EXECUTION COUNTERPART
DISTRIBUTORSHIP AGREEMENT
AND FORBEARANCE AGREEMENT
This Agreement (the "Agreement) is made and entered into effective as
of the 8th day of March, 2004, by and between LONATI SPA (SUCCESSOR TO LONATI
SRL), a corporation established and organized under the laws of the Italian
Republic, having its legal address in Italy, 25124 Brescia, Xxx Xxxxxxxxx Xxxxxx
0, fiscal code nr. 01469680175 and registered nr. 02096730961, represented by
its legal representative Xx. Xxxxxx Xxxxxx (hereinafter "Lonati") and XXXXXXXX
INDUSTRIES, INC. , a corporation established and organized under the laws of the
State of Delaware ("Speizman"), having its legal address and principal office at
000 Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, represented by its legal
representative and executive officer Xx. Xxxxxx X. Xxxxxxxx. In addition the
following entities (collectively, the "Subsidiaries") have joined in this
Agreement for the purpose of consenting thereto and the other purposes set forth
in Section 2.6 (f) below: XXXXXXXX YARN EQUIPMENT, INC., a corporation
established and organized under the laws of the State of North Carolina, having
its legal address and principal office at 000 Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000, represented by its legal representative and executive officer
Xx. Xxxxxx X. Xxxxxxxx; WINK XXXXX EQUIPMENT CO., INC., a corporation
established and organized under the laws of the State of Georgia, having its
legal address and principal office at 4938 S. Atlanta Road, Suites 800 & 900,
Xxxxxx, Xxxxxxx 00000, represented by its legal representative and executive
officer Xx. Xxxxxx X. Xxxxxxxx; XXXX MOTION CONTROLS, INC., a corporation
established and organized under the laws of the State of North Carolina, having
its legal address and principal office at 000 Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000, represented by its legal representative and executive officer
Xx. Xxxxxx X. Xxxxxxxx. Xxxxxxxx and the Subsidiaries are collectively referred
to in this Agreement as the "Obligors."
PRELIMINARY STATEMENT:
A. On January 2nd, 1992, Lonati and Speizman entered a certain Agency
Agreement, partially modified and amended by the First Amendment executed on May
3rd, 2001 and other agreements (hereinafter in its entirety as the "Original
Agreement"), in order to appoint Speizman as Lonati's exclusive agent in the
U.S.A. and Canada for the sale of Lonati's sock circular knitting machines and
spare parts, including pantyhose machines in the sole territory of Canada.
B. In connection with the extension of credit by Lonati to Speizman for
the purchase of Products (as defined in the Original Agreement) pursuant to the
Original Agreement, Speizman executed and delivered a Security Agreement dated
May 3, 2001 (the "Speizman Security Agreement") together with UCC Financing
Statements and the undersigned Subsidiaries, each of which is a subsidiary of
Speizman, executed and delivered a Security Agreement dated May 3, 2001 (the
"Subsidiary Security Agreement") together with UCC Financing Statements and a
Limited Nonrecourse Secured Guaranty of Payment Agreement dated May 3, 2001 (the
"Guaranty") (the Original Agreement, the Speizman Security Agreement, the
Subsidiary Security Agreement, the Guaranty, the UCC Financing Statements ,
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together with all other documents evidencing or securing the extension of credit
by Lonati to Speizman pursuant to the Original Agreement, or being executed in
connection therewith, being collectively referred to as the "Credit Documents").
C. During the performance of the Original Agreement, Speizman defaulted
on its contractual obligations to pay Lonati for ordered products.
D. Effective as of February 1, 2002 Lonati, Speizman and the
Subsidiaries entered into that certain Second Amendment to Agency Agreement and
Forbearance Agreement (the "Second Amendment"). Subject to the terms and
conditions contained in the Second Amendment, for so long as no Event of Default
(as defined in the Second Amendment) occurred, Lonati agreed pursuant to the
Second Amendment to forbear temporarily from exercising its remedies under the
Credit Documents with respect to the Liabilities (as defined in the Second
Amendment) representing the outstanding trade debt of Speizman to Lonati as of
the date of the Second Amendment in the amount of USD $4,223,591.00.
E. Pursuant to the Second Amendment, as an inducement to Lonati to
enter into the Second Agreement, Speizman agreed to make quarterly payments of
interest on the Liabilities as provided in the Second Amendment and to repay the
Liabilities then outstanding in 24 successive monthly installments of principal
beginning March 1, 2004 as provided in the Second Amendment. The Original
Agreement as modified and supplemented by the Second Amendment is referred to
herein as the "Prior Agreement."
