As of August 6, 1997
Xx. Xxxx X. Xxxxxx
Chief Financial Officer
Xxxxxx Color-Fi, Inc.
Star Fibers Corp.
Custom Colorants, Inc.
Xxxxxxxx Industries, Inc.
Palmetto Spinning Corporation
P.O. Box 469
Edgefield, SC 29824
Re: Modification of Loans Extended by NationsBank, N.A. to Xxxxxx
Color-Fi, Inc., et al.
Dear Xxxx:
This letter shall serve as a written modification to (i) that certain
Third Amended and Restated Loan and Security Agreement (as amended or modified
the "Loan Agreement") dated to be effective as of March 27, 1997 by and between
Xxxxxx Color-Fi, Inc., Star Fibers Corp., Custom Colorants, Inc., Xxxxxxxx
Industries, Inc. and Palmetto Spinning Corporation (collectively, the
"Borrowers") and NationsBank, N.A. ("NationsBank"); (ii) that certain Second
Amended and Restated Revolving Credit Promissory Note (the "Revolving Credit
Note") in the principal amount of $25,000,000 dated to be effective as of
December 16, 1996 executed by Xxxxxxxxx and delivered to NationsBank; (iii) that
certain Second Amended and Restated Term Loan Promissory Note (the "Term Note")
in the principal amount of $36,310,000 dated to be effective as of December 16,
1996 executed by Xxxxxxxxx and delivered to NationsBank; and (iv) the other Loan
Documents (as such term is defined in the Loan Agreement).
I. MODIFICATIONS TO LOAN AGREEMENT
The Loan Agreement is amended as follows:
(i) By amending all references to the maximum principal amount of the
Revolving Credit Loan such that for the period of time commencing
on the effective date of this letter and ending on September 30,
1997, the maximum principal amount of the Revolving Credit Loan
shall be $28,000,000; provided, from and after October 1, 1997
the maximum principal amount of the Revolving Credit Loan shall
be $25,000,000;
(ii) By deleting the provision that reads "sixty percent (60%) of the
total principal outstanding under the Revolving Credit Loan
during the period of time commencing on December 16, 1996 and
ending on August 6, 1997" at the end of the next to the last
sentence of Section 2.5 on page 13 and substituting in lieu
thereof the following:
sixty percent (60%) of the total principal outstanding under
Revolving Credit Loan during the period of time commencing
on December 16, 1996 and ending on September 30, 1997.
(iii) By inserting the following provision at the end of the second
sentence of Section 3.2:
; provided, the Income Recapture Payment due in calendar
year 1997 shall be due and payable on September 30, 1997.
II. MODIFICATIONS TO REVOLVING CREDIT NOTE
The Revolving Credit Note is modified as necessary to provide that the
maximum principal amount of the Revolving Credit Note shall be $28,000,000 for
the period of time commencing as of the effective date of this letter and ending
on September 30, 1997. From and after October 1, 1997, the maximum principal
amount of the Revolving Credit Note shall be reduced to $25,000,000.
III. MODIFICATIONS TO TERM NOTE
The Term Note is amended by inserting the following provision at the
end of the second sentence of the section entitled Repayment of Principal and
Payment of Interest:
, provided, the Income Recapture Payment due in calendar year 1997
shall be due and payable on September 30, 1997.
IV. MODIFICATIONS TO OTHER LOAN DOCUMENTS
All other Loan Documents are amended as necessary to be consistent with
the modification set forth in this letter and to provide that each of the Loan
Documents and any liens granted thereby shall continue to secure the Loans as
modified by this letter, with the same force and effect as when originally
executed.
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The intent of the foregoing modifications described in this letter are
(i) to increase the maximum principal amount of the Revolving Credit Loan to
$28,000,000 from the date hereof through September 30, 1997 at which time the
maximum principal amount of the Revolving Credit Loan shall be reduced to
$25,000,000; (ii) to provide Borrowers a period of time commencing on December
16, 1996 and ending on September 30, 1997 during which the inventory "cap" will
be raised from 50% of the total principal outstanding under the Revolving Credit
Loan to 60% of the total principal outstanding under the Revolving Credit Loan;
provided, from and after October 1, 1997, the maximum principal advanced and
outstanding under the Revolving Credit Loan against Eligible Inventory shall not
exceed, at any time, fifty percent (50%) of the total principal outstanding
under the Revolving Credit Loan; and (iii) to establish September 30, 1997 as
the date on which the Income Recapture Payment required to be paid in connection
with the Term Loan in calendar year 1997 is due.
All capitalized terms not otherwise defined in this letter shall have
the meaning ascribed to such term in the Loan Agreement. All other terms and
conditions of the Loan Documents shall remain in full force and effect.
Borrowers represent and warrant that, as of the date of this letter (i) all
representations contained in the Loan Agreement and the other Loan Documents are
true and accurate; (ii) all covenants contained in the Loan Agreement and the
other Loan Documents have been and remain satisfied; and (iii) no Event of
Default exists or no condition exists which with the giving of notice for the
passage of time, or both, would constitute an Event of Default under Loan
Agreement or the other Loan Documents.
Please have all parties execute the original of this letter to indicate
each of the Borrowers' agreement to be bound by the terms and conditions of this
letter and return the original fully-executed letter to me as soon as possible.
This letter agreement will be binding on all parties upon our receipt of the
original fully-executed and dated letter and our fee.
Kindest regards,
NationsBank, N.A.
Xxxx X. XxXxxxxx
Vice President
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Agreed to on this day of August, 1997.
BORROWERS:
XXXXXX COLOR-FI, INC.
By: Xxxx X. Xxxxxx
Its: Chief Financial Officer
STAR FIBERS CORP.
By: Xxxx X. Xxxxxx
Its: Chief Financial Officer
CUSTOM COLORANTS, INC.
By: Xxxx X. Xxxxxx
Its: Chief Financial Officer
XXXXXXXX INDUSTRIES, INC.
By: Xxxx X. Xxxxxx
Its: Chief Financial Officer
PALMETTO SPINNING CORPORATION
By: Xxxx X. Xxxxxx
Its: Chief Financial Officer
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