AMENDED AND RESTATED FORBEARANCE AGREEMENT
AMENDED AND RESTATED
FORBEARANCE AGREEMENT
THIS
AMENDED AND RESTATED FORBEARANCE AGREEMENT (this “Agreement”), dated as
of January 29, 2010, is entered into by and between Bank of America, N.A. (the
“Bank”) and
Point.360, a California corporation (the “Borrower”), with reference to the following
facts:
RECITALS
A. The
Bank and the Borrower are parties to a Forbearance Agreement, dated as of
November 12, 2009 (the “Original Forbearance
Agreement”), pursuant to which the Bank agreed to forbear from exercising
its available Default Rights and Remedies in response to the Anticipated Event
of Default through January 31, 2010.
B. The
Anticipated Event of Default has become an actual Event of Default, as the
Borrower was required to have a Basic Fixed Charge Coverage Ratio of at least
1.10 to 1.00 as of September 30, 2009, but the Borrower’s actual Basic Fixed
Charge Coverage Ratio as of such date was only 1.04 to 1.00.
C. The
Borrower has advised the Bank that additional anticipated events of default
(collectively, the “New Anticipated Events of
Default”) will occur under Section 10.12 of
the Loan Agreement as of December 31, 2009, March 31, 2010 and June 30,
2010. The New Anticipated Events of Default are due to the Borrower’s
expected failure to comply with Section 9.4 of the
Loan Agreement as of December 31, 2009, March 31, 2010 and June 30, 2010, due to
the Borrower’s anticipated failure to achieve a Basic Fixed Charge Coverage
Ratio of at least 1.10 to 1.00 for such compliance test dates (the Borrower
anticipates that its actual Basic Fixed Charge Coverage Ratio as of such dates
will be only 0.79 to 1.00, 0.73 to 1.00 and 0.67 to 1.00,
respectively).
D. The
Bank and the Borrower have jointly concluded that it is in their respective best
interests for the Bank to continue to forbear from exercising its Default Rights
and Remedies in response to the original Anticipated Event of Default and the
New Anticipated Events of Default for an additional forbearance period of sixty
(60) days, through March 31, 2010, and for the parties to reduce and make the
other amendments to the Facility Commitment described in this
Agreement.
NOW,
THEREFORE, the parties hereby agree as follows:
1. Defined
Terms. Any and all initially-capitalized terms used in this
Agreement (including, without limitation, in the recitals to this Agreement)
without definition shall have the respective meanings assigned thereto in the
Original Forbearance Agreement or in the Loan Agreement referred to in the
Original Forbearance Agreement, as applicable.
2. Limited Forbearance
Agreement. So long as no additional events of default occur
under the Loan Agreement during such period, the Bank hereby agrees to forbear
from exercising any of its available Default Rights and Remedies in response to
either the original Anticipated Event of Default or the New Anticipated Events
of Default throughout the period commencing on the date of this Agreement and
ending on March 31, 2010 (the “Forbearance
Period”).
3. No
Waiver. The agreement of the Bank under Section 2 of this
Agreement conditionally to forbear from exercising its available Default Rights
and Remedies in response to the original Anticipated Event of Default and the
New Anticipated Events of Default throughout the Forbearance Period shall not
constitute a waiver of any of such Default Rights and Remedies. The
Bank hereby expressly reserves all of its available Default Rights and
Remedies.
4. Reduction of Revolving
Credit Facility Commitment; No Further Advances. The aggregate
amount of the Facility Commitment is hereby reduced from $1,000,000 to
$500,000. The Borrower hereinafter shall have no right to request
additional advances under the Facility Commitment. From and after the
date of this Agreement, the Borrower’s obligations with respect to the
outstanding letter of credit in the face amount of $500,000 (the “Outstanding Letter of
Credit”) shall be the only obligations that may be outstanding under the
Facility Commitment. The Facility Commitment shall be permanently
reduced to $0 if the Outstanding Letter of Credit expires without being drawn
upon or if the original of the Outstanding Letter of Credit is returned to the
Bank undrawn by the beneficiary.
5. Conditional Cash Collateral
for Outstanding Letter of Credit. If the Outstanding Letter of
Credit remains outstanding at the end of the Forbearance Period, the Borrower
shall provide cash collateral to the Bank for the Borrower’s obligations in
respect of the Outstanding Letter of Credit. Such cash collateral
shall be in an amount equal to 105% of the amount then available to be drawn
under the Outstanding Letter of Credit.
6. General
Release. In consideration of the Bank’s agreement to enter
into this Agreement and hereby conditionally forbear from exercising its
available Default Rights and Remedies in response to the original Anticipated
Event of Default and the New Anticipated Events of Default throughout the
Forbearance Period, the Borrower hereby releases, discharges and acquits the
Bank and each of the Bank’s agents, servants, employees, successors and assigns
from any and all claims, demands, liabilities, obligations and causes of action,
whether known or unknown, against them, which the Borrower now owns or holds,
which the Borrower has at any time heretofore owned or held, or which the
Borrower hereafter may own or hold, by reason of any action, matter, cause or
thing whatsoever done prior to the date of this Agreement, including
specifically, but not limited to, any and all claims, demands, rights and causes
of action whatsoever arising out of or which could be alleged to arise out of
the Loan Agreement or any of the other Loan Documents.
It is the intention of the Borrower in
executing this Agreement that the same shall be effective as a bar to each and
every claim, demand, and cause of action hereinabove specified, and in
furtherance of this intention the Borrower waives and relinquishes all rights
and benefits under Section 1542 of the Civil Code of the State of California,
which provides:
“A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him might have materially affected his settlement with the
debtor.”
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The Borrower acknowledges that it may
hereafter discover facts different from or in addition to those now known or
believed to be true with respect to such claims, demands, or causes of action
and agree that this Agreement shall be and remain effective in all respects
notwithstanding any such differences or additional facts.
7. Condition
Precedent. The effectiveness of this Agreement shall be
subject to the Bank’s receipt of this Agreement, duly executed by the
Borrower.
8. Reaffirmation and
Ratification. The Borrower hereby reaffirms, ratifies and
confirms its obligations to the Bank under the Loan Agreement and the other Loan
Documents, acknowledges that all of the terms and conditions in the Loan
Agreement and the other Loan Documents remain in full force and effect, and
further acknowledges that the security interests granted to the Bank in the
Collateral described in the Security Agreement, dated as of August 25, 2009, by
and between the Borrower and the Bank, are valid and perfected.
9. Integration. This
Agreement amends, restates, replaces and supersedes (but shall not constitute a
novation of) the original Forbearance Agreement. This Agreement
constitutes the entire agreement of the parties in connection with the subject
matter hereof and cannot be changed or terminated orally. All prior
agreements, understandings, representations, warranties and negotiations
regarding the subject matter hereof, including, without limitation, the original
Forbearance Agreement, are merged into this Agreement.
10. Counterparts. This
Agreement may be executed in multiple counterparts, each of which when so
executed and delivered shall be deemed an original, and all of which, taken
together, shall constitute but one and the same agreement.
11. Governing
Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws (as opposed to the conflicts of
law principles) of the State of California.
[Rest
of page intentionally left blank; signature pages follow]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement by their
respective duly authorized officers as of the date first above
written.
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a
California corporation
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By:
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/s/Xxxx X. Steel | |
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Xxxx
X. Steel
Executive
Vice President,
Finance
and Administration
and
Chief Financial Officer
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| BANK OF AMERICA, N.A. | |||
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By:
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/s/ Xxxxxx X. Xxxxx | |
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Xxxxxx
X. Xxxxx
Vice
President
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