AMENDMENT NO. 4 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 4 TO CREDIT AGREEMENT (this "Agreement") is made and
entered into as of this 28th day of June, 2001, by and among CONE ▇▇▇▇▇
CORPORATION, a North Carolina corporation (the "Borrower"), BANK OF AMERICA,
N.A., a national banking association, each of the Lenders signatory hereto and
BANK OF AMERICA, N.A., a national banking association, as Agent (the "Agent")
for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower, the Agent and the Lenders from time to time
party thereto (the Lenders") have entered into that certain Credit Agreement
dated as of January 28, 2000, as amended by Amendment No. 1 to Credit Agreement
dated as of July 14, 2000, Amendment No. 2 to Credit Agreement dated as of
December 12, 2000, and Waiver and Amendment No. 3 to Credit Agreement dated as
of April 23, 2001 (as amended hereby and as from time to time further amended,
supplemented or replaced, the "Credit Agreement");
WHEREAS, the Borrower has requested and the Agent and the Lenders have
agreed, subject to the terms and conditions of this Agreement, to amend the
Credit Agreement pursuant to the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual covenants, promises and
conditions herein set forth, it is hereby agreed as follows:
1. Definitions. The term "Credit Agreement" as used herein and in the
other Loan Documents shall mean the Credit Agreement as previously and as hereby
amended and as from time to time further amended or modified. Unless the context
otherwise requires, all capitalized terms used herein without definition shall
have the respective meanings provided therefor in the Credit Agreement.
2. Amendments to Credit Agreement.
(a) The definition of "Applicable Margin" in Section 1.1 is
hereby deleted and the following new definition is inserted in
replacement thereof:
Applicable Margin
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Base Rate Eurodollar Rate
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2.00% 4.25%
(b) The definition of "Borrowing Base" in Section 1.1 is
amended by (1) deleting the number "45%" in subsection (i) thereof and
inserting in lieu thereof the number "85%" and (2) deleting the number
"60%" in subsection (ii) thereof and inserting in lieu thereof the
number "65%".
(c) Subsection (vii) of the definition of "Consolidated
EBITDA" in Section 1.1 is amended in its entirety so that as amended it
reads as follows:
"(vii) Non-cash Restructuring Charges not to exceed $35,000,000
in Fiscal Year 2001".
(d) The definition of "Fiscal Quarter" in Section 1.1 is
amended by deleting the phrase "and July 1, 2001" at the end thereof
and inserting in lieu thereof the phrase ", July 1, 2001, and September
30, 2001".
(e) The definition of "Fiscal Year" in Section 1.1 is amended
by inserting at the end thereof the phrase "and, with respect to fiscal
year 2001, the fiscal period ending on December 30, 2001.
(f) A new definition of "Net Proceeds" is hereby inserted in
Section 1.1 in the proper alphabetical order to read as follows:
"Net Proceeds" (a) from any public or private
offering of any security (including securities evidencing
Indebtedness and any Capital Market Transaction) means cash
payments received by the Borrower or any Subsidiary therefrom
as and when received, net of all legal, accounting, banking
and underwriting fees and expenses, commissions, discounts and
other issuance expenses incurred in connection therewith and
all taxes required to be paid or accrued as a consequence of
such issuance; and (b) from any Asset Disposition means cash
payments received by the Borrower or any Subsidiary therefrom
(including any cash payments received pursuant to any note or
other debt security received in connection with any Asset
Disposition) as and when received, net of (i) all legal fees
and expenses and other fees and expenses paid to third parties
and incurred in connection therewith, (ii) all taxes required
to be paid or accrued as a consequence of such disposition,
(iii) all amounts applied to repayment of Indebtedness (other
than the Obligations and the Senior Note Obligations) secured
by a Lien on the asset or property disposed.
