EXECUTION COUNTERPART
AMENDMENT OF
1992 NOTE AGREEMENT
This Amendment, entered into as of January 28, 2000, by and among CONE
▇▇▇▇▇ CORPORATION (the "Company") and THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA ("Noteholder").
WHEREAS, the parties hereto have executed and delivered that certain
Note Agreement dated as of August 13, 1992 (as previously amended and as it may
be further amended, modified or supplemented, the "Note Agreement");
WHEREAS, the Company has requested a modification of, among other
things, the financial covenants under the Note Agreement and has agreed to
secure its obligations under the Note Agreement, the Credit Agreement (as
defined in Section 1F(b) below) and certain other debt instruments by pledging
its assets to Prudential and certain other lenders;
WHEREAS, Noteholder is willing to enter into this Amendment subject to
the satisfaction of conditions and terms set forth herein;
WHEREAS, capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Note Agreement; and
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Amendments to Note Amendment.
1A. Paragraph 1 of the Note Agreement. Insert the words "and upon the
occurrence and during the continuance of an Event of Default" in the seventh
line of paragraph 1 after the words "on overdue payments".
1B. Paragraph 5 of the Note Agreement. Paragraph 5 is amended by the
addition of new paragraphs 5L, 5M, 5N and 5O, as follows:
5L. Credit Facility. On and after July 3, 2000, the Company
shall maintain at all times a revolving credit facility (or a binding
commitment therefore with an effective date on or prior to August 7,
2000) having a maturity date no earlier than August 7, 2002 with at
least $80,000,000 in aggregate commitments available thereunder and
otherwise in form and substance satisfactory to the Required Holders.
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5M. Other Covenants. If (in the reasonable opinion of the
Required Holders) at any time and from time to time, after the date
hereof, any of the covenants, representations and warranties or events
of default, or any other material term or provision (other than any
term or provision relating to payment terms, interest rates or
penalties), contained in any other material debt agreement or
instrument of the Company ("Material Debt Document"), is more favorable
to the lender or lenders under such Material Debt Document than are the
terms of this Agreement to the holders of the Notes, this Agreement
shall be amended to contain each such more favorable covenant,
representation and warranty, event of default, term or provision, and
the Company hereby agrees to so amend this Agreement and to execute and
deliver all such documents requested by the Required Holder(s) to
reflect such Amendment. Prior to the execution and delivery of such
documents by the Company, this Agreement shall be deemed to contain
each such more favorable covenant, representation and warranty, event
of default, term or provision for purposes of determining the rights
and obligations hereunder.
5N. New Subsidiaries. Simultaneously with (1) the acquisition
or creation of any Material Subsidiary which is a Domestic Subsidiary,
or upon any existing Domestic Subsidiary becoming a Material
Subsidiary, cause to be delivered to the Agent each of the following
and (2) the acquisition or creation of any Material Direct Foreign
Subsidiary, cause to be delivered to the Agent each of the items set
forth in (d), (e), (f), (h) (subclauses (i), (ii), (iii) and (v) only)
and (i), below:
(a) a Facility Guaranty executed by such Subsidiary
substantially in the form of Exhibit F;
(b) a General Security Agreement of such Subsidiary
substantially in the form of Exhibit G, and a Priority
Security agreement substantially in the form of Exhibit H,
together with such Uniform Commercial Code financing
statements on Form UCC-1 or otherwise duly executed by such
Subsidiary as "Debtor" and (i) naming the General Collateral
Agent for the benefit of the General Secured Parties, as
"Secured Party," and (ii) naming the Priority Collateral Agent
for the benefit of the Priority Secured Parties as "Secured
Party", in each case in form, substance and number sufficient
in the reasonable opinion of the Collateral Agents and their
special counsel to be filed in all Uniform Commercial Code
filing offices in all jurisdictions in which filing is
necessary or advisable to perfect (y) the General Lien in
favor of the General Collateral Agent for the benefit of the
General Secured Parties and (z) the Priority Lien in favor of
the Priority Collateral Agent for the benefit of the Priority
Secured Parties, in each case to the extent such General Lien
or Priority Lien may be perfected by Uniform Commercial Code
filing;
(c) Priority Mortgages and General Mortgages with
respect to all parcels of real property with a fair market
value in excess of $300,000 owned by such Subsidiary and with
respect to any Material Real Property or to the extent
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required by any law, regulation or directive of any applicable
Governmental Authority, Material Real Property Support
Documents, as applicable, and related Uniform Commercial Code
financing statements on Form UCC-1 or otherwise pertaining to
fixtures;
(d) if the Subsidiary Securities issued by such
Subsidiary that are, or are required to become, Pledged
Interests, shall be owned by a Subsidiary who has not then
executed and delivered to the General Collateral Agent a
Pledge Agreement granting a General Lien to the General
Collateral Agent, for the benefit of the General Secured
Parties, in such equity interests, a Pledge Agreement executed
by the Subsidiary that directly owns such Subsidiary
Securities substantially in the form attached hereto as
Exhibit I (or, as to the Pledged Interests issued by any
Direct Foreign Subsidiary, in a form acceptable to the Agent),
and if such Subsidiary Securities shall be owned by the
Company or a Subsidiary who has previously executed a Pledge
Agreement, a Pledge Agreement Supplement in the form required
by such Pledge Agreement pertaining to such Subsidiary
Securities;
(e) if the Pledged Interests issued by such
Subsidiary constitute securities under Article 8 of the
Uniform Commercial Code (i) the certificates representing such
Pledged Interests and (ii) duly executed, undated stock powers
or other appropriate powers of assignment in blank affixed
thereto;
(f) (i) Uniform Commercial Code financing statements
on form UCC-1 or otherwise duly executed by the pledgor as
"Debtor" and naming the General Collateral Agent for the
benefit of the General Secured Parties as "Secured Party," in
form, substance and number sufficient in the reasonable
opinion of the Agent and its special counsel to be filed in
all Uniform Commercial Code filing offices and in all
jurisdictions in which filing is necessary or advisable to
perfect in favor of the General Collateral Agent for the
benefit of the General Secured Parties the General Lien on
such Subsidiary Securities and (ii) if the Pledged Interests
issued by such Subsidiary do not constitute securities and
such Subsidiary has not elected to have such interests treated
as securities under Article 8 of the applicable Uniform
Commercial Code, a control agreement from the Registrar of
such Subsidiary, in form and substance acceptable to the Agent
and in which the Registrar (1) acknowledges that the pledgor
is at the date of such acknowledgment the sole record, and to
its knowledge, beneficial owner of such Subsidiary Securities,
(2) acknowledges the General Lien in favor of the General
Collateral Agent conferred under the Pledge Agreement and that
such General Lien will be reflected on the registry for such
Subsidiary Securities, (3) agrees that it will not register
any transfer of such Subsidiary Securities nor acknowledge any
Lien in favor of any other Person on such Subsidiary
Securities, without the prior written consent of the General
Collateral Agent, in each instance, until it receives notice
from the General Collateral Agent that all General Liens on
such
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Collateral in favor of the General Collateral Agent for the
benefit of the General Secured Parties have been released or
terminated, and (4) agrees that upon receipt of notice from
the Agent or the General Collateral Agent that an Event of
Default has occurred and is continuing and that the Subsidiary
Securities identified in such notice have been transferred to
a transferee identified in such notice, it will duly record
such transfer of Subsidiary Securities on the appropriate
registry without requiring further consent from the pledgor
and shall thereafter treat the transferee as the sole record
and beneficial owner of such Subsidiary Securities pending
further transfer, notwithstanding any contrary instruction
received from the pledgor;
(g) a supplement to the appropriate schedule attached
to the appropriate Security Documents listing the additional
Collateral, certified as true, correct and complete by an
authorized officer (provided that the failure to deliver such
supplement shall not impair the rights conferred under the
