FIRST AMENDMENT TO FORBEARANCE AGREEMENT
THIS FIRST AMENDMENT TO FORBEARANCE AGREEMENT (the "Agreement") is made
this 29th day of September, 2005, by and among UNITED BANK, a Virginia
banking institution (the "Bank" or "Lender"), and XXXXXXXX INDUSTRIES, INC.,
a Virginia corporation with offices at 0000 X.X. Xxxxxxx Xxxxx, Xxxxxxxx, XX
00000; INSURANCE RISK MANAGEMENT GROUP, INC., a Virginia corporation;
PIEDMONT METAL PRODUCTS, INC., a Virginia corporation, XXXXXXXX BRIDGE
COMPANY., a Virginia corporation, WII REALTY MANAGEMENT, INC., a Virginia
corporation, XXXXXXXX STEEL ERECTION COMPANY, INC., a Virginia corporation,
GREENWAY CORPORATION, a Maryland corporation, XXXXXXXX EQUIPMENT
CORPORATION, a District of Columbia corporation (collectively, "Original
Borrower") and S.I.P., INC. OF DELAWARE, a Delaware corporation ("S.I.P.";
collectively, with "Original Borrower", the "Borrower"), XXXXXXXX FAMILY
LIMITED PARTNERSHIP, a Virginia limited partnership ("WFLP") and XXXXX X.
XXXXXXXX, XX., individually.
RECITALS:
A. As more fully provided in the underlying loan documents, on or
about April 16, 1999, the Bank made a revolving loan to Original Borrower in
the original principal amount of $2,500,000, evidenced by Revolving Credit
Note No. 3 of even date therewith bearing initial interest at prime plus
1.25%, as thereafter amended and restated, from time to time (the Revolving
Loan), secured by, among other things, business assets pledged under a
Revolving Credit and Term Loan Agreement and a related Security Agreement of
even date, as thereafter amended, from time to time, and is also secured by
land in Manassas and Bedford, Virginia pledged to the Bank under deeds of
trust on the respective properties (the "Manassas Deed of Trust" and the
"Bedford Deed of Trust", respectively). This loan is further secured by
common stock of S.I.P. Inc. of Delaware, a Delaware corporation, under a
Pledge Agreement dated August 31, 2000,. The sum of $2,529,016.70 was due on
the Revolving Loan at May 12, 2005, when the Bank made demand for payment,
plus legal fees and costs, which are additional. Interest and other fees and
charges continue to accrue thereafter, and as of the date hereof. Borrower
acknowledges that this loan is matured and is now fully due and owing,
without defense, offset or counterclaim.
B. As more fully provided in the underlying loan documents, on or
about April 16, 1999, the Bank made a draw term loan to Original Borrower,
due April 1, 2014, evidenced by Term Note No. 1 in the amount of $2,260,750
of even date, initially bearing interest at 8.7%, as amended, from time to
time, secured by, among other things, the same collateral as secures the
Revolving Loan. The sum of $1,848,996.42 was due and owing on this loan (the
"Term Loan No. 1") as of May 12, 2005, when demand for payment was made by
the Bank ,plus legal fees and costs, which are additional. Interest and
other charges continue to accrue thereafter and as of the date hereof.
Borrower acknowledges that this loan has now been accelerated by the Bank and
is now fully due and owing, without defense, offset or counterclaim.
C. As more fully provided in the underlying loan documents, on or
about April 16, 1999, the Bank made a second term loan to Original Borrower
evidenced by a promissory note in the original principal amount of $639,250,
bearing interest at 8.7%, as amended, from time to time, which loan (Term
Loan No. 2), due April 1, 2009, secured by, among other things, the same
collateral as secures the Revolving Loan. The sum of $314,221.29 was due on
this loan as of May 12, 2005, when notice of default and demand for payment
of this loan was made by the Bank, plus legal fees and costs, which are
additional. Interest and other charges continue to accrue thereafter and as
of the date hereof. Borrower acknowledges that this loan has been
accelerated by the Bank and is now fully due and owing, without defense,
offset or counterclaim.
