SEVENTH AMENDMENT TO CREDIT AGREEMENT
THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT, dated as of May 1, 1996 (this
"Amendment"), to the Existing Credit Agreement (as defined below) is entered
into by and among TRIANGLE PACIFIC CORP., a Delaware corporation (the
"Borrower"), and the various financial institutions parties hereto
(collectively, the "Lenders").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, Bank of America NT&SA as co-agent (the
Co-Agent") for the Lenders, and The Bank of Nova Scotia as the agent (the
"Agent") for the Lenders, have heretofore entered into that certain Credit
Agreement, dated as of August 4, 1993 (together with all Exhibits, Schedules
and Attachments thereto, in each case as amended or otherwise modified prior
to the date hereof, being collectively referred to herein as the "Existing
Credit Agreement");
WHEREAS, the Borrower has requested the Lenders to amend the Existing
Credit Agreement in certain respects as set forth below; and
WHEREAS, the Lenders are willing, on the terms and conditions set forth
below, to amend the Existing Credit Agreement in certain respects as provided
herein (the Existing Credit Agreement, as amended pursuant to the terms of
this Amendment, being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Borrower and the Lenders hereby agree as
follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendment, including its preamble and recitals,
shall, except where the context otherwise requires, have the following
meanings (such meanings to be equally applicable to the singular and plural
form thereof):
"Affirmation and Consent" means the affirmation and consent executed and
delivered pursuant to Subpart 3.1.6.
"Agent" is defined in the first recital.
"Amendment" is defined in the preamble.
"Borrower" is defined in the preamble.
"Co-Agent" is defined in the first recital.
"Credit Agreement" is defined in the third recital.
"Existing Credit Agreement" is defined in the first recital.
"Lenders" is defined in the preamble.
"Seventh Amendment" is defined in Subpart 3.1.
"Seventh Amendment Effective Date" is defined in Subpart 3.1.
SUBPART 1.2. Other Definitions. Terms for which meanings are provided
in the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendment with such meanings provided
therein.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Seventh Amendment
Effective Date, and in reliance upon the representations and warranties made
herein and (if any) in each other agreement furnished to the Agent pursuant to
the terms hereof or in connection herewith, the parties hereto hereby agree
that the Existing Credit Agreement is hereby amended in accordance with this
Part II. Except as expressly so amended or modified by this Amendment, the
Existing Credit Agreement and each other Loan Document shall continue in full
force and effect in accordance with their respective terms.
SUBPART 2.1. Amendments to Article I ("DEFINITIONS AND ACCOUNTING
TERMS"). Article I of the Existing Credit Agreement is hereby amended in
accordance with Subpart 2.1.1.
SUBPART 2.1.1. Section 1.1 ("Defined Terms") of the Existing Credit
Agreement is hereby amended by inserting the following definitions in the
appropriate alphabetical order:
"Hartco" means Hartco Flooring Company, a Tennessee corporation, a
wholly owned Subsidiary of the Borrower.
"Hartco Letter of Intent" means the Letter of Intent between the
Borrower and Premark International, Inc. dated April 11, 1996.
"Seventh Amendment" means the Seventh Amendment to Credit Agreement,
dated as of May 1, 1996 among the Borrower and the Lenders parties
thereto.
"Seventh Amendment Effective Date" is defined in Subpart 3.1 of the
Seventh Amendment.
SUBPART 2.2. Amendments to Article VII ("COVENANTS"). Article VII of the
Existing Credit Agreement is hereby amended in accordance with Subparts 2.2.1,
Subpart 2.2.2, Subpart 2.2.3, Subpart 2.2.4 and Subpart 2.2.5.
SUBPART 2.2.1. Section 7.2.2 ("Indebtedness") of the Existing Credit
Agreement is hereby amended by (a) deleting the word "and" following the semi-
colon appearing at the end of clause (c)(i) of such Section, (b) inserting the
word "and" following the semi-colon appearing at the end of clause (c)(ii) of
such Section and (c) inserting a new clause (iii) to such Section which shall
read as follows:
"(iii) Indebtedness incurred by Hartco in an aggregate principal amount
not to exceed $16,500,000 and of the types described in Item
7.2.2(c)(iii) of the Disclosure Schedule."
