THIRD AMENDMENT
THIS THIRD AMENDMENT (the "Amendment"), to the Credit Agreement
referred to below is entered into as of the 30th day of January, 1997, by and
among TEXFI INDUSTRIES, INC., a corporation organized under the laws of Delaware
(the "Borrower"), THE LENDERS SIGNATORY HERETO (collectively, the "Lenders"),
and NATIONSBANK, N.A., a national banking association, as Agent (the "Agent").
STATEMENT OF PURPOSE
The Borrower, the Lenders and the Agent are parties to a certain Credit
Agreement dated as of March 15, 1996 (as heretofore amended hereby and as
further amended or modified hereby, the "Credit Agreement"), pursuant to which
the Lenders have agreed to make, and have made, certain Loans to the Borrower.
The Borrower, the Lenders and the Agent have agreed to amend the Credit
Agreement upon the terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto hereby agree as follows:
I. AMENDMENTS.
1. Section 1.1 of the Credit Agreement. Section 1.1 of the Credit
Agreement is hereby amended as follows:
(a) By deleting the definition set forth below in its entirety
and inserting in lieu thereof the following:
"Aggregate Revolving Credit Commitment" means the
aggregate amount of the Lenders' Revolving Credit Commitments
hereunder, as such amount may be reduced at any time or from
time to time pursuant to Section 2.5. As of the effective date
of the Third Amendment to Credit Agreement, the Aggregate
Revolving Credit Commitment shall be Forty-Five Million
Dollars ($45,000,000).
(b) By adding to the definition of Net Income the following
sentence:
All losses resulting from the sale, conversion or other
disposition of fixed assets by the Borrower in excess of
reserves established as of the end of the Borrower's 1996
fiscal year end shall be deducted from the Borrower's gross
revenues in determining the Borrower's Net Income.
2. Section 3.3 of the Credit Agreement. Section 3.3 of the Credit
Agreement is hereby amended by deleting the first sentence of the same in its
entirety and inserting in lieu thereof the following:
The Borrower shall repay the principal amount of the Term Loan
outstanding as of the effective the date of the Third
Amendment to Credit Agreement in (21) consecutive monthly
installments on the last day of each month commencing January
31, 1997, the first twenty (20) of which shall be in the
amount of $500,000 and the last of which shall be in the
amount of $4,378,552.80 or such other principal amount as
shall then remain unpaid under the Term Loan.
3. Section 3.5(a) of the Credit Agreement. Subsection 3.5(a) of the
Credit Agreement is hereby amended by adding the following proviso at the end of
such subsection:
;provided, that to the extent that the aggregate amount of the
Net Proceeds realized from any such Asset Sale(s) equals or
exceeds $100,000, the Borrower shall transfer such Net
Proceeds to the Agent via wire transfer to an account
designated by the Agent to be applied to the prepayment of the
Term Loan and then to permanently reduce the Aggregate
Revolving Credit Commitment in consideration for the release
by the Agent of the applicable assets sold.
4. Section 3.5(c) of the Credit Agreement. Subsection 3.5(c) of the
Credit Agreement is hereby amended by deleting the same in its entirety and
inserting in lieu thereof the following:
(c) Manner of Application. Each mandatory prepayment
under this Section 3.5 shall be applied to the principal
installments due on the Term Loan in the inverse order of
maturity (and on a pro rata basis in accordance with the
Commitment Percentage of each Lender). Each such prepayment
shall be accompanied by any payment required under Section 4.8
hereof.
5. Section 4.1(a) of the Credit Agreement. Section 4.1(a) of the Credit
Agreement is hereby amended to provide that the Borrower shall no longer have
the option to request that the CD Rate apply to any Loan. At the end of any
existing Interest Period during which the elected rate is the CD Rate, such Loan
shall, subject to the terms of the following paragraph, bear interest at the
Base Rate or LIBOR Rate plus, in each case, the Applicable Margin.
Commencing with the date of the Third Amendment and continuing until
the tenth Business Day after receipt by the Agent of the Borrower's financial
statements for the second fiscal quarter of 1997 and the accompanying Officer's
Compliance Certificate (such date being
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referred to herein as the "Rate Option Adjustment Date"), all Loans shall bear
interest at the Base Rate plus Applicable Margin, and the LIBOR Rate option
shall not be available.
