Exhibit 10 (xv)
FIFTH AMENDMENT TO LOAN MODIFICATION,
REAFFIRMATION AND FORBEARANCE AGREEMENT
This Fifth Amendment ("AGREEMENT") is made as of September 9, 2002, by
and between Bontex, Inc., a Virginia corporation having its principal place of
business at Xxx Xxxxxx Xxxxx, Xxxxx Xxxxx, XX 00000 ("BORROWER") and Congress
Financial Corporation, a Delaware corporation ("LENDER").
BACKGROUND
A. THE FACILITIES
1. Borrower and Lender entered into a certain Loan and Security
Agreement dated January 26, 2000 (together with all amendments, modifications,
addenda and supplements, the "Loan Agreement") and related documents, evidencing
certain financing arrangements between Lender and Borrower as more particularly
described therein including, without limitation, a certain Term Promissory Note
in the principal face amount of $1,000,000 dated January 27, 2000 (the "Note").
Borrower and Lender entered into an Amendment to Loan and Security Agreement on
November 13, 2000, a Second Amendment to Loan and Security Agreement on
September 12, 2001, a Third Amendment to Loan and Security Agreement on January
22, 2002, a Fourth Amendment to Loan and Security Agreement on February 26,
2002, a Loan Modification, Reaffirmation and Modification Agreement dated as of
March 11, 2002 (the "Modification Agreement"), an Amendment to the Modification
Agreement dated April 10, 2002, a Second Amendment to the Modification Agreement
dated as of May 10, 2002, a Third Amendment to the Modification Agreement dated
as of June 10, 2002; and a Fourth Amendment to the Modification Agreement dated
as of August 9, 2002.
2. All agreements and documents described or referred to in this
Section A, as amended, this Agreement, all "Financing Agreements" (as that term
is defined in the Loan Agreement) and all instruments, documents, and agreements
related thereto or executed in connection therewith, are sometime referred to
herein collectively as the "EXISTING LOAN DOCUMENTS." All capitalized terms used
herein and not defined herein shall have the meaning ascribed to such term in
the Existing Loan Documents.
B. EXISTING DEFAULT
1. As of the date hereof, Borrower is in default under the terms and
conditions of the Existing Loan Documents by its failure to repay all
Obligations on the maturity date thereof which coincides with the date of this
Agreement ("EXISTING DEFAULT").
2. Notwithstanding such Existing Default, Borrower has requested that
Lender waive, in consideration of the undertakings and obligations of Borrower
and Guarantor set forth herein, such Existing Default. Lender has agreed to
waive such Existing Default as and only to the extent set forth herein, and
without waiving any of Lender's rights and remedies.
NOW THEREFORE, with the foregoing Background deemed incorporated by
reference and for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, covenant and agree as follows:
SECTION 1. ACKNOWLEDGMENT OF INDEBTEDNESS. Borrower confirms
and acknowledges that as of the close of business on September 1, 2002, it is
indebted to Lender under the Loan Documents without any deduction, defense,
setoff, claim or counterclaim, of any nature, in the aggregate principal amount
of $1,157,235.00, comprised of: (a) $792,285.00 outstanding with respect to the
Revolving Loans, and (b) $364,850.00 outstanding with respect to the Term Loan,
plus any accrued and unpaid interest and all fees, costs and expenses (including
attorneys' fees) incurred to date in connection with the Existing Loan
Documents.
SECTION 2. AMENDMENTS
2.1. DEFINITIONS.
(a) Section 1.44 of the Loan Agreement is hereby created
and reads as follows:
"1.44 "EBITDA" shall mean with respect to any period, the sum
of Borrower's (a) net income (or deficit), plus (b) Interest Expense, plus (c)
depreciation, amortization and income tax expense, plus (d) extraordinary
non-cash losses, plus (e) accruals for stock options to the extent the same is a
charge against Borrower's net income, minus (f) extraordinary gains, all as
determined in accordance with GAAP."