SUBPART 2.2.2. Clause (c) of Section 7.2.3 ("Liens") of the Existing
Credit Agreement is hereby amended in its entirety to read as follows:
"(c) Liens
(i) granted prior to the Closing Date to secure payment of
Indebtedness of the type permitted and described in clause (c)(i) of
Section 7.2.2; and
(ii) granted by Hartco to secure the payment of Indebtedness
incurred by Hartco in an aggregate principal amount not to exceed
$16,500,000 and of the type permitted and described in Item 7.2.3(c)(ii)
of the Disclosure Schedule;"
SUBPART 2.2.3. Clauses (b), (c) and (e) of Section 7.2.4 ("Financial
Condition") of the Existing Credit Agreement are hereby amended in their
respective entireties to read as follows:
"(b) the ratio of Funded Debt (excluding Contingent Liabilities relating
to such Debt) to EBITDA, as of the last day of any Fiscal Quarter during
each Fiscal Year set forth below to be greater than the ratio set forth
opposite such Fiscal Year:
Fiscal Year Ratio
1995 3.25:1
1996 3.25:1
1997 2.75:1
1998 2.50:1
1999 2.50:1
2000 2.50:1;"
"(c) the Fixed Charge Coverage Ratio as of the last day of any Fiscal
Quarter during each Fiscal Year set forth below to be less than the ratio
set forth opposite such Fiscal Year:
Fixed Charge
Fiscal Year Coverage Ratio
1995 1.00:1
1996 .95:1
1997 1.05:1
1998 1.05:1
1999 1.10:1
2000 1.10:1;"
"(e) its Net Worth at any time during any Fiscal Year set forth below
to be less than the amount set forth opposite such Fiscal Year:
Fiscal Year Minimum Net Worth
1995 $115,000,000
1996 $130,000,000
1997 $140,000,000
1998 $150,000,000
1999 and each $150,000,000, plus an
Fiscal Year thereafter amount equal to 25%
of Net Income for such
Fiscal Year as of the
date of determination
thereof."
SUBPART 2.2.4. Clause (e) of Section 7.2.5 ("Investments") of the
Existing Credit Agreement is hereby amended in its entirety to read as
follows:
"(e)
(i) Investments by the Borrower in Hartco arising from the
transaction contemplated by the Hartco Letter of Intent; and
(ii) in the ordinary course of business, Investments by the Borrower
in any of its Subsidiaries (except Permitted Foreign Subsidiaries), or by
any such Subsidiary in any of its Subsidiaries, by way of contributions
to capital or loans or advances;"
SUBPART 2.2.5. Clause (a) of Section 7.2.16 ("No New Subsidaries") of
the Existing Credit Agreement is hereby amended by deleting the refernce to
"(i)" and deleting clause (a)(ii) in its entirety.
SUBPART 2.2.6. The Disclosure Schedule is hereby amended by adding
thereto Items 7.2.2(c)(iii) and 7.2.3(c)(ii) as set forth in Annex I hereto.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Seventh Amendment Effective Date. This Amendment (and
the amendments and modifications contained herein) shall become effective, and
shall thereafter be referred to as the "Seventh Amendment", on the date (the
"Seventh Amendment Effective Date") when all of the conditions set forth in
this Subpart 3.1 have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. The Agent shall have
received counterparts of this Amendment, duly executed and delivered on behalf
of the Borrower and each of the Lenders.
