AMENDMENT NO. 2 TO THE AMENDED AND RESTATED
CREDIT AGREEMENT AND CONSENT
THIS AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT AND
CONSENT (this "Agreement") is made and entered into as of the 12th day of
May, 2000 among each of CONSOLTEX INC., a corporation under the laws of New
Brunswick having its principal place of business in ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇ ("Consoltex"), CONSOLTEX (USA) INC., a New York
corporation ("Consoltex USA"), THE BALSON-HERCULES GROUP LTD., a Rhode
Island corporation ("Balson-Hercules"), LINQ INDUSTRIAL FABRICS, INC., a
Delaware corporation ("LINQ", and together with Consoltex, Consoltex USA
and Balson-Hercules, the "Term B Guarantors"), and CONSOLTEX MEXICO, S.A.
DE C.V., a Mexican corporation ("Consoltex Mexico") (Consoltex, Consoltex
USA, Balson-Hercules, LINQ and Consoltex Mexico are collectively referred
to herein as the "Borrowers" );
RAFYTEK, S.A. DE C.V., a Mexican corporation ("Rafytek"), RAFYTICA, S.A., a
Costa Rican corporation ("Rafytica"), ▇▇▇▇ ▇▇▇, S.A. DE C.V., a Mexican
corporation ("▇▇▇▇ ▇▇▇"), MARINO TECHNOLOGIES INCORPORATED, a Delaware
corporation ("Marino"), ROYALTON MEXICANA S.A. DE C.V., a Mexican
corporation ("Royalton"), VEST COMPANY VESTCO S.A. DE C.V., a Mexican
corporation ("Vestco") and MARINO TECHNOLOGIES DE MEXICO, S.A. DE C.V., a
Mexican corporation ("Marino Mexico") (the Borrowers, Rafytek, Rafytica,
▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, Royalton, Vestco and Marino Mexico are collectively
referred to herein as the "Guarantors" and individually referred to as a
"Guarantor");
NATIONAL BANK OF CANADA, a bank governed by the Bank Act (Canada), having
its head office in Montral, Qubec, Canada, in its capacity as a
Lender ("NBC"), BANK OF AMERICA, N.A., a national banking association
organized and existing under the laws of the United States, having its
principal office in Charlotte, North Carolina, U.S.A., successor in
interest to NationsBank, National Association, in its capacity as a Lender
("Bank of America"), and EACH OTHER FINANCIAL INSTITUTION EXECUTING AND
DELIVERING A SIGNATURE PAGE HERETO and each other financial institution
which may hereafter execute and deliver an instrument of assignment with
respect to the Credit Agreement, as defined below, pursuant to SECTION 3.8
OR 14.1 thereof (hereinafter NBC, Bank of America and such other financial
institutions may be referred to individually as a "Lender" or collectively
as the "Lenders"), NATIONAL BANK OF CANADA, in its capacity as agent for
the Canadian Facilities Lenders (as defined in the Credit Agreement) (in
such capacity, or any successor agent appointed to serve in such capacity
in accordance with the terms of SECTION 13.9 of the Credit Agreement, the
"Canadian Agent"), and BANK OF AMERICA, N.A., successor in interest to
NationsBank, National Association, in its capacity as agent for the U.S.
Facilities Lenders (as defined in the Credit Agreement) (in such capacity,
or any successor agent appointed to serve in such capacity in accordance
with the terms of SECTION 13.9 of the Credit Agreement, the "US Agent" and
together with the Canadian Agent, the "Agents"), and BANK OF AMERICA, N.A.,
successor in interest to NationsBank, National Association, a national
banking association organized and existing under the laws of the United
States, having its principal office in Charlotte, North Carolina, as
Collateral Agent (in such capacity, the "US Collateral Agent").
