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EXHIBIT 10.62
FORBEARANCE AGREEMENT
FORBEARANCE AGREEMENT, dated as of June 30, 2000 (this "Forbearance
Agreement"), 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
(vii) 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, an Event of Default (as defined in the Credit Agreement) shall
exist under Section 11(a) of the Credit Agreement based upon the failure of the
Borrower to pay installments of principal due as of June 30, 2000 and Events of
Default exist under Section 11(c) of the Credit Agreement relating to the
failure of the Borrower to comply with the financial covenants contained in
Section 10.1 of the Credit Agreement as of December 31, 1999 and March 31, 2000
(the "Specified Events of Default");
WHEREAS, the Administrative Agent, the Documentation Agent and the
Lenders are unwilling to waive the Specified Events of Default; and
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WHEREAS, notwithstanding the foregoing, subject to the terms and
conditions hereof, the Administrative Agent, the Documentation Agent and the
Lenders are willing, during the period (the "Forbearance Period") commencing on
the date hereof and ending on July 31, 2000 (the "Forbearance Termination
Date"), to forbear in the enforcement of the remedies set forth in the Loan
Documents (as defined in the Credit Agreement) including the Guarantee as set
forth herein; provided, that the rights of the Administrative Agent, the
Documentation Agent and the Lenders shall not be otherwise waived or impaired.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
contained herein and for other valuable consideration, the receipt and adequacy
of which are 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.
2. Acknowledgments.
(a) Each of the Borrower and each Guarantor acknowledges and
affirms that, as of the date hereof, the Borrower is indebted to the Lenders
(i) in respect of the Term Loans and the Term Notes in an aggregate
outstanding principal amount equal to $17,250,000 plus interest thereon, (ii)
in respect of the Revolving Credit Loans and the Revolving Credit Notes in an
aggregate outstanding principal amount equal to $22,327,448 plus interest
thereon and (iii) in respect of the Acquisition Loans and the Acquisition
Notes in an aggregate outstanding principal amount equal to $15,300,000 plus
interest thereon.
(b) Each of the Borrower and each Guarantor and acknowledges and
affirms that, as of the date hereof, (i) there exists no defense to the
repayment by the Borrower of all amounts owing under the Credit Agreement and
(ii) neither the Borrower nor any Guarantor has any claim against any Lender,
the Documentation Agent or the Administrative Agent in respect of any matter
relating to or arising under the Loan Documents or this Forbearance Agreement
and the transactions contemplated thereby or hereby.
(c) Each of the Borrower and each Guarantor acknowledges and
reaffirms the effectiveness and continuing validity of the Credit Agreement,
the Guarantee and each other Loan Document to which it is a party.
(d) Each of the Borrower and each Guarantor acknowledges and
affirms that the Specified Events of Default have occurred and is continuing
and that, pursuant to Section 11 of the Credit Agreement, but for the
effectiveness of this Forbearance Agreement, the Administrative Agent is
presently entitled, with the consent of the Lenders, to terminate the
Commitments and to declare the outstanding indebtedness and the other amounts
owing under the Credit Agreement to be due and payable and to exercise all
remedies available under the Loan Documents and at law.
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(e) Each Guarantor acknowledges and consents to this Forbearance
Agreement and to the terms hereof, this Forbearance Agreement and the terms
hereof to be without prejudice to such Guarantor's liability pursuant to the
Guarantee and the other Loan Documents to which it is a party.
(f) Each of the Borrower and each Guarantor acknowledges and
affirms that it has been advised by its legal counsel in connection with the
negotiation and execution and delivery of this Forbearance Agreement.
3. Forbearance; Deferral of Principal; Interest Rate.
(a) Subject to the terms and conditions set forth herein, none of
the Administrative Agent, the Documentation Agent or any Lender shall
exercise any of the remedies set forth in the Credit Agreement or in any of
the other Loan Documents in respect of the Specified Events of Default during
the Forbearance Period.
(b) Subject to the terms and conditions set forth herein, the
unpaid principal installments of the Term Loans and the Acquisition Loans
which were due on June 30, 2000 shall be deferred until, and shall be due on,
the Forbearance Termination Date.
(c) Subject to the terms and conditions set forth herein,
interest shall accrue on all unpaid Obligations during the Forbearance Period
at the rates provided for such Obligations in Section 6.1 of the Credit
Agreement; provided, that during the Forbearance Period, no Eurodollar Loan
shall be made or continued with an Interest Period that ends later than the
Forbearance Termination Date.
4. Termination. This Forbearance Agreement shall terminate on the
Forbearance Termination Date, unless earlier terminated upon the occurrence of a
Forbearance Event of Default.
5. Representations and Warranties. In order to induce the
Administrative Agent, the Documentation Agent and the Lenders to enter into this
Forbearance Agreement, 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.
(b) Other than the Specified Events of Default, no Default or
Event of Default has occurred and is continuing as of the date hereof.
6. Conditions Precedent to Effectiveness of Forbearance Agreement. This
Forbearance Agreement shall not become effective unless and until:
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(a) the Administrative Agent has received this Forbearance
Agreement, executed and delivered by a duly authorized officer of the
Borrower, each Guarantor, the Required Lenders, the Administrative Agent and
the Documentation Agent;
(b) payments due to the holders of the Permanent Subordinated
Debt as of June 30, 2000 shall have been deferred pursuant to the 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
(c) 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.
7. Forbearance Events of Default. The Forbearance Period shall
immediately terminate and this Forbearance Agreement 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 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 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
(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 of the
Credit Agreement and a payment blockage notice shall remain in effect, in
each case without the prior written consent of the Administrative Agent, the
Documentation Agent and the Lenders.
8. 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 or any other Loan Document;
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(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 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
this Forbearance Agreement; 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.
9. 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 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.
10. Miscellaneous.
(a) Section headings used in this Forbearance Agreement are for
convenience of reference only and shall not affect the construction of this
Forbearance Agreement.
(b) This Forbearance Agreement 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.
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(c) This Forbearance Agreement and the rights and obligations of
the parties under this Forbearance Agreement shall be governed by, and
construed and interpreted in accordance with, the law of the State of New
York.
(d) This Forbearance Agreement shall be deemed a "Loan Document"
for purposes of the Credit Agreement and the other Loan Documents.
(e) This Forbearance Agreement 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
Agreement.
(g) No amendment or modification of this Forbearance Agreement
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 Agreement
or the Loan Documents.
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IN WITNESS WHEREOF, the parties hereto have caused this Forbearance
Agreement to be duly executed and delivered as of the day and year first above
written.
DENALI INCORPORATED,
as Borrower
By: /s/ R. XXXXX XXXXXXX
-----------------------------------
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
-----------------------------------
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
-----------------------------------
Name: XXXXXX X. BEEN
Title: Assistant Vice President
SOUTHWEST BANK OF TEXAS, N.A.,
as a Lender
By: /s/ XX XXXXX
-----------------------------------
Name: XX XXXXX
Title: Senior Vice President
THE GUARANTORS:
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CONTAINMENT SOLUTIONS, INC.
By: /s/ XXXXXX XXXXXXXXX
-----------------------------------
Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
CONTAINMENT SOLUTIONS SERVICES, INC.
By: /s/ XXXXXX XXXXXXXXX
-----------------------------------
Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
INSTRUMENTATION SOLUTIONS, INC.
By: /s/ XXXXXX XXXXXXXXX
-----------------------------------
Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
DENALI MANAGEMENT, INC.
By: /s/ XXXXXX XXXXXXXXX
-----------------------------------
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
-----------------------------------
Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
ERSHIGS, INC.
By: /s/ XXXXXX XXXXXXXXX
-----------------------------------
Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
SEFCO, INC.
By: /s/ XXXXXX XXXXXXXXX
-----------------------------------
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
-----------------------------------
Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
DENALI HOLDINGS MANAGEMENT L.L.C.
By: /s/ XXXXXX XXXXXXXXX
-----------------------------------
Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
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DENALI OPERATING MANAGEMENT, LTD.
By: /s/ XXXXXX XXXXXXXXX
-----------------------------------
Name: XXXXXX XXXXXXXXX
Title: ASSISTANT SECRETARY
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