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FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (the "Fifth Amendment") dated
as of December ___, 2001, is to that Credit Agreement dated as of October
14, 1998, as amended by that certain First Amendment to Credit Agreement
dated May 21, 1999, as further amended by that certain Second Amendment to
Credit Agreement dated December 29, 1999, that certain Third Amendment to
Credit Agreement dated June 26, 2000 and that certain Fourth Amendment to
Credit Agreement dated February 14, 2001 (as may be subsequently amended
and modified from time to time, the "Credit Agreement"; terms used but not
otherwise defined herein shall have the meanings provided in the Credit
Agreement), by and among ▇▇▇ RIVER INC., a Georgia corporation (the
"Borrower"), the Guarantors identified therein, the several banks and other
financial institutions identified therein (the "Lenders") and FIRST UNION
NATIONAL BANK, as administrative agent for the Lenders thereunder (in such
capacity, the "Administrative Agent"), BANK ONE, formerly The First
National Bank of Chicago, as syndication agent, and WACHOVIA BANK, N.A., as
documentation agent.
W I T N E S S E T H:
WHEREAS, the Lenders have established a credit facility for the
benefit of the Borrower pursuant to the terms of the Credit Agreement;
WHEREAS, the Borrower wishes to amend the Credit Agreement and certain
of the Security Documents to modify certain provisions contained therein;
and
WHEREAS, the Lenders have agreed to the requested amendment on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
A. Amendments. The Credit Agreement is amended in the following
respects (Section references contained herein being references to Sections
of the Credit Agreement unless otherwise indicated herein):
1. Section 1.1 is hereby amended as follows:
a. Section 1.1 is hereby amended by making the additions
and deletions set forth in bold below:
"Consolidated EBITDA" means, for any period, the sum of
(i) Consolidated Net Income for such period, plus (ii) an amount
which, in the determination of Consolidated Net Income for such
period, has been deducted for (A) Consolidated Interest Expense,
(B) total federal, state, local and foreign income taxes and
similar taxes on income, (C) depreciation, amortization expense
and other non-cash charges, (D) Cost Savings Add-Backs resulting
from the acquisition of the Acquired Business, (E) other non-
recurring, non-cash charges, (F) charges associated with
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restructuring, provided that the amount paid in cash referred to
in this clause shall not, in the aggregate, exceed $2,000,000,
(G) charges permitted to be amortized for the purpose of
transitional funding of customer marketing programs and (H)
other adjustments to Consolidated EBITDA reasonably acceptable to
the Required Lenders.
"Interest Coverage Ratio" shall mean, with respect to the
Borrower and its Restricted Subsidiaries for any period, the
ratio of (a) Consolidated EBITDA for such period to (b)
Consolidated Interest Expense for such period.
"Required Lenders" shall mean (i) Lenders holding in the
aggregate not less than 51% (provided that (i) for any
modification or waiver to the financial covenants in Section 5.9
for the April 2002 financial covenant tests and October 2002
financial covenant tests, such percentage shall be 75%, and
(ii) for any other modification or waiver to the financial
covenants in Section 5.9, such percentage shall be 66 2/3%) of
all Revolving Loans and LOC Obligations then outstanding at such
time plus the aggregate unused Revolving Commitments at such time
(treating for purposes hereof in the case of Swingline Loans and
LOC Obligations, in the case of the Swingline Lender and the
Issuing Lender, only the portion of the Swingline Loans and the
LOC Obligations of the Swingline Lender and the Issuing Lender,
respectively, which is not subject to the Participation Interests
of the other Lenders and, in the case of the Lenders other than
the Swingline Lender and the Issuing Lender, the Participation
Interests of such Lenders in Swingline Loans and LOC Obligations
hereunder as direct Obligations) and (ii) Lenders holding in the
aggregate not less than 51% (provided that (i) for any
modification or waiver to the financial covenants in Section 5.9
for the April 2002 financial covenant tests and October 2002
financial covenant tests, such percentage shall be 75%, and
(ii) for any other modification or waiver to the financial
covenants in Section 5.9, such percentage shall be 66 2/3%) of
all Term Loans then outstanding at such time; provided, however,
that if any Lender shall be a Defaulting Lender at such time,
then there shall be excluded from the determination of Required
Lenders, Obligations (including Participation Interests) owing to
such Defaulting Lender and such Defaulting Lender's Commitments,
or after termination of the Commitments, the principal balance of
the Obligations owing to such Defaulting Lender.
b. Section 1.1 is hereby amended by amending the
definition of "Applicable Percentage" by the addition of the following
new level immediately above Level I:
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LIBOR RATE
Alternate Margin for
Base Rate Revolving
Margin for Loans, Term
Revolving Loans
Leverage Loans and Term and Letter of Commitment
Level Ratio Loans Credit Fee Fee
----- -------- -------------- ------------ -----------
A >5.50 to 3.00% 4.25% .500%
1.0
c. Section 1.1 is hereby amended by the deletion of the
definition of "Interest Payment Date" and replacing it with the
following:
"Interest Payment Date" shall mean (a) as to any Alternate
Base Rate Loan or Swingline Loan, the last day of each calendar
month and the applicable Maturity Date and (b) as to any LIBOR
Rate Loan, the last day of each calendar month and the last day
of each Interest Period applicable thereto.
d. Section 1.1 is hereby amended by the addition of the
following definitions thereto in the appropriate alphabetical order:
"Accounts" shall mean, as to any Person, all rights to
receive payment for goods sold or leased by such Person or for
services rendered in the ordinary course of business of such
Person to the extent not evidenced by an instrument or chattel
paper, including any rights in, to and under all purchase orders
or receipts now owned or hereafter acquired for goods and
services, and all collateral security and guarantees with respect
to any of the foregoing.
