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EXHIBIT 10.2
This FORBEARANCE AGREEMENT, dated as of August 15, 2001 (this
"Agreement"), is between XXXXXXXXX INDUSTRIES, INC., a Delaware corporation
("Company") and KEY PRINCIPAL PARTNERS, L.L.C. ("KPP"), with reference to that
certain Senior Subordinated Note And Warrant Purchase Agreement, dated as of
November 13, 2000, between Company and KPP (as amended to and including the date
hereof, the "Subordinated Credit Agreement" -- capitalized terms used in this
Agreement, unless otherwise defined, shall have the meanings ascribed thereto in
the Subordinated Credit Agreement).
The parties hereto hereby agree as follows:
1. DEFINITIONS. As used herein (the following definitions to be
applicable in both singular and plural forms):
"COVERED DEFAULTS" means the following Defaults:
(a) Any Default under Section 5.2(a) of the Subordinated
Credit Agreement as of the fiscal quarter ending June 30, 2001, but only to the
extent that the Company's Consolidated Adjusted Net Worth as of such date was
not less than $95,445,415;
(b) Any Default under Section 5.2(b) of the Subordinated
Credit Agreement as of the fiscal quarter ending June 30, 2001; but only to the
extent that the Company's Consolidated Funded Indebtedness to Consolidated
EBITDA Ratio for such period was not more than 12.00 to 1.00; and
(c) Any Default under Section 5.2(c) of the Subordinated
Credit Agreement as of the fiscal quarter ending June 30, 2001; but only to the
extent that the ratio of (i) the consolidated EBITDA of Company and its
consolidated Subsidiaries, minus income taxes paid in cash, Unfunded Capital
Expenditures and dividends, to (ii) the Consolidated Fixed Charges of Company
and its consolidated Subsidiaries, as of the end of such fiscal quarter of
Company, measured for the immediately preceding four fiscal quarters, was not
less than 0.79 to 1.00; and
(d) Any Default under Section 5.2(d) of the Subordinated
Credit Agreement as of the fiscal quarter ending June 30, 2001; but only to the
extent that that Company's Consolidated EBITDA for such period was not less than
a negative $2,886,166.
"COVERED PERIOD" means the period commencing on the Effective Date and
continuing until the first to occur of:
(a) October 15, 2001; or
(b) Company's failure to perform any term or condition on its
part to be performed under this Agreement or a breach of any representation or
warranty by Company hereunder; or
(c) Any termination of the Senior Debt Forbearance Agreement
or any forbearance thereunder; or
(d) Any Event of Default, other than Covered Defaults, under
the Subordinated Credit Agreement or any Covered Default ceases to be a Covered
Default.
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"EFFECTIVE DATE" means the date the forbearance becomes effective
pursuant to Section 4 hereof.
"SENIOR DEBT FORBEARANCE AGREEMENT" means a forbearance agreement
between the Company, the Senior Debt Holders and the Senior Debt Representative,
wherein the Senior Debt Holders and Senior Debt Representative agree to forbear
in the enforcement of the Senior Debt Documents for the Covered Period with
respect to any defaults under the Senior Debt Documents which correspond to the
Covered Defaults, which forbearance agreement shall be on terms no less
advantageous to the Company than the terms of this Agreement.
2. RATIFICATION OF OUTSTANDING NOTES. Company ratifies and reaffirms:
(a) All Notes outstanding under the Subordinated Credit Agreement are
due and payable in accordance with the terms of the Subordinated Credit
Agreement, without setoff, defense, or counterclaim;
(b) Company's obligations, liabilities, and duties under the
Subordinated Credit Agreement, and each other Loan Document are absolute,
uncontingent, and not subject to any defenses, setoffs, claims, or
counterclaims, and any such purported defenses, setoffs, claims, and
counterclaims are hereby waived; and
(c) KPP has not at any time directed or participated in any aspect of
the management of Company or the conduct of Company"s business, and Company has
made all of its business decisions independently of KPP. Notwithstanding any
other provision of this Agreement, the Loan Documents, or any other contract or
instrument between Company and KPP: (i) the relationship between KPP and Company
shall be limited to the relationship of a lender to a borrower in a commercial
loan transaction or of a purchase of financial assets; (ii) KPP shall not be
construed as a partner, joint venturer, alter-ego, manager, controlling person,
or other business associate or participant of any kind of Company, and KPP does
not intend to assume any such status at any time; and (iii) KPP shall not be
deemed responsible for (or a participant in) any acts, omissions, or decisions
of Company.
3. TERMS OF FORBEARANCE.
(a) Subject to Sections 3(b), 4, and 5 hereof, KPP hereby agrees to
forbear in the exercise of its rights and remedies under the Subordinated Credit
Agreement with respect to the Covered Defaults, but only for the duration of the
Covered Period.