D As more fully provided in the underlying loan documents, on or
about August 31, 2000, the Bank made a further term loan to Original Borrower
in the original principal amount of $250,000, evidenced by Term Note No. 6 of
even date, bearing interest at prime plus 1%, due September 1, 2005, (Term
Loan No. 6), as amended, from time to time, which loan is secured by, among
other things, the same collateral which secures the Revolving Loan. The sum
of $35,369.14 was due on this loan as of May 12, 2005, when notice of default
and demand for payment was made by the Bank, plus legal fees and costs, which
are additional. Interest and other charges continue to accrue thereafter and
as of the date hereof. Borrower acknowledges that this loan has been
accelerated by the Bank and is now fully due and owing, without defense,
offset or counterclaim.
E. As more fully provided in the underlying loan documents, on or
about May 1, 2001, the Bank made a further term loan to Original Borrower in
the original principal amount of $1,000,000, evidenced by a Term Note No. 7
of even date, bearing interest at prime plus 1%, due May 1, 2006 (Term Loan
No. 7), which loan is secured by, among other things, the same collateral
which secures the Revolving Loan. The sum of $211,111.83 was due on this
loan as of May 12, 2005, when notice of default and demand for payment was
made by the Bank, plus legal fees and costs, which are additional. Interest
and other charges continue to accrue thereafter and as of the date hereof.
Borrower acknowledges that this loan has been accelerated by the Bank and is
now fully due and owing, without defense, offset or counterclaim.
F. On or about April 4, 2002, the Bank made a term loan to Xxxxxxxx
Industries, Inc. evidenced by a promissory note of even date in the amount of
$43,000, bearing interest at 7.5%, due April 4, 2005 (the Xxxxxxxx Industries
Loan), secured by equipment pledged under a Commercial Security Agreement
dated April 4, 2002. The sum of $3,060.29 was due on this loan as of May 12,
2005, when the Bank gave notice of default and demand for payment, plus legal
fees and costs, which are additional. Interest and other charges continue to
accrue thereafter and as of the date hereof. Borrower acknowledges that this
loan has matured and is now fully due and owing, without defense, offset or
counterclaim.
G. On or about June 4, 2001, the Bank made a demand loan to Xxxxxxxx
Equipment Corporation (the Xxxxxxxx Equipment Loan), evidenced by a
promissory note of even date in the amount of $34,500, bearing interest at
8.25%, due on demand and, if no demand is made, on June 4, 2006. The sum of
$11,483.75 was due on this loan as of May 12, 2005, when the Bank gave notice
of default and demand for payment, plus legal fees and costs, which are
additional. Interest and other charges continue to accrue thereafter and as
of the date hereof. Borrower acknowledges that this loan has been
accelerated by the Bank and is now fully due and owing, without defense,
offset or counterclaim.
H. On or about January 12, 2004, the Bank made a term loan to
Xxxxxxxx Steel Erection Co. evidenced by a promissory note of even date in
the amount of $31,083.86. bearing interest at 5.75%, due January 12, 2008
(the Xxxxxxxx Steel Erection Co. Loan), which loan is secured by a 2000 Ford
F-250 pickup truck under a Commercial Security Agreement of even date. The
sum of $24,189.29 was due on this loan as of May 12, 2005, when the Bank gave
notice of default and demand for payment, plus legal fees and costs, which
are additional. Interest and other charges continue to accrue thereafter and
as of the date hereof. Borrower acknowledges that this loan has been
accelerated by the Bank and is now fully due and owing, without defense,
offset or counterclaim.
I. On or about June 29, 2000, the Bank made a term loan to Xxxxxxxx
Bridge Company in the original amount of $87,948, bearing interest at 9.5%,
secured by business assets, principally accounts and equipment, pledged under
a Commercial Loan and Security Agreement dated June 29, 2000, due 29, 2005.
The sum of $12,551.49 was due on this loan as of May 12, 2005, when the Bank
gave notice of default and demand for payment, plus legal fees and costs,
which are additional. Interest and other charges continue to accrue
thereafter and as of the date hereof. Borrower acknowledges that this loan
has been accelerated by the Bank and is now fully due and owing, without
defense, offset or counterclaim.
