FIFTH AMENDMENT AND FORBEARANCE AGREEMENT
Exhibit 10(a)
FIFTH AMENDMENT AND FORBEARANCE AGREEMENT
THIS FIFTH AMENDMENT AND FORBEARANCE AGREEMENT (this "Agreement"), dated and effective the 31st day of December, 2002 (the "Effective Date"), by and among XXXXXXXX INDUSTRIES, INC., a Delaware company ("Xxxxxxxx"), XXXXXXXX YARN EQUIPMENT, INC., a South Carolina company ("Xxxxxxxx Yarn"), WINK XXXXX EQUIPMENT COMPANY, INC., a Georgia company ("Wink Xxxxx"), XXXX MOTION CONTROLS, INC., a North Carolina company ("Xxxx Motion" and together with Xxxxxxxx, Xxxxxxxx Yarn, Wink Xxxxx and any future or indirect subsidiaries of Xxxxxxxx or of any other entities listed above, the "Borrowers"), jointly and severally and their respective successors and assigns, and SOUTHTRUST BANK ("Lender").
R E C I T A L S :
WHEREAS, the Borrowers above entered into that certain Credit Facility Agreement, dated as of May 31, 2000 (the "Credit Agreement") with Lender for the purpose of establishing a $17,500,000 Revolving Credit Facility and a $15,000,000 Letter of Credit Facility with the Lender in favor of the Borrowers (collectively, with all other obligations owed by Borrowers to SouthTrust, the "Obligations") (all terms not otherwise defined herein shall have the meaning ascribed to it in the Credit Agreement); and
WHEREAS, the parties amended the Credit Agreement pursuant to that certain Amendment and Forbearance Agreement dated as of the 13th day of November, 2000 (the "First Amendment"); and
WHEREAS, the parties amended the Credit Agreement pursuant to that certain Second Amendment and Forbearance Agreement dated July 1, 2001 (the "Second Amendment"); and
WHEREAS, the parties amended the Credit Agreement pursuant to that certain Third Amendment and Forbearance Agreement dated February 19, 2002 (the "Third Amendment"); and
WHEREAS, the parties amended the Credit Agreement pursuant to that certain Fourth Amendment and Forbearance Agreement dated July 31, 2002 (the "Fourth Amendment," and collectively with the First Amendment, the Second Amendment, and the Third Amendment, the "Amendments");
WHEREAS, pursuant to the Amendments, Lender’s outstanding commitment under the Revolving Credit Facility has been reduced to $15,000,000 (subject to the borrowing base formula set forth in the Credit Facility as amended pursuant to the Amendments and herein, regarding availability under the Revolving Credit Facility), and the outstanding commitment under the Letter of Credit Facility has been reduced to $6,000,000; and
WHEREAS, the Borrowers have requested the Lender to temporarily modify certain terms of the Credit Agreement and to forbear from taking remedial actions as a result of their non-compliance with certain covenants and warranties in the Credit Agreement (the "Existing
Noncompliance") and to extend the Forbearance Period as set forth in the Fourth Amendment; and
WHEREAS, the Lender is willing to accommodate the Borrowers under the terms set forth in this Agreement; and
WHEREAS, the Lender is willing to grant the forbearance requested by the Borrowers, but only upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the Borrowers and the Lender agree as follows:
1. Borrowers acknowledge and agree that the foregoing recitals are true, correct, and complete.
2. “Existing Noncompliance”: Borrowers acknowledge that as of the date hereof, they are not in compliance with Sections 10.16, 10.17, 10.18 and 10.19 of the Credit Agreement and as set forth in Sections 4.01(a), (c) and (d) of the Second Amendment. These constitute the sole Existing Noncompliance conditions. As a result, the Lender could declare an event of default under the Credit Agreement and exercise its rights and remedies thereunder and under the related Loan Documents.
3. Except as expressly set forth herein, the terms and conditions of the Credit Agreement remain in full force and effect. This Agreement shall be a Loan Document.
4. Lender agrees that, in respect of the Existing Noncompliance, during the Forbearance Period (as defined below), Lender will not enforce or exercise any remedies available to it under the Loan Documents, and will not seek collection of the Loans from the Borrowers, except as set forth herein. As used herein, the term "Forbearance Period" means the period of time commencing on as of the date of this Agreement and ending on March 31, 2003, subject to an earlier termination of the Forbearance Period as provided in Section 6 below.
5. Interest shall continue to accrue on the principal of the Loans, as set forth in the Credit Agreement, as amended, until such principal is paid in full. During the Forbearance Period, Borrowers shall make all payments in accordance with the payment terms set forth in the respective Loan Documents.