"Advance Rate" shall mean, (a) with respect to Eligible
Accounts, 85%, (b) with respect to Eligible Inventory, (i) 60%,
in the case of raw materials and finished goods, (ii) 40%, in the
case of work-in-progress and (iii) 15%, in the case of supplies;
provided, that the foregoing advance rates may be modified from
time to time in accordance with Section 2.1(b)(iv).
"Borrowing Base" shall mean, as of any Calculation Date, an
amount equal to the sum of (i) the amount of Eligible Accounts at
such date multiplied by the applicable Advance Rate and (ii) the
amount of Eligible Inventory at such date multiplied by the
applicable Advance Rate; provided that in no event can such
amount exceed the sum of (i) 85% of the book value of the
Borrower's consolidated accounts receivable and (ii) 55% of the
book value of the Borrower's consolidated inventory. The
Borrowing Base shall be determined from time to time by the
Administrative Agent in its reasonable judgment by reference to
the Borrowing Base Certificate then most recently delivered to
it, and the values of the Eligible Accounts and the Eligible
Inventory so determined shall remain in effect until the next
succeeding Calculation Date.
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"Borrowing Base Certificate" shall mean a certificate,
substantially in the form of Schedule 5.2(f) hereto (or in such
other form as the Administrative Agent shall from time to time
reasonably request), delivered to the Administrative Agent
pursuant to Section 5.2(f).
"Calculation Date" shall mean, at any time, the last day of
any period covered by the most recent Borrowing Base Certificate.
"Consolidated Capital Expenditure Limitation" shall have the
meaning set forth in Section 5.9(d).
"Eligible Accounts" shall mean, as of the Calculation Date,
all Accounts of the Borrower arising in the ordinary course of
business, other than:
(a) Accounts which are outstanding more than 90 days past
the original due date;
(b) Accounts as to which the account debtor thereunder has
not been sent an invoice;
(c) Accounts which are owed by an obligor which is an
Affiliate or employee of the Borrower;
(d) Accounts which are pre-petition liabilities owed by an
obligor which has taken any of the actions or suffered any of the
events of the kind described in Section 7.1(e);
(e) Accounts which are owed by an obligor with respect to
whom more than 50% of the Accounts of such obligor are more than
90 days past the original due date;
(f) Accounts which are owed by account debtors located
outside the United States of America (excluding territories and
possessions thereof) other than Canada, other than such Accounts
in respect of sales which are secured by standby letters of
credit or other instruments (in form and substance satisfactory
to the Administrative Agent) issued or confirmed by, and payable
at, banks satisfactory to the Administrative Agent having a place
of business in the United States of America and payable in
Dollars, which letters of credit are assigned and delivered to
the Administrative Agent;
(g) Accounts (i) upon which the Borrower's right to receive
payment is not absolute or is contingent upon the fulfillment of
any condition whatsoever or (ii) as to which the Borrower is not
able to bring suit or otherwise enforce its remedies against the
account debtor through judicial process or (iii) if the Account
represents a progress billing consisting of an invoice for goods
sold or used or services rendered pursuant to a contract under
which the account debtor's obligation to pay that invoice is
subject to the Borrower's completion of further performance under
such contract or is subject to the equitable lien of a surety
bond issuer;
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(h) any Account to the extent that any defense,
counterclaim, setoff or dispute is asserted as to such Account;
(i) any Account that is not a true and correct statement
of bona fide Indebtedness incurred in the amount of the Account
for merchandise sold to or services rendered and accepted by the
applicable account debtor;
(j) any Account to the extent the Borrower or any
Subsidiary thereof is liable for goods sold or services rendered
by the applicable account debtor to the Borrower or any
Subsidiary thereof but only to the extent of the potential
offset;
(k) any Account that arises with respect to goods which
are delivered on a ▇▇▇▇-and-hold basis (provided, that Accounts
with respect to goods delivered on a ▇▇▇▇-and-hold basis in an
aggregate amount not exceeding $5,000,000 at any one time
outstanding shall not be excluded from Eligible Accounts pursuant
to this paragraph (k)), cash-on-delivery basis or placed on
consignment, guaranteed sale or other terms by reason of which
the payment by the account debtor is or may be conditional;
(l) any Account as to which any of the representations or
warranties pertaining to Accounts set forth in this Agreement or
the Security Agreement is untrue;
(m) any Account which is payable in a currency other than
Dollars or Canadian Dollars;
(n) Accounts which are owed by a Governmental Authority or
an Affiliate thereof (unless, with respect to Accounts arising
from sales to the United States of America or to any agency,
department or division thereof, the Borrower or the relevant
Subsidiary thereof has complied with the Federal Assignment of
Claims Act with respect thereto);
(o) Accounts (i) which are not bona fide, valid and legally
enforceable obligations of the parties thereto or the account
debtor in respect thereof and which do not arise from the sale
and delivery of Inventory or the rendition of services in the
ordinary course of business to such parties or account debtors,
(ii) as to which either the Borrower or (to the best of the
Borrower's knowledge) any other party to such Account is in
default or is likely to become in default in the performance or
observance of any of the terms thereof in any material respect,
(iii) which are not solely owned by the Borrower (subject to the
Lien of the Administrative Agent therein), (iv) in which the
Borrower (1) has not granted a valid and continuing first lien
and first security interest in favor of the Administrative Agent
pursuant to the Security Documents and (2) does not have good and
marketable title, free and clear of any and all Liens (except
inchoate or similar Liens, Liens permitted under Section 6.2, and
Liens created under the Security Documents) or rights of others
enforceable as such against all other Persons, (v) as to which
all action necessary or desirable under applicable law to protect
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and perfect such lien and security interest has not been duly
taken, (vi) as to which any amounts payable under or in
connection therewith are evidenced by promissory notes or other
instruments except (1) instruments which constitute a part of
chattel paper and which have been individually marked to show the
Lien granted pursuant to the Security Documents and (2)
instruments which have been delivered to the Administrative Agent
and (vii) as to which any security agreement, financing
statement, equivalent security or lien instrument or continuation
statement covering all or any part thereof is on file or of
record in any public office, except such as may have been filed
in favor of the Administrative Agent pursuant to the Security
Documents; or
(p) Accounts which have been deemed necessary to be
excluded in the reasonable judgment of the Administrative Agent
exercised in a manner which is customary either in the commercial
finance industry or in the lending practices of the
Administrative Agent and/or the Lenders.