J. On or about May 13, 2002, the Bank made a term loan to Borrower
(i.e., to S.I.P. Inc. of Delaware, and the others noted above) evidenced by a
promissory note of even date in the amount of $900,000, reduced to $765,000
under a Change In Terms Agreement dated August 2, 2002, bearing interest at
prime plus .5%, due August 2, 2007 (the SIP Loan), which loan is secured by
business assets pledged under a Commercial Security Agreement dated May 13,
2002. The sum of $332,247.05 was due on this Loan as of June 29, 2005, plus
legal fees and costs, which are additional. Interest and other charges
continue to accrue. Borrower, by its signature below, agrees to treat this
loan as having been accelerated by the Bank, and as now fully due and owing,
without defense, offset or counterclaim.
X. Xxxxxxxx Industries, Inc. and other obligors were further
indebted to the Bank in the sum of $114,185 as of May 19, 2005, pursuant to
the terms of an Application and Agreement For Irrevocable Standby Letter of
Credit No. 2351666-5001 dated March 1, 2004, plus legal fees and costs, which
are additional.
L. The various obligations and indebtedness of Borrower, Original
Borrower, Xxxxxxxx Bridge Company, Xxxxxxxx Equipment Corporation and
Xxxxxxxx Steel Erection Company referred to in recitals A-K above is
hereinafter referred to, collectively, as the "Indebtedness." The
Indebtedness, and the other obligations and covenants and duties of the
Borrowers under the associated loan documents (the "Loan Documents"), are
hereinafter referred to, collectively, as the "Obligations".
[this space left intentionally blank]
M. Borrower, and each party hereto which is an obligor to the Bank
on the Indebtedness or any part thereof, together with Borrower's principal,
Xxxxx Xxxxxxxx, Jr. (the "Guarantor"), and Xxxxxxxx Family Limited
Partnership ("WFLP") requested the Bank to forbear from exercising its rights
under the various loan documents which evidence the Indebtedness
(collectively, the "Loan Documents"). Pursuant to the same, the parties
hereto entered into a Forbearance Agreement dated June 30, 2005, under which
the Bank agreed to forbear from exercising its legal remedies under the Loan
Documents, under and on the terms and conditions thereof.
N. The Borrower, the Guarantor and WFLP have now requested certain
modifications to the Forbearance Agreement, as set forth below, and the Bank
is amenable to the same.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Recitals. The recitals above are acknowledged to be true and
correct.
2. Supplemental Pay-down. Paragraph 8 of the Forbearance Agreement
is amended to read as follows:
"8. Supplemental Pay-down. Bank shall receive a further supplemental
principal pay-down of $750,000, paid $508,351 by no later than September 30,
2005, and $241,649 by no later than March 6, 2006, such pay-down to come from
sources outside collateral presently pledged to the Bank (including
hereunder) or the products and proceeds thereof1. Proof of the source of
this supplemental pay-down to be given to the Bank. The Guarantor absolutely
guarantees this obligation, which guarantee is a guarantee of payment, not of
collection.
To the extent, if any, that the $750,000 payment is funded, in
whole or in part, by the sale-leaseback of any property currently owned by
any of the Borrower, rental payments by any one or more of the Borrowers to
the purchaser-landlord after the sale-leaseback will be subordinated to the
payment of the Indebtedness and other Obligations to the Bank, in full,
provided that reasonable monthly rent may be paid to the purchaser-landlord
provided that there is no default under the terms of this Agreement.
The Bank will advise the Borrower which notes, letter of credit
obligations or other Obligations included within the Indebtedness will be
paid down with the proceeds of the $750,000 supplemental payment, in the
Bank's sole discretion. However, the Bank will give reasonable deference, in
making the Bank's ultimate decision, to the wishes of the Borrower regarding
which Obligations should be satisfied from this payment. In this regard,
Borrower advise the Bank that they prefer, as to the $508,351 paid against
the Supplemental Paydown on or before September 30, 2005, that the Bank pay
off all obligations of Borrowers to the Bank in recitals C-K above, to wit,
all obligations other than those set forth in recitals A and B above, with
any surplus to be applied against fees, costs, accrued interest and other
charges, and against principal, of the loans set forth in recitals A and B
above, as the Bank may see fit.
