SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) December 31, 2000
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Tumbleweed, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 333-579231 61-1327945
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State or Other Jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
2301 River Road, Suite 200, Louisville, KY 40206
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code 502-893-2441
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1900 Mellwood Avenue, Louisvile, KY 40206
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(Former Name or Former Address, if Changed Since Last Report)
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Item 1. Changes in Control of Registrant.
(a) Not applicable
Gerald Mansbach, an individual residing in Ashland, Kentucky ("Lender"),
extended a loan to TW Funding, LLC ("Borrower") in the principal amount of $4
million. Borrower used the proceeds to purchase 400,000 shares of the common
stock of Tumbleweed, Inc. (the "Company"). Members of Borrower ("Guarantors")
guaranteed payment of the Note. The Guarantors include the following officers
and directors of the Company: John A. Butorac, Jr. (Director), James M.
Mulrooney (Executive Vice President, Chief Financial Officer and Director),
David M. Roth (Director), and Gary T. Snyder (Vice President Operations). The
Borrower and the Guarantors pledged 400,000 shares and 1,900,000 shares of the
Company's stock, respectively, as collateral for the Note.
The Borrower acknowledged that it would not repay the Note on its
original maturity date of December 31, 2000. The Borrower, the Guarantors and
the Company entered into a Forbearance, Confidentiality and Amendment Agreement
as of December 31, 2000 (the "Forbearance Agreement"). The Forbearance Agreement
provides, among other things, that until March 31, 2001, the Lender will forbear
from exercising his rights and remedies, arising from the failure to repay the
Note at maturity, under the Note, related credit documents and applicable law
and from demanding immediate repayment of the Note or payment from the
Guarantors.
The Company desired to facilitate the extension of the Note's maturity
in order to maximize the stability of the Company and allow appropriate time for
its consideration of strategic alternatives. Pursuant to the Forbearance
Agreement, the Company agreed to provide certain business information to the
Lender and the Lender agreed to maintain the confidentiality of such
information.
The 2,300,000 shares pledged to secure the Note represent approximately
39% of the Company's outstanding shares. In the event that the Borrower does
not repay the Note on or before the extended maturity date of March 31, 2001,
and no further extension is agreed to by the parties, the Lender may exercise
his rights with respect to the 2,300,000 shares of the Company's stock pledged
to secure the Note. In that event, the Lender would become the beneficial owner
of approximately 41% of the Company's outstanding shares, with the power to vote
and dispose of such shares. Accordingly, pursuant to the above described
arrangements, a change of control of the Company could occur in the future.
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INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
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10.1 Forbearance, Confidentiality and Amendment Agreement dated as of
December 31, 2000, by and among TW Funding, LLC, certain
Guarantors, Tumbleweed, Inc. and Gerald Mansbach.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
TUMBLEWEED, INC.
By: /s/ Terrance A. Smith
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Name: Terrance A. Smith
Title: President
Date: January 9, 2001
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INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
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10.1 Forbearance, Confidentiality and Amendment Agreement dated as of
December 31, 2000, by and among TW Funding, LLC, certain
Guarantors, Tumbleweed, Inc. and Gerald Mansbach.
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FORBEARANCE, CONFIDENTIALITY AND AMENDMENT AGREEMENT
THIS FORBEARANCE, CONFIDENTIALITY AND AMENDMENT AGREEMENT is entered
into and effective as of December 31, 2000 (the "Agreement"), by and between (i)
TW FUNDING, LLC ("Borrower"), a Kentucky limited liability company, (ii) THE
GUARANTORS IDENTIFIED ON THE SIGNATURE PAGES HERETO ("Guarantors"), (iii)
TUMBLEWEED, INC. (the "Company"), a Delaware corporation, and (iv) GERALD
MANSBACH ("Lender"), an individual residing in Ashland, Kentucky.
RECITALS:
A. Pursuant to that certain Promissory Note dated December 31, 1998
(the "Note"), the Lender extended a loan to the Borrower in the principal amount
of FOUR MILLION DOLLARS ($4,000,000). All capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Note, unless the
context otherwise requires.