Security Documents in after acquired Collateral);
(h) an opinion or opinions of counsel to the
Subsidiary (including local counsel in each jurisdiction where
Mortgaged Property is located) dated as of the date of
delivery of the Facility Guaranty and other Related Documents
provided for in this paragraph 5N and addressed to the
Collateral Agents, in form and substance reasonably acceptable
to the Collateral Agents (which opinion may include
assumptions and qualifications of similar effect to those
contained in the opinions of counsel delivered previously), to
the effect that:
(i) such Subsidiary is duly organized,
validly existing and in good standing in the
jurisdiction of its formation, has the requisite
power and authority to own its properties and conduct
its business as then owned and then conducted and
proposed to be conducted and to execute, deliver and
perform the Facility Guaranty and other documents
described in this paragraph 5N to which such
Subsidiary is a signatory, and is duly qualified to
transact business and is in good standing as a
foreign corporation or partnership in each other
jurisdiction in which the character of the properties
owned or leased, or the business carried on by it,
requires such qualification and the failure to be so
qualified would reasonably be likely to result in a
Material Adverse Effect;
(ii) the execution, delivery and performance
of the Facility Guaranty and other documents
described in this paragraph 5N to which such
Subsidiary is a signatory have been duly authorized
by all requisite corporate or partnership action
(including any required shareholder or partner
approval), each of such agreements has been duly
executed and delivered and constitutes the valid and
binding agreement of such Subsidiary, enforceable
against such Subsidiary in accordance with its
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terms, subject to the effect of any applicable
bankruptcy, moratorium, insolvency, reorganization or
other similar law affecting the enforceability of
creditors' rights generally and to the effect of
general principles of equity (whether considered in a
proceeding at law or in equity);
(iii) the Subsidiary Securities of such
Subsidiary are duly authorized, validly issued, fully
paid and nonassessable, and free of any preemptive
rights, and the applicable General Security
Instrument (including foreign collateral documents)
is effective to create a valid security interest in
favor of the General Collateral Agent for the benefit
of the General Secured Parties in such Subsidiary
Securities as constitute Pledged Interests;
(iv) (A) the Uniform Commercial Code
financing statements on Form UCC-1 delivered to the
General Collateral Agent by the Subsidiary in
connection with the delivery of the General Security
Instruments of such Subsidiary have been duly
executed by the Subsidiary and are in form, substance
and number sufficient for filing in all Uniform
Commercial Code filing offices in all jurisdictions
in which filing is necessary to perfect in favor of
the General Collateral Agent for the benefit of the
General Secured Parties the General Lien on General
Collateral conferred under such General Security
Instruments to the extent such General Lien may be
perfected by Uniform Commercial Code filing;
(B) the Uniform Commercial Code
financing statements on Form UCC-1 delivered to the
Priority Collateral Agent by the Subsidiary in
connection with the delivery of the Priority Security
Instruments of such Subsidiary have been duly
executed by the Subsidiary and are in form, substance
and number sufficient for filing in all Uniform
Commercial Code filing offices in all jurisdictions
in which filing is necessary to perfect in favor of
the Priority Collateral Agent for the benefit of the
Priority Secured Parties the Priority Lien on
Priority Collateral conferred under such Priority
Security Instruments to the extent such Priority Lien
may be perfected by Uniform Commercial Code filing;
(v) in the case of Direct Foreign
Subsidiaries only, that under the laws of the
applicable foreign jurisdiction, all agreements,
notices and other documents that are required to be
executed, delivered, filed or recorded and all other
action required to be taken, within or pursuant to
the laws of such jurisdiction to perfect the General
Lien conferred in favor of the General Collateral
Agent under the applicable General Security
Instrument as against creditors of and purchasers for
value from the holder of the Pledged Interests has
been duly executed, delivered, filed, recorded or
taken, as the case may be;
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(vi) each Mortgage is in appropriate form
for due recordation and upon recordation shall
constitute a valid and effective, fully perfected
Priority Lien and General Lien, as applicable, on the
real property and fixtures described therein; and
(i) current copies of the Organizational Documents
and Operating Documents of such Subsidiary, minutes of duly
called and conducted meetings (or duly effected consent
actions) of the Board of Directors, partners, or appropriate
committees thereof (and, if required by such Organizational
Documents, Operating Documents or applicable law, of the
shareholders, members or partners) of such Subsidiary
authorizing the actions and the execution and delivery of
documents described in this paragraph 5N.
5O. Post Closing Deliveries. The Company shall comply
with the covenant set forth in Section 9.23 of the Credit
Agreement within the time periods specified therein, without
giving effect to any amendment to or waiver under such Section
unless expressly consented to by the Required Holders.
1C. Paragraphs 6A and 6B of the Note Agreement. Paragraphs 6A and 6B
are amended in their entirety to read as follows:
6A. Financial Limitations. The Company covenants that it will
not permit at any time:
(a) Consolidated Net Worth. Consolidated Net Worth to be less
than (i) $145,000,000 from the Effective Date until (but excluding) the
last day of the fiscal quarter that includes the Effective Date (the
"Effective Date Quarter") plus commencing October 1, 2000, 50% of
Consolidated Net Income for each Fiscal Quarter, and (ii) as at the
last day of each fiscal quarter of the Company commencing with the
Effective Date Quarter and until (but excluding) the last day of the
next following fiscal quarter of the Company, the sum of (A) the amount
of Consolidated Net Worth required to be maintained pursuant to this
paragraph 6A(i) as at the end of the immediately preceding fiscal
quarter (or, in the case of the Effective Date Quarter, required to be
maintained as of the Effective Date), plus (B) 100% of the aggregate
amount of all increases in the stated capital and additional paid-in
capital accounts of the Company resulting from the issuance of equity
securities or other capital investments.
(b) Consolidated Leverage Ratio. As of the end of each
Four-Quarter Period set forth below the Consolidated Leverage Ratio to
be more than that set forth opposite each such period:
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Leverage Ratio
Period Must Not Exceed
---------------------------------------- -------------------------
Four Quarter Period ended January 2,
2000 13.05 to 1.00
Four Quarter Period ending April 2,
2000 10.25 to 1.00
Four Quarter Period ending July 2, 2000 9.50 to 1.00
Four Quarter Period ending October 1,
2000 7.30 to 1.00
Four Quarter Period ending December
31, 2000 5.80 to 1.00
Each Four Quarter Period ending April
1, 2001 through December 30, 2001 5.00 to 1.00
Four Quarter Period ending March 31,
2002 through June 30, 2002 and
thereafter 4.50 to 1.00
(c) Consolidated Interest Coverage Ratio. As of the end of each month
for the Twelve-Month Periods set forth below the Consolidated Interest Coverage
Ratio to be less than that set forth opposite each such period:
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Interest Coverage Ratio
Period Must Exceed
--------------------------------------- ------------------------------
Twelve Month Period ended January 2,
2000 1.00 to 1.00
Twelve Month Period ending April 2,
2000 1.35 to 1.00
Twelve Month Period ending July 2,
2000 1.40 to 1.00
Twelve Month Period ending October 1,
2000 1.65 to 1.00
Twelve Month Period ending December
31, 2000 1.95 to 1.00
Each Twelve Month Period ending April
1, 2001 through December 30, 2001 2.20 to 1.00
Each Twelve Month Period ending
thereafter 2.25 to 1.00
(d) Consolidated EBITDA. Consolidated EBITDA for each period set forth
below to be less than the amount set forth opposite such period:
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Consolidated EBITDA
Period Ending Must Exceed
------------------------------------- ----------------------------------
Fiscal Quarter ended January 2, 2000 $2,000,000
One Fiscal Quarter ending April 2,
2000 $8,550,000
Two Fiscal Quarters ending July 2,
2000 $20,450,000
Three Fiscal Quarters ending
October 1, 2000 $33,750,000
Four Quarter Period ending December
31, 2000 $45,000,000
Each Four Quarter Period ending
April 1, 2001 through December 30,
2001 $50,000,000
Each Four Quarter Period ending
thereafter $52,000,000
6B. Capital Expenditures.