W I T N E S S E T H:
WHEREAS, the Borrowers, the Guarantors, the Lenders and the Agents
have entered into that certain Amended and Restated Credit Agreement dated
as of October 25, 1999, as amended by Amendment No. 1 to Amended and
Restated Credit Agreement and other Loan Documents dated as of January 3,
2000 by and among the Borrowers, the Guarantors, the Lenders and the Agents
("Amendment No. 1") (as so amended by Amendment No. 1 and from time to time
hereafter amended, supplemented, modified or amended and restated, the
"Credit Agreement"), pursuant to which the Lenders have agreed to make
certain Advances to the Borrowers; and
WHEREAS, the Borrowers, Rafytek, Rafytica, and the Agents have entered
into a Guaranty Agreement dated as of March 19, 1996 (the "Initial
Guaranty"), ▇▇▇▇ ▇▇▇, the Agents and ▇▇▇▇▇▇▇▇▇▇ Trust Inc. have entered
into a Guaranty Agreement dated as of May 31, 1996 (the "▇▇▇▇ ▇▇▇
Guaranty") and Marino, Royalton, Vestco, Marino Mexico, the Agents and
▇▇▇▇▇▇▇▇▇▇ Trust Inc. have entered into a Guaranty Agreement dated as of
October 22, 1999 (the "1999 Guaranty" and together with the Initial
Guaranty and the ▇▇▇▇ ▇▇▇ Guaranty, and as any of them from time to time
hereafter may be amended, supplemented, modified or amended and restated,
the "Guaranty Agreements"), pursuant to which Guaranty Agreements the
Guarantors have guaranteed payment of the Borrowers' Liabilities (as
defined in each respective Guaranty Agreement); and
WHEREAS, the Borrowers (except for Consoltex Mexico), and the US
Collateral Agent have entered into a Security Agreement dated as of March
19, 1996, as amended by Amendment No. 1 (as amended, the "1996 Security
Agreement") and Marino and the US Collateral Agent have entered into a
Security Agreement dated as of October 22, 1999, as amended by Amendment
No. 1 (as amended, the "1999 Security Agreement", and together with the
1996 Security Agreement, and as any of them from time to time hereafter may
be amended, supplemented, modified or amended and restated, the "Security
Agreements"); and
WHEREAS, the Borrowers (except for Consoltex Mexico) and the US
Collateral Agent have entered into an Assignment of Patents, Trademarks,
Service Marks and Copyrights dated as of March 19, 1996, as amended by
Amendment No. 1 (as so amended by Amendment No. 1 and from time to time
hereafter amended, supplemented, modified or amended and restated, the "IP
Assignment"); and
WHEREAS, Consoltex, Consoltex USA and Consoltex Mexico and the US
Collateral Agent have entered into a Stock Pledge Agreement dated as of
March 19, 1996 (the "Initial Pledge Agreement") and Consoltex, Consoltex
USA and Consoltex Mexico and the US Collateral Agent have entered into a
Stock Pledge Agreement (Mexican Subsidiaries) dated as of March 19, 1996
(the "Mexican Subsidiaries Pledge Agreement" and together with the Initial
Pledge Agreement, and as either of them from time to time hereafter may be
amended, supplemented, modified or amended and restated, the "Pledge
Agreements"); and
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WHEREAS, the Borrowers have informed the Agents and the Lenders that
for financial reporting purposes, effective as of January 1, 2000, the
Borrowers have adopted the generally accepted accounting principles as from
time to time applicable in the United States of America ("U.S. GAAP") and
report all financial data in their consolidated financial statements in
United States Dollars; and
WHEREAS, previously the Borrowers prepared their consolidated
financial statements utilizing the accounting principles generally accepted
in Canada as recommended in the Canadian Institute of Chartered Accountants
Handbook ("Canadian GAAP") and reported all financial data in their
consolidated financial statements in Canadian Dollars, and the Credit
Agreement calculated all financial covenants in SECTIONS 11.1 and 11.3 in
the Credit Agreement in Canadian Dollars applying Canadian GAAP; and
WHEREAS, the Borrowers have requested that SECTIONS 11.1 and 11.3 of
the Credit Agreement and the definitions attendant thereto be amended as
necessary to provide for calculation of the financial covenants to be made
in United States Dollars applying U.S. GAAP, and for the covenant levels to
be modified to give effect to such change in reporting currency and
application of U.S. GAAP, in order to be consistent with the Borrowers'
preparation and reporting of its consolidated financial statements; and
WHEREAS, the Borrowers have informed the Agents and the Lenders that
AIP/CGI NB Acquisition Corp. ("AIP/CGI") intends to acquire from Les
Gantiers Holding B.V., by purchase, amalgamation, merger, consolidation or
otherwise, all the multiple voting shares issued and outstanding by
Consoltex (the "AIP Change of Control"), which will thereby result in a
Change of Control as prohibited by SECTION 11.13(A) of the Credit
Agreement; and
WHEREAS, the Borrowers have also informed the Agents and the Lenders
that the following will sequentially occur after the AIP Change of Control
(collectively, the "Reorganization");
(i) Consoltex is to be amalgamated with and into AIP/CGI, at such
time the holder of all multiple voting shares and subordinate voting
shares issued by Consoltex; then
(ii) AIP/CGI will contribute all the equity interest in Consoltex
USA, its wholly owned subsidiary, to its parent corporation, AIP/CGI
Acquisition Corp. ("AIPCO"), such that Consoltex USA will become a
wholly owned subsidiary of AIPCO and an affiliate of AIP/CGI, which is
also a wholly owned subsidiary of AIPCO; and
WHEREAS, the Required Lenders and the Agents are willing to consent to
the AIP Change of Control and to the Reorganization on the terms set forth
herein;
NOW, THEREFORE, in consideration of the mutual covenants and the
fulfillment of the conditions set forth herein, the parties hereto do
hereby agree as follows:
1. DEFINITIONS. Any capitalized terms used herein without
definition shall have the meaning set forth in the Credit Agreement.