(g) The definition of "Permitted Asset Dispositions" in
Section 1.1 is amended in its entirety so that as amended it reads as
follows:
"Permitted Asset Dispositions" means Asset
Dispositions consisting of (i) dispositions of inventory in
the ordinary course of business, (ii) dispositions of property
that is substantially worn, damaged, obsolete or, in the
judgment of the Borrower, no longer best used or useful in its
business or that of any Subsidiary which in the aggregate
during any Fiscal Year has a fair market value or book value,
whichever is greater, of $1,000,000 or less, (iii) transfers
of assets necessary to give effect to merger or consolidation
transactions permitted by Section 10.8, (iv) the disposition
of cash or Eligible Securities in the ordinary course of
management of the investment portfolio of the Borrower and its
Subsidiaries, (v) securitization of accounts receivable and
related rights pursuant to the Securitization Transaction,
(vi) the sale or discount without recourse of accounts
receivable or notes receivable, or the conversion or exchange
of accounts receivable into or for notes receivable in
connection with the compromise or collection thereof, each in
the ordinary course of business, (vii) dispositions of assets
described on Schedule 1.1 hereto, (viii) dispositions of
assets described on Schedule 1.1A hereto and (ix) sale and
leaseback transactions permitted under Section 10.14."
(h) The definition of "Stated Termination Date" in Section 1.1
is amended in its entirety so that as amended it reads as follows:
"Stated Termination Date" means November 7, 2001."
(i) Section 1.1 is hereby amended by adding a new defined term
"Senior Pro Rata Share" which shall read as follows:
"Senior Pro Rata Share" means, with respect to any
Net Proceeds, that amount determined by multiplying the amount of such
Net Proceeds by a fraction, (a) the denominator of which shall be the
sum of all Obligations (calculated prior to the occurrence and
continuation of an Event of Default as the Clawback Amount (as defined
in the Senior Debt Intercreditor Agreement) and after the occurrence
and during the continuation of an Event of Default as all outstanding
Obligations), plus all Senior Note Obligations and (b) the numerator of
which shall be all Obligations (calculated prior to the occurrence and
continuation of an Event of Default as the Clawback Amount (as defined
in the Senior Debt Intercreditor Agreement) and after the occurrence
and during the continuation of an Event of Default as all outstanding
Obligations).
(j) The first sentence of Section 2.1(f) is amended in its entirety
so that as amended it reads as follows:
"In addition to any optional reductions of the Total
Revolving Credit Commitment effected under Section 2.1(e), the
Borrower shall make a mandatory prepayment in an amount equal
to (i) the Lenders' Senior Pro Rata Share of (A) the Net
Proceeds of each Capital Market Transaction of the Borrower or
any Subsidiary (other than securities issued to the Borrower
or another Subsidiary) permitted, (B) the Net Proceeds of any
Asset Dispositions described in clause (vii) of the definition
of "Permitted Asset Dispositions", and (C) the Net Proceeds of
any Asset Dispositions described in clause (viii) of the
definition of "Permitted Asset Dispositions", and (ii) 100% of
the proceeds of any other Sharing Payment (as defined in the
Senior Debt Intercreditor Agreement) received by the Agent or
the Lenders from time to time.
Each such mandatory prepayment required under Section
2.1(f)(i)(C) shall be applied to the Priority Senior
Obligations (as defined in the Senior Debt Intercreditor
Agreement) and to the extent applied to the Revolving Credit
Outstanding shall be a permanent reduction in the Total
Revolving Credit Commitment to be effective on the date of
receipt of such Net Proceeds. Each such mandatory prepayment
required under Section 2.1(f)(i)(A) and (B) and Section
2.1(f)(ii)shall be applied as a permanent reduction in the
Total Revolving Credit Commitment to be effective on the date
of receipt of such Net Proceeds.