(a) Make or become committed to make U.S. Capital Expenditures which
exceed in the aggregate in any Fiscal Year of the Company described below (on a
noncumulative basis, with the effect that amounts not expended in any Fiscal
Year may not be carried forward to a subsequent period), the amount set forth
opposite each such period:
Capital Expenditures
Period Not to Exceed
------------------------------------------------ ----------------------
Fiscal Year ended January 2, 2000 $13,500,000
January 3, 2000 through and including August $8,000,000
7, 2000
(b) Make or become committed to make Mexican Capital Expenditures from
the Effective Date until August 7, 2000 except to the extent an Event of Default
has not occurred and is continuing, for Capital Expenditures in an aggregate
amount not in excess of $1,000,000 for the purpose of purchasing certain real
property in Altamira, Mexico
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and making certain improvements thereto to the extent such improvements have
been contractually agreed to with third parties prior to the Effective Date.
1D. ▇▇▇▇▇▇▇▇▇ ▇▇ of the Note Agreement. Paragraph 6C is amended as
follows:
(a) Paragraph 6C(1). Paragraph 6C(1) is amended by deleting clause (v)
thereof in its entirety and adding new clauses (v), (vi) and (vii) as follows:
(v) purchase money Liens to secure Debt permitted under
paragraph 6C(2)(e) and incurred to purchase fixed assets, provided such
Debt represents not less than 75% and not more than 95% of the purchase
price of such assets as of the date of purchase thereof and no property
other than the assets so purchased secures such Debt;
(vi) Liens on the General Collateral and the Priority
Collateral created under the General Security Instruments and the
Priority Security Instruments in favor of the General Collateral Agent
or the Priority Collateral Agent, as applicable, or any refinancing on
substantially the same terms as the Credit Agreement and otherwise in
form and substance acceptable to the Required Holders; and
(vii) Liens on Receivables (as defined in and transferred by
an Originator in accordance with the Receivables Transfer Agreement)
and Returned Goods (as defined in the Securitization Intercreditor
Agreement) in favor of General Electric Capital Corporation, as
collateral agent under the Receivables Purchase Agreement including,
but not limited to, either (i) Liens securing an increase in the
Securitization Outstandings under the Receivables Purchase Agreement
from $50,000,000 to $60,000,000 or (ii) Liens securing an additional
factoring or securitization of receivables in an aggregate amount not
to exceed $10,000,000.
(b) Paragraph 6C(2). Paragraph 6C(2) shall be deleted in its entirety
and the following shall be substituted therefor:
6C(2) Debt. Incur, create, assume or permit to exist any Debt,
howsoever evidenced, except:
(a) Debt existing as of the Effective Date as set forth in
Schedule 6C(2); provided, none of the instruments and agreements
evidencing or governing such Debt shall be amended, supplemented or
restated after the Effective Date to change any terms of subordination,
repayment or rights of enforcement, conversion, put or exchange rights
to be materially less favorable to the holders of the Notes than the
terms and rights as in effect on the Effective Date;
(b) Debt hereunder;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
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(d) Debt arising from Rate Hedging Obligations in an aggregate
notional amount not to exceed at any time $40,000,000, which create
Rate Hedging Obligations incurred to limit risks of currency or
interest rate fluctuations to which the Company and its Subsidiaries
are otherwise subject by virtue of the operations of their businesses,
and not for speculative purposes;
(e) purchase money Debt (other than the Parras Cone Debt)
described in paragraph 6C(1)(v) not to exceed an aggregate outstanding
principal amount at any time of $10,000,000;
(f) Capitalized Lease Obligations not to exceed an aggregate
principal amount at any time in excess of $5,000,000;
(g) unsecured intercompany Debt for loans and advances made by
the Company or any Guarantor to the Company or any Guarantor, any such
Debt of the Company owing to any Guarantor shall be subordinate to
payment of the Obligations hereunder at all times in accordance with
the terms of the Facility Guaranty;
(h) additional unsecured Debt for Money Borrowed not otherwise
covered by clauses (a) through (g) above, provided that the aggregate
outstanding principal amount of all such other Debt permitted under
this clause (h) shall in no event exceed $10,000,000 at any time;
(i) the Parras Cone Debt;
(j) Debt extending the maturity of, or renewing, refunding or
refinancing, in whole or in part, Debt incurred under clauses (a), (b),
(g), (h) and (i) of this paragraph 6C(2), provided that the terms of
any such extension, renewal, refunding or refinancing Debt (and of any
agreement or instrument entered into in connection therewith) shall not
change any terms of subordination, repayment or rights of enforcement,
conversion, put or exchange rights to be materially less favorable to
the holders of the Notes than the terms of the Debt as in effect prior
to such action, and provided further that (1) the aggregate principal
amount of such extended, renewed, refunded or refinanced Debt shall not
be increased by such action, (2) the group of direct or contingent
obligors on such Debt shall not be expanded as a result of any such
action, and (3) immediately before and immediately after giving effect
to any such extension, renewal, refunding or refinancing, no Default or
Event of Default shall have occurred and be continuing; and
(k) Securitization Outstandings or Indebtedness described in
and secured by Liens permitted under paragraph 6C(1)(vii).
(c) Paragraph 6C(3) through 6C(7). Each of Paragraph 6C(3) through
6C(7), inclusive, shall be deleted in its entirety and the following shall be
substituted therefor:
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6C(3) Incorporation of Credit Agreement. Each of Sections
10.2, 10.6 through 10.20, inclusive, of the Credit Agreement, together
with any relevant definitions, shall be incorporated herein by this
reference as though set forth herein and shall be in full force and
effect. Each such Section shall remain in effect until the Maturity
Date and shall not be modified or waived by any amendment to or consent
under the Credit Agreement.
1E. Paragraph 7 of the Note Agreement. Paragraph 7 is amended as
follows:
(a) by deleting clause (v) thereof and substituting the following
therefore:
(v) the Company fails to perform or observe any agreement
contained in paragraphs 5D, 5E, 5L, 5M, 5N or 6; or
(b) by the addition of the following new clauses:
(xv) the Company or any other Credit Party or any other Person
shall disavow or attempt to terminate any or all of the Related
Documents or any or all of the Related Documents shall cease to be in
full force and effect in whole or in part for any reason whatsoever; or
(xvi) if any of the Security Documents shall be cancelled,
terminated, revoked or rescinded or the security interests, mortgages
or liens in any of the Collateral shall cease to be perfected, or shall
cease to have the priority contemplated by the Security Documents, or
any action at law, suit or in equity or other legal proceeding to
cancel, revoke or rescind any of the Related Documents shall be
commenced by or on behalf of the Company or any of its Subsidiaries
party thereto or any of their respective stockholders or any other
Person, or any court or any other governmental or regulatory authority
or agency of competent jurisdiction shall make a determination that, or
issue a judgment, order, decree or ruling to the effect that, any one
or more of the Security Documents is illegal, invalid or unenforceable
in accordance with the terms thereof; or
(xv) (i) a default or event of default shall have occurred and
be continuing under the Credit Agreement, or (ii) the banks party to
the Credit Agreement shall accelerate the maturity of all or any part
of the indebtedness thereunder, or (iii) the commitments under the
Credit Agreement shall be terminated in whole or in part, or (iv) the
banks a party to the Credit Agreement shall refuse to advance funds
under the Credit Agreement for any reason whatsoever; or
(xvi) the Company or any Subsidiary shall, other than in the
ordinary course of business (as determined by past practices), suspend
all or any part of its operations material to the conduct of the
business of the Company or such Subsidiary for a period of more than 60
days; or
(xvii) the Company or any Subsidiary shall breach any of the
material terms or conditions of any agreement under which any Rate
Hedging Obligations permitted
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hereby is created and such breach shall continue beyond any grace
period, if any, relating thereto pursuant to the terms of such
agreement, or if the Company or any Subsidiary shall disaffirm or seek
to disaffirm any such agreement or any of its obligations thereunder;
or
(xviii) any Material Supply Agreement shall be terminated,
canceled or not renewed, or any notice of the foregoing shall be given
by any other party thereto, or a default shall occur under such
agreement and continue beyond the grace or cure period, if any,
applicable thereto; or
(xix) there shall occur any Change in Control; or
(xx) there shall occur any Termination Event as defined in the
Receivables Purchase Agreement; or
(xxi) the Company shall refuse to permit the engagement of a
third-party business consultant ("Consultant") to be hired by the
Noteholder on or before February 15, 2000 on terms and in a manner
acceptable to the Noteholder in its sole discretion or the Company
shall fail to pay any fees, expenses or other obligations owing to the
Consultant or otherwise fails to comply in any material respect with
the provisions of any agreement entered into with the Consultant; or
1F. Amendments to Paragraph 10B of the Note Agreement. (a) The
following definitions shall be added in the appropriate alphabetical order:
"Applicable Rate" means 11.00% per annum.