2. AMENDMENTS TO AND RESTATEMENTS OF TERMS OF THE CREDIT AGREEMENT.
Subject to the terms and conditions set forth herein, the Credit Agreement
is hereby amended as follows:
(a) The definition of "GAAP" or "Generally Accepted Accounting
Principles" in SECTION 1.1 of the Credit Agreement is amended and restated
in its entirety as set forth below:
"GAAP" or "Generally Accepted Accounting Principles" means, effective
January 1, 2000, generally accepted accounting principles at such time
applicable in the United States of America, being those principles of
accounting set forth in pronouncements of the Accounting Principles Board,
the Financial Accounting Standards Board, the American Institute of
Certified Public Accountants, or which have other substantial authoritative
support.
(b) The definition of "Consolidated EBITDA" in SECTION 1.1 of
the Credit Agreement is hereby amended by deleting the phrase "and (vi)
and inserting in lieu thereof the following:"
"(vi) all management or other fees paid by Consoltex to AIP/CGI NB
Acquisition Corp., AIP/CGI Acquisition Corp., or AIP Industrial Partners
Capital Fund II L.P. during the six month fiscal period beginning January
1, 2000 and ending June 30, 2000, in an aggregate amount not to exceed
US$675,000, and (vii)"
(c) The second sentence of SECTION 1.2(A) of the Credit
Agreement is amended and restated in its entirety as follows: "In
reference to the application of GAAP, the accounting principles observed in
the period referred to shall be comparable in all material respects to
those applied in the preparation of the audited financial statements of
Consoltex for the fiscal year ending December 31, 1999 delivered to the
Lenders and satisfactory thereto in form and substance."
(d) Section 11.1 of the Credit Agreement is hereby amended and
restated in its entirety as set forth below:
11.1 FINANCIAL COVENANTS.
(a) CONSOLIDATED NET WORTH. Permit Consolidated Net Worth to be less
than US $74,000,000 as of March 31, 2000 and June 30, 2000.
(b) CONSOLIDATED FIXED CHARGE RATIO. Permit as of the last day of
the respective periods set forth below the Consolidated Fixed
Charge Ratio to be less than that ratio set forth opposite each
such period:
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Doc. No. 343228
Consolidated
Fixed Charge
Ratio Must Not Be
PERIOD LESS THAN
Each Four-Quarter Period ending on
March 31, 2000 and June 30, 2000 1.35 to 1.00
1. CONSOLIDATED TOTAL DEBT TO CONSOLIDATED EBITDA. Permit at any time
during the respective periods set forth below the ratio of Consolidated
Total Debt (at such time) to Consolidated EBITDA (as of the most recently
ended Four-Quarter Period at or prior to such time) to be greater than that
ratio set forth opposite each such period:
Consolidated Total
Debt/Consolidated
EBITDA
PERIOD RATIO MUST NOT EXCEED
The Four-Quarter Period ending
on March 31, 2000 5.37 to 1.0
The Four-Quarter Period ending
on June 30, 2000 5.14 to 1.0
(d) ADJUSTED CONSOLIDATED TOTAL DEBT TO CONSOLIDATED EBITDA. Permit
at any time during the respective periods set forth below the ratio of
Adjusted Consolidated Total Debt (at such time) to Consolidated EBITDA (as
of the most recently ended Four-Quarter Period at or prior to such time) to
be greater than that ratio set forth opposite each such period:
Adjusted Consolidated
Total Debt/
Consolidated EBITDA
PERIOD RATIO MUST NOT EXCEED
The Four-Quarter Period ending
on March 31, 2000 5.98 to 1.0
The Four-Quarter Period ending
on June 30, 2000 5.72 to 1.0
(e) ADJUSTED CONSOLIDATED TOTAL DEBT TO CONSOLIDATED TOTAL
CAPITALIZATION. Permit at any date set forth below the ratio of
Adjusted Consolidated Total Debt (at such date) to Consolidated
Total Capitalization (at such date) to be greater than that
ratio set forth opposite each such period:
Adjusted
Consolidated Total
Debt/Consolidated
Total Capitalization
PERIOD RATIO MUST NOT EXCEED
The last day of the Four-Quarter Period
ending on March 31, 2000 .765 to 1.00
The last day of the Four-Quarter Period
ending on June 30, 2000 .765 to 1.00
(f) All determinations made of the financial covenants in subsections
(a) through (e) above shall be done giving effect to the Marino Transaction
as of June 30, 1999 and the Atlas Acquisition as of September 30, 1999.
