AMENDMENT NO. 3
TO LOAN AGREEMENT
AGREEMENT (the "Amendment"), made as of the 22nd day of December, 1995 by
and among:
XXXXXX INDUSTRIES, INC., a Delaware corporation (hereinafter referred to as
the "Borrower"); and
NATWEST BANK N.A. (formerly National Westminster Bank USA), a national
banking association and SUNTRUST BANK, ATLANTA (formerly Trust Company Bank), a
Georgia banking corporation (individually, a "Bank" and collectively, the
"Banks");
W I T N E S S E T H
WHEREAS:
A. The Borrower and the Banks have entered into a Loan Agreement dated
March 26, 1993 as amended by a Letter Agreement dated August 12, 1993, Amendment
No. 1 dated as of May 16, 1994, and Amendment No. 2 thereto dated as of November
15, 1994 (as so amended, the "Existing Loan Agreement", and as amended by this
Agreement and as it may hereafter by amended, modified and/or supplemented,
hereinafter the "Loan Agreement") pursuant to which the Banks made loans to the
Borrower in an aggregate principal amount of up to $25,000,000;
B. The Borrower has requested that the Banks amend the Existing Loan
Agreement to revise the financial covenants and make such other changes to the
Existing Loan Agreement as are provided for herein, and the Banks are willing to
make all of such changes on the terms and conditions hereinafter set forth; and
C. All capitalized terms that are used herein and are defined in the
Existing Loan Agreement and not otherwise defined herein shall have the meanings
ascribed to them in the Existing Loan Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
Article 1. Amendments to the Existing Loan Agreement.
Effective upon the satisfaction of the conditions precedent set forth in
Article 5 hereof, the Existing Loan Agreement is hereby amended as follows:
(a) Article I is amended by:
(i) Adding the following new definition in the appropriate alphabetical
order:
"Net Loss" - for any perod, the consolidated net loss of any Person after
deducting all income taxes of such Person relating to such period, as determined
in accordance with generally accepted accounting priniciples, consistently
applied.
(ii) Deleting the first sentence of the definition of "Applicable Margin"
and substituting therefor the following:
"as at any date of determination thereof, with respect to any Prime Rate
Loans, .75%, and with respect to any Eurodollar Loans, 2.75%, provided, however,
that if the Fixed Charge Coverage Ratio exceeds 3.00:1.00, then with respect to
any Prime Rate Loans, .25%, and with respect to any Eurodollar Loans, 2.25%."
(b) Section 6.9 is amended by:
(i) Deleting subsection 6.9 (a) in its entirety and substituting therefor
the following:
"(a) A Current Ratio of not less than 2.00:1.00."
(ii) Deleting subsection 6.9(c) in its entirety and substituting therefor
the following:
"(c) The sum of Tangible Net Worth plus Subordinated Debt during the
periods set forth below at not less than the respective amounts set forth
opposite each such period:
Minimum Tangible
Period Net Worth Plus Subordinated Debt
October 1, 1995 through
June 29, 1996 $72,000,000
June 30, 1996 through
September 29, 1996 $73,000,000
September 30, 1996 through
September 29, 1997 $75,000,000, which amount shall increase
as at the last day of each fiscal year ,
ending September 30, 1997 and thereafter
by an amount equal to the greater of
(i) $2,000,000 or (ii) 50% of each year's
Net Income, and be maintained at each
increase level until the last day of each
of the next followingfiscal years when it
shall increase again."
(iii) Subsection 6.9(d) is amended by deleting such subsection in its
entirety and substituting therefor the following:
"(d) (i) For the six-month period ended March 31, 1996, the quotient,
expressed as a percentage (which may be in excess of 100%), determined by
dividing Net Income available for Debt Service for such six-month period by the
sum of: (x) fifty (50%) percent of the Current Portion of Long-Term Indebtedness
at March 31, 1996, plus (y) Interest Expense for the six-month period ended
March 31, 1996, at not less than 25%.
(ii) For the nine-month period ended June 30, 1996, the quotient, expressed
as a percentage (which may be in excess of 100%), determined by dividing Net
Income available for Debt Service for such nine-month period by the sum of: (x)
seventy-five (75%) percent of the Current Portion of Long-Term Indebtedness at
June 30, 1996, plus (y) Interest Expense for the nine-month period ended June
30, 1996, at not less than 50%.
(iii) Debt Service Coverage for the twelve-month period ended on September
30, 1996 and on each fiscal quarter thereafter at not less than 80%."
(iv) Deleting subsection 6.9(e) in its entirety and substituting therefor:
"Fixed Charge Coverage Ratio for the twelve month period ended September
30, 1996 and on each fiscal quarter thereafter at not less than 1.25:1.00."
(v) Inserting the following new Section 6.14:
"Section 6.14 Loss.
Incur a Net Loss not in excess of $3,300,000 for the three-month period
ended December 31, 1995."
(c) Article 7 is hereby amended by:
(i) Amending Section 7.2 by inserting the following new subsection 7.2(f):
"(f) Accounts receivable to be factored to SunTrust Bank, Atlanta
pursuant to a notification factoring agreement to be entered into between the
Borrower and the Bank for up to $10,000,000 of factoring advances (the
"Factoring Advances") at a minimum 90% factoring advance rate." (ii) Amending
Section 7.5 by deleting the proviso "provided, however, that the Borrower may
enter into any of the transactions described in subsections (a) and (b) above,
but only if the amounts involved do not exceed the following: (i) during the
fiscal year commencing October 1, 1994, an aggregate amount not in excess of
$3,000,000; and (ii) during each fiscal quarter commencing October 1, 1994,
cumulatively, an aggregate amount not in excess of the balance, if any, of the
$3,000,000 provided for in clause (i) not distributed or paid to redeem shares
plus, on a cumulative basis, 50% of consolidated net income after taxes (less
losses) of the Borrower during the preceding fiscal quarter, less, in each case,
any amount distributed or paid by the Borrower pursuant to this proviso."
(iii) Amending Section 7.7 by deleting the proviso "and with respect to
accounts receivable of the Borrower's infantswear business now factored to Trust
Company pursuant to those two certain Factoring Agreements dated as of April 23,
1979 and December 12, 1988, respectively, between the Borrower and Trust
Company, as each of them may be amended, modified, supplemented or replaced from
time to time," and substituting therefor the following "and with respect to
accounts receivable to be factored to SunTrust Bank, Atlanta pursuant to a
notification factoring agreement to be entered into between the Borrower and the
Bank for up to $10,000,000 of Factoring Advances at a minimum 90% factoring
advance rate, provided that all such Factoring Advances are repaid on or prior
to the earlier of closing on the new $60 million credit facility contemplated by
the Borrower to be established in its favor by the Banks and First Union
National Bank of South Carolina (the "New Facility") or February 28, 1996."
(iv) Amending Section 7 .15 effective October 1, 1994 by deleting it in its
entirety.
Article 2. References and Confirmations.
(a) Upon the effectiveness of this Amendment, all references in the
Existing Loan Agreement and all references in the other Loan Documents:
(i) to the "Loan" or "Loans" shall be deemed to refer collectively to the
"Loan" or "Loans" as defined in the Existing Loan Agreement as amended by this
Amendment; and
(ii) to this "Agreement" or "Loan Agreement", and all other references to
provisions of the Loan Agreement, in the Existing Loan Agreement and the other
Loan Documents shall be deemed to refer to the Existing Loan Agreement as
amended by this Amendment; and
(b) The parties hereto acknowledge that the Loan Agreement and the other
Loan Documents shall be deemed amended to the full extent necessary to give
effect to the provisions of this Amendment.
Article 3. Amendment Fee
Simultaneously with and in consideration of the execution and delivery by
NatWest Bank N.A. of this Third Amendment, the Borrower shall pay to NatWest
Bank N.A. a fee in the amount of $25,000. If the New Facility has not been
closed by February 28, 1996, then (i) it should be an additional Event of
Default under the Loan Agreement (and the Loan Agreement is hereby deemed
further amended to affect same) and (ii) the Borrower shall pay to SunTrust
Bank, Atlanta a fee in the amount of $25,000 in consideration of the execution
and delivery by SunTrust Bank, Atlanta of this Third Amendment.
Article 4. Representations and Warranties.
The Borrower hereby represents and warrants to the Banks that:
Section 4.1 Existing Representations.
Each and every one of the representations and warranties set forth in
Article 3 of the Existing Loan Agreement is true in all respects as of the date
hereof and with the same effect as though made on the date hereof, and is hereby
incorporated herein in full by reference as if fully restated herein in its
entirety, except for changes in the ordinary course of business which are not
prohibited by the Existing Loan Agreement as amended by this Amendment and which
are not, either singly or in the aggregate, material to the operations or
financial condition of the Borrower.
Section 4.2 No Defaults.
There exists no Default or Event of Default, as defined in the Existing
Loan Agreement as amended by this Amendment and no event or condition exists
which, with the giving of notice or lapse of time or both, would constitute such
a Default or Event of Default.
Section 4.3 Power, Authority, Consents.
(a) The Borrower has the power or capacity to execute, deliver and perform
this Amendment.
