Exhibit 10.48
LIMITED FORBEARANCE AGREEMENT
THIS LIMITED FORBEARANCE AGREEMENT (this "Agreement") is made as of the
14th day of October, 2002, by and among XXXXXX INDUSTRIES, INC., a corporation
organized and existing under the laws of the State of Maryland (the "Borrower");
OBSIDIAN ENTERPRISES, INC., a corporation organized and existing under the laws
of the State of New York (the "Guarantor"); (the Borrower and the Guarantor are
herein collectively referred to as the "Obligors" and individually as an
"Obligor"); and BANK OF AMERICA, N.A., a national banking association (the
"Lender").
RECITALS
A. The Borrower applied to the Lender for revolving loans, advances and
other financial accommodations under the provisions of a certain Business Loan
Agreement (Asset Based) dated August 15, 2001 by and between the Borrower and
the Lender (as amended, restated, supplemented and modified at any time and from
time to time, the "Financing Agreement"). Under and subject to the provisions of
the Financing Agreement, the Lender agreed to make loans (collectively, the
"Revolving Credit Loans" and each individually, a "Revolving Credit Loan") to
the Borrower under a revolving credit facility (the "Revolving Loan") in a
principal amount not to exceed, in the aggregate, One Million Dollars
($1,000,000). The Revolving Credit Loans are evidenced by, and repaid with
interest in accordance with, the terms and conditions of that certain Promissory
Note dated August 15, 2001, from the Borrower, as maker, payable to the order of
the Lender in the maximum principal amount of the Revolving Loan (as amended,
restated, supplemented and modified at any time and from time to time, the
"Revolving Credit Note").
B. The Borrower applied to the Lender for a term loan in the original
principal amount of One Million Dollars ($1,000,000) (the "Term Loan"; the
Revolving Credit Loans and the Term Loan are herein sometimes collectively
referred to as the "Loans"). The Term Loan is evidenced by, and repaid with
interest in accordance with, the terms and conditions of a certain Promissory
Note dated August 15, 2001 from the Borrower, as maker, payable to the order of
the Lender in the original principal amount of the Term Loan (as amended,
restated, supplemented and modified at any time and from time to time, the "Term
Note"; the Revolving Credit Note and the Term Note are sometimes herein
sometimes collectively referred to herein as the "Notes").
C. The "Indebtedness" (as defined in the Financing Agreement), including,
without limitation, the Loans, are secured by, among other things (i) the
"Collateral", as defined in a certain Security Agreement dated August 15, 2001
executed by the Borrower for the benefit of the Lender (as amended, restated,
supplemented and modified at any time and from time to time, the "Security
Agreement"), (ii) the "Property" as defined in a certain Deed of Trust,
Assignment and Security Agreement dated August 15, 2001 executed by the Borrower
in favor of PRLAP, Inc., as trustee, for the benefit of the Lender (as amended,
restated, supplemented and modified at any time and from time to time, the "Deed
of Trust") (iii) a certain Commercial Guaranty dated August 15, 2001 from the
Guarantor to the Lender (as amended, restated, supplemented and modified at any
time and from time to time, the "Guaranty") and (iv) various Uniform Commercial
Code Financing Statements filed with the Maryland State Department of
Assessments and Taxation and in the land records of Washington County, Maryland
listing the Borrower as debtor.
D. The Lender advised the Borrower and the Guarantor of the following
material defaults under the Financing Agreement, the Guaranty, the Loans and the
other Financing Documents (as hereinafter defined): (a) the Borrower's and the
Guarantor's failure to pay the outstanding principal balance plus all accrued
and unpaid interest upon maturity as provided in the Financing Agreement, the
Revolving Credit Note and the Guaranty, (b) the Borrower's failure to maintain a
Debt Service Coverage Ratio (as defined in the Financing Agreement) of at least
1.25:1.0 as required by the terms of the Financing Agreement (the "Debt Service
Covenant") and (c) accrued and unpaid late charges (the "Late Fees") as provided
for in the Financing Documents in the aggregate sum of Thirty-Three Thousand
Dollars ($33,000) ((a), (b) and (c) above collectively referred to herein as the
"Existing Defaults").