"Eligible Inventory" shall mean, as of the Calculation Date,
all Inventory, other than:
(a) Inventory (A) which is not solely owned by the
Borrower; or (B) which is not located on property owned by the
Borrower, unless (i) such Inventory is located on property leased
by the Borrower, is in a contract warehouse or is located at an
outside contractor and (ii) with respect to Inventory described
in this clause (B), the Borrower has entered into an agreement (a
"Waiver Agreement") in form and substance reasonably satisfactory
to the Administrative Agent granting the Administrative Agent and
its designated representatives access to such Inventory and
waiving the lessor's or contract warehouseman's or outside
contractor's Liens, if any, on such Inventory (the Borrower
hereby agreeing to use its reasonable best efforts to obtain
Waiver Agreements with respect to all such Inventory within 30
days after the Fifth Amendment Effective Date); provided that no
Inventory shall be excluded from Eligible Inventory pursuant to
this clause (B), but rather, with respect to any such Inventory
not covered by a Waiver Agreement on or after the date which is
30 days after the Fifth Amendment Effective Date, the
Administrative Agent may establish such reserves against such
Inventory as the Administrative Agent in its reasonable credit
judgment shall determine to be appropriate to reflect risks
relating to the lack of such Waiver Agreement.
(b) Inventory as to which the Borrower (x) has not granted
a valid and continuing first Lien in favor of the Administrative
Agent pursuant to the Security Documents or (y) does not have
good and marketable title, free and clear of any and all Liens
(other than inchoate warehouseman's or similar Liens, Liens
permitted under Section 6.2, and Liens created pursuant to the
Security Documents but including the rights of a purchaser that
has made progress payments and the rights of a surety that has
issued a bond to assure the Borrower's performance with respect
to that Inventory);
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(c) Inventory as to which any security agreement, financing
statement, equivalent security or lien instrument or continuation
statement covering all or any part thereof is on file or of
record in any public office, except such as may have been filed
in favor of the Administrative Agent pursuant to the Security
Documents;
(d) Inventory which constitutes goods outside of the United
States of America (excluding territories and possessions thereof)
or Canada, goods returned or rejected by the customers of the
Borrower or the relevant Subsidiary (other than goods that are
undamaged and resalable in the ordinary course of business),
goods to be returned to the suppliers of the Borrower or the
relevant Subsidiary or goods in transit to third parties (other
than the Administrative Agents or warehouses of the Borrower and
its Subsidiaries);
(e) Inventory which is placed on consignment or is in
transit;
(f) Inventory which is covered by a negotiable document of
title, unless such document has been delivered to Administrative
Agent with all necessary endorsements, free and clear of all
Liens except those in favor of Administrative Agent and Lenders;
(g) Inventory which in Administrative Agent's reasonable
determination, is excess, obsolete, unsalable, shopworn, seconds,
damaged or unfit for sale;
(h) Inventory which is not of a type held for sale in the
ordinary course of the Borrower's business;
(i) Inventory as to which Administrative Agent's Lien, on
behalf of the Administrative Agents and Lenders, therein is not a
first priority perfected Lien;
(j) Inventory as to which any of the representations or
warranties pertaining to Inventory set forth in this Agreement or
the Security Agreement is untrue;
(k) Inventory which consists of any costs associated with
"freight-in" charges;
(l) Inventory which is not covered by casualty insurance
acceptable to the Administrative Agent;
(m) Inventory as to which all action necessary or desirable
to protect and perfect the lien and security interest in favor of
the Administrative Agent has not been duly taken pursuant to the
Security Documents; or
(n) Inventory which is otherwise unacceptable to the
Administrative Agent in its reasonable credit judgment exercised
in a manner which is customary either in the commercial finance
industry or in the lending practices of the Administrative Agent
and/or the Lenders.
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"Fifth Amendment Effective Date" shall mean the date upon
which the Fifth Amendment hereto, dated as of December ___, 2001,
becomes effective in accordance with its terms.
"Inventory" means, as to any Person, any "inventory" (as
such term is defined in Section 9-102(48) of the Uniform
Commercial Code as in effect on the date hereof in the State of
New York) now or hereafter owned by such Person.