Provided the Borrower is in compliance with Sections 9.2 and 9.3, as
amended by the Third Amendment, as of the end of the first and second fiscal
quarters of 1997, on and after the Rate Option Adjustment Date the principal
balance of each Loan shall bear interest at the Base Rate or the LIBOR Rate
plus, in each case, the Applicable Margin, as elected by the Borrower in
accordance with the terms of Section 4.1, as amended hereby.
6. Section 4.1(c) of the Credit Agreement. Section 4.1(c) of the Credit
Agreement is hereby amended by deleting the pricing matrix in its entirety and
inserting in lieu thereof the following pricing matrix:
Applicable Margin Per Annum
Leverage Ratio Base Rate + Fixed Rate +
greater than or equal to
4.75 to 1.0 2.00% 3.00%
less than 4.75 to 1.0
but equal to or greater
than 4.0 to 1.0 1.75% 2.75%
less than 4.0 to 1.0
but equal to or greater
than 3.25 to 1.0 1.50% 2.50%
less than 3.25 to 1.0 1.25% 2.25%
7. Section 7.3 of the Credit Agreement. Subsection (f) of Section 7.3
of the Credit Agreement is hereby amended to become subsection (h) of Section
7.3 of the Credit Agreement and the following subsections (f) and (g) of Section
7.3 of the Credit Agreement are hereby added to the Credit Agreement:
(f) Weekly, a certificate of the chief executive
officer or chief financial officer of the Borrower in the form
of Exhibit Q attached hereto setting forth as of the end of
the preceding week the status of the discontinued assets of
the Borrower and its Subsidiaries, including, without
limitation, accounts receivable, inventory, and property,
plant and equipment, relating to the Borrower's Kingstree
Knits business and the Borrower's facility in Graham, North
Carolina;
(g) As soon as practicable and in no event later than
15 days after the end of each month, a certificate of the
chief executive officer or
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chief financial officer of the
Borrower setting forth as of the end of
such month the status of the accounts payable of the Borrower
and its Subsidiaries, including, without limitation, an
accounts payable aging report of the Borrower and its
Subsidiaries; and
8. Section 8.14 of the Credit Agreement. Article VIII of the Credit
Agreement is hereby amended by inserting the following new Section thereto:
8.14 Minimum Asset Sales. Prior to the end of the Borrower's
1997 fiscal year, sell or otherwise dispose of fixed assets in
connection with the closing of the Borrower's Kingstree Knits business
and the Borrower's facility in Graham, North Carolina having an
aggregate value of not less than $6,000,000.
9. Section 9.2 of the Credit Agreement. Section 9.2 of the Credit
Agreement is hereby amended by deleting the same in its entirety and inserting
in lieu thereof the following:
Section 9.2 Coverage Ratio. Permit the Coverage Ratio to be
less than the following ratios as of the date indicated:
Ratio Applicable Date
.70 to 1.0 At the end of the fourth quarter of
the Borrower's 1996 fiscal year.
.95 to 1.0 At the end of the first quarter of
the Borrower's 1997 fiscal year.
.85 to 1.0 At the end of the second quarter
of the Borrower's 1997 fiscal
year.
.85 to 1.0 At the end of the third quarter of
the Borrower's 1997 fiscal year.
1.00 to 1.0 At the end of the fourth quarter of
the Borrower's 1997 fiscal year.
1.10 to 1.0 At the end of the first quarter of
the Borrower's 1998 fiscal year.
1.25 to 1.0 At the end of the second quarter
of the Borrower's 1998 fiscal year
and at the end of each fiscal
quarter thereafter.
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Notwithstanding the manner in which the calculation of the "Coverage
Ratio" is set forth in Section 1.1 hereof, compliance with Section 9.2
as of the end of the first quarter of fiscal year 1997 shall be
calculated for the one (1) fiscal quarter then ended, compliance with
Section 9.2 as of the end of the second quarter of fiscal year 1997
shall be calculated for the period of two (2) consecutive fiscal
quarters then ended and compliance with Section 9.2 as of the end of
the third fiscal quarter of fiscal year 1997 shall be calculated for
the period of three (3) consecutive fiscal quarters then ended.
10. Section 9.3 of the Credit Agreement. Section 9.3 of the Credit
Agreement is hereby amended by deleting the same in its entirety and inserting
in lieu thereof the following:
Section 9.3 Leverage Ratio. Permit the Leverage Ratio to
exceed the following ratios as of the date indicated:
Ratio Applicable Date
6.40 to 1.0 At the end of the fourth quarter of
the Borrower's 1996 fiscal year.
5.25 to 1.0 At the end of the first quarter of
the Borrower's 1997 fiscal year.
5.15 to 1.0 At the end of the second quarter
of the Borrower's 1997 fiscal
year.
4.85 to 1.0 At the end of the third quarter of
the Borrower's 1997 fiscal year.
3.55 to 1.0 At the end of the fourth quarter of
the Borrower's 1997 fiscal year.
3.50 to 1.0 At the end of the first quarter of
the Borrower's 1998 fiscal year
and at the end of each fiscal
quarter thereafter.
11. Section 9.4 of the Credit Agreement. Section 9.4 of the Credit
Agreement is hereby amended by deleting the same in its entirety and inserting
in lieu thereof the following:
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Section 9.4 Minimum Net Worth. Permit Consolidated Net Worth
to be less than negative $13,141,000 as of the end of the fourth
quarter of the Borrower's 1996 fiscal year, negative $12,585,000 as of
the end of the first quarter of the Borrower's 1997 fiscal year and as
of any date thereafter, an amount equal to the sum of (x) negative
$12,585,000 plus (y) fifty percent (50%) of Consolidated Net Income (if
positive) of the Borrower and its Subsidiaries for each fiscal quarter
occurring after the first fiscal quarter of the Borrower's 1997 fiscal
year plus (z) one hundred percent (100%) of the aggregate Net Proceeds
of any issuance or offering of capital stock received by the Borrower
or any of its Subsidiaries after the first fiscal quarter of the
Borrower's 1997 fiscal year.
12. Section 10.11 of the Credit Agreement. Section 10.11 of the Credit
Agreement is hereby amended by deleting the proviso in its entirety and
inserting in lieu thereof the following:
; provided that the Borrower may make the payment of principal under
the Borrower's 11-1/4% Convertible Senior Subordinated Debentures due
October 1, 1997, subject to the following conditions precedent: (i) No
Default or Event of Default shall have occurred and be continuing or
would result therefrom; and (ii) after giving effect to such payment
and for the period of thirty (30) consecutive days ending on the date
of such payment, the Committed Amount shall exceed the aggregate
outstanding principal amount of all Revolving Credit Loans and Letter
of Credit Obligations by at least $4,000,000. The right of the Borrower
to make payments of principal of more than $315,000 with respect to the
Subordinated Extendible Debentures due April 1, 2000, Series C, are
subject to the following conditions precedent: (i) No Default or Event
of Default shall have occurred and be continuing or would result
therefrom; and (ii) after giving effect to any such payment and for the
period of thirty (30) consecutive days ending on the date of such
payment, the Committed Amount shall exceed the aggregate principal
amount of all Revolving Credit Loans and Letter of Credit Obligations
by at least $2,000,000. Provided no Default or Event of Default shall
have occurred and be continuing or would result therefrom, the Borrower
may (i) make all scheduled payments of interest necessary to comply
with its binding obligations under the instruments evidencing the
Subordinated Debt outstanding on Xxxxx 00, 0000, (xx) all sinking fund
payments required to be made under the Borrower's 11-1/4% Convertible
Senior Subordinated Debendures due October 1, 1997, and (iii) make all
redemptions required under Paragraph 6 of the Borrower's 8-3/4% Senior
Subordinated Debentures due August 1, 1999, provided the Borrower is
not obligated to redeem more than an aggregate of $50,000 in principal
amount of debentures tendered on behalf of any single deceased Initial
Holder (as defined therein). In the event of any conflict or
inconsistency between the terms of this Section 10.11 and Section 2.1,
this Section 10.11 shall control.
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No amendment or waiver of the foregoing conditions precedent to the
right of the Borrower to make payments under the instruments evidencing
the referenced Subordinated Debt shall be effective without the prior
written consent of each Lender.
13. Section 13.10 of the Credit Agreement. The Lenders hereby consent
and agree that pursuant to Section 13.10 of the Credit Agreement the Agent may,
without the further consent of the Lenders, release Collateral in connection
with (i) any asset sale permitted pursuant to subsections (a) and (d) of Section
10.6 (including, without limitation, the sale of assets in connection with the
Borrower's Kingstree Knits business and the Borrower's facility in Graham, North
Carolina) and (ii) sale-leasebacks permitted under Section 10.6 with respect to
Equipment to be purchased under the Borrower's 1996, 1997 and 1998 capital
expenditure plans included in the projections furnished by the Borrower to the
Lenders which will be financed under operating leases to be entered into by the
Borrower with respect to such Equipment and under any capital expenditure plans
subsequently furnished to and approved by the Lenders in connection with the
Borrower's annual budgets or otherwise.