SUBPART 3.1.2. Resolutions. etc. The Agent shall have received in
form and substance satisfactory to the Agent,
(a) a certificate, dated the Seventh Amendment Effective Date, of
the Borrower's Secretary or Assistant Secretary as to
(i) resolutions of the Borrower's Board of Directors then in
full force and effect authorizing the execution, delivery and
performance of this Amendment and each other Loan Document executed
or to be executed by it in connection herewith; and
(ii) the incumbency and signatures of those officers of the
Borrower authorized to act with respect to this Amendment and each
other Loan Document executed or to be executed by it in connection
herewith,
upon which certificate each Lender may conclusively rely with respect to
the incumbency and signature of such Authorized Officers until it shall
have received a further certificate of the Secretary or Assistant
Secretary of the Borrower cancelling or amending such prior certificate;
(b) a certificate, dated the Seventh Amendment Effective Date, of
the Secretary or Assistant Secretary of Hartco as to
(i) resolutions of the Board of Directors of Hartco then in
full force and effect authorizing the execution, delivery and
performance of a guaranty and security agreement (as such are
described in Subparts 3.1.3 and 3.1.4, below) and each other Loan
Document executed or to be executed by it in connection herewith and
therewith; and
(ii) the incumbency and signatures of those officers of Hartco
authorized to act with respect to the guaranty and the security
agreement of Hartco described in Subparts 3.1.3 and 3.1.4 below and
each other Loan Document executed or to be executed by it in
connection herewith and therewith,
upon which certificate each Lender may conclusively rely with respect to
the incumbency and signature of such Authorized Officers until it shall
have received a further certificate of the Secretary or Assistant
Secretary of Hartco cancelling or amending such prior certificate;
(c) a certificate, dated the Seventh Amendment Effective Date, of
the Secretary or Assistant Secretary of each other Obligor as to
(i) resolutions of such Obligor's Board of Directors then in
full force and effect authorizing the execution, delivery and
performance of the Affirmation and Consent and each other Loan
Document executed or to be executed by it in connection herewith;
and
(ii) the incumbency and signatures of those officers of such
Obligor authorized to act with respect to the Affirmation and
Consent and each other Loan Document executed or to be executed by
it in connection herewith,
upon which certificate each Lender may conclusively rely with respect to
the incumbency and signature of such Authorized Officers until it shall
have received a further certificate of the Secretary or Assistant
Secretary of such Obligor cancelling or amending such prior certificate;
and
(d) such other documents (certified if requested) or certificates
as the Agent may reasonably request with respect to this Amendment, the
Affirmation and Consent, any other Loan Document or any Organic Document
or approval.
SUBPART 3.1.3. Delivery of Hartco Guaranty. The Agent shall have
received, for the benefit of each Lender, the Issuer and the Agent, a guaranty
in respect of the Obligations in a form reasonably satisfactory to the Agent,
duly executed and delivered by an Authorized Officer of Hartco, dated as of
the Seventh Amendment Effective date.
SUBPART 3.1.4. Delivery of Hartco Security Agreement. The Agent shall
have received, for the benefit of each Lender, the Issuer and the Agent, a
security agreement in a form reasonably satisfactory to the Agent, duly
executed and delivered by an Authorized Officer of Hartco, dated as of the
Seventh Amendment Effective Date, together with such opinions in form and
substance and from counsel satisfactory to Agent, as the Agent may require,
together with (i) executed copies of proper Uniform Commercial Code Form UCC-3
termination statements, if any, necessary to release all Liens and other
rights of any Person in any collateral described in such security agreement
previously granted by any Person, (ii) Uniform Commercial Code financing
statements naming Hartco as the debtor and the Agent as the secured party to
be filed under all jurisdictions as may be necessary or, in the opinion of the
Agent, desirable to perfect the security interest of the Agent pursuant to
such security agreement and (iii) certified copies of Uniform Commercial Code
requests for information or similar search reports dated a date reasonably
near the date of the acquisition of Hartco listing all effective financing
statements which name Hartco as a debtor.
SUBPART 3.1.5. Solvency Certificate. The Agent shall have received for
the benefit of each Lender, the Issuer and the Agent, a solvency certificate
of an Authorized Officer of Borrower, in a form reasonably satisfactory to the
Agent, dated as of the Seventh Amendment Effective Date.
SUBPART 3.1.6. Affirmation and Consent. The Agent shall have received a
duly executed copy of the Affirmation and Consent to this Amendment, in a form
reasonably satisfactory to the Agent, duly executed and delivered by each
Obligor.
