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Amendment To Joinder And Forbearance Agreement

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Sectors: Manufacturing
Governing Law: United States
Effective Date: October 31, 2000
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EXHIBIT 10.146
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AMENDMENT TO JOINDER AND FORBEARANCE AGREEMENT


This Amendment to Joinder and Forbearance Agreement (the "Amendment") is made and dated as of this 31st day of October, 2000, by and among DISPLAY TECHNOLOGIES, INC., a Nevada corporation ("Display"), AD ART ELECTRONIC SIGN CORPORATION, a Florida corporation ("Ad Art"), CERTIFIED MAINTENANCE SERVICE, INC., a Florida corporation, DON BELL INDUSTRIES, INC., a Florida corporation ("Don Bell"), J.M. STEWART MANUFACTURING, INC., a Florida corporation, LA-MAN CORPORATION, a Nevada corporation ("La-Man"), J.M. STEWART CORPORATION, a Florida corporation, J.M. STEWART INDUSTRIES, INC., a Florida corporation, VISION TRUST MARKETING, INC., a Florida corporation, LOCKWOOD SIGN GROUP, INC., a Florida corporation ("Lockwood") (collectively, the foregoing entities shall be referred to as the "Original Borrowers"), HAMILTON DIGITAL DESIGNS, LTD., an Ontario (Canada) corporation ("Hamilton" and, together with the Original Borrowers, the "Borrowers"), and SOUTHTRUST BANK, a bank chartered under the laws of the State of Alabama and formerly doing business as SouthTrust Bank, National Association ("SouthTrust" or the "Bank"), and amends that certain Joinder and Forbearance Agreement dated as of September 26, 2000 by and among the Borrowers and the Bank (the "Forbearance Agreement").


W I T N E S S E T H:
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A. Pursuant to that Loan and Security Agreement dated as of June 2, 1999, as amended by Amendment No. 1 to Loan and Security Agreement dated March 3, 2000 by and among the Bank and the Original Borrowers and by the Forbearance Agreement (as amended, the "Loan Agreement"), the Bank extended the following credit facilities to the Borrowers:


1. A revolving loan in the maximum principal amount of
$23,000,000.00 (the "Revolving Loan"), evidenced by that certain
Amended and Restated Revolving Loan Promissory Note dated March 3, 2000
in the maximum principal amount of $23,000,000.00 made by the Original
Borrowers to the order to SouthTrust (the "Revolving Note"). The
Revolving Loan originally was limited to the maximum principal amount
of $10,000,000.00 pursuant to that certain Loan and Security Agreement
by and between Display Technologies, as Borrower, and SouthTrust, dated
as of June 2, 1999 and that certain Revolving Loan Promissory Note
dated June 2, 1999 in principal amount of $10,000,000, but was
subsequently increased in March 2000 to a maximum principal amount of
$23,000,000.00 pursuant to the Amendment;


2. A term loan in the original principal amount of $1,000,000.00
(the "Term Loan"), evidenced by that certain Term Promissory Note dated
June 2, 1999 in the original principal amount of $1,000,000.00 made by
Borrowers to the order of SouthTrust (the "Term Note");


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3. Irrevocable Letter of Credit # SB-1326 in amount of up to
$2,500,000.00 dated August 1, 1997 issued by SouthTrust for the account
of the Original Borrowers (the "1997 Letter of Credit"), securing
$2,500,000.00 of Display's Variable/Fixed Rate Credit Enhanced Notes
(the "1997 Demand Notes") issued pursuant to that certain Trust
Indenture dated as of August 1, 1997; and


4. Irrevocable Letter of Credit # SB2128 in amount of up to
$2,546,028.00 dated June 17, 1999 issued by SouthTrust for the account
of the Original Borrowers (the "1999 Letter of Credit"), securing
$2,500,000 of Display's Variable/Fixed Rate Credit Enhanced Notes (the
"1999 Demand Notes") issued pursuant to that certain Trust Indenture
dated as of June 2, 1999 (collectively, the "Loans").


B. As more particularly set forth in the Forbearance Agreement, certain Events of Default had occurred under the Loan Agreement prior to the execution and delivery of the Forbearance Agreement.


C. As a result of the Events of Default under the Loan Agreement, the Bank had no obligation under the Loan Agreement to make any further advances on the Revolving Note and had the right to declare the unpaid balance of the Loans to be forthwith due and payable and to exercise such other rights and remedies available to the Bank under the Loan Documents and applicable law.


D. At the request of the Borrowers, the Bank agreed to and did enter into the Forbearance Agreement, pursuant to which the Bank agreed until no later than October 31, 2000, to, among other things, forbear from exercising its rights and remedies under the Loan Documents, and provide the Borrowers with additional revolving credit availability.


E. The Borrowers have asked the Bank to amend the Forbearance Agreement to extend the Forbearance Period and to continue for a limited period of time to provide the Borrowers with additional revolving credit availability.


