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EXHIBIT 10.63
FORBEARANCE EXTENSION AGREEMENT
FORBEARANCE EXTENSION AGREEMENT, dated as of July 31, 2000 (this
"Forbearance Extension"), among
(i) DENALI INCORPORATED (the "Borrower");
(ii) each of the guarantors which are signatories hereto (each a
"Guarantor", collectively, the "Guarantors");
(iii) CANADIAN IMPERIAL BANK OF COMMERCE (in its capacity as
administrative agent for the Lenders referenced below, the "Administrative
Agent");
(iv) ING (U.S.) CAPITAL LLC (in its capacity as documentation agent for
the Lenders referenced below, the "Documentation Agent"); and
(v) the lenders party to the Credit Agreement referenced below (the
"Lenders"), in respect of the Credit Agreement referenced below.
WITNESSETH:
WHEREAS, the Borrower, the Lenders, the Administrative Agent and the
Documentation Agent have entered into that certain Credit Agreement, dated as of
January 12, 1999 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement");
WHEREAS, the Guarantors are party to that certain Guarantee, dated as
of January 12, 1999 (as amended, supplemented or otherwise modified from time to
time, the "Guarantee"), in favor of the Administrative Agent for the benefit of
the Lenders;
WHEREAS, the Borrower, the Guarantors, the Lenders, the Administrative
Agent and the Documentation Agent have entered into that certain Forbearance
Agreement, dated as of June 30, 2000 (the "Forbearance Agreement"); and
WHEREAS, the Borrower and the Guarantors have requested that the
Lenders, the Administrative Agent and the Documentation Agent extend the
Forbearance Termination Date (as defined in the Forbearance Agreement) and to
provide for certain other amendments or modifications to the Credit Agreement
and the Forbearance Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
contained herein and for other valuable consideration, the receipt and adequacy
of which are
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hereby acknowledged, the Borrower, the Guarantors, the Administrative Agent, the
Documentation Agent and the Lenders hereby agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
shall have the meanings ascribed thereto in the Credit Agreement or the
Forbearance Agreement. The following terms shall have the following meanings:
"Xxxxx Transaction": a transaction including new subordinated
indebtedness and preferred equity entered into by the Borrower with Xxxxxxx
Xxxxx Mezzanine Capital Partners which is in form and substance satisfactory to
the Administrative Agent.
"Forbearance Period": the period from the date hereof until the
Forbearance Termination Date.
2. Forbearance Extension. The Forbearance Termination Date set forth in
the Forbearance Agreement is hereby amended to be the earliest to occur of (i)
September 30, 2000, (ii) the closing of the Xxxxx Transaction and (iii) the
occurrence of a Forbearance Event of Default.
3. Additional Provisions.
(a) Subject to the terms and conditions set forth herein,
interest shall accrue on all unpaid Obligations during the Forbearance Period
at an interest rate equal to the highest non-default interest rate for the
related Type of Loan set forth in Section 6.1 of the Credit Agreement.
Additional interest shall accrue at a rate equal to the difference between
the applicable default rate for each Loan provided in the Credit Agreement
and applicable interest rate set forth in the preceding sentence, which
additional interest shall be due and payable on the Forbearance Termination
Date. During the Forbearance Period, no Eurodollar Loan shall be made or
continued with an Interest Period that ends later than September 30, 2000.
(b) Subject to the terms and conditions set forth herein, the
Lenders hereby waive any mandatory prepayment required to be made pursuant to
Section 6.5(c) of the Credit Agreement relating to proceeds of new common
equity investments into the Borrower of up to $1,600,000 in the aggregate
made by existing shareholders, directors, or senior management of the
Borrower substantially contemporaneously herewith.
(c) Subject to the terms and conditions set forth herein, during
the Forbearance Period the Lenders shall increase the aggregate Revolving
Credit Commitments by an aggregate of $2,000,000 to a total of $27,000,000,
such increase to be allocated among the Lenders as set forth on Exhibit A
attached hereto. On the Forbearance Termination Date, the Revolving Credit
Commitments shall automatically revert back to an aggregate of $25,000,000
with allocations among the Lenders as was in effect immediately prior to the
increase provided for herein.
