EXHIBIT 10.38
May 1, 2000
Xx. Xxxx Xxxxxxx, President
Wellington Hall Caribbean Corporation ("WHCC " or "Company")
X.X. Xxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Xx. Xxxx Xxxxxxx, President
Wellington Hall, Limited ("WH" or "Sponsor")
Xxxxx 00, X.X. Xxxxxxx Xx. 00 and Xx. 00
X.X. Xxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 27293-1354
Xx. Xxxx Xxxxxxx, President
Muebles Wellington Xxxx, X.X. ("Muebles" or "Guarantor")
X.X. Xxx 0000
Xxx Xxxxx Xxxx, Xxxxxxxx, X.X.
Re: Wellington Hall Caribbean Corporation's
Financing for Operations in Honduras
Ladies and Gentlemen:
1. We refer to the Loan Agreement, (as amended), and related documents executed
among and between Wellington Hall Caribbean Corporation ("WHCC" or "Company"),
Wellington Hall, Limited ("WH" or "Sponsor") and Muebles Wellington Hall
("Muebles" or Guarantor") and the Overseas Private Investment Corporation
("OPIC" or "Lender") with respect to WHCC's furniture manufacturing operations
in Honduras (the "Project") through its wholly owned subsidiary, Muebles. All
capitalized terms used and not otherwise defined herein shall have the meaning
set forth for such terms in the Loan Agreement.
2. Pursuant to the Loan Agreement, the parties hereto agree that the Loan
disbursed by OPIC has matured and remains unpaid and past due. The Company.
Sponsor and Guarantor each hereby acknowledge liability for the unpaid, matured,
and past due loan balance of $832,677.75, which unpaid balance consists of : (i)
an unpaid principal balance in the amount of $826,479.16; and (ii) unpaid and
accrued default interest in the amount of $6,198.59. Each of WHCC, the Sponsor
and the Guarantor further hereby acknowledge that failure to pay the loan
balance in full when due constitutes an Event of Default as defined under the
Loan Agreement, and the OPIC has the right to proceed to protect and enforce its
rights and remedies by appropriate proceedings under the terms of the Loan
Agreement. OPIC, however, as the Lender proposed to undertake the following
measure in lieu of foreclosure, based upon certain conditions hereinafter
stipulated:
From October 31, 1999 until October 31, 2000, (the "Forbearance Period"),
OPIC agrees to forbear from seeking to enforce its rights against the collateral
under the Loan Agreement due to the failure by the Company to make payment of
principal in full, and interest thereon by October 31, 1999, as required under
the terms of the Loan Agreement.
3. In consideration for OPIC's above-stated agreement to forbear from seeking to
enforce rights against the collateral, WHCC shall:
(i) No later than July 31, 2000, pledge, or cause to be pledged, to OPIC in
a manner and with documentation (including legal opinions) acceptable to OPIC in
form and substance (once executed, such documentation shall constitute
"Financing Documents") all of the shares of Muebles; and
(ii) Make quarterly interest payments in the manner and at the default rate
specified in the Loan Agreement on the full, unpaid balance of the loan,
effective as of October 31, 1999; and
(iii) Exercise its best efforts to sell Muebles at a net value sufficient
to repay OPIC's debt in full, and to cover OPIC's cost of collection, and
commencing May 1, 2000, provide a written report to OPIC on a monthly basis
regarding the Company's efforts to sell Muebles. The terms of any proposed sale
are subject to OPIC's prior approval, and all of the proceeds of any sale shall
be payable to OPIC, in the manner OPIC may specify, up to the amount owing to
OPIC under the Financing Documents; and
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(iv) As may be requested by OPIC, WHCC shall cooperate fully to provide
OPIC with a written appraisal, or to work with such broker as OPIC may identify
to expeditiously sell Muebles, subject to the provisions of the last sentence of
subparagraph (iii) above;
4. OPIC's agreement to forbear as stated herein is subject to the prior
fulfillment, to OPIC's satisfaction of the following conditions precedent:
(i) OPIC's shall have received corporate resolutions authorizing the
transactions specified herein, including a copy of the resolutions of the Board
of Directors of WHCC, the Sponsor and the Guarantor, authorizing the execution,
delivery and performance of this Agreement, and any other authorizations or
documents that OPIC may, in its reasonable discretion request; and
(ii) OPIC's shall have received a duly executed original of this Agreement,
signed by an Authorized Officer of each of WHCC, the Sponsor and the Guarantor,
together with all documents, certificates, security interest, legal opinions and
other items required as preconditions to the effectiveness of such agreements,
each of which is in full force and effect; and
(iii) WHCC shall have delivered legal opinions from law firms acceptable to
OPIC in form and substance as to the validity and enforceability of this
Agreement, the documents delivered pursuant to this Agreement, and such other
related matters as OPIC may reasonably request.
Upon satisfaction of all of the above conditions, OPIC will agree to forbear on
proceeding to protect and enforce its rights and remedies by appropriate
proceedings under the terms of the Loan Agreement.
5. Noncompliance with the Agreement will be treated as an Event of Default under
the Financing Documents. OPIC is under no obligation to forbear upon the
occurrence of any Event of Default under the Financing Documents other than that
described in paragraph 2 hereof. Upon the occurrence of any such Event of
Default under the Financing Documents, the Forbearance Period shall
automatically terminate and OPIC may exercise any of its rights and remedies.
6. All principal payments deferred during the Forbearance Period shall be due
and payable in full on October 31, 2000, or, if earlier, upon termination of the
Forbearance Period.
