Contract
EXHIBIT
10.1
12
This
Forbearance Agreement (herein, the “Agreement”) is made as of
this 29th day of December, 2009, by and among Champion Industries, Inc. (the “Borrower”) Xx. Xxxxxxxx
Xxxxxxxx, individually (the “Shareholder”), Fifth Third
Bank, an Ohio banking corporation, as a Lender, L/C Issuer, and Administrative
Agent for the Lenders (the “Administrative Agent”) and
the other Lenders party hereto.
Recitals:
A.The Borrower, the Lenders, and the Administrative Agent are party
to a Credit Agreement, dated as of September 14, 2007 (as heretofore amended and
as the same may further be amended, supplemented and otherwise modified from
time to time, the “Credit
Agreement”).
B.The Borrower has informed the Administrative Agent and the
Lenders that it has failed to comply with Sections 6.20(a), 6.20(b), 6.20(c) and
6.20(d) of the
Credit Agreement as of January 31, 2009, April 30, 2009,
July 31, 2009 and October 31, 2009 (each such instance of
noncompliance being hereinafter referred to as an “Existing Default” and
collectively, the “Existing
Defaults”).
C.The Lenders are not willing to waive the Existing
Defaults.
D.The Borrower has advised the Lenders that it intends to continue
to reduce costs and take other steps to improve operations, and the Borrower has
requested that the Lenders temporarily forbear from exercising certain rights
and remedies under the Loan Documents in order to afford the Borrower the
opportunity to do so.
E.In order to accommodate the Borrower’s request, during and only
during the period (the “Standstill Period”)
beginning on the date of this Agreement and ending on March 31, 2010
(the “Scheduled Standstill
Expiration Date”), the Required Lenders
are willing to temporarily forbear from exercising certain rights and remedies
available solely by reason of the Existing Defaults on the terms, conditions,
and provisions contained in this Agreement.
F.Because of the Existing Defaults, the Administrative Agent,
acting at the direction of the Required Lenders, on December 7, 2009, suspended
the Borrower’s option to elect Eurodollar Loans and took $2 Million of cash
collateral from an account maintained by the Borrower at Fifth Third Bank and on
December 16, 2009, took an additional $1 Million of cash collateral
from the same account (the $3 Million aggregate cash collateral is collectively
referred to herein as the “Cash
Collateral”).
G.As a shareholder of the Borrower, and benefiting from the Credit
Agreement and the forbearance terms contained in this agreement, the Shareholder
is agreeable to executing and delivering this Agreement.
Now, Therefore, for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1.Incorporation
of Recitals; Defined Terms. The Borrower and Shareholder
acknowledge that the Recitals set forth above are true and correct in all
material respects. The defined terms in the Recitals set forth above
are hereby incorporated into this Agreement by reference. All other
capitalized terms used herein without definition shall have the same meanings
herein as such terms have in the Credit Agreement.
2.Amounts
Owing. The Borrower acknowledges and agrees that the principal
amount of Loans and Letters of Credit as of December 29, 2009, is
$66,157,937.87 ($56,632,442.00 in Term Loans, $8,725,495.87 in Revolving Loans,
$800,000.00 in Swing Loans, and $0.00 in Letters of Credit), and such amount
(together with interest and fees thereon) is justly and truly owing by the
Borrower without defense, offset or counterclaim.
3.Acknowledgment
of Default(s). The Existing Defaults constitute Events of
Default under Section 7.1(b) of the Credit Agreement. The Borrower
acknowledges that, because of the Existing Defaults, the Lenders are permitted
and entitled under Sections 7.2 and 9.3 of the Credit Agreement to decline
to provide further credit to the Borrower, to terminate the Commitments, to
accelerate the Obligations, to enforce Liens granted under the Collateral
Documents, and to exercise any other rights or remedies that may be available
under the Loan Documents or under applicable law. The Borrower
represents to the Administrative Agent and Lenders that there are no Defaults or
Events of Default other than the Existing
Defaults.
4.Forbearance. Without
limiting the right of the Administrative Agent under Section 2.2 of the Credit
Agreement, including without limitation, the right to establish reserves against
the Borrowing Base without prior notice to the Borrower because of the Existing
Defaults, unless and until a Standstill Termination occurs, the Lenders will not
accelerate the Obligations or enforce any of the Liens granted under the
Collateral Documents or, except as provided with respect to Section 2.2 of the
Credit Agreement and as expressly provided below herein, exercise any other
rights or remedies available solely by reason of the Existing Defaults.