F. In a Form 8-K filed with the U.S. Securities and Exchange Commission
dated February 17, 2004 (the "February 17th SEC Filing"), and in the press
release attached thereto and issued by Speizman on February 17, 2004, Speizman
stated that "after the close of its business on Thursday, February 12, 2004, its
lender delivered a notice of default under its secured loan agreement and
terminated the forbearance agreement previously agreed to, due to defaults in
the financial covenants contained in the loan agreement..."
G. By a written Notice of Default from Lonati to Speizman and the
Subsidiaries dated February 27, 2004 and delivered to Speizman and the
Subsidiaries on March 1, 2004 (the "Notice of Default"), Lonati notified
Speizman and the Subsidiaries that the default by Speizman under its secured
loan agreement constituted an Event of Default under the Prior Agreement.
Pursuant to the Notice of Default, Lonati among other actions, terminated the
Prior Agreement, accelerated payment of the Liabilities and declared the entire
unpaid principal balance of the Liabilities in the amount of USD $4,223,591.00,
and accrued and unpaid interest thereon in the amount of $63,353.87, to be
immediately due and payable.
X. Xxxxxxxx has requested that Lonati forbear for a period of 60 days
from exercising any remedies with respect to payment of the Liabilities. Lonati
has agreed to such forbearance on the terms and conditions set forth herein.
X. Xxxxxx and Xxxxxxxx have also agreed that Speizman shall be
appointed and shall serve as the exclusive distributor for Lonati for a period
of 60 days on the terms and conditions set forth in this Agreement, and subject
to earlier termination as provided herein.
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NOW THEREFORE, in consideration of the premises and the mutual promises
and covenants set forth herein, the parties hereby agree as follows
AGREEMENT:
1. APPOINTMENT OF SPEIZMAN AS DISTRIBUTOR, TERM OF AGREEMENT.
(a) Subject to the terms and conditions set forth herein, Lonati hereby
appoints Speizman as the exclusive distributor of its present range of single
and double cylinder sock knitting machines and spare parts ("Products") to
purchase from Lonati, resell, market and promote the Products to all classes of
trade in the United States and Canada (the "Territory") for the term of this
Agreement. Lonati shall have the right, without notice and in its sole
discretion, to modify the Products, including without limitation, as to
specifications, materials, design, and type, from time to time, and shall be
under no obligation to manufacture, sell or supply any particular Product or to
continue, discontinue or change any Product.
(b) Lonati shall not solicit sales of the Products in the Territory,
but reserves the right to sell, lease or loan Products directly to end-user
customers residing or having facilities located in the Territory when contacted
directly by such customers. In such cases, Lonati will notify Speizman and will
pay to Speizman a commission to be negotiated between Lonati and Speizman on a
case by case basis.
(c) Xxxxxxxx shall not advertise, promote or solicit sales of the
Products or otherwise represent Lonati in any geographic area other than the
Territory, without the prior written consent of Lonati. Speizman shall refer to
Lonati all orders and inquiries concerning the Products received during the term
of this Agreement from customers residing or having facilities located outside
the Territory.
(d) During the term of this Agreement, Speizman shall not manufacture,
sell or distribute in the Territory any products competitive with the Products
that it purchases from and distributes for Lonati, without the prior written
approval of Lonati.
(e) No rights or license to manufacture the Products are granted to
Speizman by this Agreement.
(f) During the term of this Agreement, Speizman shall continuously and
diligently use its best efforts to (i) market, promote and sell the Products to
all classes of trade in the Territory; (ii) service the Products of customers
located in the Territory; (iii) order and maintain a sufficient inventory of
spare parts, as is reasonable under the circumstances, to supply and service its
customers on a timely basis; (iv) ensure dissemination on a timely basis to all
customers of operational manuals, service bulletins and other communications
relating to the Products; and (v) perform any and all services necessary and
appropriate to the effective merchandising of the Products in the Territory.
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(g) The term of this Agreement and of Speizman's exclusive
distributorship hereunder shall commence on the date hereof and shall be for a
60 day period commencing March 8 2004 and ending on, and including May 7, 2004
(the "Term"). Upon the expiration of the Term, all rights of Speizman to act as
a distributor to Lonati shall cease and terminate. The Term shall not be
extended except by a written instrument signed by both Speizman and Lonati.