(b) Section 1.45 of the Loan Agreement is hereby created
and reads as follows:
"1.45 "Interest Expense" shall mean for any period, the
aggregate amount of interest expense required to be paid or accrued during such
period for all indebtedness of Borrower outstanding during all or any part of
such period, as determined in accordance with GAAP."
2.2. FORBEARANCE. Section 2 of the Modification Agreement is
hereby deleted in its entirety.
2.3. FINANCIAL COVENANTS.
(a) Section 9.14 of the Loan Agreement is hereby amended
to read as follows:
"9.14 Adjusted Tangible Net Worth. Borrower (excluding, for
purposes of this covenant, foreign subsidiaries and affiliates) shall
continuously maintain Adjustable Tangible Net Worth (which, for purposes of this
Section 9.14, shall not include Borrower's accrued pension liability as shown on
the financial statements required under Section 9.6(a) of this Agreement) of not
less than Five Million, Two Hundred Thousand Dollars ($5,200,000.00) from and
including June 30, 2002 and at all times thereafter."
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(b) Section 9.17 of the Loan Agreement is hereby created
and reads as follows:
"9.17 Minimum EBITDA. Borrower and Guarantor shall not permit
the cumulative EBITDA of Borrower and Guarantor for Borrower's fiscal year
commencing July 1, 2002, tested on the last day of each month, to be less than
the amounts set forth in the following table:
July, 2002 ($48,400.00)
August, 2002 ($61,128.00)
September, 2002 $70,869.00
October, 2002 $173,452.00
November, 2002 $301,459.00
December, 2002 $435,515.00
January, 2003 $593,826.00
February, 2003 $791,453.00
Xxxxx, 0000 $995,999.00
April, 2003 $1,153,525.00
May, 2003 $1,375,794.00
June, 2003 $1,621,147.00"
2.4. TERM OF AGREEMENT; MATURITY DATE. Section 12 of the Loan
Agreement is hereby amended by striking out in its entirety Section 12.1(a) of
the Loan Agreement, and, in lieu thereof, substituting the following:
"(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on July 1, 2003 ("Maturity Date").
Upon the expiration of the Maturity Date, Borrower shall pay to Lender, in full,
all outstanding and unpaid Obligations and shall furnish cash collateral to
Lender in such amounts as Lender determines are reasonably necessary to secure
Lender from loss, cost, damage or expense, including attorneys' fees and legal
expenses, in connection with any contingent Obligations, including checks or
other payments provisionally credited to the Obligations and/or as to which
Lender has not yet received final and indefeasible payment. Such payments in
respect of the Obligations and cash collateral shall be remitted by
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wire transfer in Federal funds to such bank account of Lender, as Lender may, in
its discretion, designate in writing to Borrower for such purpose. Interest
shall be due until and including the next business day, if the amounts so paid
by Borrower to the bank account designated by Lender are received in such bank
account later than 12:00 noon (Eastern Time)."
SECTION 3. WAIVER OF EXISTING DEFAULT. Upon the effectiveness of this
Agreement, Lender shall be deemed to have waived Borrower's failure to comply
with Section 12.1 (Term of Loan Agreement) of the Loan Agreement, effective as
of June 30, 2002, provided that Lender's waiver shall not be deemed a waiver of
any subsequent violations of such covenants or a waiver of any other Events of
Defaults which may have occurred but are not specifically referred to herein.
