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EXHIBIT 10(A)
May 15, 2001
Xxxxxx Industries, Inc.
Attention: Xx. Xxxxx X. Xxxxxx
Vice President & Chief Financial Officer
X.X. Xxx 000
Xxxxxxxx, Xxxxxxx 00000
Re: Line of Credit (Account #120435-524769); Term Loan (Account
#120435-087445 and #120435-087452); Loan Agreement dated January 7,
1993, as amended April 5, 1994, February 17, 1995, March 15, 1995,
March 28, 1996, August 28, 1997, January 1, 2000, December 29, 2000,
January 31, 2001 and March 15, 2001 (collectively "Loan Agreement") by
and among Xxxxxx Industries, Inc. ("Xxxxxx Industries") and AmSouth
Bank ("the Bank"). In this letter capitalized terms shall be given the
meanings indicated in the Loan Agreement and/or in this letter.
Dear Xx. Xxxxxx:
I am writing this letter to you concerning the indebtednesses ("Indebtednesses")
referenced above of Xxxxxx Industries to the Bank and our recent discussions
concerning the Bank extending and amending the Loan Agreement. In accordance
with our recent discussions, the Bank proposes a financing arrangement as
outlined in the Financing Proposal attached as Exhibit A to this letter. The
attached Financing Proposal does not summarize all of the terms, conditions,
covenants and other provisions which will be contained in the definitive
documentation for the amended Loan Agreement and is not to be construed as a
commitment or an agreement on the part of the Bank to provide financing on the
terms therein.
We have discussed with you the further extension of the Loan Agreement to enable
the parties adequate time to complete the required definitive documentation for
the proposed amended Loan Agreement. In this regard, the Bank hereby (i) amends
the definition of "Line of Credit Termination Date" in Section 1.02 of the Loan
Agreement, as heretofore amended, to substitute "June 15, 2001" in lieu of "May
15, 2001," (ii) extends the date on which payment of the semi-annual installment
of principal in the amount of $596,700 is due under the Term Note, as previously
extended, from May 15, 2001, to June 15, 2001, and (iii) increase the interest
rate on the Indebtednesses to Prime plus 1%, effective May 15, 2001.
To evidence the acceptance of these extensions on the terms and conditions
stated herein, please sign and return to me the enclosed copy of this letter. By
so signing the enclosed copy of this letter, Xxxxxx Industries acknowledges and
agrees to the following terms and conditions of such extension:
1. This letter agreement shall not be deemed to be an accord and
satisfaction of the Indebtednesses or any other obligation owed to the
Bank.
2. All collateral that now secures all or any of the Indebtednesses shall
continue to secure same. Nothing in this letter agreement diminishes
any security interest or lien that the Bank has in any assets securing
the Indebtednesses. All of the collateral, rights, security, and
guarantees that the Bank now has to secure any of the Indebtednesses
due from Xxxxxx Industries shall remain in full force and effect and
are hereby ratified and confirmed.
3. The Bank waives until June 15, 2001, any default or Event of Default
arising out of (i) the Borrower's failure to comply with the provisions
of the Loan Agreement as set forth on Exhibit B, and (ii) the
Borrower's failure to pay on May 15, 2001, the semi-annual installment
of principal due under the Term Loan. Except as provided in the
preceding sentence, the Bank reserves all of its rights and remedies
under the Loan Agreement, the Security Documents, any other Loan
Documents, and/or applicable law, in respect of any Event(s) of
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Default. The current non-exercise by the Bank of any rights and
remedies which it may have shall not constitute a release or waiver of
any of its rights and/or remedies or a release or waiver of any
Event(s) of Default under the Loan Agreement, the Security Documents,
or any other Loan Documents, except for the waiver provided in the
first sentence of this paragraph. Except as provided in the first
sentence of this paragraph, the Bank specifically reserves the right to
invoke any and all rights and remedies at any time in its sole
discretion.
4. Xxxxxx Industries hereby releases, satisfies, cancels, waives, acquits,
and forever discharges the Bank, its directors, officers, employees,
agents, attorneys, successors and assigns, of and from any and all
claims, demands, actions, or causes of action of any kind or character,
arising at any time in the past, up to and including the date of this
letter, which relate or pertain in any way to the Indebtednesses and/or
collection of them.
