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Exhibit 10.1
THIRD FORBEARANCE AGREEMENT
THIRD FORBEARANCE AGREEMENT, dated as of September 15, 2000 (the
"Agreement") to the Credit Agreement, dated as of July 31, 1998 (as heretofore
amended and as may be further amended, restated, modified and supplemented from
time to time, the "Credit Agreement"), among GLOBE MANUFACTURING CORP., an
Alabama corporation (the "Borrower"), the several lenders from time to time
party to the Credit Agreement (the "Lenders"), BANK OF AMERICA, N.A., as
Administrative Agent (the "Agent"), GLOBE HOLDINGS, INC., a Massachusetts
corporation ("Holdings"), and the other Guarantors identified in the Credit
Agreement. Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Credit Agreement.
WHEREAS, the Borrower, Holdings, the Agent and the Lenders are party
to that certain Forbearance Agreement dated as of July 17, 2000 (the
"Forbearance Agreement"); and
WHEREAS, pursuant to the Forbearance Agreement, the Agent and the
Lenders agreed, inter alia, to forbear from exercising certain rights in respect
of the Subject Defaults (as defined in the Forbearance Agreement) through
September 15, 2000; and
WHEREAS, the Borrower has informed the Agent that additional Events of
Default may occur and continue as a result of the non-compliance by the Borrower
with the financial covenants contained in Sections 8.08, 8.09 and 8.16 of the
Credit Agreement for the period ended September 30, 2000 and Section 8.10 of the
Credit Agreement from September 16, 2000 through December 31, 2000
(collectively, the "Covenant Defaults"); and
WHEREAS, the Borrower has informed the Agent that it may not be able
to make the interest payments due on the Loans during the Forbearance Period (as
hereinafter defined) (the "Interest Default" and together with the Subject
Defaults and Covenant Defaults, the "New Specified Defaults"); and
WHEREAS, the Borrower has requested that the Lenders and the Agent
forbear from exercising certain rights in respect of the New Specified Defaults,
and the Agent and the Lenders have agreed to do so on the terms contained
herein.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the fulfillment of
the conditions set forth below, the parties hereto agree as follows:
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SECTION 1. Forbearance Provisions.
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(a) The Agent, the Lenders, the Borrower and each of the Guarantors
hereby acknowledge the occurrence and continuance of each of the Subject
Defaults which have occurred and are continuing. The Borrower and each of the
Guarantors agree that during the pendency of the Forbearance Period and so long
as any Default or Event of Default remains in effect (including any New
Specified Defaults), the Borrower shall not request, and the Lenders shall not
be obligated to make or issue, any new Loan or any new Letter of Credit;
provided, that any Loan outstanding as of the Effective Date (as herein defined)
may only be converted to or continued as a Base Rate Loan.
(b) The Agent and the Lenders agree to forbear from taking any action
permitted to be taken by them under the Credit Agreement with respect to all New
Specified Defaults for the period of time commencing on the Effective Date and
terminating on the Termination Date (as herein defined) (the "Forbearance
Period"); provided, however, that such forbearance shall extend only to the New
Specified Defaults and not to any other Defaults or Events of Default now
existing or occurring after the Effective Date and shall not in any way or
manner restrict the Agent or the Lenders from exercising any rights or remedies
they may have with respect to New Specified Defaults after the expiration or
termination of the Forbearance Period or with respect to any other Default or
Event of Default at any time. "Termination Date" shall mean the earliest to
occur of any of the following events: (i) 5:00 p.m. (Eastern time) on December
31, 2000; (ii) the occurrence and continuance of an Event of Default other than
the New Specified Defaults; (iii) the Borrower's Consolidated Interest Coverage
Ratio shall be less than 1.12 to 1.0 for the rolling twelve-months ended
September 30, 2000; (iv) the Borrower's Consolidated Leverage Ratio shall be no
more than 12.93 to 1.0 at any time during the rolling twelve-months ended
September 30, 2000; (v) the Borrower's Consolidated Fixed Charge Coverage Ratio
shall be less than 0.660 to 1.0 for the rolling twelve-months ended September
30, 2000; and (vi) the Borrower's failure to comply with any of the provisions
of this Agreement;
(c) Subject to the terms hereof, the Borrower, each of the
Guarantors, the Agent and the Lenders hereby agree that, notwithstanding the
first sentence of Section 2.09(c) of the Credit Agreement and in order to induce
the Agent and the Lenders to enter into this Agreement, during the Forbearance
Period, interest on each Loan outstanding as of the Effective Date shall, to the
extent the Borrower has sufficient cash available, be paid on the last Business
Day of each month.