E. The Lender has agreed, subject to the terms, conditions and
understandings expressed in this Agreement, to refrain and forbear temporarily
from exercising and enforcing any of its remedies against any or all of the
Obligors with respect to the Indebtedness relating to the Loans, under the
Financing Agreement, the Notes, the Deed of Trust, the Guaranty and under any of
the other "Related Documents" (as defined in the Financing Agreement; the
Financing Agreement, the Notes, the Security Agreement, the Deed of Trust, the
Guaranty, the Related Documents and any and all other documents evidencing or
securing the Loans are collectively referred to herein as the "Financing
Documents"), or under applicable laws for a period commencing on the date of
this Agreement and ending on, and including, the earlier of the date of a
"Forbearance Default" under the terms of this Agreement (as hereinafter defined)
or March 31, 2003 (such earlier date being referred to herein as the
"Forbearance Termination Date") in order to allow the Obligors the opportunity
to obtain alternate financing; provided that, among other things, the Obligors
execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Lender and the Obligors hereby agree as follows:
AGREEMENTS
1. Forbearance. Subject to the terms, conditions and understandings
contained in this Agreement, and for so long as there does not exist a
Forbearance Default, the Lender hereby agrees to: (a) refrain and forbear
temporarily from exercising and enforcing its rights and remedies under the
Financing Agreement, under the Notes, under the Security Agreement, under the
Deed of Trust, under the Guaranty, under any of the other Financing Documents,
or under applicable laws with respect to the Existing Defaults. Lender's limited
forbearance agreements contained in the foregoing sentence of this Section 1
shall be effective commencing on the date of this Agreement and ending on, and
including the Forbearance Termination Date (the "Forbearance Period"). The
Lender shall have no obligation to refrain and forbear from exercising or
enforcing any of its rights or remedies during the Forbearance Period or at any
time thereafter upon the occurrence and during the continuance of a Forbearance
Default.
2. Interest Rate During Forbearance. Subject to the terms, conditions and
understandings contained in this Agreement, and for so long as there does not
exist a Forbearance Default and notwithstanding anything in the Financing
Agreement, the Notes, the Guaranty or any of the other Financing Documents to
the contrary, commencing on October 1, 2002 and continuing throughout the
Forbearance Period, the accrued but unpaid principal balance of the Loans shall
bear interest at the Prime Rate (as hereinafter defined), plus three hundred
(300) basis points per annum (the "Forbearance Rate"). The "Prime Rate" means
the floating and fluctuating per annum prime commercial lending rate of interest
of the Lender, as established and declared by the Lender at any time or from
time to time. The Prime Rate shall be adjusted automatically, without notice, as
of the effective date of any change in such prime commercial lending rate. The
Prime Rate does not necessarily represent the lowest rate of interest charged by
the Lender to borrowers. The Prime Rate shall be computed on a 360/365 basis;
that is, by multiplying the ratio of the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number days the principal balance is outstanding. Nothing in this Agreement or
otherwise shall be deemed to waive, modify or alter the provisions regarding
interest after default set forth in the Revolving Credit Note or the term
"Default Rate" as defined in the Term Note (collectively, the "Financing
Document Default Rates"). Such Financing Document Default Rates shall be
applicable, at Lender's option in its sole discretion, upon a Forbearance
Default.
3. Repayments During Forbearance. Notwithstanding anything in the Financing
Agreement, the Notes, the Guaranty or any of the other Financing Documents to
the contrary, subject to the terms, conditions and understandings contained in
this Agreement, and for so long as there does not exist a Forbearance Default,
the Obligor shall make payments on the Loans during the Forbearance Period as
follows:
(a) Borrower will pay regular monthly payments of accrued and unpaid
interest on the Revolving Credit Loans at the Forbearance Rate, beginning
October 31, 2002, with all subsequent interest payments to be due on the last
day of each successive month thereafter.
(b) Borrower shall repay the principal amount of the Term Loan in
consecutive monthly installments of principal in the amount of Five Thousand
Five Hundred Fifty-Five Dollars ($5,555) plus interest payments on the
outstanding principal balance at the Forbearance Rate beginning on October 31,
2002 and continuing on the last day of each successive month thereafter.
(c) Notwithstanding any provision of this Agreement to the contrary, the
unpaid principal balance, all accrued and unpaid interest and all other
Indebtedness, if not sooner paid, shall be paid on the Forbearance Termination
Date.
4. Advances During Forbearance Period. Notwithstanding anything in the
Financing Agreement, the Notes, the Guaranty or any of the other Financing
Documents to the contrary the Lender and the Obligors agree that the Lender
shall have no further obligation or commitment to make or to consider making any
additional Revolving Credit Loans, provided, however, that, subject to the
terms, conditions and understandings contained in this Agreement, the Lender may
make Revolving Credit Loans during the Forbearance Period in its sole, absolute
and complete discretion and such Revolving Loans shall be fully secured pursuant
to the Financing Documents by the Collateral and the Property. Nothing in this
Section 4, this Agreement, the Financing Agreement or any of the Financing
Documents shall be construed as a binding commitment to make Revolving Credit
Loans during the Forbearance Period and the Lender shall have no obligation to
make Revolving Credit Loans after a Forbearance Default. If, at any time during
the Forbearance Period or otherwise, the aggregate principal amount of the
outstanding Revolving Credit Loans shall exceed the "Borrowing Base" (as that
term is defined in the Financing Agreement), Borrower shall immediately pay to
Lender an amount equal to the difference between the outstanding principal
balance of the Revolving Credit Loans and the Borrowing Base.