3. Forbearance. Paragraph 10 of the Forbearance Agreement is
amended to read as follows:
"10. Forbearance. Subject to the provisions of this Forbearance
Agreement and provided that there is no Forbearance Default hereunder, the
initial term of the Bank's forbearance shall be from the date hereof through
March 6, 2005, provided, however, that if there is no default hereunder, and,
without limitation, the Bank receives the supplemental pay-down of $508,351
by September 30, 2005, as required by the terms hereof, and a further
$241,649 by March 6, 2006, the term of the Bank's forbearance shall extend to
March 6, 2006.
Each of the following shall constitute a "Forbearance Default":
(a) Any further Event of Default, beyond cure, under the
governing loan documents for the Indebtedness shall occur after the date
hereof;
(b) Borrower shall fail to observe or perform any monetary
covenant or obligation contained in this Agreement;
(c) Any party to this Agreement shall fail to observe or
perform any non-monetary covenant or obligation contained in this Agreement,
which default shall continue for five (5) business days after notice thereof;
(d) Any representation or warranty of any party hereto or in
any document delivered pursuant to this Agreement shall prove to be
materially false, misleading or incorrect when made;
(e) Guarantor shall fail to observe or perform any of his
obligations or covenants under this Agreement or the Guaranty;
(f) Borrower or the Guarantor shall suffer a material adverse
change in financial position, as compared to the date hereof, as determined
by the Bank; or
(g) An involuntary bankruptcy petition shall be filed against
Borrower or any member or entity thereof;
(h) Borrower or any member or entity thereof shall make an
assignment for the benefit of creditors or file a voluntary bankruptcy
petition;
(i) Any action shall be taken, by any person, to challenge,
void or set aside the Bank's liens, or its rights under the Loan Documents,
this Agreement or under the Guarantee thereof by the Guarantor, which action
is not dismissed within ten (10) business days of the notice thereof.
(j) [intentionally deleted];
(k) [intentionally deleted]
Upon expiration of the Forbearance Period, the Lender may institute such
collection proceedings and such other remedies, contractual, legal or
equitable, against Borrower and/or the Guarantor, as the Lender, in its sole
discretion, may elect.
4. Representations and Warranties. To induce the Lender to enter
into this Agreement, Borrower, WFLP and the Guarantor re-affirm, as of the
date hereof, all representations and warranties in paragraph 13 of the
Forbearance Agreement, all being incorporated herein by reference, both as of
the date of the Forbearance Agreement and again as of the date hereof.
5. No Novation, Waivers or Impairment. The parties hereto agree
that neither this Agreement nor any other document executed in accordance
herewith is intended to be a novation of any of the Loan Documents or of the
Forbearance Agreement or of any obligation under the Loan Documents or the
Forbearance Agreement.
As modified herein, the Forbearance Agreement and all obligations
therein continue in full force and effect, as modified herein.
The parties further agree that,:
(a) Subject to Lender's duty to forbear under the terms of this
Agreement, nothing herein shall release or waive any of the Borrowers'
obligations under any of the Loan Documents or those of WFLP or the Borrower
under the Forbearance Agreement, all of which remain in full force and
effect, or impair the validity, perfection or priority of any security
interest or collateral therefore, nor release the obligations of any
guarantee thereof, all of which obligations, security interests, collateral,
duties, rights and guarantees are hereby ratified and affirmed by the
Borrower, WFLP and the Guarantor, without prejudice to their rights herein or
therein;
(b) Subject to the Lender's duty to forbear under the terms of
the Forbearance Agreement as modified by this Agreement, nothing herein shall
waive or impair any rights, powers or remedies of the Lender under the Loan
Documents or under the Forbearance Agreement, including, without limitation,
any right or remedy of Lender against the Guarantor under his Guaranty, as
amended by the Amended and Restated Guaranty Agreement of even date (the
"Guaranty");
(c) Nothing herein shall be construed to constitute an
agreement by the Lender or to require the Lender to extend the Forbearance
Period or grant additional forbearance periods, or to otherwise forbear,
except on the terms hereof;
(d) The Lender shall have the right at any time to take any
action at law or in equity with respect to the Loan Documents and/or the
Guaranty provided that such action is not inconsistent with the terms and
conditions of this Agreement and Lender's duty to forbear under the terms and
conditions hereof, including seeking the entry of such court orders and
judgments as the Lender in its sole discretion deems appropriate to enforce
the terms of this Agreement or to protect its security interests and rights
to repayment under the Loan Documents and the Guaranty.