"Capital Expenditures" means, with respect to the Company and
its Subsidiaries, for any period the sum of (without duplication) (i)
all expenditures (whether paid in cash or accrued as liabilities) by
the Company or any Subsidiary during such period for items that would
be classified as "property, plant or equipment" or comparable items on
the consolidated balance sheet of the Company and its Subsidiaries,
including without limitation all transactional costs incurred in
connection with such expenditures provided the same have been
capitalized, excluding, however, the amount of any Capital Expenditures
paid for with proceeds of casualty insurance as evidenced in writing
and submitted to the Significant Holders together with a compliance
certificate, and (ii) with respect to any Capital Lease entered into by
the Company or its Subsidiaries during such period, the present value
of the lease payments due under such Capital Lease over the term of
such Capital Lease applying a discount rate equal to the interest rate
provided in such lease (or in the absence of a stated interest rate,
that rate used in the preparation of the audited financial statements
most recently delivered hereunder), all the foregoing in accordance
with GAAP applied on a Consistent Basis.
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"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement Nos. 13 and 98 of the Financial Accounting
Standards Board and any successor thereof.
"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act) either (A) becomes the "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act ), directly or
indirectly, of Voting Securities of the Company (or securities
convertible into or exchangeable for such Voting Securities)
representing 25% or more of the combined voting power of all Voting
Securities of the Company (on a fully diluted basis) or (B) otherwise
has the ability, directly or indirectly, to elect a majority of the
board of directors of the Company;
(ii) during any period of up to 24 consecutive months,
commencing on the Effective Date, individuals who at the beginning of
such 24-month period were directors of the Company shall cease for any
reason (other than the death, disability or retirement of an officer of
the Company that is serving as a director at such time so long as
another officer of the Company replaces such Person as a director) to
constitute a majority of the board of directors of the Company; or
(iii) any Person or two or more Persons acting in concert
shall have acquired by contract or otherwise, or shall have entered
into a contract or arrangement that, upon consummation thereof, will
result in its or their acquisition of the power to exercise, directly
or indirectly, a controlling influence on the management or policies of
the Company.
"Collateral" means, collectively, all General Collateral and
all Priority Collateral.
"Collateral Agency Agreements" means, collectively, the
General Collateral Agency Agreement and the Priority Collateral Agency
Agreement, as amended, modified, supplemented or amended and restated
from time to time.
"Collateral Agents" means, collectively, the Priority
Collateral Agent and the General Collateral Agent.
"Compliance Certificate" means an Officer's Certificate of the
Company demonstrating compliance with the financial covenants contained
in paragraph 6A, substantially in the form of Exhibit J.
"Consistent Basis" in reference to the application of GAAP
means the accounting principles observed in the period referred to are
comparable in all material respects to those applied in the preparation
of the audited financial statements of the Company most recently
delivered as of the Effective Date.
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"Consolidated EBITDA" means, with respect to the Company and
its Subsidiaries for any period ending on the date of computation
thereof, the sum of, without duplication, (i) Consolidated Net Income,
(ii) Consolidated Interest Expense, (iii) taxes on income, (iv)
amortization, (v) depreciation, (vi) non-cash charges otherwise
deducted in calculating Consolidated Net Income resulting from FASB No.
88 Adjustments, FASB No. 106 Adjustments, FASB No. 112 Adjustments or
FASB No. 121 Adjustments and (vii) Non-cash Restructuring Charges, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis; provided, however, in the event that any Non-Cash
Restructuring Charges accrued in a prior period are paid in cash in any
subsequent period, the amount of such cash payment shall be subtracted
from Consolidated EBITDA for such subsequent period.
"Consolidated Indebtedness" means all Indebtedness for Money
Borrowed of the Company and its Subsidiaries, all determined on a
consolidated basis.
"Consolidated Interest Coverage Ratio" means for any
Four-Quarter Period ending on the date of computation thereof, the
ratio of (i) Consolidated EBITDA for such Four-Quarter Period, to (ii)
Consolidated Interest Expense for such Four-Quarter Period.
"Consolidated Interest Expense" means, with respect to any
period of computation thereof, the gross interest expense of the
Company and its Subsidiaries, including without limitation (i) the
current amortized portion of debt discounts to the extent included in
gross interest expense, (ii) the current amortized portion of all fees
(including fees payable in respect of any Rate Hedging Obligations)
payable in connection with the incurrence of Indebtedness to the extent
included in gross interest expense, (iii) the portion of any payments
made in connection with Capital Leases allocable to interest expense,
and (iv) the net cash financing costs incurred in connection with any
Securitization Transaction, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Leverage Ratio" means, as of the date of
computation thereof, the ratio of (i) Consolidated Indebtedness
(determined as at such date) to (ii) Consolidated EBITDA (for the
Four-Quarter Period ending on (or most recently ended prior to) such
date).
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Company and its
Subsidiaries other than Parras Cone to the extent it constitutes a
Subsidiary (including payments received by the Company and its
Subsidiaries of (i) interest income, and (ii) dividends and
distributions made in the ordinary course of their businesses by
Persons (including Parras Cone) in which investment is permitted
pursuant to this Agreement and not related to an extraordinary event),
less all operating and non-operating expenses of the Company and its
Subsidiaries including taxes on income, all determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis; but excluding (for all purposes
16
other than compliance with paragraph 6A hereof as income): (a) net
gains or losses on the sale, conversion or other disposition of capital
assets, (b) net gains or losses on the acquisition, retirement, sale or
other disposition of capital stock and other securities of the Company
or its Subsidiaries, (c) net gains on the collection of proceeds of
life insurance policies, (d) any write-up of any asset, (e) any net
gain or loss recorded as a result of FASB 133 Adjustments, and (f) any
other net gain or credit of an extraordinary nature as determined in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Net Worth" means, as of any date on which the
amount thereof is to be determined, the sum of the following in respect
of the Company and its Subsidiaries (determined on a consolidated basis
and excluding any upward adjustment after the Effective Date due to
revaluation of assets, including without limitation any FASB 133
Adjustment): (i) the amount of issued and outstanding share capital,
plus (ii) the amount of additional paid-in capital and retained
earnings (or, in the case of a deficit, minus the amount of such
deficit), plus (iii) the amount of any foreign currency translation
adjustment (if positive, or, if negative, minus the amount of such
translation adjustment), minus (iv) the amount of any treasury stock,
minus (v) (without duplication of deductions in respect of items
already deducted in arriving at surplus and retained earnings) all
reserves (other than contingency reserves not allocated to any
particular purpose), including without limitation reserves for
depreciation, depletion, amortization, obsolescence, deferred income
taxes, insurance and inventory valuation, all as determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis.