5. The Indebtednesses are owed by Xxxxxx Industries to the Bank for the
amounts (exclusive of outstanding letters of credit, ACH exposures and
the Bank's attorneys fees) herein stated and there are no defenses,
setoffs, or counterclaims with respect to any of them:
Payoff as of
General Description Obligation No. 05/14/01
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Term Loan #1 #087445 $ 1,192,029.35
Term Loan #2 #087452 $ 1,192,497.09
Term Loan #3 #524769 $ 9,876,726.79
6. Xxxxxx Industries agrees to pay the Indebtednesses strictly and
promptly in accordance with the terms of the applicable promissory
notes or other debt instruments, as specifically modified by the Loan
Agreement and this letter agreement.
7. Xxxxxx Industries agrees to pay to the Bank's counsel, Xxxxxx, Xxx &
Xxxx, P.A., on or before June 15, 2001, all of its attorney's fees
incurred in connection with this extension and/or the collection of the
Indebtednesses.
Very truly yours,
/s/ XXXXXXX XXXXXXXX
Xxxxxxx Xxxxxxxx
Vice President
cc: Xx. Xxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx III, Esq.
S. Dagnal Xxxx, Esq.
ACCEPTED AND AGREED TO BY:
XXXXXX INDUSTRIES, INC.
By: /s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx
Its Vice President of Administration
and Finance and Chief Financial Officer
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EXHIBIT A
FINANCING PROPOSAL
AmSouth Bank (the "Bank") proposes the following terms as amendments to
the Loan Agreement and other Loan Documents with Xxxxxx Industries, Inc.
("Xxxxxx Industries" or the "Company"):
1. Extension: The definition of "Line of Credit Termination Date"
in Section 1.02 of the Loan Agreement, as heretofore
amended, will be further amended to read "January 1,
2002."
2. Line of Credit: The Line of Credit will be increased by $1 million
for a total line of up to $11 million. The actual
amount available under the Line of Credit will be
determined periodically as the sum of: (a) 80% of the
eligible accounts receivable of the Company, net of
customary reserves, (to be determined) plus (b) 38%
of finished goods inventory, plus (c) 30% of raw
material inventory (less reserves for warranty and
obsolete inventory, subject to adjustment of the
final advance rates - additional reserves to be
determined).
3. Term Loans: The Term Loans will be reamortized from biannually to
monthly and defaults arising through the execution of
the amendment to the Loan Agreement will be deferred.
4. Interest Rates and Fees:
The rate of interest charged on the first $10 million
under the Line of Credit will be increased from the
current rate to the Bank's Prime Rate plus 1%. The
rate of interest charged on any borrowings under the
additional $1 million made available under the Line
of Credit will be the Bank's Prime Rate plus 3%.
The rate of interest charged on the Term Loan will be
increased from the current rate to the Bank's Prime
Rate plus 1%; provided, however, that in the event
such an increase will adversely affect the tax
exemption received by the Bank with respect to the
Term Loan, this increase will not be implemented.
Fees will include a closing fee of one-half of one
percent (0.50%) of the total credit facility
(approximately $66,900), an annual loan service fee,
to be paid monthly, equal to one-half of one percent
(0.50%) of the total credit facility, and a fee equal
to one-half of one percent (0.50%) per annum, charged
per diem and payable monthly, of the average daily
unused portion of the Line of Credit.
5. Additional Terms:
(a) All proceeds of accounts receivable will be
required to be paid into a lockbox account of the
Bank. No payments will be made to the Company and all
invoices shall be marked with the Bank's lockbox as
the mailing address. Provision shall be made for the
lockbox account to be monitored daily to insure its
compliance with the borrowing base.
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(b) The borrowing base under the Line of Credit
will be determined and certificated weekly. Daily
reports on new invoices will be required.
(c) The current financial covenants included in
the Loan Agreement will be amended to reflect 90% of
the Company's current projections and will include
minimum EBITDA, debt coverage ratio, current ratio
and minimum net worth. Other covenants will include a
requirement that the Company prepare an appropriate
offering memorandum to raise an agreed upon
additional amount of equity or to sell the Company or
certain operations or assets thereof by July 15,
2001, and the Company receive letters of intent for
purchase of whole or part of the company or equity
issuance or commitment letters for replacement
financing by August 15, 2001.
(d) The amended Loan Agreement shall also
include a provision whereby the Line of Credit will
be permanently reduced to $6 million on October 31,
2001.
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EXHIBIT B
PROVISIONS OF LOAN AGREEMENT
Section Covenant
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ss. 8.09 Debt Service Coverage Ratio
ss. 8.11 Working Capital
ss. 8.13 Net Worth
ss. 7.04(b) Furnish monthly financial statementS
ss. 7.08 Notice of Default (i.e., Borrower's failure to give notice of
any of the foregoing defaults).
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