"Maximum Outstanding Amount" means, at any time during any
fiscal period set forth below, the amount set forth for such
fiscal period below:
Fiscal Period Amount
------------- ------
November 2001 $129,000,000
December 2001 $145,250,000
January 2002 $146,250,000
February 2002 $145,000,000
March 2002 $143,750,000
April 2002 $144,750,000
May 2002 $146,750,000
June 2002 $150,000,000
and thereafter
2. Section 2.1(a) is hereby amended by making the additions and
deletions set forth in bold below:
(a) Revolving Commitment. During the Commitment Period, subject
to the terms and conditions hereof, each Lender severally agrees to
make revolving credit loans ("Revolving Loans") to the Borrower from
time to time for the purposes hereinafter set forth; provided,
however, that (i) with regard to each Lender individually, the sum of
such Lender's share of outstanding Revolving Loans plus such Lender's
Revolving Commitment Percentage of Swingline Loans plus such Lender's
LOC Commitment Percentage of LOC Obligations shall not exceed the
least of (A) such Lender's Revolving Commitment Percentage of the
aggregate Revolving Committed Amount, (B) such Lender's Revolving
Commitment Percentage of the Maximum Outstanding Amount then in effect
and (C) such Lender's Revolving Commitment Percentage of the Borrowing
Base then in effect, and (ii) with regard to the Lenders collectively,
the sum of the aggregate amount of outstanding Revolving Loans plus
Swingline Loans plus LOC Obligations shall not exceed the least of
(A) the Revolving Committed Amount, (B) the Maximum Outstanding Amount
then in effect and (C) the Borrowing Base then in effect. For
purposes hereof, the aggregate amount available hereunder (subject to
the restrictions hereof) shall be ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000) (as such aggregate maximum amount may be reduced from
time to time as provided in Section 2.6, the "Revolving Committed
Amount"). Revolving Loans may consist of Alternate Base Rate Loans or
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LIBOR Rate Loans, or a combination thereof, as the Borrower may
request, and may be repaid and reborrowed in accordance with the
provisions hereof. LIBOR Rate Loans shall be made by each Lender at
its LIBOR Lending Office and Alternate Base Rate Loans at its Domestic
Lending Office.
3. Section 2.1(b) is hereby amended by adding the following
paragraph (iv) immediately after paragraph (iii):
(iv) Borrowing Base. Based on the most recent Borrowing
Base Certificate delivered by the Borrower to the Administrative
Agent and on other information available to the Administrative
Agent, the Administrative Agent shall in its reasonable credit
judgment determine which Accounts of the Borrowers shall be
"Eligible Accounts" for purposes of this Agreement and which
Inventory of the Borrower shall be "Eligible Inventory" for
purposes of this Agreement. In determining whether a particular
Account constitutes an Eligible Account, the Administrative Agent
shall not include any such Account to which any of the
exclusionary criteria set forth in the definition of Eligible
Accounts applies. In determining whether any particular
Inventory constitutes Eligible Inventory, the Administrative
Agent shall not include any such Inventory to which any of the
exclusionary criteria set forth in the definition of Eligible
Inventory applies. The Administrative Agent at the request of
the Required Lenders reserves the right, at any time and from
time to time upon ten (10) Business Days' prior written notice to
the Borrower, to adjust any such criteria, to establish new
criteria and to adjust Advance Rates with respect to Eligible
Accounts and Eligible Inventory, in its reasonable credit
judgment and which is customary either in the Borrower's industry
or in the lending practices of the Administrative Agent and/or
the Lenders, subject to the approval of the Required Lenders in
the case of adjustments or new criteria or changes in Advance
Rates which have the effect of making more credit available.
4. Section 2.2(b) is hereby amended and restated in its
entirety to read as follows:
(b) Repayment of Term Loan. The principal amount of the
Term Loan shall be repaid in fifteen (15) consecutive fiscal
quarterly installments as follows, unless accelerated sooner
pursuant to Section 7.2:
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Principal Amortization Term Loan Principal
Payment Dates Amortization Payment
---------------------- --------------------
March 31, 2000 $5,000,000
June 30, 2000 $5,000,000
September 29, 2000 $5,000,000
December 29, 2000 $5,000,000
March 30, 2001 $6,500,000
June 29, 2001 $6,500,000
September 28, 2001 $10,000,000
December 15, 2001 $10,000,000
March 29, 2002 $2,500,000
June 15, 2002 $2,500,000
September 30, 2002 $10,000,000
December 15, 2002 $10,000,000
March 31, 2003 $10,000,000
June 15, 2003 $10,000,000
September 30, 2003 $39,910,000
provided, that the principal amortization payments on the Term Loans
scheduled to be made on December 15, 2001, June 15, 2002, December 15, 2002
and June 15, 2003 or if such date is not a Business Day, such date as
determined pursuant to Section 2.12 (each date, a "Scheduled Payment Date")
shall in any event be made on the earlier of (i) such Scheduled Payment
Date and (ii) the date on which the Borrower pays the interest payment due
on the same date as the corresponding Scheduled Payment Date in respect of
the Subordinated Debt issued pursuant to the Subordinated Note Indenture.