"Credit Parties" means, collectively, the Company, each
Guarantor and each other Person providing Collateral pursuant to any
Security Document from time to time (which Credit Parties as of the
Effective Date are listed on Schedule 10B).
"Direct Foreign Subsidiary" means a Subsidiary other than a
Domestic Subsidiary a majority of whose Voting Securities, or a
majority of whose Subsidiary Securities, are owned by the Company or a
Domestic Subsidiary.
"Domestic Subsidiary" means any Subsidiary of the Company
organized under the laws of the United States of America, any state or
territory thereof or the District of Columbia.
"Effective Date" means January 28, 2000.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Facility Guaranty" means each Guaranty Agreement between one
or more Guarantors and the banks a party to the Credit Agreement,
Noteholder and certain other parties and the Priority Collateral Agent
delivered as of the Effective Date and otherwise
17
pursuant to paragraph 5N, as the same may be amended, modified,
supplemented, or amended and restated from time to time.
"Fiscal Quarter" means each of the three month fiscal periods
of the Company and its Subsidiaries with respect to 2000, ending on
January 2, 2000, April 2, 2000, July 2, 2000, October 1, 2000 and
December 31, 2000; with respect to 2001, ending on April 1, 2001, July
1, 2001, September 30, 2001 and December 30, 2001; with respect to
2002, ending on March 31, 2002 and June 30, 2002.
"Four-Quarter Period" means a period of four full consecutive
Fiscal Quarters of the Company and its Subsidiaries, taken together as
one accounting period.
"Fiscal Year" means, with respect to fiscal year 1999, the
fiscal period of the Company and its Subsidiaries ending on January 2,
2000 and, with respect to fiscal year 2000, the fiscal period ending
December 31, 2000 and, with respect to fiscal year 2001, the fiscal
period ending December 30, 2001 and, with respect to the fiscal year
ending 2002, the fiscal period ending December 29, 2002.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public
Accountants, or which have other substantial authoritative support and
are applicable in the circumstances as of the date of a report.
"General Collateral" means the real and personal property,
fixtures and assets of the Company and its Material Subsidiaries
whether now existing or hereafter arising, created or acquired upon
which a General Lien has been granted to the General Collateral Agent
for the benefit of the General Secured Parties pursuant to the General
Security Instruments.
"General Collateral Agency Agreement" means that certain
Collateral Agency Agreement dated as of the date hereof among the
General Secured Parties and the General Collateral Agent, as amended,
modified, supplemented or amended and restated from time to time.
"General Collateral Agent" means Wilmington Trust Company, not
individually but solely in its capacity as collateral agent on behalf
of the General Secured Parties hereunder with respect to the General
Collateral, pursuant to the terms of the General Collateral Agency
Agreement, and the Designated Collateral Subagent and their agents,
successors and permitted assigns.
"General Lien" means, with respect to any General Collateral,
a valid and enforceable Lien thereon in favor of the General Collateral
Agent for the benefit of the General Secured Parties conferred under
the General Security Instruments which is fully
18
perfected and ranking of higher priority than any other Lien on such
property other than a Priority Lien and Permitted Liens.
"General Mortgages" means, collectively, all mortgages, deeds
of trust and deeds to secure debt, substantially in the form delivered
on the Effective Date and otherwise satisfactory to the Required
Holders, granting a General Lien by the Company or a Guarantor to the
General Collateral Agent (or a trustee for the benefit of the General
Collateral Agent) for the benefit of the General Secured Parties in
General Collateral constituting real property and fixtures as
collateral security for the General Senior Obligations, and the
Guarantors' Obligations with respect thereto, as such documents may be
amended, supplemented or restated from time to time.
"General Secured Parties" shall have the meaning set forth in
the Senior Debt Intercreditor Agreement.
"General Security Agreement" means that certain General
Security Agreement dated as of the date hereof and each additional
General Security Agreement entered into after the Effective Date by any
Subsidiary granting a General Lien to the General Collateral Agent for
the benefit of the General Secured Parties pursuant to the General
Collateral Agency Agreement, as collateral security for the General
Senior Obligations, and the Guarantors' Obligations with respect
thereto, as amended, modified, supplemented or amended and restated
from time to time.
"General Security Instruments" means (i) the General Security
Agreement, (ii) the General Mortgages, (iii) the Pledge Agreement and
(iv) all other agreements, instruments and other documents, whether now
existing or hereafter in effect, pursuant to which the Company or any
Material Subsidiary shall grant or convey to the General Collateral
Agent for the benefit of the General Secured Parties a General Lien in
property as security for payment of all or any portion of the General
Senior Obligations and the Guarantors' Obligations with respect
thereto, as any of the foregoing may be amended, supplemented or
restated from time to time.
"Guarantors' Obligations" has the meaning given to such term
in the Facility Guaranty.
"Indebtedness for Money Borrowed" means with respect to any
Person, without duplication, all indebtedness in respect of money
borrowed, including without limitation, all Capital Leases Obligations,
all Synthetic Lease Indebtedness, all Securitization Outstandings, the
deferred purchase price of any property or services, the aggregate face
amount of all surety bonds, letters of credit, and bankers'
acceptances, and (without duplication) all payment and reimbursement
obligations in respect thereof whether or not matured, evidenced by a
promissory note, bond, debenture or similar written obligation for the
payment of money (including reimbursement agreements and conditional
sales or similar title retention agreements), other than trade
payables, documentary letters of credit and accrued expenses incurred
in the ordinary course of business.
19
"Intercreditor Agreements" means, collectively, the Senior
Debt Intercreditor Agreement, the Leased Facility Intercreditor
Agreement and the Securitization Intercreditor Agreement.
"Leased Facility Intercreditor Agreement" means that certain
Intercreditor Agreement dated as of the date hereof between the Agent
and the Senior Lease Creditor relating to relative rights and remedies
with respect to the Senior Leased Facility, as from time to time
amended, supplemented or replaced.
"Material Adverse Effect" means a material adverse effect on
(i) the business, properties, operations, prospects or condition,
financial or otherwise, of the Company and its Subsidiaries, taken as a
whole, (ii) the ability of any Credit Party to pay or perform its
respective obligations, liabilities and indebtedness under the Related
Documents as such payment or performance becomes due in accordance with
the terms thereof, or (iii) the rights, powers and remedies of the
Noteholder under any Related Document or the validity, legality or
enforceability thereof.
"Material Direct Foreign Subsidiary" means any Direct Foreign
Subsidiary which would be considered a Material Subsidiary under
clauses (i) or (ii) of the definition "Material Subsidiary" if it were
a Domestic Subsidiary.
"Material Real Property Support Documents" means each Material
Real Property Support Document required to be delivered under the
Credit Agreement.
"Material Subsidiary" means any direct or indirect Domestic
Subsidiary of the Company which (i) has total assets equal to or
greater than 2% of consolidated total assets of the Company and its
Domestic Subsidiaries (calculated as of the most recent fiscal period
for which financial statements have been received) (the "Required
Financial Information")) or (ii) has revenue equal to or greater than
2% of consolidated total revenue of the Company and its Domestic
Subsidiaries (calculated for the most recent period for which the Agent
has received the Required Financial Information); provided, however,
that notwithstanding the foregoing, the term "Material Subsidiary"
shall mean each of those Domestic Subsidiaries that together with the
Company and each other Material Subsidiary have assets equal to not
less than 98% of consolidated total assets of the Company and its
Domestic Subsidiaries (calculated as described above) and revenue of
not less than 98% of consolidated total revenue of the Company and its
Domestic Subsidiaries (calculated as described above); provided further
that if more than one combination of Domestic Subsidiaries satisfies
both such thresholds, then those Domestic Subsidiaries so determined to
be "Material Subsidiaries" shall be specified by the Company, and which
include as of the Effective Date the Subsidiaries identified on
Schedule 10B.