(d) Notwithstanding any provision in the Credit Agreement or the Loan
Documents to the contrary, during the Forbearance Period, all fees which are
payable under the Credit Agreement and the Loan Documents on a quarterly basis,
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including, without limitation, the Commitment Fee and letter of credit fees,
shall be payable on a monthly basis on the last Business Day of each month.
SECTION 2. Additional Provisions.
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(a) During the term of the Forbearance Period, the Borrower shall (i)
cause its financial advisors to consult and review with the Agent's counsel's
financial advisor, PricewaterhouseCoopers ("PWC"), the Borrower's capital
expenditure program, (ii) employ additional financial staff (either through
external hiring or continuing the retention of professionals from Rothschild or
the Borrower's outside auditors) for the purposes of preparing financial and
cash flow projections, (iii) provide PWC reasonable access to all of the
Borrower's books of account, records and financial information, as well as
reasonable access to the Borrower's financial officers and representatives for
the purpose of evaluating the Borrower's business plan and financial
restructuring plan, in a manner and scope satisfactory to the Agent, (iv)
deliver to the Agent and the Lenders weekly flash reports (including rolling
thirteen week cash flow projections) by no later than the third Business Day of
the following week and (v) provide to the Agent and the Lenders on the last
Business Day of each week a status report in form and substance reasonably
acceptable to the Required Lenders regarding the sale process undertaken by the
Borrower.
(b) The Borrower shall have received, and provided copies to the
Agent and the Lenders, the following items on the dates specified below: (i) by
no later than September 29, 2000, a bona fide letter of intent for the purchase
of the Borrower's assets or stock by a qualified prospective purchaser, (ii) by
no later than November 15, 2000, a binding letter of intent from a qualified
prospective purchaser for the sale of the Borrower's assets or stock, together
with a written summary of the terms of such sale which summary of terms shall be
in form and substance reasonably acceptable to the Agent and the Required
Lenders, and (iii) by no later than December 15, 2000, the Borrower shall have
executed a purchase and sale agreement having customary conditions in form and
substance reasonably acceptable to the Agent and the Required Lenders.
(c) The Borrower, each of the Guarantors, the Agent and the Lenders
agree that the Aggregate Revolving Commitment is hereby permanently and
irrevocably reduced to $27,900,000.
SECTION 3. Total Cash Disbursements. The Borrower agrees that it shall not
permit "Total Cash Disbursements" as listed in the projections delivered to the
Agent on September 7, 2000 for any month during the Forbearance Period, before
giving effect to any interest payment scheduled to have been made during the
Forbearance Period, to exceed 125% (the "Threshold") of the amount budgeted for
such month except to the
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extent that such amounts in excess of the Threshold can be attributed to short-
term, i.e., 3 to 5 business days, timing issues.
SECTION 4. Representations and Warranties. The Borrower and each of the
Guarantors represents and warrants (which representations and warranties shall
survive the execution and delivery hereof) to the Agent and Lenders that:
(a) It has the corporate power and authority to execute, deliver and
carry out the terms and provisions of this Agreement and the transactions
contemplated hereby and has taken or caused to be taken all necessary corporate
action to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby;
(b) No consent of any person (including, without limitation,
shareholders or creditors of the Borrower or any Guarantor), and no action of,
or filing with any governmental or public body or authority is required to
authorize, or is otherwise required in connection with the execution, delivery
and performance of this Agreement and the other instruments and documents
contemplated hereby which has not been obtained;
(c) This Agreement and the other instruments and documents
contemplated hereby have been duly executed and delivered by a duly authorized
officer on behalf of such party, and constitutes a legal, valid and binding
obligation of such party enforceable against such party in accordance with its
terms, subject to bankruptcy, reorganization, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally and the
exercise of judicial discretion in accordance with general principles of equity;
(d) The execution, delivery and performance of this Agreement and the
other instruments and documents contemplated hereby will not violate any law,
statute or regulation, or any order or decree of any court or governmental
instrumentality, or conflict with, or result in the breach of, or constitute a
default under any contractual obligation of such party;
(e) After giving effect to this Agreement, there does not exist any
Default or Event of Default other than the Subject Defaults; and
(f) After giving effect to this Agreement, the representations and
warranties contained in the Credit Agreement and in the other Loan Documents are
true and correct in all material respects on and as of the Effective Date as if
such representations and warranties had been made on and as of the Effective
Date (except to the extent such representations and warranties expressly relate
to an earlier date).