5. Collateral Reporting During Forbearance, Appraisal. Concurrently with
the execution and delivery of this Agreement, Borrower shall execute and deliver
to Lender such schedules relating to the Borrowing Base as Lender may require,
including, but not limited to schedules of Accounts (as defined in the Financing
Agreement), Accounts aging, Inventory (as defined in the Financing Agreement),
Eligible Accounts (as defined in the Financing Agreement) and Eligible Inventory
(as defined in the Financing Agreement) in form and substance satisfactory to
Lender in its sole discretion. Supplemental schedules shall be delivered monthly
within ten (10) days from month end. The Lender will have the Collateral (as
defined in the Security Agreement) and the Property (as defined in the Deed of
Trust) appraised by an appraiser acceptable to the Lender. The Borrower shall
pay to the Lender the reasonable costs incurred by Lender pursuant to the
appraisal upon Lender's demand.
6. Acceleration of the Indebtedness. Notwithstanding anything in the
Financing Documents to the contrary, the entire amount of the Indebtedness,
including, without limitation, the Term Loan, is hereby accelerated and, subject
to the terms of this Agreement, is immediately due and payable in full.
7. Waiver of Late Fees. Notwithstanding anything in the financing documents
to the contrary, the Lender hereby waives the Late Fees, provided, however, that
such waiver shall be a waiver only with respect to the Late Fees to which the
waiver relates and shall in no way impair the rights of Lender or the
obligations of the Borrower to the Lender in any other respect at any other
time.
8. Waiver of Debt Service Covenant. Notwithstanding anything in the
financing documents to the contrary, the Lender hereby waives the Borrower's
past non-compliance with the Debt Service Covenant. The Lender further Agrees
that the Financing Agreement and the other Financing Documents are amended to
delete all references to the Debt Service Covenant and that future
non-compliance by the Borrower with the Debt Service Covenant shall not be an
Event of Default under the Financing Agreement, the Financing Documents or this
Agreement, provided, however, that such waiver and amendment shall be a waiver
and amendment only with respect to the Debt Service Covenant to which the waiver
and amendment relates and shall in no way impair the rights of Lender or the
obligations of the Borrower to the Lender in any other respect at any other
time.
9. Conditions Precedent to Lender's Forbearance and Waiver of Late Fees.
The agreements of the Lender under this Agreement are subject to the following
terms and conditions, time being of the essence:
(a) The Borrower shall pay the Lender a forbearance fee of Nineteen
Thousand Five Hundred Dollars ($19,500) (the "Forbearance Fee"), which is fully
earned upon the date of this Agreement. Nine Thousand Seven Hundred Fifty
Dollars ($9,750) of the Forbearance Fee shall due and payable on the date of
this Agreement and the remaining Nine Thousand Seven Hundred Fifty Dollars
($9,750) of the Forbearance Fee is due and payable on the earlier of the
Forbearance Termination Date or the occurrence of a Forbearance Default,
provided, however, that if the Indebtedness is paid in full prior to earlier of
the occurrence of a Forbearance Default or the Forbearance Termination Date,
then the Lender hereby agrees to waive the second $9,750 installment of the
Forbearance Fee.
(b) At the time this Agreement is executed, the Obligors shall pay all
accrued and unpaid interest, fees, and expenses incurred by Lender and its
agents, including, but not limited to all reasonable attorneys' fees of Lender's
counsel.
(c) At the time this Agreement is executed, the Obligors will reimburse the
Lender Seven Hundred Sixty-Eight Dollars and Twenty-Five Cents ($768.25) for
travel and other travel-related incidental costs incurred by the Lender.
(d) At the time this Agreement is executed, the Borrower shall provide
Lender with: (i) a financial statement and compliance certificate pursuant to
the Financing Agreement for the period ending August 31, 2002, (ii) a
depreciation schedule on its fixed assets listing the date of acquisition of
each asset, cost of each asset, depreciation taken on each asset and the net
book value of each asset, (iii) a schedule listing all of Borrower's
indebtedness, including the amount, terms and conditions of all indebtedness of
Borrower to Guarantor (iv) the executed schedules relating to the Borrowing Base
as provided in Section 5 of this Agreement and the Financing Agreement and (v)
an open work order summary. Each of (i), (ii), (iii), (iv) and (v) above shall
be in form and substance satisfactory to Lender in its sole discretion.
10. Acknowledgements, Representations and Warranties. In order to induce
the Lender to enter into this Agreement, each of the Obligors jointly and
severally, for itself, himself or herself and for its, his or her heirs,
personal representatives, successors and assigns, hereby acknowledges,
represents, warrants and agrees as follows:
(a) The unpaid balance of the Indebtedness as of October 10, 2002 is One
Million Seven Hundred Six Dollars ($1,762,550.67); which unpaid balance consists
of
(i) an unpaid principal balance on the Revolving Credit Loans equal to
Eight Hundred Twenty-Five Thousand Dollars ($825,000); plus
(ii) unpaid and accrued interest on the Revolving Credit Loans at the
current contract rate in the amount of Four Thousand Five Hundred
Ninety-Six Dollars and Forty Cents ($4,596.40); plus
(iii) an unpaid principal balance on the Term Loan equal to Nine
Hundred Twenty-Seven Thousand Seven Hundred Eighty-Five Dollars ($927,785);
plus
(iv) unpaid and accrued interest on the Term Loan at the current
contract rate in the amount of Five Thousand One Hundred Sixty-Nine Dollars
and TwentySeven Cents ($5,169.27); plus
(v) unpaid fees and expenses due and owing to the Lender, including,
without limitation, unpaid attorneys' fees and expenses incurred by the
Lender in connection with the collection and enforcement of the
Indebtedness. The Obligors each acknowledge and agree that interest shall
continue to accrue on the unpaid principal balance of the Indebtedness at
either the Financing Documents Default Rate or the Forbearance Rates,
pursuant to the terms of this Agreement and the Financing Documents.
