<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 28, 1999
TEXFI INDUSTRIES, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 1-6797 56-0795032
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
1430 Broadway, 13th Floor
New York, New York 10018
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(Address of Principal Executive Offices)
(Zip Code)
(212) 930-7200
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former name or address, if changed from last report)
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Item 5. Other Events.
On December 28, 1999, the Company negotiated Amendment Number Four to its
credit facility dated August 28, 1998. The Fourth Amendment changed the
definition of the Company's Borrowing Base to (a) reduce the borrowing rate on
insured inhouse accounts receivable, (b) change certain borrowing rates and
allowable inventory components, and (c) provide for a Junior Participation
Amount through which certain participants shall purchase from the credit
facility's lender group on a non-recourse basis junior participation interests
aggregating $2.5 million. In addition, the Fourth Amendment (a) reduced the
credit facility to $22.5 million, (b) expanded the Company's reporting
requirements to the lender group, and (c) imposed minimum sales and EBITDA
levels for five of the first six months of the Company's fiscal year 2000.
In addition, the Company was in violation of its August 28, 1998 term loan
for failing to remit monthly interest payments, principal installments, and
monitoring fees since November 1, 1999. The Company entered into a Forbearance
Agreement through which it (a) paid accrued interest on the term loan, (b)
increased the term note by the balance of an unpaid anniversary fee due to the
term loan lender, (c) provided for the infusion of subordinated debt or equity
aggregating $1.5 million through March 20, 2000, (d) expanded the Company's
reporting requirements to the lender, and (e) accelerated the termination date
of the term loan to April 30, 2000.
The Company's credit facility's Forbearance Agreement dated October 8, 1999
had expired. The Company negotiated a new credit Facility Forbearance Agreement
dated December 28, 1999 with the lender group which effectively (a) extended the
Company's working capital financing through April 30, 2000, (b) expanded the
Company's reporting requirements to the lender group, (c) required a junior
participation agreement as described in the Fourth Amendment, and (d) prohibited
payment of interest or principal on any of the Company's subordinated debt.
As a condition precedent to the three Agreements described above, the
Company amended and restated its Factoring Agreement with the CIT Group whereby
the Company agreed to (a) factor not less than 2/3rds of all its eligible
accounts receivables with the CIT Group and (b) allow the CIT Group to process
and administer the Company's inhouse receivables.
The Agreements are filed as Exhibits hereto and are incorporated by
reference herein.
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Exhibits
Exhibit 4(d)(1) Fourth Amendment to Loan and Security Agreement
and Note Modification Agreement dated December 28, 1999, among
Registrant, as Borrower, and the Financial Institutions referred
to therein, and BankBoston, N.A., as Agent.
Exhibit 4(d)(2) Forbearance Agreement dated December 29, 1999,
among Registrant, as Borrower, and Back Bay Capital Funding, LLC
(f/k/a Back Bay Capital, LLC.).
Exhibit 4(d)(3) Forbearance Agreement dated December 28, 1999,
among Registrant, as Borrower, and the Financial Institutions
referred to therein, and BankBoston, N.A., as Agent.
Exhibit 4(d)(4) Amended and Restated Assignment of Factoring
Proceeds Agreement dated December 28, 1999, among Registrant, as
Borrower, and the CIT Group/Commercial Services, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 31, 2000
TEXFI INDUSTRIES, INC.
By: /s/ Robert P. Ambrosini
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Robert P. Ambrosini
Executive Vice President and Chief
Financial Officer
<PAGE>
Exhibit 4(d)(1)
FOURTH AMENDMENT TO LOAN AND SECURITY
AGREEMENT AND NOTE MODIFICATION AGREEMENT
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This FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT AND NOTE
MODIFICATION AGREEMENT (this "Amendment") is made and entered into this 28th day
of December, 1999, by and among TEXFI INDUSTRIES, INC., a Delaware corporation
("Borrower"); the financial institutions party to the Loan Agreement (as defined
below) as "Lenders"; and BANKBOSTON, N.A., a national banking association, in
its capacity as collateral and administrative agent for the Lenders (together
with its successors in such capacity, "Agent").
Recitals
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Lenders, Agent and Borrower are parties to a certain Loan and Security
Agreement dated as of August 28, 1998 (as at any time amended, the "Loan
Agreement") pursuant to which Lenders have made certain revolving credit loans
and other extensions of credit to Borrower.
The parties desire to amend the Loan Agreement as hereinafter set
forth.
NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good
and valuable consideration, the receipt and sufficiency of which are hereby
severally acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Definitions. All capitalized terms used in this Amendment, unless
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otherwise defined herein, shall have the meaning ascribed to such terms in the
Loan Agreement.
2. Amendment to Loan Agreement. The Loan Agreement is hereby amended
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as follows:
a. By deleting the definitions of "Applicable Margin," "Base Rate
Revolving Credit Loan," "Borrowing Base," "EBITDA," "Effective Interest Rate,"
"Eligible Factored Receivable," "Eurodollar Rate," "Eurodollar Rate Revolving
Credit Loan," "Eurodollar Reserve Percentage," "House Receivable," "Interbank
Offered Rate," "Interest Payment Date," "Interest Period," "Notice of Conversion
or Continuation," and "Revolving Credit Facility" in their entirety from Section
1.1 and inserting the following definition in Section 1.1 in appropriate
alphabetical order:
"Applicable Margin" means 2%.
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"Bill and Hold Goods" means goods sold by the Borrower in a Bill
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and Hold Transaction.
"Bill and Hold Receivable" means any Receivable arising from a
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Bill and Hold Transaction.
"Bill and Hold Transaction" means a transaction between the
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Borrower and a Person pursuant to which goods are sold by the Borrower
in a final sale to such Person on terms that provide for the
Borrower's retention and storage of such goods at the Borrower's place
of business pending shipment of such goods at a later date at such
Person's request.
"Borrowing Base" means, at any time of determination, an amount
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equal to the lesser of:
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(a) the amount of the Revolving Credit Facility, minus the sum of
(i) the Letter of Credit Reserve, plus (ii) an amount equal to the
amount of real property taxes on owned Real Estate that are past due
beyond the date after which penalties may attach thereto, less the
amount then on deposit in any escrow or other account maintained for
the benefit of BBC with respect to such taxes, plus (iii) the Junior
Participation Reserve Amount, plus (iv) such other reserves as the
Agent in its reasonable credit judgment may establish from time to
time, and
(b) an amount equal to
(i) 90% (or such lesser percentage as the Agent may in
its reasonable credit judgment determine from time to time) of
the Net Balance of Eligible Factored (Factor Risk) Receivables
due and owing at such time, plus
(ii) 65% (or such lesser percentage as the Agent may in
its reasonable credit judgment determine from time to time) of
the Net Balance of Eligible Factored (Borrower Risk) Receivables
due and owing at such time, plus
(iii) 65% (or such lesser percentage as the Agent may in
its reasonable credit judgment determine from time to time) of
the Net Balance of Eligible House Receivables due and owing at
such time, plus
(iv) the lesser of (A) $8,000,000, and (B) the sum of (1)
55% or such lesser percentage as the Agent may in its reasonable
credit judgment determine from time to time) of the Value of
Eligible Raw Materials Inventory, plus (2) 55% or such lesser
percentage as the Agent may in its reasonable credit judgment
determine from time to time) of the Value of Eligible Greige
Goods Inventory, plus (3) 50% or such lesser percentage as the
Agent may in its reasonable credit judgment determine from time
to time) of the Value of Eligible Finished Inventory, plus (4)
the lesser of (y) $1,000,000, or (z) 35% or such lesser
percentage as the Agent may in its reasonable credit judgment
determine from time to time) of the Value of Eligible Work in
Process Inventory, plus (5) the lesser of (y) $400,000, or (z)
35% or such lesser percentage as the Agent may in its reasonable
credit judgment determine from time to time) of the Value of
Eligible Chemical and Sample Inventory, plus
(v) the Junior Participation Principal Amount at such time,
minus
(vi) the sum at such time of (A) the Letter of Credit
Reserve; (B) an amount equal to all real property taxes on owned
Real Estate that are past due beyond the date after which
penalties may attach thereto, less the amount then on deposit in
any escrow or other account maintained for the benefit of BBC
with respect to such taxes; (C) the Junior
<PAGE>
Participation Reserve Amount; and (D) such other reserves as the
Agent in its reasonable credit judgment may establish from time
to time.
"CIT" means The CIT Group/Commercial Services, Inc.
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"EBIT" shall have the meaning set forth in Section 11.1.
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"EBITDA" shall mean, for any fiscal period of the Borrower, the
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Borrower's consolidated (i) income (or loss) before interest and taxes,
plus (ii) to the extent deducted in determining such income (or loss),
depreciation, amortization and other similar non-cash charges, minus (iii)
to the extent recognized in determining such income (or loss) extraordinary
gains (or losses).
"Effective Interest Rate" means the rate of interest
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per annum on the Revolving Credit Loans in effect from time to time
pursuant to the provisions of Section 4.1.
"Eligible Chemical and Sample Inventory" means Eligible Inventory
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consisting of dyes, chemicals and samples.
"Eligible Factored (Borrower Risk) Receivable" means an Eligible
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Receivable that is a Factored Receivable, but only to the extent of the
amount thereof as to which a Factor does not bear the Credit Risk and only
if and for so long as the Factor purchasing such Receivable is a party to
an Assignment of Factoring Proceeds with Agent and Borrower.
"Eligible Factored (Factor Risk) Receivable" means an Eligible
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Receivable that is a Factored Receivable, but only to the extent of the
amount thereof as to which a Factor bears the Credit Risk and only if and
for so long as the Factor purchasing such Eligible Receivable is a party to
an Assignment of Factoring Proceeds with Agent and Borrower.
"Eligible Greige Goods Inventory" means Eligible Inventory consisting
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of undyed greige goods; provided, however, that no more than $909,090.91 of
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such undyed greige goods more than 180 days old shall be considered
Eligible Greige Goods Inventory.
"Eligible House Receivable" means a House Receivable (i) the payment
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of which is secured or supported by a letter of credit or which was in
existence on December 28, 1999 and which Factors, in their discretion,
elect not to Factor and (ii) that is an Eligible Receivable.
"Eligible Raw Material Inventory" means Eligible Inventory consisting
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of raw materials (other than chemicals, dyes, samples, and greige goods),
including, without limitation, yarn and bulk fiber for spinning into yarn.
"Eligible Work in Process Inventory" means Eligible Inventory
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consisting of greige goods in the dying and finishing stages and yarn-in-
process.
"Factored Receivable" means a Receivable factored by Borrower with a
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Factor in accordance with and pursuant to the terms and provisions of a
Factoring Agreement.
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"House Receivable" means any Receivable owned by the Borrower (a) the
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payment of which is secured or supported by a letter of credit, (b) which
is a Receivable existing on December 28, 1999 which Factors, in their
discretion, elect not to factor, or (c) which is a Receivable that has been
reassigned by a Factor to the Borrower pursuant to the applicable Factoring
Agreement.
"Interest Payment Date" means the first day of each calendar month,
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commencing on September 1, 1998 and continuing thereafter until Secured
Obligations have been irrevocably paid in full.
"Junior Participant" means a Person acceptable to Agent and Lenders
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who agrees to purchase junior participation interests from Lenders pursuant
to the Junior Participation Agreement.
"Junior Participation Agreement" means a Junior Participation
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Agreement to be entered into among Agent, Lenders and Junior Participant,
in form and substance satisfactory to Agent and Lenders, pursuant to which,
among other things, Junior Participant shall agree to purchase from
Lenders, on a non-recourse basis, junior participation interests
aggregating $2,500,000 in five (5) installments of $500,000 each on January
15, 2000, February 15, 2000, March 15, 2000, March 31, 2000, and April 15,
2000.