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5.Revolving
Credit. During the Standstill Period, so long as the Borrower
has (and will continue to have after any request for credit) Excess Availability
equal to or greater than One Million and 00/100 Dollars ($1,000,000.00), the
Borrower may continue to request credit under the Revolving
Credit. Any request for credit under the Revolving Credit during the
Standstill Period shall be subject to the satisfaction of the conditions
precedent set forth in Section 3.1 of the Credit Agreement, except to the extent
non-compliance with the conditions set forth therein relate solely to an
Existing Default.
6.Principal
Payments. The Borrower shall continue to pay all principal on
the Loans and Reimbursement Obligations on all Letters of Credit as and under
the Credit Agreement when due, including, without limitation, all scheduled
payments of principal on the Term Loans.
7.Interest and
Fee Payments. The Borrower will keep interest and fees current
on the Loans and payable at the default rate pursuant to Section 2.4(c) of the
Credit Agreement. The Borrower agrees that no new Eurodollar Loans
may be created and any outstanding Eurodollar Loans shall be converted into Base
Rate Loans at the expiration of the relevant Interest Periods.
8.Prepayment
Contribution. The Shareholder and the Borrower acknowledge and
agree that the Shareholder delivered $3,000,000.00 to the Administrative Agent
on or about October 30, 2009 (the “Prepayment Contribution”);
and the Borrower, the Shareholder and the Lenders agree that the Prepayment
Contribution constitutes cash equity contributed to the Borrower in exchange for
common stock issued by the Borrower or, notwithstanding anything to the contrary
in Section 6.11 of the Credit Agreement, upon execution and delivery by the
Shareholder of a subordination agreement to the Administrative Agent acceptable
to the Administrative Agent in form and substance (which agreement shall, among
other things, subordinate the Prepayment Contribution to the right in payment in
full of the Obligations, Hedging Liability and Funds Transfer and Deposit
Account Liability and prohibit any payment of principal or cash interest on the
Prepayment Contribution until payment in full of the Obligations), the
Prepayment Contribution shall constitute subordinated unsecured Indebtedness
owed by the Borrower to the Shareholder that is permitted under Section 6.11 of
the Credit Agreement.
9.Additional
Agreements. The Borrower further agrees that:
(a)The Borrower shall (i) concurrently with the delivery of the
statements required by Section 11 hereof, deliver the same statements to Duff
& Xxxxxx, (ii) engage Duff & Xxxxxx to update its previously
delivered report on the financial condition and expected financial performance
of the Borrower and its Subsidiaries and (iii) cause Duff & Xxxxxx
to deliver a copy of such updated report to the Administrative Agent on or
before January 29, 2010.
(b)The Borrower agrees that it shall not, nor shall it permit any
Subsidiary to, issue, incur, assume, create or have outstanding any new
Indebtedness other than that which is (i) outstanding on the date hereof, (ii)
approved in writing by the Administrative Agent in its sole discretion, or (iii)
incurred to finance Capital Expenditures to the extent permitted by Sections
6.11 and 6.20(d) of the Credit Agreement.
(c) The Borrower agrees that it will not make any Restricted
Payments.
(d)Notwithstanding anything in Section 6.22 of the Credit Agreement
to the contrary, the Borrower shall maintain a concentration account with the
Administrative Agent with a balance of at least Seven Hundred Fifty Thousand and
00/100 Dollars ($750,000.00) at all times.
(e)The Borrower acknowledges and agrees that field audits,
inspections, and appraisals of the Collateral may be conducted at any time and
from time to time as the Administrative Agent or the Required Lenders may
require; and the Borrower agrees to cooperate in connection with each such
audit, inspection or appraisal. The Borrower acknowledges and agrees
that the costs of each such field audit, inspection and appraisal shall be at
the Borrower’s expense.
(f)On or prior to the date hereof, but after giving effect hereto,
including Section 8 hereof, the Borrower shall have reduced the outstanding Term
Loans minus cash
collateral for such Term Loans held by the Administrative Agent for application
to the Term Loans in accordance with Section 10 hereof, to an amount equal to or
less than $49,632,442.00.
(g)The Borrower agrees that it has substantial Eurodollar Loans
outstanding on the date hereof and that the Administrative Agent may, in its
sole discretion but without obligation, hold cash proceeds and cash payments
received from the Borrower as collateral to reduce outstanding Obligations after
such Eurodollar Loans convert to Base Rate Loans.