5. Section 2.3(a) is hereby amended by making the additions and
deletions set forth in bold below:
(a) Swingline Commitment. During the Commitment Period,
subject to the terms and conditions hereof, the Swingline Lender,
in its individual capacity, agrees to make certain revolving
credit loans to the Borrower (each a "Swingline Loan" and,
collectively, the "Swingline Loans") for the purposes hereinafter
set forth; provided, however, (i) the aggregate amount of
Swingline Loans outstanding at any time shall not exceed FIFTEEN
MILLION DOLLARS ($15,000,000) (the "Swingline Committed Amount"),
and (ii) the sum of the aggregate amount of outstanding Revolving
Loans plus Swingline Loans plus LOC Obligations shall not exceed
the least of (A) the Revolving Committed Amount, (B) the Maximum
Outstanding Amount then in effect and (C) the Borrowing Base then
in effect. Swingline Loans hereunder may be repaid and
reborrowed in accordance with the provisions hereof.
6. Section 2.4(a)(ii) is hereby amended by making the additions
and deletions set forth in bold below:
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(ii) the sum of the aggregate amount of Revolving Loans plus
Swingline Loans plus LOC Obligations shall not at any time exceed
the least of (A) the Revolving Committed Amount, (B) the Maximum
Outstanding Amount then in effect and (C) the Borrowing Base then
in effect,
7. Section 2.5(a) is hereby amended by deleting the words
"Revolving Commitment Amount" and replacing such words with the words
"Maximum Outstanding Amount".
8. Section 2.7(b)(i) is hereby amended by making the additions
and deletions set forth in bold below:
(i) Revolving Committed Amount. If at any time after
the Closing Date, the sum of the aggregate principal amount of
outstanding Revolving Loans plus Swingline Loans plus LOC
Obligations shall exceed the least of (A) the Revolving Committed
Amount, (B) the Maximum Outstanding Amount then in effect and
(C) the Borrowing Base then in effect, the Borrower immediately
shall prepay the Revolving Loans and (after all Revolving Loans
have been repaid) cash collateralize the LOC Obligations, in an
amount sufficient to eliminate such excess.
9. Section 2.7(b) is hereby amended by adding the following
paragraph (vi) immediately after paragraph (v):
(vi) If, after giving effect to a prepayment of the Loans
in the amount of $3,000,000 on the last day of any of the
Borrower's third fiscal quarter in 2002, fourth fiscal quarter in
2002, and first fiscal quarter in 2003, the (i) availability of
the undrawn Revolving Commitment under this Agreement plus (ii)
cash and Cash Equivalents would be at least $20,000,000 on such
last day, the Borrower shall prepay the Loans in the amount of
$3,000,000 on the Business Day following such last day.
10. Section 5.1 is hereby amended by deleting the word "and" at
the end of paragraph (b), adding the word "and" at the end of
paragraph (c), and adding new paragraphs (d), (e) and (f) as follows:
(d) Monthly Reporting. As soon as available and in any
event not later than 30 days after the end of such fiscal month
(60 days in the case of the month of December), unaudited
consolidated balance sheets as at the end of each month of the
fiscal year and the related unaudited consolidated statements of
income and of cash flows for such month and the portion of the
fiscal year through the end of such month, setting forth in each
case in comparative form the figures for the previous year, in
each case in form and detail satisfactory to the Administrative
Agent.
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(e) Cash Flow Forecast. As soon as available and in any
event not later than the third Business Day after the end of each
successive two-week period, a 13-week cash flow forecast,
substantially in the form of Exhibit A to this Agreement,
together with a comparison of the actual results for the two-week
period in the immediately preceding cash flow forecast delivered
pursuant to this paragraph, in form and detail satisfactory to
the Administrative Agent.
(f) Sales Flash Report. As soon as available and in any
event not later than the second Business Day after the end of
each week, a weekly sales flash report, in form and detail
satisfactory to the Administrative Agent.
11. Section 5.2 is hereby amended by deleting the word "and" at
the end of paragraph (e), replacing the letter "f" in paragraph (f) with
the letter "g", and adding a new paragraph (f) as follows:
(f) promptly and in any event not later than the second
Business Day of the following week, a Borrowing Base Certificate
calculating the Borrowing Base at the end of the preceding week
(using month-end inventory data for the month with respect to
which the most recent financial statements have been provided to
the Administrative Agent and using weekly account data based upon
the most accurate information currently available to the
Borrower), accompanied by supporting detail and documentation;
and
12. Section 5.6 is hereby amended by adding the following
sentence "The Administrative Agent will also be given access to perform
field audits of the Borrowing Base from time to time." at the end of such
section.
