FORBEARANCE AGREEMENT AND AMENDMENT
This FORBEARANCE AGREEMENT AND AMENDMENT (this "Agreement"), dated as of
January 5, 1996, is by and among XXXXX MEAT INC., an Illinois corporation
("RMI"), XXXXX INTERNATIONAL SEAFOOD INC., an Illinois corporation ("RISI"),
XXXXX FOODS INC., a Delaware corporation ("RFI") and LASALLE NATIONAL BANK, a
national banking association ("LASALLE"). RMI and RISI are sometimes
hereinafter collectively referred to as "BORROWERS" and individually, each as a
"BORROWER").
R E C I T A L S
X. XXXX, RMI, RFI (as guarantor) and LaSalle entered into that certain
Loan And Security Agreement dated as of April 7, 1995 (as amended prior to the
date hereof, the "Loan Agreement"), pursuant to which Lenders agreed, among
other things, to make revolving loans and other financial accommodations to
Borrowers.
B. Those specified Events of Default listed on Exhibit A annexed hereto
(collectively, the "Forbearance Events of Default") have occurred and are
continuing under the Loan Documents and LaSalle is entitled to exercise its
rights and remedies under the Loan Instruments and applicable law.
C. Each Borrower and RFI has requested that LaSalle: (i) temporarily
forbear from exercising its remedies under the Loan Documents and applicable law
with respect to the Forbearance Events of Default; and (ii) agree to amend the
Loan Agreement as provided herein.
D. RFI has announced publicly that the next scheduled payment due on the
Senior Notes (as defined in the Loan Agreement) will be paid in kind and not in
cash.
X. XxXxxxx, as Agent and Lender, is willing to agree to such requests,
but only subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the recitals set forth above, the
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
all parties hereto, and subject to the terms and conditions hereof, Borrower and
LaSalle agree as follows:
1. INCORPORATION OF RECITALS. The Recitals set forth above are
incorporated herein, are acknowledged by each Borrower and RFI to be true and
correct and are made a part hereof.
2. DEFINITIONS. All capitalized terms used but not elsewhere defined
herein shall have the respective meanings ascribed to such terms in the Loan
Agreement, as amended by this Agreement.
3. INDUCEMENT. To induce LaSalle to enter into this Agreement:
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(a) COMPLIANCE WITH LOAN DOCUMENTS. Each Borrower represents and
warrants that on the date hereof after giving effect to this Agreement and
other than the Forbearance Events of Default, it is in compliance with all
of the terms and provisions set forth in the Loan Agreement and no Event of
Default and no event which, upon notice or lapse of time, or both, would
constitute an Event of Default, has occurred and is continuing.
(b) REPRESENTATIONS AND WARRANTIES. Each Borrower represents and
warrants that: (i) on the date hereof, the representations and warranties
set forth in the Loan Agreement are true and correct, with the same effect
as though such representations and warranties had been made on the date
hereof, except to the extent that such representations and warranties are
limited by their terms to an earlier date; and (ii) except for the
Forbearance Events of Default, Borrower is in compliance with all of the
terms and provisions of the Loan Agreement and no other Event of Default
has occurred and is continuing.
(c) AUTHORITY. Each Borrower and RFI represents and warrants that it
has full power and authority to enter into this Agreement, and has full
power and authority to incur and perform the obligations provided for under
this Agreement, all of which have been duly authorized by all proper and
necessary action, and that no consent or approval of any of Borrowers' or
RFI's directors, shareholders, creditors or of any public authority or
regulatory body is required as a condition to the validity or
enforceability of this Agreement.
(d) AGREEMENT AS BINDING AGREEMENT. Each Borrower and RFI represents
and warrants that this Agreement constitutes the valid and legally binding
obligation of it, fully enforceable against it in accordance with this
Agreement's terms.