3. CONSENT TO AIP CHANGE OF CONTROL. The Required Lenders and the
Agents hereby consent to the AIP Change of Control and waive any Event of
Default that would occur under SECTION 11.13(A) of the Credit Agreement as
a result thereof, subject to review of all documentation evidencing or
governing the AIP Change of Control by the Agents and their counsel and
satisfaction thereby with the terms thereof and the consistency of such
terms with information regarding the AIP Change of Control as previously
disclosed by the Borrowers to the Lenders prior to the date of this
Agreement. This waiver is granted only for the AIP Change of Control and
is not intended to, and does not, create a course of dealing or otherwise
impair the future ability of the Agents or the Lenders to declare a Default
or Event of Default for any other Change of Control or for any other reason
or otherwise enforce the terms of the Credit Agreement and the other Loan
Documents.
4. CONDITIONAL CONSENT TO THE REORGANIZATION. The Required Lenders
and the Agent hereby consent to the Reorganization, subject to:
(a) review of all documentation evidencing or governing the
Reorganization by the Agents and their counsel and satisfaction
thereby with the terms thereof and the consistency of such terms with
information regarding the Reorganization as previously disclosed by
the Borrowers to the Lenders prior to the date of this Agreement,
(b) satisfaction of the conditions precedent to such consent
being effective that: (i) AIPCO and AIP/CGI, as successor to Consoltex
by amalgamation, become Borrowers under the Credit Agreement; (ii)
AIPCO and AIP/CGI execute and deliver to the Agents and the Lenders
concurrently with or prior to the effectiveness of the Reorganization
all new and replacement Notes, and amendments to the various Loan
Documents, including without limitation the Guaranty Agreement, the
Security Agreements, the IP Assignment and the Pledge Agreements,
together with such other Borrowers and Guarantors' party thereto, as
necessary or desirable by the Agents or the Required Lenders to
reflect accurately the Reorganization, the Lenders' continued security
interest of equal priority in the Collateral and the addition of AIPCO
and AIP/CGI as Borrowers under the Facilities, and (iii) AIPCO and
AIP/CGI, together with such other Borrowers and Guarantors', as
necessary, execute and deliver all other documents in connection
thereto as reasonably requested by the Agents.
5 CONSENT OF GUARANTORS. Each of the Guarantors has joined in the
execution of this Amendment solely for the purposes of consenting hereto
and for the further purpose of confirming its guaranty of the Obligations
of the Borrowers pursuant to the Guaranty Agreement to which such Guarantor
is party, and each such Guarantor, together with each Borrower in its
capacity as a Guarantor under the Initial Guaranty, does hereby so consent
hereto and confirm such guaranty.
6 REPRESENTATIONS AND WARRANTIES. In order to induce the Agents
and the Lenders to enter into this Agreement, the Borrowers and the
Guarantors represent and warrant to the Agents and the Lenders as follows:
(a) The representations and warranties made by each Borrower or
Guarantor in ARTICLE IX of the Credit Agreement and in each of the
other Loan Documents to which it is a party are true and correct in
all material respects on and as of the date hereof, except to the
extent that such representations and warranties expressly relate to an
earlier date;
(b) There has been no material adverse change in the condition,
financial or otherwise, of the Borrowers and their Subsidiaries, taken
as a whole, since the date of the most recent financial reports of the
Borrowers received by each Agent and the Lenders under SECTION 10.1 of
the Credit Agreement, including without limitation, giving effect to
the AIP Change of Control; and
(c) No Default or Event of Default has occurred and is continuing
and no Acceleration Event has occurred.
7 ENTIRE AGREEMENT. This Agreement, together with all the Loan
Documents (collectively, the "Relevant Documents"), sets forth the entire
understanding and agreement of the parties hereto in relation to the
subject matter hereof and supersedes any prior negotiations and agreements
among the parties relative to such subject matter. No promise, condition,
representation or warranty, express or implied, not herein set forth shall
bind any party hereto, and not one of them has relied on any such promise,
condition, representation or warranty. Each of the parties hereto
acknowledges that, except as otherwise expressly stated in the Relevant
Documents, no representations, warranties or commitments, express or
implied, have been made by any party to the other. None of the terms or
conditions of this Agreement may be changed, modified, waived or canceled
orally or otherwise, except as permitted pursuant to SECTION 14.6 of the
Credit Agreement.