"Junior Participation Amount" means, on any date, the sum of (i) the
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Junior Participation Principal Amount as of such date and (ii) the amount
of all accrued interest and other charges payable in connection with such
Junior Participation Principal Amount on such date.
"Junior Participation Principal Amount" means, on any date, the
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aggregate amount paid by Junior Participant to Lenders on or before such
date pursuant to the Junior Participation Agreement in connection with
Junior Participant's purchase of junior participation interests in the
Revolving Credit Loans.
"Junior Participation Reserve Amount" means, on any date, a reserve in
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an amount equal to $750,000 from December 27, 1999 through December 30,
1999; $1,000,000 from December 31, 1999 through January 2, 2000; $750,000
from January 3, 2000 until the earlier of (i) January 14, 2000 or (ii) the
date the Junior Participation Amount is equal to or greater than $500,000;
$500,000 from the earlier of (i) January 14, 2000 or (ii) the date the
Junior Participation Amount is equal to or greater than $500,000 through
January 30, 2000; $750,000 on January 31, 2000; $500,000 from and after
February 1, 2000; provided, however, that the amount of such reserve may be
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increased to $1,000,000 if Junior Participant has not executed and
delivered to Agent the Junior Participation Agreement, in form and
substance acceptable to Agent and Lenders, on or before January 14, 2000 or
if Junior Participant does not timely and faithfully perform its
obligations under the Junior Participation Agreement, including purchase of
junior participation interests in the amounts and on the dates set forth
therein.
<PAGE>
"Net Balance" means (i) with respect to a House Receivable, the face
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amount of such Receivable, minus any and all returns, rebates, discounts
(which may, at Agent's option, be calculated on shortest terms), credits,
allowances or Taxes (including sales, excise or other taxes) at any time
issued, owing, claimed by Account Debtors, granted, outstanding or payable
in connection with, or any interest accrued on the amount of, such
Receivables at such date; (ii) with respect to an Eligible Factored
(Borrower Risk) Receivable of an Account Debtor, the face amount of such
Factored Receivable, minus all discounts, returns, credit or allowances at
any time issued, owing or outstanding with respect to such Receivable,
minus the amount by which the aggregate amount of all Receivables of such
Account Debtor that are 60 days or more past due exceeds 10% of all
Borrower's Receivables, minus all such Factored Receivables that, to
Borrower's knowledge, remain unpaid 180 days after the invoice date
therefor, minus all reserves under a Factoring Agreement with respect to
such Factored Receivable and all commissions, fees and expenses due a
Factor under a Factoring Agreement with respect to such Factored
Receivable; (iii) with respect to an Eligible Factored (Factor Risk)
Receivables, the face amount of such Factored Receivable, minus all
discounts, returns, credit or allowances at any time issued, owing or
outstanding with respect to such Factored Receivable, minus all reserves
under a Factoring Agreement with respect to such Factored Receivable and
all commissions, fees and expenses due a Factor under a Factoring Agreement
with respect to such Factored Receivable.
"Revolving Credit Facility" means the principal amount of $22,500,000
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or such lesser or greater amount as shall be agreed upon from time to time
in writing by Agent, the Lenders and the Borrower.
"Taxes" mean any present or future taxes, levies, imposts, duties,
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fees, assessments, deductions, withholdings or other charges of whatever
nature, including income, receipts, excise, property, sales, use, transfer,
license, payroll, withholding, social security and franchise taxes now or
hereafter imposed or levied by the United States, or any state, local or
foreign government or by any department, agency or other political
subdivision or taxing authority thereof or therein and all interest,
penalties, additions to tax and similar liabilities with respect thereto,
but excluding, in the case of each Lender, taxes imposed on or measured by
the net income or overall gross receipts of such Lender.
"Value" means, with reference to the value of any Inventory, value
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determined on the basis of the lower of cost or market of such Inventory,
with the cost thereof calculated on a first-in, first-out basis determined
in accordance with GAAP.
b. By deleting clause (a) of the definition of "Eligible Receivable" in
Section 1.1 and inserting the following in lieu thereof:
(a) such Receivable (i) is created by the Borrower in the ordinary
course of the Borrower's business, (ii) represents a bona fide sale of
goods transaction, (iii) except for the delivery of Bill and Hold Goods in
connection with a Bill and Hold Transaction from which such Receivable has
arisen, requires no further act under any circumstances on the part of the
Borrower to make such Receivable payable by the Account Debtor, and (iv) is
owned by Borrower or a Factor,
c. By deleting clause (d) of the definition of "Eligible Receivable" in
Section 1.1 and inserting the following in lieu thereof:
<PAGE>
"(d) either (i) the goods the sale of which gave rise to such
Receivable were shipped or delivered to the Account Debtor on an absolute
sale basis and not on a consignment sale basis, a guaranteed sale basis, a
sale or return basis, or on the basis of any other similar understanding or
(ii) the Receivable is a Bill and Hold Receivable as to which a Factor
bears the Credit Risk under the applicable Factoring Agreement, and, in
either case, no material part of the goods related to such Receivable has
been returned or rejected,"
d. By deleting the "and" at the end of clause (u) of the definition of
"Eligible Receivable" in Section 1.1.
e. By deleting clause (v) of the definition of "Eligible Receivable" in
Section 1.1 and inserting the following in lieu thereof:
"(v) the Account Debtor for such Receivable is a Person other than
Daisy Group, Ltd. (or any tradename or fictitious name thereof), and
"(w) neither such Receivable nor the Account Debtor with respect to
such Receivable is determined by Agent in its reasonable credit judgment to
be ineligible for any other reason."
f. By changing all references to "Base Rate Revolving Credit Loans" to
"Revolving Credit Loans" and all references to "Base Rate Revolving Credit Loan"
to "Revolving Credit Loan."
g. By deleting Section 2.2(a)(i) in its entirety and inserting the
following in lieu thereof:
"(i) Revolving Credit Loans. A request for a Borrowing of Revolving
----------------------
Credit Loans under the Revolving Credit Facility shall be made, or shall be
deemed to be made, in the following manner:"
h. By deleting Section 2.2(a)(ii) in its entirety and by renumbering
Section 2.1(a)(iii) as Section 2.2(a)(ii).
i. By deleting Sections 4.1(a) and (b) in their entirety and inserting
the following in lieu thereof:
"(a) Subject to the provisions of Section 4.1(c), interest will accrue
on the unpaid principal amount of each Revolving Credit Loan, for each day
from the day such Loan is made until such Loan is paid (whether at
maturity, by reason of acceleration, or otherwise), at a rate per annum
equal to the sum of (i) the Applicable Margin and (ii) the Alternate Base
Rate. The Borrower shall pay interest on all Loans, monthly in arrears on
each Interest Payment Date; provided, however, until of the Secured
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Obligations (other than an amount equal to the Junior Participation Amount)
and all of the Junior Secured Obligations have been paid in full, Borrower
shall not be required to pay any interest with respect to that portion of
the principal amount of the Secured Obligations equal to the Junior
Participation Principal Amount.
<PAGE>
"(b) Intentionally Omitted."
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j. By deleting Sections 4.12, 4.13, 4.14, 4.15, 4.16 and 4.17 in their
entirety and inserting the following in lieu thereof:
"SECTION 4.12. Intentionally Omitted.
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"SECTION 4.13. Intentionally Omitted.
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"SECTION 4.14. Intentionally Omitted.
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"SECTION 4.15. Intentionally Omitted.
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"SECTION 4.16. Intentionally Omitted.
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"SECTION 4.17. Intentionally Omitted."
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k. By deleting Sections 8.12(a), 8.12(b) and 8.12(c) in their entirety
and inserting the following in lieu thereof:
"(a) Schedules of Receivables. The Borrower shall deliver to Agent
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not later than Wednesday of each week:
"(i) a Schedule of Receivables that have been sold to each Factor
pursuant to a Factoring Agreement, which shall be as of the last
Business Day of the immediately preceding week, shall be reconciled to
a Borrowing Base Certificate as of such last Business Date of the
immediately preceding week, and shall set forth a detailed aged trial
balance of all such sold Receivables, specifying the names and balance
due for each Account Debtor obligated on a Receivable so listed,
"(ii) a Schedule of Receivables that have not been sold to the
Factors pursuant to the Factoring Agreements, which shall be as of the
last Business Day of the immediately preceding week, shall be
reconciled to a Borrowing Base Certificate as of such last Business
Date of the preceding week, and shall set forth a detailed aged trial
balance of all such unsold Receivables, specifying the names and
balance due for each Account Debtor obligated on a Receivable so
listed, and
"(iii) a Schedule of Receivables that are Bill and Hold
Receivables, which shall be as of the last Business Day of the
immediately preceding week, shall be reconciled to a Borrowing Base
Certificate as of such last Business Date of the preceding week, and
shall set forth a detailed aged trial balance of all such unsold
Receivables, specifying the names and balance due for each Account
Debtor obligated on a Receivable so listed.
"(b) Schedules of Inventory. The Borrower shall deliver to Agent not
----------------------
later than Wednesday of each week a Schedule of Inventory as of the last
<PAGE>
Business Day of the preceding week, itemizing and describing the kind,
type and quantity of Inventory, the Borrower's cost thereof and the
location thereof.
"(c) Borrowing Base Certificate. The Borrower shall deliver to
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the Agent no later than 12:30 p.m. on each Business Day a Borrowing
Base Certificate prepared as of the closing of business the previous
Business Day, which shall be adjusted daily to reflect the for the
amount of outstanding Receivables and weekly to reflect changes in
Eligible Inventory and Receivables that are not Eligible Receivables."
l. By deleting Section 10.1(a) in its entirety and inserting the
following in lieu thereof:
"(a) Audited Year-End Statements. As soon as available, but in
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any event within 90 days after the end of each Fiscal Year, copies of
the consolidating and consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as at the end of such Fiscal Year and
the related statements of income, shareholders' equity and cash flows
for such Fiscal Year, in each case setting forth in comparative form
the figures from the previous Fiscal Year of the Borrower, reported
on, as to such consolidated statements, without qualification, by
Ernst & Young LLC or other independent certified public accountants of
nationally recognized standing; provided, however, the financial
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statements for the Borrower's 1999 Fiscal Year shall be furnished to
Agent and Lenders on or before February 15, 2000."
m. By inserting the following immediately following Section 11.1(b)
as new Sections 11.1(c) and (d):
"(c) Minimum Sales. Permit the Borrower's gross sales at any
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time:
(i) during the period from December 1, 1999 through
December 31, 1999 to be less than $5,400,000 ;
(ii) during the period from January 1, 2000 through
January 31, 2000 to be less than $7,020,000;
(iii) during the period from February 1, 2000 through
February 29, 2000 to be less than $7,650,000;
(iv) during the period from March 1, 2000 through
March 31, 2000 to be less than $6,210,000; and
(v) during the period from April 1, 2000 through
April 30, 2000 to be less than $6,210,000.
"(d) Minimum EBITDA. Permit the Borrower's EBITDA at any time:
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(i) during the period from December 1, 1999 through
December 31, 1999 to be less than ($500,000) ;
(ii) during the period from December 1, 1999 through
January 31, 2000 to be less than ($1,400,000);
(iii) during the period from December 1, 1999 through
February 29, 2000 to be less than ($1,300,000);
(iv) during the period from December 1, 1999 through
March 31, 2000 to be less than ($1,200,000); and
(v) during the period from December 1, 1999 through
April 30, 2000 to be less than ($1,100,000)."
