EXHIBIT 10.34
FOURTH AMENDMENT AND FORBEARANCE AGREEMENT
THIS FOURTH AMENDMENT AND FORBEARANCE AGREEMENT (this "Agreement"),
dated and effective the 31/st/ day of July, 2002 (the "Effective Date"), by and
among XXXXXXXX INDUSTRIES, INC., a Delaware company ("Xxxxxxxx"), XXXXXXXX YARN
EQUIPMENT, INC., a South Carolina company ("Xxxxxxxx Yarn"), WINK XXXXX
EQUIPMENT COMPANY, INC., a Georgia company ("Wink Xxxxx"), XXXX MOTION CONTROLS,
INC., a North Carolina company ("Xxxx Motion" and together with Xxxxxxxx,
Xxxxxxxx Yarn, Wink Xxxxx and any future or indirect subsidiaries of Xxxxxxxx or
of any other entities listed above, the "Borrowers"), jointly and severally and
their respective successors and assigns, and SOUTHTRUST BANK ("Lender").
R E C I T A L S :
WHEREAS, the Borrowers above entered into that certain Credit Facility
Agreement, dated as of May 31, 2000 (the "Credit Agreement") with Lender for the
purpose of establishing a $17,500,000 Revolving Credit Facility and a
$15,000,000 Letter of Credit Facility with the Lender in favor of the Borrowers
(collectively, with all other obligations owed by Borrowers to SouthTrust, the
"Obligations") (all terms not otherwise defined herein shall have the meaning
ascribed to it in the Credit Agreement); and
WHEREAS, the parties amended the Credit Agreement pursuant to that
certain Amendment and Forbearance Agreement dated as of the 13/th/ day of
November, 2000 (the "First Amendment") which was superseded by the Second
Amendment as hereinafter defined; and
WHEREAS, the parties amended the Credit Agreement pursuant to that
certain Second Amendment and Forbearance Agreement dated July 1, 2001 (the
"Second Amendment"); and
WHEREAS, the parties amended the Credit Agreement pursuant to that
certain Third Amendment and Forbearance Agreement dated February 19, 2002 (the
"Third Amendment"); (the Credit Agreement, Second Amendment, and Third Amendment
are collectively the "Credit Agreements"); and
WHEREAS, the Borrowers have requested the Lender to temporarily modify
certain terms of the Credit Agreement and to forbear from taking remedial
actions as a result of their non-compliance with certain covenants and
warranties in the Credit Agreement (the "Existing Noncompliance") and to extend
the Forbearance Period as set forth in the Third Amendment; and
WHEREAS, the Lender is willing to accommodate the Borrowers under the
terms set forth in this Agreement; and
WHEREAS, the Lender is willing to grant the forbearance requested by
the Borrowers, but only upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, the Borrowers and the Lender agree as follows:
1. Borrowers acknowledge and agree that the foregoing recitals are
true, correct, and complete.
2. "Existing Noncompliance": Borrowers acknowledge that as of the date
hereof, they are not in compliance with Sections 10.16, 10.17, 10.18 and 10.19
of the Credit Agreement and as set forth in Sections 4.01(a), (c) and (d) of the
Second Amendment. As a result, the Lender could declare an event of default
under the Credit Agreement and exercise its rights and remedies thereunder and
under the related Loan Documents.
3. Except as expressly set forth herein, the terms and conditions of
the Credit Agreements remain in full force and effect. This Agreement shall be a
Loan Document.
4. Lender agrees that, in respect of the Existing Noncompliance,
during the Forbearance Period (as defined below), Lender will not enforce or
exercise any remedies available to it under the Loan Documents, and will not
seek collection of the Loans from the Borrowers, except as set forth herein. As
used herein, the term "Forbearance Period" means the period of time commencing
on as of the date of this Agreement and ending on December 31, 2002, subject to
an earlier termination of the Forbearance Period as provided in Section 6 below.
