EXHIBIT 10.1
[CONFORMED COPY]
AMENDMENT NO. 3 TO FORBEARANCE AGREEMENT
This AMENDMENT NO. 3 TO FORBEARANCE AGREEMENT, dated as of April 30, 2002
(this "AMENDMENT"), is entered into among XXXXXXXXX XXXXX CORPORATION, an
Illinois corporation ("BORROWER"), XXXXXX MAY HOLDINGS, INC., a Delaware
corporation ("PARENT"), XXXXXXXXX XXXXX (CANADA) CORPORATION, a corporation
incorporated under the federal laws of Canada ("CANADIAN SUBSIDIARY" and
together with Borrower and Parent, collectively, the "CONTINUING CREDIT
PARTIES"), the lending institutions parties to the Forbearance Agreement (the
"LENDERS"), and THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation, as
Agent for the Lenders ("AGENT").
PRELIMINARY STATEMENTS:
(1) Borrower, Agent and the Lenders are parties to the Financing
Agreement, dated as of June 28, 2001 (as amended and as the same may from time
to time be further amended, restated or otherwise modified, the "FINANCING
AGREEMENT").
(2) As a result of certain defaults and events of default that occurred
under the Financing Agreement, the Continuing Credit Parties, the Lenders and
Agent entered into the Forbearance Agreement, dated as of December 31, 2001 (as
amended and as the same may from time to time be further amended, restated or
otherwise modified, the "FORBEARANCE AGREEMENT"; unless otherwise defined herein
the terms defined therein are used herein as so defined).
(3) Borrower and the Holders, as defined in the Indenture (as defined in
the Financing Agreement), of more than $140,000,000 of the aggregate outstanding
principal amount of Notes, as defined in the Financing Agreement (the "REQUIRED
NOTEHOLDERS"), have entered into the Forbearance Agreement, dated as of March 1,
2002 (as the same may from time to time be amended, restated or otherwise
modified, the "NOTEHOLDER FORBEARANCE AGREEMENT").
(4) The Continuing Credit Parties, Agent and the Lenders desire to modify
certain terms and provisions of the Forbearance Agreement, including, without
limitation, extending the Forbearance Period.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. AMENDMENTS.
1.1. EXTENSION OF FORBEARANCE PERIOD. Section 2.1(a) of the Forbearance
Agreement is hereby amended to replace the date of "April 30, 2002" with "May
31, 2002".
1.2. AMENDMENT TO MAXIMUM OUTSTANDING REVOLVING LOANS AND LETTERS OF
CREDIT. Section 2.4(a)(vii) of the Forbearance Agreement is hereby amended and
restated in its entirety as follows:
and (vii) $15,000,000 on March 2, 2002 through May 31, 2002;
1.3. AMENDMENT TO COVENANT DEFAULTS. Section 1.3 of the Forbearance
Agreement is hereby amended and restated in its entirety as follows:
1.3 COVENANT DEFAULTS. The Continuing Credit Parties acknowledge and
agree that the Existing Defaults resulting under Section 10.1(e) of the
Financing Agreement relate only to the violations that occurred and/or will
occur under Sections 7.3, 7.10(j), 7.12(b),(c),(d), and (e) and 7.23 of the
Financing Agreement.
1.4. AMENDMENT TO BORROWING BASE CALCULATION. Section 2.4(b) of the
Forbearance Agreement is hereby amended and restated in its entirety as follows:
(b) in calculating the Borrowing Base, (i) the advance rate with
respect to Eligible Special Inventory shall be the lesser of (A) 62% of the
aggregate value of Eligible Special Inventory (as determined in accordance
with the terms of the Financing Agreement) and (B) 85% of the net orderly
liquidation value of Eligible Special Inventory as set forth in the most
recently completed appraisal of Borrower's Inventory that has been
delivered to Agent, which appraisal shall be in form and detail
satisfactory to Agent and prepared by Hilco or such other appraiser
acceptable to Agent, (ii) notwithstanding the foregoing, Eligible Special
Inventory shall not at any time account for more than $13,000,000 of the
aggregate amount of the Borrowing Base, (iii) the Real Estate Sublimit
shall be deleted from such calculation, (iv) on and after the date on which
the Cash Collateralization occurs, the Overadvance, as defined in the
Post-Petition Credit Agreement (as defined in the Financing Agreement),
shall be deleted from such calculation, and (v) if the Cash
Collateralization occurs on or before the Cash Collateral Date, as defined
below, $1,000,000 shall be added to the Borrowing Base as an overadvance;
and
1.5. AMENDMENT TO ADD NEW CONDITIONS TO LENDING. Section 2.4 of the
Forbearance Agreement is hereby amended to add the following new subsections
(d), (e), and (f) thereto:
(d) on or before May 15, 2002 (the "CASH COLLATERAL DATE"), (i)
Borrower shall have deposited $1,000,000 into a deposit account maintained
at LaSalle Bank National Association, in the name of Agent and under the
exclusive control of Agent (the "CASH COLLATERAL ACCOUNT"), and (ii)
Borrower shall have obtained all necessary consents and approvals,
including, without limitation, any required consent under the Indenture, to
permit the security interest provided for in the Cash Collateral Account
and all cash, monies, checks, and other deposits, if any, contained therein