<PAGE>
n. By deleting Section 12.1(d)(i) in its entirety and inserting the
following in lieu thereof:
"(i) Articles 7, 8, 10 or 11, Sections 9.1 (insofar as it
requires the preservation of the corporate existence of Borrower),
9.8, 9.10(a) or 9.12 and the Agent shall have delivered to the
Borrower written notice of such default, or"
o. By deleting Section 12.3(b) in its entirety and inserting the
following in lieu thereof:
"(b) Second: to the payment of all of the Secured Obligations
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except for an amount equal to the Junior Participation Amount in such
order of application as the Agent may elect consistent with this
Agreement (with the Borrower remaining liable for any deficiency),"
p. By deleting Section 12.3(e) in its entirety and inserting the
following in lieu thereof:
"(e) Fifth: to the payment of all remaining Secured Obligations
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(with the Borrower remaining liable for any deficiency), and"
q. By inserting the following immediately following Section 12.3(e)
as a new Section 12.3(f):
"(f) Sixth: the balance (if any) of such proceeds shall be paid
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to the Borrower, subject to any duty imposed by law, or otherwise to
whomsoever shall be entitled thereto."
r. By inserting the following immediately prior to the last sentence
of Section 14.7:
"Notwithstanding anything to the contrary in this Agreement, the
Lenders agree that the foregoing indemnity shall include, without
limitation, indemnification for any liabilities incurred by the Agent
in connection with any indemnity given to a Factor under an Assignment
of Factoring Proceeds.
s. By amending the address in Section 15.1(b) to which notices are
to be sent to Agent to be the following address: Suite 800, 300 Galleria
Parkway, N.W., Atlanta, Georgia 30339, Attn: John W. Getz, Facsimile No. (770)
859-2483.
t. By deleting Annex A to the Loan Agreement in its entirety and
inserting in lieu thereof Annex A attached hereto.
3. Modification of Notes. Each of the Revolving Credit Notes dated
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as of August 28, 1998 is hereby modified by reducing the principal amount of
each such Revolving Credit Note from $20,000,000 to $11,250,000.
4. Ratification and Reaffirmation. Borrower hereby ratifies and
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reaffirms the Obligations, each of the Loan Documents and all of Borrower's
covenants, duties, indebtedness and liabilities under the Loan Documents.
<PAGE>
5. Acknowledgments and Stipulations. Borrower acknowledges and
--------------------------------
stipulates that the Loan Agreement and the other Loan Documents executed by
Borrower are legal, valid and binding obligations of Borrower that are
enforceable against Borrower in accordance with the terms thereof; all of the
Obligations are owing and payable without defense, offset or counterclaim (and
to the extent there exists any such defense, offset or counterclaim on the date
hereof, the same is hereby waived by Borrower); the Liens granted by Borrower in
favor of Lender are duly perfected, first priority Liens in all of the
Collateral except for Liens in favor of Term Lender in the Borrower's equipment
and real estate; the unpaid principal amount of the Revolving Credit Loans on
and as of the opening of business on December 27, 1999, totaled approximately
$16,935,000; Events of Default (the "Existing Defaults") exist under the Loan
Agreement on the date hereof as more fully described in the Forbearance
Agreement (as defined below). Borrower further acknowledges and agrees that
Borrower's obligations under Section 7.2 of the Loan Agreement require Borrower
to execute such instruments and agreements as may be necessary or reasonably
required by Agent to insure that Agent has a valid, duly perfected security
interest in or assignment of Borrower's right to receive any process under any
policy of life insurance pursuant to the terms of such policy or any independent
contract relating thereto.
6. Representations and Warranties. Borrower represents and warrants
------------------------------
to Agent and Lenders, to induce Agent and Lenders to enter into this Amendment,
that the execution, delivery and performance of this Amendment have been duly
authorized by all requisite corporate action on the part of Borrower and this
Amendment has been duly executed and delivered by Borrower; and except as may
have been disclosed in writing by Borrower to Lenders prior to the date hereof,
all of the representations and warranties made by Borrower in the Loan Agreement
are true and correct on and as of the date hereof.
7. Reference to Loan Agreement. Upon the effectiveness of this
---------------------------
Amendment, each reference in the Loan Agreement to "this Agreement,"
"hereunder," or words of like import shall mean and be a reference to the Loan
Agreement, as amended by this Amendment.
8. Breach of Amendment. This Amendment shall be part of the Loan
-------------------
Agreement and a breach of any of any representation, warranty or covenant herein
shall constitute an Event of Default.
9. Conditions Precedent. The effectiveness of the amendments
--------------------
contained in Section 2 and Section 3 hereof is subject to the satisfaction of
the following conditions precedent, in form and substance satisfactory to Agent
and Lenders: (a) Borrower, Lenders, Agent and The CIT Group/Commercial Services,
Inc. (in its capacity as a Factor) shall have entered into a Forbearance
Agreement (the "Forbearance Agreement"), in form and substance acceptable to
Agent and Lenders, (b) all conditions precedent to the effectiveness of such
Forbearance Agreement shall have been satisfied, and (c) all conditions
precedent and all "Forbearance Conditions" under (and as defined in) the
Forbearance Agreement shall have been satisfied.
10. No Waiver of Defaults; Assumption by Agent. In no event shall
------------------------------------------
Lenders' continued honoring of requests by Borrower for Loans pursuant to the
Loan Agreement be deemed a waiver of any of the Existing Defaults or any other
Default or Event of Default that may occur. Notwithstanding the occurrence or
existence of the Existing Defaults or any other Default or Event of Default or
the failure of any Forbearance Condition to be satisfied, unless and until Agent
shall have received written notice (a "Funding Termination Notice") from a
Lender expressly stating that such Lender does not intend to make available to
such Lender's ratable share of Loans made after the effective date of such
notice, the Agent shall be entitled to continue to make the assumptions
described in
<PAGE>
Section 4.7(b) of the Loan Agreement. In order to be effective, such Funding
Termination Notice must (a) specify the existence of a Default, Event of Default
or some other circumstance which would relieve such Lender of its obligation to
make Loans, and (b) specify that one or more of the Forbearance Conditions has
ceased to be satisfied.
11. Borrower Authorizations. The Borrower hereby authorizes the Agent
-----------------------
and/or the Lenders to make Revolving Credit Loans on the first day of each
month, and to disburse the proceeds thereof to Term Lender, in amounts necessary
to pay all accrued and unpaid interest that Borrower is obligated to pay each
month to Term Lender pursuant to the Term Loan and Security Agreement. Such
Revolving Credit Loans may be disbursed by wire transfer pursuant to
instructions provided by the Term Lender to the Agent in writing at least two
Business Days in advance of each such requested Revolving Credit Loan. Agent and
Lenders are authorized to rely upon any statement or writing from Term Lender
regarding the amount of interest accrued and payable on any date and, in the
event of any dispute by Borrower regarding such amount, such dispute shall be
resolved by Borrower directly with Term Lender and shall not affect Borrower's
liability for any funding made by Agent or Lenders in reliance upon any
representation from Term Lender. Borrower acknowledges that this authorization
shall not obligate Lenders or Agent to honor requests by the Borrower for
Revolving Credit Loans and that each funding by Lenders and Agent of Revolving
Credit Loans is subject, at all times, to all of the terms, conditions and
covenants in the Revolving Loan Agreement and subject to the continued
satisfaction of each of the Forbearance Conditions. Borrower may revoke the
foregoing authorization by giving the Agent and Lenders written notice of such
revocation at least two Business Days in advance of any such requested Revolving
Credit Loan. The Borrower also authorizes Agent and each Lender to provide to
Term Lender at any time or times (but without any obligation to do so) copies of
any and all Borrowing Base Certificates provided to Agent or Lenders by Borrower
under the Loan Agreement.
12. Expenses of Agent and Lenders. Borrower agrees to pay, on demand,
-----------------------------
all costs and expenses, including reasonable legal fees, incurred by Agent and
Lenders in connection with the preparation, negotiation and execution of this
Amendment and any other Loan Documents executed pursuant hereto and any and all
amendments, modifications, and supplements thereto, including, without
limitation, the costs and fees of Agent's and each Lender's legal counsel and
any taxes or expenses associated with or incurred in connection with any
instrument or agreement referred to herein or contemplated hereby.
13. Effectiveness; Governing Law. This Amendment shall be effective
----------------------------
upon acceptance by Agent in Atlanta, Georgia (notice of which acceptance is
hereby waived), whereupon the same shall be governed by and construed in
accordance with the internal laws of the State of Georgia.
14. Successors and Assigns. This Amendment shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors and
assigns.
15. No Novation, etc. Except as otherwise expressly provided in this
----------------
Amendment, nothing herein shall be deemed to amend or modify any provision of
the Loan Agreement or any of the other Loan Documents, each of which shall
remain in full force and effect. This Amendment is not intended to be, nor shall
it be construed to create, a novation or accord and satisfaction, and the Loan
Agreement as herein modified shall continue in full force and effect.
16. Counterparts ; Telecopied Signatures. This Amendment may be
------------------------------------
executed in any number of counterparts and by different parties to this
Amendment on separate counterparts, each of which, when so executed, shall be
deemed an original, but all such counterparts shall constitute one and
<PAGE>
the same agreement. Any signature delivered by a party by facsimile transmission
shall be deemed to be an original signature hereto.
17. Further Assurances. Borrower agrees to take such further actions
------------------
as Agent shall reasonably request from time to time in connection herewith to
evidence or give effect to the amendments set forth herein or any of the
transactions contemplated hereby. Borrower also agrees to take any such further
actions as may be necessary or reasonably required by Agent to perfect or
improve Agent's Lien, for its benefit and the ratable benefit of Lenders, on any
right Borrower has to receive benefits, including all rights to any death
benefits, under any life insurance policies.
18. Section Titles. Section titles and references used in this
--------------
Amendment shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreements among the parties hereto.
19. Release of Claims. To induce Agent and Lenders to enter into this
-----------------
Amendment, Borrower hereby releases, acquits and forever discharges Agent and
each Lender, and all officers, directors, agents, employees, successors and
assigns of Agent and each Lender, from any and all liabilities, claims, demands,
actions or causes of action of any kind or nature (if there be any), whether
absolute or contingent, disputed or undisputed, at law or in equity, or known or
unknown, that Borrower now has or ever had against Agent and each Lender arising
under or in connection with any of the Loan Documents or otherwise. Borrower
represents and warrants to Agent and each Lender that Borrower has not
transferred or assigned to any Person any claim that Borrower ever had or
claimed to have against Agent or any Lender.
20. Waiver of Jury Trial. To the fullest extent permitted by
--------------------
applicable law, the parties hereto each hereby waives the right to trial by jury
in any action, suit, counterclaim or proceeding arising out of or related to
this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under and delivered by their respective duly authorized officers
on the date first written above.
ATTEST: TEXFI INDUSTRIES, INC.
("Borrower")
/s/ Andrew J. Parise, Jr. By: /s/ Robert P. Ambrosini
- -------------------------------
Name: Andrew J. Parise, Jr. Name: Robert P. Ambrosini
Title: Chairman, CEO & COO Title: EVP & CFO
[CORPORATE SEAL]
<PAGE>
THE CIT GROUP/COMMERCIAL SERVICES, INC.,
in its capacity as a Lender
By: /s/ Grover P. Reinle
Name: Grover P. Reinle
Title: SVP
---
Accepted in Atlanta, Georgia, on
December 28, 1999:
BANKBOSTON, N.A., in its capacity as a
Lender and as Agent
By: /s/ John W. Getz
Name: John W. Getz
Title: Authorized Officer
<PAGE>
ANNEX A
-------
COMMITMENTS
BankBoston, N.A. $11,250,000
The CIT Group/Commercial Services, Inc. $11,250,000
<PAGE>
EXHIBIT 4(d)(2)
_____________________________________
FORBEARANCE AGREEMENT
_____________________________________
BACK BAY CAPITAL FUNDING, LLC
The "Lender"
TEXFI INDUSTRIES, INC.