"Material Supply Agreement" means, collectively, (i) the
exclusive Supply Agreement dated as of March 30, 1992 between the
Company and Levi ▇▇▇▇▇▇▇ & Co., as amended or replaced from time to
time, and (ii) any other contract or agreement with any
20
retail or wholesale customer of the Company or any Subsidiary the
cancellation, termination, or non-renewal of which would reasonably be
likely to have a Material Adverse Effect.
"Maturity Date" means August 7, 2002, provided, however, that
in the event the Company shall fail to comply with paragraph 5L hereof,
then the Maturity Date shall be August 7, 2000.
"Mexican Capital Expenditures" means all Capital Expenditures
made with respect to property, plant or equipment located in Mexico
other than Parras Cone Capital Expenditures.
"▇▇▇▇▇▇ Swap Agreement" means that certain ISDA Master
Agreement dated as of July 20, 1998 between the Company and ▇▇▇▇▇▇ as
supplemented pursuant to that certain letter agreement dated as of July
20, 1998, as from time to time amended, supplemented or replaced.
"Non-cash Restructuring Charges" means those expenses and
charges against earnings incurred in connection with the Company's
comprehensive corporate downsizing and reorganization program and which
do not result in any cash payment by the Company or any Subsidiary, all
as determined on a consolidated basis in accordance with GAAP applied
on a Consistent Basis.
"Operating Documents" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, the bylaws, operating agreement, partnership
agreement, limited partnership agreement or other applicable documents
relating to the operation, governance or management of such entity.
"Organizational Documents" means with respect to any
corporation, limited liability company, partnership, limited
partnership, limited liability partnership or other legally authorized
incorporated or unincorporated entity, the articles of incorporation,
certificate of incorporation, articles of organization, certificate of
limited partnership or other applicable organizational or charter
documents relating to the creation of such entity.
"Parras Cone Capital Expenditures" means all Capital
Expenditures made by Parras Cone financed exclusively from internally
generated revenue and/or the Parras Cone Debt.
"Pledge Agreement" means, collectively (or individually as the
context may indicate), (i) that certain Securities Pledge Agreement
dated as of the date hereof from the Company to the General Collateral
Agent for the benefit of the General Secured Parties, (ii) that certain
Pledge Agreement dated as of the date hereof from the Company pledging
65% of the total outstanding shares of each of its Material Direct
Foreign Subsidiaries to
21
the General Collateral Agent for the benefit of the General Secured
Parties, (iii) any additional Securities Pledge Agreement delivered
pursuant to paragraph 5N, and (iv) with respect to any Subsidiary
Securities issued by a Material Direct Foreign Subsidiary, any
additional or substitute charge, agreement, document, instrument or
conveyance, in form and substance acceptable to the Required Holders,
conferring under applicable foreign law upon the General Collateral
Agent for the benefit of the General Secured Parties a General Lien
upon such Subsidiary Securities and equity interests as are owned by
the Company or any Domestic Subsidiary, in each case as hereafter
amended, supplemented (including by Pledge Agreement Supplement) or
restated from time to time.
"Pledge Agreement Supplement" means, with respect to each
Pledge Agreement, the Pledge Agreement Supplement in the form affixed
as an exhibit to such Pledge Agreement.
"Pledged Interests" means the Subsidiary Securities required
to be pledged as General Collateral pursuant to the terms of any Pledge
Agreement.
"Priority Collateral" means the certain personal and real
property, assets and fixtures of the Company and its Material
Subsidiaries whether now existing or hereafter arising, created or
acquired, upon which a Priority Lien has been granted to the Priority
Collateral Agent for the benefit of the Priority Secured Parties
pursuant to the Priority Security Instruments.
"Priority Collateral Agency Agreement" means that certain
Collateral Agency Agreement dated as of the date hereof among the
Priority Secured Parties and the Priority Collateral Agent, as amended,
supplemented or restated from time to time.
"Priority Collateral Agent" means Bank of America not
individually but solely in its capacity as collateral agent for the
Priority Secured Parties with respect to the Priority Collateral
pursuant to the terms of the Priority Collateral Agency Agreement, and
its agents, successors and permitted assigns.
"Priority Lien" means, with respect to any Priority
Collateral, a valid and enforceable Lien thereon in favor of the
Priority Collateral Agent for the benefit of the Priority Secured
Parties conferred under the Priority Security Instruments which is
fully perfected and ranking of higher priority than any other Lien,
including any General Lien, on such property, except for Permitted
Liens.
"Priority Mortgages" means, collectively, all mortgages, deeds
of trust and deeds to secure debt substantially in the form delivered
on the Effective Date granting a Priority Lien by the Company or a
Guarantor to the Priority Collateral Agent (or a trustee for the
benefit of the Priority Collateral Agent) for the benefit of the
Priority Secured Parties in Priority Collateral constituting real
property and fixtures as collateral security for the Priority Senior
Obligations, and if applicable, the Guarantors' Obligations with
respect thereto, as such documents may be amended, supplemented or
restated from time to time.
22
"Priority Secured Parties" shall have the meaning set forth in
the Senior Debt Intercreditor Agreement.
"Priority Security Agreement" means that certain Priority
Security Agreement dated as of the date hereof, and each additional
Priority Security Agreement entered into after the Effective Date by
any Subsidiary in accordance with the terms of any Senior Credit
Document, granting a Priority Lien to the Priority Collateral Agent for
the benefit of the Priority Secured Parties pursuant to the Priority
Collateral Agency Agreement as collateral security for the Priority
Senior Obligations, and if applicable, the Guarantors' Obligations with
respect thereto, as amended, supplemented or restated from time to
time.
"Priority Security Instruments" means (i) the Priority
Security Agreement, (ii) the Priority Mortgages and (iii) all other
agreements, instruments and other documents, whether now existing or
hereafter in effect pursuant to which the Company or any Material
Subsidiary shall grant or convey a Priority Lien to the Priority
Collateral Agent for the benefit of the Priority Secured Parties as
collateral security for the Priority Senior Obligations, all as
amended, supplemented or restated from time to time.
"Rate Hedging Obligations" means, without duplication, any and
all obligations of the Company or any Subsidiary, whether absolute or
contingent and howsoever and whensoever created, arising, evidenced or
acquired (including all renewals, extensions and modifications thereof
and substitutions therefor), under (i) any and all agreements, devices
or arrangements designed to protect at least one of the parties thereto
from the fluctuations of interest rates, exchange rates or forward
rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, Dollar-denominated or
cross-currency interest rate exchange agreements, forward currency
exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts, warrants and
those commonly known as interest rate "swap" agreements; (ii) all other
"derivative instruments" as defined in FASB 133 and which are subject
to the reporting requirements of FASB 133; and (iii) any and all
cancellations, buybacks, reversals, terminations or assignments of any
of the foregoing; provided, however, under no circumstances shall
obligations for cotton hedging in the ordinary course of business be
considered Rate Hedging Obligations.
"Receivables Purchase Agreement" means that certain
Receivables Purchase and Servicing Agreement dated September 1, 1999 by
and among Cone Receivables II LLC, as Seller, Redwood Receivables
Corporation, as Purchaser, Cone ▇▇▇▇▇ Corporation, as Servicer, and
General Electric Capital Corporation, as Operating Agent and Collateral
Agent, as amended by the First Amendment and Waiver to Securitization
Agreements dated as of November 16, 1999 and the Second Amendment to
Securitization Agreements dated as of the Effective Date and as
amended, supplemented or restated from time to time.
23
"Receivables Transfer Agreement" means that certain
Receivables Transfer Agreement dated September 1, 1999 by and among
Cone ▇▇▇▇▇ Corporation, the other originators party thereto and Cone
Receivables II LLC, as amended by the First Amendment and Waiver to
Securitization Agreements dated as of November 16, 1999 and the Second
Amendment to Securitization Agreements dated as of the Effective Date
and as amended, supplemented or restated from time to time.