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SECTION 5. Conditions to Effectiveness.
This Agreement shall become effective on the date (the "Effective
Date") upon which the following conditions have been satisfied in full or waived
by the Agent in writing:
(i) The Agent shall have received in form and substance satisfactory
to the Agent and its counsel, counterparts of this Agreement executed by the
Borrower, the Guarantors, and the Lenders and such other approvals or documents
as the Agent may reasonably request;
(ii) All representations and warranties contained in this Agreement
or otherwise made in writing to the Agent in connection herewith shall be true
and correct in all material respects;
(iii) No Default or Event of Default, other than the Subject
Defaults, shall have occurred and be continuing;
(iv) The Agent shall have received payment in full of all outstanding
invoices for reasonable costs and expenses owing to the Agent and the Lenders in
accordance with Section 12.04 of the Credit Agreement, including, without
limitation, the reasonable fees and expenses of (x) counsel to the Agent, (y)
counsel to the individual Lenders and (z) the Agent's financial advisor; and
(v) The Agent shall have received from the Borrower the sum of
$400,000 to be applied as a prepayment of interest on account of the Loans.
SECTION 6. Ratification; Waiver of Defenses.
(a) The Credit Agreement and the Loan Documents remain in full force
and effect and are hereby ratified and affirmed. The Borrower and each Guarantor
hereby (i) confirms and agrees that the Borrower is truly and justly indebted to
the Agent, the Lenders, the Issuing Bank and the Cash Management Bank in the
aggregate amount of the Obligations without defense, counterclaim or offset of
any kind whatsoever; and (ii) reaffirms and admits the validity and
enforceability of the Credit Agreement and the Loan Documents and the Liens in
the Collateral which were granted pursuant to the Loan Documents and otherwise.
(b) This Agreement shall be limited precisely as written and shall
not be deemed (i) to be a consent granted pursuant to, or a waiver or
modification of, any other term or condition of the Credit Agreement or any of
the instruments or agreements referred to therein or a waiver of any Default or
Event of Default under the Credit Agreement, whether or not known to the Agent
or the Lenders or (ii) to prejudice any
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other right or rights which the Agent or the Lenders may now have or have in the
future under or in connection with the Credit Agreement or any of the
instruments or agreements referred to therein.
SECTION 7. References. All references to the Credit Agreement in the Credit
Agreement or any other Loan Document and the other documents and instruments
delivered pursuant to or in connection therewith shall mean such Credit
Agreement as modified hereby and as each may in the future be amended, restated,
supplemented or modified from time to time. This Agreement shall constitute a
Loan Document.
SECTION 8. Counterparts. This Agreement may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which shall
be an original and all of which, taken together, shall constitute one and the
same agreement. Delivery of an executed counterpart of a signature page by
telecopier shall be effective as delivery of a manually executed counterpart.
SECTION 9. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.
SECTION 10. Acknowledgement by Guarantors. Each of the Guarantors hereby
acknowledges that it has read this Agreement and consents to the terms hereof
and further confirms and agrees that, notwithstanding the effectiveness of this
Agreement, (i) its obligations under its Guaranty shall not be impaired or
affected and (ii) such Guaranty is, and shall continue to be, in full force and
effect and is hereby confirmed and ratified in all respects.
SECTION 11. Miscellaneous. The parties hereto shall, at any time and from time
to time following the execution of this Agreement, execute and deliver all such
further instruments and take all such further action as may be reasonably
necessary or appropriate in order to carry out the provisions of this Agreement.
SECTION 12. Headings. Section headings in this Agreement are included herein
for convenience of reference only and are not to affect the construction of, or
to be taken into consideration in interpreting, this Agreement.
[Signatures on Following Page]
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IN WITNESS WHEREOF, the Borrower, each Guarantor, the Lenders and the
Agent have caused this Agreement to be duly executed by their respective
officers on the day and year first above written.
GLOBE MANUFACTURING CORP.
By: /s/ Richard F. Heitmiller
----------------------------
Name: Richard F. Heitmiller
Title: Vice Chairman and Chief
Executive Officer
GLOBE HOLDINGS, INC.
