EXHIBIT 10.16
February 13, 2002
Galaxy Nutritional Foods, Inc.
0000 Xxxxxxxx Xxx
Xxxxxxx, XX 00000
Attention: Xx. Xxxxxx Xxxxxx, Chief Executive Officer
Re: Galaxy Nutritional Foods, Inc.
Dear Xx. Xxxxxx:
Galaxy Nutritional Foods, Inc. (the "Company") has requested that
FINOVA Mezzanine Capital, Inc. ("FMC") waive certain Events of Default which
have occurred under that certain Loan Agreement dated September 30, 1999 between
the Company and FMC, as amended from time to time (the "Loan Agreement"). Unless
otherwise defined, all capitalized terms herein shall have the meaning given in
the Loan Agreement.
Subject to satisfaction of the conditions set forth below, FMC hereby
waives the Events of Default under Section 5.1.3 of the Loan Agreement which
have arisen by virtue of (1) Borrower's failure to comply with the Limitation on
Indebtedness as of the fiscal quarter ended December 31, 2001 as set forth in
Section 3.14 of the Loan Agreement, (2) Borrower's failure to maintain the
required Funded Debt to EBITDA Ratio as of the fiscal quarter ended December 31,
2001 as set forth in Section 3.22 of the Loan Agreement and (3) Borrower's
failure to maintain the required Debt Service Coverage Ratio as of its fiscal
quarter ended December 31, 2001 pursuant to Section 3.23 of the Loan Agreement.
The waivers granted herein are expressly conditioned upon Xxxxxxxx's
payment to FMC of a waiver fee ("Waiver Fee") in the amount of $10,000, which
fee shall be deemed fully earned on the date hereof and due and payable in six
equal installments of $1,666.66 beginning on February 14, 2002 and continuing on
each Thursday until fully repaid.
Borrower hereby authorizes FINOVA Capital Corporation ("FINOVA") to
cause advance(s) to be made under that certain Security Agreement (Accounts
Receivable, Inventory, and Equipment) between Borrower and FINOVA dated November
1, 1996 and to utilize the proceeds of such advance(s) to satisfy Borrowers
Obligations to pay the Waiver Fee and any other interest, fees, commissions,
charges, costs and expenses incurred with or in respect of the Loan Agreement.
Galaxy Nutritional Foods, Inc.
Attention: Xx. Xxxxxx Xxxxxx, President
November 14, 2001
Page 2
Borrower hereby releases, remises, acquits and forever discharges FMC
and FMC'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 of any and every
character, known or unknown, direct and/or indirect, at law or in equity, of
whatsoever kind or nature, whether heretofore or hereafter arising, for or
because of any matter or things done, omitted or suffered to be done by any of
the Released Parties prior to and including the date and execution hereof, and
in any way directly or indirectly arising out of or in any way connected to this
letter, the Loan Agreement and the other Loan Documents and the transactions
related thereto (all of the foregoing hereinafter called the "Released
Matters"); provided, however, that the foregoing release shall not apply to
discharge FMC from any obligations which are expressly imposed upon FMC pursuant
to the terms of this letter, the Loan Agreement, or any of the other Loan
Documents, as modified through the date hereof. Borrower acknowledges that the
agreements in this section are intended to be in full satisfaction of all or any
alleged injuries or damages arising in connection with the Released Matters.
Borrower represents and warrants to FMC that it has not purported to transfer,
assign or otherwise convey any right, title or interest of Borrower in any
Released Matter to any other Person and that the foregoing constitutes a full
and complete release of all Released Matters.
Except as specifically waived hereby, the Loan Agreement and other
documents, instruments or agreements entered into, executed or delivered in
connection therewith (collectively, the "Loan Documents") shall remain in full
force and effect and are hereby ratified and confirmed, and the execution,
delivery and performance of this limited waiver and consent shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
the undersigned under the Loan Documents. Without limiting the generality of the
foregoing, the waiver set forth above shall be limited precisely as set forth
above, and nothing in this limited waiver and consent shall, except as expressly
provided herein, operate as a waiver of any right, power or remedy of the
undersigned under the Loan Documents. Without limiting the generality of the
foregoing, the waiver set forth above shall be limited precisely as set forth
above, and
Galaxy Nutritional Foods, Inc.
Attention: Xx. Xxxxxx Xxxxxx, President
November 14, 2001
Page 3
nothing in this limited waiver and consent shall be deemed (i) to constitute a
waiver of compliance by Borrower with respect to any other provision of the Loan
Agreement or other Loan Documents, or (ii) to prejudice any right or remedy that
the undersigned may now have or may have in the future under or in connection
with the Loan Agreement or any other Loan Document.
Sincerely,
FINOVA Mezzanine Capital, Inc.
By:
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Name: Xxxxxxx XxXxxxxx
Title: Vice President
Agreed to and Acknowledged this ____ day of February 2002.
GALAXY NUTRITIONAL FOODS, INC.
By:
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Name:
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Title:
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