B. Pursuant to that certain Guarantee dated December 31, 1998
("Guarantee"), the Guarantors personally and jointly and severally guaranteed
the payment of all principal, interest and other amounts due under the Note.
C. Pursuant to certain Stock Pledge Agreements dated December 31, 1998
("Stock Pledge Agreements"), certain of the Guarantors pledged an aggregate of
1,900,000 shares of the Company's common stock, $.01 par value per share
("Common Stock") to secure the Guarantors' respective obligations under the
Guarantee and the Borrower pledged 400,000 shares of Common Stock to secure its
obligations under the Note. The 2,300,000 shares pledged by the Guarantors and
the Borrower are hereinafter referred to as the "Collateral."
D. Certain of the Guarantors and related parties entered into a
Shareholders Agreement with the Lender dated January 1, 1999 ("Shareholder
Agreement") which, among other things, sets forth certain voting rights relating
to a portion of the Collateral in the event of a default under the Note.
E. Borrower acknowledges that it will not repay the principal amount of
the Note, plus all accrued and unpaid interest thereon, on December 31, 2000.
Borrower further acknowledges that such failure to repay the Note constitutes a
violation of Section 3 of the Note ("Violation").
F. The Borrower and the Guarantors have requested that the Lender
forbear from exercising remedies under the Note, the Stock Pledge Agreements,
the Shareholders Agreement and the Guarantee, and under applicable law, existing
or arising as a result of the Violation and that the Lender agree to amend
Section 3 of the Note to provide that the Maturity Date of the Note shall be
extended to March 31, 2001.
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G. The Lender is willing to forbear from exercising remedies on account
of the Violation and agree to the amendment of the Note to extend the Maturity
Date of the Note to March 31, 2001, provided that the Company supplies
information concerning the Company and its business, as well as information
known by the Company with respect to any proposed sale of the Collateral or
transaction which would or could result in the sale of the Collateral, to him on
an ongoing basis until the Note is fully repaid.
H. The Company desires to facilitate the extension of the Maturity Date
of the Note in order to maximize the stability of the Company and allow
appropriate time for its consideration of strategic alternatives. The Company is
willing to provide such information to the Lender until the Note is fully
repaid, so long as the Lender agrees to maintain the confidentiality of the
information.
AGREEMENT:
NOW, THEREFORE, the parties hereby agree as follows:
1. FORBEARANCE.
1.1 REAFFIRMATION OF EXISTING DEBT. The Borrower and the Guarantors
acknowledge and confirm (a) that the outstanding unpaid principal balance of the
Note as of the date hereof is $4,000,000, (b) that the Lender has a valid and
enforceable first priority perfected security interest in the Collateral, (c)
that the Borrower's obligation to repay the outstanding principal amount of the
Note is unconditional and not subject to any offsets, defenses or counterclaims
(based upon facts known to Guarantors as of the date hereof), and (d) by
entering into this Agreement, the Lender does not waive or release any term or
condition of the Note (except as provided in Section 1.2 and Section 3 hereof),
the Guarantee, the Shareholders Agreement or the Stock Pledge Agreements
("Credit Documents") or any of his rights or remedies under such Credit
Documents or applicable law or any of the Borrower's or Guarantors' obligations
thereunder.
1.2 AGREEMENT TO FORBEAR. The Lender agrees that he shall, until March
31, 2001, forbear from exercising his rights and remedies arising from the
Violation under the Note, any of the other Credit Documents and applicable law
and from demanding immediate repayment of the Note or payment under the
Guarantee as a result of the Violation. The Lender agrees that interest accruing
on the Note during the period beginning January 1, 2001 and ending March 31,
2001 shall accrue at the rate set forth in Section 4 of the Note. Except as set
forth in this provision, nothing herein shall be deemed to constitute a waiver
of any rights or remedies the Lender may have under the Note or any of the other
Credit Documents or under applicable law. Without limiting the foregoing, after
March 31, 2001, Lender may exercise any and all rights and remedies arising from
the Violation under the Note, any of the other Credit Documents and applicable
law, including but not limited to making demand for immediate repayment of the
Note, and/or payment under the Guarantee as a result of the Violation.
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2. AMENDMENT TO NOTE.