(e) NO CONFLICTING AGREEMENTS. Each Borrower and RFI represents and
warrants that the execution and performance by it of this Agreement will
not: (i) violate any provision of law, any order of any court or other
agency of government, or the articles of incorporation or bylaws of it;
(ii) violate any indenture (including, without limitation, the Senior Note
Indenture), contract, agreement or other instrument to which it is a party,
or by which any of its property is bound, or be in conflict with, result in
a breach of or constitute (with due notice and/or lapse of time) a default
under, any such indenture, contract, agreement or other instrument; or
(iii) result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of its respective property or
assets, other than in favor of LaSalle.
4. FORBEARANCE. In accordance with the terms hereof, LaSalle agrees
that, notwithstanding the Forbearance Events of Default and until the expiration
of the "Forbearance Period" (as hereinafter defined), LaSalle will temporarily
forbear from exercising any rights and remedies under the Loan Documents and
applicable law with respect to the Forbearance Events of Default during the
Forbearance Period pursuant to the terms and conditions hereof. Upon expiration
of the Forbearance Period, LaSalle's agreement to forbear hereunder immediately
shall be null and void and LaSalle shall be free to exercise its rights and
remedies under the Loan Documents and applicable law, immediately and without
further notice. As used herein,
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the term "FORBEARANCE PERIOD" means the period beginning on the date hereof and
continuing until the earliest to occur of (a) January 27, 1996; (b) the date of
the occurrence of any Event of Default other than the Forbearance Events of
Default; (c) any date selected by LaSalle, in its sole and absolute discretion,
as the date for expiry of the Forbearance Period and written notice of which
date LaSalle has sent Borrowers and RFI at least one Business Day prior to such
date; (d) the cash payment by or on behalf of Borrowers of any amounts to, with
respect to, or for the benefit of RFI or the trustee for, or the holder of, any
notes or other indebtedness issued, evidenced or incurred pursuant to the Senior
Note Indenture (or any substitution or refinancing thereof).
5. NO WAIVER OF FORBEARANCE EVENTS OF DEFAULT. Nothing in this Agreement
shall be deemed to waive the Forbearance Events of Default, or, except as
expressly provided herein, limit or impair LaSalle's rights or remedies under
the Loan Agreement, the other Loan Documents, or applicable law, all of which
are hereby expressly reserved.
6. CERTAIN AFFIRMATIONS BY BORROWERS AND RFI. Each Borrower and RFI
hereby agrees and acknowledges that LaSalle has performed all obligations and
duties owed to Borrowers and RFI, if any, as of the date hereof.
7. AMENDMENT OF THE LOAN AGREEMENT. The Loan Agreement is hereby amended
as set forth below:
7.1 The definition of "BORROWING BASE" set forth in Section 1.1 of
the Loan Agreement is amended by deleting provision (b)(ii)
thereof in its entirety and inserting the following in lieu
thereof:
"(ii) an amount equal to the lesser of (x) Twenty Million
Dollars ($20,000,000) or (y) an amount equal to the sum of
(I) the Raw Materials Advance Percentage of that portion of
Eligible Inventory constituting raw materials, PLUS (II) the
Finished Goods Advance Percentage of that portion of
Eligible Inventory constituting finished goods, plus (III)
the Commercial Letter of Credit Advance Percentage of the
face amount of Commercial Letters of Credit; MINUS
(subtract from the lesser of clauses (a) and (b) above)"
7.2 Section 1.1 of the Loan Agreement is amended by inserting the
following new definitions in the appropriate alphabetical order:
"COMMERCIAL LETTER OF CREDIT ADVANCE PERCENTAGE - With
respect to Commercial Letters of Credit issued for the
benefit of RISI, sixty-five percent (65%) or such other
percentage as Agent, in the reasonable exercise of its
discretion, deems appropriate. With respect to Commercial
Letters of Credit issued for the benefit of RMI, the
following percentages for the respective periods, or such
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other percentage as Agent, in the reasonable exercise of its
discretion, deems appropriate: (i) sixty-five percent (65%)
for the period through and including December 31, 1995; (ii)
sixty-four percent (64%) for the period commencing January
1, 1996 through and including January 31, 1996; (iii) sixty-
three percent (63%) for the period commencing February 1,
1996 through and including February 29, 1996; (iv) sixty-two
percent (62%) for the period commencing March 1, 1996
through and including March 31, 1996; (v) sixty-one percent
(61%) for the period commencing April 1, 1996 through and
including April 30, 1996; and (vi) sixty percent (60%) for
the period commencing May 1, 1996 and thereafter."
"DOMINION ACCOUNT - an account or accounts of Borrower
established or to be established at Agent for the benefit of
Agent and the ratable benefit of Lenders pursuant to this
Agreement at LaSalle National Bank, and over which, Agent
for its benefit and the ratable benefit of Lenders, shall
have sole and exclusive dominion, access and control for
withdrawal purposes."
"FINISHED GOODS ADVANCE PERCENTAGE - With respect to
Eligible Inventory comprising finished goods owned by RISI,
sixty-five percent (65%) or such other percentage as Agent,
in the reasonable exercise of its discretion, deems
appropriate. With respect to Eligible Inventory comprising
finished goods owned by RMI, the following percentages for
the respective periods, or such other percentage as Agent,
in the reasonable exercise of its discretion, deems
appropriate: (i) sixty-five percent (65%) for the period
through and including December 31, 1995; (ii) sixty-four
percent (64%) for the period commencing January 1, 1996
through and including January 31, 1996; (iii) sixty-three
percent (63%) for the period commencing February 1, 1996
through and including February 29, 1996; (iv) sixty-two
percent (62%) for the period commencing March 1, 1996
through and including March 31, 1996; (v) sixty-one percent
(61%) for the period commencing April 1, 1996 through and
including April 30, 1996; and (vi) sixty percent (60%) for
the period commencing May 1, 1996 and thereafter."
"RAW MATERIALS ADVANCE PERCENTAGE - With respect to Eligible
Inventory comprising raw materials owned by RISI, sixty
percent (60%) or such other percentage as Agent, in the
reasonable exercise of its discretion, deems appropriate.
With respect to Eligible Inventory comprising finished goods
owned by RMI, the following percentages for the respective
periods, or such other percentage as Agent, in the
reasonable exercise of its discretion, deems appropriate:
(i) sixty percent (60%) for the period through
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and including December 31, 1995; (ii) fifty-nine percent
(59%) for the period commencing January 1, 1996 through and
including January 31, 1996; (iii) fifty-eight percent (58%)
for the period commencing February 1, 1996 through and
including February 29, 1996; (iv) fifty-seven percent (57%)
for the period commencing March 1, 1996 through and
including March 31, 1996; (v) fifty-six percent (56%) for
the period commencing April 1, 1996 through and including
April 30, 1996; and (vi) fifty-five percent (55%) for the
period commencing May 1, 1996 and thereafter."
7.3 Section 5.4(A) of the Loan Agreement is amended by deleting the
same in its entirety and substituting therefor the following:
"(A) To expedite collection, Borrowers shall endeavor
in the first instance to make collections of its Accounts
for Agent. All remittances received by any Borrower on
account of Accounts shall be: (i) held to the extent of the
Obligations as Agent's property (for its benefit and the
ratable benefit of Lenders) by such Borrower as trustee of
an express trust for Agent's benefit; and (ii) each Borrower
shall immediately deposit all such remittances, whether then
held by such Borrower or received thereafter, in the
Dominion Account. Agent retains the right at all times,
after the occurrence and during the continuation of an Event
of Default, to notify Account Debtors that Accounts have
been assigned to Agent and to collect Accounts directly in
its own name and to charge the collection costs and
expenses, including reasonable attorneys' fees, to
Borrowers. For all purposes of computing interest
hereunder, all items of payment received by Agent shall be
deemed applied by Agent on account of Obligations (subject
to final payment of such items) on the second Business Day
after receipt by Agent of such items in immediately
available funds."
7.4 Section 9.1(K) of the Loan Agreement is amended by adding to the
end thereof the following:
"In addition, Borrowers shall give Agent and Lenders written
notice within one (1) Business Day of any filing or recording of
a trust, Lien or other interest of any Person in any property of
Borrowers pursuant to Title 7 of the United States Code or
pursuant to any other federal or municipal statute, code or
regulation."
7.5 From and after the effective date hereof: (i) all references in
the Loan Agreement and the other Loan Documents to the Loan
Agreement shall be deemed to refer to the Loan Agreement, as
amended hereby; and (ii) all references in the Loan Documents to
a term defined in the Loan Agreement shall be deemed to refer to
such defined term, as amended hereby.
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8. EVENT OF DEFAULT. Borrower hereby acknowledges and agrees that a
breach by Borrower of any term, provision, covenant or condition herein set
forth or herein required of Borrower to be kept or performed, shall constitute
an Event of Default under the Loan Documents.
9. COUNTERCLAIMS AND RELEASE. Each Borrower and RFI hereby represents
and warrants to, and covenants with, LaSalle that as of the date hereof: (a) it
has no actions, defenses, offsets or counterclaims of any kind or nature
whatsoever against LaSalle with respect to the Loan Agreement or any of the Loan
Documents, any amount owed to LaSalle or the performance or observance by
LaSalle of any warranty or covenant contained therein or any action previously
taken or not taken by LaSalle with respect thereto or with respect to any
security interest, encumbrance, lien or collateral in connection therewith to
secure the liabilities of Borrowers or RFI; and (b) LaSalle has fully performed
all obligations to Borrowers and RFI, if any, which it may have had or have on
and of the date hereof. Without limiting the generality of the foregoing, each
Borrower and RFI: (a) on its own behalf and on behalf of its representatives,
agents, employees, servants, officers, and directors, (b) to the extent such
claims could be made by the following parties claiming through such Borrower or
RFI and to the fullest extent permitted by applicable law, on behalf of partners
and shareholders and subsidiary, affiliated and related companies, and (c) on
behalf of successors and assigns (together, the "BORROWING GROUP") waives,
releases and forever discharges LaSalle, each Lender and its respective
officers, directors, subsidiary, affiliated and related companies, agents,
servants, employees, shareholders, representatives, successors, assigns,
attorneys, accountants, assets and properties, as the case may be (the "LENDER
GROUP") from and against all manner of actions, cause and causes of action,
suits, debts, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises, obligations,
liabilities, costs, expenses, losses, damages, judgments, executions, claims and
demands, of whatsoever kind or nature, in law or in equity, whether known or
unknown, whether or not concealed or hidden, arising out of or relating to any
matter, cause or thing whatsoever, that any of the Borrowing Group, whether
individually and/or jointly or severally, may have had, or now have or that may
subsequently accrue against the Lender Group by reason of any matter or thing
whatsoever through the date hereof arising out of or in any way connected to,
directly, or indirectly, the Loan Agreement, this Agreement and/or any of the
other Loan Documents. Each Borrower and RFI hereby acknowledges and agrees that
LaSalle is specifically relying upon the representations, warranties, covenants
and agreements contained herein and that such representations, warranties,
covenants and agreements constitute a material inducement to enter into this
Agreement.
10. COSTS. Each Borrower, jointly and severally, shall pay or cause to be
paid to LaSalle all fees and expenses of LaSalle relating to this Agreement and
the transactions contemplated herein, including, without limitation, fees and
expenses of LaSalle's counsel (the "COSTS").
11. NO CUSTOM; SECTION HEADINGS. This Agreement shall not establish a
custom or course of dealing, or waive, limit or condition the rights, defenses
and remedies of LaSalle under the Loan Agreement or the other Loan Documents,
all of which rights, defenses and remedies are expressly reserved. The section
headings and captions herein are for convenience
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of reference only and shall not be deemed to limit, impair or affect the
interpretation and construction of the terms hereof.
12. REPRESENTATION BY COUNSEL. Each Borrower and RFI hereby represents
and warrants to LaSalle that throughout the negotiations, preparation and
execution of this Agreement and the closing hereunder, it has been represented
by competent legal counsel of its own choosing and that this Agreement was
entered into by its free will and pursuant to arm's-length negotiations.
13. SEVERABILITY. If any provision of this Agreement or the application
thereof to any party or circumstance is held invalid or unenforceable, the
remainder of this Agreement and the application of such provision or provisions
to the other parties and circumstances will not be affected thereby, the
provisions of this Agreement being severable in any such instance.
14. FULL FORCE AND EFFECT. Except as may be expressly set forth herein to
the contrary, the Loan Documents remain unmodified and all other terms and
conditions of the Loan Documents remain in full force and effect. Each Borrower
and RFI hereby reaffirms its respective obligations to fulfill and comply with
each of its covenants, duties and obligations under the Loan Agreement, the
Guaranty Agreement and each of the other Loan Documents, all in accordance with
the terms thereof.
15. COUNTERPARTS. This Agreement may be signed in counterparts, each of
which shall be deemed an original and all of which shall be deemed to constitute
one agreement.
16. MERGER; MODIFICATION. This Agreement embodies the entire agreement
between the parties hereto with respect to the matters addressed herein and
supersedes all prior oral and written and all contemporaneous oral
communications with respect to such matters. This Agreement shall not be
modified or amended or extended except in a writing signed by the parties
hereto.
17. DELIVERIES BY BORROWER/FURTHER ASSURANCES. Each Borrower and RFI
shall deliver the following to LaSalle, each in form and substance satisfactory
to LaSalle: (i) certified copies of resolutions adopted by its respective board
of directors authorizing the execution and delivery of this Agreement; and (ii)
such other instruments, documents, certificates, consents, waivers and opinions
as LaSalle reasonably may request.
18. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS AND DECISIONS OF THE STATE OF ILLINOIS, WITHOUT REGARD
TO ANY CONFLICT OF LAW PROVISIONS. FOR PURPOSES OF THIS SECTION 18, THIS
AGREEMENT SHALL BE DEEMED TO BE PERFORMED AND MADE IN THE STATE OF ILLINOIS.
19. WAIVERS BY BORROWERS AND RFI. EACH BORROWER AND RFI HEREBY WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT PROCEEDING OR COUNTERCLAIM OF ANY
KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by each
of the parties hereto by a duly authorized officer of each such party on the
date first set forth above.
XXXXX MEAT INC.
/s/ Xxxxxx X. Xxxxxxx
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By: Xxxxxx X. Xxxxxxx
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Title: Sr. Vice President Finance
----------------------------
XXXXX INTERNATIONAL SEA FOOD INC.
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
By: Xxxxxx X. Xxxxxxx
----------------------------
Title: Sr. Vice President Finance
----------------------------
XXXXX FOODS INC. (GUARANTOR)
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
By: Xxxxxx X. Xxxxxxx
----------------------------
Title: Chief Financial Officer
----------------------------
LASALLE NATIONAL BANK (AS AGENT AND
LENDER)
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
By: Xxxxxxx X. Xxxxxxxx
----------------------------
Title: First Vice President
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EXHIBIT A
Forbearance Events of Default
As of, and with respect to the period ending, October 28, 1995, Borrowers were
not in compliance with the Loan Agreement solely to the extent set forth below:
Borrowers are in default of Sections 9.3(A), 9.3(B), 9.3(C), 9.3(D) and
9.3(E) of the Loan Agreement.