SUBPART 3.1.7. Hartco Acquisition. The Borrower's acquisition of Hartco
shall have been completed without a material change in the terms of the
acquisition from those set forth in the Hartco Letter of Intent, except as may
be otherwise consented to by the Required Lenders.
SUBPART 3.1.8. No Material Adverse Change. Since December 29, 1995,
there has been no material adverse change in the financial condition,
operations, assets, business or properties of the Borrower and its
Subsidiaries, taken as a whole.
SUBPART 3.1.9. Fees and Expenses. The Agent shall have received for its
own account, or for the account of each Lender, as the case may be, all fees
and expenses due and payable under Subpart 4.5.
SUBPART 3.1.10. Environmental Audits. The Agent shall have received
written reports from an environmental consultant relating to environmental
audits of material real property to be acquired in the acquisition of Hartco
reasonably satisfactory in scope and results to the Agent.
SUBPART 3.1.11. Opinions of Counsel. The Agent shall have received such
opinions, each dated the Seventh Amendment Effective Date, in form and
substance and from counsel satisfactory to the Agent, as the Agent may
require.
SUBPART 3.1.12. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the Agent and
its counsel. The Agent and its counsel shall have received all information
and such counterpart originals or such certified or other copies or such
materials as the Agent or its counsel may reasonably request, and all legal
matters incident to the transactions contemplated by this Amendment shall be
satisfactory to the Agent and its counsel.
PART IV
MISCELLANEOUS; REPRESENTATIONS
SUBPART 4.1. Cross-References. References in this Amendment to any Part
or Subpart are, unless otherwise specified or otherwise required by the
context, to such Part or Subpart of this Amendment.
SUBPART 4.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendment is a Loan Document executed pursuant to the Existing Credit
Agreement and shall be construed, administered and applied in accordance with
all of the terms and provisions of the Existing Credit Agreement (and,
following the Seventh Amendment Effective Date, the Credit Agreement).
SUBPART 4.3. Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.4. Full Force and Effect; Limited Amendment. Except as
expressly amended hereby, all of the representations, warranties, terms,
covenants, conditions and other provisions of the Existing Credit Agreement
and the other Loan Documents shall remain unamended and unwaived and shall
continue to be, and shall remain, in full force and effect in accordance with
their respective terms. The amendments set forth herein shall be limited
precisely as provided for herein to the provisions expressly amended herein
and shall not be deemed to be an amendment to, waiver of, consent to or
modification of any other term or provision of the Existing Credit Agreement,
any other Loan Document referred to therein or herein or of any transaction or
further or future action on the part of the Borrower which would require the
consent of the Lenders under the Existing Credit Agreement or any of the Loan
Documents.
SUBPART 4.5. Payment of Fees and Expenses. The Borrower hereby agrees
to pay and reimburse the Agent for all of its reasonable fees and expenses
incurred in connection with the negotiation, preparation, execution and
delivery of this Amendment and related documents, including all reasonable
fees and disbursements of counsel to the Agent.
SUBPART 4.6. Counterparts. This Amendment may be executed by the
parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.7. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SUBPART 4.8. Compliance with Warranties. No Default, etc. Both before
and after giving effect to the occurrence of the Seventh Amendment Effective
Date and the amendments to the Existing Credit Agreement set forth above, the
Borrower represents and warrants to the Lenders that the following statements
are true and correct:
(a) the representations and warranties set forth in Article VI
(excluding, however, those contained in Section 6.7) of the Existing
Credit Agreement and the representations and warranties set forth in
Article III of each Security Agreement and in Article III of the
Subsidiary Guaranty and in each other Loan Document are true and correct
in all material respects with the same effect as if then made (unless
stated to relate solely to an earlier date, in which case such
representations and warranties were true and correct as of such earlier
date);
(b) except as disclosed by the Borrower to the Agent and the
Lenders pursuant to Section 6.7 of the Existing Credit Agreement,
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding is pending or, to the
knowledge of the Borrower, threatened against the Borrower or any of
its Subsidiaries which could result in a Material Adverse Effect
(including with respect to this Amendment or any other Loan Document
delivered in connection herewith); and
(ii) no development has occurred in any labor controversy,
litigation, arbitration or governmental investigation or proceeding
disclosed pursuant to Section 6.7 of the Existing Credit Agreement
which could result in a Material Adverse Effect (including with
respect to this Amendment or any other Loan Document delivered in
connection herewith); and
(c) no Default has occurred and is continuing.