The Note is hereby amended in accordance with this Section 2. Except as
so amended, the Note shall continue in full force and effect. Section 3 of the
Note is amended in its entirety to read as follows:
"3. PREPAYMENT; MATURITY DATE; NET CASH FLOW PAYMENTS. The
principal of this Note may be repaid in whole or in part without penalty or
premium at any time prior to the first to occur of (a) 30 days after the sale of
all or any portion of the assets of the Maker, or (b) March 31, 2001 (as
applicable, the "Maturity Date"); provided, however, that Payee shall have no
obligation to advance, and Maker shall have no right to reborrow, any amounts so
repaid. The entire outstanding principal balance, if not sooner repaid, plus all
accrued but unpaid interest thereon, shall be due and payable in full on the
Maturity Date."
3. PROVISION OF INFORMATION; CONFIDENTIALITY.
3.1 PROVISION OF INFORMATION TO THE LENDER. The Company hereby agrees
to furnish to the Lender on an ongoing basis until the Note is fully repaid,
information relating to the business, operations and financial affairs of the
Company as is reasonably requested by the Lender. Without limiting the
generality of the foregoing, the information to be provided to the Lender will
include information known to the Company with respect to any proposed sale of
the Collateral or transaction which would or could result in the sale of the
Collateral. Notwithstanding the foregoing, the Company shall not be required to
provide information if the disclosure of such information to the Lender would
violate any applicable law or regulation or any agreement to which the Company
is a party.
3.2 USE OF CONFIDENTIAL INFORMATION. The Lender agrees to keep
confidential all of the written and oral information and material obtained from
the Company and its stockholders, directors, officers, employees, agents and
representatives pursuant to this Agreement ("Confidential Information"). The
Lender shall refrain from using the Confidential Information for its own, or any
other person's or entity's advantage or commercial purposes and from directly or
indirectly disclosing or making available any Confidential Information to any
person or entity for any use whatsoever, except as permitted by this Agreement.
Without limiting the generality of the foregoing, the Lender shall not buy,
sell, or engage in any transaction relating to, any of the Company's equity
securities while in possession of any material Confidential Information.
Notwithstanding the foregoing, after March 31, 2001, the Lender shall not be
restricted from communicating or negotiating with any person or entity with whom
or which the Company or the Guarantors have been or are engaged in discussions
or negotiations.
3.3 PERMITTED DISCLOSURE. The Lender may disclose Confidential
Information to his agents, representatives and advisors who need to know such
information for the purpose of advising or assisting the Lender. The Lender
shall advise each such agent, representative and advisor who may have access to
the Confidential Information of the obligation of confidentiality imposed by
this
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Agreement and will require each of such agents, representatives and advisors,
upon receipt of any Confidential Information, to agree to be bound by the
confidentiality provisions of this Agreement and will require each of them to
refrain from using any Confidential Information for such person's use, advantage
or commercial purpose (including buying, selling or engaging in any transaction
relating to any of the Company's securities) or from making any disclosure
prohibited by this Agreement. The Lender shall take all other measures that may
be reasonably necessary to protect the confidentiality of the Confidential
Information.
3.4 PROHIBITED CONTACT. Neither the Lender, nor any agent,
representative or advisor of the Lender, shall initiate or maintain contact with
any supplier or customer of the Company or with any person or entity with whom
or which the Company or the Guarantors may be engaged in discussions or
negotiations regarding the purchase of the stock or assets of the Company or
with reference to outstanding debt of the Company, except with the prior written
consent of the Company. Notwithstanding the foregoing, after March 31, 2001, the
Lender shall not be restricted from communicating or negotiating with any person
or entity with whom or which the Company or the Guarantors have been or are
engaged in discussions or negotiations.
3.5 DISPOSITION OF CONFIDENTIAL INFORMATION. Upon full repayment of
the Note, the Lender shall promptly deliver to the Company all of the written
Confidential Information and shall retain no copies, extracts or other
reproductions thereof. All documents, memoranda, notes and other writings
whatsoever, including, but not limited to, any analyses, compilations,
forecasts, computer generated data, studies or other such materials prepared by
the Lender for his own use from the Confidential Information may be retained by
him, but shall continue to be subject to all obligations imposed by this
Agreement.