"Related Documents" shall mean the Notes, the Facility
Guaranty Agreements, the Security Documents and any other agreement,
instrument or other document executed in connection therewith.
"Securitization Intercreditor Agreement" means the
Intercreditor Agreement of even date herewith among General Electric
Capital Corporation, the General Collateral Agent and certain other
parties and more particularly described in the definition of "Permitted
Encumbrances" in Annex X to the Receivables Purchase Agreement, as
amended, supplemented or restated from time to time.
"Securitization Outstandings" means, at any time, the Capital
Investment (as defined in the Receivables Purchase Agreement) under the
Receivables Purchase Agreement, in an aggregate amount not in excess of
$60,000,000 at any time.
"Security Agreement" means, collectively (or individually as
the context may indicate), (i) the Priority Security Agreement, (ii)
the General Security Agreement, and (iii) any additional Security
Agreement delivered pursuant to paragraph 5N, as amended, supplemented
or restated from time to time.
"Security Documents" means, collectively, the General Security
Instruments, the Priority Security Instruments and the Senior Lease
Facility Mortgage.
"Senior Indenture" means that certain Indenture dated as of
February 14, 1995 between the Company and The Bank of New York, as
Trustee, as amended, restated or supplemented from time to time.
"Senior Lease Documents" means the Master Lease, the Loan
Agreement (up to $16,000,000) dated as of October 24, 1994 between
Atlantic Financial Group, Ltd. (as successor to TCB Realty II
Corporation), as borrower, and SunTrust Bank (as successor to Citicorp
Leasing, Inc.), as lender (the "Development Loan Agreement") and the
other Key Agreements (as defined in the Development Loan Agreement), as
amended by the Tenth Amendment to Master Lease of even date herewith
and as amended, supplemented or restated from time to time.
"Subsidiary Securities" means the shares of capital stock or
the other equity interests issued by or equity participations in any
Subsidiary, whether or not constituting a "security" under Article 8 of
the Uniform Commercial Code as in effect in any jurisdiction.
24
"Synthetic Lease" means a leveraged leasing arrangement under
which the lease of property is treated as an operating lease under GAAP
but is treated as a financing lease arrangement for legal and tax
purposes and in which a special purpose entity incurs Indebtedness to
acquire such property and leases such property to the Company.
"Synthetic Lease Indebtedness" means, with respect to a Person
that is a lessee under a Synthetic Lease, at any time an amount equal
to (i) the aggregate purchase price of any property that the lessor
under such synthetic lease acquired, through one or a series of related
transactions, and thereafter leased to such Person pursuant to such
Synthetic Lease less (ii) the aggregate amount of all payments made on
or prior to such time of fixed rent or other rent payments which
reduced such Person's obligation under such Synthetic Lease and which
are not the financial equivalent of interest. Synthetic Lease
Indebtedness of a Person shall also include, without duplication, the
amount of Synthetic Lease Indebtedness of others to the extent
guarantied by such Person.
"Twelve-Month Period" means a period of twelve consecutive
calendar months taken together as one accounting period.
"U.S. Capital Expenditures" means all Capital Expenditures
other than Mexican Capital Expenditures and Parras Cone Capital
Expenditures.
"Voting Securities" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders
of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
(b) The definition of the term Credit Agreement shall be
deleted in its entirety and the following definition shall be
substituted therefor:
"Credit Agreement" shall mean that certain Credit Agreement
dated as of January 28, 2000 among the Company, the banks a party
thereto and Bank of America, N.A., as Agent, as it may be amended,
modified or supplemented from time to time in accordance with its
terms.
(c) Each of the following defined terms shall be deleted in
its entirety:
Bank Facility
Current Assets
Current Liabilities
Current Ratio
25
Fixed Charge Coverage
1G. Amendment to Paragraph 11 of the Note Agreement. A new paragraph
11P shall be added as follows:
11P. Third Party Beneficiary. The Company hereby agrees that
the Noteholder is an express third-party beneficiary of Article V of
the Credit Agreement and that the holders of the Notes shall have all
of the rights and benefits afforded thereby as though such Article V
were set forth herein. Furthermore, the Company agrees that,
notwithstanding any provision of the Credit Agreement to the contrary,
no consent or waiver under such Article V nor any amendment or
modification thereof shall be effective unless the Company shall have
received the prior written approval of the Required Holders.
1H. Amendment to Exhibit A of the Note Agreement. The Exhibit A to the
Note Agreement shall be deleted in its entirety and the Exhibit A attached
hereto shall be substituted therefor.
2. Conditions of Effectiveness. This Amendment shall become effective
when, and only when, (a) the Noteholder shall have received all of the following
documents, each (unless otherwise indicated) being dated the date hereof, in
form and substance satisfactory to the Noteholder:
(i) executed originals of each of this Amendment, the Notes,
the initial Facility Guaranties, the initial Security Documents and the
other Related Documents, together with all schedules and exhibits
thereto;
(ii) the favorable written opinions with respect to the
Related Documents and the transactions contemplated thereby of special
counsel to the Credit Parties (including special indenture counsel) in
the jurisdictions of North Carolina, South Carolina, New York and
Mexico, dated the Effective Date, addressed to the Noteholder and
satisfactory to its counsel;
(iii) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee thereof) of
each Credit Party certified by its secretary or assistant secretary as
of the Effective Date, approving and adopting the Related Documents to
be executed by such Credit Party, and authorizing the execution and
delivery thereof;
(iv) specimen signatures of officers or other appropriate
representatives executing the Related Documents on behalf of each of
the Credit Parties, certified by the secretary or assistant secretary
of such Credit Party;
(v) the Organizational Documents of each of the Credit Parties
certified as of a recent date by the Secretary of State of its state of
organization;
26
(vi) Operating Documents of each of the Credit Parties
certified as of the Effective Date as true and correct by its secretary
or assistant secretary;
(vii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of formation of
each of the Credit Parties as to the due existence and good standing of
such Credit Party;
(viii) appropriate certificates of qualification to do
business, good standing and, where appropriate, authority to conduct
business under assumed name, issued in respect of each of the Credit
Parties as of a recent date by the Secretary of State or comparable
official of each jurisdiction in which the failure to be qualified to
do business or authorized so to conduct business could have a Material
Adverse Effect;
(ix) a Compliance Certificate as of the end of the fiscal
quarter most recently ended prior to the Effective Date;
(x) evidence of the filing of Uniform Commercial Code
financing statements reflecting the filing in all places required by
applicable law to perfect the General Liens of the General Collateral
Agent under the General Security Instruments and the Priority Liens of
the Priority Collateral Agent under the Priority Security Instruments,
as to items of Collateral in which a security interest may be perfected
by the filing of financing statements, and such other documents and/or
evidence of other actions as may be necessary under applicable law to
perfect the General Liens of the General Collateral Agent under the
General Security Instruments and the Priority Liens of the Priority
Collateral Agent under the Priority Security Instruments, as the
General Collateral Agent or Priority Collateral Agent may require,
including without limitation the delivery by the Company of all
certificates evidencing Pledged Interests, accompanied in each case by
duly executed stock powers (or other appropriate transfer documents) in
blank affixed thereto;
(xi) executed originals of the Collateral Agency Agreements
and the Senior Debt Intercreditor Agreement;
(xii) executed originals of the Securitization Intercreditor
Agreement and the Leased Facility Intercreditor Agreement;
(xiii) copies of the Senior Indenture, the Credit Agreement,
the ▇▇▇▇▇▇ Swap Agreement, the Receivables Transfer Agreement, the
Receivables Purchase Agreement and the Senior Lease Documents, together
with all material agreements executed in connection therewith, and
amendments of each of the foregoing, each in form and substance
acceptable to the Noteholder, certified as true and correct and in full
force and effect by an authorized officer of the Company;
(xiv) Uniform Commercial Code search results as of a recent
date showing only those Liens as are acceptable to the Noteholder;
27
(xv) delivery of Material Real Property Support Documents as
may be required by any governmental authority in connection with the
delivery of any Mortgage;
(b) Satisfaction of the terms and provisions of that certain Letter
Agreement dated the date hereof between the Company and the Noteholder;
(c) The Company shall have paid in immediately available funds, the
nonrefundable restructuring fee to the Noteholder;
(d) The Company shall have paid all costs and expenses (including legal
fees) incurred by the Noteholder;
(e) executed officer's certificate by the chief financial officer of
the Company as to compliance with Section 3.9(i) of the Indenture;
(f) thirteen week consolidated cash flow projections of the Company and
its Subsidiaries commencing with the week starting January 17, 2000, acceptable
to the Noteholder in form and substance;
(g) Such other documents, instruments, approvals or opinions as the
Noteholder may reasonably request; and
(h) The representations and warranties contained herein shall be true
on and as of the date hereof, there shall exist on the date hereof, no Event of
Default or Default; there shall exist no material adverse change in the
financial condition, business operation or prospects of the Company or its
Subsidiaries since January 3, 1999 except (i) as set forth in the financial
projections dated October 1999 delivered to the Noteholder by the Company and
(ii) as disclosed to the Noteholder with respect to certain customer's payment
practices; and the Company shall have delivered to the Noteholder an Officer's
Certificate to such effect.