14. Exhibits. Attached hereto is a copy of Exhibit Q as referenced in
this Third Amendment.
II. CONFIRMATION; CONDITIONS TO EFFECTIVENESS.
1. Representations and Warranties. In order to induce the Lenders and
the Agent to execute this Amendment, the Borrower hereby confirms that each
representation and warranty made by it under the Loan Documents is true and
correct as of the date hereof and that after giving effect to this Amendment, no
Default or Event of Default exists under the Credit Agreement. The Borrower
hereby represents and warrants that as of the date hereof there are no claims or
offsets against or defenses or counterclaims to its obligations under the Credit
Agreement or any other Loan Document.
2. Conditions to Effectiveness. This Amendment shall become effective
upon completion of the following conditions to the satisfaction of the Agent:
(a) receipt by the Agent of an originally executed copy of this
Amendment; and
(b) receipt by the Agent of any other document or instrument
reasonably requested by it in connection with the execution of
this Amendment; and
(c) receipt by the Agent of the Amendment fee in the amount of
$74,223 to be shared by the Lenders pro rata in accordance the
Commitment Percentage of each Lender.
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III. GENERAL PROVISIONS.
1. Additional Fee. In the event the balance of the Term Loan
outstanding as of July 1, 1997 is more than $6,500,000, the Borrower shall pay
to the Agent, for the account of the Lenders, a fee in an amount equal to 25
basis points of the Committed Amount plus the Term Loan balance on July 1, 1997,
such fee to be paid not later than July 15, 1997.
2. Limited Amendment. The amendment of Sections 9.2, 9.3 and 9.4 of the
Credit Agreement as set forth in Paragraphs 9, 10 and 11 of this Amendment shall
be effective as of November 1, 1996. Except as expressly amended herein, the
Credit Agreement and each other Loan Document shall continue to be, and shall
remain, in full force and effect. This Amendment shall not be deemed (i) to be a
waiver of, or consent to, or a modification or amendment of, any other term or
condition of the Credit Agreement or (ii) to prejudice any other right or rights
which the Agent or any Lender may now have or may have in the future under or in
connection with the Credit Agreement or the Loan Documents or any of the
instruments or agreements referred to therein, as the same may be amended or
modified from time to time.
3. Counterparts. This Amendment may be executed by one or more of the
parties hereto in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
4. Definitions. All capitalized terms used and not defined herein shall
have the meanings given thereto in the Credit Agreement.
5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NORTH CAROLINA.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective duly authorized officers as of the
date first above written.
BORROWER:
TEXFI INDUSTRIES, INC.
By:
Name:
Title:
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AGENT:
NATIONSBANK, N.A.
By:
Name:
Title:
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LENDERS:
NATIONSBANK, N.A.
By:
Name:
Title:
MELLON BANK, N.A.
By:
Name:
Title:
THE FIRST NATIONAL BANK OF BOSTON
By:
Name:
Title:
CORESTATES BANK, N.A.
By:
Name:
Title:
FLEET BANK, NATIONAL ASSOCIATION
By:
Name:
Title:
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NATIONAL BANK OF CANADA
By:
Name:
Title:
By:
Name:
Title:
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Exhibit Q
to
Third Amendment
by and among
Texfi Industries, Inc.,
the Lenders Signatory Hereto,
NationsBank, N.A. and
NationsBanc Commercial Corporation
Dated January ___, 1996
Asset Status Certificate
This certificate is delivered pursuant to Section 7.3 of the Credit
Agreement (the "Credit Agreement") dated as of March 15, 1996 by and among TEXFI
INDUSTRIES, INC. (the "Borrower") and the Lenders party thereto and NATIONSBANK,
N.A. as Agent. The undersigned, on behalf of the Borrower, hereby certifies to
NationsBank, N.A., in its capacity as Agent for the Lenders that this
certificate has been prepared under his supervision and is true and correct in
all respects, to the best of his knowledge.
Witness the following signature, the ____ day of _____________, 1997.
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Name: ____________________________
Title: ____________________________
