TWELFTH AMENDMENT AND
FORBEARANCE AGREEMENT
This Twelfth Amendment and Forbearance Agreement ("Agreement") is
entered into as of December 18, 2001, between Xxxxxxxx Casting Corporation, a
Kansas corporation (the "Borrower"), Xxxxxx Trust and Savings Bank ("Xxxxxx"),
as Agent (Xxxxxx in such capacity being hereinafter referred to as the "Agent"),
and each Bank currently party to the Credit Agreement hereinafter identified and
defined (the term "Bank Group" as used herein to mean each Bank now and from
time to time hereafter party to the Credit Agreement and the Agent under the
Credit Agreement for such Banks).
BACKGROUND
A. The Borrower, the Banks party thereto and the Agent entered into an
Amended and Restated Credit Agreement dated as of April 3, 1998 (such Credit
Agreement, as the same has been amended, waived, or otherwise modified prior to
the date hereof, being referred to herein as the "Credit Agreement"). All
capitalized terms used herein without definition shall have the same meanings
herein as such terms have in the Credit Agreement.
B. The Borrower and Teachers Insurance and Annuity Association of
America ("TIAA") executed and delivered that certain Note Purchase Agreement,
dated July 29, 1994 (such Note Agreement, as the same has been amended, waived
or otherwise modified prior to the date hereof, being referred to herein as the
"Note Agreement"), pursuant to which TIAA purchased $20,000,000 in aggregate
principal amount of the Borrower's 8.44% Senior Notes due July 29, 2004
("Teachers' Notes").
C. The Borrower, TIAA, the Bank Group, and Xxxxxx entered into that
certain Intercreditor and Collateral Agency Agreement (as amended, the
"Intercreditor Agreement"), dated February 15, 2000, pursuant to which Xxxxxx
was appointed as collateral agent (Xxxxxx, in such capacity, being the
"Collateral Agent").
D. As of the date hereof, the Borrower is not in compliance with
the Credit Agreement as described on Schedule I attached hereto (collectively,
the "Existing Defaults").
E. The Borrower, Guarantors, Bank Group, TIAA and the Collateral Agent
intend to enter into a Cash Collateral Use Agreement (the "Cash Collateral Use
Agreement") to govern the use of the proceeds of the Collateral.
F. The Borrower has requested that the Bank Group temporarily waive,
or at least temporarily forbear from enforcing its rights and remedies with
respect to, the Existing Defaults during the period (such period, as the same
may be terminated earlier pursuant to the terms hereof, being hereinafter
referred as the "Standstill Period") ending on June 30, 2002 (the "Standstill
Expiration Date"), on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, upon the mutual promises contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Borrower and the Bank Group agree as follows:
1. Forbearance. Subject to the terms and conditions of this Agreement,
unless and until a Standstill Termination occurs:
(a) Credit shall remain available under and subject to the Credit
Agreement as modified hereby to the Borrower; and
(b) The Bank Group will not enforce collection of the Obligations
or enforce its Liens on the Collateral or exercise any other right or
remedy available under the Loan Documents or otherwise against the
Borrower or any Subsidiary by virtue of (i) the Existing Defaults and
(ii) continued noncompliance with the covenants therein referenced.
2. Amendments. Subject to the terms and conditions of this Agreement,
unless and until a Standstill Termination occurs the Credit Agreement is hereby
amended as follows:
(a) Section 1.1(b)(iv) of the Credit Agreement is hereby amended
by inserting immediately at the end of the first sentence thereof the
following:
; provided that if at the time of such request the aggregate
Original Dollar Amount of all Revolving Loans, the aggregate
undrawn face amount of Letters of Credit and the aggregate
unpaid Reimbursement Obligations at any time exceed
$70,000,000 each Bank that has a temporary increase in
Commitments under Section 1.14 hereof shall make a Revolving
Loan in an amount equal to such Bank's Temporary Commitment
Percentage (as defined in Section 1.14).
3. Paragraph 3 of the Eleventh Amendment and Forbearance Agreement
("Eleventh Amendment") and Paragraph 2 of the Tenth Amendment and Forbearance
Agreement ("Tenth Amendment") are hereby amended in their entirety to read as
follows:
Maximum Exposure. During the Standstill Period, and subject to
the further provisions of this Paragraph 3, the Borrower must not at any time
permit the aggregate principal amount outstanding on the Loans (including Swing
Loans) and Letters of Credit to exceed the lesser of (i) $75,487,626.39 (as such
amount is reduced from time to time pursuant to the terms of the Credit
Agreement and this Agreement, the "Maximum Exposure Cap") and (ii) the Borrowing
Base as in effect from time to time. The Banks agree that, subject to the
further provisions of this Agreement, the temporary increase in Commitments
(shown, for convenience, on Schedule II attached hereto) under Section 1.14 of
the Credit Agreement shall continue in effect during the Standstill Period in
the percentages set forth in clause (b) of the last sentence of Section 1.14 of
the Credit Agreement. The Borrower shall immediately make such payments as are
necessary to assure that the outstanding Loans (including Swing Loans) and
Letters of Credit
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do not exceed the lesser of (i) Maximum Exposure Cap and (ii) the Borrowing Base
as in effect from time to time.
