EXHIBIT 10.34 TERMINATION OF FORBEARANCE AGREEMENT
Exhibit 10.34
TERMINATION
OF
FORBEARANCE AGREEMENT
This termination of forbearance agreement (the "Agreement") is made and
entered into as of the 31st day of December, 1999 and is by and among ARLINGTON
SQUARE LIMITED PARTNERSHIP, a Virginia limited partnership ("Borrower");
ARLINGTON SQUARE, INC., THE WASHINGTON CORPORATION XXXXXXX X. XXXXX, XXXX X.
XXXX, XXXXXXXX X. XXXXXX and XXXXXXX X. XXXXXX, as tenants by the entirety,
XXXXX X. XXXXXX and K-F ASSOCIATES L.C. (individually, a "Guarantor" and
collectively, the "Guarantors"); and ALLIED CAPITAL CORPORATION, a Maryland
limited partnership and successor to Allied Capital Commercial Corporation
("Lender"). The Borrower, the Lender and the Guarantors are sometimes
hereinafter collectively referred to herein as the "parties".
RECITALS:
R-1. Pursuant to separate guarantees dated as of November 24, 1998
(individually, a "Guaranty" and collectively, the "Guarantees"), each of the
Guarantors guaranteed repayment of all sums due pursuant to a certain promissory
note dated November 20, 1997 from Borrower to Lender in the original principal
amount of One Million Dollars ($1,000,000.00) (as modified by Allonge and
Modification to Promissory Note dated April 23, 1998, "Note B").
R-2. Each Guarantor's liability pursuant to the Guaranty executed
by it is secured by a pledge by the Guarantor of all (or fifty percent (50%), as
the case may be) of its partnership interests in the Borrower pursuant to a
certain Partnership Interest Pledge Agreement dated as of November 24, 1998
(individually, a "Pledge Agreement", and collectively, the "Pledge Agreements").
R-3. Pursuant to that certain Forbearance Agreement dated as of
December 1, 1998, by and between the parties (the "Forbearance Agreement"),
Lender agreed to forbear from seeking to enforce its rights pursuant to the
Guarantees and the Pledge Agreement in the event that Borrower failed to pay
to Lender in full the sum of One Million Eight Hundred and Fifty Thousand
Dollars ($1,850,000.00), which amount represented sums remaining due and
payable pursuant to Note B, by June 1, 2000, as required pursuant to the
provisions of Note B.
R-4. Lender's Agreement to so forbear was upon the condition
that, notwithstanding the provisions of Note B, Borrower repaid said
$1,850,000.00 over the period, at the interest rate and with monthly payments
set forth in an amortization schedule incorporated into the Forbearance
Agreement.
R-5. Note B has since been amended and restated in its entirety
pursuant to an Amended and Restated Promissory Note dated as of December 1,
1998 in the principal amount of One Million Eight Hundred and Fifty Thousand
Dollars ($1,850,000.00) (the "Amended and Restated Note"), pursuant to which
such amount is to be repaid by Borrower to Lender over a period, at an
interest rate and with monthly payments consistent with the amortization
schedule incorporated into the Forbearance Agreement.
R-6. Accordingly, the Forbearance Agreement serves no further
purpose and the parties desire to terminate the Forbearance Agreement on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the above-premises and other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereby agree as follows:
1. The foregoing Recitals are hereby incorporated herein by this
reference as through fully set forth in the body of this Agreement.
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2. Effective the date hereof, the Forbearance Agreement is hereby
terminated. The above notwithstanding, all payments made pursuant to the
Forbearance Agreement shall be credited as having been made pursuant to the
Amended and Restated Note.
3. In the event that Borrower shall fail to timely pay to
Lender any amounts due and payable pursuant to the Amended and Restated Note,
Guarantors hereby acknowledge and agree that Lender may seek to enforce its
rights pursuant to the Guarantees and the Pledge Agreements pursuant to the
provisions thereof, subject however to Lender's agreement that it will not
seek to enforce such rights pursuant to the Guarantees and Pledge Agreements
for a period of ninety (90) days after the date of written notice to Borrower
given pursuant to the provisions of the Loan Agreement dated April 20, 1997
by and among Borrower, Lender, The Washington Corporation and Arlington
Square, Inc. Furthermore, in the event the indebtedness evidenced by the
Amended and Restated Note shall be accelerated for any reason other than
Borrower's failure to pay any payment of principal and/or interest due Lender
which continues for three (3) days after written notice from Lender to
Borrower (a "Non-Monetary Acceleration"), then so long as monthly payments
continue to be timely made to Lender pursuant to Paragraph 2(b) of the
Amended and Restated Note and the required payment at maturity is timely made
pursuant to Paragraph 2(c) of the Amended and Restated Note despite the
Non-Monetary Acceleration, Lender shall forebear from enforcing its rights
pursuant to the Guarantees and the Pledge Agreements. The foregoing shall be
without prejudice to Lender's rights to proceed against any of Borrower's
collateral or other assets upon the occurrence of a Non-Monetary
Acceleration, subject, however, to the provisions of that certain
Subordination Agreement dated November 25, 1998, as amended, by and among
Borrower, Lender and Metropolitan Life Insurance Company (as Senior Lender).
4. This Agreement may be entered into in counterparts.
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5. This Agreement shall be governed in accordance with the laws
of the State of Maryland.
In Witness Whereof, the parties hereto have executed this Agreement as
of the date first above written.
BORROWER
Arlington Square Limited Partnership
By: Arlington Square, Inc.
General Partner
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
LENDER:
Allied Capital Corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Principal
GUARANTORS:
Arlington Square, Inc.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
The Washington Corporation
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
/s/ Xxxxxxx X. Xxxxx
----------------------------------------
Xxxxxxx X. Xxxxx
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/s/ Xxxx X. Xxxx
----------------------------------------
Xxxx X. Xxxx
/s/ Xxxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxxx X. Xxxxxx, tenant by the
entirety with Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx, tenant by the
entirety with Xxxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx
----------------------------------------
Xxxxx X. Xxxxxx
X-X Associates L.C.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Manager
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