SECTION 4. EFFECTIVENESS CONDITIONS. Lender's undertakings hereunder
are subject to satisfactory completion and performance, as determined by Lender
in its sole discretion, (all documents to be in form and substance satisfactory
to Lender and its counsel) of the following conditions ("EFFECTIVENESS
CONDITIONS"):
(a) Borrower's execution and delivery of this Agreement;
(b) Borrower shall be required to deliver to Lender a
supplemental closing fee of Fifty Thousand Dollars ($50,000), which fee shall be
fully earned as of the date hereof, and payable in two disbursements:
1. Thirty Thousand Dollars ($30,000) in immediately
available funds, which Borrower authorizes Lender to advance as a Revolving Loan
under the Loan Agreement; and
2. The remaining Twenty Thousand Dollars ($20,000)
payable ninety (90) days after the date of this Agreement (the "Refinancing
Period"), which Borrower authorizes Lender to advance as a Revolving Loan under
the Loan Agreement; provided, however, that if all Obligations are fully and
finally paid prior to the expiration of the Refinancing Period, Lender shall
waive and fully release Borrower from any obligation to pay this second
disbursement;
(c) Guarantor's execution and delivery of the Consent of
Guarantor; and
(d) Borrower providing to Lender, by October 15, 2002, an
unqualified opinion of an independent accountant that states the submitted
financial statements were prepared in accordance with GAAP, and present fairly
the results of operations and financial condition of Borrower at the end of, and
for the fiscal year then ended.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Borrower
represents and warrants to, and covenants with, Lender as follows, which
representations, warranties and covenants are continuing and shall survive the
execution and delivery hereof, and the truth and accuracy of, or compliance with
each, together with the representations, warranties and covenants in the other
Financing Agreements, being a continuing condition of the making of Loans by
Lender to Borrower:
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(a) This Agreement has been duly executed and delivered by
Borrower and is in full force and effect as of the date hereof and the
agreements and obligations of Borrower contained herein constitute legal, valid
and binding obligations of Borrower enforceable against Borrower in accordance
with their respective terms;
(b) Borrower has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement;
(c) This Agreement is, or when executed by Borrower and
delivered to Lender, will be, duly executed and constitute a valid and legally
binding obligation of Borrower, enforceable against Borrower in accordance with
its terms; and
(d) The execution by Borrower and delivery to Lender of this
Agreement is not and will not be in contravention of any order of any court or
other agency of government, law or any other indenture or agreement to which
wither Borrower is bound or the Articles of Incorporation or bylaws of Borrower
to be in conflict with, or result in a breach of, or constitute (with due notice
and/or passage of time) a default under any such indenture, agreement or
undertaking or result in the imposition of any lien, charge, encumbrance of any
nature on any property of Borrower.
SECTION 6. REAFFIRMATION. Except as expressly amended herein, all of
the terms, provisions and conditions of the Loan Agreement (as previously
amended), the Note (as previously amended), and the Modification Agreement are
hereby reaffirmed and ratified in all respects, and remain in full force and
effect. Borrower reaffirms each of the representations and warranties under the
Loan Agreement, as if said representations and warranties were made and given on
and as of the date hereof.
SECTION 7. MISCELLANEOUS
7.1. Counterparts. This Agreement may be executed in any number
of counterparts, each of which will constitute an original and all of which
together shall constitute one instrument. Signature by facsimile shall bind the
parties hereto.
7.2. Third-Party Rights. No rights are intended to be created
hereunder for the benefit of any third- party donee, creditor, or incidental
beneficiary.
7.3. Modifications. No modification hereof or any agreement
referred to herein shall be binding or enforceable unless in writing and signed
on behalf of the party against whom enforcement is sought.
7.4. Indemnity. Borrower hereby agrees to indemnify Lender from
and against all losses, costs, expense, demands and damages whatsoever which
Lender may suffer or incur in respect of any claims which have or may be brought
by any third party relating to this Agreement, the Existing Loan Documents or
the transactions contemplated hereby or thereby. This indemnity shall continue
in full force and effect after the Termination Date and notwithstanding the
completion of the other matters referred to in this Agreement. This
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indemnification is in addition to and shall not limit any other indemnification
agreement between Borrower and Lender, and shall be included within the
Obligations.
7.5. Integrated Agreement. This Agreement shall be deemed incorporated
into and made a part of the Existing Loan Documents. Except as expressly set
forth herein, all of the terms, conditions and agreements of the Existing Loan
Documents are ratified and confirmed. The Existing Loan Documents and this
Agreement shall be construed as integrated and complementary of each other, and
as augmenting and not restricting Lender's rights, remedies and security. If,
after applying the foregoing, an inconsistency still exists, the provisions of
this Agreement shall control.