6. Notwithstanding the provisions of Section 2 above, the Forbearance Period shall automatically terminate without further notice to the Borrowers or any other person (all notice otherwise required by the Loan Documents or otherwise being hereby waived) if (i) any case or other proceeding is instituted by or against Borrowers under any state or federal law relating to the bankruptcy or insolvency of debtors, including, without limitation, the United States Bankruptcy Code, 11 U.S.C. § 101 et seq.; (ii) any "Event of Default" (as defined in the Loan Documents) occurs under any of the Loan Documents other than the Existing Noncompliance; (iii) any of the acknowledgments, warranties, or representations of Borrowers set forth herein shall be untrue or inaccurate in any material respect as of the date made; or (iv) Borrowers breach, default, or failure to perform any other obligation or agreement contained in this Agreement in a material way arising to an Event of Default under the Loan Documents,
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including, without limitation, the failure to meet its EBITDA projections as set forth in more detail in paragraph 10.
7. During the Forbearance Period, SouthTrust can require Borrowers, at Borrowers' sole expense, to hire an independent outside consulting firm to assist Borrowers with financial reporting, soliciting alternative financing opportunities, and seeking potential investors and/or purchasers. SouthTrust shall notify Borrowers in writing of such request. Borrowers will thereafter notify SouthTrust in writing of the name and address of the consultant that Borrowers intends to hire.
8. The Credit Agreement, as amended, is hereby amended as follows:
(a) The “Facility Number 1 Termination Date” means March 31, 2003.
(b) The “Facility Number 2 Termination Date” means March 31, 2003.
9. In addition to the reports required under Section 10.1 of the Credit Agreement, as amended by the Amendments, the Borrowers will provide within 20 days after the end of each month, all financial information and reporting currently required under the Credit Agreement on a quarterly basis, including EBITDA calculations, on a monthly basis with financial information for the immediately proceeding month.
10. Borrowers have provided Lender month-end EBITDA projections for all months covered by the Forbearance Agreement (the "EBITDA Projections"). A copy of the EBITDA Projections are attached hereto as Exhibit A. It shall constitute an Event of Default hereunder, and cause the termination of this Agreement, if the actual EBITDA numbers for any one month do not fall within a variance of $100,000 of the EBITDA Projections for that month.
11. The Lender shall have no further obligation to provide additional financing to the Borrowers except as set forth under the Loan Documents or herein. Nothing contained herein shall constitute a commitment or guarantee by Lender to extend any future financing to Borrowers, except as set forth in the Loan Documents.
12. Borrowers acknowledge and agree that (i) this Agreement is not intended to be, and shall not be deemed or construed to be, a novation or release of the Loan Documents or any of them; (ii) except as expressly provided in this Agreement, this Agreement is not intended to be, and shall not be deemed or construed to be, a modification, amendment, or waiver of the Loan Documents or any of them; (iii) neither this Agreement nor any payments made or other actions taken pursuant to this Agreement shall be deemed to cure the Existing Noncompliance unless and until all sums payable with respect thereto pursuant to the Loan Documents are paid in full or Borrowers shall have met the conditions of this Agreement with respect thereto; (iv) except as otherwise expressly provided in this Agreement, Lender reserves all available rights and remedies, at law, in equity, and under the Loan Documents, in connection with any Event of Default, including the Existing Noncompliance, whether now existing or hereafter occurring, under the Loan Documents; and (v) all requirements in the Loan Documents for notice by Lender to the Borrowers, or any of them, are hereby waived, except as set forth herein.
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13. Borrowers ratify and confirm all terms and conditions of the Loan Documents (as amended hereby). Borrowers acknowledge that: (i) all the Loan Documents are in full force and effect, and (ii) the Loan Documents constitute the legal, valid and binding obligations of Borrowers enforceable against Borrowers in accordance with their terms. Borrowers represent and warrant to Lender that as of the date hereof, Borrowers have no defenses, setoffs, rights of recoupment, counterclaims or claims of any nature whatsoever in respect to the Loan Documents, and to the extent any such defenses, setoffs, rights of recoupment, counterclaims or claims may exist, whether known or unknown, the same are hereby expressly waived, released and discharged. Borrowers represents and warrants to Lender that the Loans continue to be secured by the Loan Documents, and that except with respect to the Existing Noncompliance, no Event of Default has occurred and is continuing under the Loan Documents, and no event has occurred or failed to occur that, with the lapse of time, giving of notice or both, would constitute an Event of Default under the Loan Documents.