5. Interest shall continue to accrue on the principal of the Loans, as
set forth in the Credit Agreement, as amended, until such principal is paid in
full. During the Forbearance Period, Borrowers shall make all payments in
accordance with the payment terms set forth in the respective Loan Documents.
6. Notwithstanding the provisions of Section 2 above, the Forbearance
Period shall automatically terminate without further notice to the Borrowers or
any other person (all notice otherwise required by the Loan Documents or
otherwise being hereby waived) if (i) any case or other proceeding is instituted
by or against Borrowers under any state or federal law relating to the
bankruptcy or insolvency of debtors, including, without limitation, the United
States Bankruptcy Code, 11 U.S.C. (S) 101 et seq.; (ii) any "Event of Default"
(as defined in the Loan Documents) occurs under any of the Loan Documents other
than the Existing Noncompliance; (iii) any of the acknowledgments, warranties,
or representations of Borrowers set forth herein shall be untrue or inaccurate
in any material respect as of the date made; or (iv) Borrowers breach, default,
or failure to perform any other obligation or agreement contained in this
Agreement in a material way arising to an Event of Default under the Loan
Documents, including, without limitation, the failure to meet its EBITDA
projections as set forth in more detail in paragraph 9.
7. During the Forbearance Period, SouthTrust can require Borrowers, at
Borrowers' sole expense, to hire an independent outside consulting firm to
assist Borrowers with financial reporting, soliciting alternative financing
opportunities, and seeking potential investors and/or purchasers. SouthTrust
shall notify Borrowers in writing of such request. Borrowers will thereafter
notify SouthTrust in writing of the name and address of the consultant that
Borrowers intends to hire.
8. The Credit Agreement, as amended, is hereby amended as follows:
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(a) Section 3.1 of the Credit Agreement is amended to increase the
maximum principal face amount of Documentary Letters of Credit
by $2,000,000 to $6,000,000.
(b) Lender will permit no over-advancements under the Revolving
Credit Loan. Any Over-Advance Condition shall be an immediate
Event of Default hereunder.
(c) The percentage of Eligible Accounts used to determine, and as
stated in the definition of "Borrowing Base Amount" remains
80%.
(d) The Borrowing Base Certificate attached as Exhibit B to the
Second Amendment shall continue to be used by the Borrowers
with the amended percentage of Eligible Accounts set forth
above.
9. In addition to the reports required under Section 10.1 of the
Credit Agreement, as amended by the Second Amendment, the Borrowers will provide
within 20 days after the end of each month, all financial information and
reporting currently required under the Credit Agreement on a quarterly basis,
including EBITDA calculations, on a monthly basis with financial information for
the immediately proceeding month.
10. Borrowers have provided Lender month-end EBITDA projections for all
months covered by the Forbearance Agreement (the "EBITDA Projections"). A copy
of the EBITDA Projections are attached hereto as Exhibit A. It shall constitute
an Event of Default hereunder, and cause the termination of this Agreement, if
the actual EBITDA numbers for any one month do not fall within a variance of
$100,000 of the EBITDA Projections for that month.
11. The Lender shall have no further obligation to provide additional
financing to the Borrowers except as set forth under the Loan Documents or
herein. Nothing contained herein shall constitute a commitment or guarantee by
Lender to extend any future financing to Borrowers, except as set forth in the
Loan Documents.
12. Borrowers acknowledge and agree that (i) this Agreement is not
intended to be, and shall not be deemed or construed to be, a novation or
release of the Loan Documents or any of them; (ii) except as expressly provided
in this Agreement, this Agreement is not intended to be, and shall not be deemed
or construed to be, a modification, amendment, or waiver of the Loan Documents
or any of them; (iii) neither this Agreement nor any payments made or other
actions taken pursuant to this Agreement shall be deemed to cure the Existing
Noncompliance unless and until all sums payable with respect thereto pursuant to
the Loan Documents are paid in full or Borrowers shall have met the conditions
of this Agreement with respect thereto; (iv) except as otherwise expressly
provided in this Agreement, Lender reserves all available rights and remedies,
at law, in equity, and under the Loan Documents, in connection with any Event of
Default, including the Existing Noncompliance, whether now existing or hereafter
occurring, under the Loan Documents; and (v) all requirements in the Loan
Documents for notice by Lender to the Borrowers, or any of them, are hereby
waived, except as set forth herein.