(b) The Borrower has taken all necessary action to authorize the execution,
delivery and performance of this Amendment and the other Loan Documents. No
consent or approval of any Person (including, without limitation, any
stockholder of the Borrower), no consent or approval of any landlord or
mortgagee, no waiver of any Lien or right of distraint or other similar right
and no consent, license, approval, authorization or declaration of any
governmental authority, bureau or agency, is required as of the date hereof in
connection with the execution, delivery or performance by the Borrower, or the
validity, enforcement or priority, of this Amendment and the other Loan
Documents or any Lien created, granted or confirmed thereunder.
Section 4.4 No Violation of Law or Agreements.
The execution and delivery by the Borrower of this Amendment and the other
Loan Documents and performance by it hereunder and thereunder, will not violate
any provision of law presently in effect and will not conflict with or result in
a breach of any order, writ, injunction, ordinance, resolution, decree, or other
similar document or instrument presently in effect of any court or governmental
authority, bureau or agency, domestic or foreign, or the certificate of
incorporation or by-laws of the Borrower, or create (with or without the giving
of notice or lapse of time, or both) a default under or breach of any agreement,
bond, note or indenture presently in effect to which the Borrower is a party, or
by which it is bound or any of its properties or assets is affected, or result
in the imposition of any Lien of any nature whatsoever upon any of the
properties or assets owned by or used in connection with the business of the
Borrower.
Section 4.5 Due Execution, Validity, Enforceability.
This Amendment and each of the other Loan Documents being executed in
connection herewith has been duly executed and delivered by the Borrower and
each constitutes the valid and legally binding obligation of the Borrower,
enforceable in accordance with its terms except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
other similar laws, now or hereafter in effect, relating to or affecting the
enforcement of creditors' rights generally and except that the remedy of
specific performance and other equitable remedies are subject to judicial
discretion.
Article 5. Conditions to the Effectiveness.
The effectiveness of this Amendment shall be subject to the fulfillment (to
the satisfaction of the Banks) of the following conditions precedent:
(a) The Borrower shall have executed and delivered to the Banks this
Amendment.
(b) The Borrower shall have paid to NatWest Bank N.A. an amendment fee of
$25,000.
(c) All legal matters incident to the transactions contemplated by this
Amendment shall be satisfactory to legal counsel to the Banks.
(d) The Borrower shall have paid all legal expenses of the Banks in
connections with the preparation, negotiation and execution of this Amendment
and any documents, instruments and agreements required hereby or thereby.
(e) The Borrower shall have executed and delivered to the Banks a
commitment letter for the New Facility, which letter shall also be executed or
accepted by each Bank and First Union National Bank of South Carolina.
Article 6. Miscellaneous.
Section 6.1 Continued Effectiveness.
Except as specifically amended herein, the Existing Loan Agreement and each
of the other Loan Documents shall remain in full force and effect in accordance
with their respective terms and are hereby in all respects ratified and
confirmed.
Section 6.2 Construction.
The provisions of Article 9 of the Existing Loan Agreement shall govern
this Amendment with respect to the subject matter set forth therein. THIS
AMENDMENT, THE EXISTING LOAN AGREEMENT AS AMENDED BY THIS AMENDMENT, AND THE
OTHER LOAN DOCUMENTS AS ACKNOWLEDGED AND CONFIRMED HEREBY, AND ALL OTHER
DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH AND
THEREWITH, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
Section 6.3 Modifications.
No modification or waiver of or with respect to any provision of this
Amendment or any other agreement, instrument or document delivered pursuant
hereto, nor consent to any departure by the Borrower from any of the terms or
conditions hereof, shall in any event be effective unless it shall be in writing
and signed by the Banks and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. No consent to or
demand on the Borrower in any case shall, of itself, entitle it to any other or
further notice or demand in similar or other circumstances. This Amendment
together with the Existing Loan Agreement and the documents referenced herein
and therein embodies the entire agreement and understanding between the Banks
and the Borrower and supersedes all prior agreements and understandings relating
to the subject mater hereof.
Section 6.4 Severability.
The provisions of this Amendment are severable, and if any clause or
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction and shall not in any
manner affect such clause or provision in any other jurisdiction, or any other
clause or provision in this Amendment in any jurisdiction.
Section 6.5 Counterparts
This Amendment may be signed in any number of counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
Section 6.6 Successors.
This Amendment shall be binding upon and inure to the benefit of the
Borrower and its successors and to the benefit of the Banks and their respective
successors and assigns. The rights and obligations of the Borrower under this
Amendment shall not be assigned or delegated without the prior written consent
of the Banks, and any purported assignment or delegation without such consent
shall be void.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed on the date first above written.
XXXXXX INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxx
Vice President Title
NATWEST BANK N.A.
By /s/Xxxxxxxxxxx Xxxxxxxxxx
Vice President Title
SUNTRUST BANK, ATLANTA
By /s/Xxxxx Xxxxxxxxxxx
Group Vice President Title
By /s/Xxxxxxxxx X. Xxxx
Vice President Title