3.6 UNIQUE NATURE OF CONFIDENTIAL INFORMATION; REMEDIES FOR BREACH.
The parties agree that the agreement by the Lender to maintain confidentiality
and the Confidential Information disclosed to the Lender are of a special,
unique and extraordinary character and that the Company could be irreparably
harmed by any disclosure of the Confidential Information by the Lender in
violation of this Agreement. Therefore, the Lender waives any claim or defense
that the Company has an adequate remedy at law for the unauthorized disclosure
of Confidential Information and agrees that the Company shall be entitled to
injunctive relief to prevent such disclosures, which remedy shall not be deemed
to be the exclusive remedy for the Lender's breach of this Agreement, but shall
be in addition to all other remedies available at law or in equity.
3.7 EXCLUSIONS FROM CONFIDENTIAL INFORMATION. Confidential Information
does not include any information which (a) at the time disclosed or obtained is
in the public domain; (b) after being disclosed to or obtained by the Lender
becomes part of the public domain through no act, omission or fault of the
Lender or his agents, representatives, or advisors; (c) prior to disclosure to
the Lender was already in the Lender's possession as evidenced by written
records kept in the ordinary course of business of the Lender or by proof of
actual use by the Lender; or (d) the Lender demonstrates was received by him
from a third party who was not under any obligation of confidence to the
Company.
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4. MISCELLANEOUS.
4.1 CROSS-REFERENCES. References in this Agreement to any Section or
Subsection are, unless otherwise specified, to such Section or Subsection of
this Agreement.
4.2 CREDIT DOCUMENTS. The Borrower and Guarantors hereby confirm to the
Lender that the Note (as amended hereby) and the other Credit Documents are, and
shall continue to be, in full force and effect.
4.3 COSTS AND EXPENSES. The Borrower hereby agrees to pay on demand all
costs and expenses (including without limitation the reasonable fees and
expenses of counsel to the Lender) incurred by the Lender in connection with the
enforcement or preservation of any rights and remedies of the Lender hereunder.
4.4 COUNTERPARTS. This Agreement may be executed by the parties hereto
in several counterparts, each of which shall be deemed to be an original and all
of which shall constitute together but one and the same agreement.
4.5 GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE COMMONWEALTH OF KENTUCKY
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
4.6 BINDING EFFECT. This Agreement shall be binding upon and inure to
the to the benefit of the parties hereto, their heirs, representatives,
successors and assigns.
4.7 SEVERABILITY. The invalidity or unenforceability of any provision
hereof shall not affect the validity or enforceability of any other provision
hereof.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first written above.
BORROWER: TW FUNDING, LLC
By: /s/ James M. Mulrooney
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Title: Executive Vice President, Manager
GUARANTORS: /s/ John A. Butorac, Jr.
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JOHN A. BUTORAC, JR.
/s/ Barbara E. Butorac
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BARBARA E. BUTORAC
/s/ James M. Mulrooney
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JAMES M. MULROONEY
/s/ Gloria J. Mulrooney
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GLORIA J. MULROONEY
/s/ David M. Roth
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DAVID M. ROTH
/s/ Marsha B. Roth
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MARSHA B. ROTH
/s/ Richard J. Reeves
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RICHARD J. REEVES
/s/ Judith Reeves
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JUDITH REEVES
/s/ John L. Brewer
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JOHN L. BREWER
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/s/ Kathy C. Brewer
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KATHY C. BREWER
/s/ Gary Snyder
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GARY SNYDER
/s/ Cindy R. Snyder
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CINDY R. SNYDER
/s/ Greogry A. Compton
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GREGORY A. COMPTON
/s/ Janis B. Compton
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JANIS B. COMPTON
/s/ Wayne P. Jones
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WAYNE P. JONES
/s/ Linda Allen Jones
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LINDA ALLEN JONES
VALLEY VISTA VENTURES, LLC
By: /s/ David M. Roth
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Title: Manager
COMPANY: TUMBLEWEED, INC.
By: /s/ Terrance A. Smith
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Title: President
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LENDER: /s/ Gerald Mansbach
GERALD MANSBACH
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