Waiver of Default Letter between Wachovia Bank and JPS Industries, Inc. (January 2004)
This letter agreement is between Wachovia Bank and JPS Industries, Inc. It waives certain defaults by JPS Industries under their Revolving Credit and Security Agreement, specifically related to financial ratio and net worth requirements for specified periods. The waiver is limited to the defaults described and does not apply to future or other defaults. JPS Industries confirms there are no other defaults and that the loan documents remain in effect. The waiver is effective upon JPS Industries signing and returning the letter.
EXHIBIT 10.71
January 27, 2004
Mr. Charles R. Tutterow
Executive Vice President
JPS Industries, Inc.
555 North Pleasantburg Drive
Suite 202
Greenville, SC 29607
Re: | Obligor # 4794862899, Obligation # 1331016 |
Dear Chuck:
Reference is made to that certain Revolving Credit and Security Agreement dated as of May 9, 2001, and subsequent modifications, between JPS Industries, Inc. (the Borrower) and Wachovia Bank, National Association (the Bank). The Revolving Credit and Security Agreement and all other documents executed and delivered in connection therewith are collectively referred to herein as the Loan Documents. All capitalized terms used but not defined herein shall have the meanings assigned in the Loan Documents.
The document provides:
Section 7(a)- Funded Debt to Cash Flow Ratio. Borrower shall at all times maintain, on a consolidated basis, a ratio of Funded Debt to Cash Flow of not more than 2.75 to 1.00 through fiscal quarter ending January 31, 2003, and of not more than 2.00 to 1.00 at fiscal quarter ending April 30, 2003 and at all times thereafter.
The Bank has determined that the Borrower has violated the above-referenced provision due to the following:
Per the Borrowers quarterly compliance report for the fiscal quarter ended November 1, 2003, Funded Debt to Cash Flow Ratio is 2.29. Additionally, based on information received from the Borrower, the Bank has determined that the Borrower will remain in default of the Funded Debt to Cash Flow covenant as of January 31, 2004.
The Borrower has requested the Banks waiver, and the Bank does hereby waive the Borrowers default under this provision for the fourth quarter ended November 1, 2003, and for the first quarter ended January 31, 2004 subject to Borrowers execution of and return of this letter. This waiver is limited to the default recited above and shall not be construed to be a waiver of any subsequent default under the referenced provision, or of any existing or future defaults under any other provision of any Loan Documents.
The document further provides:
Section 7 (b)- Tangible Net Worth. Borrower shall at all times, maintain, on a consolidated basis, a Tangible Net Worth of at least $48,000,000. Total Liabilities shall mean all liabilities of Borrower, including capitalized leases and all reserves for deferred taxes and other deferred sums appearing on the liabilities side of a balance sheet of Borrower in accordance with GAAP applied on a consistent basis. Tangible Net Worth shall mean the total assets (including goodwill) minus Total Liabilities. For purposes of this computation, the aggregate amount flowing from any officers, stockholders or other Affiliates of Borrower shall be subtracted from total assets, and Total Liabilities shall include debt fully subordinated to Bank on terms and conditions acceptable to Bank.
The Bank has determined that the Borrower has violated the above-referenced provision due to the following:
Per the Borrowers quarterly compliance report for the fiscal quarter ended November 1, 2003, Tangible Net Worth totaled $5,036,000.00.
The Borrower has requested the Banks waiver, and the Bank does hereby waive the Borrowers default under this provision through November 1, 2004, subject to Borrowers execution of and return of this letter. This waiver is limited to the default recited above and future violations on a quarterly basis of Section 7(b) through November 1, 2004 and shall not be construed to be a waiver of any default subsequent to November 1, 2004 under the referenced provision, or of any existing or future defaults under any other provision of any Loan Documents.
The Borrower, by signature below, represents and warrants that there exist no defaults or event of default under the Loan Documents other than those specifically waived herein, that the Loan Documents are in full force and effect, and that Borrower does not have any defenses to its obligations under the Loan Documents nor any claims against Bank.
Please evidence your acceptance of the terms of this waiver by signing and returning to the Bank a copy of this letter bearing original authorized signature of each of the parties indicated by January 26, 2004.
Sincerely,
WACHOVIA BANK, NATIONAL ASSOCIATION | ||
By: | /s/ James K. Baumgardner | |
James K. Baumgardner Senior Vice President |
ACCEPTED AND AGREED TO:
JPS INDUSTRIES, INC. | ||||
By: | /s/ Charles R. Tutterow | January 27, 2004 | ||
Charles R. Tutterow Executive Vice President | Date |