The "Borrower"
AS OF DECEMBER 28, 1999
<PAGE>
THIS FORBEARANCE AGREEMENT (hereinafter, this "Agreement") made this 28th
day of December, 1999 by and between:
BACK BAY CAPITAL FUNDING, LLC f/k/a Back Bay Capital, LLC (hereinafter, the
"Lender"), a Delaware limited liability company with its principal offices
located at 40 Broad Street, Boston, Massachusetts; and
TEXFI INDUSTRIES, INC. (hereinafter, the "Borrower"), a Delaware corporation
with its principal office located at 1430 Broadway, New York, New York.
Background
- ----------
Reference is made to a certain loan arrangement (hereinafter, the "Loan
Arrangement") maintained by and between the Lender and the Borrower evidenced
by, among other things, the following documents, instruments, and agreements
(hereinafter collectively, the "Loan Documents"). (Capitalized terms used in
this Agreement and not otherwise defined shall have the meanings as defined in
the Loan Documents):
1. Term Loan and Security Agreement (hereinafter, the "Loan Agreement")
dated August 28, 1998, as modified by a certain Forbearance Agreement dated
February 28, 1999, as amended and extended as of May 28, 1999, September 28,
1999, and October 8, 1999;
2. Term Note (hereinafter, the "Term Note") dated August 28, 1998 made by
the Borrower payable to the Lender;
The Borrower has defaulted under the Loan Agreement and the Term Note and the
Lender has, among other things, (i) notified the Borrower of the occurrence of
an Event of Default, (ii) accelerated all Liabilities and declared them to be
immediately due and payable in full, and (iii) commenced suit against the
Borrower in the Commonwealth of Massachusetts, Suffolk County Superior Court,
Civil Action No. 99-6050-F (hereinafter, the "Civil Action"). The Borrower has
requested that the Lender forbear from exercising its rights and remedies upon
default. The Lender has agreed to so forbear, but only upon the terms and
conditions set forth herein.
Accordingly, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, it is hereby agreed by and between the Lender and
the Borrower, as follows:
<PAGE>
Acknowledgment of Indebtedness
------------------------------
1. The Borrower hereby acknowledges and agrees that it is currently
unconditionally liable to the Lender for the following amounts
(hereinafter all amounts due as set forth in this Paragraph 1 shall be
referred to collectively as the "Obligations")/1/:
1. Term Note: Principal $12,285,544.26
Current Pay Interest $ 41,527.78
[Exclusive of interest to be paid pursuant
to Paragraph 4(a), below]
2. PIK Interest $ 47,983.67
3. Collateral Monitoring Fee $ 38,500.00
4. Appraisal Fees $ 32,580.11
e. Legal Fees and Expenses [Estimate] $ 65,000.00
f. All Current Pay Interest and PIK Interest hereafter
accruing under the Term Note, and all costs, expenses,
and costs of collection (including attorneys' fees)
hereafter incurred by the Lender in connection with the
Loan Arrangement.
Waiver of Claims
----------------
2. The Borrower, for itself and on behalf of its officers, directors,
employees, attorneys, representatives, administrators, successors, and
assigns hereby acknowledges and agrees that it has no offsets,
defenses, claims, or counterclaims against the Lender or its officers,
directors, employees, attorneys, representatives, parent, affiliates,
successors, and assigns with respect to the Obligations, or otherwise,
and that if the Borrower now has, or ever did have, any offsets,
defenses, claims, or counterclaims against the Lender or its officers,
directors, employees, attorneys, representatives, parent, affiliates,
successors, and assigns, whether known or unknown, at law or in
equity, from the beginning of the world through this date and
_________________________
/1/ The following amounts are calculated as of December 10, 1999
3
<PAGE>
through the time of execution of this Agreement, all of them are
hereby expressly WAIVED, and the Borrower hereby RELEASES the Lender
and its officers, directors, employees, attorneys, representatives,
parent, affiliates, successors, and assigns from any liability
therefor.
Ratification of Loan Documents; Further Assurances
--------------------------------------------------
3. The Borrower:
a. Hereby ratifies and confirms all and singular the terms and
conditions of the Loan Documents. The Borrower further
acknowledges and agrees that, except as specifically modified in
this Agreement, all terms and conditions of the Loan Documents
shall remain in full force and effect; and
b. Shall, from and after the execution of this Agreement, execute
and deliver to the Lender whatever additional documents,
instruments, and agreements that the Lender reasonably may
require in order to vest or perfect the Loan Documents and the
collateral granted therein more securely in the Lender and to
otherwise give effect to the terms and conditions of this
Agreement.
Conditions Precedent
--------------------
4. In order to induce the Lender to enter into this Agreement, and as
precondition to the Lender's forbearance:
a. The Borrower shall, upon the execution of this Agreement, pay to
the Lender all accrued and unpaid Current Pay Interest through
and including November 30, 1999 in the amount of $253,319.44.
b. The Borrower hereby ratifies the prior payment to the Lender of
the unpaid balance of the Anniversary Fee through an increase to
the outstanding principal balance of the Term Note.
c. The Borrower shall have entered into, prior to or simultaneously
with the execution of this Agreement, a forbearance agreement
(the "Tranche A Forbearance Agreement") on terms and conditions
satisfactory to the Lender, in the Lender's sole and exclusive
discretion, with BankBoston, N. A., in its capacity as agent (in
such capacity, together with its successors in such capacity, the
"Agent") on behalf of certain Lenders (the "Tranche A Lenders"),
and the Tranche A Lenders with respect to the Loan and Security
Agreement (the "Tranche A Loan Agreement") dated as of August 28,
1998
4
<PAGE>
entered into by and between the Borrower, the Agent, and the
Tranche A Lenders.
d. The Lender shall have entered into, prior to or simultaneously
with the execution of this Agreement, a letter agreement with the
Agent confirming the terms and conditions, when applicable, under
which the Intercreditor Agreement dated August 28, 1998 between
the Agent and the Lender will be amended to address the Working
Capital Infusions, as described in Paragraph 6(d) below.
Submission of Projections
-------------------------
5. The Borrower has submitted to the Lender financial projections
(hereinafter, "Projections") dated December 3, 1999 of the Borrower's
cash availability for the period from November, 1999 through May,
2000, a copy of which is annexed hereto marked Exhibit "A".
a. The Borrower hereby warrants and represents to the Lender that
the Projections contain the Borrower's best, good faith
determination of its projected cash availability for the period
represented in the Projections; and
b. The Borrower shall use its reasonable best efforts to (i) meet
the financial performance benchmarks contained in the Projections
or on which the Projections are based, and (ii) operate its
business in accordance with the Projections and the assumptions
on which they are based, including without limitation, payment of
all past due, current, and future real estate taxes and other
liens and assessments with respect to the Borrower's real and
personal property.
Working Capital Infusions
-------------------------
6. The Borrower has advised the Lender that the Projections include,
among other things, cash availability based in part on the Borrower's
receipt of additional subordinated debt or equity infusions during the
period from January 15, 2000 through the Termination Date (as defined
in Paragraph 8(c), below).
a. The Borrower shall receive, on or about the 15th day of January,
2000, but in no event later than January 20, 2000, additional
subordinated debt or an equity infusion in the amount of
$500,000.00;
5
<PAGE>
b. The Borrower shall receive, on or about the 15th day of February,
2000, but in no event later than February 21, 2000, additional
subordinated debt or an equity infusion in the amount of
$500,000.00;
c. The Borrower shall receive, on or about the 15th day of March,
2000, but in no event later than March 20, 2000, additional
subordinated debt or an equity infusion in the amount of
$500,000.00;
d. Each new infusion of subordinated debt or equity shall be through
a subordinated last-out participation in the loans under the
Tranche A Loan Agreement which increases the "Borrowing Base"
under, and as defined in, the Tranche A Loan Agreement by a like
amount. Such participation shall be subordinate in collateral
priority and repayment terms to the Obligations, and otherwise on
terms and conditions satisfactory to the Lender, in the Lender's
sole and exclusive discretion.
Satisfaction of Obligations
---------------------------
7. The Borrower has indicated to the Lender that it intends to satisfy
all amounts due under the Loan Arrangement in full through the
proceeds of a refinancing loan from a replacement lender, additional
infusions of equity, or the sale of the Borrower's assets. In that
regard, the Borrower shall, to the extent not otherwise confidential,
keep the Lender apprised of all material developments in connection
with the Borrower's efforts to consummate the refinancing, the equity
infusion, or the sale of assets and provide the Lender with copies of
any notices or other communication relating to thereto.
Repayment of the Obligations
----------------------------
8. From and after the execution of this Agreement, the Obligations shall
be repaid, as follows:
a. Monthly Payments. Interest shall continue to accrue on the
outstanding principal balance of the Term Note at the rate of
Sixteen (16%) percent per annum. Monthly payments of Current Pay
Interest shall continue to be made on the Term Note each month:
(i) On the seventh day of January, 2000;
(ii) On the first day of February, 2000;
(iii) On the first day of March, 2000; and
6
<PAGE>
(iv) On the first day of April, 2000.
b. PIK Interest. PIK Interest shall continue to accrue in
accordance with the terms of the Loan Agreement;
c. Termination Date. The entire outstanding balance of the
Obligations, including all principal, interest (accrued and
hereafter accruing, Current Pay and PIK), other fees, and
reasonable and necessary charges, costs, expenses, and costs of
collection (including reasonable attorneys' fees), shall be paid
in full, if not sooner payable upon the occurrence of a
Termination Event (as defined in Paragraph 12, below), on or
before 5:00 P.M. Boston time on Friday, April 30, 2000
(hereinafter, the "Termination Date").
Alternative Payments
--------------------
9. Notwithstanding the terms and conditions of Paragraph 6(b) (a Working
Capital Infusion) or Paragraph 8(a) (Monthly Payments of Current Pay
Interest), in the event that the Working Capital Infusion of
$500,000.00 due on or about February 15, 2000 has not been received on
or before February 21, 2000, then the Borrower shall pay to the Lender
$100,000.00 in principal on each of February 21, 2000, March 20, 2000,
and April 20, 2000.
a. If the Borrower makes the foregoing payments, then no Termination
Event shall occur as a result of the failure of the Borrower to
have complied with the terms of Paragraph 6(b);
b. The Borrower shall remain obligated to make the monthly payments
of Current Pay Interest on March 1, 2000, and April 1, 2000;
7
<PAGE>
c. The Borrower shall remain obligated to make the
payment of $100,000.00 in principal on March 2000, even if an
additional Working Capital Infusion is received in March, 2000.
Financial Reporting Requirements
--------------------------------
10. In addition to any other reporting requirements
contained in the Loan Agreement, the Borrower shall use its good faith
best efforts to:
a. Submit the following information to the Lender
by the specified dates and times:
(i) As and when submitted to the Tranche A
Lenders, via telecopier, a copy of the
"Borrowing Base Certificate" provided to
the Agent or the Tranche A Lenders;
(ii) As and when requested by the Lender, such
other and further information that the Lender reasonably may
require from time to time.
b. Confirm in writing with the submission of each
financial report that all of the information contained therein
is, to the best of the Borrower's knowledge, true, accurate, and
complete.
c. Permit the Lender to conduct field audits,
appraisals, and examinations of the Borrower's business
operations and assets, as and when deemed necessary or
appropriate by the Lender. The Borrower shall reimburse the
Lender on demand for the reasonable expenses of One (1) of each
(i) field audit, (ii) appraisal, and (iii) examination.