(b) Each of the Obligors is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its incorporation and
each has the corporate power to own its properties and to carry on its business
as now being conducted, and each is duly qualified to do business and is in good
standing in each jurisdiction in which the character of the properties owned or
leased by it therein or in which the transaction of its business makes such
qualification necessary.
(c) Each of the Obligors has full corporate 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. No consent or approval of shareholders of, or
lenders to, either of the Obligors and no consent, approval, filing or
registration with or notice to any governmental authority is required as a
condition to the validity of this Agreement or the performance of any of either
of the Obligors' obligations hereunder.
(d) The Obligors each are in default under and with respect to the
Indebtedness pursuant to the Existing Defaults. The Obligors each acknowledge
and agree that the Existing Defaults constitute material defaults under the
Financing Documents and that the Existing Defaults have not been, are not hereby
and shall not be deemed, waived by the Lender, expressly, impliedly, through
course of conduct or otherwise. The agreement of the Lender to refrain and
forbear from exercising any rights and remedies by reason of any existing
default or any future default shall not constitute a waiver of, consent to, or
condoning of, any existing or future default.
(e) All understandings, representations, warranties and recitals contained
or expressed in this Agreement, the Financing Agreement, the Notes, the Deed of
Trust, the Guaranty and the other Financing Documents are and remain true,
accurate, complete and correct in all respects; and, no such understanding,
representation, warranty or recital fails or omits to state or otherwise
disclose any material fact or information necessary to prevent such
understanding, representation, warranty or recital from being misleading. The
Obligors acknowledge and agree that the Lender has been induced in part to enter
into this Agreement based upon the Lender's justifiable reliance on the truth,
accuracy, and completeness of all understandings, representations, warranties
and recitals contained in this Agreement, the Financing Agreement, the Notes,
the Deed of Trust, the Guaranty and the other Financing Documents. The recitals
are deemed to be part of this Agreement. There is no fact known to any Obligor
or which should be known to any Obligor which the Obligors have not disclosed to
the Lender in writing on or prior to the date of this Agreement which would or
could materially and adversely affect the understandings of the Lender expressed
in this Agreement or any representation, warranty or recital contained in this
Agreement, the Financing Agreement, the Notes, the Deed of Trust, the Guaranty
and the other Financing Documents. The Obligors hereby issue, ratify and confirm
the representations, warranties and covenants contained in the Financing
Agreement, the Notes, the Deed of Trust, the Guaranty and the other Financing
Documents, as amended hereby. The Borrower agrees that this Agreement is not
intended to and shall not cause a novation with respect to any or all of the
obligations contained in the Financing Agreement, the Notes, the Deed of Trust,
the Guaranty and the other Financing Documents.
(f) Each of the Financing Documents continues in full force and effect
notwithstanding the execution and delivery of this Agreement. Each of the
Obligors hereby reissues, ratifies and confirms the enforceability and validity
of all Financing Documents to which it is a party and agree that this Agreement
and each of the Financing Documents constitute the legal, valid and binding
obligations of each of the Obligors to the extent such Obligor is party thereto,
enforceable in accordance with their respective terms. In addition, the Obligors
each acknowledge and agree that neither the execution and delivery of this
Agreement nor any of the terms, provisions, covenants or agreements contained in
this Agreement shall in any manner release, impair, lessen, modify, waive or
otherwise affect the liability and obligations of the Obligors under the terms
of the Financing Documents. The Obligors acknowledge and confirm the Lender's
duly perfected first priority security interest to and against the Collateral
and the Lender's rights and first priority security interest as to the Property
pursuant to the Deed of Trust and financing statements.