10.Application of
Cash Collateral and Prepayment Contribution. Notwithstanding
anything in the Credit Agreement to the contrary, including, without limitation,
Sections 2.8 and 2.9 thereof, the Borrower and the Lenders agree that
Administrative Agent shall apply the Cash Collateral and the Prepayment
Contribution to payment of the Term Loans in the inverse order of maturity
thereof.
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11.Delivery of
Information. On or before January 8, 2010, the
Borrower shall deliver to the Administrative Agent, each in form and with detail
acceptable to the Administrative Agent: (i) a 1-year business
plan for the Borrower’s fiscal year ending on or about
October 31, 2010 including a month-by-month statement of Availability,
a full set of monthly detailed financial statements, including, without
limitation, an income statement, balance sheet and statement of cash flows and a
statement of all key assumptions for the Borrower and its Subsidiaries, which
shall include an express detailed statement of projected expense reductions,
including cash and non-cash restructuring charges, and the timing therefore,
(ii) a detailed month-to-month statement of actual expense cuts made by the
Borrower and its Subsidiaries for the period from October 31, 2008 through the
date hereof, and (iii) a schedule showing on a month-to-month basis from
October 31, 2008 through October 31, 2010, the number of people
employed by and projected to be employed by the Borrower and its Subsidiaries
(showing the number of people employed by each entity, and each division thereof
to the extent applicable, for each respective month).
12.Standstill
Termination. As used in this Agreement, “Standstill Termination”
shall mean the occurrence of the Scheduled Standstill Expiration Date, or, if
earlier, the occurrence of any one or more of the following events: (a) any
Default or Event of Default under the Credit Agreement, in each case other than
the Existing Defaults; (b) any failure by the Borrower for any reason to
comply with any term, condition, or provision contained in this Agreement;
(c) any representation made by the Borrower in this Agreement or pursuant
to it proves to be incorrect or misleading in any material respect when made; or
(d) any Material Adverse Effect shall occur as determined in good faith by
the Administrative Agent or the Required Lenders. The occurrence of
any Standstill Termination shall be deemed an Event of Default under the Credit
Agreement. Upon the occurrence of a Standstill Termination, the
Standstill Period is automatically terminated and the Lenders are then permitted
and entitled under Sections 3.1, 7.2, 7.3 and 7.4 of the Credit Agreement,
among other things, to decline to provide additional credit to the Borrower, to
permanently terminate the Commitments, to accelerate the Obligations, to require
cash collateral for undrawn Letters of Credit and to exercise any other rights
and remedies that may be available under the Loan Documents or applicable
law.
13.No Waiver and
Reservation of Rights. The Borrower acknowledges that the
Lenders are not waiving the Existing Defaults, but are simply agreeing to
forbear from exercising their rights with respect to the Existing Defaults to
the extent expressly set forth in this Agreement. Without limiting
the generality of the foregoing, the Borrower acknowledges and agrees that
immediately upon expiration of the Standstill Period, the Administrative Agent
and the Lenders have all of their rights and remedies with respect to the
Existing Defaults to the same extent, and with the same force and effect, as if
the forbearance had not occurred. The Borrower will not assert and
hereby forever waives any right to assert that the Administrative Agent or the
Lenders are obligated in any way to continue beyond the Standstill Period to
forbear from enforcing their rights or remedies or that the Administrative Agent
and the Lenders are not entitled to act on the Existing Defaults after the
occurrence of a Standstill Termination as if such default had just occurred and
the Standstill Period had never existed. The Borrower acknowledges
that the Lenders have made no representations as to what actions, if any, the
Lenders will take after the Standstill Period or upon the occurrence of any
Standstill Termination, a Default or Event of Default, and the Lenders and the
Administrative Agent must and do hereby specifically reserve any and all rights,
remedies, and claims they have (after giving effect hereto) with respect to the
Existing Defaults and each other Default or Event of Default that may
occur.
14.Acknowledgement
of Liens. The Borrower hereby acknowledges and agrees that the
Obligations owing to the Administrative Agent and the Lenders arising out of or
in any manner relating to the Loan Documents, as well as all Hedging
Liability and Funds Transfer and Deposit Account Liability, shall continue to be
secured by Liens on all assets and property of the Borrower and its
Subsidiaries, including, without limitation, all accounts, chattel paper,
instruments, documents, general intangibles, investment property, deposit
accounts, inventory, equipment, fixtures, and certain other assets and
properties of the Borrower and its Subsidiaries pursuant to the Loan Documents
heretofore executed and delivered by the Borrower and its Subsidiaries, and nothing herein
contained shall in any manner affect or impair the priority of the Liens created
and provided for thereby as to the indebtedness, obligations, and liabilities
which would be secured thereby prior to giving effect to this Agreement.
15.Release. For value
received, including without limitation, the agreements of the Lenders in this
Agreement, the Shareholder, the Borrower and its Subsidiaries hereby release the
Administrative Agent and each Lender, its current and former shareholders,
directors, officers, Administrative Agents, employees, attorneys, consultants,
and professional advisors (collectively, the “Released Parties”) of and
from any and all demands, actions, causes of action, suits, controversies, acts
and omissions, liabilities, and other claims of every kind or nature whatsoever,
both in law and in equity, known or unknown, which all of the Shareholder, the
Borrower and the Subsidiaries has or ever had against the Released Parties prior
to, through, and including this date, including, without limitation, those
arising out of the existing financing arrangements between the Borrower and the
Lenders, and all of the Shareholder, the Borrower and the Subsidiaries further
acknowledge that, as of the date hereof, they do not have any counterclaim,
set-off, or defense against the Released Parties, each of which the Shareholder,
the Borrower and the Subsidiaries hereby expressly waives.
16.Loan Documents
Remain Effective. Except as expressly set forth in this
Agreement, the Loan Documents and all of the obligations of the Borrower
thereunder, the rights and benefits of the Administrative Agent and Lenders
thereunder, and the Liens created thereby remain in full force and
effect. Without limiting the foregoing, the Borrower agrees to comply
with all of the terms, conditions, and provisions of the Loan Documents except
to the extent such compliance is irreconcilably inconsistent with the express
provisions of this Agreement. This Agreement and the Loan Documents
are intended by the Lenders as a final expression of their agreement and are
intended as a complete and exclusive statement of the terms and conditions of
that agreement.
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17.Fees and
Expenses. The Borrower hereby agrees to pay to the
Administrative Agent for the benefit of the Lenders party to this Agreement
according to their Percentages a non-refundable forbearance fee of $100,000.00
upon closing of this Agreement. The Borrower shall also pay on demand
all fees and expenses (including attorneys’ fees and expenses and financial
advisors’ fees and expenses) incurred by the Administrative Agent and its
counsel in connection with this Agreement and the other instruments and
documents being executed and delivered in connection herewith and the
transactions contemplated hereby (the Borrower acknowledges that it will receive
summary invoice(s) reflecting only the total amount then due and that such
summary invoice(s) will not contain any narrative description of the services
provided, and that delivery of such summary invoice(s) shall not in any way
constitute a waiver of any right or privilege of the Administrative Agent and
the Lenders associated with such invoice(s)).
18.Conditions
Precedent. The effectiveness of this Agreement is subject to
the satisfaction of the following conditions precedent (the date upon which the
following conditions have been satisfied being referred to herein as the “Forbearance Effective
Date”):
(a)the Borrower, the Administrative Agent, and the Required Lenders
shall have executed and delivered this Agreement on or before the close
of business on December 29, 2009.
(b)the payment of the forbearance fee and current legal,
professional and financial advisory, and other fees and expenses referred to in
Section 15 above.
19.Miscellaneous. By
its acceptance hereof, the Borrower hereby represents that it has the necessary
power and authority to execute, deliver, and perform the undertakings contained
herein, and that this Agreement constitutes the valid and binding obligation of
the Borrower enforceable against it in accordance with its terms. Any
provision of this Agreement held invalid, illegal, or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality, or unenforceability without affecting the validity,
legality, and enforceability of the remaining provision hereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction. The parties
hereto hereby acknowledge and agree that this Agreement shall constitute a Loan
Document for all purposes of the Credit Agreement and the other Loan
Documents. Unless otherwise expressly stated herein, the provisions
of this Agreement shall survive the termination of the Standstill
Period. This Agreement may be executed in counterparts and by
different parties on separate counterpart signature pages, each of which
constitutes an original and all of which taken together constitute one and the
same instrument. Delivery of executed counterparts of this Agreement
by telecopy shall be effective as an original. This Agreement shall
be governed by Ohio law and shall be governed and interpreted on the same basis
as the Credit Agreement.
[Signature
Pages to Follow]
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This
Forbearance Agreement is entered into as of the date and year first above
written.
| "Borrower" | ||
| Champion Industries, Inc | ||
| By | /s/ Xxxx X. Xxx | |
| Name | Xxxx X. Xxx | |
| Title | Senior Vice President and Chief Financial Officer | |
| "Shareholder" | ||
| By | /s/ Xxxxxxxx X. Xxxxxxxx | |
| Xx. Xxxxxxxx Xxxxxxxx, individually | ||
| "Required Lenders" | ||
| Fifth Third Bank, an Ohio banking corporation, as a Lender, as L/C Issuer, and as Administrative Agent | ||
| By | /s/ Xxxx X. Xxxxxxxx | |
| Name | Xxxx X. Xxxxxxxx | |
| Title | Vice President | |
|
The
Huntington National Bank
|
||
| By | /s/ Xxxxx X. Xxxxxxx | |
| Name | Xxxxx X. Xxxxxxx | |
| Title | Senior Vice President | |
|
Integra
Bank N.A.
|
||
| By | /s/ Xxxxx X. Xxxxxxxx | |
| Name | Xxxxx X. Xxxxxxxx | |
| Title | Senior Vice President | |
|
Summit
Community Bank
|
||
| By | /s/ Xxxxx Xxxxxx | |
| Name | Xxxxx Xxxxxx | |
| Title | Senior Vice President | |
|
SunTrust
Bank
|
||
| By | /s/ Xxx Xxxx | |
| Name | Xxx Xxxx | |
| Title | First Vice President | |
|
United
Bank, Inc.
|
||
| By | /s/ Xxxxx X. Xxxxxxxxx | |
| Name | Xxxxx X. Xxxxxxxxx | |
| Title | Vice President | |
Reaffirmation,
Consent and Joinder
Each of
the undersigned heretofore executed and delivered to the Administrative Agent a
Guaranty Agreement dated as of September 14, 2007 (the “Guaranty”). Each
of the undersigned hereby consents to the Forbearance Agreement as set forth
above, joins such agreement with respect to Paragraph 13 thereof, and confirms
that its Guaranty, all obligations thereunder, and all Collateral Documents
executed and delivered by it, and any Liens created or provided for thereunder
remain in full force and effect and shall not be affected, impaired or
discharged by the Forbearance Agreement. Each of the undersigned
further agrees that its consent to any further amendments, waivers or consents
in connection with the Credit Agreement shall not be required as a result of
this consent having been obtained. Each of the undersigned
acknowledges that the Required Lenders are relying on the joinder and assurances
provided herein in entering into the Forbearance Agreement set forth
above.
Dated as
of: December 29, 2009
|
The
Xxxxxxx Printing Company, Inc., a West Virginia
corporation
|
|
|
Stationers,
Inc., a West Virginia corporation
|
|
|
Xxxxxxx
Printing, Inc., a Louisiana corporation
|
|
|
Dallas
Printing Company, Inc., a Mississippi corporation
|
|
|
Carolina
Cut Sheets, Inc., a West Virginia corporation
|
|
|
Donihe
Graphics, Inc., a Tennessee corporation
|
|
|
Xxxxx
& Xxxxxxxxxxx Co., Inc., an Indiana corporation
|
|
|
The
Xxxxxx Company, an Ohio corporation
|
|
|
Interform
Corporation, a Pennsylvania corporation
|
|
|
CHMP
Leasing, Inc., a West Virginia corporation
|
|
|
Blue
Ridge Printing Co., Inc., North Carolina corporation
|
|
|
Capitol
Business Equipment, Inc., a West Virginia corporation
|
|
|
Xxxxxxxx’x
of Morgantown, Inc., a West Virginia corporation
|
|
|
Independent
Printing Service, Inc., an Indiana corporation
|
|
|
Diez
Business Machines, Inc., a Louisiana corporation
|
|
|
Transdata
Systems, Inc., a Louisiana corporation
|
|
|
Syscan
Corporation, a West Virginia corporation
|
|
|
Champion
Publishing, Inc., a West Virginia corporation
|
|
|
By
|
/s/ Xxxx X. Xxx |
|
Name:
Xxxx X. Xxx
|
|
|
Title: Senior
Vice President and Chief Financial
Officer
|
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