(b) THE FORBEARANCE GRANTED HEREIN IS A CONDITIONAL, LIMITED, TEMPORARY
FORBEARANCE RELATING SOLELY TO THE COVERED DEFAULTS AND SHALL BE IN EFFECT ONLY
DURING AND WITH RESPECT TO THE COVERED PERIOD. COMPANY UNDERSTANDS AND
ACKNOWLEDGES THAT (i) THE FORBEARANCE GRANTED HEREIN DOES NOT CONSTITUTE A
WAIVER OF ANY TERM, PROVISION, OR CONDITION OF ANY LOAN DOCUMENT, (ii) COMPANY
IS OBLIGATED TO COMPLY WITH EACH AND EVERY TERM, PROVISION, AND CONDITION
(INCLUDING CONDITIONS OF LENDING) OF EACH LOAN DOCUMENT, IN EACH CASE, AS
AMENDED BY THIS AGREEMENT, NOTWITHSTANDING THIS FORBEARANCE, AND (iii) THE
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FORBEARANCE GRANTED HEREIN SHALL NOT PRECLUDE THE EXERCISE OF, OR CONSTITUTE A
WAIVER OF, ANY RIGHT, REMEDY, POWER, OR PRIVILEGE THAT KPP MAY NOW OR IN THE
FUTURE HAVE AT ANY TIME WITH RESPECT TO EVENTS OF DEFAULT (INCLUDING, WITHOUT
LIMITATION, DEFAULTS BY COMPANY IN THE PERFORMANCE OF ITS OBLIGATIONS UNDER THIS
AGREEMENT) OTHER THAN THE COVERED DEFAULTS OR, WITH RESPECT TO THE COVERED
DEFAULTS, AFTER THE EXPIRATION OF THE COVERED PERIOD.
4. CONDITIONS TO EFFECTIVENESS. The forbearance under Section 3(a) and
(b) hereof shall become effective when, and is subject to the condition
precedent that, KPP shall have received the following;
(a) A counterpart of this Agreement executed by Company;
(b) A fully executed duplicate original of the Senior Debt Forbearance
Agreement which xxxx be in form and substance acceptable to KPP; and
(c) Such other documents as are reasonably required by KPP to carry out
the provisions and intent of this Agreement.
5. EFFECT. The execution, delivery, and effectiveness of this Agreement
shall not operate as a waiver of any default, right, power, or remedy of KPP
under any Loan Document, and each Loan Document shall remain in full force and
effect and are hereby ratified and confirmed. Without limiting the generality of
the foregoing, KPP does not agree to forbear, or otherwise refrain, from
exercise of KPP's rights and remedies under the Loan Documents.
6. REPRESENTATIONS AND WARRANTIES. As part of the consideration for
entering into this Agreement, Company represents and warrants to KPP that:
(a) DUE AUTHORITY. The execution, delivery, and performance by Company
of this Agreement are within Company's corporate powers, have been duly
authorized by all necessary corporate action, and require no action by or in
respect of, or filing with, any governmental body, agency or official, and the
execution, delivery, and performance by Company of this Agreement do not
contravene, or constitute a default under, any provision of applicable law or
regulations or the charter documents of Company, or any other material
agreement, judgment, injunction, order, decree, or other instrument binding upon
Company or any assets of Company, or result in the creation or imposition of any
lien on any asset of Company, except for liens in favor of KPP.
(b) ENFORCEABILITY. This Agreement constitutes a binding and valid
obligation of Company, enforceable against Company in accordance with its terms.
(c) DEFAULTS. Except for the Covered Defaults, no Default has occurred
and is continuing.
7. INDEMNITY. As additional consideration for KPP entering into this
Agreement, Company shall indemnify, exonerate, pay, and hold each Indemnified
Party (as hereinafter defined) harmless from any and all claims, demands,
grievances, liabilities, debts, accounts, obligations, costs, expenses, liens,
rights, actions, and causes of action, of every kind and nature whatsoever
(including fees and expenses of counsel to any Indemnified Party in connection
with any investigative, administrative, or judicial proceeding, irrespective of
whether such Indemnified Party shall be designated a party thereto), other than
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those arising as a result of the gross negligence or willful misconduct of any
Indemnified Party, which may be imposed on, incurred by, or asserted against
such Indemnified Party in any manner relating to or arising out of or in
connection with this Agreement or any of the Loan Documents, or any of the
transactions contemplated by any of the foregoing. As used in this Agreement,
the term "Indemnified Parties" means, collectively, KPP and its affiliated
corporations, and all of its current and former directors, officers, agents,
employees, shareholders, and attorneys, and all of their respective successors
and assigns.