6. Release of the Lender. In consideration of Lender's entry into
this Agreement, the Borrower, WFLP and the Guarantor hereby release, remise,
acquit and forever discharge the Lender, the Lender's employees, agents,
representatives, consultants, attorneys, fiduciaries, servants, officers,
directors, partners, predecessors, successors and assigns, subsidiary
corporations, parent corporations and related corporate divisions (all of the
foregoing hereinafter called the "Released Parties") from any and all actions
and causes of action, judgments, executions, suits, debts, claims, demands,
liabilities, obligations, damages and expenses, breaches, rights of setoff,
counterclaims and statutory rights, of any and every character, known or
unknown, direct or indirect, liquidated or unliquidated, contingent or non-
contingent, at law or in equity, of every kind or nature, including any which
may arise in a bankruptcy or insolvency proceeding, whether heretofore or
hereafter arising, for or because of any manner of things done, omitted or
suffered to be done by any of the Released Parties prior to and including the
date of execution hereof, arising from or in any way directly or indirectly
related to this Agreement, the Forbearance Agreement as originally executed
on June 30, 2005, or any of the Loan Documents or from the performance and
payment by Borrower or WFLP thereunder, or from the Guarantee of Borrowers'
obligations to Lender by the Guarantor, and also from all other claims,
rights, demands or causes of action of any kind, in law or in equity against
the Lender, except for Lenders duties hereunder (all of the foregoing
hereinafter called, collectively, the "Released Matters"). Borrower, WFLP and
the Guarantor acknowledge that the agreements in this Section are intended to
be in full satisfaction of any and all alleged injuries or damages arising in
connection with the Released Matters, whether known or unknown, at law or in
equity, and that this release is a material inducement to the Lender's entry
into this Agreement. Each of the Borrower, WFLP and the Guarantor further
represents and warrants to the Lender that it has not transferred, assigned
or otherwise conveyed, or purported to transfer, assign or otherwise convey,
any right, title or interest in the Released Matters as to any Person and
that the foregoing constitutes a full and complete release of all Released
Matters.
7. No Partnership. Nothing herein shall be construed to make the
Lender, the Borrower, WFLP or the Guarantor the agent, partner, or joint
venturer of the other, and the Borrower, WFLP and the Guarantor have no
relationship with Lender other than that of debtor and creditor.
8. Entire Agreement. This Agreement constitutes the entire
agreement of the parties concerning the subject matter hereof and supersedes
any prior or contemporaneous representations or agreements not contained
herein. In entering into this Agreement, each of Borrower, WFLP and the
Guarantor acknowledges that it is not relying on any statement,
representation, warranty, covenant or agreement of any kind made by the
Lender or by any agent or employee thereof, except for the agreements of the
Lender set forth herein. They further acknowledge that Lender will only be
bound by written instruments, duly executed by Lender, and that no officer,
agent or representative of Lender has authority to act in any other manner.
9. Construction. The parties acknowledge that all parties and their
counsel have reviewed this Agreement and any rule of construction to the
effect that any ambiguity should be construed against the drafting party will
not be employed in the interpretation of this Agreement or any amendments
hereto. All signatories to this Agreement acknowledge that it has been
negotiated at arms length and in good faith, and that each has relied upon
independent legal counsel of their choice.
10. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding on the parties and their successors and assigns;
provided, however, that this Agreement may not be assigned by any of the
Borrowers without the prior written consent of the Lender.
11. Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties on different counterparts, each of
which shall constitute an original and all of which together shall constitute
one and the same agreement.
12. Time of the Essence. Time is of the essence under this
Agreement. Closing must occur by no later than noon on September 30, 2005,
and post-Closing obligations must thereafter timely occur.
13. No waivers. By entering into this Agreement it is agreed that
Lender does not waiver or limit any right it may have against Borrower, WFLP
or the Guarantor, except as may be expressly stated herein, all rights and
remedies of Lender being reserved.
14. Signatures. Faxed signatures shall be accepted for all
purposes, with originals to be provided within three (3) business days
thereafter. This Agreement may be signed in counterparts, each of which so
executed shall be deemed an original and all of which, taken together, shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument as of the day and year set forth above.
[signatures omitted]