7.6. Non-Waiver. No omission or delay by Lender in exercising any right
or power under this Agreement, or the Existing Loan Documents or any related
agreement will impair such right or power or be construed to be a waiver of any
default or Event of Default or an acquiescence therein, and any single or
partial exercise of any such right or power will not preclude other or further
exercise thereof or the exercise of any other right, and no waiver will be valid
unless in writing and then only to the extent specified. Lender's rights and
remedies are cumulative and concurrent and may be pursued singly, successively
or together.
7.7. Headings. The headings of any paragraph of this Agreement
are for convenience only and shall not be used to interpret any provision of
this Agreement.
7.8. Survival. All warranties, representations and covenants made by
Borrower herein, or in any agreement referred to herein or on any certificate,
document or other instrument delivered by them or on their behalf under this
Agreement, shall be considered to have been relied upon by Lender. All
statements in any such certificate or other instrument shall constitute
warranties and representations by Borrower hereunder. All warranties,
representations, indemnities and covenants made by Borrower hereunder or under
any other agreement or instrument shall be deemed continuing until the
Obligations are indefeasibly paid and satisfied in full.
7.9. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto.
No delegation by Borrower of any duty or obligation of performance may be made
or is intended to be made to Lender. No rights are intended to be created
hereunder or under any related instruments, documents or agreements for the
benefit of any third party donee, creditor, incidental beneficiary or affiliate
of Borrower.
7.10. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. The provisions of this
Agreement are to be deemed severable, and the invalidity or unenforceability of
any provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.
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IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement the day and year first above written.
LENDER CONGRESS FINANCIAL CORPORATION
By: /s/ Xxxx Xxxxx, Assistant Vice President
----------------------------------------
BORROWER BONTEX, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx, C.F.O.
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CONSENT OF GUARANTOR
The undersigned guarantor hereby consents to the provisions of the
foregoing Agreement and agrees that the undersigned's obligations under the
Limited Guaranty shall be unimpaired by the said Agreement and that the
undersigned has no defenses or set offs against Lender, its officers, directors,
employees, agents or attorneys, with respect to the Limited Guaranty, and that
all of the terms, conditions and covenants in the Limited Guaranty remain
unaltered and in full force and effect and are hereby ratified and confirmed.
The undersigned hereby certifies that the representations and warranties made in
the Limited Guaranty are true and correct. THE UNDERSIGNED HEREBY RATIFIES AND
CONFIRMS THE WAIVER OF JURY TRIAL PROVISION CONTAINED IN THE LIMITED GUARANTY.
WITNESS the due execution hereof as a document under seal, as of
September 9, 2002, intending to be legally bound hereby.
/s/ Xxxxx X. Xxxxxxxx, C.E.O.
-----------------------------
Xxxxx X. Xxxxxxxx
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CORPORATE ACKNOWLEDGMENT
STATE OF VIRGINIA :
: ss
CITY OF BUENA VISTA :
On this, the 9th day of September, 2002, before me, the undersigned Notary
Public, personally appeared Xxxxx X. Xxxxxxxx, known to me (or satisfactorily
proven) and says that he is the C.E.O. of Bontex, Inc., whose name is subscribed
to the within instrument and who acknowledged that he executed the same for the
purposes therein contained.
WITNESS my hand and seal the day and year aforesaid.
/s/ Xxxxx X. Xxxxx
Notary Public
My Commission Expires: July 31, 2004
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CORPORATE ACKNOWLEDGMENT
STATE OF VIRGINIA :
: ss
CITY OF BUENA VISTA :
On this, the 9th day of September, 2002, before me, the undersigned Notary
Public, personally appeared Xxxxxxx X. Xxxxxxxx, known to me (or satisfactorily
proven) and says that he is the C.F.O. of Bontex, Inc., whose name is subscribed
to the within instrument and who acknowledged that he executed the same for the
purposes therein contained.
WITNESS my hand and seal the day and year aforesaid.
/s/ Xxxxx X. Xxxxx
Notary Public
My Commission Expires: July 31, 2004
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