(g) The Lender has acted in good faith and has conducted itself in a
commercially reasonable manner in its relationships with each of the Obligors in
connection with this Agreement and in connection with the Loans, the
Indebtedness and the Financing Documents, the Obligors each hereby waiving and
releasing any claims to the contrary. The Obligors have no defenses, affirmative
or otherwise, rights of setoff, rights of recoupment, claims, counterclaims,
actions or causes of action of any kind or nature whatsoever against the Lender
or any past, present or future agent, attorney, legal representative,
predecessor in interest, affiliate, successor, assign, employee, director or
officer of the Lender (collectively, the "Lender Group"), directly or
indirectly, arising out of, based upon, or in any manner connected with, any
transaction, event, circumstance, action, failure to act, or occurrence of any
sort or type, whether known or unknown, which occurred, existed, was taken,
permitted, or begun prior to the execution of this Agreement and occurred,
existed, was taken, permitted or begun in accordance with, pursuant to, or by
virtue of the Indebtedness or any of the terms or conditions of the Financing
Documents, or which directly or indirectly relate to or arise out of or in any
manner are connected with the Indebtedness or any of the Financing Documents; to
the extent any such defenses, affirmative or otherwise, rights of setoff, rights
of recoupment, claims, counterclaims, actions or causes of action exist or
existed, such defenses, rights, claims, counterclaims, actions and causes of
action are hereby forever waived, discharged and released. The Obligors hereby
acknowledge and agree that the execution of this Agreement by the Lender shall
not constitute an acknowledgment of or admission by the Lender or any member of
the Lender Group of the existence of any claims or of liability for any matter
or precedent upon which any claim or liability may be asserted. The Obligors
further acknowledge and agree that, to the extent any such claims may exist,
they are of a speculative nature so as to be incapable of objective valuation
and that, in any event, the value to each of the Obligors of the covenants and
obligations of the Lender contained in this Agreement and the other documents
executed and delivered in connection with this Agreement substantially and
materially exceeds any and all value of any kind or nature whatsoever of any
such claims. The Obligors further acknowledge and agree that Lender is not in
any way responsible or liable for the previous, current or future condition or
deterioration of the business operations and/or financial condition of any of
the Obligors and that the Lender has not breached any agreement or commitment to
loan money or otherwise make financial accommodations available to the Borrower
or to fund any operations of the Borrower at any time.
(h) THE OBLIGORS 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 (I) ALL TERMS AND
CONDITIONS OF THIS AGREEMENT, (II) ANY AND ALL OTHER DOCUMENTS EXECUTED AND
DELIVERED IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT,
AND (III) ALL FACTUAL AND LEGAL MATTERS RELEVANT TO THIS AGREEMENT AND/OR ANY
AND ALL SUCH OTHER DOCUMENTS, WITH COUNSEL FREELY AND INDEPENDENTLY SELECTED BY
THE OBLIGORS. THE OBLIGORS FURTHER ACKNOWLEDGE AND AGREE THAT THEY HAVE ACTIVELY
AND WITH FULL UNDERSTANDING PARTICIPATED IN THE NEGOTIATION OF THIS AGREEMENT
AND ALL OTHER DOCUMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS AGREEMENT
AFTER CONSULTATION AND REVIEW 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 ARM'S-LENGTH, AND THAT
THIS AGREEMENT AND ANY ALL SUCH OTHER DOCUMENTS HAVE BEEN NEGOTIATED, PREPARED
AND EXECUTED WITHOUT FRAUD, DURESS, UNDUE INFLUENCE, OR COERCION OF ANY KIND OR
NATURE WHATSOEVER HAVING BEEN EXERTED BY OR IMPOSED UPON ANY PARTY TO THIS
AGREEMENT UPON ANY OTHER PARTY. NO PROVISION OF THIS AGREEMENT OR SUCH OTHER
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 BEING DEEMED TO HAVE STRUCTURED, DICTATED OR
DRAFTED SUCH PROVISION.
(i) Except as otherwise disclosed to the Lender in writing on Exhibit "A"
attached hereto and made a part hereof, there are no proceedings or
investigations pending or, so far as the Obligors know, threatened before any
court or arbitrator or before or by, any governmental, administrative or
judicial authority or agency, or arbitrator, against any of the Obligors.
(j) There is no statute, regulation, rule, order or judgment, no charter,
by-law, or preference stock provision of any Obligor, and no provision of any
mortgage, indenture, contract or other agreement binding on any Obligor or any
of its or their respective properties, which would prohibit or cause a default
under or in any way prevent the execution, delivery, performance, compliance or
observance of any of the terms and conditions of this Agreement and/or any of
the other documents executed and delivered in connection with this Agreement.
