Exhibit 10.25
CITY NATIONAL BANK
Special Assets Department
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
May 9, 1997
VIA CERTIFIED MAIL
Uni-Star Industries, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx, President
RE: Accounts Receivable Loan Agreement, by and between Uni-Star
Industries, Inc. ("Borrower") and City National Bank ("CNB"),
dated as of August 30, 1995, as amended ("Credit Agreement") and
Term Loans 24426 and 96802 (collectively, the "Notes")
Dear Xx. Xxxxxxxx:
The Credit Agreement matured on April 30, 1997. You have requested that
CNB extend the Termination Date thereunder to August 31, 1997 to provide you
with adequate time to complete your search for alternative financing.
Uni-Star reaffirms the debt owed to CNB, as of May 7, 1997, in the
principal amount of $2,252,944.52 plus unpaid interest under the Credit
Agreement and Notes ("Present Indebtedness") and that it has no defenses or
offsets to such indebtedness.
CNB hereby agrees to forebear from exercising its rights and remedies
under the Credit Agreement or pursuant to applicable law until August 31, 1997,
with respect to all Events of Default currently existing under the Credit
Agreement. In consideration of CNB's agreement to forebear, Xxxxxxxx hereby
agrees to all of the following:
1. The Revolving Credit Commitment will be reduced by $600,000 to $1,900,000.
The Borrowing base will be modified as follows:
A) i) Eighty percent (80%) of Eligible Accounts from 5/1/97 to 5/30/97. ii)
Seventy nine percent (79%) of Eligible Accounts from 6/1/97 to 6/30/97. iii)
Seventy eight (78%) of Eligible Accounts from 7/1/97 to 7/31/97. iv) Seventy
seven percent (77%) of Eligible Accounts thereafter. The foregoing percentages
are conditioned upon the maintenance of the existing dilution rate of no more
than eight percent (8%) as provided in Section 9.1.11.
In no event shall the Borrowing Base exceed the Revolving Credit Commitment.
The terms, Revolving Credit Commitment, Eligible Accounts and Dilution Rate
(except as amended in the prior paragraph) are defined in the Credit Agreement.
There will be no further advances under the Term Loan Facility and Equipment
Acquisition Facility and any advances repaid to date or during the term of the
forbearance agreement will not be available for re-borrowing;
To pay CNB, on or before 5/15/97, loan fees of $3,750.
The interest rate on the Notes and Credit Agreement shall be increased to the
Prime Rate plus 2 percent (2%) per year effective 5/1/97; effective 6/1/97, the
interest rate shall be increased to the Prime rate plus 2.25 percent (2.25%) per
year; effective 7/1/97, the interest rate shall be increased to Prime plus 2.5
percent (2.5%) per year; effective 8/1/97, the interest rate shall be increased
to 2.75 percent (2.75%) per year.
To keep all payments on the Notes and under the Credit Agreement current and to
repay in full all obligations owed by Borrower to CNB on the Notes and under the
Credit Agreement no later than August 31, 1997;
In addition to that required by the Credit Agreement, to submit current
financial and collateral information to CNB at such times and in such form as
CNB may request.
7. RELEASE. Xxxxxxxx intends and agrees that this Agreement will be effective
as a full, final and general release of and from all matters covered herein. In
furtherance thereof, Xxxxxxxx acknowledges that Xxxxxxxx is familiar with, and
that Xxxxxxxx's attorney of record, if any, has advised Borrower of, California
Civil Code (S)1542, which provides as follows:
A general release does not extend to claims which the creditor does not know
or suspect to exist in his favor at the time of execution of the release, which
if known by him must have materially affected his settlement with the debtor.
Borrower expressly waives and releases any right or benefit which Borrower has
or may in the future have under California Civil Code (S)1542 to the fullest
extent that such rights or benefits may be lawfully waived and released.
Further, Borrower acknowledges that Borrower may hereafter discover facts
different from or in addition to those facts now known or believed by Borrower
to be true with respect to any or all of the matters covered by this Agreement,
and agrees that this Agreement will nevertheless be binding and remain in full
and complete force and effect.
Please be advised that CNB reserves all of its rights and remedies with
respect to (a) all currently existing Events of Default, and (b) all Events of
Default that arise after the date of this letter or due to any material adverse
change in the business, operations or conditions, financial or otherwise, of
Borrower since the date of the last financial statements received by CNB. Except
as expressly amended herein, all of the terms and conditions of the Notes and
Credit Agreement shall remain unchanged and in full force and effect. Further,
nothing in this Agreement obligates CNB to extend the Notes and Credit Agreement
beyond August 31, 1997.
Please indicate your agreement with the foregoing by signing the enclosed
copy where indicated, and returning the same to my attention. Please be advised
that CNB's agreement to this forbearance shall not become effective until CNB
has received a copy of this letter executed by Xxxxxxxx and the fee set forth in
Paragraph 3 above. Capitalized terms not defined herein shall have the meaning
given them in the Notes and Credit Agreement.
Please call me if you have any questions relating to this matter.
Very truly yours,
Xxxxxxx X. Xxxx
Vice President
2
AGREED TO AND ACCEPTED ON BEHALF OF
Uni-Star Industries, Inc. BY:
/s/ Xxxxxx Xxxxxxxx
----------------------------------------
Xxxxxx Xxxxxxxx, President
/s/ Xxxxxx X. Xxxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxxx, Assistant Secretary
3