13. Borrowers ratify and confirm all terms and conditions of the Loan
Documents (as amended hereby). Borrowers acknowledge that: (i) all the Loan
Documents are in full force and
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effect, and (ii) the Loan Documents constitute the legal, valid and binding
obligations of Borrowers enforceable against Borrowers in accordance with their
terms. Borrowers represent and warrant to Lender that as of the date hereof,
Borrowers have no defenses, setoffs, rights of recoupment, counterclaims or
claims of any nature whatsoever in respect to the Loan Documents, and to the
extent any such defenses, setoffs, rights of recoupment, counterclaims or claims
may exist, whether known or unknown, the same are hereby expressly waived,
released and discharged. Borrowers represents and warrants to Lender that the
Loans continue to be secured by the Loan Documents, and that except with respect
to the Existing Noncompliance, no Event of Default has occurred and is
continuing under the Loan Documents, and no event has occurred or failed to
occur that, with the lapse of time, giving of notice or both, would constitute
an Event of Default under the Loan Documents.
14. Borrowers, in consideration of Lender's agreement to forebear and
modify the Agreements as set forth above and herein, and as a material
inducement therefore, does hereby release, remise and forever discharge Lender
and its affiliates, parents, divisions, subsidiaries, successors, predecessors,
stockholders, officers, directors, agents, employees, attorneys, successors, and
assigns (Lender and such other parties being collectively referred to herein as
the "Released Parties") of and from any and all claims, liabilities, actions,
and causes of action, if any, of whatever kind or nature, whether known or
unknown, those that are contingent, suspected, or unsuspected, and whether
concealed or hidden, which have existed, arising out of or in any way connected
with any occurrences, acts, omissions, or transactions involving, directly or
indirectly, the Loan Documents, or any of the Obligations, or any other
transactions and dealings between the Borrower.
15. Borrowers further acknowledge and agree that all of the Loan
Documents will continue to secure all of the Obligations, and Borrowers have
heretofore and do hereby waive any right for a marshaling of any Collateral now
or hereafter subject to the liens and security interests of the Loan Documents.
16. In recognition of Lender's right to have all its attorneys' fees
and other expenses incurred in connection with the preparation, negotiations and
drafting of this Agreement secured by the Collateral, notwithstanding payment in
full of all Obligations by Borrowers, Lender shall not be required to record any
terminations or satisfactions of any of its liens on the Collateral unless and
until Borrowers has executed and delivered to Lender releases of all claims,
known and unknown which exist as of the date thereof. Borrowers understand that
this provision constitutes a waiver of its rights under (S) 7-9A-513 of the
Alabama Code.
17. Borrowers acknowledge and agree that, if Lender shall, pursuant to
the rights granted to Lender hereunder, under the Loan Documents, or under
applicable law, dispose of any or all of the Collateral after the occurrence of
an Event of Default, such disposition shall be deemed commercially reasonable
if, in the written opinion of three (3) commercial loan officers outside of
Lender with experience in the textile machine and laundry equipment industry
with three (3) years of experience each, the manner of the disposition is not
inconsistent with the manner in which such commercial loan officers would have
handled the disposition.