8. RELEASE BY COMPANY.
(a) NO PRESENT CLAIMS. Company acknowledges and agrees that: (i)
Company has no claim or cause of action against any Indemnified Party; (ii)
Company has no offset right, counterclaim, or defense of any kind against any of
the Indebtedness; and (iii) each Indemnified Party has heretofore properly
performed and satisfied in a timely manner any and all of such Indemnified
Party's obligations, if any, to Company. KPP desires, and Company agrees, to
eliminate any possibility that any past conditions, acts, omissions, events,
circumstances, or matters would impair or otherwise adversely affect any of
KPP's rights, interests, collateral security, or remedies. Therefore, Company,
on behalf of Company and all successors and assigns of Company and any and all
other parties claiming rights through Company, unconditionally releases,
acquits, and forever discharges each and every Indemnified Party from: (1) any
and all liabilities, obligations, duties, or indebtedness of any of the
Indemnified Parties to Company, whether known or unknown, arising prior to the
date hereof, and (2) any and all claims, offsets, causes of action, suits, or
defenses, whether known or unknown, which Company might otherwise have against
any of the Indemnified Parties on account of any condition, act, omission,
event, contract, liability, obligation, indebtedness, claim, cause of action,
defense, circumstance, or matter of any kind which existed, arose or occurred at
any time prior to the date hereof.
(b) WAIVER OF UNKNOWN CLAIMS. Company is aware that Company may later
discover facts in addition to or different from those which Company now knows or
believes to be true with respect to the releases given herein, and that it is
nevertheless Company's intention to settle, release, and discharge fully,
finally, and forever all of these matters, known or unknown, suspected or
unsuspected, which previously existed, now exist, or may exist. In furtherance
of such intention, Company specifically acknowledges and agrees that the
releases given in this Agreement shall be and shall remain in effect as full and
complete releases of the matters being released, notwithstanding the discovery
or existence of any such additional or different facts and that such releases
shall not be subject to termination or rescission by reason of any such
additional or different facts.
(c) WARRANTY OF NON-ASSIGNMENT. Company hereby represents and warrants
that it has not previously assigned or transferred, or purported to assign or
transfer, to any person or entity any of the claims, demands, grievances,
liabilities, debts, accounts, obligations, costs, expenses, liens, rights,
actions, or causes of action released by the terms of this Agreement.
9. PAYMENT OF FEES, COSTS, AND EXPENSES. Company shall reimburse KPP,
upon demand, for all fees, costs, and expenses (including attorneys' fees and
costs) incurred by KPP in connection with the negotiation and preparation of
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this Agreement, and Company shall pay all expenses incurred by KPP in connection
with KPP's enforcement and exercise of any of KPP's rights and remedies as
herein provided, whether or not suit is commenced by KPP
10. MISCELLANEOUS.
(a) SEVERABILITY OF PROVISIONS. In the event that any one or more of
the provisions contained in this Agreement is held to be invalid, illegal, or
unenforceable in any respect, then such provision shall be ineffective only to
the extent of such prohibition or invalidity, and the validity, legality, and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
(b) AMENDMENT AND WAIVER. This Agreement may not be amended, modified,
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the amendment,
modification, change, waiver, discharge or termination is sought.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of Company, KPP, and their respective successors and
assigns.
(d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. Each of
the parties hereto understands and agrees that this document (and any other
document required herein) may be delivered by any party thereto either in the
form of an executed original or an executed original sent by facsimile
transmission to be followed promptly by mailing of a hard copy original, and
that receipt by KPP of a facsimile transmitted document purportedly bearing the
signature of the Company shall bind the Company with the same force and effect
as the delivery of a hard copy original. Any failure by KPP to receive the hard
copy executed original of such document shall not diminish the binding effect of
receipt of the facsimile transmitted executed original of such document.
(e) NO OTHER AMENDMENTS. Except as expressly modified hereby, the
Subordinated Credit Agreement and the Loan Documents are in all respects
ratified and confirmed and shall remain unchanged and in full force and effect.
(f) ENTIRE AGREEMENT; CONFLICTS. This Agreement embodies the entire
agreement and understanding among the parties hereto relating to the subject
matter hereof and supersedes all prior agreements and understandings relating to
the subject matter hereof. No course of prior dealings among the parties hereto,
no usage of the trade, and no parol or extrinsic evidence of any nature, shall
be used or be relevant to supplement, explain or modify any term used herein. In
the event of any conflict between the terms and provisions of this Agreement and
any Loan Document, the terms and provisions of this Agreement shall control.
This Agreement has been fully reviewed and negotiated between the parties and no
uncertainty or ambiguity in any term or provision of this Agreement shall be
construed strictly against KPP or Company under any rule of construction or
otherwise.
(g) GOVERNING LAW, SUBMISSION TO JURISDICTION, AND WAIVER OF JURY
TRIAL/ARBITRATION. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AND IS SUBJECT TO THE
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PROVISIONS OF SECTION 8.8 OF THE SUBORDINATED CREDIT AGREEMENT, RELATING TO
CHOICE OF LAW, SUBMISSION TO JURISDICTION, AND WAIVER OF JURY TRIAL, THE
PROVISIONS OF WHICH ARE BY THIS REFERENCE HEREBY INCORPORATED HEREIN IN FULL.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
COMPANY: XXXXXXXXX INDUSTRIES, INC., a Delaware corporation
By
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KPP: KEY PRINCIPAL PARTNERS, L.L.C.
By
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Title:
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