3. Representations and Warranties.
(a) The Company hereby repeats and confirms each of the representations
and warranties made by it in the Credit Agreement (it being understood that any
reference to (i) Lender includes the Noteholder, and (ii) Loan Documents
includes the Note Agreement and the Notes, as amended hereby) and in paragraph
8H of the Note Agreement, as amended hereby, as though made on and as of the
date hereof, with each reference therein to "this Agreement", "hereof",
"hereunder", "thereof", "thereunder" and words of like import being deemed to be
a reference to the Note Agreement as amended hereby.
(b) The Company further represents and warrants as follows:
(i) The execution, delivery and performance by the Company of
this Amendment and the Notes are within its corporate powers, have been
duly authorized by all necessary corporate action and do not contravene
(A) its charter or by-laws, (B) law or
28
(C) any legal or contractual restriction binding on or affecting the
Company; and such execution, delivery and performance do not or will
not result in or require the creation of any Lien upon or with respect
to any of its properties.
(ii) No governmental approval is required for the due
execution, delivery and performance by the Company of this Amendment or
the Notes, except for such governmental approvals as have been duly
obtained or made and which are in full force and effect on the date
hereof and not subject to appeal.
(iii) This Amendment and the Notes constitute the legal, valid
and binding obligations of the Company enforceable against the Company
in accordance with its terms.
(iv) There are no pending or threatened actions, suits or
proceedings affecting the Company or any of its Subsidiaries or the
properties of the Company or any of its Subsidiaries before any court,
governmental agency or arbitrator, that may, if adversely determined,
materially adversely affect the financial condition, properties,
business, operations or prospects of the Company and it Subsidiaries,
considered as a whole, or affect the legality, validity or
enforceability of the Note Agreement or the Notes, as amended by this
Amendment.
4. Miscellaneous.
4A. Reference to and Effect on the Note Agreement. (a) Upon the
effectiveness of this Amendment, on and after the date hereof each reference in
the Note Agreement to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Note Agreement, and each reference in any other document
to "the Note Agreement", "thereunder", "thereof" or words of like import
referring to the Note Agreement, shall mean and be a reference to the Note
Agreement, as amended hereby and each reference to the Notes, and each reference
in any other document to "the Notes", "thereunder", "thereof" or words of like
import referring to the Notes, shall mean and be a reference to the Notes, as
amended hereby.
(b) Except as specifically amended above, the Note Agreement and the
Notes, and all other related documents, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any holder of a Note under the Note Agreement or the Notes,
nor constitute a waiver of any provision of any of the foregoing.
4B. Costs and Expenses. The Company agrees to pay on demand all costs
and expenses incurred by any holder of a Note in connection with the
preparation, execution and delivery of this Amendment, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel. The
Company further agrees to pay on demand all costs and expenses, if
29
any (including, without limitation, reasonable counsel fees and expenses of
counsel), incurred by any holder of a Note in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this
Amendment, including, without limitation, counsel fees and expenses in
connection with the enforcement of rights under this paragraph 6B.
4C. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same
instrument.
4D. Governing Law. This Amendment shall be governed by, and construed
in accordance with, the laws of the State of New York.
4E. Nature of Purchase. The Noteholder did not acquire the Notes with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act, provided that the disposition of its property has
been and will remain within its control at all times.
▇▇. ▇▇▇▇▇▇▇▇. To induce the Noteholder to enter into this Amendment,
the Company hereby acknowledges and agrees that, as of the date hereof, there
exists no right of offset, defense or counterclaim in favor of the Company
against any holder of the Notes with respect to the obligations of the Company
to any such holder, either with or without giving effect to this Amendment.
[Signatures on Next Page.]
30
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CONE ▇▇▇▇▇ CORPORATION
By_________________________
Name:
Title:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By_________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE OFFERED OR SOLD IN VIOLATION OF SUCH ACT.
THIS NOTE IS GIVEN IN SUBSTITUTION AND WITHOUT NOVATION OF THE PROMISSORY NOTE
DATED AUGUST 13, 1992 ISSUED BY CONE ▇▇▇▇▇ CORPORATION.
CONE ▇▇▇▇▇ CORPORATION
11.00% SENIOR NOTE DUE AUGUST 7, 2002
No. R-__ January __, 2000
$----------
FOR VALUE RECEIVED, the undersigned, CONE ▇▇▇▇▇ CORPORATION, a
corporation organized and existing under the laws of the State of North
Carolina, hereby promises to pay to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
or registered assigns, the principal sum of __________________ DOLLARS on the
Maturity Date subject to the immediately following paragraph, with interest
(computed on the basis of a 360-day year having twelve 30-day months) on the
unpaid balance thereof (a) at the Applicable Rate per annum from the date hereof
subject to the immediately following paragraph, payable semiannually on the 7th
day of August and February in each year, commencing with August 7 or February 7
next succeeding the date hereof, until the principal hereof shall have become
due and payable, and (b) on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Yield-Maintenance Amount (as defined in the Note Agreement
referred to below) or if an Event of Default under the Note Agreement shall have
occurred and be continuing, at a rate per annum from time to time equal to the
greater of (i) Applicable Rate plus 2.5% or (ii) 2.5% over the rate of interest
publicly announced by ▇▇▇▇▇▇ Guaranty Trust Company of New York from time to
time in New York City as its Prime Rate payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Yield-Maintenance Amount
payment with respect to this Note are to be made at the main office of Bank of
New York in New York City or at such other place as the holder hereof shall
designate to the Company in writing, in lawful money of the United States of
America.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to the Note Agreement, dated as of August 13, 1992 (as
amended, modified or supplemented, the "Agreement"), among the Company and The
Prudential Insurance Company of America and is entitled to the benefits thereof.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
The Company agrees to make prepayments of principal on the dates and in
the amounts specified in the Agreement. This Note is also subject to optional
prepayment, in whole or from time to time in part, on the terms specified in the
Agreement.
In case an Event of Default, as defined in the Agreement, shall occur
and be continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner and with the effect provided in the
Agreement.
This Note is intended to be performed in the State of New York and
shall be construed and enforced in accordance with the law of such State. AS
PROVIDED IN PARAGRAPH 11L OF THE AGREEMENT, THE COMPANY SUBMITS TO THE
JURISDICTION OF THE SUPREME COURT OF NEW YORK COUNTY, NEW YORK AND THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, IN ANY ACTION OR
PROCEEDING RELATING TO THIS NOTE.
CONE ▇▇▇▇▇ CORPORATION
By:________________________
Name:
Title:
By:________________________
Name:
Title:
A-2