8 FULL FORCE AND EFFECT OF AGREEMENT. Except as hereby
specifically amended, modified or supplemented, the Credit Agreement and
all other Loan Documents are hereby confirmed and ratified in all respects
by each party hereto and shall be and remain in full force and effect
according to their respective terms. Each Guarantor hereby acknowledges
and agrees to the amendments of the Credit Agreement set forth herein and
hereby confirms and ratifies in all respects the Guaranty Agreement to
which such Guarantor is a party and enforceability of such Guaranty
Agreement against such Guarantor in accordance with its terms.
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument.
10. GOVERNING LAW. This Agreement shall in all respects be governed
by, and construed in accordance with, the laws of the state of New York.
11. ENFORCEABILITY. Should any one or more of the provisions of this
Agreement be determined to be illegal or unenforceable as to one or more of
the parties hereto, all other provisions nevertheless shall remain
effective and binding on the parties hereto.
12. REFERENCES. All references in any of the Loan Documents to the
"Credit Agreement" shall mean the Credit Agreement, as amended hereby. All
references in any of the Loan Documents to "Consoltex Group" shall be
amended hereby to refer to "Consoltex."
13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of each of the Borrowers, the Guarantors, the Lenders,
the Agents, the U.S. Collateral Agent and their respective successors,
assigns and legal representatives; PROVIDED, however, that the Borrowers
and the Guarantors, without the prior consent of the Agents, may not assign
any rights, powers, duties or obligations hereunder.
14. EXPENSES. Borrowers agree to pay to the Agents and the Lenders
all reasonable out-of-pocket expenses incurred or arising in connection
with the negotiation and preparation of this Agreement.
15. CONDITIONS PRECEDENT. The effectiveness of this Agreement is
subject to the receipt by the Agents of the following, in form and
substance satisfactory to them:
(i) executed originals of this Agreement;
(ii) payment by the Borrowers in immediately available funds of
an amendment fee to each Lender consenting to this Agreement equal in
amount to 1/8% of such Lender's Commitment under each Facility; and
(iii) copies of all additional agreements, instruments and
documents which the Lenders may reasonably request, such documents,
when appropriate, to be certified by appropriate governmental
authorities.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the
day and year first above written.
BORROWERS:
CONSOLTEX INC., as Borrower
and Guarantor
By:
Name:
Title:
By:
Name:
Title:
CONSOLTEX (USA) INC., as
Borrower and Guarantor
By:
Name:
Title:
By:
Name:
Title:
THE BALSON-HERCULES GROUP LTD., as
Borrower and Guarantor
By:
Name:
Title:
By:
Name:
Title:
LINQ INDUSTRIAL FABRICS, INC.,
as Borrower and Guarantor
By:
Name:
Title:
By:
Name:
Title:
CONSOLTEX MEXICO, S.A. de
C.V., as Borrower and Guarantor
By:
Name:
Title:
By:
Name:
Title:
AGENTS:
NATIONAL BANK OF CANADA,
as Canadian Agent
By:
Name:
Title:
BANK OF AMERICA, N.A.,
as US Agent and U.S. Collateral Agent
By:
Name:
Title:
LENDERS:
NATIONAL BANK OF CANADA
By:
Name:
Title:
BANK OF AMERICA, N.A.
By:
Name:
Title:
NATIONAL BANK OF CANADA, U.S. DIVISION
By:
Name:
Title:
THE BANK OF NOVA SCOTIA
By:
Name:
Title:
By:
Name:
Title:
THE BANK OF NOVA SCOTIA
By:
Name:
Title:
By:
Name:
Title:
FLEET BUSINESS CREDIT CORPORATION
(successor to Sanwa Business
Credit Corp. and BankBoston, N.A.)
By:
Name:
Title:
GUARANTORS:
RAFYTEK, S.A. de C.V., as Guarantor
By:
Name:
Title:
RAFYTICA, S.A., as Guarantor
By:
Name:
Title:
▇▇▇▇ ▇▇▇, S.A. de C.V., as Guarantor
By:
Name:
Title:
MARINO TECHNOLOGIES INC., as Guarantor
By:
Name:
Title:
ROYALTON MEXICANA, S.A. DE C.V., as Guarantor
By:
Name:
Title:
VEST COMPANY VESTCO, S.A. DE
C.V., as Guarantor
By:
Name:
Title:
MARINO TECHNOLOGIES DE MEXICO,
S.A. DE C.V., as Guarantor
By:
Name:
Title: