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EXHIBIT 10.1
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Agreement"), dated as
of September 29, 1999, is by and among Steel Heddle Mfg. Co. (the "Borrower"),
certain subsidiaries of the Borrower identified on the signature pages hereto
(the "Guarantors"), the lenders identified on the signature pages hereto (the
"Lenders") and Bank of America, N.A. (formerly known as NationsBank, N.A.), as
agent for the Lenders (in such capacity, the "Agent"). Capitalized terms used
herein which are not defined herein and which are defined in the Credit
Agreement shall have the same meanings as therein defined.
W I T N E S S E T H
WHEREAS, the Borrower, the Guarantors, the Lenders, the Agent and DLJ
Capital Funding, Inc., as syndication agent entered into that certain Credit
Agreement dated as of May 26, 1998, as amended by the First Amendment to Credit
Agreement and Assignment dated as of May 28, 1998, as amended by the Second
Amendment to Credit Agreement dated as of December 31, 1998 and as amended by
the Third Amendment and Waiver to Credit Agreement dates as of June 30, 1999
(the "Existing Credit Agreement");
WHEREAS, the Borrower has requested that the Lenders amend certain
provisions of the Existing Credit Agreement; and
WHEREAS, the parties to the Existing Credit Agreement have agreed to
amend the Existing Credit Agreement as provided herein;
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1 Certain Definitions. Unless otherwise defined herein or the
context otherwise requires, the following terms used in this Agreement,
including its preamble and recitals, have the following meanings:
"Amended Credit Agreement" means the Existing Credit Agreement as
amended hereby.
"Agreement Effective Date" is defined in Subpart 3.1.
SUBPART 1.2 Other Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Agreement, including its preamble
and recitals, have the meanings provided in the Amended Credit Agreement.
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PART II
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Agreement Effective
Date, the Existing Credit Agreement is hereby amended in accordance with this
Part II:
SUBPART 2.1 Amendments to Section 1.1. Section 1.1 of the Existing
Credit Agreement is hereby amended in the following respects:
(a) The pricing grid in the definition "Applicable Percentage" is
replaced with the pricing grid set forth below:
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======== ============ ============= ============ ============== ============== ==============
Applicable Applicable Applicable Applicable Applicable
Percentage Percentage Percentage Percentage Percentage
Total For For For Standby for Trade For
Pricing Leverage Eurodollar Base Rate Letter of Letter of Commitment
Level Ratio Loans Loans Credit Fee Credit Fee Fees
-------- ------------ ------------- ------------ -------------- -------------- --------------
Greater than 6.00 to
I 1.00 3.50% 2.00% 3.50% 1.75% 0.50%
-------- --------------------- ------------- ------------ -------------- -------------- --------------
Less than 6.00 to
1.00 but
Greater than 5.50 to
II 1.00 3.25% 1.75% 3.25% 1.625% 0.50%
-------- --------------------- ------------- ------------ -------------- -------------- --------------
Less than 5.50 to
1.00 but
Greater than 5.00 to
III 1.00 3.00% 1.50% 3.00% 1.50% 0.50%
-------- ---------------------- ------------- ------------ -------------- -------------- --------------
Less than 5.00 to
1.00 but
Greater than 4.50 to
IV 1.00 2.00% 0.75% 2.00% 1.00% 0.50%
-------- --------------------- ------------- ------------ -------------- -------------- --------------
Less than 4.50 to
1.00 but
Greater than 4.00 to
V 1.00 1.75% 0.50% 1.75% 0.875% 0.50%
-------- -------------------- ------------- ------------ -------------- -------------- --------------
Less than 4.00 to
VI 1.00 1.50% 0.25% 1.50% 0.75% 0.50%
======== ==================== ============= ============ ============== ============== ==============
(b) The definition of "Consolidated EBITDA" is hereby amended in
its entirety to read as follows:
"Consolidated EBITDA" means, with respect to the
Consolidated Parties on a consolidated basis, as of the end of
each fiscal month period, for the three fiscal month period then
ended (or in the case of Millentex Investment Corporation, as of
the end of the most recently completed fiscal quarter for the
three fiscal month period then ended), divided by the number of
days in such three fiscal month period then ended, multiplied by
365, the sum of (a) Consolidated EBIT for such period plus (b) an
amount which, in the determination of Consolidated Net Income for
such period, has been deducted for depreciation and
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amortization expense plus (c) the amounts of the annual
management and Chairman of the Board fees expensed during such
period in accordance with the terms of Section 8.8 plus (d)
retroactive expenses, if any, required to be recognized by the
Securities and Exchange Commission during such period plus (e)
expense items incurred in connection with the Cost Reduction Plan
to the extent such items have been included in the calculation of
Consolidated Net Income, all as determined in accordance with
GAAP.
(c) The definition of "Consolidated Interest Expense" is hereby
amended in its entirety to read as follows:
"Consolidated Interest Expense" means, for any period of
determination with respect to the Consolidated Parties on a
consolidated basis, all net interest expense, including the
interest component under Capital Leases and, to the extent
payable pursuant to Section 8.7, cash interest expense on the
Discount Notes, but excluding the amendment fee associated with
the Fourth Amendment to Credit Agreement dated as of September
29, 1999, as determined in accordance with GAAP.
(d) The definition of "Interest Coverage Ratio" is hereby amended
in its entirety to read as follows:
"Interest Coverage Ratio" means, with respect to the
Consolidated Parties on a consolidated basis, the ratio of (a)
Consolidated EBITDA to (b) Consolidated Interest Expense for the
twelve fiscal month period then ended
(e) The definition of "Permitted Acquisition" is hereby amended
in its entirety to read as follows:
"Permitted Acquisition" means an Acquisition by the
Borrower or any Subsidiary of the Borrower for not more than the
fair market value of the Capital Stock or Property acquired,
provided that (i) the Capital Stock or Property acquired in such
Acquisition relates to a line of business similar to the business
of any Consolidated Party engaged in on the Closing Date, (ii)
the Agent shall have received all items in respect of the Capital
Stock or Property acquired in such Acquisition (and/or the seller
thereof) required to be delivered by the terms of Section 7.9
and/or Section 7.13, (iii) in the case of an Acquisition of the
Capital Stock of another Person, the board of directors (or other
comparable governing body) of such other Person shall have duly
approved such Acquisition, (iv) the Borrower shall have delivered
to the Agent a certificate demonstrating that, upon giving pro
forma effect to such Acquisition (assuming, for purposes hereof,
that such Acquisition was consummated as of the first day of the
four fiscal-quarter period ending as of such fiscal quarter end),
(a) no violation of Section 7.12 would have occurred as of the
most recent fiscal quarter end preceding the date of such
Acquisition with respect to which the Agent has received the
financial statements and officer's certificate as required by
Section 7.1(a) or (b) and Section 7.1(c) and
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(b) the Total Leverage Ratio would not exceed 5.85 to 1.0, (v)
the representations and warranties made by the Credit Parties in
any Credit Document shall be true and correct in all material
respects at and as if made as of the date of such Acquisition
(after giving effect thereto) except to the extent such
representations and warranties expressly relate to an earlier
date, (vi) after giving effect to such Acquisition, the Revolving
Committed Amount shall be at least $5,000,000 greater than the
sum of the Revolving Loans outstanding plus LOC Obligations
outstanding and (vii) the aggregate consideration (including cash
consideration and non-cash consideration (including Capital Stock
of the Parent) and any assumption of liabilities (other than
current working capital liabilities not constituting
Indebtedness)) for all such Acquisitions occurring after the
Closing Date shall not exceed $10,000,000.
(f) The definition of "Senior Leverage Ratio" is hereby amended
in its entirety to read as follows:
"Senior Leverage Ratio" means, with respect to the
Consolidated Parties on a consolidated basis, the ratio of (a)
Senior Funded Indebtedness of the Consolidated Parties on a
consolidated basis on the last day of each fiscal month to (b)
Consolidated EBITDA.
(g) The definition of "Total Leverage Ratio" is hereby amended in
its entirety to read as follows:
"Total Leverage Ratio" means, with respect to the
Consolidated Parties on a consolidated basis, the ratio of (a)
all Funded Indebtedness (including Subordinated Indebtedness) of
the Consolidated Parties on a consolidated basis on the last day
of each fiscal month to (b) Consolidated EBITDA.
(h) The following new definition is added to Section 1.1 of the
Existing Credit Agreement in appropriate alphabetical order:
"Cost Reduction Plan" means that certain plan pursuant to
which the Borrower plans to implement certain cost reduction
measures in the form substantially similar to those measures set
forth in that certain memorandum of the Borrower dated as of
September 8, 1999 delivered by the Borrower to the Agent.
SUBPART 2.2 Amendments to Section 7.12. Section 7.12 of the Existing
Credit Agreement is hereby amended in its entirety to read as follows:
7.12 FINANCIAL COVENANTS.
(a) Interest Coverage Ratio. The Interest Coverage Ratio, as
of the last day of each fiscal month, to be greater than or equal to:
(i)for the fiscal month ending October 2, 1999, 1.05 to
1.00;
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(ii) for the fiscal month ending October 30, 1999, 1.05 to
1.00;
(iii) for the fiscal month ending November 27, 1999, .95
to 1.00;
(iv) for the fiscal month ending January 1, 2000, .95 to
1.00;
(v) for the fiscal month ending January 29, 2000, 1.05 to
1.00;
(vi) for the fiscal month ending February 26, 2000, 1.15
to 1.00;
(vii) for each fiscal month ending during the period from
February 27, 2000 to and including July 1, 2000, 1.65 to 1.00;
(viii) for each fiscal month ending during the period from
July 2, 2000 to and including December 30, 2000, 1.70 to 1.00;
(ix) for each fiscal month ending during the period from
December 31, 2000 to and including December 29, 2001, 1.75 to
1.00;
(x) for each fiscal month ending during the period from
December 30, 2001 to and including December 28, 2002, 1.85 to
1.00;
(xi) for each fiscal month ending during the period from
December 29, 2002 and at all times thereafter, 1.60 to 1.00;
(b) Senior Leverage Ratio. The Senior Leverage Ratio, as of the last day
of each fiscal month, to be less than or equal to:
(i)for the fiscal month ending October 2, 1999, 2.45 to
1.00;
(ii) for the fiscal month ending October 30, 1999, 2.45 to
1.00;
(iii) for the fiscal month ending November 27, 1999, 2.50
to 1.00;
(iv) for the fiscal month ending January 1, 2000, 2.75 to
1.00;
(v) for the fiscal month ending January 29, 2000, 2.55 to
1.00;
(vi) for the fiscal month ending February 26, 2000, 2.20
to 1.00;
(vii) for each fiscal month ending during the period from
February 27, 2000 to and including December 30, 2000, 1.60 to
1.00;
(viii) for each fiscal month ending during the period from
December 31, 2000 to and including December 29, 2001, 1.40 to
1.00; and
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(ix) for each fiscal month ending during the period from
December 30, 2001 and at all times thereafter, 1.10 to 1.00.
(c) Total Leverage Ratio. The Total Leverage Ratio, as of the
last day of each fiscal month, to be less than or equal to:
(i) for the fiscal month ending October 2, 1999, 9.75 to
1.00;
(ii) for the fiscal month ending October 30, 1999, 9.75 to
1.00;
(iii) for the fiscal month ending November 27, 1999, 9.75
to 1.00;
(iv) for the fiscal month ending January 1, 2000, 9.75 to
1.00;
(v) for the fiscal month ending January 29, 2000, 9.00 to
1.00;
(vi) for the fiscal month ending February 26, 2000, 8.00
to 1.00;
(vii) for each fiscal month ending during the period from
February 27, 2000 to and including December 30, 2000, 5.85 to
1.00;
(viii) for each fiscal month ending during the period from
December 31, 2000 to and including December 29, 2001, 5.40 to
1.00; and
(ix) for each fiscal month ending during the period from
December 30, 2001 and at all times thereafter, 4.90 to 1.00.
(d) Minimum EBITDA. EBITDA, as of the last day of each fiscal
month for the twelve month period then ended, to be greater than or
equal to:
(i) for the fiscal month ending October 2, 1999,
$14,500,000;
(ii) for the fiscal month ending October 30, 1999,
$13,500,000;
(iii) for the fiscal month ending November 27, 1999,
$13,000,000;
(iv) for the fiscal month ending January 1, 2000,
$13,500,000;
(v) for the fiscal month ending January 29, 2000,
$14,500,000;
(vi) for the fiscal month ending February 26, 2000,
$15,000,000;
(vii) for each fiscal month ending during the period from
February 27, 2000 to and including December 30, 2000,
$20,660,000;
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(viii) for the period from December 31, 2000 to and
including December 29, 2001, $21,680,000;
(ix) for the period from December 30, 2001 to and
including December 28, 2002, $22,610,000; and
(x) for the period from December 29, 2002 and at all times
thereafter, $23,000,000.
SUBPART 2.3 Amendments to Section 8.8. Subsection (e) of Section 8.8 of
the Existing Credit Agreement is hereby amended in its entirety to read as
follows:
8.8 TRANSACTIONS WITH AFFILIATES.
No Consolidated Party will, nor will it permit any of its
Subsidiaries to, enter into or permit to exist any transaction or series
of transactions with any officer, director, shareholder, Subsidiary or
Affiliate of such Person other than
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(e) provided that no Default or Event of Default has occurred and
is continuing or would be directly or indirectly caused as a
result thereof, payments to the Sponsor of annual management fees
of up to $895,000 plus the unused amount available for payments
of such management fees under this Section 8.8 for the
immediately preceding fiscal year (excluding any carryover amount
from any prior fiscal year), provided further that the
semi-annual management fee payment due to the Sponsor in December
1999, shall not be paid until December 2000,
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PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1 Agreement Effective Date. This Agreement shall be and become
effective as of the date hereof (the "Agreement Effective Date") when all of the
conditions set forth in this Part III shall have been satisfied.
SUBPART 3.2 Execution of Counterparts of Agreement. The Agent shall have
received counterparts (or other evidence of execution, including telephonic
message, satisfactory to the Agent) of this Agreement, which collectively shall
have been duly executed on behalf of each of the Borrower, the Guarantors and
the Lenders.
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SUBPART 3.3 Payment of Amendment Fees. The Agent shall have received,
for the account of each Lender approving this Amendment on or before September
29, 1999, an amendment fee equal to 0.50% the Commitment of each such Lender
under the Existing Credit Agreement.
SUBPART 3.4 Other Items. The Agent shall have received such other
documents, agreements or information which may be reasonably requested by the
Agent.
PART IV
MISCELLANEOUS
SUBPART 4.1 Representations and Warranties. Borrower hereby represents
and warrants to the Agent and the Lenders that, after giving effect to this
Agreement, (a) no Default or Event of Default exists under the Credit Agreement
or any of the other Credit Documents and (b) the representations and warranties
set forth in Section 6 of the Existing Credit Agreement are, subject to the
limitations set forth therein, true and correct in all material respects as of
the date hereof (except for those which expressly relate to an earlier date).
SUBPART 4.2 Reaffirmation of Credit Party Obligations. Each Credit Party
hereby ratifies the Credit Agreement and acknowledges and reaffirms (a) that it
is bound by all terms of the Credit Agreement applicable to it and (b) that it
is responsible for the observance and full performance of its respective Credit
Party Obligations.
SUBPART 4.3 Cross-References. References in this Agreement to any Part
or Subpart are, unless otherwise specified, to such Part or Subpart of this
Agreement.
SUBPART 4.4 Instrument Pursuant to Existing Credit Agreement. This
Agreement is a Credit Document executed pursuant to the Existing Credit
Agreement and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of the
Existing Credit Agreement.
SUBPART 4.5 References in Other Credit Documents. At such time as this
Agreement shall become effective pursuant to the terms of Subpart 3.1, all
references in the Credit Documents to the "Credit Agreement" shall be deemed to
refer to the Credit Agreement as amended by this Agreement.
SUBPART 4.6 Limitation. This Agreement is given solely for the matter
set forth herein and for no other matter, and it is the intent of the parties
that this Agreement be narrowly construed. Except as specifically set forth
herein, the Credit Agreement shall not be deemed to have been amended or
modified and shall continue in full force and effect.
SUBPART 4.7 Counterparts/Telecopy. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement. Delivery of executed counterparts of
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the Agreement by telecopy shall be effective as an original and shall constitute
a representation that an original shall be delivered.
SUBPART 4.8 Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SUBPART 4.9 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
[The remainder of this page has been left blank intentionally.]
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IN WITNESS WHEREOF the Borrower, the Guarantors, and the Lenders have
caused this Agreement to be duly executed on the date first above written.
BORROWER: STEEL HEDDLE MFG. CO.
By: /s/ XXXXXXXX X. TEAM
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Name: Xxxxxxxx X. Team
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Title: President
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GUARANTORS: STEEL HEEDLE INTERNATIONAL, INC.
By: /s/ XXXXXXXX X. TEAM
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Name: Xxxxxxxx X. Team
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Title: President
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HEDDLE CAPITAL CORP.
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
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Title: Vice-President
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MILLENTEX INVESTMENT CORPORATION
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
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Title: Vice-President
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AGENT: BANK OF AMERICA, N.A.
(FORMERLY KNOWN AS NATIONSBANK, N. A.)
By: /s/ XXXXX X. XXXXXXX
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Name: Xxxxx X. Xxxxxxx
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Title: Senior Vice President
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LENDERS: BANK OF AMERICA, N.A.
(FORMERLY KNOWN AS NATIONSBANK, N. A.)
By: /s/ XXXXX X. XXXXXXX
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Name: Xxxxx X. Xxxxxxx
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Title: Senior Vice President
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BANKBOSTON, N.A.
By: /s/ XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. XxXxxxx
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Title: Managing Director
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CREDITANSTALT CORPORATE FINANCE, INC.
By: /s/ XXXXXXX X. XXXXXXXX, XX.
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Name: Xxxxxxx X. XxXxxxxx, Xx.
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Title: Senior Associate
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By: /s/ XXXXXXX X. XXXX
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Name: Xxxxxxx X. Xxxx
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Title: Senior Associate
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WACHOVIA BANK, N.A.
By: /s/ XXXXXX X. XXXXXX
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Name: Xxxxxx X. Xxxxxx
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Title: Vice President
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