13. Section 5.9 is hereby amended and restated in its entirety
to read as follows:
Section 5.9 Financial Covenants. The Borrower shall, and
shall cause each of its Subsidiaries to, comply with the
following financial covenants:
a. Cumulative Consolidated EBITDA. Cumulative
Consolidated EBITDA for each period beginning July 2001 and
ending on the last day of each fiscal month set forth below shall
be equal to or greater than the amount set forth opposite such
fiscal month below:
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Fiscal Period Amount
------------- ------
October 2001 $14,900,000
November 2001 $17,200,000
December 2001 $20,330,000
January 2002 $20,800,000
February 2002 $25,100,000
March 2002 $31,750,000
April 2002 $34,500,000
May 2002 $41,250,000
June 2002 $51,110,000
b. Consolidated EBITDA. Consolidated EBITDA for any period
of twelve consecutive fiscal months ending on the last day of any
fiscal month set forth below shall be equal to or greater than
the amount set forth below opposite such fiscal month below:
Fiscal Period Amount
------------- ------
July 2002 $49,000,000
August 2002 $52,500,000
September 2002 $59,120,000
October 2002 $65,000,000
November 2002 $70,500,000
December 2002 $72,500,000
January 2003 $73,500,000
February 2003 $74,500,000
March 2003 $75,000,000
and thereafter
c. Interest Coverage Ratio. The Interest Coverage Ratio
(based upon cash interest only), for each period consisting of
the fiscal months set forth below, shall be greater than or equal
to the following:
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Interest
Fiscal Period Coverage Ratio
------------- --------------
July 2001 - 1.20 to 1.0
December 2001
July 2001 - 1.20 to 1.0
March 2002
July 2001 - 1.50 to 1.0
June 2002
October 2001 - 1.70 to 1.0
September 2002
January 2002 - 2.00 to 1.0
December 2002
April 2002 - 2.00 to 1.0
March 2003
July 2002 - 2.00 to 1.0
June 2003
d. Maximum Consolidated Capital Expenditures. Consolidated
Capital Expenditures shall not exceed the dollar amount set forth
below opposite the applicable period (the "Consolidated Capital
Expenditure Limitation"):
Consolidated Capital
Fiscal Period Expenditure Limitation
------------- ----------------------
Fiscal year 2002 $25,000,000
Fiscal year 2003 $18,000,000
; provided, however, that (i) up to $15,000,000 of the Consolidated
Capital Expenditure Limitation not utilized during any fiscal year may
be carried forward to the immediately following fiscal year only, and
any capital expenditures made during any fiscal year shall first be
applied to the Consolidated Capital Expenditure Limitation for such
fiscal year and then to reduce the carry-forward (from the prior
fiscal year only) and (ii) in the event the proposed restructuring of
the Whitehorse and Arnco facilities is not consummated prior to
December 31, 2001, the Consolidated Capital Expenditure Limitation for
fiscal year 2002 shall be increased by $2,300,000.
15
14. Section 5.16 is hereby added as follows:
Section 5.16. Cash Management System. As promptly as
practicable after the Fifth Amendment Effective Date, but in any
event no later than 180 days after the Fifth Amendment Effective
Date, (i) establish a system of lock box accounts and
concentration accounts with the Administrative Agent into which
all accounts receivable of the Borrower and its subsidiaries
shall be paid, (ii) maintain all operating accounts and deposit
accounts with the Administrative Agent, other than accounts
established in local branches with the prior written consent of
the Administrative Agent, (iii) execute and deliver to the
Administrative Agent such documents as the Administrative Agent
deems necessary or advisable to grant to the Administrative
Agent, for the benefit of the Lenders, a security interest in all
such lockbox, concentration, operating and deposit accounts and
(iv) take all actions necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in such property, including
causing the relevant parties to enter into contractual agreements
with respect to such accounts and providing to the Administrative
Agent appropriate legal opinions with respect thereto or as may
be requested by the Administrative Agent. Prior to the occurrence
of an Event of Default and the exercise of the Administrative
Agent of control with respect to any such account, the Borrower
shall retain the right to direct the disposition of the funds in
the lock box accounts and concentration accounts.
15. Section 6.1 is hereby amended by the addition of the
following sentence after paragraph (k):
Notwithstanding anything in this Section to the contrary, the
Borrower shall be prohibited from incurring any additional
Indebtedness after the Fifth Amendment Effective Date other than
(i) Indebtedness incurred under this Agreement and
(ii) Indebtedness in respect of vendor equipment financings or
Capital Lease Obligations in an aggregate principal amount not to
exceed $7,500,000 at any one time outstanding.
16. Section 6.5(a)(v) is hereby amended and restated in its
entirety to read as follows:
(v) the sale, lease or transfer of property or assets
yielding Net Cash Proceeds not to exceed $1,000,000 in the
aggregate in any fiscal year, except for (A) a proposed swap of
looms valued at approximately $2,000,000 and (B) the sale of
receivables that are credit concerns, on terms and conditions
reasonably satisfactory to the Agent; provided that any sale,
lease or transfer of property or assets yielding Net Cash
Proceeds in excess of $1,000,000 shall be permitted so long as an
amount equal to such excess amount shall be applied to pre-pay
the Loans pursuant to subsection 2.7(b)(v), but in no event shall
such sale, lease or transfer of property or assets permitted by
this subsection 6.5(a)(v) exceed $5,000,000 in the aggregate in
any fiscal year; and
16
17. Section 6.5(b)(i) is hereby amended and restated in its
entirety to read as follows:
(b) (i) purchase, lease or otherwise acquire (in a single
transaction or a series of related transactions) the property or
assets of any Person (other than purchases or other acquisitions
of inventory, leases, materials, property and equipment in the
ordinary course of business).
18. Section 6.11 is hereby amended by replacing the proviso
"provided, however, that notwithstanding the provisions of subclause (d),
the Borrower shall not be permitted to pay any cash dividends or repurchase
any shares of its Capital Stock during fiscal year 2001 or fiscal year
2002." at the end of the paragraph with the proviso provided, however, that
notwithstanding the provisions of subclause (d), the Borrower shall not be
permitted to pay any cash dividends or repurchase any shares of its Capital
Stock during fiscal year 2001, fiscal year 2002 or fiscal year 2003."