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(d) Subject to the terms and conditions set forth herein, the
Lenders shall defer their rights to exercise any warrants held by the Lenders
relating to the Borrower that are exercisable on July 31, 2000 and on August
31, 2000 until the Forbearance Termination Date. If the Xxxxx Transaction is
consummated on or prior to September 30, 2000, the Lenders shall surrender
such warrants to the Borrower for cancellation.
(e) The Borrower shall deliver to the Administrative Agent an
updated weekly cash forecast on Monday of each week, or if such day is not a
Business Day, the next succeeding Business Day.
(f) The Borrower shall deliver notice to the Administrative Agent
if it becomes reasonably likely that the Xxxxx Transaction will not close on
or prior to September 30, 2000 and shall describe the circumstances relating
to the Xxxxx Transaction at that time. The Borrower shall promptly give
notice to the Administrative Agent of all material developments relating to
the Xxxxx Transaction.
4. Forbearance Fee. The Borrower shall pay to the Administrative Agent
for the account of each Lender a forbearance fee in an amount equal to the
product of (x) 25 basis points times (y) the sum of (i) such Lender's Revolving
Credit Commitment (after giving effect to the increase contemplated hereby) and
(ii) the aggregate outstanding principal balance of all Term Loans and
Acquisition Loans made by such Lender as of the date hereof. Such forbearance
fee shall be due and payable on the Forbearance Termination Date.
5. Termination. The Forbearance Agreement, as modified by this
Forbearance Extension and this Forbearance Extension shall terminate on the
Forbearance Termination Date.
6. Representations and Warranties. In order to induce the
Administrative Agent, the Documentation Agent and the Lenders to enter into this
Forbearance Extension, the Borrower and each Guarantor hereby represents and
warrants to the Administrative Agent, the Documentation Agent and to each Lender
that:
(a) Other than as set forth in Section 5(b), each of the
representations and warranties made by the Borrower and each of the
Guarantors in each Loan Document to which it is a party is true and correct
in all material respects as of the date hereof.
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(b) Other than the Specified Events of Default, no Default or
Event of Default has occurred and is continuing as of the date hereof.
7. Conditions Precedent to Effectiveness of Forbearance Extension. This
Forbearance Extension shall not become effective unless and until:
(a) the Administrative Agent has received this Forbearance
Extension, executed and delivered by a duly authorized officer of the
Borrower, each Guarantor, the Required Lenders, the Administrative Agent and
the Documentation Agent;
(b) the Administrative Agent shall have received for the account
of each Lender payment of all accrued interest, including any accrued default
interest, through July 31, 2000;
(c) payments due to the holders of the Permanent Subordinated
Debt as of the date hereof shall have been deferred pursuant to a waiver
agreement, dated as of the date hereof, among the Borrower and the holders of
the Permanent Subordinated Debt and such waiver agreement shall have been
duly executed by the Borrower and each such noteholder and shall be in form
and substance satisfactory to the Administrative Agent;
(d) the Borrower shall have received an equity investment from
the existing shareholders, directors, or senior management of the Borrower of
not less than $1,400,000 which shall be in form and substance satisfactory to
the Administrative Agent;
(e) the Administrative Agent shall have received a note
endorsement in respect of each Revolving Credit Note giving effect to the
increase in the Revolving Credit Commitments contemplated hereby, duly
executed and delivered by the Borrower; and
(f) the Administrative Agent has received such other documents
and information as the Administrative Agent may reasonably require, which
documents and information shall be satisfactory to the Administrative Agent
in its sole discretion.