Forbearance by Lender
---------------------
11. The Lender shall forbear from enforcing its rights
and remedies as a result of the Borrower's defaults, until the earlier
of (i) the occurrence of a Termination Event, as defined in Paragraph
12, below, or (ii) the Termination Date.
a. In particular, upon the execution of this
Agreement and satisfaction of each of the Conditions Precedent
set forth in Paragraph 4, above, the Lender shall postpone the
hearing in the Civil Action on the Lender's request for
injunctive relief, currently scheduled for Tuesday, December 28,
1999 at 2:00 P. M., until on or after January 21, 2000.
8
<PAGE>
b. If the Working Capital Infusion due under Paragraph
6(a), above, has been timely received by the Borrower, and so
long as no other Termination Event has occurred, then the Lender
shall further postpone the hearing in the Civil Action on the
Lender's request for injunctive relief until on or after February
2, 2000.
c. If the monthly payment of Current Pay Interest due
under Paragraph 8(a)(ii), above, has been timely made by the
Borrower, and so long as no other Termination Event has occurred,
then on or about February 3, 2000, the Lender shall file a notice
of voluntary dismissal, without prejudice, in the Civil Action.
d. The Lender agrees that the Borrower need not file
an Answer to the Lender's Complaint in the Civil Action until
Five (5) days after the occurrence of a Termination Event.
e. Nothing contained in this Agreement shall
constitute a waiver by the Lender of any Event of Default under
the Loan Documents, whether now existing or hereafter arising.
This Agreement shall only constitute an agreement by the Lender
to forbear from enforcing its rights and remedies upon the terms
and conditions set forth herein.
Termination Events
------------------
12. The occurrence of any one or more of the following
events shall constitute a termination event (hereinafter, a
"Termination Event") under this Agreement:
a. The failure of the Borrower to promptly,
punctually, or faithfully perform any term or condition of this
Agreement (other than under Paragraph 10(a)(i) - - as to which,
see Paragraph 12(b), below) as and when due, it being expressly
acknowledged and agreed that TIME IS OF THE ESSENCE;
b. The failure of the Borrower to have submitted the
"Borrowing Base Certificate" required by Paragraph 10(a)(i),
above, for Three (3) consecutive days;
c. The failure of the Borrower to pay any amount
required to be paid to the Lender under this Agreement as and
when due, including without limitation, the failure of the
Borrower to pay all Obligations in full on or before 5:00 p.m.
Boston time on the Termination Date, it being expressly
acknowledged and agreed that TIME IS OF THE ESSENCE;
9
<PAGE>
d. The commencement of any case under the United
States Bankruptcy Code by or against the Borrower;
e. The occurrence of any event of default by the
Borrower under the Tranche A Forbearance Agreement, through the
failure of the Borrower to satisfy the Tranche A "Forbearance
Conditions" set forth therein or otherwise, unless the Tranche A
Lenders have not acted upon the event of default and are
continuing to make loans to the Borrower in accordance with the
Tranche A Loan Agreement.
Rights Upon Termination
-----------------------
13. Upon the occurrence of any Termination Event:
a. The agreement of the Lender to forbear as set forth
in this Agreement shall automatically terminate and the Lender
may immediately commence enforcing its rights and remedies
pursuant to the Loan Documents, and otherwise;
b. All Obligations shall be immediately due and
payable in full, without demand, notice, or protest, all of which
are hereby expressly WAIVED; and
c. Interest shall thereafter accrue on the unpaid
principal balance of the Term Note at the rate of Nineteen (19%)
percent per annum.
Costs of Collection
-------------------
14. The Borrower shall reimburse the Lender on demand for
any and all reasonable and necessary costs, expenses, and costs of
collection (including reasonable attorneys' fees) hereafter incurred
by the Lender in connection with the protection, preservation, and
enforcement by the Lender of its rights and remedies.
Notices
-------
15. Any communication between the Lender and the Borrower
shall be forwarded via (i) telecopier or (ii) recognized overnight
courier, addressed as follows:
If to the Lender: Back Bay Capital Funding, LLC
40 Broad Street
10
<PAGE>
Boston, Massachusetts 02109
Attention: Michael Pizette,
Managing Director Telecopier No. (617) 434-4312
With a copy via telecopier to:
Donald E. Rothman, Esquire
Riemer & Braunstein, LLP
Three Center Plaza
Boston, Massachusetts 02108
Telecopier No. (617) 880-3456
If to the Borrower:
Texfi Industries, Inc.
1430 Broadway
New York, New York 10018
Attention: Robert P. Ambrosini
Telecopier No. (212) 930-7208
With copies via telecopier to:
James Shein, Esquire
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606-5096
Telecopier No. (312) 984-2134
Robert Dehney, Esquire
Morris Nichols, Arsht & Tunnell
1201 North Market Street
P. O. Box 1347
Wilmington, Delaware 19899-1347
Telecopier No. (302) 658-3989
Waivers
-------
16. Non-Interference. From and after the occurrence of any
Event of Default, the Borrower agrees not to interfere with the
exercise by the Lender of any of its rights and remedies. The Borrower
further agree that they shall not seek to distrain or otherwise
hinder, delay, or impair the Lender's efforts to realize upon the
Collateral, or otherwise to enforce its rights and remedies pursuant
to the Loan Documents. The provisions of this Paragraph 16 shall be
specifically enforceable by the Lender.
11
<PAGE>
17. Jury Trial. The Borrower hereby makes the following
waiver knowingly, voluntarily, and intentionally, and understands that
the Lender, in entering into this Agreement or making any financial
accommodations to the Borrower, whether now or in the future, is
relying on such a waiver: THE BORROWER HEREBY IRREVOCABLY WAIVES ANY
PRESENT OR FUTURE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR
CONTROVERSY IN WHICH THE LENDER BECOMES A PARTY (WHETHER SUCH CASE OR
CONTROVERSY IS INITIATED BY OR AGAINST THE LENDER OR IN WHICH THE
LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY
ARISES OUT OF, OR IS IN RESPECT OF, ANY RELATIONSHIP BETWEEN THE
BORROWER, OR ANY OTHER PERSON, AND THE LENDER.
Entire Agreement
----------------
18. This Agreement shall be binding upon the Borrower and
the Borrower's officers, directors, employees, representatives,
successors, and assigns, and shall inure to the benefit of the Lender
and the Lender's successors and assigns. This Agreement and all
documents, instruments, and agreements executed in connection herewith
incorporate all of the discussions and negotiations between the
Borrower and the Lender, either expressed or implied, concerning the
matters included herein and in such other documents, instruments and
agreements, any statute, custom, or usage to the contrary
notwithstanding. No such discussions or negotiations shall limit,
modify, or otherwise affect the provisions hereof. No modification,
amendment, or waiver of any provision of this Agreement, or any
provision of any other document, instrument, or agreement between the
Borrower and the Lender shall be effective unless executed in writing
by the party to be charged with such modification, amendment, or
waiver, and if such party be the Lender, then by a duly authorized
officer thereof.
Construction of Agreement
-------------------------
19. In connection with the interpretation of this Agreement
and all other documents, instruments, and agreements incidental
hereto:
a. All rights and obligations hereunder and
thereunder, including matters of construction, validity, and
performance, shall be governed by and construed in accordance
with the law of the Commonwealth of Massachusetts and are
intended to take effect as sealed instruments.
b. The captions of this Agreement are for convenience
purposes only, and shall not be used in construing the intent of
the Lender and the Borrower under this Agreement.
12
<PAGE>
c. In the event of any inconsistency between the
provisions of this Agreement and any other document, instrument,
or agreement entered into by and between the Lender and the
Borrower, the provisions of this Agreement shall govern and
control.
d. The Lender and the Borrower have prepared this
Agreement and all documents, instruments, and agreements
incidental hereto with the aid and assistance of their respective
counsel. Accordingly, all of them shall be deemed to have been
drafted by the Lender and the Borrower and shall not be construed
against either (i) the Lender, or (ii) the Borrower.
Illegality or Unenforceability
------------------------------
20. Any determination that any provision or application of
this Agreement is invalid, illegal, or unenforceable in any respect,
or in any instance, shall not affect the validity, legality, or
enforceability of any such provision in any other instance, or the
validity, legality, or enforceability of any other provision of this
Agreement.
Jurisdiction
------------
21. The Borrower and the Lender agree that any legal
action, proceeding, case, or controversy with respect to this
Agreement and the Obligations or any Loan Document shall be brought in
the Superior Court of Suffolk County Massachusetts or in the United
States District Court, District of Massachusetts, sitting in Boston,
Massachusetts and that such Courts shall have exclusive jurisdiction
with respect to such action. By execution and delivery of this
Agreement, the Borrower and the Lender, for themselves and in respect
of their property, accept, submit, and consent generally and
unconditionally, to the jurisdiction of the aforesaid courts.
a. The Borrower and the Lender WAIVE personal service
-----
of any and all process upon either of them, and irrevocably
consent to the service of process out of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by certified mail, postage prepaid, to
them at their address set forth above, such service to become
effective five (5) business days after such mailing.
b. The Borrower and the Lender WAIVE any objection
-----
based on forum non conveniens and any objection to venue of any
action or proceeding instituted under this Agreement or any of
the Loan Documents and consent to the granting of such legal or
equitable remedy as is deemed appropriate by the Court.
13
<PAGE>
Informed Execution
------------------
22. The Borrower warrants and represents to the Lender that
the Borrower:
a. Has read and understands all of the terms and
conditions of this Agreement;
b. Intends to be bound by the terms and conditions of
this Agreement; and
c. Is executing this Agreement freely and voluntarily,
without duress, after consultation with independent counsel of
the Borrower's own selection.
IN WITNESS WHEREOF, this Agreement has been executed this 28 day of December,
1999.
BACK BAY CAPITAL FUNDING, LLC TEXFI INDUSTRIES, INC.
By: /s/ Michael Pizette By: /s/ Robert P. Ambrosini
Michael Pizette Robert P. Ambrosini
Title: Managing Director Title: EVP & CFO
14
<PAGE>
EXHIBIT 4(d)(3)
FORBEARANCE AGREEMENT
---------------------
This FORBEARANCE AGREEMENT (this "Agreement") is made and entered into
on December 28, 1999, by and among TEXFI INDUSTRIES, INC. ("Borrower"), THE CIT
GROUP/COMMERCIAL SERVICES, INC. ("CIT"), BANKBOSTON, N.A. ("BankBoston";
collectively with CIT, the "Revolving Lenders"), and BANKBOSTON, N.A., in its
capacity as administrative and collateral agent for the Revolving Lenders
(together with its successors in such capacity, "Agent;" collectively, with CIT
and BankBoston, the "Creditors").
Recitals
--------
As of the opening of business on the date hereof, Borrower is indebted
to Revolving Lenders in the approximate aggregate principal amount of
$16,935,000 (hereinafter, together with all interest, attorneys' fees and other
expenses heretofore or hereafter accruing or chargeable to Borrower, the
"Revolver Obligations") under that certain Loan and Security Agreement dated as
of August 28, 1998, among Borrower, Revolving Lenders and Agent (as at any time
amended, the "Revolving Loan Agreement").
