EXHIBIT 4.12
SECOND AMENDMENT TO FOREBEARANCE AGREEMENT
This Second Amendment to Forebearance Agreement (the "Second
Amendment"), dated as of July 14, 2003, is made by and between Donlar
Corporation, an Illinois corporation (the "Borrower") and the Tennessee Farmers
Life Insurance Company (the "Lender"). Capitalized terms used herein, but not
otherwise defined herein, shall have the same meaning assigned thereto in the
Forebearance Agreement, the Amendment To Forebearance Agreement or the Term Loan
Agreement.
R E C I T A L S
A. The Borrower and the Lender are parties to (i) that certain Bridge
and Consolidated Term Loan Agreement dated March 18, 2002 as amended by that
First Amendment to Bridge and Consolidated Term Loan Agreement dated May 31,
2002 (the "Term Loan Agreement"); (ii) that certain Forebearance Agreement dated
as of March 18, 2003 (the "Forebearance Agreement"); and (iii) that certain
Amendment To Forebearance Agreement dated as of May 2, 2003 (the "Amendment").
B. Events of Default, as detailed in Recitals C and D of the
Forebearance Agreement, presently exist and the Borrower already has
acknowledged in that certain Forebearance Agreement and hereby reaffirms that
the Lender is presently entitled to accelerate and cross-accelerate and declare
the obligations under any or all of the Term Loans to be immediately due and
payable, demand payment thereof, and begin exercising collection remedies in
connection therewith;
C. The Borrower requested a forebearance to and through July 14, 2003
in the Lender's exercise of its rights and remedies under the Term Loan
Agreement, and related documents (collectively, the "Loan Documents") and/or
applicable law in connection with such existing Events of Default in order to
provide the Borrower with an opportunity to arrange for a resolution of the
Obligations through the sale of the Borrower (an "Acceptable Strategic
Transaction");
D. The Lender was willing to forebear until July 14, 2003 from
exercising, as a result of the Events of Default, any of the rights, powers and
remedies of the Lender against the Borrower or its property, including without
limitation, foreclosure on any of the Lender's collateral (the "Forebearance"),
but only pursuant to and upon the terms and conditions of the Forebearance
Agreement (as amended), including, without limitation, that the Forebearance may
and/or shall be terminated under certain circumstances as set forth in SECTION 8
of the Forebearance Agreement and the acknowledgment by the Borrower that
interest has accrued on the principal amount of the Term Loans on and after
March 18, 2003 to the date of the Forebearance Agreement at the non-default
rate, and shall continue to accrue thereon at such rates after the date of the
Forebearance Agreement, after the date of the Amendment, and after the date of
this Second Amendment;
E. The Borrower has requested a continuation of the stated termination
date of the Forebearance. The Lender is willing to agree to an extension of the
stated termination date of the Forebearance (i.e., to and through August 28,
2003), but only pursuant to and upon the existing terms and conditions of the
Forebearance Agreement (as amended). Consistent with the foregoing, and without
limiting the generality of the preservation of rights set forth in SECTION 10 of
the Forebearance Agreement, nothing contained in the Forebearance Agreement (as
amended) is intended or shall be deemed to constitute an acknowledgment,
representation, warranty, covenant, or other agreement on the part of the Lender
that it has agreed or that it will agree either (i) to enter into any
restructuring of the obligations owing under the Term Loan Agreement or related
documents on any terms and conditions or (ii) to any forebearance beyond August
28, 2003;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and promises herein contained, the parties hereto agree as follows:
1. Adoption and Incorporation of Recitals. The above recitals are
confirmed and adopted by the parties hereto as if set forth herein.
2. Amendment to Forebearance Agreement. The Forebearance Agreement
hereby shall be amended by deleting from Recital F thereof the stated
Forebearance termination date of "July 14, 2003" and substituting "August 28,
2003" in lieu thereof.
3. Effectiveness Conditions. In order for this Second Amendment to be
effective this Second Amendment must be completed, executed, and delivered by
the Borrower to the Lender on or before July 23, 2003.