and delivered to Agent evidence, satisfactory to Agent, of such consent
and/or approval (the foregoing subparts
2
(i) and (ii) are collectively referred to herein as the "CASH
COLLATERALIZATION"); PROVIDED, HOWEVER, that if the Cash Collateralization
fails to occur on or before the Cash Collateral Date such failure shall not
constitute a Termination Event (or an Event of Default, as defined in the
Financing Agreement, under the Financing Agreement) so long as Borrower
pays to Agent on or before the Cash Collateral Date a fee in the amount of
$25,000 ("CASH COLLATERAL FEE"), which Cash Collateral Fee shall be fully
earned when paid;
(e) on or before May 24, 2002 (the "COMMITMENT LETTER DATE"),
Borrower shall have delivered to Agent a fully executed and effective
commitment letter, in form and substance reasonably satisfactory to Agent,
from a lender or syndicate of lenders reasonably acceptable to Agent
("COMMITMENT LETTER"), which Commitment Letter shall provide, among other
things, for the refinancing of the Financing Agreement and all Obligations
(other than the obligations of Borrower under the Post-Petition Guaranty,
as defined in the Financing Agreement) outstanding thereunder; PROVIDED,
HOWEVER, that if Borrower fails to deliver the Commitment Letter on or
before the Commitment Letter Date such failure shall not constitute a
Termination Event (or an Event of Default, as defined in the Financing
Agreement, under the Financing Agreement) if Borrower pays to Agent on or
before the Commitment Letter Date a fee in the amount of $25,000 (the
"REFINANCING REJECTION FEE"), which Refinancing Rejection Fee shall be
fully earned when paid; and
(f) on or immediately after the date on which (i) the Cash
Collateralization occurs and (ii)(A) all Post-Petition Obligations, as
defined in the Financing Agreement, have been paid in full and (B) the
Post-Petition Credit Agreement, as defined in the Financing Agreement, has
been terminated and not replaced or refinanced by Post-Petition Lender, as
defined in the Financing Agreement, Agent shall apply, for the benefit of
the Lenders, all cash, monies, checks, and/or other deposits contained in
the Cash Collateral Account as a mandatory prepayment of outstanding
Revolving Loans; provided that Agent shall return to Borrower the remaining
balance, if any, in the Cash Collateral Account after such mandatory
prepayment occurs.
3
1.6. AMENDMENT TO SECURITY INTEREST. Notwithstanding anything in the
Financing Agreement to the contrary, effective on and after the date on which
the Cash Collateralization occurs, (a) as security for the prompt payment in
full of all Obligations, as defined in the Financing Agreement, Borrower pledges
and grants to Agent, for the benefit of the Lenders, and to Post-Petition
Lender, as defined in the Financing Agreement, a continuing general lien upon,
security interest in, and assignment of the Cash Collateral Account (to the
extent applicable) and all of Borrower's cash, monies, checks, and other
deposits, if any, contained in the Cash Collateral Account, and (b) the
definition of "Collateral" in Section 1 of the Financing Agreement shall include
the Cash Collateral Account and all cash, monies, checks, and other deposits
from time to time contained therein.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
Each Continuing Credit Party represents and warrants as follows:
2.1. AUTHORIZATION AND VALIDITY OF AMENDMENT. This Amendment has been duly
authorized by all necessary corporate action, has been duly executed and
delivered by a duly authorized officer, and constitutes the valid and binding
agreement of such Continuing Credit Party, enforceable against such Continuing
Credit Party in accordance with its terms except as enforcement thereof may be
subject to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and general
principles of equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law or otherwise).
2.2. REPRESENTATIONS AND WARRANTIES. The representations and warranties of
such Continuing Credit Party contained in the Forbearance Agreement, the
Financing Agreement and the other Loan Documents, as defined in the Financing
Agreement, are true and correct in all material respects on and as of the date
hereof, as though made on and as of the date hereof, except to the extent that
such representations and warranties expressly relate to an earlier specified
date, in which case such representations and warranties are hereby reaffirmed as
true and correct in all material respects as of the date when made.
2.3. NO EVENT OF DEFAULT. After giving effect to this Amendment, other than
the Existing Defaults, no Default or Event of Default will exist.
2.4. NO CLAIMS. There is no claim or offset against, or defense or
counterclaim to, any of the obligations or liabilities of such Continuing Credit
Party (or any of its Subsidiaries, as defined in the Financing Agreement) under
the Forbearance Agreement, the Financing Agreement or any other Loan Document.
4
SECTION 3. RATIFICATIONS.