2. FORBEARANCE
2.1 Subject to the terms, conditions, and understandings contained in this
Agreement, and for so long as there does not exist an "Event of Default" (as
hereinafter defined) under the terms of this Agreement , Lonati hereby agrees to
refrain and forbear temporarily from exercising and enforcing any of its
remedies under the Prior Agreement and the Credit Documents with respect to the
outstanding debt of Speizman to Lonati in the principal amount of USD
4,223,591.00 (Four Million Two Hundred Twenty-Three Thousand Five Hundred
Ninety-One and 00/100 U.S. Dollars) (the "Liabilities") for a 60 day period
commencing March 8 2004 and ending on, and including May 7, 2004 (the
"Forbearance Period"). Lonati shall have no obligation to refrain and forbear
from exercising or enforcing any of its rights or remedies during the
Forbearance Period or at any time thereafter upon the occurrence and during the
continuance of an Event of Default. During the Forbearance Period, and as an
inducement to Lonati to enter into this Agreement, Speizman has agreed to make
two (2) payments on the Liabilities of $197,100.92 on the date hereof and
$196,221.00 on April 1, 2004 as provided for in Section 2.2 hereof.
2.2 Speizman shall make a payment on the Liabilities in the amount of
$197,100.92 on March 8, 2004 and $196,221.00 on April 1, 2004. Speizman
acknowledges and agrees that each such payment represents an amount equal to the
monthly installment of principal and accrued interest on the Liabilities that
was payable pursuant to the Second Amendment on March 1, 2004 and April 1, 2004.
Such payments shall be made by wire transfer to Lonati in lawful money of the
United States of America . 2.3 Speizman shall during the Forbearance Period, and
for so long thereafter as any payment is due to Lonati with respect to any
Products ordered from Lonati prior to or after the date of this Agreement,
promptly provide Lonati by telefax or international courier with copies of all
financial reports, financial forecasts, budgets, projections, restructuring
plans, cash flow reports, outside consultant reports and similar documents
provided to SouthTrust Bank, N.A. in connection with its secured credit facility
to Speizman and any forbearance or workout with respect to such credit facility.
2.4 SPEIZMAN AND EACH OF THE OTHER OBLIGORS HEREBY AGREES THAT, IN
CONSIDERATION OF THE PREMISES AND MUTUAL COVENANTS CONTAINED HEREIN, AND FOR
OTHER GOOD AND VALUABLE CONSIDERATION, INCLUDING THE FORBEARANCE OF LONATI
DURING THE FORBEARANCE PERIOD FROM EXERCISING ITS RIGHTS AND REMEDIES OTHERWISE
AVAILABLE TO IT , THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED,
IN THE EVENT ANY OF THE OBLIGORS (BY ITS OR HIS OWN ACTION, OR THE ACTION OF ANY
OTHER PERSONS) SHALL, ON OR BEFORE THE DATE LONATI IS PAID IN FULL ON THE
LIABILITIES AND WITH RESPECT TO ANY OTHER INDEBTEDNESS AS EVIDENCED BY THE PRIOR
AGREEMENT, THIS AGREEMENT AND/OR THE CREDIT DOCUMENTS, (I) FILE WITH A
BANKRUPTCY COURT OF COMPETENT
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JURISDICTION OR BE THE SUBJECT OF ANY PETITION FOR RELIEF UNDER TITLE 11 OF THE
U.S. CODE (THE "BANKRUPTCY CODE"), AS AMENDED, (II) BE THE SUBJECT OF ANY ORDER
FOR RELIEF ISSUED UNDER THE BANKRUPTCY CODE, (III) FILE OR BE THE SUBJECT OF ANY
PETITION SEEKING ANY REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT,
LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL
OR STATE ACT OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR OTHER RELIEF FOR
DEBTORS, (IV) HAVE SOUGHT OR CONSENTED TO OR ACQUIESCED IN THE APPOINTMENT OF
ANY TRUSTEE, RECEIVER, CONSERVATOR, LIQUIDATOR, (V) BE THE SUBJECT OF ANY ORDER,
JUDGMENT OR DECREE ENTERED BY ANY COURT OR COMPETENT JURISDICTION APPROVING A
PETITION FILED AGAINST SUCH PARTY FOR ANY REORGANIZATION, ARRANGEMENT,
COMPOSITION, READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY
PRESENT OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY,
INSOLVENCY, OR RELIEF FOR DEBTORS, LONATI SHALL THEREUPON BE ENTITLED TO RELIEF
FROM ANY AUTOMATIC STAY IMPOSED BY SECTION 362 OF THE BANKRUPTCY CODE, OR
OTHERWISE, ON OR AGAINST THE EXERCISE OF THE RIGHTS AND REMEDIES OTHERWISE
AVAILABLE TO LONATI AS PROVIDED IN THE PRIOR AGREEMENT, THIS AGREEMENT AND/OR
THE CREDIT DOCUMENTS, AND AS OTHERWISE PROVIDED BY LAW, INCLUDING, WITHOUT
LIMITATION, ITS RIGHT TO FORECLOSE UPON AND REPOSSESS THE COLLATERAL SECURING
SUCH OBLIGATIONS AS DESCRIBED IN THE CREDIT DOCUMENTS, AND EACH OF THE OBLIGORS
HEREBY WAIVES THE BENEFITS OF SUCH AUTOMATIC STAY AND CONSENTS AND AGREES TO
RAISE NO OBJECTION TO ANY REQUEST MADE BY LONATI FOR SUCH RELIEF.
2.5 Immediately upon the occurrence of an Event of Default under this
Agreement or upon the expiration of the Forbearance Period, whichever occurs
first, all forbearances, deferrals and indulgences granted by Lonati pursuant to
the provisions of Section 2.1 through 2.4 above shall automatically terminate,
and Lonati shall thereupon have, and shall be entitled to exercise, any and all
rights and remedies which it may have upon the occurrence of an Event of Default
under this Agreement and/or under the Prior Agreement and/or under applicable
law, including pursuing collection against the Obligors with respect to the
Liabilities, without further notice of any kind.
2.6 In order to induce Lonati to enter into this Agreement, each of the
Obligors jointly and severally, for itself and for its successors, and assigns,
hereby acknowledges, represents, warrants and agrees as follows:
a. The unpaid principal balance of the Liabilities as of the date of this
Agreement is USD $4,223,591.00. The accrued and unpaid interest thereon as of
February 27, 2004 was in the amount of $63,353.87. All such amounts are due and
payable in full, without offset, deduction or counterclaim of any kind or
character whatsoever.
b. None of the Obligors has any claim or counterclaim of any kind or nature
against Lonati or its affiliates, officers or directors relating to thc Prior
Agreement, the Liabilities or otherwise.
x. Xxxxxxxx and each Subsidiary has full power and authority to enter into
this Agreement and to incur and perform all obligations and covenants contained
herein, all of which have been duly authorized by all proper and necessary
corporate action. No consent or approval of shareholders of, or lenders to,
Speizman or any Subsidiary and no consent, approval, filing,
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or registration with or notice to any governmental authority is required as a
condition to the validity of this Agreement or the performance of any of any
Obligor's obligations hereunder.
x. Xxxxxxxx defaulted under its secured loan agreement with SouthTrust
Bank, N.A. as described in the February 17th SEC Filing and such default
constituted an Event of Default under the Prior Agreement. Pursuant to the
Notice of Default, Lonati terminated the Prior Agreement, accelerated payment of
the Liabilities and declared the entire unpaid principal balance of the
Liabilities in the amount of USD $4,223,591.00, and accrued and unpaid interest
thereon in the amount of $63,353.87, to be immediately due and payable. Each of
the Obligors is in default under and with respect to the Liabilities for failure
to pay the Liabilities when and as due. Each of the Obligors acknowledges and
agrees that the defaults under the Prior Agreement and under the Credit
Documents constitute material defaults under the Prior Agreement and under the
Credit Documents and that such defaults have not been, are not hereby, and shall
not be deemed, waived by Lonati, expressly, impliedly, through course of
conduct, or otherwise. The agreement of Lonati to refrain and forbear from
exercising any rights and remedies by reason of any existing default or any
future default shall not constitute a waiver of, consent to, or condoning of,
any existing or future default.
e. All understandings, representations, warranties, and recitals contained
or expressed in this Agreement are true, accurate, and complete and correct in
all respects; and no such understanding, representation, warranty, or recital
fails or omits to state or otherwise disclose any material fact or information
necessary to prevent such understanding, representation, warranty, or recital
from being misleading.
f. Each of the Obligors hereby reissues, ratifies, and confirms the
enforceability and validity of all Credit Documents to which it is a party and
agrees that this Agreement and each of the Credit Documents constitute the
legal, valid, and binding obligations of such Obligor to the extent such Obligor
is party thereto, enforceable in accordance with their respective terms.
Speizman and each of the other Obligors confirms and acknowledges that the Prior
Agreement has been terminated by Lonati due to an Event of Default and that
Speizman and each Obligor to the extent such Obligor is party thereto remains
liable under the Prior Agreement for the breach thereof as provided in the Prior
Agreement and by applicable law and agrees that the Prior Agreement constitutes
the legal, valid, and binding obligations of such Obligor to the extent such
Obligor is party thereto, enforceable in accordance with its terms. In addition,
each of the Obligors acknowledges and agrees that neither the execution and
delivery of this Agreement nor any of the terms, provisions, covenants, or
agreements contained in this Agreement shall in any manner release, impair,
lessen, modify, waive, or otherwise affect the liability and obligations of such
Obligor under the terms of the Credit Documents or with respect to the
Liabilities. Without limiting the generality of the foregoing, each of the
Subsidiaries join in the execution of this Agreement as evidence of their
knowledge of the provisions hereof and their consent to the modifications herein
made. The Subsidiaries do hereby confirm, ratify and reaffirm their obligations
contained in the Guaranty and do further confirm that they have no right of
set-off, counterclaim or defense to the obligations contained in such Guaranty.