4. Preservation and No Waiver of Rights/Ratification of Loan Documents
and Forebearance Agreement. This Second Amendment shall not be deemed a waiver,
amendment, extension or modification by the Lender of any term or provision of,
or default under, any Loan Document, any promissory note, or any collateral
documents; and except as otherwise expressly provided for in the Forebearance
Agreement (as amended), the Lender hereby fully preserves all its rights, powers
and remedies against the Borrower and/or any other person or entity. In
addition, nothing contained herein shall be deemed to be a waiver or abandonment
of any Event of Default or Forebearance Termination Event (whether presently or
subsequently existing), any rights or remedies available to the Lender under the
Loan Documents, any promissory note, any collateral documents, applicable law or
otherwise, each of which rights, powers or remedies is hereby specifically and
expressly reserved, including without limitation, the right to seek judgment
against the Borrower and/or any other person or entity, to foreclose its
interest in any collateral held by the Lender or in which the Lender has a
security interest or other lien, or to take any other action permitted under the
Loan Documents and/or applicable law. Each of the Loan Documents is hereby
ratified and confirmed in all respects. The Forebearance Agreement and Amendment
as hereby amended are hereby ratified and confirmed in all respects.
5. Representations. The Borrower hereby represents and warrants to the
Lender that the execution and delivery of this Second Amendment and the
performance by it of its
obligations under the Forebearance Agreement (as amended) are within its
corporate powers, have been duly authorized by all necessary corporate action,
and do not and will not contravene or conflict with any provision of law or of
its articles of incorporation or its by-laws and that the Forebearance Agreement
(as amended) constitutes its legal, valid, and binding obligations and is
enforceable in accordance with its terms except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect relating to creditors' rights generally or as such
enforcement may be limited in equity.
6. Reliance by the Lender. The parties hereto understand and
acknowledge that the Second Amendment has been executed for the purposes of
inducing the Lender to agree to extend the stated termination date of the
Forebearance. Each of the parties hereto further understands and acknowledges
that the Lender is relying on, and would not have entered into this Second
Amendment (and would not have extended the stated termination date of the
Forebearance) had it not been for the agreements, representations and warranties
of the Borrower set forth herein.
7. Successors and Assigns. Subject to any assignment or other transfer
restrictions set forth in the Loan Documents and herein, the Forebearance
Agreement (as amended) shall be binding upon the parties hereto and their
respective successors and assigns.
8. Counterparts. This Second Amendment may be executed in any number of
counterparts, each of which will be deemed to be an original, but all of which
together shall constitute one and the same instrument.
9. Governing Law. This Second Amendment will be governed by the
internal laws of the State of Tennessee, without giving effect to any of the
State's conflicts-of-law provisions.
10. Notice. Any notice provided for hereunder shall be in writing,
personally delivered, if such notice is to the Borrower to the address shown
below its or his signature hereto, and, if such notice is to the Lender, to the
Lender's attorney as follows: Xx. Xxxxxx X. Xxxxxxxx, 000 Xxxxx XxXxxxx Xxxxxx,
Xxxxxxx, XX 00000, and in each instance may be given by facsimile transmission.
11. Entire Agreement. This Second Amendment contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings relating to the subject
matter hereof and shall not be altered, amended or otherwise modified except by
a written instrument signed by the party sought to be thereby bound.
12. Headings. The headings and captions used herein are provided for
convenience of reference only and shall not be employed in the construction of
this letter agreement.
13. No Third Party Beneficiaries. The Forebearance Agreement (as
amended) is solely for the benefit of the parties hereto, and, no provision of
the Forebearance Agreement (as amended) shall be deemed to confer upon any third
parties (including, without limitation, any
other creditors or parties in interest (including equity holders) of the
Borrower) any claim, remedy, liability, reimbursement, cause of action or other
right.
14. JURY TRIAL. THE PARTIES HERETO EACH HEREBY VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THE FOREBEARANCE AGREEMENT (AS AMENDED
FROM TIME TO TIME, INCLUDING, WITHOUT LIMITATION, AS AMENDED HEREBY), OR UNDER
ANY OTHER DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY LENDERING RELATIONSHIP
EXISTING IN CONNECTION WITH THE LOAN DOCUMENTS, AND AGREE THAT ANY SUCH ACTION,
PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
THIS PROVISION IS A MATERIAL INDUCEMENT TO THE LENDER TO ENTER INTO THIS SECOND
AMENDMENT.
IN WITNESS WHEREOF, the parties hereto execute and deliver this Second
Amendment on the date first above written.
DONLAR CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Its: President
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Address: 0000 Xxxxx Xxxxxx Xxxx
Xxxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxx
Fax: (000) 000-0000
THE TENNESSEE FARMERS LIFE
INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxxxxx
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Its: Secretary
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Address: X.X. Xxx 000
Xxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