18. Borrowers represent and warrant to Lender that: (i) Borrowers are,
respectively, corporations organized, validly existing and in good standing
under the laws of the State set forth
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above and have full power and authority to execute, deliver and perform this
Agreement and the other Loan Documents, and the same have been duly authorized
pursuant to all requisite corporate action; (ii) this Agreement and the other
Loan Documents constitute valid and legally binding obligations of the
Borrowers, enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally, and general principles
of equity; (iii) the execution, delivery and performance by the Borrowers of
this Agreement and the other Loan Documents, will not and did not, violate,
conflict with, or constitute any default under any law (including laws relating
to usury), government regulation, or any other agreement or instrument binding
upon the Borrowers; and (iv) no approval, authorization or other action by, or
filing with, any governmental official, board or authority is required in
connection with the execution and delivery of this Agreement or any of the other
Loan Documents, and the performance of the provisions thereof, except such
approvals and authorizations as have been received, such actions as have been
taken, and such filings as have been made.
19. This Agreement shall be construed in accordance with, and shall in
all respects be governed by, the laws of the State of North Carolina. The Loans
owing under the Loan Documents are payable to Lender by Borrowers at Lender's
principal place of business in Birmingham, Jefferson County, Alabama, and the
Loan Documents and this Agreement shall be enforceable in the state and federal
courts presiding in Jefferson County, Alabama, and any other court of competent
jurisdiction.
20. Borrowers agree to pay all reasonable expenses, including
attorneys' fees, incurred by Lender in connection with the negotiations and
preparation of this Agreement. The validity and effectiveness of this Agreement
is conditioned upon Borrowers paying all outstanding expenses of Lender as of
the Effective Date, including attorneys' fees, being _________________________.
21. WAIVER OF JURY TRIAL. BORROWERS AND LENDER HEREBY EXPRESSLY WAIVE
ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN ANY LAWSUIT OR OTHER COURT ACTION
RELATED TO THE LOANS, THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THEREBY, INCLUDING, WITHOUT LIMITATION, IN
RESPECT TO ANY CLAIM, COUNTERCLAIM, THIRD-PARTY CLAIM, DEFENSE, OR SET-OFF
ASSERTED IN ANY SUCH LAWSUIT OR COURT ACTION. ANY SUCH LAWSUIT OR COURT ACTION
SHALL BE TRIED EXCLUSIVELY TO A COURT WITHOUT A JURY. BORROWERS SPECIFICALLY
ACKNOWLEDGE THAT THEIR EXECUTION OF THIS WAIVER OF JURY TRIAL IS A MATERIAL
PORTION OF THE CONSIDERATION RECEIVED BY THE LENDER IN EXCHANGE FOR ITS ENTERING
INTO THIS AGREEMENT.
22. This Agreement may be executed in any number of counterparts, but
it shall not be necessary that each counterpart be executed by all the parties
hereto as long as each party executes at least one such counterpart. When each
of the parties hereto has executed at least one counterpart hereof, this
Agreement shall thereupon be deemed executed by all parties, and together all
such counterparts shall comprise but a single instrument. No provision of this
Agreement shall be construed against or interpreted to the disadvantage of any
party to this
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Agreement by any court or other governmental or judicial authority by reason of
such party's having or being deemed to have structured or dictated such
provision. This Agreement will inure to the benefit of the parties hereto, their
respective successors and assigns. This Agreement and the obligations of the
parties hereunder shall be interpreted, construed and enforced in accordance
with the laws of the State of North Carolina. Time is of the essence in the
performance of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COMPANY AND SUBSIDIARIES: LENDER:
XXXXXXXX INDUSTRIES, INC. (SEAL) SOUTHTRUST BANK (SEAL)
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx Xxxxx
------------------------------ ---------------------------------------
Xxxxxx X. Xxxxxxxx Xxxx Xxxxx
Title: President Title: Vice President
XXXXXXXX YARN EQUIPMENT, INC.
(SEAL)
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxx
Title: President
XXXX MOTION CONTROLS, INC.