(k) The Obligors each hereby jointly and severally, knowingly and
voluntarily, forever release, acquit and discharge the Lender and the Lender
Group from and of any and all claims that the Lender or any of the Lender Group
is in any way responsible for the past, current or future condition or
deterioration of the business operations and/or financial condition of any of
the Obligors, and from and of any and all claims that the Lender or any of the
Lender Group breached any agreement to loan money or make other financial
accommodations available to the Borrower or to fund any operations of the
Borrower at any time. The Obligors each further hereby jointly and severally,
knowingly and voluntarily forever release, acquit and discharge the Lender and
the Lender Group, from and of any and all other claims, damages, losses,
actions, counterclaims, suits, judgments, obligations, liabilities, defenses,
affirmative defenses, setoffs, and demands of any kind or nature whatsoever, in
law or in equity, whether presently known or unknown, which any or all of the
Obligors may have had, now have, or which they can, shall or may have for, upon,
or by reason of any matter, course or thing whatsoever relating to, arising out
of, based upon, or in any manner connected with, any transaction, event,
circumstance, action, failure to act, or occurrence of any sort or type, whether
known or unknown, which occurred, existed, was taken, permitted, begun, or
otherwise related or connected to or with any or all of the Indebtedness, this
Agreement, any or all of the Financing Documents, and/or any direct or indirect
action or omission of the Lender and/or any of the Lender Group. The Obligors
further agree that from and after the date hereof, they will not assert to any
person or entity that any deterioration of the business operations or financial
condition of any of the Obligors was caused by any breach or wrongful act of the
Lender or any of the Lender Group. (k) If the Guarantor is or becomes an
"insider" as defined from time to time in Section 101 of the United States
Bankruptcy Code, U.S.C. Title 11 (the "Bankruptcy Code") with respect to any
other Obligor, then each such Guarantor irrevocably and absolutely waives any
and all rights of subrogation, contribution, indemnification, reimbursement or
any similar right against such Obligor in connection with the Indebtedness and
the transactions contemplated herein, whether such rights arise under an express
or implied contract or by operation of law, it being the intention of the
parties that the Guarantor shall not be deemed a "creditor", as defined in
Section 101 of the Bankruptcy Code, of any Obligor in the event any such Obligor
becomes a debtor in any proceeding under the Bankruptcy Code.
12. Default. The occurrence of any or more of the following events or
occurrences shall constitute a " Forbearance Default" under this Agreement:
(a) The failure of any of the Obligors to observe, perform, or comply with
any of the terms, conditions or provisions of this Agreement and/or any other
document executed and delivered in connection with this Agreement, as and when
required.
(b) If any recital, representation or warranty made herein, in any document
executed and delivered in connection herewith, or in any report, certificate,
financial statement or other instrument or document previously, now or hereafter
furnished by or on behalf of any of the Obligors in connection with this
Agreement or any other document executed and delivered in connection with this
Agreement, shall prove to have been false, incomplete or misleading in any
respect on the date as of which it was made.
(c) The occurrence of a default under any of the Financing Documents other
than the Existing Defaults.
(d) If any of the Obligors commences, institutes or otherwise intervenes in
any proceeding or action against the Lender or any member of the Lender Group in
connection with any of the Indebtedness, any of the Financing Documents, this
Agreement or any of the documents executed and delivered in connection with this
Agreement.
13. Remedies. Immediately upon the occurrence of any Forbearance Default,
the obligations, agreements and commitments of the Lender set forth in this
Agreement shall immediately and automatically terminate and be of no further
force or effect without further notice to or consent of any of the Obligors, and
the Lender shall have the right to exercise and enforce any and all rights and
remedies available to the Lender under this Agreement, under any and all
documents executed and delivered in connection with this Agreement, under any
and all Financing Documents, and under applicable laws to the same extent as
though this Agreement had never been executed, without regard to any notice or
cure period contained in any of the foregoing or otherwise available under
applicable laws. All rights and remedies available to the Lender under this
Agreement, under any documents executed and delivered in connection with this
Agreement, under any and all of the Financing Documents, and under applicable
laws, may be asserted, enforced and exercised concurrently, cumulatively or
successively from time to time and at any time until such time as all of the
Indebtedness have been indefeasibly paid in full.
14. Expenses. The Lender shall be entitled to obtain at the expense of the
Obligors, such appraisals, reports, record searches, and legal and other
opinions and advice as the Lender may from time to time deem necessary with
respect to any or all of Obligors and/or any or all collateral and security now
or hereafter securing any of the Indebtedness. The Obligors agree jointly and
severally to pay all costs, fees and expenses of the Lender in connection with
the preparation, execution and delivery of this Agreement and any and all other
documents executed and delivered in connection with this Agreement and all other
costs, fees and expenses, incurred by, or on behalf of the Lender in connection
with the enforcement, preservation, or collection of the Indebtedness and/or
this Agreement, including, without limitation, attorneys fees and expenses, and
recordation and filing fees and taxes (collectively, the "Enforcement Costs").
Such Enforcement Costs shall be deemed to be part of the Indebtedness and shall
be payable upon demand.