NOW, THEREFORE, in consideration of the foregoing premises and the agreements and undertakings contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:


1. DEFINITIONS.


a. Capitalized terms used but not defined herein shall have the same meanings assigned to such terms in the Forbearance Agreement.


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b. The term "Loan Documents" as used herein and in the Forbearance Agreement is hereby amended to specifically include, without limitation, the Forbearance Agreement, the Forbearance Documents, this Amendment, and any and all documents executed in connection with this Amendment.


c. The term "Collateral" as used herein and in the Forbearance Agreement is hereby amended to specifically include, without limitation, the Additional Collateral.


2. ACKNOWLEDGMENTS BY BORROWERS. Each of the Borrowers acknowledges and agrees as follows:


A. ACKNOWLEDGMENT OF DEFAULT AND ENTITLEMENT TO PAYMENT. That (i) on and as of the date hereof, each of the Term Loan and the Revolving Loan is and remains in default; (ii) on and as of the date hereof, the Bank has the right to make demand upon each of the Borrowers for the payment in full of the Term Loan and the Revolving Loan, and that such demand for payment would be proper in all respects; and (iii) the Borrowers each waive any and all further notice, presentment, notice of dishonor or demand with respect to the indebtedness evidenced by the Loan Documents;


B. ACKNOWLEDGMENT OF INDEBTEDNESS TO SOUTHTRUST. That, as of October 30, 2000, (i) the Borrowers are indebted, jointly and severally, to the Bank under the Revolving Loan in the principal amount of $14,099,974.33, for accrued interest in the amount of $125,007.93, and for legal fees and other costs and expenses due under the Loan Documents relating to the Revolving Loan; (ii) the Borrowers are indebted, jointly and severally, to the Bank under the Term Loan in the principal amount of $540,249.00, for accrued interest in the amount of $5,004.81, and for legal fees and other costs and expenses due under the Loan Documents relating to the Term Loan; (iii) on and as of the date hereof, all of the foregoing amounts remain outstanding and unpaid; (iv) on and as of the date hereof, none of the Borrowers has any claim or counterclaim of any kind or nature against the Bank, relating to the Loans or otherwise; and (v) on and as of the date hereof, all such amounts are due and payable in full, without offset, deduction or counterclaim of any kind or character whatsoever, but are subject to increase as a result of any and all interest, fees and other charges which are or shall become due and payable to the Bank under the Loan Documents;


C. ACKNOWLEDGMENT OF INDEBTEDNESS DUE UNDER THE DEMAND NOTES. That, as of October 30, 2000, (i) the outstanding principal indebtedness due under the 1997 Demand Notes is $2,270,000.00, along with interest accrued at the contract rate from September 1, 2000 until the date hereof; (ii) the outstanding principal indebtedness due under the 1999 Demand Notes is $2,275,000, along with interest accrued at the contract rate from September 1, 2000 until the date hereof; (iii) the Borrowers are current on all payments of interest due under the 1997 Demand Notes and the 1999 Demand Notes; and (iv) to the extent any draws are made against the 1997 Letter of Credit or the 1999 Letter of Credit (together, the "Letters of Credit") and the Bank is required to fund such Letters of Credit, the Borrowers are liable, jointly and severally, to reimburse the Bank for all such amounts and all other fees and expenses due under the Loan Documents;


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D. ACKNOWLEDGMENT THAT LIABILITIES CONTINUE IN FULL FORCE AND EFFECT. That the Loan Documents and all other respective liabilities and obligations of the Borrowers to the Bank under the Loan Documents shall, except as expressly modified herein during the Forbearance Period (as hereinafter defined), remain in full force and effect, and shall not be released, impaired, diminished or in any other way modified or amended as a result of the execution and delivery of this Agreement or by the agreements and undertakings of the parties contained herein;


E. ACKNOWLEDGMENT OF LIENS ON COLLATERAL. That the Bank's security interests in and liens on Collateral, and any and all rents and proceeds therefrom, are and shall remain in full force and effect as security for all the indebtedness evidenced by the Loan Documents, and the same is hereby ratified and confirmed by the Borrowers in all respects;


F. ACKNOWLEDGMENT OF CROSS-DEFAULT OF LOANS. That (i) each of the Loans is and shall be cross-defaulted with the other Loans such that the occurrence of a default or Event of Default under any of the Loans is and shall be a default and Event of Default under all of the Loans and (ii) each of the Loans is and shall be cross-collateralized, such that any Collateral (other than the Display Mortgaged Property which secures the repayment of only the Term Loan) securing any of such Loans shall secure the repayment of all of such Loans and such that the Bank shall have no obligation to release its liens on any of its collateral securing such Loans unless and until each of these Loans has been paid or otherwise satisfied in full;