8. Forbearance Events of Default. The Forbearance Period shall
immediately terminate and this Forbearance Extension shall be of no further
force and effect upon the occurrence of any of the following (each, a
"Forbearance Event of Default"):
(a) the occurrence of one or more Defaults or Events of Default
under the Credit Agreement (other than a Specified Event of Default); or
(b) any representation or warranty made or deemed made by the
Borrower or any Guarantor herein, in the Forbearance Agreement or which is
contained in any certificate, document or financial or other statement
created and/or delivered at any time under or in connection with this
Forbearance Extension, the Forbearance Agreement or on or subsequent to the
date hereof under or in connection with any other Loan Document shall prove
to have been incorrect in any material respect on or as of the date made or
deemed made; or
(c) the Borrower or any Subsidiary shall default in the
observance or performance of any agreement contained herein or in the
Forbearance Agreement; or
(d) the Borrower shall make, or permit to be made by any
Guarantor, any payment to any Person in respect of the Permanent Subordinated
Debt so long as an Event of Default shall continue to exist under the Credit
Agreement and such payment shall be waived by the holders of the Permanent
Subordinated Debt or a payment
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blockage notice shall remain in effect, in each case without the prior
written consent of the Administrative Agent, the Documentation Agent and the
Lenders; or
(e) the Borrower shall fail to maintain either (i) for the two
calendar month period ending July 31, 2000, a Consolidated Domestic EBITDA of
not less than $1,200,000, or (ii) for the one calendar month period ending
July 31, 2000, a Consolidated Domestic EBITDA of not less than $605,000; or
(f) the Administrative Agent shall determine in good faith that
the Xxxxx Transaction will not close on or prior to September 30, 2000.
9. Absence of Waiver. The parties hereto agree that the agreements set
forth herein shall not be deemed to:
(a) be a consent to cure, or waiver of, any Default or Event of
Default;
(b) except as expressly set forth herein, modify or limit any
other term or condition of the Credit Agreement, the Forbearance Agreement or
any other Loan Document;
(c) impose upon any Lender, the Administrative Agent or the
Documentation Agent any commitment or obligation, express or implied, to
consent to any amendment or further modification of the Credit Agreement, the
Forbearance Agreement or other Loan Documents;
(d) impose upon any Lender, the Administrative Agent or any
Documentation Agent any commitment or obligation, express or implied, to
grant or extend any financial accommodations to the Borrower or the
Guarantors (other than as expressly set forth herein) or to modify or extend
the Forbearance Agreement or this Forbearance Extension; or
(e) prejudice any right or remedy that the Administrative Agent,
the Documentation Agent or the Lenders may now have or may in the future have
under the Credit Agreement or under or in connection with the other Loan
Documents or any instrument or agreement referred to therein including,
without limitation, any right or remedy resulting from any Default or Event
of Default.
10. Release of Claims and Waiver. Each of the Borrower and each
Guarantor hereby releases, remises, acquits and forever discharges each Lender,
the Administrative Agent and the Documentation Agent and each of their
employees, agents, representative, consultants, attorneys, officers, directors,
partners, fiduciaries, predecessors, successors and assigns, subsidiary
corporations, parent corporations and related corporate divisions (collectively,
the "Released Parties"), from any and all actions, causes of action, judgments,
executions, suits, debts, claims, demands, liabilities, obligations, damages and
expenses of any and every character, known or unknown, direct or indirect, at
law or in equity, of whatever nature or kind, 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 of execution
hereof, and in
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any way directly or indirectly arising out of any or in any way connected to
this Agreement or the Loan Documents (collectively, the "Released Matters").
Each of the Borrower and each Guarantor hereby acknowledges that the agreements
in this Section 9 are intended to be in full satisfaction of all or any alleged
injuries or damages arising in connection with the Released Matters. Each of the
Borrower and each Guarantor hereby represents and warrants to the Administrative
Agent, the Documentation Agent and each Lender that it has not purported to
transfer, assign or otherwise convey any right, title or interest of the
Borrower or any Guarantor in any Released Matter to any other Person and that
the foregoing constitutes a full and complete release of all Released Matters.
11. Miscellaneous.
(a) Section headings used in this Forbearance Extension are for
convenience of reference only and shall not affect the construction of this
Forbearance Extension.
(b) This Forbearance Extension may be executed by one or more of
the parties hereto by facsimile or in any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.
(c) This Forbearance Extension and the rights and obligations of
the parties under this Forbearance Extension shall be governed by, and
construed and interpreted in accordance with, the law of the State of New
York.
(d) This Forbearance Extension shall be deemed a "Loan Document"
for purposes of the Credit Agreement and the other Loan Documents.
(e) This Forbearance Extension constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes
all prior and contemporaneous oral or written agreements with respect to the
subject matter hereof.
(f) Time is of the essence in this Forbearance Extension.
(g) No amendment or modification of this Forbearance Extension
shall be effective unless made in writing and signed by all parties. Each of
the Borrower and each of the Guarantors acknowledges and agrees that any and
all future discussions with any Lender, the Administrative Agent or the
Documentation Agent shall be without prejudice to any Lender, the
Administrative Agent or the Documentation Agent and shall not be deemed to
modify, waive, or amend any term or provision of this Forbearance Extension
or the Loan Documents.
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IN WITNESS WHEREOF, the parties hereto have caused this Forbearance
Extension to be duly executed and delivered as of the day and year first above
written.
DENALI INCORPORATED,
as Borrower
By /s/ R. XXXXX XXXXXXX
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Name: R. Xxxxx Xxxxxxx
Title: CFO/Treasurer
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
By: /s/ XXXXXX XXXXXXX
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Name: XXXXXX XXXXXXX
Title: Executive Director
ING (U.S.) CAPITAL LLC,
as Documentation Agent and as a Lender
By: /s/ XXXXXX XXXXXXX
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Name: XXXXXX XXXXXXX
Title: Director
CIBC INC.,
as a Lender
By: /s/ XXXXXX XXXXXXX
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Name: XXXXXX XXXXXXX
Title: Executive Director
KEY CORPORATE CAPITAL INC.,
as a Lender
By: /s/ XXXXXXX X. XXXXXXX
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Name: XXXXXXX X. XXXXXXX
Title: Vice President
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BANK OF OKLAHOMA N.A.,
as a Lender
By: /s/ XXXXXX X. BEEN
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Name: XXXXXX X. BEEN
Title: Assistant Vice President
SOUTHWEST BANK OF TEXAS, N.A.,
as a Lender
By: /s/ XX XXXXX
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Name: XX XXXXX
Title: Senior Vice President
THE GUARANTORS:
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CONTAINMENT SOLUTIONS, INC.
By: /s/ XXXXXX XXXXXXXXX
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Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
CONTAINMENT SOLUTIONS SERVICES, INC.
By: /s/ XXXXXX XXXXXXXXX
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Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
INSTRUMENTATION SOLUTIONS, INC.
By: /s/ XXXXXX XXXXXXXXX
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Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
DENALI MANAGEMENT, INC.
By: /s/ XXXXXX XXXXXXXXX
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Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
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SPECIALTY SOLUTIONS, INC.
By: /s/ XXXXXX XXXXXXXXX
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Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
BELCO MANUFACTURING COMPANY, INC.
By: /s/ XXXXXX XXXXXXXXX
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Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
ERSHIGS, INC.
By: /s/ XXXXXX XXXXXXXXX
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Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
SEFCO, INC.
By: /s/ XXXXXX XXXXXXXXX
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Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
FIBERCAST COMPANY
By: /s/ XXXXXX XXXXXXXXX
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Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
PLASTI-FAB, INC.
By: /s/ XXXXXX XXXXXXXXX
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Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
DENALI HOLDINGS MANAGEMENT L.L.C.
By: /s/ XXXXXX XXXXXXXXX
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Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
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DENALI OPERATING MANAGEMENT, LTD.
By: /s/ XXXXXX XXXXXXXXX
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Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
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EXHIBIT A
REVOLVING CREDIT COMMITMENTS
LENDER EXISTING R/C EXISTING NEW R/C NEW R/C
COMMITMENT COMMITMENT % COMMITMENT ($'S) COMMITMENT (%)
------------------- ------------- ------------- ---------------- --------------
CIBC 5,833,333.34 23.3333% 6,146,000.00 22.7630%
ING 5,833,333.33 23.3333% 6,146,000.00 22.7630%
KEY BANK 5,833,333.33 23.3333% 6,146,000.00 22.7630%
BANK OF OKLAHOMA 5,000,000.00 20.0000% 5,928,000.00 21.9556%
SOUTHWEST BANK 2,500,000.00 10.0000% 2,634,000.00 9.7556%
------------- ------------- ---------------- --------------
TOTAL 25,000,000.00 100.0000% 27,000,000.00 100.0000%
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