SUBPART 4.9. Additional Representations. In order to induce the Lenders
and the Agents to enter into this Amendment, the Borrower hereby additionally
represents and warrants as follows:
(a) the execution and delivery of this Amendment and the
performance by the Borrower and each of its Subsidiaries of each of their
respective obligations hereunder, under each other Loan Document, under
the Existing Credit Agreement as amended hereby and, upon the occurrence
of the Seventh Amendment Effective Date, under the Credit Agreement are
within such Person's corporate powers, have been duly authorized by all
necessary corporate action, have received all necessary governmental
approvals (if any shall be required), and do not (i) contravene such
Person' s Organic Documents, (ii) contravene any contractual restriction,
law or governmental regulation or court decree or order binding on or
affecting such Person or (iii) result in, or require the creation or
imposition of, any Lien on any of such Person's properties (other than
pursuant to a Loan Document); and
(b) this Amendment, each other Loan Document, the Existing Credit
Agreement as amended hereby and, upon the occurrence of the Seventh
Amendment Effective Date, the Credit Agreement are the legal, valid and
binding obligations of the Borrower and each of its Subsidiaries, as
applicable, enforceable in accordance with their respective terms (except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally and by principles of equity).
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
TRIANGLE PACIFIC CORP.
By:
---------------------------
Title:
THE BANK OF NOVA SCOTIA
By:
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Title:
BANK OF AMERICA NT&SA
By:
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Title:
COMERICA BANK - TEXAS
By:
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Title:
ANNEX I
TO SEVENTH AMENDMENT TO CREDIT AGREEMENT
DATED AS OF MAY 1, 1996
Item 7.2.2(c)(iii)
1. $10 Million Industrial Development Building Bonds
Floating Rate: 3.85%
Loan Agreement:
Section 7.6: Hartco must maintain corporate existence, with
certain exceptions. Nothing prevents the sale of
stock.
Section 9.1: The note is prepayable at any time. Otherwise the
obligation lasts until 2009 with letter of credit
obligations.
Section 10.4: Assignment only with issuer's consent and letter of
credit bank's consent.
Reimbursement Agreement:
Section 5.4: Guarantor must cause insurance to be maintained.
Section 5.5: No liens can be placed upon the facility.
Section 5.6: There can be no consolidation or merger of Hartco.
Section 8.8: Assignment only with bank's consent.
Indenture:
Section 3.02: The bonds are optionally redeemable on any date.
2. $5.4 Million Kentucky Rural Economic Development Bonds (approximately $5
Million left)
Fixed Rate: 10%
Indenture:
Section 3.1: The bonds are redeemable at any time at par upon
purchase of the facility for the outstanding bond
balance.
Lease:
Section 9.1: Assignment only with lessor's consent.
Section 9.4: The bonds are redeemable at any time.
Section 11.1: Terminable at any time if bonds are paid.
There is no Premark guaranty, and Premark owns the bonds.
3. Additional Indebtedness. In addition to the Indebtedness described above,
additional Indebtedness of Hartco in an amount not to exceed $1.5 Million.
Item 7.2.3(c)(ii)
Purchase money mortgages, purchase money security interests or other Liens
granted to secure payment of Indebtedness incurred by Hartco (a) for the
purpose of financing the construction of properties or fixed improvements or
(b) in respect of Purchase Money Obligations for property used in a Permitted
Business, and covering only (together in each case with accessions and
fixtures thereto) the property so acquired or the properties or fixed
improvements so constructed (it being understood that any Lien granted on
property so acquired may also encumber and extend to properties and fixed
improvements constructed thereon, and any Lien granted on properties and fixed
improvements so constructed may also encumber and extend to property so
acquired on which such improvements are constructed).