3. TERMS FOR PURCHASE AND SALE OF PRODUCTS
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3.1 Speizman shall pay all future spare part orders on and after the date
of this Agreement by irrevocable and confirmed Letter of Credit net ninety (90)
days from the date of the invoice or by wire transfer within five days from the
date of the invoice.
3.2 Furthermore, on and after the date of this Agreement, Speizman shall
pay for new machine orders comprising Products on the following payment terms:
twenty percent (20%) of the purchase price by down-payment in cash at the order
confirmation and the remaining eighty percent (80%) of the purchase price
against ninety (90) days irrevocable and confirmed Letter of Credit or by wire
transfer within five days from the date of the invoice.
3.3 The effectiveness of each purchase order is conditioned upon the
correct and full payment and performance of the aforementioned twenty percent
(20%) down-payment.
3.4 Each irrevocable Letter of Credit shall be issued at least 7 days prior
to the shipment date and shall be payable at 90 (ninety) days from the invoice
issued by Lonati for the Products. Speizman shall pay for Products in United
States Dollars and all letters of credit issued with respect to such purchases
shall be payable in United States Dollars. All letters of credit must be
irrevocable when issued and must be issued and confirmed by a bank satisfactory
to Lonati. Other terms of the letters of credit must be satisfactory to Lonati.
3.5 The terms of payment set forth in this Section 3 shall apply to all
purchases by Speizman of Products , including spare parts and new machines, made
after the date of this Agreement. In addition, with respect to any pending
orders for Products submitted by Speizman prior to the date of this Agreement
and approved by Lonati, the down payment payable to Lonati by Speizman with
respect to such pending orders shall be, and hereby is, increased from ten
percent (10%) of the purchase price to twenty percent (20%) of the purchase
price effective as of the date of this Agreement. One-half of the amount
required to be paid by Speizman in order to increase the down-payment for any
pending order to 20% of the purchase price shall be paid by wire transfer to
Lonati within three (3) calendar days of the date of this Agreement and the
remaining one-half of such amount shall be paid by wire transfer within 10
calendar days of the date of this Agreement Spare part orders that are less than
USD $50,000.00 (Fifty Thousand and 00/100 US Dollars) in value shall be paid by
wire transfer upon Lonati's notice that the goods are ready to be shipped.
3.6 Lonati shall sell the Products to Speizman at such prices and on such
terms and conditions as shall be established by Lonati and in effect on the date
Speizman's order is accepted. Prices shall be subject to change by Lonati at any
time and without notice. All prices quoted by Lonati to Speizman shall be a net
price EXW (Ex Works) Lonati's manufacturing facility in Brecia, Italy (per
INCOTERMS 1990) and crated for sea shipment, unless otherwise designated by
Lonati. Special packing or handling, other than in accordance with Lonati's
standard commercial export practices in effect at the time of shipment, shall be
at the sole expense of Speizman.
4. LIMITED WARRANTY, DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITY.
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(a) Lonati warrants to Speizman only that all Products shall be free
from defects in mechanical parts and workmanship for a period of twelve (12)
months from the date of delivery and shall be free of defects in electrical
parts for a period of six (6) months from the date of delivery. Parts subject to
normal wear and tear are not warranted. Speizman is not authorized to make or
give additional warranties, express or implied, on behalf of Lonati.
(b) LONATI MAKES NO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE, OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED, EXCEPT AS
EXPRESSLY PROVIDED HEREIN.
(c) LONATI SHALL IN NO EVENT BE LIABLE, WHETHER IN CONTRACT, TORT, OR
ON ANY OTHER BASIS, FOR CONSEQUENTIAL, INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES,
OR LOSS OF PROFITS OF ANY KIND SUSTAINED BY SPEIZMAN, OR BY ANY PERSON DEALING
WITH SPEIZMAN, IN CONNECTION WITH THE PRODUCTS. LONATI'S LIABILITY FOR ANY CLAIM
OF ANY KIND (INCLUDING, WITHOUT LIMITATION, CLAIMS BASED UPON ANY EXPRESS
WARRANTY CONTAINED HEREIN AND CLAIMS BASED UPON ANY WARRANTY IMPLIED BY LAW),
SHALL BE LIMITED, AT LONATI'S OPTION, TO EITHER REPAIR OR REPLACEMENT OF THE
PRODUCTS OR THE RETURN TO SPEIZMAN OF THE PRICE PAID, AND SPEIZMAN EXPRESSLY
WAIVES ANY RIGHT IT MIGHT HAVE TO ANY OTHER MEASURE OF DAMAGES, STATUTORY OR
OTHERWISE.
