FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this "First
Amendment"), dated as of June 19, 1998, is entered into among PILLOWTEX
CORPORATION, a Texas corporation (the "Borrower"), the banks listed on the
signature pages hereof (collectively, the "Lenders"), and NATIONSBANK, N.A.
(successor by merger to NationsBank of Texas, N.A.), as Administrative Agent (in
said capacity, the "Administrative Agent").
BACKGROUND
A. The Borrower, the Lenders and the Administrative Agent are parties to
that certain Amended and Restated Credit Agreement, dated as of December 19,
1997 (the "Credit Agreement"; the terms defined in the Credit Agreement and not
otherwise defined herein shall be used herein as defined in the Credit
Agreement).
B. The Borrower, the Lenders and the Administrative Agent desire to make
certain amendments to the Credit Agreement.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, the Borrower, the
Lenders and the Administrative Agent covenant and agree as follows:
1. AMENDMENTS TO CREDIT AGREEMENT.
(a) Section 7.14 of the Credit Agreement is hereby amended to read as
follows:
"Section 7.14 Sale or Discount of Receivables. The Borrower shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
sell, with or without recourse, for discount or otherwise, notes or accounts
receivable during the term of this Agreement in an aggregate principal amount in
excess of $5,000,000."
(b) The Compliance Certificate is hereby amended to be in the form of
Exhibit D attached to this First Amendment.
2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its
execution and delivery hereof, the Borrower represents and warrants that, as of
the date hereof and after giving effect to the amendments contemplated by the
foregoing Section 1:
(a) the representations and warranties contained in the Credit Agreement
and the other Loan Documents are true and correct on and as of the date hereof
as made on and as of such date;
(b) no event has occurred and is continuing which constitutes a Default or
an Event of Default;
(c) the Borrower has full power and authority to execute and deliver this
First Amendment, and this First Amendment constitutes the legal, valid and
binding obligations of the Borrower, enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable Debtor
Relief Laws and by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and except as rights
to indemnity may be limited by federal or state securities laws;
(d) neither the execution, delivery and performance of this First
Amendment nor the consummation of any transactions contemplated herein will
conflict with any Law, the articles of incorporation, bylaws or other governance
document of the Borrower or any of its Subsidiaries, or any indenture, agreement
or other instrument to which the Borrower or any of its Subsidiaries or any of
their respective property is subject; and
(e) no authorization, approval consent, or other action by, notice to, or
filing with, any governmental authority or other Person (including the Board of
Directors of the Borrower or any Guarantor), is required for the execution,
delivery or performance by the Borrower of this First Amendment or the
acknowledgment of this First Amendment by any Guarantor.
3. CONDITIONS OF EFFECTIVENESS. This First Amendment shall be effective
as of June 19, 1998, subject to the following:
(a) the Administrative Agent shall receive counterparts of this First
Amendment executed by the Required Lenders (as defined in the Intercreditor
Agreement);
(b) the Administrative Agent shall receive counterparts of this First
Amendment executed by the Borrower and acknowledged by each Guarantor; and
(c) the Administrative Agent shall receive, in form and substance
satisfactory to the Administrative Agent and its counsel, such other documents,
certificates and instruments as the Administrative Agent shall reasonably
require.
4. GUARANTOR ACKNOWLEDGMENT. By signing below, each of the Guarantors
(i) acknowledges, consents and agrees to the execution and delivery of this
First Amendment, (ii) acknowledges and agrees that its obligations in respect of
its Subsidiary Guaranty are not released, diminished, waived, modified, impaired
or affected in any manner by this First Amendment or any of the provisions
contemplated herein, (iii) ratifies and confirms its obligations under its
Subsidiary Guaranty, and (iv) acknowledges and agrees that it has no claims or
offsets against, or defenses or counterclaims to, its Subsidiary Guaranty as a
result of this First Amendment.
2
5. REFERENCE TO THE CREDIT AGREEMENT.
(a) Upon the effectiveness of this First Amendment, each reference in the
Credit Agreement to "this Agreement", "hereunder", or words of like import shall
mean and be a reference to the Credit Agreement, as amended by this First
Amendment.
(b) The Credit Agreement, as amended by this First Amendment, and all
other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed.
6. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on demand all
reasonable costs and expenses of the Administrative Agent in connection with the
preparation, reproduction, execution and delivery of this First Amendment and
the other instruments and documents to be delivered hereunder (including the
reasonable fees and out-of-pocket expenses of counsel for the Administrative
Agent with respect thereto and with respect to advising the Administrative Agent
as to its rights and responsibilities under the Credit Agreement, as amended by
this First Amendment).
7. EXECUTION IN COUNTERPARTS. This First Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each 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.
8. GOVERNING LAW: BINDING EFFECT. This First Amendment shall be
governed by and construed in accordance with the laws of the State of Texas and
shall be binding upon the Borrower and each Lender and their respective
successors and assigns.
9. HEADINGS. Section headings in this First Amendment are included
herein for convenience of reference only and shall not constitute a part of this
First Amendment for any other purpose.
10. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FIRST
AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
3
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as the date first above written.
PILLOWTEX CORPORATION
By:
-------------------------
Name:
Title:
NATIONSBANK, N.A. (successor by merger to
NationsBank of Texas, N.A.), as Administrative
Agent and as a Lender, Swing Line Bank and Issuing
Bank
By:
-------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
BANK OF AMERICA NT&SA
By:
-------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
ATLANTA AGENCY
By:
-------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
-------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
COMERICA BANK
By:
-------------------------
Name:
Title:
4
CREDIT LYONNAIS NEW YORK BRANCH
By:
-------------------------
Name:
Title:
▇▇▇▇▇ FARGO BANK (TEXAS), NATIONAL ASSOCIATION
By:
-------------------------
Name:
Title:
THE BANK OF TOKYO-MITSUBISHI, LTD.
By:
-------------------------
Name:
Title:
BANK ONE, TEXAS, N.A.
By:
-------------------------
Name:
Title:
BANKBOSTON, N.A.
By:
-------------------------
Name:
Title:
BHF-BANK AKTIENGESELLSCHAFT
By:
-------------------------
Name:
Title:
FIRST UNION NATIONAL BANK
By:
-------------------------
Name:
Title:
5
GENERAL ELECTRIC CAPITAL CORPORATION
By:
-------------------------
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
SOCIETE GENERALE, SOUTHWEST AGENCY
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
-------------------------
Name:
Title:
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION
EUROPEENNE
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
6
CREDITANSTALT CORPORATE FINANCE, INC.
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
FLEET BANK, N.A.
By:
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
THE FUJI BANK, LTD. - HOUSTON AGENCY
By:
-------------------------
Name:
Title:
NATIONAL BANK OF CANADA
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
NATIONAL CITY BANK OF KENTUCKY
By:
-------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By:
-------------------------
Name:
Title:
7
ACKNOWLEDGED AND AGREED:
PILLOWTEX, INC.
PTEX HOLDING COMPANY
PILLOWTEX MANAGEMENT SERVICES COMPANY
BEACON MANUFACTURING COMPANY
▇▇▇▇▇▇▇ HOME FASHIONS, INC.
TENNESSEE WOOLEN ▇▇▇▇▇
FIELDCREST ▇▇▇▇▇▇, INC.
CRESTFIELD COTTON COMPANY
ENCEE, INC.
FCC CANADA, INC.
FIELDCREST ▇▇▇▇▇▇ FINANCING, INC.
FIELDCREST ▇▇▇▇▇▇ LICENSING, INC.
FIELDCREST ▇▇▇▇▇▇ INTERNATIONAL, INC.
FIELDCREST ▇▇▇▇▇▇ SURE FIT, INC.
FIELDCREST ▇▇▇▇▇▇ TRANSPORTATION, INC.
ST. MARYS, INC.
AMOSKEAG COMPANY
AMOSKEAG MANAGEMENT CORPORATION
DOWNEAST SECURITIES CORPORATION
BANGOR INVESTMENT COMPANY
▇▇▇▇▇'▇ FALLS CORPORATION
By:
-------------------------
Name:
Title:
8
EXHIBIT D
COMPLIANCE CERTIFICATE
To: NationsBank, N.A., as Administrative Agent
From: Pillowtex Corporation
Date:
-------- --, ----
Re: Amended and Restated Credit Agreement, dated as of December 19, 1997 (as
amended or modified, "Credit Agreement"), among Pillowtex Corporation
(the "Borrower"), certain Lenders, and NationsBank, N.A., (successor by
merger to NationsBank of Texas, N.A.) as Administrative Agent.