Each mandatory prepayment required under this Section
2.1(f) shall be made (1) within 10 Business Days after the end
of each Fiscal Quarter if the aggregate Net Proceeds received
during such Fiscal Quarter (exclusive of amounts paid pursuant
to subsection (3) below) are less than $250,000, (2) within 10
Business Days after the date on which the aggregate Net
Proceeds received in any Fiscal Quarter (exclusive of amounts
paid pursuant to subsection (3) below) exceed $250,0000, and
(3) within 3 Business Days after the date of receipt of Net
Proceeds of $250,000 or more from any individual transaction.
Each mandatory prepayment required under this Section 2.1(f)
shall include a certificate of an Authorized Representative
setting forth in reasonable detail the calculations utilized
in computing the amount of such prepayment."
(k) Section 4.1(a) is amended in its entirety to reads as follows:
(a) Eurodollar Rate Loans and Base Rate Loans may be
outstanding at the same time and, so long as no Default or
Event of Default shall have occurred and be continuing, the
Borrower shall have the option to elect the Type of Loan and
the duration of the initial and any subsequent Interest
Periods and to Convert Revolving Loans in accordance with
Sections 2.1(c)(i) and 4.2, as applicable; provided, however,
(i) there shall not be outstanding at any one time Eurodollar
Rate Loans having more than ten (10) different Interest
Periods, (ii) each Eurodollar Rate Loan (including each
Conversion into and each Continuation as a Eurodollar Rate
Loan) shall be in an amount of $1,000,000 or, if greater than
$1,000,000, an integral multiple of $1,000,000, and (iii) no
Eurodollar Rate Loan shall have an Interest Period that
extends beyond the Stated Termination Date. If the Agent does
not receive a Borrowing Notice or an Interest Rate Selection
Notice giving notice of election of the duration of an
Interest Period or of Conversion of any Loan to or
Continuation of a Loan as a Eurodollar Rate Loan by the time
prescribed by Sections 2.1(c)(i) and 4.2, as applicable, the
Borrower shall be deemed to have elected to obtain or Convert
such Loan to (or Continue such Loan as) a Base Rate Loan until
the Borrower notifies the Agent in accordance with Section
4.2. The Borrower shall not be entitled to elect to Continue
any Loan as or Convert any Loan into a Eurodollar Rate Loan if
a Default or Event of Default shall have occurred and be continuing.
(l) Section 9.1(j) is hereby amended in its entirety to read as
follows:
"(j) On the last Business Day of each week, the
Borrower shall deliver to the Agent (i) projected cash flow
statements of the Borrower and its Subsidiaries for the 13
week period beginning on such date, (ii) a comparison of the
week most recently ended with the amount projected for such
week in the statements delivered pursuant to Section 9.1(j)(i)
and (iii) an explanation of any material variances (10% or
greater) between actual and projected cash flow;"
(m) Section 10.1(a) is amended by deleting the number "$138,000,000"
and inserting in lieu thereof the number "$120,000,000".
(n) Section 10.1(b) is amended in its entirety so that as amended it
reads as follows:
"(b) Consolidated Leverage Ratio. Permit the
Consolidated Leverage Ratio to be more than (i) 8.75 to 1.00
as of the end of the Four Quarter Period ending on July 1,
2001 and (ii) 9.90 to 1.00 as of the end of the Four Quarter
Period ending on September 30, 2001."
(o) Section 10.1(c) is amended in its entirety so that as amended it
reads as follows:
"(c) Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio to be less than (i) 1.25
to 1.00 as of the end of the Four Quarter Period ending on
July 1, 2001 and (ii) 1.10 to 1.00 as of the end of the Four
Quarter Period ending on September 30, 2001."
(p) Section 10.1(d) is amended in its entirety so that as amended it
reads as follows:
"(d) Consolidated EBITDA. Permit Consolidated EBITDA
to be less than (i) $25,000,000 for the Four Quarter Period
ending on July 1, 2001 and (ii) $23,500,000 for the Four
Quarter Period ending on September 30, 2001."
(q) A new Section 10.1(e) is hereby added to Section 10.1 to read as
follows:
"(e) Permit Non-cash Restructuring Charges to be
greater than $35,000,000 in Fiscal Year 2001."