As security for the payment of all Revolver Obligations, Borrower
granted to Agent, pursuant to the Revolving Loan Agreement and related documents
(collectively, "Revolving Loan Documents"), security interests in and liens upon
all of Borrower's accounts, inventory, general intangibles, chattel paper,
documents, and instruments and related books and records (together with the
proceeds thereof, the "Working Capital Collateral") and all of Borrower's real
property (including all improvements thereto) and equipment (together with the
proceeds thereof, the "Fixed Asset Collateral"; the Working Capital Collateral
and the Fixed Asset Collateral being referred to as the "Collateral").
Borrower and CIT are parties to a factoring agreement (as at any time
amended, the "Factoring Agreement"). Pursuant to the Factoring Agreement, CIT,
as a factor (in such capacity, the "Factor") has from time to time purchased or
otherwise assumed the credit risk with respect to certain of Borrower's
accounts. The liens and security interests granted in favor of Agent with
respect to the Collateral also secure certain "ledger debt" of Borrower to CIT
(together with Borrower's obligations to CIT under the Factoring Agreement, the
"Factor Obligations").
Events of Default under (and as defined in) the Revolving Loan
Agreement have occurred and are continuing by reason of Borrower's failure to
comply with or default in its obligations under or covenants in Sections 9.6,
10.1 and 11.1 and by reason of the occurrence of events or conditions described
in paragraphs (b), (d), (e), (f) and (l) of Section 12.1 of the Revolving Loan
Agreement (the "Revolving Loan Defaults"). The foregoing Revolving Loan Defaults
together with any defaults that may exist on the date hereof under the Factoring
Agreement are referred to hereinafter as the "Stipulated Defaults."
Borrower, Revolving Lenders, Agent, Factor, Leasing (as defined below),
and Back Bay (as defined below) are parties to that certain Forbearance
Agreement dated as of February 25, 1999 (as at any time amended, the "Prior
Forbearance Agreement"), and the forbearance period agreed to by the parties
pursuant to the Prior Forbearance Agreement has expired.
Borrower has requested that Creditors forbear, and each Creditor has
agreed to forebear, for a specified period from exercising the various rights
and remedies available to them by reason of any Stipulated Default in order to
afford Borrower an opportunity to reorganize its affairs and to pay the
indebtedness owing to Creditors.
<PAGE>
Borrower desires that Revolving Lenders continue, during the period of
such forbearance, to make loans to Borrower pursuant to the Revolving Loan
Agreement and that Factor continue, during the period of such forbearance, to
factor Borrower's receivables pursuant to the Factoring Agreement.
NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and in
consideration of the premises and the mutual covenants herein contained, the
parties hereto, intending to be legally bound hereby, agree as follows:
1. Definitions; Rules of Construction.
----------------------------------
(a) Capitalized terms used in this Agreement, unless otherwise
defined, shall have the meaning ascribed to them in the Revolving Loan
Agreement. In addition to the terms defined elsewhere in this Agreement, the
following terms shall have the meaning ascribed to them (terms defined in the
singular to have the same meaning when used in the plural and vice versa):
"1990 Debentures" shall mean the Subordinated Extendible
---------------
Debentures, 11%, due April 1, 2000, issued pursuant to that certain
Indenture dated as of April 12, 1990, between Borrower, State Street
Bank and Trust Company, as Trustee and First Union National Bank, as
paying agent.
"1993 Debentures" shall mean the Senior Subordinated
---------------
Debentures, 8.75%, due August 1, 1999, issued pursuant to that certain
Indenture dated as of September 8, 1993, between Borrower and Norwest
Bank Minnesota, National Association, as successor trustee, as amended
by the First Supplemental Indenture dated as of March 10, 1995, the
Second Supplemental Indenture, dated as of March 15, 1996 and the Third
Supplemental Indenture dated as of August 28, 1998.
"Amended Assignment" shall mean the Amended and Restated
------------------
Assignment of Factoring Proceeds Agreement to be entered into among
Agent, Factor and Borrower, in form and substance mutually acceptable
to the parties thereto.
"Back Bay" shall mean Back Bay Capital Funding, LLC (formerly
--------
known as Back Bay Capital, LLC), a Delaware limited liability company.
"Back Bay Forbearance Agreement" shall mean that certain
------------------------------
Forbearance Agreement between Back Bay and Borrower to be dated on or
about the date hereof.
"Back Bay Liquidation Notice" shall have the meaning ascribed
---------------------------
to it in the Intercreditor Agreement.
"Back Bay Termination Event" shall have the meaning ascribed
--------------------------
to it in the Back Bay Forbearance Agreement.
"Collateral" shall mean all of the property and interests in
----------
property of Borrower that now or hereafter secure the payment and
performance of any of the Obligations.
"Credit Documents" shall mean the Factoring Agreement and the
----------------
Revolving Loan Documents and all other instruments and agreements at
any time executed in favor of a Creditor in connection therewith,
including the Amended Assignment.
<PAGE>
"Default Rate" shall mean any higher rate of interest or other
------------
charges that a Creditor is entitled to charge Borrower on account of
the existence of any default or event of default under any of the
Credit Documents.
"Forbearance Conditions" shall mean the conditions to
----------------------
forbearance set forth in Section 4 of this Agreement.
"Forbearance Period" shall mean the period commencing on the
------------------
date of this Agreement and ending at 5:00 p.m. on the close of business
on April 30, 2000, unless extended in writing by Creditors in their
sole and absolute discretion.
"Forbearance Termination Date" shall mean the sooner to occur
----------------------------
of (a) 5:01 p.m. on the last day of the Forbearance Period or (b) the
date on which Creditors' agreement to forbear terminates as provided in
Section 6 of this Agreement.
"Governmental Authority" shall mean any federal, state,
----------------------
municipal, national, foreign or other governmental department,
commission, board, bureau, court, agency or instrumentality or
political subdivision thereof or any entity or officer exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government or any court, in each case
whether associated with a state of the United States, the District of
Columbia or a foreign entity or government.
"Insolvency Proceeding" shall mean any action, case or
---------------------
proceeding commenced by or against a Person, or any agreement of such
Person, for (a) the entry of an order for relief under any chapter of
the Bankruptcy Code or other insolvency or debt adjustment law (whether
state, federal or foreign); (b) the appointment of a receiver, trustee,
liquidator or other custodial for such Person or any part of its
Property; (c) an assignment or trust mortgage for the benefit of
creditors of such Person; or (d) the liquidation, dissolution or
winding up of the affairs of such Person.
"Intercreditor Agreement" shall mean that certain
-----------------------
Intercreditor Agreement dated August 28, 1998, between Agent and Back
Bay.
"Junior Participant" shall mean a Person reasonably acceptable
------------------
to Agent and Revolving Lenders who agrees to purchase junior
participation interests in the Revolving Credit Loans pursuant to the
Junior Participation Agreement.
"Junior Participation Agreement" shall mean a Junior
------------------------------
Participation Agreement to be entered into by and among Junior
Participant, Agent and Revolving Lenders, in form and substance
acceptable to Agent and Revolving Lenders in their sole discretion,
pursuant to which Junior Participant shall purchase from Revolving
Lenders aggregate junior participation interests totaling $2,500,000 in
the Revolving Credit Loans.
"Leasing" shall mean BancBoston Leasing Inc.
-------
"Material Action" shall mean any of the following actions
---------------
taken by any creditor of Borrower (including a trade creditor, Back
Bay, any holder of Subordinated Debt, Leasing or any other equipment
lessor) to collect any indebtedness or other obligations owed by
Borrower to such creditor: (1) obtaining a judgment against Borrower in
excess of $75,000; (2) commencing enforcement proceedings upon any
judgment or order; (3) attaching, garnishing, reclaiming, repossessing,
foreclosing or liquidating any material part of Borrower's property; or
(4)
<PAGE>
challenging the validity, perfection or priority of any Liens of any
Creditor on any Collateral securing any of the Obligations or the
validity or enforceability of this Agreement or any of the other Credit
Documents.
"MAIL" shall mean Moore Assets International Limited
----
(Registration No. 84998B), a company organized under the International
Business Companies Act of the Commonwealth of the Bahamas.
"MAIL Loan" shall mean that certain $1,500,000 unsecured loan
---------
made by MAIL to Borrower and evidenced by that certain Subordinated
Note dated February 26, 1999, payable by Borrower to the order of MAIL
in the original principal amount of $1,500,000.
"Obligations" shall mean, collectively, the Revolving Loan
-----------
Obligations and the Factor Obligations.
"Payroll Taxes" shall mean all taxes and deposits required to
-------------
be paid or withheld from the wages or salaries of Borrower's employees.
"Projections" shall mean the financial projections prepared by
-----------
Borrower dated December 3, 1999 which show the Borrower's projected
cash availability from the period from November 1999 through May 2000,
a copy of which is attached hereto as Exhibit A.
"Revolving Loan Obligations" shall mean the "Secured
--------------------------
Obligations" under (and as defined in) the Revolving Loan Agreement.
"Subordinated Debt" shall mean the indebtedness of Borrower
-----------------
outstanding under the 1990 Debentures, the 1993 Debentures and the MAIL
Loan.
(b) The terms "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
section, paragraph or subdivision. Any pronoun used shall be deemed to cover all
genders. In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including" and the words "to"
and "until" each means "to but excluding." The section titles appear as a matter
of convenience only and shall not affect the interpretation of this Agreement.
All references to statutes and related regulations shall include any amendments
of same and any successor statutes and regulations; to any agreement shall
include any and all modifications thereto and any and all restatements,
extensions or renewals thereof; to any Person shall mean and include the
successors and permitted assigns of such Person; to "including" and "include"
shall be understood to mean "including, without limitation" (and, for purposes
of this Agreement, the parties agree that the rule of ejusdem generis shall not
be applicable to limit a general statement, which is followed by or referable to
an enumeration of specific matters to matters similar to the matters
specifically mentioned); and to the time of day shall mean the time of day on
the day in question in Atlanta, Georgia, unless otherwise expressly provided in
this Agreement. This Agreement and all documents, instruments and agreements
incidental hereto have been prepared with the assistance of Creditors and
Borrower and with the aid and assistance of their respective counsel, and,
accordingly, this Agreement and all documents, instruments and agreements
incidental hereto shall be deemed to have been drafted by Creditors and Borrower
and shall not be construed against any party hereto.
2. Acknowledgments and Stipulations by Borrower. Borrower
--------------------------------------------
acknowledges, stipulates and agrees that (a) each of the recitals contained at
the beginning of this Agreement are true and correct, and (b) prior to executing
this Agreement, Borrower consulted with and had the benefit of
<PAGE>
advice of legal counsel of its own selection and has relied upon the advice of
such counsel, and in no part upon any representation of any Creditor concerning
the legal effects of this Agreement or any provision hereof.
3. Agreement to Forbear. Subject to the satisfaction of the
--------------------
conditions precedent set forth in Section 5 of this Agreement and if and for so
long as each of the Forbearance Conditions is satisfied, each Creditor agrees
that during the Forbearance Period it will not, solely by reason of the
existence on this date of any of the Stipulated Defaults, (a) exercise any
default remedy available to such Creditor under any of the Credit Documents or
Applicable Law to enforce collection from Borrower of any of the Obligations
owing to such Creditor or to foreclose any security interest of such Creditor in
any of the Collateral or (b) charge any Default Rate with respect to the
principal balance of any of the Obligations owing to such Creditor. Neither this
Agreement nor any Creditor's forbearance hereunder shall be deemed to be a
waiver of or a consent to any Stipulated Default or any other default or event
of default now or hereafter occurring under any of the Credit Documents. Nothing
in this Agreement shall be construed to alter the demand nature of any portion
of the Obligations payable on demand under the terms of any of the Credit
Documents.
4. Conditions to Forbearance. The following conditions shall
-------------------------
constitute Forbearance Conditions, the timely satisfaction of each and every one
of which during the Forbearance Period shall be a condition to the agreement of
Creditors to forbear as set forth in Section 3 of this Agreement:
(a) Borrower duly and punctually observes, performs and
discharges each and every obligation and covenant on its part to be performed
under this Agreement;
(b) No representation or warranty made by Borrower in this
Agreement proves to have been false or misleading in any material respect;
(c) Borrower timely deducts from the wages of its employees and
makes timely and proper deposits for all Payroll Taxes as the same became due
and payable, and provides Creditors with proof of all deposits for Payroll Taxes
if, and when, requested to do so by any Creditor;
(d) No payments are made by Borrower on or after the date of
this Agreement to any Affiliate of Borrower or in respect of principal or
interest on any Subordinated Debt to the extent the holders of such Subordinated
Debt have contractually agreed not to accept such payment when any of the
Stipulated Defaults exist;
(e) Junior Participant purchases an aggregate of $2,500,000 in
junior participations in the Revolving Credit Loans from the Revolving Lenders
in five (5) installments of $500,000 each on January 15, 2000, February 15,
2000, March 15, 2000, March 31, 2000, and April 15, 2000;
(f) Borrower does not amend, modify or otherwise change any of
the terms or provisions of the Back Bay Forbearance Agreement as in effect on
the date hereof without the prior written consent of all Creditors;
(g) No Person to whom Borrower is indebted for money borrowed
(including the holders of the Subordinated Debt or Back Bay, but excluding
NationsBank Leasing with respect to its equipment leases with Borrower)
hereafter accelerates the maturity or demands payment of such indebtedness, in
whole or in part;
<PAGE>
(h) No Insolvency Proceeding is commenced by or against
Borrower;
(i) No Person institutes a Material Action against Borrower;
(j) No Back Bay Termination Event occurs;
(k) Back Bay does not issue a Back Bay Liquidation Notice on or
after the date hereof;
(l) On or before 2:00 p.m. on Tuesday of each week, Borrower
provides Agent with a report comparing the Projections to Borrower's actual cash
availability for the preceding week and delineating all variances from the
Projections;
(m) No default or event of default (other than the Stipulated
Defaults) occurs or exists under any of the Credit Documents; and
(n) Borrower factors all of its Receivables, other than House
Receivables, with one or more factors.
5. Conditions Precedent. The effectiveness of Creditors'
--------------------
agreement to forbear contained in Section 3 hereof is subject to the
satisfaction of each of the following conditions precedent, in form and
substance satisfactory to Creditors, unless satisfaction thereof is specifically
waived in writing by each Creditor: (a) Agent shall have received, for the
ratable benefit of the Revolving Lenders, a forbearance fee of $50,000; (b)
Borrower and Back Bay shall have entered into the Back Bay Forbearance Agreement
(to be in form and substance satisfactory to Creditors in their sole discretion)
and all conditions precedent to the effectiveness of such Back Bay Forbearance
Agreement shall have been satisfied; (c) Borrower, Agent and Lenders shall have
entered into a Fourth Amendment to Loan and Security Agreement, in form and
substance acceptable to each of the Creditors in their sole discretion; (d)
Agent, Factor and Borrower shall have entered into the Amended Assignment; (e)
Back Bay and Agent shall have entered into the First Amendment to Intercreditor
Agreement, in form and substance acceptable to each of the Creditors in their
sole discretion; and (f) Back Bay shall have either dismissed its pending
lawsuit against Borrower or continued the hearing thereon to a date after
January 20, 2000.
6. Termination of Forbearance. If any one or more of the
--------------------------
Forbearance Conditions is not satisfied or ceases to be satisfied, Creditors'
agreement to forbear as set forth in Section 3 of this Agreement shall, without
further notice to or demand upon Borrower, terminate. On and after the
Forbearance Termination Date, each Creditor shall be authorized at any time,
without further notice to or demand upon Borrower or any other Person, to
enforce all of its remedies under the Credit Documents to which it is a party
and Applicable Law.
7. Continued Financing of Borrower.
-------------------------------
<PAGE>
(a) Notwithstanding the existence of the Stipulated Defaults,
Revolving Lenders will continue during the Forbearance Period to honor requests
by Borrower for Revolving Credit Loans pursuant to the Revolving Loan Agreement,
subject, however, to all of the terms, conditions and covenants in the Revolving
Loan Agreement and subject to the continued satisfaction of each of the
Forbearance Conditions. In no event shall the Revolving Lenders' funding of any
Revolving Credit Loans be deemed a waiver of any of the Stipulated Defaults or
any other default or event of default that may occur or exist under the
Revolving Loan Documents. If the unpaid balance of Revolving Credit Loans
outstanding at any time should exceed the Borrowing Base at such time, all such
Revolving Credit Loans shall nevertheless constitute Revolving Loan Obligations
owing to the Revolving Lenders that are secured by the Collateral and entitled
to all of the benefits thereof.
(b) Notwithstanding the existence of the Stipulated Defaults,
CIT will continue during the Forbearance Period to factor Borrower's Receivables
pursuant to and subject to all the terms of the Factoring Agreement, but in no
event shall the CIT's continued factoring of Receivables be deemed a waiver of
any of the Stipulated Defaults or any other default or event of default that may
occur or exist under the Factoring Agreement. Nothing in this Agreement or the
Credit Documents is intended to be or shall be deemed to be a waiver by CIT of
any of its rights, powers or remedies with respect to that portion of the Factor
Obligations constituting "ledger debt" of Borrower.
8. Representations and Warranties of Borrower. Borrower
------------------------------------------
represents and warrants to Creditors, as an inducement to Creditors' entering
into this Agreement, that (a) no default or event of default exists under the
Credit Documents, except for Stipulated Defaults that are in existence on the
date hereof; (b) subject to the existence of the Stipulated Defaults, the
representations and warranties of Borrower contained in the Credit Documents
were true and correct in all material respects when made and continue to be true
and correct in all material respects on the date hereof; (c) the execution,
delivery and performance by Borrower of this Agreement and the consummation of
the transactions contemplated hereby are within the corporate power of Borrower
and have been duly authorized by all necessary corporate action on the part of
Borrower, do not require any approval or consent, or filing with, any
Governmental Authority, do not violate any provisions of any Applicable Law or
any provision of any order, writ, judgment, injunction, decree, determination or
award presently in effect in which Borrower is named or any provision of the
organization documents of Borrower and do not result in a breach of or
constitute a default under any agreement or instrument to which Borrower is a
party or by which it or any of its properties are bound; (d) this Agreement
constitutes the legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms; (e) all Payroll Taxes required to
be withheld from the wages of Borrower's employees have been paid or deposited
when due; (f) Borrower is entering into this Agreement freely and voluntarily
with the advice of legal counsel of his or its own choosing; (g) Borrower has
freely and voluntarily agreed to the releases, waivers and undertakings set
forth in this Agreement; and (h) the Projections contain Borrower's best, good
faith determination of its projected cash availability for the period
represented in the Projections.
9. Reimbursement of Expenses. Notwithstanding anything to the
-------------------------
contrary contained in any of the Credit Documents, Borrower shall have no
obligation to reimburse any Creditor for the costs of any appraisal of
Collateral procured by such Creditor after the date hereof but prior to the
Forbearance Termination Date, and Borrower's liability to reimburse Creditors
for the costs of any field audit or examination conducted after the date hereof
but prior to the Forbearance Termination Date shall be limited to the amount of
costs, fees and other expenses reasonably incurred by Creditors in the conduct
of such field audit or examination. Borrower agrees to reimburse Creditors for
all costs, including reasonable legal fees, incurred by Creditors in connection
with the reviewing, preparing, drafting, negotiation and closing of this
Agreement, the Junior Participation Agreement, the amendment to the Revolving
Loan Agreement, the review of the Back Bay Forbearance Agreement and related
<PAGE>
documents, the review of the amendment to the Intercreditor Agreement, the
review and preparation of the Amended and Restated Assignment of Factoring
Proceeds and Intercreditor Agreement, and the transactions contemplated by the
foregoing documents. Except as expressly provided by the first sentence of this
Section 9, nothing herein shall be deemed to limit, amend or waive any of the
provisions of the Revolving Loan Agreement (including Section 15.2 thereof) or
any of the other Credit Documents relating to the payment of or reimbursement by
Borrower of fees and expenses of any Creditor.
10. Reaffirmation of Obligations. Borrower hereby ratifies and
----------------------------
reaffirms each of the Credit Documents and all of its obligations and
liabilities thereunder.
11. Relationship of Parties; No Third Party Beneficiaries.
-----------------------------------------------------
Nothing in this Agreement shall be construed to alter the existing debtor-
creditor relationship between Borrower and Creditors. This Agreement is not
intended, nor shall it be construed, to create a partnership or joint venture
relationship between or among any of the parties hereto. No Person other than a
party hereto is intended to be a beneficiary hereof and no Person other than a
party hereto shall be authorized to rely upon or enforce the contents of this
Agreement. Nothing in this Agreement shall be construed to amend, modify or
alter in any way any of the terms or provisions of or agreements set forth in
the Prior Forbearance Agreement.
12. Time of Essence. Time is of the essence of this Agreement
---------------
and all documents, instruments and agreements incidental hereto.
13. Entire Agreement; Modification of Agreement. This Agreement
-------------------------------------------
and the other Credit Documents constitute the entire understanding of the
parties with respect to the subject matter hereof and thereof. This Agreement
may not be modified, altered or amended except by agreement in writing signed by
all the parties hereto.
14. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of Georgia.
15. Non-Waiver of Default. Neither this Agreement, any
---------------------
Creditor's forbearance hereunder nor any Creditor's continued making of loans or
other extensions of credit at any time to Borrower in accordance with this
Agreement and the Credit Documents shall be deemed a waiver of or consent to the
Stipulated Defaults or any of other default or event of default. Borrower agrees
that the Stipulated Defaults and any other such defaults or events of default
shall not be deemed to have been waived, released or cured by virtue of such
loans or other extensions of credit at any time extended to Borrower, Creditors'
agreement to forbear pursuant to the terms of this Agreement or the execution of
this Agreement.
16. No Novation, etc. This Agreement is not intended to be, nor
----------------
shall it be construed to create, a novation or accord and satisfaction and each
of the Credit Documents shall remain in full force and effect. Notwithstanding
any prior mutual temporary disregard of any of the terms of any of the Credit
Documents, each of the Creditors party hereto agree with Borrower that the terms
of each of the Credit Documents shall be strictly adhered to on and after the
date hereof, except as expressly modified by this Agreement.
17. Counterparts; Waivers of Notice of Acceptance. This
---------------------------------------------
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall constitute
an original, but all of which taken together shall be one and the same
instrument. In proving this Agreement or any of the Credit Documents, it shall
not be necessary to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.
<PAGE>
18. Waiver of Jury Trial. To the fullest extent permitted by
--------------------
Applicable Law, the parties hereto each hereby waives the right to trial by jury
in any action, suit or proceeding arising out of or related to this Agreement or
any Credit Document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered on the date first written above.
ATTEST: TEXFI INDUSTRIES, INC.
("Borrower")
/s/ Andrew J. Parise, Jr. By: /s/ Robert P. Ambrosini
- ------------------------------------
Name: Andrew J. Parise, Jr. Name: Robert P. Ambrosini
Title: Chairman, CEO & COO Title: EVP & CFO
[CORPORATE SEAL]
THE CIT GROUP/COMMERCIAL
SERVICES, INC., in its capacity as a
Revolving Lender and as Factor
By: /s/ Grover P. Reinle
Name: Grover P. Reinle
Title: SVP
BANKBOSTON, N.A., in its capacity
as a Revolving Lender and as Agent
By: /s/ John W. Getz
Name: John W. Getz
Title: Authorized Officer
<PAGE>
EXHIBIT 4(d)(4)
AMENDED AND RESTATED
ASSIGNMENT OF FACTORING PROCEEDS AGREEMENT
Texfi Industries, Inc., a Delaware corporation, (the "Borrower"), assigns
to BankBoston, N.A., a national banking association, (together with its
successors in such capacity, the "Agent") for the ratable benefit of the
financial institutions (the "Lenders") as are or may from time to time become
parties to that certain Loan and Security Agreement dated as of August 28, 1998
(together with any modifications, substitutions, supplements, amendments,
renewals or restatements thereof, the "Loan Agreement"), and grants to the
Agent, for its benefit and the benefit of the Lenders, a security interest in
all funds now or hereafter payable to the Borrower by The CIT Group/Commercial
Services, Inc. (the "Factor") pursuant to the factoring agreement annexed as
Exhibit A hereto (as at any time amended, the "Factoring Agreement") between the
Borrower and the Factor.
The Agent understands that the amount of funds, if any, that may be payable
at any time to the Borrower pursuant to the Factoring Agreement is uncertain.
Further, this Agreement is subject to and shall not affect any rights of the
Factor, under the terms and conditions of the Factoring Agreement or applicable
law, with respect to the right to "charge back" to the Borrower's account any
disputed invoices and other items and sums. Any credit balance shown on any
statement of account is provisional only and is subject to such charges.
The Borrower hereby authorizes the Factor, and the Factor agrees, to
provide to the Agent (i) copies of the monthly factoring statement plus interim
reports and such other information as the Agent may reasonably request from time
to time and (ii) a copy of the monthly detailed aging and such other information
pertaining to the factoring relationship as the Agent may reasonably request
from time to time.
The Borrower hereby directs the Factor to pay to the Agent, and the Factor
agrees to pay to the Agent, such funds as the Factor in its discretion
determines to be payable to the Borrower from time to time pursuant to the
Factoring Agreement. Such payment shall be for the account of the Borrower.
The Factor is hereby authorized to recognize the Agent's claim to rights
hereunder without investigating the reason for any action taken by the Agent or
the validity or the amount of obligations of the Borrower to the Agent and the
Lenders.
This Assignment cannot be terminated by the Borrower or the Factor but only
upon the Factor's receipt of a written termination notice from the Agent. Such
notice shall be sent by certified mail, return receipt requested to:
The CIT Group/Commercial Services, Inc.
1211 Avenue of the Americas
New York, New York 10036
Attention: Grover P. Reinle, Senior Vice President
Telecopy No. (212)382-6840
The following terms shall have the meanings ascribed to herein:
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Account Debtor- any person who is or may become obligated under or on
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a Receivable.
Agent Senior Collateral - all Borrower's Property in which Agent has a
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Lien other than any such Property that constitutes Factor Senior Collateral.
Borrower Risk Factored Receivable - a Factored Receivable (or portion
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thereof) that is not a Factor Risk Factored Receivable.
Factor Risk Factored Receivable - a Factored Receivable (or a portion
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thereof) for which, pursuant to the Factoring Agreement, Factor bears the risk
of loss in the event of non-payment thereof.
Factor Senior Collateral - all of Borrower's now existing and
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hereafter created Receivables, that are Factored Receivables, all proceeds
thereof and all returned, reclaimed and repossessed goods relating thereto.
Factored Receivable - a Receivable factored by Borrower with Factor in
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accordance with and pursuant to the terms and provisions of the Factoring
Agreement.
House Receivable - a Receivable owned by the Borrower (a) the payment
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of which is secured or supported by a letter of credit, (b) is a Receivable
existing on the date hereof which Factor, in its discretion, elects not to
factor, or (c) which is a Receivable that has been reassigned by Factor to
Borrower pursuant to the Factoring Agreement.
Ledger Debt - any sums owing to the Factor arising from the Borrower's
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purchases from other clients of Factor.
Lien - any interest in Property securing an obligation owed to, or a
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claim by, a person other than the owner of the Property, whether such interest
is based on common law, statute, judicial order or contract.
Property - any interest in any kind of property or asset, whether
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real, personal or mixed, or tangible or intangible.
Receivable - all rights of Borrower to payment for goods sold or
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leased or services rendered whether constituting an account, contract right,
chattel paper, general intangible or instrument.
Until this Assignment is terminated pursuant to the preceding paragraph,
the Borrower and Factor agree that, notwithstanding anything contained to the
contrary in the Factoring Agreement or any other document, all of Borrower`s
Receivables arising from and after date hereof, with the sole exception of the
House Receivables, shall be factored with and assigned to the Factor and such
other institution or institutions which may factor the Borrower`s Receivables,
in accordance with the Factoring Agreement and agreements with the other
institution who may factor the Borrower`s Receivables. Borrower and Factor
further agree that not less than 2/3 of the amount of all of Borrower`s Factored
Receivables, arising from and after
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date hereof, shall be factored with and/or assigned to Factor, with the
remaining 1/3 with the other institution or institutions which may factor the
Borrower`s Receivables.
The Factor shall remit to the Agent, for application by Agent in accordance
with the Loan Agreement, all monies due or to become due to the Borrower under
the Factoring Agreement, including, without limitation, all sums payable by the
Factor in connection with its purchase of any Receivables regardless of whether
or not any such Receivables are Borrower Risk Factored Receivables or Factor
Risk Factored Receivables provided that the Factor may deduct from or offset
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against any proceeds of a Factored Receivable the commission, fees and
collections expenses attributable thereto and may apply any proceeds of Factor
Risk Factored Receivables to the unpaid balance of any Factor Risk Factored
Receivable that is properly charged back to the Borrower pursuant to the
Factoring Agreement as well as any collection expenses attributable to such
unpaid Factor Risk Factored Receivable. Notwithstanding anything to the
contrary in the Factoring Agreement, the Factor shall not deduct from or offset
against any amounts otherwise payable under the Factoring Agreement any Ledger
Debt, provided that the foregoing shall not prohibit the Factor from receiving,
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or the Borrower from paying by direct remittance to the Factor, any sums with
respect to such Ledger Debt from time to time in accordance with the prior
course of conduct between the Borrower and the Factor. If the Factor shall
receive any payment, distribution or other recovery of Property in respect of
any Factored Receivables (i) in any bankruptcy or other insolvency proceeding of
any Account Debtor or (ii) as a result of any litigation or threatened
litigation against any Account Debtor after such Factored Receivables are turned
over to an attorney for collection, such payment, distribution or other recovery
shall be shared between the Factor and the Agent ratably based upon the portion
of the Factored Receivables on account of which such payment, distribution or
other recovery is made that constitutes Factor Risk Factored Receivables and the
portion that constitutes Borrower Risk Factored Receivables.
With respect to Borrower`s Receivables which constitute House Receivables,
such House Receivables will not be factored by Factor. Any collections which
Factor may receive from the House Receivables shall be remitted by the Factor to
the Agent for application by Agent in accordance with the Loan Agreement.
Borrower further agrees that notwithstanding anything contained in the
Factoring Agreement, it will not (i) borrow from or obtain any loan, secured or
unsecured, from the Factor, nor take any advance or anticipated payment against
any monies due under the Factoring Agreement, (ii) have the Factor guarantee any
amount due or to become due from the Borrower to any third party other than
Ledger Debt, or (iii) have the Factor open any letters of credit on behalf of
the Borrower. The Factor agrees that it will not extend any such accommodations
to the Borrower. The Factor further agrees not to amend the Factoring Agreement
(except for changes in commission) without the Agent`s prior consent, and
warrants that the Factoring Agreement attached hereto as Exhibit B comprises the
entire Factoring Agreement on the date of this Assignment.
The Factor agrees to notify the Agent in writing of the sending by the
Factor to the Borrower of any notice of termination of the Factoring Agreement.
Such notice shall be sent by certified mail, return receipt requested to:
BankBoston, N.A.
Suite 800
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300 Galleria Parkway, NE
Atlanta, Georgia 30339
Attention: John W. Getz
Telecopy No.. (770) 859-2437
The terms of this Agreement may not be altered except by a written
agreement signed by the Borrower, the Factor and the Agent.
The Agent warrants and represents to the Factor that it holds a first
priority perfected security interest in the collected funds assigned hereunder
for itself and the ratable benefit of Lenders and that the Agent is entitled to
receive all amounts otherwise available to the Borrower pursuant to the
Factoring Agreement. The Agent hereby agrees to indemnify and to hold the
Factor harmless from any and all liability or expense which may be incurred by
reason of the Factor's recognition of the assignment and security interest
herein contained and its remittances to the Agent as herein provided. This
indemnity shall survive termination of this Agreement.
The Agent agrees that any interest that it may have in the Factor Senior
Collateral shall be and hereby is made junior and subordinate to the interest of
the Factor therein. The Agent agrees that its subordination hereunder shall
survive termination of this Agreement and shall remain in full force and effect
until all obligations of the Borrower to the Factor under the Factoring
Agreement have been satisfied in full. The Agent further agrees that until all
of the obligations of the Borrower to the Factor have been satisfied in full, it
will not enforce its security interest in the Factor Senior Collateral, nor will
it attach, levy upon, execute against, exercise any rights, assert any claim or
take any action or institute any proceedings with respect thereto except for
collection efforts with regard to Borrower Risk Receivables.
The Factor agrees that any security interest that it may have in the Agent
Senior Collateral shall be and hereby is junior and subordinate to the interest
of the Agent therein. The Factor agrees that its subordination hereunder shall
survive termination of this Agreement and shall remain in full force and effect
until all obligations of the Borrower to the Agent and the Lenders under the
Loan Agreement have been satisfied in full. The Factor further agrees that
until all of the obligations of the Borrower to the Agent and the Lenders under
the Loan Agreement have been satisfied in full, it will not enforce its security
interest in the Agent Senior Collateral, nor will it attach, levy upon, execute
against, exercise any rights, assert any claim or take any action or institute
any proceedings with respect thereto. Upon the request of Borrower and with the
written consent of the Agent, the Factor may, at its option, attempt to collect
the House Receivables. Subject to the payment of all fees and collection
expenses Factor will remit all such collections to the Agent.
The subordination and relative priority agreements set forth herein are
expressly conditioned on the non-avoidability and perfection of the interest to
which another interest is subordinated and if the interest to which another
interest is subordinated is not perfected or is voidable for any reason, then
the subordination provided for herein shall not be effective as to that
particular property.
The validity, interpretation and enforcement of this Agreement shall be
governed by the laws of the State of Georgia. This Agreement shall bind the
parties and their respective
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successors and assigns. This Agreement is for the benefit of the Factor, the
Agent and the Lenders only and their respective successors and assigns.
This Agreement (the "Amended and Restated Assignment of Factoring
Proceeds") replaces in its entirety that Assignment of Factoring Proceeds
Agreement dated as of August 28, 1998 between Borrower, Factor and Agent, as
amended, modified, supplemented or extended.
This Agreement may be executed in counterparts, each of which when so
executed, shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the 28 day of December, 1999.
TEXFI INDUSTRIES, INC.,
Borrower
By: /s/ Robert P. Ambrosini
Name: Robert P. Ambrosini
Title: EVP & CFO
Accepted and Agreed:
BANKBOSTON, N.A., as Agent
By: /s/ John W. Getz
Name: John W. Getz
Title: Authorized Officer
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By: /s/ Grover P. Reinle
Name: Grover P. Reinle
Title: SVP
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