(d) ALL WARRANTY DISCLAIMERS CONTAINED HEREIN ARE INTENDED TO COMPLY
WITH APPLICABLE LAW AND SHALL BE ENFORCED TO THE FULLEST EXTENT POSSIBLE UNDER
APPLICABLE LAW. TO THE EXTENT THAT ANY WARRANTY DISCLAIMER IS DEEMED INVALID
UNDER ANY LAW WHICH MAY BE APPLIED, ANY RELATED NON-DISCLAIMABLE WARRANTIES,
WHETHER EXPRESS OR IMPLIED, SHALL BE LIMITED IN DURATION TO A PERIOD OF SIX
MONTHS.
(e) THE WARRANTIES CONTAINED HEREIN SHALL NOT BE APPLICABLE TO ANY
PRODUCTS WHICH HAVE SUFFERED ACCIDENT, MISUSE, NEGLECT, OR HAVE BEEN MODIFIED
WITHOUT LONATI'S CONSENT.
(f) Neither Speizman, nor any agent, representative or designee of
Speizman shall make any warranties, representations or guarantees to any person,
either orally or in writing, with respect to the Products, or in the name of, or
on behalf of Lonati without Lonati's prior written consent. "
5. DEFAULT AND TERMINATION
5.1 The occurrence of any of the following events (an "Event of Default")
shall constitute a default under this Agreement and under each Credit Document:
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(a) Speizman and SouthTrust Bank, N.A. shall fail for any reason whatsoever
to enter into a written and binding forbearance agreement (the "New Forbearance
Agreement") on or before 5:00 PM, EST, Friday, March 17, 2004 with respect to
the defaults under Speizman's existing loan agreement described in the February
17th SEC Filing, and in that certain Notice of Default from SouthTrust Bank,
N.A. to Speizman dated February 12, 2004 (the "Bank Notice"), which New
Forebearance Agreement shall require SouthTrust Bank to forbear from exercising
its remedies in connection with the Loan Obligations (as defined in the Bank
Notice) with respect to any defaults or events of default described in the Bank
Notice or in existence on the date of such New Forbearance Agreement for a
period extending at least through May 7, 2004.
(b) Speizman shall fail to provide Lonati with a copy by telefax of any New
Forbearance Agreement, or any amendment thereto, within one (1) business day of
the execution of any such New Forbearance Agreement or amendment thereto.
(c) Xxxxxxxx shall default in the payment when and as due of either or both
of the payments on the Liabilities due on March 8, 2004 and on April 1, 2004
pursuant to Section 2.2 of this Agreement.
(d) Any Obligor shall default upon any other indebtedness owed by any
Obligor to Lonati other than the payments on the Liabilities described in
Section 2.2, and such default shall continue unremedied for three business days
after written notice of such default.
(e) Speizman or any other Obligor shall default in the performance or
observance of any term, covenant, condition or agreement contained in this
Agreement (other than monetary defaults) and such default shall continue
unremedied for a period of three business days after written notice thereof has
been given to the defaulting Obligor by Lonati.
(f) Any representation or warranty made by any Obligor under this Agreement
or any Credit Document or any amendment hereto or thereto, shall at any time
prove to have been incorrect or misleading in any material respect when made or
deemed made.
(g) Speizman shall default in the payment or performance of it existing
credit facility with SouthTrust Bank, N.A. (apart from the continuation during
any agreed-upon forbearance period of any existing default which is the subject
of the New Forbearance Agreement or any Existing Noncompliance described in the
Seventh Amendment and Restated Forbearance Agreement dated December 22, 2003
identified in the Bank Notice).
(h) Speizman or any of its subsidiaries shall default in the payment or
performance of any note, loan agreement or other documents evidencing or
securing or otherwise executed in connection with any indebtedness for borrowed
money, the aggregate outstanding amount of which indebtedness is in excess of
$1,000,000 beyond the period of grace if any, provided in the instrument or
agreement under which such indebtedness was created.
(i) Speizman shall fail to obtain refinancing of the existing credit
facility from SouthTrust Bank, N.A. or other banks upon maturity of such
facility (by acceleration upon default or otherwise) in the principal amount of
at least USD 12,000,000.00 (Twelve Million
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US Dollars) and for a term extending at least six (6) months beyond the maturity
of any such facility.
(j) Xxxxxxxx or any Subsidiary or any other subsidiary of Speizman shall
(i) commence a voluntary case under the federal bankruptcy laws (as now or
hereafter in effect), (ii) file a petition seeking to take advantage of any
other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts, (iii) consent
to or fail to contest in a timely and appropriate manner any petition filed
against it in an involuntary case under such bankruptcy laws or other laws, (iv)
apply for or consent to, or fail to contest in a timely and appropriate manner,
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, or liquidator of itself or of a substantial part of its property,
domestic or foreign, (v) admit in writing its inability to pay its debts as they
become due, (vi) make a general assignment for the benefit of creditors, or
(vii) take any corporate action for the purpose of authorizing any of the
foregoing.