By: /s/ Richard F. Heitmiller
------------------------------
Name: Richard F. Heitmiller
Title: Vice Chairman and Chief
Executive Officer
BANK OF AMERICA, N.A., as Administrative
Agent
By: /s/ Liliana Claar
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Name: Liliana Claar
Title: Vice President
BANK OF AMERICA, N.A., as Lender
By: /s/ Jay T. Wampler
-------------------------------
Name: Jay T. Wampler
Title: Managing Director
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MERRILL LYNCH CAPITAL CORPORATION
By:
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Name:
Title:
OAKTREE CAPITAL MANAGEMENT LLC, as general partner
of or investment manager for OCM Opportunities
Fund III, L.P. and Columbia/HCA Master Retirement
Trust (separate account)
By: /s/ Phillip W. Otero
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Name: Phillip W. Otero
Title: Vice President
By: /s/ Kenneth Liang
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Name: Kenneth Liang
Title: Managing Director & General Counsel
BHF (USA) CAPITAL CORPORATION
By: /s/ Christopher Ruzzi
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Name: Christopher Ruzzi
Title: Vice President
By: /s/ Dana McDougall
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Name: Dana McDougall
Title: Vice President
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CYPRESSTREE INSTITUTIONAL FUND, LLC
By: CypressTree Investment Management
Company, Inc., its Managing Manager
By:
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Name: Jeffrey W. Heuer
Title: Principal
CYPRESSTREE INVESTMENT FUND, LLC
By: CypressTree Investment Management Company,
Inc., its Managing Manager
By:
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Name: Jeffrey W. Heuer
Title: Principal
CYPRESSTREE INVESTMENT MANAGEMENT COMPANY, INC.
As: Attorney-in-Fact and on behalf of First
Allmerica Financial Life Insurance
Company as Portfolio Manager
By:
---------------------------------------
Name: Jeffrey W. Heuer
Title: Principal
CYPRESSTREE SENIOR FLOATING RATE FUND
By: CypressTree Investment Management Company,
Inc., as Portfolio Manager
By:
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Name: Jeffrey W. Heuer
Title: Principal
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CYPRESSTREE INVESTMENT PARTNERS I LTD.
By: CypressTree Investment Management Company,
Inc., as Portfolio Manager
By:
---------------------------------------------
Name: Jeffrey W. Heuer
Title: Principal
NORTH AMERICAN SENIOR FLOATING RATE FUND
By: CypressTree Investment Management Company,
Inc., as Portfolio Manager
By:
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Name: Jeffrey W. Heuer
Title: Principal
EATON VANCE SENIOR INCOME TRUST
By: Eaton Vance Management, as
Investment Advisor
By: /s/ Payson F. Swaffield
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Name: Payson F. Swaffield
Title: Vice President
FIRST SOURCE FINANCIAL LLP
By: First Source Financial Inc., its
Agent/Manager
By: /s/ Jeffrey A. Cerny
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Name: Jeffrey A. Cerny
Title: Vice President
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FLEET NATIONAL BANK
By:
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Name:
Title:
HELLER FINANCIAL, INC.
By: /s/ Hugh Wilder
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Name: Hugh Wilder
Title: Senior Vice President
KZH - CYPRESSTREE-1 CORPORATION
By:
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Name: Peter Chin
Title: Authorized Agent
MORGAN STANLEY DEAN WITTER
PRIME INCOME TRUST
By: c/o Morgan Stanley Dean Witter Advisors,
Inc.
By: /s/ Sheila Finnerty
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Name: Sheila Finnerty
Title: Vice President
NATIONAL CITY BANK
By: /s/ Sharon Johnston
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Name: Sharon Johnston
Title: Vice President
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OXFORD STRATEGIC INCOME FUND
By: Eaton Vance Management, as
Investment Advisor
By: /s/ Payson F. Swaffield
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Name: Payson F. Swaffield
Title: Vice President
SENIOR DEBT PORTFOLIO
By: Boston Management and Research, as
Investment Advisor
By: /s/ Payson F. Swaffield
---------------------------------------------
Name: Payson F. Swaffield
Title: Vice President
SUNTRUST BANK
By: /s/ T. Michael Logan
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Name: T. Michael Logan
Title: Managing Director
WILLIAM E. SIMON & SONS SPECIAL SITUATION
PARTNERS, L.P.
By: /s/ Dale Leshaw
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Name: Dale Leshaw
Title: Vice President
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