Exhibit 10.38
FIRST MODIFICATION TO FORBEARANCE AGREEMENT
This FIRST MODIFICATION TO FORBEARANCE AGREEMENT is made as of the
22nd day of November, 2004 by and among Stronghold Technologies, Inc., a New
Jersey corporation ("Stronghold NJ"), Stronghold Technologies, Inc., a Nevada
corporation ("Stronghold Nevada") (Stronghold NJ and Stronghold Nevada
individually referred to as a "Borrower" and together referred to as the
"Borrowers"), both Borrowers having an address of 000 Xxxxx Xxxx, Xxxxxxx Xxxxx,
Xxx Xxxxxx, 00000, Xxxxxxxxxxx X. Xxxxx, residing at 000 Xxxxxxxxx Xxxx,
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000 (the "Guarantor"), Xxxx X. Xxxxx, residing at
000 Xxxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx 00000 (the "Limited
Guarantor")(the Guarantor and the Limited Guarantor being together referred to
as the "Guarantors"), and PNC Bank, National Association, as successor by merger
to UnitedTrust Bank, Xxx Xxxxx Xxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx
00000 ("Lender").
The Lender, the Borrowers and the Guarantors are parties to a
Forbearance Agreement dated as of July 7, 2004 (the "Forbearance Agreement"). In
consideration of the mutual promises and covenants set forth herein, the Lender,
the Borrowers and the Guarantors hereby agree to modify the terms of the
Forbearance Agreement as follows:
1. All capitalized terms not defined in this Modification Agreement
shall have the same meaning set forth in the Forbearance Agreement.
2. Effective November 1, 2004, the rate of interest payable on the
Loan has been increased to the New Default Rate (8.0% over the Prime Rate).
3. The repayment terms are hereby modified to provide that the
Borrowers shall make payments of interest only on November 15, 2004, December
15, 2004 and January 15, 2005. On or before January 31, 2005, the Borrowers
shall pay all remaining principal, interest at the New Default Rate, and unpaid
costs and expenses outstanding under the Loan, including all legal fees
(including but not limited to all fees and expenses incurred in connection with
the preparation of this Modification Agreement), accounting, appraisal and other
professional fees and expenses incurred by the Lender.
4. The Borrowers shall pay the Lender a non-refundable modification
fee in the amount of $9,000.00. Such fee shall be paid in installments as
follows: $3,000.00 on December 15, 2004, $3,000.00 on January 15, 2005 and
$3,000.00 on January 31, 2005.
5. The "Termination Date" is hereby modified to mean the earlier of:
(i) the date an Event of Default under the Forbearance Agreement occurs; or (ii)
January 31, 2005.
6. Except as expressly modified herein, the Forbearance Agreement
shall continue in full force and effect. By executing this Modification
Agreement, the Borrowers and the Guarantors hereby acknowledge that the
Forbearance Agreement and all documents executed by the Borrowers in connection
with the Loan shall continue in full force and effect, are valid and binding,
and they hereby expressly ratify, confirm and reaffirm all terms and conditions
thereof. The Borrowers and Guarantors hereby represent, warrant and confirm that
there are no set-offs, defenses, rights, claims or causes of action of any
nature whatsoever which the Borrowers or the Guarantors have or may assert
against the Lender with respect to the Forbearance Agreement, the Loan, or any
of the documents executed in connection therewith.
DATED as of the date and year first above written.
BORROWERS:
Stronghold Technologies, Inc.,
a Nevada corporation
Attest:_______________________ By: /s/ Xxxxxxxxxxx X. Xxxxx
-------------------------
Xxxxxxxxxxx X. Xxxxx
Title:________________________ Title: President
Stronghold Technologies, Inc.,
a New Jersey corporation
Attest:_______________________ By: /s/ Xxxxxxxxxxx X. Xxxxx
-------------------------
Xxxxxxxxxxx X. Xxxxx
Title:________________________ Title: President
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GUARANTOR:
/s/ Xxxxxxxxxxx X. Xxxxx
----------------------------- ------------------------
Witness Xxxxxxxxxxx X. Xxxxx
LIMITED GUARANTOR:
/s/ Xxxx X. Xxxxx
----------------------------- ----------------
Witness Xxxx X. Xxxxx
LENDER:
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------
Xxxx X. Xxxxxxxxxx
Title: Vice President
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