hereby amended by amending and restating in itsentirety clause (v) of such Section 2 as follows:

 

(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 Borrowers maintain unrestricted Cash at all timesduring the Forbearance Period of not less than $750,000 and (b) Borrower’sentry into this Agreement and Borrower’s taking the actions contemplated inthis Agreement (including, without limitation, the actions set forth onSchedule A hereto) shall not constitute an Event of Default under the LoanDocuments.

 

**2.****            ****BORROWER’SREPRESENTATIONS AND WARRANTIES**.  Each Borrower represents and warrants that:

 

**(a)****          **Borrower has the corporate or limitedliability company power and authority to execute and deliver this Amendment andto perform its obligations under the Loan Documents and the Agreement, asamended by this Amendment;

 

**(b)****          **the execution and delivery by Borrower ofthis Amendment and the performance by Borrower of its obligations under theLoan Documents and the 

 

2

----

 

Agreement, as amended, havebeen duly authorized by all necessary corporate and limited liability companyaction on the part of Borrower;

 

**(c)****          **this Amendment has been duly executed anddelivered by Borrower and the Agreement, as amended by this Amendment is thebinding obligation of Borrower, enforceable against it in accordance with itsterms, except as such enforceability may be limited by bankruptcy, insolvency,reorganization, liquidation, moratorium or other similar laws of generalapplication and equitable principles relating to or affecting creditors’rights; and

 

Borrower understands andacknowledges that Lender is entering into this Amendment in reliance upon, andin partial consideration for, the above representations and warranties, andagrees that such reliance is reasonable and appropriate.

 

**3.****            ****LIMITATION**.  The amendments and forbearances set forth inthis Amendment and the Agreement, as amended hereby, shall be limited preciselyas written and shall not be deemed (a) to be a waiver or modification ofany other term or condition of the Loan Agreement or of any other instrument oragreement referred to therein or to prejudice any right or remedy which Lendermay now have or may have in the future under or in connection with the LoanAgreement or any instrument or agreement referred to therein; or (b) to bea consent to any future amendment or modification or waiver to any instrumentor agreement the execution and delivery of which is consented to hereby, or toany waiver of any of the provisions thereof. Except as expressly amended hereby, the Loan Agreement and the otherLoan Documents shall continue in full force and effect.

 

**4.****            ****EFFECTIVENESS**.  This Amendment shall become effective uponthe satisfaction of all the following conditions precedent:

 

**4.1****         ****Amendment**.  Borrower and Lender shall have duly executedand delivered this Amendment to Lender.

 

**4**.2.          **Fee Letter**.  Borrower shall deliver to Lender a dulyexecuted fee letter relating to the proposed restructuring described in theSummary of Revised Indicative Terms and Conditions for the InfoLogixRestructuring Proposal, dated October 14, 2009, such fee letter to be inform, scope and substance satisfactory to Lender.

 

**5.****            ****REAFFIRMATIONOF RELEASE**. In consideration of theforegoing, Borrower and its successors, assigns, agents, and subsidiaries(collectively, the “Releasors”), as applicable, release and foreverdischarge Lender, and its parents, subsidiaries, affiliates, officers,directors, employees, agents, attorneys, predecessors, successors and assigns,both present and former (collectively, together with Lender, the “Releasees”),of and from any and all manner of action and actions, causes of action, suits,debts, controversies, damages, judgments, executions, claims and demandsarising out of the Loan Agreement and the other Loan Documents, 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 any manner,cause, causes or thing whatsoever, whether presently existing, suspected,known, unknown, contemplated or anticipated. Releasors specifically agree, represent, and warrant that the mattersreleased herein are not limited to matters which are known or disclosed, andReleasors hereby waive any and all rights 

 

3

----

 

and benefits which Releasorsnow have, or in the future may have, conferred upon Releasors by virtue of theprovisions of Section 1542 of the Civil Code of the State of Californiawhich provides as follows:

 

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

 

**6.****            ****COUNTERPARTS**.  This Amendment may be signed in any number ofcounterparts, and by different parties hereto in separate counterparts, withthe same effect as if the signatures to each such counterpart were upon asingle instrument.  All counterpartsshall be deemed an original of this Amendment.

 

**7.****            ****INTEGRATION**.  This Amendment and any documents executed inconnection herewith or pursuant hereto contain the entire agreement between theparties with respect to the subject matter hereof and supersede all prioragreements, understandings, offers and negotiations, oral or written, withrespect thereto and no extrinsic evidence whatsoever may be introduced in anyjudicial or arbitration proceeding, if any, involving this Amendment; exceptthat any financing statements or other agreements or instruments filed byLender with respect to Borrower shall remain in full force and effect.

 

**8.****            ****GOVERNINGLAW; VENUE.**  THISAMENDMENT SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED INACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.  Borrower and Lender each submit to theexclusive jurisdiction of the State and Federal courts in Santa Clara County,California.

 

[signaturepage follows]

 

4

----

 

**IN WITNESS WHEREOF**, the parties have dulyauthorized and caused this Amendment to be executed as of the date firstwritten above.

 
| **BORROWER**:                        |                |       |
|--------------------------------------|---------------------|------------|
|                                 |                |       |
| **INFOLOGIX, INC.**                  |                |       |
| ** **                           |                |       |
| By:                                  | /s/ John A. Roberts |       |   |
|                                 |                |       |
| Name: Jay Roberts                    |                |       |
|                                 | ** **          | ** ** |
| Title: Chief Financial Officer       | ** **          | ** ** |
|                                 |                |       |
| **INFOLOGIX SYSTEMS CORPORATION**    |                |       |
|                                 |                |       |
| By:                                  | /s/ John A. Roberts |       |   |
|                                 |                |       |
| Name: Jay Roberts                    |                |       |
|                                 |                |       |
| Title: Chief Financial  Officer      |                |       |
|                                 |                |       |
|                                 |                |       |
| **OPT ACQUISITION, LLC**             |                |       |
|                                 |                |       |
| By:                                  | /s/ John A. Roberts |       |   |
|                                 |                |       |
| Name: Jay Roberts                    |                |       |
|                                 |                |       |
| Title: Chief Financial Officer       |                |       |
|                                 |                |       |
| **EMBEDDED TECHNOLOGIES, LLC**       |                |       |
| By: INFOLOGIX, INC. its  sole member |                |       |
|                                 |                |       |
| By:                                  | /s/ John A. Roberts |       |   |
|                                 |                |       |
| Name: Jay Roberts                    |                |       |
|                                 |                |       |
| Title: Chief Financial  Officer      |                |       |
|                                 |                |       |
|                                 |                |       |
| **INFOLOGIX — DDMS, INC.**      |                |       |
|                                 |                |       |
| By:                                  | /s/ John A. Roberts |       |   |
|                                 |                |       |
| Name: Jay Roberts                    |                |       |
|                                 |                |       |
| Title: Chief Financial Officer       |                |       |

 

----

 
| **LENDER**:                                  |                     |   |
|----------------------------------------------|--------------------------|--------|
|                                         |                     |   |
| **HERCULES TECHNOLOGY GROWTH CAPITAL, INC.** |                     |   |
|                                         |                     |   |
|                                         |                     |   |
| By:                                          | /s/ K. Nicholas Matitsch |   |   |
|                                         |                     |   |
| Name: K. Nicholas  Martitsch                 |                     |   |
|                                         |                     |   |
| Title:  Associate General Counsel            |                     |   |
|                                              |                          |        |  |

 

----