(k) A case or other proceeding shall be commenced against Speizman or any
Subsidiary or any subsidiary of Speizman in any court of competent jurisdiction
seeking (i) relief under the federal bankruptcy laws (as now or hereafter in
effect) or under any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or adjustment of debts, or (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like for
Speizman or any Subsidiary or any subsidiary of Speizman or for all or any
substantial part of their respective assets, domestic or foreign, and such case
or proceeding shall continue without dismissal or stay for a period of sixty
(60) consecutive days, or an order granting the relief requested in such case or
proceeding (including, but not limited to, an order for relief under such
federal bankruptcy laws) shall be entered.
(l) A judgment or order for the payment of money which causes the aggregate
amount of all such judgments (to the extent not fully covered by insurance) to
exceed $1,000,000 shall be entered against Speizman or any of its subsidiaries
or any Subsidiary by any court.
(m) Any Credit Document or any provision thereof shall cease to be in full
force and effect, or any Obligor shall deny or disaffirm such Obligor's
obligations under the Credit Document.
5.2 Immediately upon the occurrence of any Event of Default, (i) the
obligations, agreements, and commitments of Lonati set forth in this Agreement
shall immediately and automatically terminate and be of no further force or
effect without further notice to or consent of any of the Obligors, (ii) Lonati
shall have the right to terminate this Agreement and all of Speizman's rights
and agency thereunder, (iii) the principal of and interest on the Liabilities at
the time outstanding, and all other amounts owed to Lonati under this Agreement,
the Prior Agreement or any of the Credit Documents, shall immediately become due
and payable without presentment, demand, protest or other notice of any kind,
all of which are expressly waived, (iv) prior to any termination of this
Agreement by Lonati, Speizman's exclusive distributorship hereunder shall be
deemed non-exclusive immediately upon the occurrence of any such Event of
Default without any further notice and (v) Lonati shall have the right to
exercise and enforce any
10
and all rights and remedies available to Lonati under this Agreement, under any
and all documents executed and delivered in connection with this Agreement,
under the Prior Agreement and under any and all Credit Documents, and under
applicable laws to the same extent as though no forbearance had been agreed to
by Lonati as provided in this Agreement, without regard to any notice or cure
period contained in any of the foregoing or otherwise available under applicable
laws. All rights and remedies available to Lonati under this Agreement, the
Prior Agreement and the Credit Documents, and under any documents executed and
delivered in connection therewith, under any and all of the Credit Documents,
and under applicable laws, may be asserted, enforced, and exercised
concurrently, cumulatively, or successively from time to time and at any time
until such time as all of the Liabilities have been indefeasibly paid in full
and all obligations and liabilities of Xxxxxxxx to Lonati have been fully
performed and satisfied.
6. NOTICES.
Any notice required or permitted herein shall be in writing and, unless
otherwise specified in this Agreement, shall be given by personal delivery,
facsimile (confirmed by hard copy), or certified or registered mail,
return-receipt requested, properly addressed to the party to be notified at its
address as stated in this Agreement or its last known address, and shall be
deemed delivered when so transmitted.
7. EFFECT OF TERMINATION
(a) Upon expiration or termination of this Agreement for any reason,
Speizman's rights under this Agreement shall immediately terminate and Xxxxxxxx
shall immediately cease (i) using Lonati's trademarks relating to the Products,
(ii) selling, promoting or distributing the Products, and (iii) otherwise
representing in any manner that Xxxxxxxx is authorized to distribute the
Products. Xxxxxxxx shall promptly return to Lonati, at Lonati's expense if
Lonati terminates the Agreement, in good order all documents and other material
relating to the Products previously furnished by Lonati and in Speizman's
possession, including but not limited to, customer lists, technical data,
marketing plans, price lists and advertising and promotional materials.
(b) Upon expiration or termination of this Agreement for any reason,
Lonati shall, at its option, (i) repurchase Speizman's inventory of the Products
(except spare parts) at the net invoice price paid to Lonati by Xxxxxxxx for
such Products; or (ii) permit Xxxxxxxx to sell such inventory, provided that
Xxxxxxxx must complete all such sales within three (3) months of the termination
date and fully perform all its obligations required by this Agreement.
(c) Neither termination nor expiration shall relieve either party from
the duty to discharge in full all obligations accrued or due prior to the date
thereof.
