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EXHIBIT 10.1
October 23, 1997
Xx. Xxxxxxxxx X. Xxxxxxx
Vice President/CFO
Jalate Limited, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxx xx Xxxxxxxx, XX 00000
Dear Xx. Xxxxxxx:
Reference is made to that certain Credit Agreement by and between Jalate
Limited, Inc., a California corporation ("Borrower") and Xxxxx Fargo HSBC Trade
Bank, N.A. ("Bank") dated as of May 31, 1997 and all related documentation
executed in connection therewith ("Credit Agreement") governing, among other
things that certain Loans Against Imports Facility evidenced by a Loans Against
Imports Note in the amount of Two Million ($2,000,000) dollars ("Note").
Capitalized terms used herein but not defined shall have the meanings set forth
in the Credit Agreement.
By letter dated October 3, 1997 Borrower was notified by Bank of the
occurrence of certain events of default under the Credit Agreement ("Events of
Default"). Specifically, based on financial information provided to Bank by
Borrower for Borrower's fiscal eight month period ended August 31, 1997,
Borrower is in default of certain financial covenants ("Covenants") governing
Borrower's minimum required level of working capital and maximum allowable
year-to-date pre-tax loss.
Borrower has requested that Bank: 1) forbear until December 1, 1997,
from exercising its rights and remedies with regard to the above-described
Events of Default; and 2) waive compliance with the Covenants for future fiscal
periods through the maturity of the Note, December 1, 1997.
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Xx. Xxxxxxxxx X. Xxxxxxx
October 23, 1997
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Bank will agree to the requested forbearance and waiver strictly subject
to the following conditions: 1) such forbearance by Bank shall not be deemed a
waiver by Bank of any of Bank's rights and remedies, or an agreement to forbear
or a waiver by Bank of any of Bank's rights and remedies, or an agreement to
forbear or a waiver by Bank with respect to any other Event of Default which may
occur; 2) that certain provision in the Note which states that "Each advance
shall be payable on the earlier of (i) the due date thereof, as inscribed by
Bank on its records, or (ii) 60 days after the date such advance is made." shall
be changed to state that "Each advance shall be payable on the earlier of the
earlier of (i) the the due date thereof, as inscribed by Bank on its records, or
(ii) 30 days after the date such advance is made."; and 3) the Facility
Termination Date of the L/C Facility shall be changed from December 1, 1997 to
October 1, 1997. Except as modified by this letter, the terms and conditions of
the Credit Agreement shall remain in full force and effect.
Please acknowledge your agreement to the foregoing by signing a copy of
this letter in the space provided below and returning it to Bank. The
forbearance and waiver provided herein shall not be effective until this letter
has been signed by Borrower and returned to Bank.
Sincerely,
/s/ Xxxx Xxxxxxxxxx
Vice President
Acknowledged and Agreed to by:
JALATE LIMITED, INC.
By: /s/ Xxxx Xxxxxxx
Title: _______________________