(r) Section 10.2 is amended in its entirety so that as amended it
reads as follows:
"10.2 Acquisitions. Enter into any agreement,
contract, binding commitment or other arrangement providing
for any Acquisition, or take any action to solicit the tender
of securities or proxies in respect thereof in order to effect
any Acquisition."
(s) Section 10.3 is amended in its entirety so that as amended it
reads as follows:
"10.3 Capital Expenditures. (a) Make or become committed to
make U.S. Capital Expenditures which exceed $10,000,000 in Fiscal
Year 2001.
(b) Make or become committed to make Mexican Capital
Expenditures unless (i) no Default or Event of Default has
occurred and is continuing, (ii) such Mexican Capital
Expenditures are only for the purpose of purchasing the
certain real property in Altamira, Mexico and making certain
improvements thereto and (iii) such Mexican Capital
expenditures do not exceed $200,000 in Fiscal Year 2001."
(t) Section 10.5(d) is hereby amended by deleting the Dollar
amount "$10,000,000" and inserting in lieu thereof the Dollar amount
"$0".
(u) Section 10.5(f) is hereby amended by deleting the Dollar
amount "$5,000,000" and inserting in lieu thereof the Dollar amount
"$0".
(v) Section 10.7(g) is amended in its entirety so that as amended it
reads as follows:
"(g) investments made at such time as no Default or Event
of Default shall have occurred and be continuing relating to the
site in Altamira, Mexico (at which site the Borrower intends to
construct a denim manufacturing facility), not in excess of
$2,700,000 in Fiscal Year 2001."
(w) A new Schedule 1.1A is hereby added to the Credit Agreement to
read as Schedule 1.1A attached hereto.
3. Amendment Fee. On the date hereof the Borrower shall pay to the
Agent for the pro rata benefit of the Lenders party hereto an Amendment Fee
equal to $73,000.
4. Guarantors. Each of the Guarantors has joined into the execution of
this Agreement for the purpose of consenting to the amendment contained herein
and reaffirming its guaranty of the Obligations as amended by the terms of this
Agreement.
5. Borrower's Representations and Warranties. The Borrower hereby
represents, warrants and certifies that:
(a) The representations and warranties made by it in Article
VIII of the Credit Agreement are true on and as of the date hereof
before and after giving effect to this Agreement except that the
financial statements referred to in Section 8.6(a) shall be those most
recently furnished to each Lender pursuant to Section 9.1(a) and (b) of
the Credit Agreement;
(b) The Borrower has the power and authority to execute and perform
this Agreement and has taken all action required for the lawful
execution, delivery and performance thereof;
(c) Except as has been disclosed to the Agent and the Lenders
in writing, there has been no material adverse change in the condition,
financial or otherwise, of the Borrower and its Subsidiaries, taken as
a whole, since the date of the most recent financial reports of the
Borrower received by each Lender under Section 9.1(a) of the Credit
Agreement after giving effect to the transaction contemplated by this
Agreement;
(d) The business and properties of the Borrower and its
Subsidiaries are not, and since the date of the most recent financial
report of the Borrower and its Subsidiaries received by the Agent under
Section 9.1(a) of the Credit Agreement have not been, adversely
affected in any substantial way as the result of any fire, explosion,
earthquake, accident, strike, lockout, combination of workmen, flood,
embargo, riot, activities of armed forces, war or acts of God or the
public enemy, or cancellation or loss of any major contracts; and
(e) No Default or Event of Default has occurred and is continuing.
6. Entire Agreement. This Agreement 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. None of the terms or conditions of this Agreement may be
changed, modified, waived or canceled orally or otherwise, except by writing,
signed by all the parties hereto, specifying such change, modification, waiver
or cancellation of such terms or conditions, or of any proceeding or succeeding
breach thereof.