19. Section 9.5 of the Credit Agreement is hereby amended by
adding the following sentence before the last sentence of such Section:
The Borrower agrees to pay the reasonable fees and expenses
of internal and third-party consultants and auditors retained by
the Administrative Agent to advise in connection with the
Agreement.
20. Section 9.13 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
Section 9.13 Governing Law. This Agreement and the Notes
and the rights and obligations of the parties under this
Agreement and the Notes shall be governed by, and construed and
interpreted in accordance with, the law of the State of
New York.
21. Section 9.14 of the Credit Agreement is hereby amended by
deleting the words "court of competent jurisdiction in the State of North
Carolina" in line 3 thereof and adding the words "court of competent
jurisdiction in the State of
New York" in their place and stead.
22. Schedule 5.2(f), in the form attached hereto as Exhibit A,
is hereby added to the Credit Agreement.
B. Modifications of Security Documents. The Security Documents are
amended in the following respects:
1. Section 18 of the Amendment and Restated Security Agreement
is hereby amended and restated in its entirety to read as follows:
18. Governing Law; Submission to Jurisdiction; Waivers.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
17
(b) Each Obligor hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Credit
Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the
Southern District of
New York, and appellate courts from any
thereof.
(ii) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now
or hereafter have to the venue of any such action or proceeding
in any such court or that such action or proceeding was brought
in an inconvenient court and agrees not to plead or claim the
same.
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form
of mail), postage prepaid, to such Obligor at its address
referred to in Section 9.2 of the Credit Agreement or at such
other address of which the Administrative Agent shall have been
notified pursuant thereto.
(iv) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to ▇▇▇ in any other jurisdiction.
(v) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or
proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.
2. Section 19 of the Pledge Agreement is hereby amended and
restated in its entirety to read as follows:
19. Governing Law; Submission to Jurisdiction; Waiver of
Jury Trial; Venue. This Pledge Agreement and the rights and
obligations of the parties under this Pledge Agreement shall be
governed by, and construed and interpreted in accordance with, the
laws of the State of
New York. The provisions of the Credit Agreement
relating to submission to jurisdiction, waiver of jury trial and venue
are hereby incorporated by reference herein, mutatis mutandis.
C. Transfer of Subsidiaries' Assets to Borrower; Release of Security
Interest in Subsidiaries' Assets. Concurrently with the effectiveness of
this Amendment, (a) the Borrower shall cause each of The ▇▇▇▇ Company and
▇▇▇ River Factory Stores, Inc. to transfer to the Borrower substantially
18
all of its assets (which shall become subject to the security interest of
the Administrative Agent) and (b) the Lenders hereby release any security
interest that may have been granted to the Lenders or the Administrative
Agent pursuant to the Security Documents in any assets of Subsidiaries of
the Borrower, and the Lenders hereby authorize and instruct the
Administrative Agent to execute and deliver and permit to be filed or
recorded all such documents and instruments, and to take such other
actions, as shall be required to effect or evidence the release of security
interests provided for in this clause (b).
D. Amended Terms. The terms "Credit Agreement", "Security
Agreement" and "Pledge Agreement" as used in each of the Credit Documents
shall hereafter mean such documents as amended by this Fifth Amendment.
Except as modified hereby, all of the terms and provisions of the Credit
Agreement (and Exhibits) and Security Documents, including the Security
Agreement and Pledge Agreement, remain in full force and effect.
E. Waiver. Each Lender party hereto hereby waives any Default or
Event of Default in existence on or prior to the Fifth Amendment Effective
Date arising from violations of Section 5.9 of the Credit Agreement prior
to the date hereof.
F. Representations and Warranties of Credit Parties. Each of the
Credit Parties hereby represents and warrants as follows:
1. The representations and warranties contained in Article III
of the Credit Agreement or in any Security Document to which such Credit
Party is a party are correct in all material respects on and as of the date
hereof as though made on and as of such date (except for those which
expressly relate to an earlier date) and after giving effect to the
amendments contained herein.
2. No Default or Event of Default exists on and as of the date
hereof and after giving effect to the amendments contained herein.
3. It has the corporate power and authority to execute and
deliver this Fifth Amendment and to perform its obligations hereunder and
has taken all necessary corporate action to authorize the execution,
delivery and performance by it of this Fifth Amendment.
4. It has obtained all governmental, shareholder and material
third party consents and approvals necessary in connection with the
financings and other transactions contemplated hereby, and all applicable
waiting periods have expired without any action being taken by any
authority that could restrain, prevent or impose any material adverse
conditions on such transactions or that could seek or threaten any of the
foregoing.
5. It has duly executed and delivered this Fifth Amendment, and
this Fifth Amendment constitutes its legal, valid and binding obligation
enforceable in accordance with its terms.
19
G. Closing Conditions. This Fifth Amendment shall become effective
upon the satisfaction of the following conditions precedent:
1. Execution of Documents. The Administrative Agent shall have
received copies of this Fifth Amendment duly executed and delivered by each
Lender and each Credit Party.