G. ACKNOWLEDGMENT OF NO COMMITMENT TO LEND. That, except as specifically provided in this Amendment, nothing contained in this Amendment does or shall, at any time, require Bank to make any further loans or other extensions of credit to any of the Borrowers;


H. ACKNOWLEDGMENT OF LIABILITY FOR LEGAL FEES AND COLLECTION COSTS. That, without limitation of the foregoing, the Borrowers are liable, jointly and severally, for all of the Bank's reasonable attorneys' fees and expenses and collection costs incurred in connection with the Loans through the date of this Amendment and are liable for all of the Bank's attorneys' fees and expenses and collection costs incurred after the date hereof; and


I. ACKNOWLEDGMENT OF BANK'S RIGHT TO ACCRUE AND COLLECT INTEREST AT THE DEFAULT RATE. That, as a result of the Pre-July Events of Default and the Continuing Events of Default, the Bank has the right under the Loan Agreement, the other Loan Documents and applicable law to accrue and collect interest on the unpaid principal balance of the Loans at the Default Rate provided for under the Loan Agreement.


3. REAFFIRMATION OF REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the Borrowers hereby ratifies and reaffirms each of its representations and warranties made to the Bank in the Loan Agreement and each of the other Loan Documents, except for those representations and warranties described on Schedules 1 and 2 to the Forbearance Agreement, and avers that such representations and warranties remain true and correct as of the date of this Amendment. Each of the Borrowers further ratifies and reaffirms each of its covenants made in the Loan Documents and


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in the Forbearance Agreement, except for those covenants described on Schedules 1 and 2 to the Forbearance Agreement, and further ratifies and reaffirms its obligation and agreement to perform such covenants for the benefit of the Bank.


4. FORBEARANCE BY BANK. Section 5.a of the Forbearance Agreement entitled Forbearance Period is hereby deleted in its entirety and replaced with the following:


"A. FORBEARANCE PERIOD. At the request of the Borrowers, and
upon the terms and conditions set forth herein, Bank agrees to forbear
from pursuing collection of the indebtedness due under the Loan
Documents as a result of the defaults and the Continuing Events of
Default existing under the Loan Documents, as of the date of this
Agreement until the earliest to occur of the following times: (i) 2:00
p.m., central time, on January 15, 2001, (ii) the time at which any of
the Borrowers fails to comply in any respect with any of the covenants
to Bank set forth in this Agreement or the Borrowers' breach of any of
the representations made herein; or (iii) the occurrence of any Event
of Default under any of the Loan Documents (other than the continuation
of the Continuing Events of Default described in the Forbearance
Agreement) (the period beginning on the date of this Agreement and
terminating on the earliest of such dates being hereinafter referred to
as the "Forbearance Period")."


5. ADVANCES ON THE REVOLVING LOAN DURING THE FORBEARANCE PERIOD. Section 7.a of the Forbearance Agreement entitled "Maximum Amount of Advances under Revolving Loan" is hereby deleted in its entirety and replaced with the following:


"A. MAXIMUM AMOUNT OF ADVANCES UNDER REVOLVING LOAN. During
the Forbearance Period, and subject to the satisfaction of each of the
conditions set forth in Section 12 below, the Bank shall continue to
make advances to the Borrowers under the Revolving Loan in accordance
with the terms of the Loan Agreement and the other Loan Documents;
provided, however, that during the Forbearance Period, the term
"Aggregate Loan Values", as used in the Loan Agreement, shall mean the
lesser of (a) Twenty-Three Million and No/100 Dollars (U.S.
$23,000,000.00) or (b) the sum of (i) the Loan Value of Accounts, plus
(ii) the Loan Value of Inventory, plus (iii) (A) Three Million and
No/100 Dollars (U.S. $3,000,000.00) during the period commencing on
November 1, 2000 and ending on November 30, 2000, (B) Two Million Seven
Hundred Thousand and No/100 Dollars (U.S. $2,700,000.00) during the
period commencing on December 1, 2000 and ending on December 31, 2000,
or (C) Two Million Four Hundred Thousand and No/100 Dollars (U.S.
$2,400,000.00) during the period commencing on January 1, 2001 and
ending on January 15, 2001. Except as specifically provided in Section
7.b below, the Borrowers' ability to obtain advances and overadvances
on the Revolving Loan during the Agreement shall remain subject to all
other conditions and restrictions set forth in the Loan Agreement."


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6. PAYMENT OF LOAN RESTRUCTURING FEE. To induce the Bank to enter into the Amendment, the Borrowers shall, upon the execution and delivery of the Amendment, pay in cash to the Bank a loan restructuring fee in the amount of Fifty Thousand and No/100 Dollars (U.S. $50,000.00).


7. PAYOFF OF LOANS. The Borrowers, and each of them, covenant and agree that the Borrowers shall pay off the Loans and al
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