This Compliance Certificate is delivered pursuant to Section 6.3 of the
Credit Agreement. All capitalized terms used herein and defined in the Credit
Agreement shall be used as so defined. For purposes hereof, section references
herein related to sections of the Credit Agreement and bracketed amounts or
ratios refer to the maximum or minimum amounts or ratios required under the
relevant sections of the Credit Agreement.
I. Leverage Ratio
A. Total Debt, determined for the Borrower and its Subsidiaries on a
consolidated basis
1. Indebtedness for borrowed money $
-------
2. Obligations evidenced by bonds, debentures,
notes or other similar instruments $
-------
3. Non-contingent obligations to pay the deferred
purchase price of property or services other than
trade payables incurred in the ordinary course of
business $
-------
4. Capitalized Lease Obligations $
-------
5. Total Debt [(1) + (2) + (3) + (4)] $
-------
B. EBITDA, calculated for the four consecutive Fiscal
Quarters ending on the date of calculation (adjusted
on a pro forma basis to exclude from any period under
consideration personnel costs that have been eliminated
concurrent with, or during the twelve-month period
subsequent to, the Agreement Date)
1. Earnings from operations $
-------
2. Depreciation $
-------
3. Amortization $
-------
4. Other non-cash charges (to the extent included in
determining Earnings from operations) $
-------
5. EBITDA [(1) + (2) + (3) + (4)] $
-------
C. Leverage Ratio [(A) to (B)] to 1
---
II. COVENANT CALCULATIONS. [To be completed quarterly] Demonstration of
compliance with certain covenants contained in Article 7 of the Credit
Agreement for the period ended .
-----------------
A. Section 7.1(c) Indebtedness of the Borrower and its Domestic
Subsidiaries, including in respect of Capitalized Lease Obligations,
incurred to purchase, or to finance the purchase of, assets which
constitute property, plant and equipment $
----------
1. Maximum in aggregate principal amount outstanding, when
aggregated with Section 7.1(o) $35,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
B. Section 7.1(h) Indebtedness assumed in connection with
Acquisitions permitted under Section 7.6 (excluding the
Fieldcrest ▇▇▇▇▇▇ Transaction)
1. Maximum in aggregate principal amount outstanding $20,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
C. Section 7.1(o) Other Indebtedness of the Borrower and its
Domestic Subsidiaries
1. Maximum in aggregate principal amount outstanding,
when aggregated with Section 7.1(c) $35,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
D. Section 7.3(g) Investments consisting of non-cash
consideration received in connection with a sale of
assets permitted by Section 7.5
1. Maximum in aggregate amount outstanding at any time $25,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
2
E. Section 7.3(i) Loans or advances to directors, officers
and employees of the Borrower or any of its Subsidiaries
1. Maximum in aggregate amount outstanding at any time $ 5,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
F. Section 7.3(j) Other Investments
1. Maximum in aggregate amount outstanding at any time $25,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
G. Section 7.5(c) Net Cash Proceeds from the disposition of
assets (to the extent not applied pursuant to Section 2.5(b))
outstanding and pending reinvestment pursuant to Section 7.5(c)
1. Maximum at any time $ 5,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
H. Section 7.7 Capital Expenditures
1. Maximum after the Agreement Date in aggregate
amount
a. 3.25% of cumulative net revenues of the
Borrower and its Subsidiaries from and
after the Agreement Date $
----------
b. Maximum [$175,000,000 + (a)] $
----------
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
I. Section 7.8(b) Dividends payable by the Borrower
1. Maximum in aggregate amount during any Fiscal Year $10,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
3
J. Section 7.11 Maximum Leverage Ratio
1. Maximum
a. From and including the last Fiscal Quarter
of Fiscal Year 1997 to but not including
the last Fiscal Quarter of Fiscal Year 1998 5.75 to 1
b. From and including the last Fiscal Quarter
of Fiscal Year 1998 to but not including
the last Fiscal Quarter of Fiscal Year 1999 5.25 to 1
c. From and including the last Fiscal Quarter
of Fiscal Year 1999 to but not including
the last Fiscal Quarter of Fiscal Year 2000 4.75 to 1
d. From and including the last Fiscal Quarter