2. Authority Documents. The Administrative Agent shall have
received the following:
a. Articles of Incorporation. Copies of the articles of
incorporation or other charter documents, as applicable, of each
Credit Party certified to be true and complete as of a recent date by
the appropriate governmental authority of the state of its
incorporation.
b. Resolutions. Copies of resolutions of the board of
directors of each Credit Party approving and adopting this Fifth
Amendment and the transactions contemplated herein and authorizing
execution and delivery thereof, certified by an officer of such Credit
Party as of the date hereof to be true and correct and in force and
effect as of such date.
c. Bylaws. A copy of the bylaws of each Credit Party
certified by an officer of such Credit Party as of the date hereof to
be true and correct and in force and effect as of such date.
d. Good Standing. Copies of (i) certificates of good
standing, existence or its equivalent with respect to the each Credit
Party certified as of a recent date by the appropriate governmental
authorities of the state of incorporation and (ii) a certificate
indicating payment of all corporate franchise taxes certified as of a
recent date by the appropriate governmental taxing authorities from
each jurisdiction in which the failure to pay such franchise taxes
could reasonably be expected to have a Material Adverse Effect on the
business or operations of the Borrower and its Subsidiaries in such
jurisdiction.
e. Incumbency. An incumbency certificate of each Credit
Party certified by a secretary or assistant secretary to be true and
correct as of the date hereof substantially in the form of Schedule
4.1(b) to the Credit Agreement.
3. Legal Opinions of Counsel. The Administrative Agent shall
have received, in form and substance reasonably satisfactory to the
Administrative Agent, an opinion of King & Spalding, counsel for the Credit
Parties, dated as of the date hereof and addressed to the Administrative
Agent and the Lenders.
20
4. Fees. The Borrower shall have paid all expenses for which
invoices have been presented and all fees required to be paid, including an
amendment fee to the Administrative Agent for the account of each Lender
approving this Fifth Amendment on or before the date hereof in the amount
of .50% of the sum of such Lender's Revolving Commitment and the
outstanding principal amount of such Lender's Term Loan.
5. Actions Pursuant to Section C. The actions required of the
Borrower pursuant to Section C of this Fifth Amendment shall have been
taken.
H. Costs and Expenses. The Borrower shall pay all reasonable
expenses of the Administrative Agent associated with the preparation,
execution, delivery and administration of the Amendment Documentation
(including, but not limited to, fees and disbursements of counsel and of
internal and third-party consultants and auditors advising the
Administrative Agent).
I. Acknowledgment of Each Credit Party. Each Credit Party
acknowledges and consents to all of the terms and conditions of this Fifth
Amendment and agrees that this Fifth Amendment and all documents executed
in connection herewith do not operate to reduce or discharge such Credit
Party's obligations under the Credit Agreement or the other Credit
Documents. Each Credit Party further acknowledges and agrees that such
Credit Party has no claims, counterclaims, offsets, or defenses to the
Credit Documents and the performance of such Credit Party's obligations
thereunder or if such Credit Party did have any such claims, counterclaims,
offsets or defenses to the Credit Documents or any transaction related to
the Credit Documents, the same are hereby waived, relinquished and released
in consideration of the Lenders' execution and delivery of this Fifth
Amendment. Each Credit Party listed as a Guarantor on the signature pages
hereof acknowledges that it is a Guarantor under the Credit Agreement.
J. Counterparts. This Fifth Amendment may be executed in any number
of counterparts, each of which when so executed and delivered shall be
deemed an original and it shall not be necessary in making proof of this
Fifth Amendment to produce or account for more than one such counterpart.
K. Governing Law. This Fifth Amendment shall be governed by, and
construed in accordance with, the laws of the State of
New York.
[Balance of Page Intentionally Blank]
21
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Fifth Amendment to be duly executed and delivered as of
the date and year first above written.
BORROWER: ▇▇▇ RIVER, INC.,
a Georgia corporation
By:
Name:
Title:
GUARANTORS: THE ▇▇▇▇ COMPANY,
a Delaware corporation
By:_________________________
Name:
Title:
▇▇▇ RIVER FACTORY STORES, INC.,
a Georgia corporation
By:_________________________
Name:
Title:
▇▇▇ RIVER INTERNATIONAL LTD,
a Virginia corporation
By:_________________________
Name:
Title:
22
AGENTS AND LENDERS: FIRST UNION NATIONAL BANK,
------------------ as Administrative Agent and as a Lender
By:_________________________
Name:
Title:
23
BANK ONE,
formerly The First National Bank of Chicago,
as Syndication Agent and as a Lender
By:_________________________
Name:
Title:
24
WACHOVIA BANK, N.A.,
as Documentation Agent and as a Lender
By:_________________________
Name:
Title:
25
LENDERS: SUNTRUST BANK,
------- as a Lender
By:_________________________
Name:
Title:
▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
as a Lender
By:_________________________
Name:
Title:
27
COMERICA BANK,
as a Lender
By:_________________________
Name:
Title:
28
COOPERATIVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A. "RABOBANK NEDERLAND",
NEW YORK BRANCH, as a Lender
By:_________________________
Name:
Title:
29
CENTURA BANK,
as a Lender
By:_________________________
Name:
Title:
30
FLEET BANK, N.A.,
as a Lender
By:_________________________
Name:
Title:
31
ABN AMRO BANK N.V.,
as a Lender
By:_________________________
Name:
Title:
▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇,
as a Lender
By:_________________________
Name:
Title:
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇,
as a Lender
By:_________________________
Name:
Title:
34
SOUTHTRUST BANK, N.A.,
as a Lender
By:_________________________
Name:
Title:
35
NATIONAL CITY BANK,
as a Lender
By:_________________________
Name:
Title:
36
APEX (IDM) CDO I, LTD.,
as a Lender
By:_________________________
Name:
Title:
37
Exhibit A
---------
SCHEDULE 5.2(f)
---------------
[FORM OF BORROWING BASE CERTIFICATE]