14. Borrowers, in consideration of Lender's agreement to forebear and modify the Agreements as set forth above and herein, and as a material inducement therefore, does hereby release, remise and forever discharge Lender and its affiliates, parents, divisions, subsidiaries, successors, predecessors, stockholders, officers, directors, agents, employees, attorneys, successors, and assigns (Lender and such other parties being collectively referred to herein as the "Released Parties") of and from any and all claims, liabilities, actions, and causes of action, if any, of whatever kind or nature, whether known or unknown, those that are contingent, suspected, or unsuspected, and whether concealed or hidden, which have existed, arising out of or in any way connected with any occurrences, acts, omissions, or transactions involving, directly or indirectly, the Loan Documents, or any of the Obligations, or any other transactions and dealings between the Borrower.
15. Borrowers further acknowledge and agree that all of the Loan Documents will continue to secure all of the Obligations, and Borrowers have heretofore and do hereby waive any right for a marshaling of any Collateral now or hereafter subject to the liens and security interests of the Loan Documents.
16. In recognition of Lender's right to have all its attorneys' fees and other expenses incurred in connection with the preparation, negotiations and drafting of this Agreement secured by the Collateral, notwithstanding payment in full of all Obligations by Borrowers, Lender shall not be required to record any terminations or satisfactions of any of its liens on the Collateral unless and until Borrowers has executed and delivered to Lender releases of all claims, known and unknown which exist as of the date thereof. Borrowers understand that this provision constitutes a waiver of its rights under § 7-9A-513 of the Alabama Code.
17. Borrowers acknowledge and agree that, if Lender shall, pursuant to the rights granted to Lender hereunder, under the Loan Documents, or under applicable law, dispose of any or all of the Collateral after the occurrence of an Event of Default, such disposition shall be deemed commercially reasonable if, in the written opinion of three (3) commercial loan officers with three (3) years of experience each, the manner of the disposition is not inconsistent with the manner in which such commercial loan officers would have handled the disposition.
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18. Borrowers represent and warrant to Lender that: (i) Borrowers are, respectively, corporations organized, validly existing and in good standing under the laws of the State set forth above and have full power and authority to execute, deliver and perform this Agreement and the other Loan Documents, and the same have been duly authorized pursuant to all requisite corporate action; (ii) this Agreement and the other Loan Documents constitute valid and legally binding obligations of the Borrowers, enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally, and general principles of equity; (iii) the execution, delivery and performance by the Borrowers of this Agreement and the other Loan Documents, will not and did not, violate, conflict with, or constitute any default under any law (including laws relating to usury), government regulation, or any other agreement or instrument binding upon the Borrowers; and (iv) no approval, authorization or other action by, or filing with, any governmental official, board or authority is required in connection with the execution and delivery of this Agreement or any of the other Loan Documents, and the performance of the provisions thereof, except such approvals and authorizations as have been received, such actions as have been taken, and such filings as have been made.
19. This Agreement shall be construed in accordance with, and shall in all respects be governed by, the laws of the State of North Carolina. The Loans owing under the Loan Documents are payable to Lender by Borrowers at Lender's principal place of business in Birmingham, Jefferson County, Alabama, and the Loan Documents and this Agreement shall be enforceable in the state and federal courts presiding in Jefferson County, Alabama, and any other court of competent jurisdiction. Borrowers agree to pay all expenses, including reasonable attorney's fees, incurred by Lender in connection with the negotiation and preparation of this Agreement.
20. Borrowers agree to pay all expenses, including reasonable attorneys' fees, incurred by Lender in connection with the negotiations and preparation of this Agreement. The validity and effectiveness of this Agreement is conditioned upon Borrowers paying all outstanding expenses of Lender as of the Effective Date, including attorneys' fees.
21. WAIVER OF JURY TRIAL. BORROWERS AND LENDER HEREBY EXPRESSLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN ANY LAWSUIT OR OTHER COURT ACTION RELATED TO THE LOANS, THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY, INCLUDING, WITHOUT LIMITATION, IN RESPECT TO ANY CLAIM, COUNTERCLAIM, THIRD-PARTY CLAIM, DEFENSE, OR SET-OFF ASSERTED IN ANY SUCH LAWSUIT OR COURT ACTION. ANY SUCH LAWSUIT OR COURT ACTION SHALL BE TRIED EXCLUSIVELY TO A COURT WITHOUT A JURY. BORROWERS SPECIFICALLY ACKNOWLEDGE THAT THEIR EXECUTION OF THIS WAIVER OF JURY TRIAL IS A MATERIAL PORTION OF THE CONSIDERATION RECEIVED BY THE LENDER IN EXCHANGE FOR ITS ENTERING INTO THIS AGREEMENT.
22. This Agreement may be executed in any number of counterparts, but it shall not be necessary that each counterpart be executed by all the parties hereto as long as each party executes at least one such counterpart. When each of the parties hereto has executed at least one
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counterpart hereof, this Agreement shall thereupon be deemed executed by all parties, and together all such counterparts shall comprise but a single instrument. No provision of this Agreement shall be construed against or interpreted to the disadvantage of any party to this Agreement by any court or other governmental or judicial authority by reason of such party's having or being deemed to have structured or dictated such provision. This Agreement will inure to the benefit of the parties hereto, their respective successors and assigns. This Agreement and the obligations of the parties hereunder shall be interpreted, construed and enforced in accordance with the laws of the State of North Carolina. Time is of the essence in the performance of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
COMPANY AND SUBSIDIARIES: LENDER:
XXXXXXXX INDUSTRIES, INC. (SEAL) SOUTHTRUST BANK (SEAL)
By: /s/ Xxxx Xxxxxxx
By: /s/ Xxxx
Xxxxxx
Xxxx
Xxxxxxx
Xxxx Xxxxxx
Title: Vice
President
Title: Vice President
XXXXXXXX YARN EQUIPMENT, INC.
(SEAL)
By: /s/ Xxxx Xxxxxxx
Xxxx
Xxxxxxx
Title: Vice
President
XXXX MOTION CONTROLS, INC.
(SEAL)
By: /s/ Xxxx Xxxxxxx
Xxxx
Xxxxxxx
Title: Vice
President
WINK XXXXX EQUIPMENT
COMPANY, INC. (SEAL)
By: /s/ Xxxx
Xxxxxxx
Xxxx
Xxxxxxx
Title: Vice
President
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| XXXXX XX XXXXX XXXXXXXX XXXXXX XX XXXXXXXXXXX |
) ) ) |
I, L. Xxxx Xxxxxx, a Notary Public in and for said County in said State, hereby certify that Xxxx X.X. Xxxxxxx, whose name as Vice President of XXXXXXXX INDUSTRIES, INC., a Delaware corporation, is signed to the foregoing Forbearance Agreement, and who is known to me, acknowledged before me on this day that, being informed of the contents of such instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand and seal, this 31st day of December, 2002
NOTARY PUBLIC – /s/ L. Xxxx Xxxxxx
[SEAL]
My Commission Expires: November 11, 0000
| XXXXX XX XXXXX XXXXXXXX XXXXXX XX XXXXXXXXXXX |
) ) ) |
I, L. Xxxx Xxxxxx, a Notary Public in and for said County in said State, hereby certify that Xxxx X.X. Xxxxxxx, whose name as Vice President of XXXXXXXX YARN EQUIPMENT, INC., a South Carolina corporation, is signed to the foregoing Forbearance Agreement, and who is known to me, acknowledged before me on this day that, being informed of the contents of such instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand and seal, this 31st day of December, 2002.
NOTARY PUBLIC – /s/ L. Xxxx Xxxxxx
[SEAL]
My Commission Expires: November 11, 2005
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| STATE OF NORTH CAROLINA COUNTY OF MECKLENBURG |
) ) ) |
I, L. Xxxx Xxxxxx, a Notary Public in and for said County in said State, hereby certify that Xxxx X.X. Xxxxxxx, whose name as Vice President of XXXX MOTION CONTROLS, INC., a North Carolina corporation, is signed to the foregoing Forbearance Agreement, and who is known to me, acknowledged before me on this day that, being informed of the contents of such instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand and seal, this 31st day of December, 2002.
NOTARY PUBLIC – /s/ L. Xxxx Xxxxxx
[SEAL]
My Commission Expires: November 11, 0000
| XXXXX XX XXXXX XXXXXXXX XXXXXX XX XXXXXXXXXXX |
) ) ) |
I, L. Xxxx Xxxxxx, a Notary Public in and for said County in said State, hereby certify that Xxxx X.X. Xxxxxxx, whose name as Vice President of WINK XXXXX EQUIPMENT, INC., a Georgia corporation, is signed to the foregoing Forbearance Agreement, and who is known to me, acknowledged before me on this day that, being informed of the contents of such instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand and seal, this 31st day of December, 2002.
NOTARY PUBLIC – /s/ L. Xxxx Xxxxxx
[SEAL]
My Commission Expires: November 11, 2005
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| STATE OF ALABAMA COUNTY OF JEFFERSON |
) ) ) |
I, Xxxxx X. Xxxxxxxx, a Notary Public in and for said County in said State, hereby certify that Xxxx Xxxxxx, whose name as Vice President of SOUTHTRUST BANK is signed to the foregoing Forbearance, and who is known to me, acknowledged before me on this day that, being informed of the contents of such instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said SOUTHTRUST BANK.
Given under my hand and seal, this 31st day of December, 2002.
NOTARY PUBLIC - /s/ Xxxxx X. Xxxxxxxx
[SEAL]
My Commission Expires: February 5, 2005
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EXHIBIT A
EBITDA PROJECTIONS