7. Full Force and Effect of Amendment. Except as hereby specifically
amended, modified or supplemented, the Credit Agreement and all of the other
Loan Documents are hereby confirmed and ratified in all respects and shall
remain in full force and effect according to their respective terms.
8. Counterparts. This Agreement may be executed in any number of
counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
9. 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.
10. Credit Agreement and Other Loan Documents. All references in any of
the Loan Documents to the "Credit Agreement" shall mean the Credit Agreement as
amended hereby.
11. Condition to Effectiveness. This Agreement shall become effective as
of the date hereof provided the Agent shall have received (a) the Amendment Fee
and (b) at least one executed copy, certified by the Borrower, of each of (i)
an amendment to the Senior Note Agreement containing substantially the same
amendments as are contained herein and otherwise in form and substance
acceptable to the Agent and in full force and effect and (ii) the approval
letter required under the Securitization Intercreditor Agreement.
[Signature pages follow.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the day and year
first above written.
BORROWER:
CONE ▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Exec. Vice President & CFO
GUARANTORS:
CIPCO S.C., INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
CONE FOREIGN TRADING LLC
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Exec. Vice President & CFO
AGENT:
BANK OF AMERICA, N.A. as Agent for the Lenders
By: /s/▇▇▇▇ ▇. Register
Name: ▇▇▇▇ ▇. Register
Title: Principal
Signature Page 1 of 2
LENDERS:
BANK OF AMERICA, N.A.
By: /s/▇▇▇▇ ▇. Register
Name: ▇▇▇▇ ▇. Register
Title: Principal
FIRST UNION NATIONAL BANK
By: /s/▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Vice President
WACHOVIA BANK, N.A.
By: /s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
SUNTRUST BANK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Director
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
Signature Page 2 of 2
Schedule 1.1A
Disposition of Additional Assets
The expected value of net proceeds on the disposition of fixed assets under
Cone's 2001 Reinvention Plan is $10,813,000 as shown below. The total excludes
assets listed on Schedule 1.1; $349,000 for Salisbury warehouse sold in June
2001 and estimated $590,000 from auction of remaining Salisbury equipment in
late July with proceeds expected in third quarter of 2001. Total expected value
of proceeds from the plan $11,752,000.
1) ▇▇▇▇▇▇ Plant
- 80 Nissan SC looms, 10 Sulzer P7200's, 90 LA51 Nissan looms
- EV of proceeds = $1,089,000
- Target timeline: in 2001
2) ▇▇▇▇▇▇▇▇ Plant
- Equipment sold post closing - slashers
- EV of proceeds = $80,000
- Target timeline: 2002
3) Raytex Plant
- Equipment
- EV of proceeds = $3,720,000
- Target timeline: July 2001 - December 2002
- Land & Building
- EV of proceeds = $2,933,000
- Target timeline: Sale to Seiren Corp in 2001 or 2002/2003 to other
buyers
4) Greensboro land - Proximity site
- 28 acres on Maple Street in Greensboro NC, corner of Wendover &
Yanceyville
- EV of proceeds = $2,080,000
- Target timeline: December 2001 - December 2002
5) Greensboro land - behind White Oak
- 13 acres of land on the SW corner of Summit Avenue and 16th Street
- EV of proceeds = $500,000
- Target timeline: December 2001
6) Greensboro land - behind wastewater treatment facility - odor issues
- 45 acres of land on Summit Avenue in Greensboro
- EV of proceeds = $372,000
- Target timeline: December 2001
7) Miscellaneous land
- ▇▇▇▇▇▇▇▇▇▇ County - Cotton Mill Cafe land
- EV of proceeds = $6,000
- Target timeline: 2001 - needed releases
- ▇▇▇▇▇▇▇▇▇▇ County - ▇▇▇▇▇▇▇ land
- EV of proceeds = $23,000
- Target timeline: 2001 - needed releases
- Salisbury - 6.5 acres Town Creek flood plain
- EV of proceeds = $10,000
- Target timeline: 2001