7. Except for the forbearance granted hereunder, no waiver of any default under
any of the Financing Documents has been granted by OPIC, nor shall anything
contained in this Agreement constitute or be construed as a waiver of any
existing or future default or a modification or limitation of any existing
rights or remedies available to the OPIC against WHCC or the Sponsor of
Guarantor. Further, OPIC has no obligation to extend the expiration date of the
Forbearance Period (and the execution of this Agreement shall not be construed
to require any such extension), to enter into any further forbearances or
waivers with respect to the Financing Documents. Subject to the forbearance
granted hereunder, OPIC specifically reserves the right to insist on strict
compliance with the terms of the Financing Documents, this Agreement and each
document executed in connection herewith. Each of WHCC, the Sponsor and the
Guarantor hereby expressly acknowledge such reservation of rights.
8. The Company, the Sponsor and the Guarantor hereby reaffirms its obligations
under the Financing Documents with each of the undersigned and confirms that
such obligation remain in full force and effect, without any claims, set-offs or
defenses.
9. Upon termination of the Forbearance Period, all principal amounts deferred
hereunder shall be immediately due and payable, and OPIC may pursue all
available rights and remedies pursuant to the Financing Documents or the
documents signed pursuant to this Agreement, at law or in equity.
10. No other person and no creditor of WHCC, the Sponsor, or Guarantor other
than the undersigned may rely on this Agreement.
11. Each signatory of WHCC, the Sponsor and the Guarantor has full power and
authority to enter into this Agreement and to incur and perform all obligations
and covenants contained herein, all of which have been duly authorized by all
proper and necessary corporate action.
12. This Agreement embodies the entire understanding of the parties hereto, and
supersedes all prior negotiations, understandings, promises and agreements
between them with respect to the subject matter hereof. This Agreement
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may not be modified in any manner, except by written agreement signed by all
parties hereto. This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument and any
of the parties hereto may execute this Agreement by signing any such
counterpart. In addition, each of the Company, Sponsor and Guarantor hereby
acknowledge and agree that neither the execution and delivery of this Agreement
nor any of the terms, provisions, covenants or agreements contained in these
Agreement shall in any manner release, impair, lessen, modify, waive, or
otherwise affect the liability and obligations of the Company, Sponsor and
Guarantor under the terms of the Financing Documents, except provided in this
Forbearance Agreement.
13. THE COMPANY, SPONSOR, AND GUARANTOR EACH HEREBY ACKNOWLEDGE THAT THEY HAVE
FREELY AND VOLUNTARILY ENTERED INTO THIS AGREEMENT AFTER AN ADEQUATE OPPORTUNITY
AND SUFFICIENT PERIOD OF TIME TO REVIEW, ANALYZE, AND DISCUSS ALL TERMS AND
CONDITIONS OF THIS AGREEMENT WITH COUNSEL FREELY AND INDEPENDENTLY SELECTED BY
THE COMPANY, SPONSOR, AND GUARANTOR. EACH OF THE COMPANY, SPONSOR AND GUARANTOR
FURTHER ACKNOWLEDGE AND AGREE THAT THEY HAVE ACTIVELY AND WITH FULL
UNDERSTANDING PARTICIPATED IN THE NEGOTIATION OF THIS AGREEMENT WITH THEIR
COUNSEL; THAT ALL OF THE TERMS AND CONDITIONS OF THIS AGREEMENT AND THE OTHER
DOCUMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS AGREEMENT HAVE BEEN
NEGOTIATED AT ARMS-LENGTH, AND THAT THIS AGREEMENT AND ANY AND ALL SUCH OTHER
DOCUMENTS HAVE BEEN NEGOTIATED, PREPARED, AND EXECUTED WITHOUT FRAUD, BEEN
EXERTED BY OR IMPOSED UPON ANY PARTY TO THIS AGREEMENT OR UPON ANY OTHER PARTY.
NO PROVISION OF THIS AGREEMENT OR OTHER SUCH DOCUMENTS SHALL BE CONSTRUED
AGAINST OR INTERPRETED TO THE DISADVANTAGE OF ANY PARTY TO THIS AGREEMENT BY ANY
COURT OR OTHER GOVERNMENTAL OR JUDICIAL AUTHORITY BY REASON OF SUCH PARTY HAVING
OR BEEN DEEMED TO HAVE STRUCTURED, DICTATED, OR DRAFTED SUCH PROVISION.
14. This Agreement shall be binding upon and inure to the benefit of the
Company, Sponsor, Guarantor, OPIC , and each of their respective heirs, personal
representatives, successors, and assigns. None of the Company, Sponsor, or
Guarantor shall assign any of their respective rights or obligations under this
Agreement without the express written consent of OPIC.
16. In case one or more provisions contained in this Agreement shall be invalid,
illegal, or unenforceable in any respect under any law, the validity, legality,
and enforceability of the remaining provisions contained herein shall remain
effective and binding shall not be affected or impaired thereby.
17. This Agreement shall be governed by the laws of the District of Columbia
without regard to the conflict of laws principles thereof.
18. Time is of the essence with respect to each provision of this Agreement.
Please sign and return a copy of this Agreement confirming your
acknowledgment and agreement with the terms hereof, whereupon this Agreement
shall constitute a legally binding document.
Yours truly,
Xxxx X. Xxxxxxx
Manager, Special Assets
SIGNATURES
WELLINGTON HALL CARIBBEAN CORPORATION
By: Date:
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Xxxx Xxxxxxx
President
WELLINGTON HALL, LIMITED
By: Date:
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Xxxx Xxxxxxx
President
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XXXXXXX XXXXXXXXXX XXXX, X.X.
By: Date:
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Xxxx Xxxxxxx
President