Except as expressly modified and superseded by this Amendment, the terms
and provisions of the Forbearance Agreement are ratified and confirmed and shall
continue in full force and effect.
SECTION 4. CONDITIONS TO EFFECTIVENESS.
The amendments set forth in Section 1 of this Amendment shall become
effective upon the satisfaction of the following conditions precedent:
(a) Borrower and the Required Noteholders shall have entered into an
amendment to the Noteholder Forbearance Agreement, in the form of the attached
EXHIBIT A, on or before the date hereof;
(b) Borrower shall have paid to Agent an amendment fee in the amount of
$25,000, which shall be fully earned when paid;
(c) after giving effect to the terms of this Amendment, other than the
Existing Defaults, no other default or event of default or Termination Event
shall have occurred under the Forbearance Agreement;
(d) Xxxxxxxxx shall have paid all reasonable legal fees and expenses of
Agent in connection with this Amendment and the documents executed in connection
herewith; and
(e) the Continuing Credit Parties shall have provided such other items and
shall have satisfied such other conditions as may be reasonably required by
Agent and the Lenders.
SECTION 5. MISCELLANEOUS.
5.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in this Amendment shall survive the execution and delivery of
this Amendment, and no investigation by Agent or any Lender or any subsequent
Revolving Loan or other extension of credit under the Forbearance Agreement
shall affect the representations and warranties or the right of Agent or any
Lender to rely upon them.
5.2. REFERENCE TO FORBEARANCE AGREEMENT. The Forbearance Agreement and any
and all other agreements, instruments or documentation now or hereafter executed
and delivered pursuant to the terms of the Forbearance Agreement as amended
hereby, are hereby amended so that any reference therein to the Forbearance
Agreement shall mean a reference to the Forbearance Agreement as amended hereby.
5.3. SEVERABILITY. Any term or provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder
5
of this Amendment and the effect thereof shall be confined to the term or
provision so held to be invalid or unenforceable.
5.4. HEADINGS. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
5.5. ENTIRE AGREEMENT. This Amendment is specifically limited to the
matters expressly set forth herein. This Amendment and all other instruments,
agreements and documentation executed and delivered in connection with this
Amendment embody the final, entire agreement among the parties hereto with
respect to the subject matter hereof and supersede any and all prior
commitments, agreements, representations and understandings, whether written or
oral, relating to the matters covered by this Amendment, and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of the parties hereto. There are no oral agreements
among the parties hereto relating to the subject matter hereof or any other
subject matter relating to the Forbearance Agreement. Except as set forth
herein, the Forbearance Agreement shall remain in full force and effect and be
unaffected hereby.
5.6. COUNTERPARTS. This Amendment may be executed by the parties hereto
separately in one or more counterparts and by facsimile signature, each of which
when so executed shall be deemed to be an original, but all of which when taken
together shall constitute one and the same agreement.
5.7. WAIVER OF CLAIMS. Each Continuing Credit Party, by signing below,
hereby waives and releases Agent and each of the Lenders and their respective
directors, officers, employees, attorneys, affiliates and subsidiaries from any
and all claims, offsets, defenses and counterclaims of which such Continuing
Credit Party is aware, such waiver and release being with full knowledge and
understanding of the circumstances and effect thereof and after having consulted
legal counsel with respect thereto.
5.8. APPLICABLE LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS.
[Remainder of page intentionally left blank.]
6
5.9. JURY TRIAL WAIVER. THE CONTINUING CREDIT PARTIES, AGENT AND THE
LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF THIS AGREEMENT, THE FORBEARANCE AGREEMENT, ANY OF THE
OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREUNDER. THE CONTINUING
CREDIT PARTIES HEREBY IRREVOCABLY WAIVE PERSONAL SERVICE OF PROCESS AND CONSENT
TO SERVICE OF PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED.
IN NO EVENT WILL AGENT OR THE LENDERS BE LIABLE FOR LOST PROFITS OR OTHER
SPECIAL OR CONSEQUENTIAL DAMAGES.
IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as
of the date first above written.
BORROWER:
XXXXXXXXX XXXXX CORPORATION
By: /s/ Xxx X. Xxxxxxxx
Name: Xxx X. Xxxxxxxx
Title: President and Chief Operating Officer
CONTINUING CREDIT PARTIES:
XXXXXX MAY HOLDINGS, INC.
By: /s/ Xxx X. Xxxxxxxx
Name: Xxx X. Xxxxxxxx
Title: President and Chief Operating Officer
XXXXXXXXX XXXXX (CANADA) CORPORATION
By: /s/ Xxx X. Xxxxxxxx
Name: Xxx X. Xxxxxxxx
Title: President and Chief Operating Officer
AGENT AND SOLE LENDER:
THE CIT GROUP/BUSINESS CREDIT, INC., as Agent
and as the sole Lender
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
7
Title: Assistant Vice President
8
EXHIBIT A
Noteholder Forbearance Amendment
(See attached)