15. CONFESSION OF JUDGMENT. THE OBLIGORS AUTHORIZE ANY ATTORNEY ADMITTED TO
PRACTICE BEFORE ANY COURT OF RECORD IN THE UNITED STATES TO APPEAR ON BEHALF OF
THE OBLIGORS IN ANY COURT IN ONE OR MORE PROCEEDINGS, OR BEFORE ANY CLERK
THEREOF OR PROTHONOTARY OR OTHER COURT OFFICIAL, AND TO CONFESS JUDGMENT AGAINST
THE DEBTOR IN FAVOR OF THE HOLDER OF THIS AGREEMENT IN THE FULL AMOUNT DUE UNDER
THIS AGREEMENT (INCLUDING PRINCIPAL, ACCRUED INTEREST AND ANY AND ALL CHARGES,
FEES AND COSTS) PLUS ATTORNEYS' FEES EQUAL TO FIFTEEN PERCENT (15%) OF THE
AMOUNT DUE, PLUS COURT COSTS, ALL WITHOUT PRIOR NOTICE OR OPPORTUNITY OF DEBTOR
FOR PRIOR HEARING. DEBTOR AGREES AND CONSENTS THAT VENUE AND JURISDICTION SHALL
BE PROPER IN THE CIRCUIT COURT OF ANY COUNTY OF THE STATE OF MARYLAND OR OF
BALTIMORE CITY, MARYLAND, OR IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF MARYLAND. DEBTOR WAIVES THE BENEFIT OF ANY AND EVERY STATUTE,
ORDINANCE, OR RULE OF COURT WHICH MAY BE LAWFULLY WAIVED CONFERRING UPON DEBTOR
ANY RIGHT OR PRIVILEGE OF EXEMPTION, HOMESTEAD RIGHTS, STAY OF EXECUTION, OR
SUPPLEMENTARY PROCEEDINGS, OR OTHER RELIEF FROM THE ENFORCEMENT OR IMMEDIATE
ENFORCEMENT OF A JUDGMENT OR RELATED PROCEEDINGS ON A JUDGMENT. THE AUTHORITY
AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST DEBTOR SHALL NOT BE EXHAUSTED
BY ONE OR MORE EXERCISES THEROF, OR BY ANY IMPERFECT EXERCISE THEROF, AND SHALL
NOT BE EXTINGGUISHED BY ANY JUDGMENT ENTERED PURSUANT THERETO; SUCH AUTHORITY
AND POWER MAY BE EXERCISED ON ONE OR MORE OCCASIONS FROM TIME TO TIME, IN THE
SAME OR DIFFERENT JURISDICTIONS, AS OFTEN AS THE HOLDER SHALL DEEM NECESSARY,
CONVENIENT, OR PROPER.
16. WAIVER OF JURY TRIAL. THE OBLIGORS AND THE LENDER EACH HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH ANY OR ALL OF THE OBLIGORS
AND THE LENDER MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO (A)
THIS AGREEMENT, (B) ANY OF THE DOCUMENTS EXECUTED AND DELIVERED IN CONNECTION
WITH THIS AGREEMENT, (C) ANY OF THE INDEBTEDNESS, AND (D) ANY OF THE FINANCING
DOCUMENTS. IT IS AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF
TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS,
INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT.
THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE OBLIGORS
AND THE LENDER, AND THE OBLIGORS AND THE LENDER EACH HEREBY REPRESENT AND
WARRANT THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY
INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR
NULLIFY ITS EFFECT. THE OBLIGORS FURTHER REPRESENT THAT THEY HAVE BEEN
REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE
HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
17. RELIEF FROM THE AUTOMATIC STAY. THE BORROWER HEREBY ACKNOWLEDGES AND
AGREES THAT THE LENDER HAS AGREED TO ENTER INTO THIS AGREEMENT IN ORDER TO
PERMIT THE BORROWER AN OPPORTUNITY TO REPAY AND SATISFY THE INDEBTEDNESS IN A
MUTUALLY ACCEPTABLE, CONSENSUAL MANNER, RATHER THAN THROUGH THE LENDER'S
EXERCISE AND ENFORCEMENT OF ITS RIGHTS AND REMEDIES UNDER THE FINANCING
AGREEMENT, THE FINANCING DOCUMENTS AND APPLICABLE LAWS. THE BORROWER FURTHER
ACKNOWLEDGES AND AGREES THAT BECAUSE OF THE EXISTING DEFAULTS UNDER AND IN
CONNECTION WITH THE INDEBTEDNESS, THE LENDER WOULD OTHERWISE BE ENTITLED TO
EXERCISE IMMEDIATELY ANY AND ALL SUCH RIGHTS AND REMEDIES IF THE LENDER DID NOT
ENTER INTO THIS AGREEMENT. THE BORROWER FURTHER ACKNOWLEDGES AND AGREES THAT
ALTHOUGH THE LENDER'S INTEREST IN ITS COLLATERAL AND SECURITY IS NOT PRESENTLY
BEING ADEQUATELY PROTECTED, THE LENDER HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT IN RELIANCE UPON THE UNDERSTANDING THAT IN THE EVENT THE LENDER
EXERCISES ANY OF ITS RIGHTS OR REMEDIES UNDER THE FINANCING AGREEMENT AND/OR ANY
OR ALL OF THE FINANCING DOCUMENTS AND/OR UNDER ANY APPLICABLE LAWS UPON THE
OCCURRENCE OF A FORBEARANCE DEFAULT, THE BORROWER WILL COOPERATE WITH THE LENDER
IN THE LENDER'S EFFORTS TO EXERCISE ANY AND ALL SUCH RIGHTS AND REMEDIES
AVAILABLE TO THE LENDER. ACCORDINGLY, IF THE BORROWER BECOMES THE SUBJECT OF A
BANKRUPTCY CASE, THE BORROWER CONSENTS TO ALLOW THE LENDER TO EXERCISE ANY AND
ALL RIGHTS AND REMEDIES AVAILABLE TO THE LENDER WITH RESPECT TO ITS COLLATERAL
AND SECURITY. THE BORROWER HEREBY CONSENTS TO ANY MOTION FILED BY OR ON BEHALF
OF THE LENDER FOR RELIEF FROM THE AUTOMATIC STAY UNDER XXXXXXX 000 XX XXX XXXXXX
XXXXXX BANKRUPTCY CODE. THE BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS
THE LENDER TO FILE THIS CONSENT WITH THE BANKRUPTCY COURT PRESIDING OVER ANY
SUCH BANKRUPTCY CASE OF THE BORROWER, AND FURTHER AGREES NOT TO OPPOSE ANY SUCH
MOTION FOR RELIEF FROM THE AUTOMATIC STAY FILED BY OR ON BEHALF OF THE LENDER.