4. Commitment Reductions. (a) On January 31, 2002 a portion of the
Commitments (and, accordingly, the Maximum Exposure Cap) shall automatically
terminate in an amount necessary, if any, so that after giving effect to such
termination, the remaining Commitments (and, accordingly, the Maximum Exposure
Cap) shall not exceed $72,487,626.39. On March 31, 2002 a portion of the
Commitments (and, accordingly, the Maximum Exposure Cap) shall automatically
terminate in an amount necessary, if any, so that after giving effect to such
termination, the remaining Commitments (and, accordingly, the Maximum Exposure
Cap) shall not exceed $70,487,626.39.
(b) All reductions in the Commitments required by this
paragraph 4 shall be applied first to terminate the temporary increase
in Commitments under Section 1.14 of the Credit Agreement of each bank
whose Commitment was temporarily increased pro rata in accordance with
the respective amounts of such Banks' temporary increases and then
applied to terminate the remaining Commitments of each Bank pro rata in
accordance with such remaining Commitments. If the aggregate principal
amount of the outstanding Loans (including Swing Loans) and Letters of
Credit exceed the Commitments as reduced by this paragraph 4, the
Borrower shall immediately and without notice or demand, pay the amount
of such excess to the Agent as a prepayment of the Loans and, if
necessary, a prefunding of Letters of Credit (with such payment applied
to the Obligations as required by the Credit Agreement (after giving
effect to, among other things, this Amendment).
5. Paragraph 3 of the Tenth Amendment is hereby amended in its
entirety to read as follows:
Interest and Fees. Notwithstanding anything in any Credit
Document to the contrary, but subject to the further provisions of this Agreement:
(a) Interest shall accrue on Loans made available as Domestic
Rate Loans (x) through the Standstill Period at the rate per annum
determined by adding the 2% to the Domestic Rate as from time to time
in effect (payable weekly on the first Business Day of each calendar
week) and (y) after the Standstill Period until paid at the rate per
annum determined by adding 4% to the Domestic Rate from time to time in
effect.
(b) Accrued but unpaid interest on the Loans shall be due and
payable on the first Business Day of each calendar week and at maturity
(whether by acceleration or otherwise).
(c) No Loan shall be advanced as a Eurocurrency Loan.
(d) Section 2.1(a) of the Credit Agreement and paragraph
3(e) of the Tenth Amendment and Forbearance Agreement are each hereby
amended in their entirety to read as follows: [Intentionally
Omitted].
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(e) In addition to any fees the Borrower is currently
obligated to pay the Agent, the Borrower agrees to pay to the Agent for
its own use and benefit a non-refundable agency fee of $10,000 on the
first Business Day of each calendar month commencing with January 2,
2002.
6. Asset Sales. Paragraph 6 of the Eleventh Amendment and
Forbearance Agreement is hereby amended in its entirety to read as follows:
[Intentionally Omitted.]
7. Paragraph 6 of the Eleventh Amendment and Paragraph 4 of the
Tenth Amendment are hereby amended in their entirety to read as follows:
Asset Sales and Reduction in Commitments. The Borrower hereby
requests that the Banks consent to the sale of certain assets of the Borrower
and its Subsidiaries from time to time as identified by category in the further
provisions of this paragraph 7 and agree to release their Liens under the
Collateral Documents on the Property so sold. Consent is hereby given to the
sale of Property and agreement is hereby made to the release of such Liens on
the Property so sold, if and only if such property is identified by category in
the further provisions of the paragraph 7 and the Agent receives, out of the
proceeds of such sale, for application to the Obligations, an amount equal to
the percentage of the net proceeds of such sale ("net proceeds" for such
purposes to mean the gross proceeds of any such sale less only those ordinary
and necessary capital gains taxes and out-of-pocket transaction expenses in each
case directly incurred and payable by the Borrower and its Subsidiaries as a
result of such sale) specified in the further provisions of this paragraph 7.
Notwithstanding the foregoing, the terms of the sale of (i) any Subsidiary or
(ii) assets (either individually or in the aggregate with other assets sold as a
group) with either a fair market value or book value in excess of $250,000 must
be approved by the Required Lenders. If the Borrower or any Subsidiary shall in
connection with any asset sale accept a note or similar instrument, an equity
interest or other non-cash compensation in lieu of cash, the Borrower or such
Subsidiary shall take all such actions reasonably requested by the Agent to
confirm that the Collateral Agent's security interest in such note, instrument,
equity interest or other non-cash compensation, as applicable, continues to be
perfected.
A portion of the Commitments shall terminate on the Business Day on
which the Borrower or any of its Subsidiaries receives (i) the proceeds of any
sale, transfer or other disposition (whether voluntary or involuntary) by the
Borrower or any of its Subsidiaries of any asset relating to the Xxxx Foundry
(other than sales, transfers or other dispositions of inventory in the ordinary
course of business), (ii) the net proceeds of any sale, transfer or other
disposition (whether voluntary or involuntary) by the Borrower or any of its
Subsidiaries of any equipment or on account of any damage, destruction or
condemnation of any equipment (other than sales, transfers or other dispositions
of equipment (A) covered by clause (i) above or (v) below, (B) with a fair
market value in excess of $50,000 that are concurrently with such sale, transfer
or other disposition replaced with equipment performing similar functions or (C)
with a fair market value of less than $50,000), (iii) the net proceeds of any
business interruption or insurance policies protecting the Borrower and its
Subsidiaries from acts and omissions of their respective past or present
officers and employees or any insurance settlements with respect thereto, (iv)
any tax refund, or (v) the net proceeds of any sale, transfer or other
disposition of any asset located at Los Angeles Die Casting Inc. or Xxxxxxx
Industries, Inc. or any other facility that has been sold
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or closed or any real property located at facilities that have been closed or
sold or on account of any damage, destruction or condemnation of any asset
(other than sales, transfers or other dispositions of inventory in the ordinary
course of business and dispositions covered under clause (i) or (ii) above) (the
sums described in the immediately preceding clauses (i)-(v) being hereinafter
referred to as "Liquidation Proceeds"), in each case by an amount equal to the
percentage of such proceeds set forth below next to such category:
COMMITMENT REDUCTION AS PERCENT TO BE APPLIED TO TEACHER'S
PROCEEDS CATEGORY A PERCENT OF PROCEEDS NOTE
Clause (i) Xxxx Foundry 87.12% 12.88%
Clause (ii) Equipment 87.12% 12.88%
Clause (iii) Insurance 52.28% 7.72%
Clause (iv) Tax Refund 43.56% 6.44%
Clause (v) 52.28% 7.72%
Miscellaneous Asset
Sales
All reductions in the Commitments required by this paragraph 7 shall be applied
first to terminate the temporary increase in Commitments under Section 1.14 of
the Credit Agreement of each Bank whose Commitment was so temporarily increased
pro rata in accordance with the respective amounts of such Banks' temporary
increase and then applied to terminate the remaining Commitments of each Bank
pro rata in accordance with such remaining Commitments. If the aggregate
principal amount of the outstanding Loans (including Swing Loans) and Letters of
Credit exceed the Commitments as reduced by this paragraph 7, the Borrower shall
immediately and without notice or demand, pay the amount of such excess out of
such proceeds to the Agent as a prepayment of the Loans and, if necessary, a
prefunding of Letters of Credit (with such payment applied to the Obligations as
required by the Credit Agreement (after giving effect to, among other things,
this Amendment)).
The Borrower covenants and agrees to enter into an amendment and
forbearance agreement with TIAA containing provisions in which it agrees to
repay TIAA a portion of the Teacher's Note in an amount not in excess of that
percentage of such proceeds as set forth above next to the applicable category.
In addition, the Borrower covenants and agrees not to amend or otherwise modify
such provision with TIAA without the prior written consent of the Required
Banks. The balance of any such proceeds (after giving effect to the repayment of
the Obligations owing the Bank Group and the Teacher's Note as required above)
(the "Excess Funds") shall be deposited with the Collateral Agent under the Cash
Collateral Use Agreement and held in a separate Cash Collateral Account (as
defined in the Cash Collateral Use Agreement). If the Borrower is in compliance
with the Minimum Cumulative EBITDA requirements contained in paragraph 11
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hereof through December 31, 2001 and provided that the Standstill Period has not
ended, the Collateral Agent is authorized to transfer the Excess Funds from the
Cash Collateral Account to the extent permitted by the Cash Collateral Use
Agreement. If the Borrower is not in compliance with the Minimum Cumulative
EBITDA requirements contained in paragraph 11 hereof through December 31, 2001
or if the Standstill Period has expired, a portion of the Commitments shall
terminate by an amount equal to 87.12% of such Excess Funds and the Collateral
Agent is directed to repay the Obligations in an amount equal to 87.12% of such
Excess Funds.
8. Paragraph 8 of the Eleventh Amendment and Paragraph 9 of the
Tenth Amendment are hereby amended in their entirety to read as follows:
Information. The Borrower and its Subsidiaries shall furnish to
the Bank Group such information as any member of the Bank Group may reasonably
request regarding the Borrower or any Subsidiary and its business, operations,
and financial condition, as and when reasonably requested by any member of the
Bank Group, and without any such request, the Borrower shall furnish to the Bank
Group:
(a) as soon as available, and in any event no later than 30
days after the close of each calendar month (commencing November 2001),
a consolidated balance sheet of the Borrower as at the close of such
month and a consolidated income statement and consolidated statement of
cash flows of the Borrower for the month and for the fiscal
year-to-date then ended, each in the same form as the monthly financial
statements currently furnished by the Borrower;
(b) as soon as available, and in any event no later than the
3rd Business Day at each week a report containing weekly updates of
sales by plant and invoices and no later than 30 days after each month
a report containing a rolling monthly update of inventory, prepared in
reasonable detail by the Borrower and its North American Subsidiaries
in a form acceptable to the Agent and certified by the Borrower's chief
financial officer;
(c) no later than the first Monday of each month (commencing
with January 7, 2002) a 12-week cash flow projection for the Borrower
and its North American Subsidiaries;
(d) as soon as available, and in any event not later than the
30th day of each month an inventory certificate and an accounts
receivable and accounts payable aging report, each prepared in
reasonable detail by the Borrower and its North American Subsidiaries
in a form acceptable to the Agent and certified to by the Borrower's
chief financial officer;
(e) as soon as available, and in any event no later than
January 31, 2002 a written plan detailing the Borrower's contingency
business plan in the event the Borrower is unable to meet its Budget as
provided in the Cash Collateral Use Agreement and a written analysis of
the cash necessary to support the Borrower and its Subsidiaries in such
contingency business plan through June 30, 2002, in a form acceptable
to the Agent; and
(f) as soon as available, and in any event no later than the
time periods set forth in the Credit Agreement, all other reports and
financial information required to be delivered by the Borrower under
Section 7.6 of the Credit Agreement.
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9. Reduction in Commitments. Paragraph 7 of the Tenth Amendment
and Forbearance Agreement is hereby amended to the extent necessary to provide
that the Commitment terminations provided therein shall not apply
during the Standstill Period.
10. Paragraph 9 of the Eleventh Amendment and Paragraph 11 of the
Tenth Amendment are hereby amended in their entirety to read as follows:
Dividends, Redemptions and Investments. Neither the Borrower nor
any Subsidiary shall declare, pay or otherwise make any dividend or other
distribution in respect of, or otherwise acquire or retire, any of its capital
stock; provided, however, that the foregoing shall neither apply to nor operate
to prevent Wholly Owned Subsidiaries from declaring and paying dividends to the
Borrower or any domestic Subsidiary during the Standstill Period. Neither the
Borrower nor any Subsidiary organized under the laws of any state of the United
States or under the laws of Canada shall make a further Investment in any
Subsidiary not organized under the laws of any state of the United States or
under the laws of Canada.
11. Minimum Cumulative EBITDA. The Borrower shall maintain EBITDA
(which is calculated only with respect to the Borrower and its Subsidiaries
North American operations) for each period commencing on July 1, 2001 and ending
on a date set forth below at not less than the amount set forth below
immediately to the right of such period:
CUMULATIVE EBITDA MUST EQUAL OR
FOR PERIOD ENDED EXCEED:
July 31, 2001 ($839,000)
August 31, 2001 $395,000
September 30, 2001 $1,628,000
October 31, 2001 $3,333,600
November 30, 2001 $5,333,400
December 31, 2001 $5,650,000
January 31, 2002 $6,650,000
February 28, 2002 $8,350,000
March 31, 2002 $10,850,000
April 30, 2002 $12,675,000
May 31, 2002 $15,000,000
June 30, 2002 $17,400,000
12. Title Commitments. The Borrower shall supply to the Collateral
Agent at the Borrower's cost and expense no later than January 15, 2002
mortgagee's commitments of title insurance (with such specimen endorsements as
the Collateral Agent shall reasonably request) from Chicago Title Insurance
Company ("CTIC") (the "Title Commitments") pursuant to which CTIC is committed,
upon payment of the title insurance premiums, to issue title insurance policies
that will insure the validity of each mortgage and deed of trust previously
delivered by the Borrower or any Subsidiary to the Collateral Agent and its
status as a first Lien (subject to permitted Liens) on the real property
encumbered thereby which Title Commitments shall have an expiration date no
earlier than April 30, 2002. On or prior to April 30, 2002 the Borrower
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shall at the Borrower's cost and expense obtain from CTIC an extension of the
expiration date of the Title Commitments to a date no earlier than October 31,
2002.
13. Insurance Proceeds. The Borrower shall use reasonable efforts to
provide at the Borrower's cost and expense no later than January 15, 2002 a
first prior perfected security interest in favor of the Collateral Agent in all
business interruption and all insurance policies protecting the Borrower and its
Subsidiaries from acts and omissions of their respective past or present
officers or employees. The Borrower acknowledges and agrees that such Liens
shall be granted to the Collateral Agent for the ratable benefit of the Bank
Group and TIAA in accordance with the terms in the Intercreditor Agreement and
shall be valid and perfected Liens subject, however, to any prior Liens on such
property permitted by the Credit Agreement. The Borrower agrees to execute and
to cause its Subsidiaries to execute all such documents reasonably requested by
the Collateral Agent to provide for such pledge.
14. GE Capital. The Borrower shall use reasonable efforts to provide at
the Borrower's cost and expense no later than January 15, 2002 a perfected
security interest in favor of the Collateral Agent in all property of the
Borrower which is currently pledged to secure the existing financing with
General Electric Capital Corporation. In addition, the Borrower shall use
reasonable efforts to provide at the Borrower's cost and expense no later than
January 15, 2002 a perfected security interest in favor of the Collateral Agent
in the real estate of the Borrower in Atchison, Kansas and St. Xxxxxx, Missouri
commonly known respectively as the Atchison Foundry and St. Xxxxxx Machine Shop.
The Borrower acknowledges and agrees that such Liens shall be granted to the
Collateral Agent for the ratable benefit of the Bank Group and TIAA in
accordance with the terms in the Intercreditor Agreement and shall be valid and
perfected Liens subject, however, to any prior Liens on such property permitted
by the Credit Agreement and Liens in favor of General Electric Capital
Corporation, in each case pursuant to one or more collateral documents from such
persons, each in form and substance satisfactory to the Collateral Agent.
15. Borrowing Base Definitions. The following terms when used herein
have the following meanings: "Borrowing Base" means, as of any time it is to be
determined, (a) 80% of the net book value of Eligible Accounts plus (b) 50% of
the value of Eligible Inventory consisting of raw materials or finished goods
plus (c) 25% of Eligible Inventory consisting of work-in-process, plus (d) the
Allowable Over Advance minus (e) the aggregate principal amount outstanding
under the Teachers' Note.
"Allowable Over Advance" means $57,000,000 plus after the sale of any
Subsidiary, an amount equal to the positive difference, if any,
between (i) the dollar amount of assets of such Subsidiary that was
part of the Borrowing Base of the end of the month prior to the month
in which such Subsidiary was sold minus (ii) amount equal to
the sum of the Commitment reductions which resulted from such sale
plus the amount of principal reductions on the Teacher's Note which
resulted from such sale.
"Eligible Account" means each account receivable of the Borrower and
its North American Subsidiaries that: (a) arises out of the sale by
such company of inventory delivered to and accepted by, or out of the
rendition of services fully performed by such
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company and accepted by, the account debtor on such account
receivable, and in each case such account receivable otherwise
represents a final sale; (b) is an asset of such company to which it
has good and marketable title, is freely assignable, is subject to a
perfected, first priority Lien in favor of the Collateral Agent, and
is free and clear of any other Lien; (c) the account debtor thereon is
not a Subsidiary or an affiliate of any such company; and (d) is not
unpaid more that ninety (90) days after the original due date of the
applicable original invoice.
"Eligible Inventory" means all raw materials, work-in-process, and
finished goods inventory of the Borrower and its North American
Subsidiaries (other than packaging, crating and supplies inventory),
provided that such inventory: (a) is an asset of such company to which
it has good and marketable title, is freely assignable, is subject to a
perfected, first priority Lien in favor of the Agent, and is free and
clear of any other Lien other than Liens permitted by the Credit
Agreement; and (b) is located in the United States or Canada.
16. Loan Documents Remain Effective. Except as expressly set forth in
this Agreement, the Credit Documents remain unchanged and in full force and
effect. Without limiting the foregoing, the Borrower and its Subsidiaries shall
comply with all of the terms, conditions, and provisions of the Credit Documents
as modified hereby except to the extent such compliance is irreconcilably
inconsistent with the express provisions of this Agreement.
17. Paragraph 11 of the Eleventh Amendment and Paragraph 15 of the
Tenth Amendment are hereby amended in their entirety to read as follows:
Standstill Termination. As used in this Agreement, "Standstill
Termination" means the occurrence of the Standstill Expiration Date, or, if
earlier, the occurrence of any one or more of the following events: (a) any
Event of Default occurs other than the Existing Defaults and other than the
continued noncompliance with the covenants referenced in Schedule I; (b) any
failure (other than any failure constituting an Existing Default) by the
Borrower or any Subsidiary for any reason to comply with any term, condition, or
provision contained in this Agreement or any other Credit Document executed by
it; (c) any holder of the Teachers' Notes or any other holder of Debt in excess
of $100,000 of the Borrower or any Subsidiary shall commence any action to
accelerate such Debt or begin any enforcement action for the collection of such
Debt; (d) any forbearance or similar arrangements TIAA enters into with the
Borrower shall terminate; (e) any representation made by or on behalf of the
Borrower or any Subsidiary in this Agreement or any other Credit Document
executed by it or in any other document delivered by it pursuant thereto proves
to be incorrect or misleading in any material respect when made (other than any
such misrepresentation constituting an Existing Default); (f) the refinancing
and payment or other satisfaction of the Teachers' Notes without a corresponding
refinancing or satisfaction of the Obligations or (g) the Borrower or any
Subsidiary is in breach of any of the obligations under the Cash Collateral Use
Agreement. The occurrence of any Standstill Termination shall be deemed an Event
of Default under the Credit Agreement. Upon the occurrence of a Standstill
Termination, the Standstill Period is automatically terminated and the Bank
Group is then permitted and entitled, among other things, to enforce collection
of the
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Obligations, to enforce its liens on the Collateral, and to exercise any and all
other rights and remedies that may be available under the Loan Documents or
applicable law.
18. Acknowledgement of Debt; Acknowledgement of Liens. As of the
date hereof, the following aggregate principal amounts are outstanding on the
Revolving Loans, Swing Loans and Letters of Credit:
AGGREGATE PRINCIPAL
TYPE OF CREDIT: AMOUNT OUTSTANDING:
Revolving Loans $67,493,208.41
Swing Loans $0
Letters of Credit $7,228,685.00
The Borrower hereby confirms its promise to pay, and each Guarantor hereby
confirms its guaranty of repayment of, the principal of and interest on the
Obligations in accordance with the terms of the Credit Agreement, as modified by
this Agreement, without defense, set-off, counterclaim or reduction of any
nature whatsoever. The Borrower represents there are currently no Events of
Default other than the Existing Defaults. The Borrower and each Guarantor hereby
acknowledges and confirms that: (i) the Obligations will continue to be secured
by Liens on all accounts, chattel paper, instruments, documents, general
intangibles, investment property, deposits, inventory, equipment and
substantially all other assets and properties of the Borrower pursuant to the
mortgages, security agreements and other instruments and documents heretofore
executed and delivered by the Borrower and the Guarantors to or for the benefit
of the Bank Group; (ii) such mortgages, security agreements and other instrument
and documents, and the rights and remedies of the Bank Group thereunder, the
obligations of the Borrower and each Guarantor thereunder, and the Liens created
and provided for thereunder, in each case remain in full force and effect and
shall not be affected, impaired or discharged hereby; and (iii) nothing herein
contained shall in any manner affect or impair the priority of the Liens
interests created and provided for thereby as to the obligations which would be
secured thereby prior to giving effect to this Agreement.
19. Release. In consideration of the Required Bank's execution of this
Agreement and for other good and valuable consideration, receipt of which is
hereby acknowledged, (x) the Borrower and each Guarantor hereby acknowledges
that it has no defense, counterclaim, offset, cross-complaint, claim, or demand
of any kind or nature whatsoever that can be asserted to reduce or eliminate all
or any part of its liability to pay or perform any of the Obligations, or to pay
or perform any of its other obligations with respect to any other loans or other
extensions of credit or financial accommodations made available to or for its
account by any one or more members of the Bank Group, or to seek affirmative
relief or damages of any kind or nature from the Bank Group other than the
reservation of rights set forth in Paragraph 24 hereof, and (y) the Borrower and
each Guarantor does hereby fully, unconditionally, and irrevocably forever
relieve, relinquish, release, waive, discharge, and hold harmless the Bank Group
and each of its members and each of its member's current and former
shareholders, directors, officers, employees, agents, attorneys, successors, and
assigns of and from any and all claims, debts, actions, causes of action,
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liabilities, demands, obligations, promises, acts, agreements, costs, expenses
(including but not limited to reasonable attorneys' fees) and damages of
whatsoever kind and nature, whether now known or unknown, based upon, resulting
from, arising out of, or in connection with loans or other extensions of credit
or financial accommodations made by any one or more members of the Bank Group
from time to time to or for the account of the Borrower or any Subsidiary,
including, without limitation, any Loans made under, and Letters of Credit
issued under, the Credit Agreement or in any way connected with or related to
any other instrument or document executed or delivered in connection therewith
and/or the administration or collection thereof and/or collateral therefor or
guaranties thereof.
20. No Waiver and Reservation of Rights. The Bank Group is not waiving
the Existing Defaults, but is simply agreeing to forbear from exercising its
rights with respect to the Existing Defaults to the extent expressly set forth
in this Agreement. The Bank Group is not obligated in any way to continue beyond
the Standstill Period to forbear from enforcing its rights or remedies, and the
Bank Group is entitled to act on the Existing Defaults after the occurrence of a
Standstill Termination as if such defaults had just occurred and the Standstill
Period had never existed. The Bank Group makes no representations as to what
actions, if any, the Bank Group will take after the Standstill Period or upon
the occurrence of any Standstill Termination, an Event of Default, or an event
which with notice or lapse of time, or both, would constitute an Event of
Default, and the Bank Group must and does hereby specifically reserve any and
all rights and remedies it has (after giving effect hereto) with respect to the
Existing Defaults and each other Event of Default that may occur.
21. Integration. This Agreement is intended by the Bank Group as a final
expression of its agreement as to the subject matter hereof and is intended as a
complete and exclusive statement of the terms and conditions of that agreement.