of Fiscal Year 2000 and thereafter 4.25 to 1
2. Actual (see I.C. above) to 1
-----
K. Section 7.12 Minimum Fixed Charge Coverage Ratio
1. Minimum at the end of each Fiscal Quarter
commencing with the first Fiscal Quarter of
Fiscal Year 1998 1.10 to 1
2. Actual
a. Pretax Cash Flow, for the four consecutive
Fiscal Quarters ending on the date of
calculation
1. EBITDA (see I.B.5. above) $
----------
2. Capital Expenditures $
----------
3. Cash proceeds received from the sale
of assets pursuant to Section 7.5(d) $
----------
4. Pretax Cash Flow [(1) - (2) + (3)] $
----------
b. Fixed Charges, calculated for the Borrower
and its Subsidiaries on a consolidated
basis; for the first three Fiscal Quarters
of Fiscal Year 1998, on an annualized
basis, and for each Fiscal Quarter
thereafter, for the four consecutive
Fiscal Quarters ending on the date of
calculation
(1) Scheduled principal payments
in respect of Indebtedness $
----------
4
(2) Cash interest expense
(including interest expense
pursuant to Capitalized Lease
Obligations) $
----------
(3) Cash Dividends paid $
----------
(4) Fixed Charges [(1) + (2) + (3)] $
----------
c. Fixed Charge Coverage Ratio
[(a) to (b)] to 1
-----
L. Section 7.13 Minimum Net Worth
1. Minimum
a. Fixed amount $
-----------
(1) From the Agreement Date to but not including
the last Fiscal Quarter of Fiscal Year 1998 $250,000,000
(2) From and including the last Fiscal Quarter
of Fiscal Year 1998 to but not including the
last Fiscal Quarter of Fiscal Year 1999 $260,000,000
(3) From and including the last Fiscal Quarter
of Fiscal Year 1999 to but not including the
last Fiscal Quarter of Fiscal Year 2000 $280,000,000
(4) From and including the last Fiscal Quarter
of Fiscal Year 2000 to but not including the
last Fiscal Quarter of Fiscal Year 2001 $300,000,000
(5) From and including the last Fiscal Quarter
of Fiscal Year 2001 to but not including the
last Fiscal Quarter of Fiscal Year 2002 $320,000,000
(6) From and including the last Fiscal Quarter
of Fiscal Year 2002 and thereafter $340,000,000
5
b. An amount equal to the net worth of any
Person that, on or after the Agreement
Date becomes a Subsidiary of the Borrower
or any of its Subsidiaries or is merged
into or consolidated with the Borrower or
any of its Subsidiaries or substantially
all of the assets of which are acquired
by the Borrower or any of its Subsidiaries
to the extent that the purchase price
therefor is paid in Capital Stock of the
Borrower or any of its Subsidiaries $
-----------
c. An amount equal to 100% of any increase in
Net Worth pursuant to offerings of Capital
Stock of the Borrower or any of its
Subsidiaries or pursuant to the conversion
or exchange of any convertible subordinated
debt or redeemable preferred stock into
Capital Stock of the Borrower or any of its
Subsidiaries
(excluding any such increase in b. and c. above
as a result of the Fieldcrest ▇▇▇▇▇▇ Transaction)
d. Minimum Net Worth [(a) + (b) + (c)] $
--------
2. Actual $
--------
3. Difference [(2) - (1)] $
--------
M. Section 7.14 Sale or Discount of Receivables
1. Maximum in aggregate amount during the Credit Agreement $
--------
2. Actual $
--------
3. Difference [(1) - (2)] $
--------
III. COMPLIANCE CERTIFICATE. [To be completed quarterly] The undersigned
hereby certifies to you as follows:
(a) I am the duly elected qualified and acting chief financial officer [or
chief accounting officer] of Borrower.
(b) I have reviewed the provisions of the Credit Agreement and the other
Loan Documents, and a review of the activities of Borrower during the
period from , to , (the "Reporting Period") has been made
under my supervision with a view toward determining whether, during
the Reporting Period, Borrower has kept, observed, performed and
6
fulfilled all its obligations under the Credit Agreement and such
other Loan Documents.
(c) The representations and warranties made in the Loan Documents are true
and correct in all material respects as of the date hereof as though
made at and of the date hereof, except for such representations and
warranties which relate to a particular date or which fail to be true
and correct as a result of events or occurrences permitted under the
Loan Documents, and no Default or Event of Default has occurred or is
continuing or is imminent.
This Compliance Certificate is executed and delivered on the day
of , .
PILLOWTEX CORPORATION
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
7