8. GOVERNING LAW AND EXCLUSIVE FORUM FOR DISPUTES
8.1 This Agreement shall be governed and construed in all respects in
accordance
11
with the Laws of the Republic of Italy. The parties expressly exclude the
applicability of the United Nations Convention on Contracts for the
International Sale of Goods and any other international conventions or treaties
regarding the international sale of goods. Any reference to local uses or
customs is merely indicative.
8.2 Subject to the provisions of Section 8.3 of this Agreement, each of
the parties to this Agreement hereby irrevocably consents to the personal
jurisdiction of the the courts of Brescia, Italy, in any action, claim or other
proceeding arising out of any dispute in connection with this Agreement, any
rights or obligations hereunder or thereunder, or the performance of such rights
and obligations. Each of the Obligors hereby irrevocably consents to the service
of a summons and complaint and other process in any action, claim or proceeding
brought by Lonati in connection with this Agreement, any rights or obligations
hereunder, or the performance of such rights and obligations.
8.3 Notwithstanding the provisions of Section 8.2 with respect to
jurisdiction in the courts of Brescia, Italy, Lonati shall have the right to
waive the provisions of Section 8.2 and to bring any action or proceeding under
this Agreement against Xxxxxxxx or its properties and against any Subsidiary and
its properties in the competent courts of any other jurisdictions, including
without limitation the State and federal courts located in the State of North
Carolina, U.S.A. In addition, and without limiting the generality of the
foregoing and, notwithstanding Section 8.2 above, Lonati shall have the right to
enforce the Guaranty against each Subsidiary in any competent court(s),
including without limitation the State and federal courts located in the State
of North Carolina, U.S.A. and shall have the right to enforce the Xxxxxxxx
Security Agreement and the Subsidiary Security Agreement, and to foreclose on
the collateral secured thereby, in any State or federal court of competent
jurisdiction in the United States.
9. MISCELLANEOUS
(a) For purposes of this Agreement, Xxxxxxxx shall conduct its business
as an independent contractor and shall be responsible for filing tax returns and
paying taxes with respect to its activities hereunder. Xxxxxxxx shall not, under
any circumstances, be deemed to be an agent, employee or legal representative of
Lonati. Xxxxxxxx, its subdistributors, agents, employees and customers shall not
have or represent themselves as having any authority to enter into contracts or
make any commitments on behalf of Lonati. This Agreement does not establish a
joint venture or partnership between the parties nor does it create a
principal/agent or employer/employee relationship.
(b) This Agreement shall not be changed or modified in any manner,
except by mutual written consent signed by duly authorized representatives of
each of the parties.
(c) Should any provisions of this Agreement be invalid or unenforceable
under any applicable laws or regulations, all other provisions of the Agreement
shall remain in effect.
(d) Neither party shall have the right to assign or otherwise transfer
its rights and obligations under this Agreement except with the prior written
consent of the other party.
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(e) This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
(f) The terms and conditions of this Agreement may be waived only by a
written instrument executed by the party waiving compliance. The failure of any
party to require performance of any provision of the Agreement or to exercise
any right hereunder shall not constitute a waiver or prejudice that party's
right to enforce the same at any later date.
(g) This Agreement is entered into in the English language. Should a
translation of this Agreement into any other language be required or desired for
any reason, it is understood that in all matters involving the interpretation of
this Agreement, the English version shall govern.
(h) This Agreement may be executed and acknowledged by facsimile
signature and may be delivered by facsimile. Such facsimile signatures shall be
enforceable as original signatures to bind the party or parties hereto.
(i) This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto, through their duly authorized
officers, have executed this Agreement as of the date first written above.
LONATI S.p.A
By: /s/ Xxxxxx Xxxxxx
-----------------------------
Name: Xxxxxx Xxxxxx
Title: President
XXXXXXXX INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
[SIGNATURES CONTINUED ON NEXT PAGE]
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Xxxxxxxx Yarn Equipment, Inc.
By: /s/ Xxxxxx X. Speiaman
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
Wink Xxxxx Equipment Co., Inc.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
Xxxx Motion Controls, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
[SIGNATURES CONTINUED ON NEXT PAGE]
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SPECIFIC ACCEPTANCE
Xxxxxxxx hereby declares that it accepts specifically, pursuant to articles
1341 and 1342 of the Italian Civil Code, the following clauses as described
above: Section 5 entitled "Default and Termination"; Section 1 entitled
"Rights Granted, Appointment"; Section 8 entitled "Governing law and
Exclusive Forum for Disputes" and Section 10 entitled "Miscellaneous".
Xxxxxxxx Industries, Inc.
By: /s/ Xxxxxx X. Speiaman
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
Xxxxxxxx Yarn Equipment, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
Wink Xxxxx Equipment Co., Inc.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
Xxxx Motion Controls, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
Charlotte: March 8, 2004
