[BankBoston's Letterhead appears here]
July 21, 1998
[BankBoston Logo appears here]
Texfi Industries, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Forbearance Agreement Extension
-------------------------------
Ladies and Gentlemen:
We refer to the Forbearance Agreement dated as of June 5, 1998 (the
"Forbearance Agreement") to which you and we are parties. Terms defined in the
Forbearance Agreement are used herein as therein defined.
You have requested an extension of the Forbearance Period from July 24,
1998 to August 24, 1998, to permit additional time to negotiate a refinancing or
restructuring of the Borrower's outstanding Debt. The Agent and the Lenders
agree so to extend the Forbearance Period, provided that from and after the
earlier of the date of this letter and July 24, 1998 and continuing through
August 24, 1998,
(a) the definition "Forbearance Period" is amended in its entirety to read
as follows:
"Forbearance Period" means the period beginning on the date hereof
and ending on the earlier of August 24, 1998 and the date on which the
Agent notifies the Borrower any Forbearance Condition (as hereinafter
defined) fails or ceases to be satisfied.
(b) no repayments of principal of the Term Loan shall be required to be
made prior to August 24, 1998; and
(c) the following shall be the "Forbearance Conditions" and Section 3 of
the Forbearance Agreement is hereby amended in its entirety to read as follows:
Section 3. Forbearance Conditions. The following conditions shall
constitute the "Forbearance Conditions":
(a) The Borrower shall timely perform all of its obligations under
this Agreement;
Texfi Industries, Inc.
July 21, 1998
Page 2
(b) No Default or Event of Default, other than the Forbearance
Defaults and further instances of default, as of July 31, 1998, of the
minimum EBITDA and minimum Adjusted Operating Cash Flow to Total Debt
Service ratio requirements of the Loan Agreement, shall occur or be
continuing;
(c) No payments shall be made by the Borrower after the date of this
Agreement to Mentmore or any other Affiliate of the Borrower, provided
that the Borrower may reimburse Mentmore for out-of-pocket costs and
expenses incurred in the ordinary course of Mentmore's provision of
services to the Borrower, up to a maximum amount of such reimbursement
during the Forbearance Period of $20,000;
(d) No notice shall have been given pursuant to the Letter of Credit
Reimbursement Agreement dated as of June 17, 1998 between The Chase
Manhattan Bank and Mentmore Holdings Corporation that an "Event of
Default" under and as defined in said Agreement has occurred and is
continuing as contemplated by the provisions of Irrevocable Standby Letter
of Credit No. P-369220 issued by The Chase Manhattan Bank on June 17,
1998, in favor of BankBoston, N.A., as Agent;
(e) The Borrower shall, and shall demonstrate to the Agent's
satisfaction from time to time upon request by the Agent that the Borrower
does, timely deduct from the wages of its employees all payroll taxes and
make timely and proper deposits of all payroll and other "trust fund"
taxes;
(f) A comparison of the Borrower's results of operations and
financial condition during the period from May 15, 1998 through any
comparison date on or prior to August 24, 1998 to the business plan dated
May 15, 1998 (adjusted for the increase in the interest rate applicable to
the Loans as provided in Section 2(c)) submitted by the Borrower to the
Agent and the Lenders (the "Business Plan") for the same period, shall not
result in any material adverse variance;
(g) No payment shall have been made in respect of the Subordinated
Debt, nor shall the maturity of the Subordinated Debt have been
accelerated or the holders thereof have taken any other action to enforce
or exercise rights or remedies available to them upon default; and
(h) Not later than August 15, 1998, a crisis consultant, turnaround
manager or other similar, independent, qualified professional or firm
acceptable to the Lenders in their reasonable judgment shall have been
retained by the Borrower (including as an independent contractor, at the
Borrower's election) to consult with it as needed and to assist it in
fulfilling the Business Plan and implementing a turnaround plan, including
handling creditor relationships
Texfi Industries, Inc.
July 14, 1998
Page 3
Please indicate your acceptance of the foregoing, your representation that
as of the date hereof there are no Defaults or Events of Default existing under
the Loan Agreement, other than the Forbearance Defaults, and your ratification
of the Forbearance Agreement, the Loan Agreement and the other Loan Documents,
except as modified hereby, by signing the enclosed duplicate of this letter in
the space indicated and returning it to the undersigned.
Very truly yours,
BANKBOSTON, N.A., as the Agent and
as a Lender
By:
--------------------------------
XXXXXXX X. XxXXXXX
MANAGING DIRECTOR
THE CIT GROUP/COMMERCIAL
SERVICES, INC.:
By: /s/ Xxxxxx Xxxxx
-------------------------------
Name: Xxxxxx Xxxxx
-----------------------------
Title: Vice President
-----------------------------
NATIONAL BANK OF CANADA
By: /s/ Xxx Xxxx
---------------------------------
Name: Xxx Xxxx
---------------------------
Title:AVP
---------------------------
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
---------------------------
Title:VP & MGR
---------------------------
Texfi Industries, Inc.
July 14, 1998
Page 4
Accepted and agreed this day of July 1998.
TEXFI INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Executive Vice President & C. F. O.