22. Effectiveness. This Agreement shall take effect upon (i) its
acceptance (without modification) by the Required Banks and the Borrower on or
before December 18, 2001, in the spaces provided for that purpose below, (ii)
execution by the Guarantors of the acknowledgment attached hereto, (iii) the
Agent's receipt for the pro rata account of each Bank which executes this
Agreement of a non-refundable amendment fee of $100,000, (iv) the Agent's
receipt for its own use and benefit of a non-refundable supplemental agency fee
of $50,000 and (v) the Cash Collateral Use Agreement shall be executed and
delivered, which Cash Collateral Use Agreement shall be in form and substance
satisfactory to the Agent and the Banks. By its acceptance hereof, the Borrower
and each Guarantor hereby represents that it has duly considered the
consequences of this Agreement after consultation with counsel and such other
advisors as it deems appropriate under the circumstances, it has the necessary
power and authority to execute, deliver, and perform the undertakings contained
herein, and that the same does bind it hereto.
23. Submission to Jurisdiction; Waiver of Jury Trial. The Borrower and
each Guarantor hereby submits to the non-exclusive jurisdiction of the United
States District Court for the Northern District of Illinois and of any Illinois
State court sitting in the City of Chicago for purposes of all legal proceedings
arising out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby. The Borrower and each Guarantor
irrevocably waives, to the fullest extent permitted by law, any objection which
it may
11
now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum. THE BORROWER, EACH GUARANTOR,
THE AGENT, AND EACH BANK HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
24. Reservation of Rights. Notwithstanding anything to the contrary in
this Agreement, the Credit Agreement or any Collateral Document, if at any time
prior to July 5, 2002, any Bank receives, directly or indirectly, proceeds from
the Burdale Financing, Liquidation Proceeds, proceeds from the sale of assets or
repayments on the intercompany note from Xxxxxxxx Casting UK Limited and the
Borrower files a proceeding under Title 11 of the United States Code any time
prior to July 5, 2002, the Borrower reserved it right to contend that all of
said proceeds received by any such Bank, less any amounts reloaned to the
Borrower, are to be treated in the bankruptcy proceeding as cash collateral and
not repayments of the Loans and the Banks reserve the right to contest any such
assertion and object to any use of cash collateral or any reborrowing of any
Loans. For the avoidance of doubt this Paragraph does not affect, either
directly or indirectly, any proceeds received by National Westminster Bank plc
from the Burdale Financing as a repayment of any amounts owing to National
Westminster Bank plc by Xxxxxxxx Casting UK Limited or its subsidiaries.
25. Miscellaneous. The Borrower shall pay all costs and expenses of the
Bank Group incurred in connection with the negotiation, preparation, execution,
and delivery of this Agreement and the administration of the Loan Documents and
the transactions contemplated thereby, including the reasonable fees and
expenses of counsel to the Bank Group. This Agreement shall be governed by and
construed in accordance with Illinois law (without regard to principles of
conflicts of laws).
This Twelfth Amendment and Forbearance Agreement is entered into
between the parties hereto as of the date and year first above written.
XXXXXXXX CASTING CORPORATION
By: /s/ Xxxxx X. XxXxxxxx
Name: Xxxxx X. XxXxxxxx
Title:VP & Treasurer
12
XXXXXX TRUST AND SAVINGS BANK, in its individual
capacity as a Bank and as Agent
By: /s/ Xxxx X. Xxxxx
Title: V.P.
COMMERCE BANK, N.A.
By: /s/ Xxxxxx X. Block
Title: Senior Vice President
US BANK NATIONAL ASSOCIATION (f/k/a Firstar Bank, N.A.),
(f/k/a Firstar Bank, N.A. Overland park, f/k/a
Firstar Bank Midwest, N.A., f/k/a Mercantile Bank)
By: /s/ Xxxxx X. Xxxxxxx
Title: Vice President
KEY BANK NATIONAL ASSOCIATION
By: /s/ X. X. Xxxxx
Title: Vice Pres
13
COMERICA BANK
By: /s/ Xxxxxx X. Xxxxx
Title: Vice President
HIBERNIA NATIONAL BANK
By:
Title:__________________________________
NATIONAL WESTMINSTER BANK PLC
Nassau Branch
By: /s/ Xxxx Xxxxxxx
Title: Head of Mid-Corporate Team
Corporate Restructuring Unit
New York Branch
By: /s/ Xxxx Xxxxxxx
Title: Head of Mid-Corporate Team
Corporate Restructuring Unit
XXXXX FARGO BANK, NATIONAL ASSOCIATION
(successor by merger to Norwest
Bank Minnesota, N.A.)
By: /s/ Xxxxxx X. Xxxxxxx
Title: Vice President
14
SCHEDULE I
EXISTING DEFAULTS
1. Noncompliance with minimum current ratio requirement set forth in
Section 7.15(a) of the Credit Agreement.
