SECOND AMENDMENT TO FORBEARANCE AGREEMENT
THIS SECOND AMENDMENT TO FORBEARANCE AGREEMENT (the
"Agreement") is made this 30th day of March, 2006, 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 $1,848,996.42,833 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 are
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.
Borrower acknowledges that this obligation has been declared due
by the Bank and is now fully due and owing, without defense,
offset or counterclaim
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".
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, and,
subsequently, a First Amendment thereto dated September 29, 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. The Bank shall receive a
$250,000 pay down from Borrower on the date hereof.
3. Deposit to Money Market Account. On the date hereof,
the Borrower (which may use funds borrowed from third parties for
this purpose) shall deposit $200,000 into a money market account
at the Bank, which account the Bank may freely debit as required
to meet debt service obligations of Borrower to the Bank under the
Forbearance Agreement.
4. Extension of the Forbearance Agreement. The term of
the Bank's forbearance is initially extended to July 31, 2006. If
Xxxxxxxx Industries remits a further one million dollars
($1,000,000) to the Bank by July 31, 2006, the forbearance period
shall be extended to December 31, 2006, on condition that, to the
extent the $200,000 deposit under paragraph 3 hereof has been
drawn down prior to July 31, 2006, such deposit shall be
replenished to $200,000 on July 31, 2006.
5. Debt Service. Debt service during the extended term
of the Forbearance Agreement shall continue to be paid monthly,
interest only, as if the Obligations of Borrower to the Bank had
not been previously accelerated. It is acknowledged that all
Obligations covered by the Bank's forbearance were previously
accelerated or otherwise matured and are now fully due and owing,
subject to the terms of the Bank's forbearance hereunder, without
defense, offset or counter-claim. It is further agreed that the
Bank's acceptance of interest-only payments during the extended
forbearance period shall not waive the prior acceleration or
extend any maturity of the Obligations.
6. Additional Real Estate Collateral. WFLP, with the
written consent of all partners thereto, is executing, as part of
this Agreement, a Second Amendment to Deed of Trust, attached as
Exhibit A, together with all other documents necessary to increase
the existing deed of trust on the Wellington parcel by a further
$758,000, such deed of trust, as amended, to secure all
Obligations due to the Bank by the parties to this Agreement.
7. Real estate taxes which presently prime the Bank's
liens. The Borrower has, on even date, delivered to the Bank a
copy of all agreements concerning the deferred payment of past-due
real estate taxes due and unpaid which created tax liens that
prime the Bank's liens and security interests on any collateral
pledged to the Bank by Borrower and WFLP. The Bank, by its
signature below, acknowledges and accepts the terms of such
agreement(s). During the extended term of the Bank's forbearance
there shall be full and timely compliance with such agreements
and, moreover, all real estate and other taxes arising or due
during the term of the Bank's extended forbearance must be paid,
in full, on a timely basis, by Borrower and WFLP, such that the
unpaid real property tax obligations which prime the Bank's liens
and security interests on the date hereof do not grow in size
during the term of the Bank's extended forbearance.
8. Withdrawal of February 24, 2006, letter. The Bank
hereby withdraws its letter of February 24, 2006, nunc pro tunc,
without prejudice to the Bank's right to again invoke the same
sort of remedies if there is a further default by Borrower
hereunder.
9. Reaffirmation of Guaranty of Xxxxx X. Xxxxxxxx, Xx.
Xxxxx X. Xxxxxxxx, Xx. ("Guarantor") hereby ratifies, confirms and
extends Amended And Restated Guaranty Agreement dated September
29, 2005, and further consents to the terms of this Agreement.
Without limitation thereof, he continues to personally guarantee
the Borrower's obligation to pay the Bank $241,649 on March 6,
2006, which payment was not timely made and is not satisfied by
the $250,000 payment provided for in paragraph 1 hereof, and
remains due and owing to the Bank.
9. 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
under 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.
10. 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, the Loan
Documents and all obligations therein continue in full force and
effect.
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
September 29, 2005 (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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. 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.
17. Time of the Essence. Time is of the essence under
this Agreement. Closing must occur by no later than 2:00 P.M. on
March 30, 2006, and post-Closing obligations must thereafter
timely occur.
18. 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.
19. 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. All signators represent that their
signatures are given with full approval, after, for non-individual
signators, all required corporate and partnership action, and that
their entry into this Agreement does not violate any contract,
agreement or law to which they are subject or to which they are a
party nor require the further consent of any person not a party
hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement
as a sealed instrument as of the day and year set forth above.
[SIGNATURES OMITTED FROM THIS COPY]