(SEAL)
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxx
Title: President
WINK XXXXX EQUIPMENT
COMPANY, INC. (SEAL)
By: /s/ Xxxx X. X. Xxxxxxx
------------------------------
Xxxx X. X. Xxxxxxx
Title: Vice President-Finance, CFO
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STATE OF NORTH CAROLINA )
)
COUNTY OF MECKLENBURG )
I, Xxxx Xxxx Xxxxxxx, a Notary Public in and for said County in said
State, hereby certify that Xxxxxx X. Xxxxxxxx, whose name as President of
XXXXXXXX INDUSTRIES, INC., a Delaware corporation, is signed to the foregoing
Forbearance Agreement, and who is known to me, acknowledged before me on this
day that, being informed of the contents of such instrument, he, as such officer
and with full authority, executed the same voluntarily for and as the act of
said corporation.
Given under my hand and seal, this 31/st/ day of July, 2002.
NOTARY PUBLIC - /s/ Xxxx Xxxx Xxxxxxx
[SEAL]
My Commission Expires: June 25, 0000
XXXXX XX XXXXX XXXXXXXX )
)
COUNTY OF MECKLENBURG )
I, Xxxx Xxxx Xxxxxxx, a Notary Public in and for said County in said
State, hereby certify that Xxxxxx X. Xxxxxxxx, whose name as President of
XXXXXXXX YARN EQUIPMENT, INC., a South Carolina corporation, is signed to the
foregoing Forbearance Agreement, and who is known to me, acknowledged before me
on this day that, being informed of the contents of such instrument, he, as such
officer and with full authority, executed the same voluntarily for and as the
act of said corporation.
Given under my hand and seal, this 31/st/ day of July, 2002.
NOTARY PUBLIC - /s/ Xxxx Xxxx Xxxxxxx
[SEAL]
My Commission Expires: June 25, 2006
8
STATE OF NORTH CAROLINA )
)
COUNTY OF MECKLENBURG )
I, Xxxx Xxxx Xxxxxxx, a Notary Public in and for said County in said
State, hereby certify that Xxxxxx X. Xxxxxxxx, whose name as President of XXXX
MOTION CONTROLS, INC., a North Carolina corporation, is signed to the foregoing
Forbearance Agreement, and who is known to me, acknowledged before me on this
day that, being informed of the contents of such instrument, he, as such officer
and with full authority, executed the same voluntarily for and as the act of
said corporation.
Given under my hand and seal, this 31/st/ day of July, 2002.
NOTARY PUBLIC - /s/ Xxxx Xxxx Xxxxxxx
[SEAL]
My Commission Expires: June 25, 0000
XXXXX XX XXXXX XXXXXXXX )
)
COUNTY OF MECKLENBURG )
I, Xxxx Xxxx Xxxxxxx, a Notary Public in and for said County in said
State, hereby certify that Xxxx X. X. Xxxxxxx, whose name as Vice
President-Finance, CFO of WINK XXXXX EQUIPMENT, INC., a Georgia corporation, is
signed to the foregoing Forbearance Agreement, and who is known to me,
acknowledged before me on this day that, being informed of the contents of such
instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
Given under my hand and seal, this 31/st/ day of July, 2002.
NOTARY PUBLIC - /s/ Xxxx Xxxx Xxxxxxx
[SEAL]
My Commission Expires: June 25, 2006
9
STATE OF ALABAMA )
)
COUNTY OF JEFFERSON )
I, Xxxxxxxx Xxxxx Xxxx, a Notary Public in and for said County in said
State, hereby certify that Xxxx Xxxxx, whose name as Vice President of
SOUTHTRUST BANK is signed to the foregoing Forbearance, and who is known to me,
acknowledged before me on this day that, being informed of the contents of such
instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said SOUTHTRUST BANK.
Given under my hand and seal, this 31st day of July, 2002.
NOTARY PUBLIC - /s/ Xxxxxxxx Xxxxx Xxxx
[SEAL]
My Commission Expires: 12/20/04
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EXHIBIT A
EBITDA PROJECTIONS
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