2. Noncompliance with the minimum Stockholder's Equity requirement set
forth in Section 7.15(b) of the Credit Agreement.
3. Noncompliance with the maximum Consolidated Total Senior Debt to Total
Capitalization requirement set forth in Section 7.15 (c) of the Credit
Agreement.
4. Noncompliance with the maximum Consolidated Total Senior Debt to Total
Capitalization ratio set forth in Section 7.15(d) of the Credit Agreement.
5. Noncompliance with the minimum Fixed Charge Coverage Ratio set forth in
Section 7.15(e) of the Credit Agreement.
6. Noncompliance with the maximum Senior Debt to EBITDA ratio set forth in
Section 7.15(f)(i) of the Credit Agreement.
7. Noncompliance with the maximum Total Debt to EBITDA ratio set forth in
Section 7.15(f)(ii) of the Credit Agreement.
8. Noncompliance with Section 8.1(d) of the Credit Agreement resulting from
a default under the indebtedness permitted by Section 7.16(b) of the Credit
Agreement.
9. Noncompliance with Section 7.20 of the Credit Agreement resulting from
the $1,000,000 intercompany advance made by the Borrower to Xxxxxxxx Casting UK
Limited in August, 2001.
10. Noncompliance with the minimum EBITDA requirement set forth in Section
10 of Tenth Amendment and Forbearance.
11. Breach of representations and warranties reaffirmed under Section
6.2(c) of the Credit Agreement in connection with extensions of additional
credit due to the noncompliance described above.
SCHEDULE II
COMMITMENTS
"original commitments" "temporary increases" Commitments
-------------------- -------------------- -----------
Xxxxxx Trust and Savings Bank $17,500,000.00 $2,915,301.52 $20,415,301.52
Commerce Bank, N.A. 9,545,454.55 1,028,929.95 10,574,384.50
Firstar Bank N.A. 9,545,454.55 1,028,929.95 10,574,384.50
Key Bank National Association 9,545,454.55 0.00 9,545,454.55
Comerica Bank 6,363,636.36 0.00 6,363,636.36
Hibernia National Bank 6,363,636.36 0.00 6,363,636.36
National Westminster Bank Plc 6,363,636.36 0.00 6,363,636.36
Xxxxx Fargo Bank, National Association 4,772,727.27 514,464.97 5,287,192.24
------------- ----------- -------------
Total $70,000,000.00 $5,487,626.39 $75,487,626.39
GUARANTOR'S ACKNOWLEDGMENT AND CONSENT
Each of the undersigned has heretofore executed and delivered to the
Agent and each Bank a Guaranty Agreement. Each of the undersigned hereby
consents to the Twelfth Amendment and Forbearance Agreement as set forth above
and confirms that its Guaranty Agreement and all of their respective obligations
thereunder remain in full force and effect for the benefit of all the
Obligations (as such term is defined in the Credit Agreement and in the Guaranty
Agreements, it being understood and agreed that as so defined, such term
includes the Bridge Loans). Each of the undersigned also heretofore executed and
delivered various Security Agreements. Each of the undersigned hereby
acknowledges and agrees that the Liens created and provided for by each Security
Agreement continue to secure, among other things, the Obligations (as such term
is defined in the Credit Agreement and in the Security Agreements, it being
understood and agreed that as so defined, such term includes the Bridge Loans);
and each Security Agreement and the rights and remedies of the Secured Creditors
thereunder, the obligations of each of the undersigned thereunder, and the Liens
created and provided for thereunder remain in full force and effect and shall
not be affected, impaired or discharged hereby. Nothing herein contained shall
in any manner affect or impair the priority of liens and security interests
created and provided for by the Security Agreements as to the indebtedness which
would be secured thereby prior the giving effect to the Twelfth Amendment and
Forbearance Agreement.
AMITE FOUNDRY AND MACHINE, INC.
PROSPECT FOUNDRY, INC.
QUAKER ALLOY, INC.
CANADIAN STEEL FOUNDRIES, LTD.
3210863 CANADA INC.
XXXXXX INTERNATIONAL, INC.
EMPIRE STEEL CASTINGS, INC.
LAGRANGE FOUNDRY INC.
THE G&C FOUNDRY COMPANY
LOS ANGELES DIE CASTING INC.
CASTCAN STEEL LTD.
CANADA ALLOY CASTINGS, LTD.
PENNSYLVANIA STEEL FOUNDRY & MACHINE COMPANY
XXXX FOUNDRY CORP.
INVERNESS CASTINGS GROUP, INC.
DU-WEL PRODUCTS, INC.
XXXXX CASTING AND ASSEMBLY, INC.
CLAREMONT FOUNDRY, INC.
LONDON PRECISION MACHINE & TOOL LTD.
By: /s/ Xxxxx X. XxXxxxxx
Title: Vice President
XXXXXXX INDUSTRIES, INC.
By: /s/ Roi X. Xxxxxx
Title: Director, Special Situations