FINALLY, THE BORROWER CONSENTS AND AGREES THAT NONE OF THE COLLATERAL (INCLUDING
ANY CASH OR NON-CASH PROCEEDS THEREOF) MAY BE USED TO PAY ANY ACTUAL OR
ESTIMATED FEES INCURRED BY OR ESTIMATED TO BE INCURRED BY THE BORROWER WITH
RESPECT TO ANY FILED OR PROPOSED BANKRUPTCY CASE IN WHICH THE BORROWER IS THE
SUBJECT.
18. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or overnight delivery service or when
mailed by certified mail, postage prepaid, as follows:
If to the Lender: Bank of America, N.A.
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxx
If to the Borrower: Xxxxxx Industries, Inc.
00000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxx Xxxxxxxx, President
If to the Guarantor: Obsidian Enterprises, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx,
Chief Executive Officer
with a copy to: Xxxx X. Xxxxx, Esq..
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
or to such other address as any party hereto may designate for itself by notice
to the other parties hereto.
19. Other Agreements. The parties to this Agreement further agree:
(a) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Maryland. In any litigation in connection with or to
enforce this Agreement, the Obligors each irrevocably consents to and confers
personal jurisdiction on the courts of the State of Maryland or the United
States located within the State of Maryland and expressly waives any objections
as to venue in any such courts. Nothing contained herein shall, however, prevent
Lender from bringing action or exercising any rights within any other state or
jurisdiction or from obtaining personal jurisdiction by any other means
available under applicable law.
(b) 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 in this
Agreement shall remain effective and binding and shall not be affected or
impaired thereby.
(c) If there is any conflict between the terms of this Agreement, any of
the documents executed and delivered in connection with this Agreement, and any
of the Financing Documents, the terms of this Agreement shall prevail.
(d) This Agreement may be amended, modified or supplemented only by written
agreement of the parties hereto. No provision of this Agreement may be waived
except in writing signed by the party against whom such waiver is sought to be
enforced.
(e) This Agreement sets forth the final and entire agreement and
understanding of the parties hereto, superseding all prior representations,
understandings and agreements, written or oral, not expressly set forth in this
Agreement or in any other documents executed and delivered in connection
herewith.
(f) The Obligors agree to execute and deliver to Lender any and all further
amendments, modifications, notes, financing statements, instruments, agreements
and documents which Lender may reasonably require in connection with the terms
and provisions of this Agreement or any of the other Financing Documents.
(g) As used in this Agreement, the singular number shall include the
plural, the plural the singular and the use of the masculine, feminine or neuter
gender shall include all genders, as the context may require. Reference in this
Agreement to any one or more of the Obligors shall mean the same, jointly and
severally.
(h) The headings, titles and captions of this Agreement are for the
convenience only and are not part of this Agreement.
(i) Time is of the essence of this Agreement with respect to each of the
Obligors.
(j) This Agreement shall be binding upon and inure to the benefit of the
Obligors, the Lender and each of their respective heirs, personal
representatives, successors, and assigns. None of the Obligors shall however,
assign any of their respective rights or obligations under this Agreement.
(k) This Agreement may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be deemed
to be an original and all taken together shall constitute but one and the same
agreement. The parties agree that their respective signatures may be delivered
by fax. Any party who chooses to deliver its signature by fax agrees to provide
promptly to the other parties a counterpart of this Agreement with its inked
signature.
SIGNATURE PAGE TO LIMITED FORBEARANCE AGREEMENT BY AND BETWEEN BANK OF
AMERICA, N.A, XXXXXX INDUSTRIES, INC. AND OBSIDIAN ENTERPRISES, INC.
IN WITNESS WHEREOF, the Obligors and the Lender have executed this
Agreement under seal as of the date first written above.
WITNESS: BANK OF AMERICA, N.A.
By: (SEAL)
Name:
Title:
WITNESS: XXXXXX INDUSTRIES, INC.
By: (SEAL)
Name:
Title:
WITNESS: OBSIDIAN XXXXXXXXXXXX, INC.
By: (SEAL)
Name:
Title:
