EIGHTH AMENDMENT TO SECURITIZATION AGREEMENTS AND WAIVER
THIS EIGHTH AMENDMENT TO SECURITIZATION AGREEMENTS AND WAIVER
(this "Amendment"), made and entered into as of July 10, 2001, by and between
CONE RECEIVABLES II LLC, a North Carolina limited liability company ("CRLLC"),
CONE XXXXX CORPORATION, a North Carolina corporation ("Cone Xxxxx"), CONE
FOREIGN TRADING LLC, a North Carolina limited liability company ("CFT"; each of
CRLLC, Cone Xxxxx and CFT being herein referred to as a "Company" and,
collectively, as the "Companies"), and GENERAL ELECTRIC CAPITAL CORPORATION, a
New York corporation ("GECC"), acting in its capacities as the Purchaser,
Operating Agent, Collateral Agent, Letter of Credit Provider and Letter of
Credit Agent (as such terms are defined in the Purchase Agreement described
below).
W I T N E S E T H:
WHEREAS, Cone Xxxxx and CRLLC entered into that certain Receivables
Transfer Agreement, dated as of September 1, 1999 (as amended to the date
hereof, the "Transfer Agreement"; capitalized terms used herein and not
otherwise defined herein shall have the meanings given such terms in Annex X to
the Transfer Agreement as amended through this Amendment), whereby Cone Xxxxx
agreed (and each Subsidiary of Cone Xxxxx which thereafter becomes an Originator
will agree) to sell, contribute or otherwise transfer to CRLLC, and CRLLC agreed
to purchase or otherwise acquire from such Originators, all of the right, title
and interest of such Originators in the Receivables; and
WHEREAS, CRLLC, as Seller, Redwood Receivables Corporation ("Redwood"),
as Purchaser, Cone Xxxxx, as Servicer, and GECC, as Operating Agent and as
Collateral Agent, entered into that certain Receivables Purchasing and Servicing
Agreement, dated as of September 1, 1999 (as amended to the date hereof, the
"Purchase Agreement"; the Transfer Agreement and the Purchase Agreement are
herein collectively referred to as the "Securitization Agreements"), whereby
Purchaser agreed, among other things, to purchase from CRLLC from time to time
the Receivables sold or contributed to CRLLC pursuant to the Transfer Agreement;
and
WHEREAS, Redwood and GECC entered into that certain Assignment
Agreement, dated as of April 23, 2001 (the "Redwood Assignment"), under which
Redwood assigned and delegated to GECC, pursuant to Section 2.05 of the
Liquidity Loan Agreement, all of Redwood's rights, titles and interests in and
to, and all of Redwood's obligations under, the Purchase Agreement and the other
Related Documents; and
WHEREAS, the Securitization Agreements were amended pursuant to that
certain First Amendment and Waiver to Securitization Agreements, dated as of
November 16, 1999, among the parties hereto, that certain Second Amendment to
Securitization Agreements, dated as of January 28, 2000, among the parties
thereto, that certain Third Amendment to Securitization Agreements, dated as of
March 31, 2000, among the parties thereto, that certain Fourth Amendment to
Securitization Agreements and Additional Originator Joinder Agreement, dated as
of April 24, 2000, among such parties, that certain Fifth Amendment to
Securitization Agreements, dated as of June 30, 2000, among such parties, that
certain Sixth Amendment to Securitization Agreements, dated as of December 11,
2000, among such parties, and that certain Seventh Amendment to Securitization
Agreements, dated as of April 23, 2001; and
WHEREAS, the Companies have requested that the Securitization
Agreements be further amended in certain respects, and the parties hereto are
willing to agree to such amendments, subject to the terms and conditions of this
Amendment.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendment of Securitization Agreements. Subject to the terms and
conditions of this Amendment, including without limitation the fulfillment of
the conditions precedent specified in Section 6 below, the Securitization
Agreements shall be amended as follows:
(a) Annex G to the Purchase Agreement shall be deleted in its
entirety, and the revised Annex G attached to this Amendment as Exhibit A shall
be substituted in lieu thereof.
(b) Annex 5.02(a) to the Purchase Agreement is hereby amended by
deleting subpart (b) therefrom in its entirety.
(c) Annex X to the Securitization Agreements is hereby amended by
adding the following new definition thereto:
"Eighth Amendment Effective Date" shall mean July 10, 2001.
(d) Annex X to the Securitization Agreements is hereby amended
by deleting therefrom the definition of the term "Fee Letter" and by
substituting the following new definition of such term in lieu thereof:
"Fee Letter" shall mean that certain letter agreement dated
July 10, 2001, among the Seller, Cone Xxxxx and the Purchaser.
2. No Other Waivers or Amendments. Except for the amendment of the
Securitization Agreements expressly set forth and referred to in Section 1
above, the Securitization Agreements shall remain unchanged and
in full force and effect.
3. Representations and Warranties. Each Company hereby represents and
warrants to GECC (in its capacities as Purchaser, the Operating Agent and the
Collateral Agent) that (i) this Amendment has been duly authorized, executed and
delivered by each Company, (ii) after giving effect to this Amendment, no
Termination Event, Incipient Termination Event, Event of Servicer Termination or
Incipient Servicer Termination Event has occurred and is continuing as of the
date of this Amendment, and (iii) all of the representations and warranties made
by each Company in the Securitization Agreements are true and correct in all
material respects on and as of the date of this Amendment (except to the extent
that any such representation or warranty expressly referred to a specific prior
date). Any breach in any material respect by any Company of any of its
representations and warranties contained in this Section 3 shall be a
Termination Event and an Event of Servicer Termination for all purposes of the
Securitization Agreements.
4. Ratification. Each Company hereby ratifies and reaffirms each and
every term, covenant and condition set forth in the Securitization Agreements
and all other documents delivered by such Company in connection therewith
(including without limitation the other Related Documents to which each Company
is a party), effective as of the date hereof.
5. Waiver by the Companies. Each of the Companies hereby waives any
claim, defense, demand, action or suit of any kind or nature whatsoever against
the Purchaser, the Operating Agent or the Collateral Agent arising on or prior
to the date of this Amendment in connection with any of the Securitization
Agreements or the transactions contemplated thereunder.
6. Condition Precedent to Effectiveness. This Amendment shall become
effective, upon the Eighth Amendment Effective Date, subject to the satisfaction
of the following conditions on or prior to such date:
(a) the receipt by the Operating Agent of this Amendment, duly
executed, completed and delivered by each of the Companies, the
Purchaser, the Operating Agent and the Collateral Agent;
(b) the receipt by the Operating Agent of the Fee Letter of
even date herewith (in form and substance satisfactory to the
Purchaser) duly executed and delivered by CRLLC, Cone Xxxxx, and the
Operating Agent; and
(c) the receipt by the Operating Agent of all fees and
expenses payable to the Purchaser, the Collateral Agent, or the
Operating Agent, respectively, in connection with this Amendment,
including without limitation any fees specified in the aforesaid Fee
Letter and the reasonable legal fees and other reasonable out of pocket
expenses of the Purchaser, the Collateral Agent, or the Operating Agent
incurred in connection with this Amendment.
7. Reimbursement of Expenses. Each Company hereby agrees that it shall
reimburse the Purchaser, the Collateral Agent, and the Operating Agent on demand
for all reasonable costs and expenses (including without limitation reasonable
attorney's fees) incurred by such parties in connection with the negotiation,
documentation and consummation of this Amendment and the other documents
executed in connection herewith and therewith and the transactions contemplated
hereby and thereby.
8. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK FOR CONTRACTS TO BE PERFORMED
ENTIRELY WITHIN SAID STATE.
9. Severability of Provisions. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. To the extent
permitted by Applicable Law, each Company hereby waives any provision of law
that renders any provision hereof prohibited or unenforceable in any respect.
10. Counterparts. This Amendment may be executed in any number of
several counterparts, all of which shall be deemed to constitute but one
original and shall be binding upon all parties, their successors and
permitted assigns.
11. Entire Agreement. The Securitization Agreements as amended and
supplemented by this Amendment embody the entire agreement between the parties
hereto relating to the subject matter hereof and supersede all prior agreements,
representations and understandings, if any, relating to the subject matter
hereof.
12. Cone Xxxxx' and GECC's Capacities. Cone Xxxxx is executing and
delivering this Amendment both in its capacity as an Originator under the
Transfer Agreement and as the Servicer under the Purchase Agreement and all
references herein to "Cone Xxxxx" shall be deemed to include it in both such
capacities unless otherwise expressly indicated. GECC is executing and
delivering this Amendment both in its capacity as the Purchaser, as the
Operating Agent for the Purchaser, and as the Collateral Agent for the Purchaser
and the Purchaser Secured Parties, and all references herein to "GECC" shall be
deemed to include it in all such capacities unless otherwise expressly
indicated.
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IN WITNESS WHEREOF, the parties have caused this Amendment to
be duly executed by their respective officers thereunto duly authorized, as of
the date first above written.
CONE RECEIVABLES II LLC
By /s/ Xxxxxxx Xxxxxxxxxx
Name: Xxxxxxx Xxxxxxxxxx
Title: Treasurer
CONE XXXXX CORPORATION,
as an Originator and as Servicer
By /s/ W. Xxxxx Xxxxxxx
Name: W. Xxxxx Xxxxxxx
Title: Treasurer
CONE FOREIGN TRADING LLC
By /s/Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
GENERAL ELECTRIC CAPITAL CORPORATION,
as Purchaser, as Operating
Agent and as Collateral Agent
By /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxx
Title: Duly Authorized Signatory
EXHIBIT A
Annex G to Purchase Agreement
Financial Covenants
(a) Minimum Fixed Charge Coverage Ratio. Cone Xxxxx and its
Subsidiaries shall have on a consolidated basis, as of the end of each fiscal
quarter set forth below, a Fixed Charge Coverage Ratio for the Rolling Period
then ended of not less than the applicable ratio set forth below:
Fiscal Quarter Minimum Fixed Charge
Ending: Coverage Ratio:
-------------- --------------------
April 1, 2001 0.60 to 1.0
July 1, 2001 0.38 to 1.0
October 1, 2001 and 0.80 to 1.0
Each Fiscal Quarter
thereafter
(b) Minimum Tangible Net Worth. Cone Xxxxx and its
Subsidiaries on a consolidated basis shall have a Tangible Net Worth, as of the
Third Amendment Effective Date and as of the end of each fiscal quarter ending
April 1, 2001, July 1, 2001 or October 1, 2001, of not less than $90,000,000.
Thereafter, Cone Xxxxx and its Subsidiaries on a consolidated basis shall have,
as of the end of each fiscal year ending on or after December 31, 2001 (each
such fiscal year herein called the "Subject Fiscal Year") and as of the end of
the first three fiscal quarters of the immediately succeeding fiscal year, a
Tangible Net Worth of not less than the sum of (i) the minimum Tangible Net
Worth required hereunder for the fiscal year which immediately preceded the
Subject Fiscal Year (or, where the Subject Fiscal Year is the fiscal year ending
December 31, 2001, the sum of $90,000,000) plus (ii) an amount equal to
twenty-five percent (25%) of the positive net income of Cone Xxxxx and its
Subsidiaries on a consolidated basis for the Subject Fiscal Year plus (iii) an
amount equal to one hundred percent (100%) of the amount of any equity raised by
or capital contributed to Cone Xxxxx during the Subject Fiscal Year.
(c) Receivable Performance Covenants. The Seller shall not violate or
fail to comply with any of the following covenants as of any Settlement Date:
(i) Default Ratio shall be less than 5.5%;
(ii) Delinquency Ratio shall be less than 2.2%;
(iii) Gross Dilution Ratio shall be less than 4.0%;
(iv) Receivables Collection Turnover shall be less than 65 days; and
(v) Seller's Net Worth Percentage shall not be less than 5.0%.
(d) Minimum EDBITDA. Cone Xxxxx and its Subsidiaries shall
have on a consolidated basis, as of the end of each fiscal quarter set forth
below, EBITDA for the period then ended of not less than the amount set forth
opposite such period:
Fiscal Quarter Ending Minimum EBITDA
--------------------- --------------
July 1, 2001 $30,000,000
October 1, 2001 $26,000,000
Each Fiscal Quarter $33,800,000
thereafter
(e) Capitalized terms used in this Annex G and not otherwise
defined below shall have the respective meanings ascribed to them in Annex X.
"Capital Expenditures" shall mean, with respect to any Person,
all expenditures (by the expenditure of cash or the incurrence of Debt) by such
Person during any measuring period for any fixed assets or improvements or for
replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP, but
excluding expenditures under Capital Leases and any expenditures financed by the
incurrence of Debt other than under the Purchase Agreement or the Credit
Facility. If the expenditures cannot be specifically identified and linked to
the incurrence of Debt (other than the incurrence of Debt other than under the
Purchase Agreement or Credit Facility), then such exclusion from this definition
of Capital Expenditures shall be determined by and based on the judgment of the
Operating Agent. For purposes of this Annex G, Capital Expenditures shall
include investments in and advances by Cone Xxxxx and its Subsidiaries to
unconsolidated affiliates as determined on a consolidated basis.
"EBITDA" shall mean, with respect to Cone Xxxxx and its
Subsidiaries for any fiscal period, an amount equal to (a) consolidated Net
Income for such period, minus (b) the sum, without duplication, of (i) income
tax credits, (ii) interest income, (iii) gain from extraordinary items for such
period, (iv) any aggregate net gain (but not any aggregate net loss) during such
period arising from the sale, exchange or other disposition of capital assets by
such Person (including any fixed assets, whether tangible or intangible, all
inventory sold in conjunction with the disposition of fixed assets and all
securities), and (v) any other non-cash gains that have been added in
determining consolidated Net Income, in each case to the extent included in the
calculation of consolidated Net Income of such Person for such period in
accordance with GAAP, plus (c) the sum, without duplication, of (i) any
provision for income taxes, (ii) Interest Expense, (iii) loss from extraordinary
items for such period, (iv) depreciation and amortization for such period, (v)
amortized debt discount for such period, (vi) Restructuring Charges, and (vii)
the amount of any deduction to consolidated Net Income as the result of any
grant to any members of the management of such Person of any Stock, in each case
to the extent included in the calculation of consolidated Net Income of such
Person for such period in accordance with GAAP. For purposes of this definition,
the following items shall be excluded in determining consolidated Net Income of
a Person: (A) the income (or deficit) of any other Person accrued prior to the
date it became a Subsidiary of, or was merged or consolidated into, such Person
or any of such Person's Subsidiaries; (B) the income (or deficit) of any other
Person (other than a Subsidiary) in which such Person has an ownership interest,
except to the extent any such income has actually been received by such Person
in the form of cash dividends or distributions; (C) the undistributed earnings
of any Subsidiary of such Person to the extent that the declaration or payment
of dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (D) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
income accrued during such period; (E) any write-up of any asset; (F) any net
gain from the collection of the proceeds of life insurance policies; (G) any net
gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Debt, of such Person, (H) in the case of a successor to such
Person by consolidation or merger or as a transferee of its assets, any earnings
of such successor prior to such consolidation, merger or transfer of assets, and
(I) any deferred credit representing the excess of equity in any Subsidiary of
such Person at the date of acquisition of such Subsidiary over the cost to such
Person of the investment in such Subsidiary.
"Fixed Charges" shall mean, with respect to any Person for any
fiscal period, the aggregate of (a) all Interest Expense paid or accrued during
such period, plus (b) all cash income taxes paid during such period plus (c)
scheduled payments of principal with respect to Debt (other than Debt of a type
described in parts (f) or (g) of the definition of such term in Annex X) made or
due during such period, plus (d) scheduled reductions in availability under the
Credit Facility, plus (e) cash dividends or other cash distributions on such
Person's Stock (common or preferred) made or paid during such period.
"Fixed Charge Coverage Ratio" shall mean, with respect to any
Person for any fiscal period, the ratio of (i) EBITDA less Capital Expenditures
to (ii) Fixed Charges.
"Interest Expense" shall mean, with respect to any Person for
any fiscal period, interest expense (whether cash or non-cash) of such Person
determined on a consolidated basis in accordance with GAAP for the relevant
period ended on such date, including (a) amortization of original issue discount
on any Debt and of all fees payable in connection with the incurrence of such
Debt (to the extent included in interest expense), (b) the interest component of
any Capital Lease Obligation, (c) with respect to Cone Xxxxx and Seller only,
Redwood Yield and fees (other than servicing fees), (d) with respect to Cone
Xxxxx only, amounts paid or payable by Cone Xxxxx under the Xxxxxx Swap
Agreement, and (e) with respect to Cone Xxxxx only, net cash paid with respect
to interest, discount, yield, and fees owed by Cone Xxxxx or any of its
Subsidiaries under the Existing Receivables Purchase Facility.
"Net Income" shall mean, with respect to Cone Xxxxx and its
Subsidiaries on a consolidated basis and for any period, the after taxes net
income or loss of Cone Xxxxx and its Subsidiaries as it would appear on a
consolidated statement of income of Cone Xxxxx and its Subsidiaries for such
period prepared in accordance with GAAP (such net income or loss shall (a) be
net of extraordinary items and (b) include, to the extent the inclusion thereof
is in accordance with GAAP, the equity of Cone Xxxxx or any Subsidiary in the
net income or loss of any other Person).
"Net Worth" shall mean, with respect to any Person as of any
date of determination, (a) the book value of the assets of such Person, minus
(b) reserves applicable thereto, minus (c) all of such Person's liabilities on a
consolidated basis (including accrued and deferred income taxes), all as
determined in accordance with GAAP.
"Net Worth Percentage" shall mean, as of any date of
determination thereof, a fraction (expressed as a percentage) (a) the numerator
of which equals the excess of the Seller's assets over its liabilities, in each
case as determined in accordance with GAAP consistently applied, and (b) the
denominator of which equals the aggregate Outstanding Balance of the Transferred
Receivables.
"Restructuring Charges" shall mean, with respect to Cone Xxxxx
and its Subsidiaries on a consolidated basis, (i) for any Rolling Period shown
below, any of the expenses related to Cone Xxxxx' restructuring plans announced
in the fourth quarter of 1998 and first quarter of 1999 relating to closing its
Salisbury Plant, overhead downsizing and reorganization, the merger of the denim
and sportswear fabric businesses into one unit and the corresponding reduction
of the manufacturing staff, the closing of the Xxxxxxxx and Cliffside yarn
manufacturing facilities, the restructuring, downsizing and reorganization of
the Carlisle Plant, and inventory and related charges associated with these
product realignments and plant closings, but at no time will the aggregate of
the Restructuring Charges under this part (i) for any Rolling Period shown below
exceed the amount listed below for such period:
Rolling Period ending Amount
--------------------- ------
July 4, 1999 $33,800,000
October 3, 1999 $36,800,000
January 2, 2000 $19,500,000
April 2, 2000 $ 5,000,000
July 2, 2000 $ 5,000,000
October 1, 2000 $ 2,000,000
Each fiscal quarter thereafter $ 0
; (ii) solely with respect to each of the Rolling Periods ending on December 30,
2000, April 1, 2001 and July 1, 2001, any of the expenses related to Cone Mill's
restructuring plans announced in the fourth quarter of 2000 relating to
restructuring, downsizing, and reorganization of Cone Mill's Raytex Plant, but
the amount of Restructuring Charges under this part (ii) shall be calculated on
a pretax basis and shall not exceed in the aggregate the lesser of the actual
pre-tax Restructuring Charges recorded or $45,000,000 (of which not more than
$2,500,000 of such Restructuring Charges shall be cash charges at the time of
the recording of the charge or in any subsequent Rolling Period thereafter); and
(iii) solely with respect to the Rolling Period ending on July 1, 2001, any of
the expenses related to Cone Mill's reinvention plan announced in June 2001, but
the amount of Restructuring Charges under this part (iii) shall be calculated on
a pretax basis and shall not exceed in the aggregate the lesser of the actual
pre-tax Restructuring Charges recorded or $35,000,000 (of which not more than
$4,000,000 of such Restructuring Charges shall be cash charges at the time of
the recording of the charge or in any subsequent Rolling Period thereafter).
"Rolling Period" shall mean, as of the end of any fiscal
quarter of any person, the immediately preceding 4 fiscal quarters, including
the fiscal quarter then ending.
"Tangible Net Worth" shall mean, with respect to any Person at
any date, the Net Worth of such Person at such date, excluding, however, from
the determination of the total assets at such date, (a) all goodwill,
capitalized organizational expenses, capitalized research and development
expenses, trademarks, trade names, copyrights, patents, patent applications,
licenses and rights in any thereof, and other intangible items (excluding any
intangible assets generated pursuant to FASB 132 relating to pension
liabilities), (b) all unamortized debt discount and expense, (c) treasury Stock,
and (d) any write-up in the book value of any asset resulting from a revaluation
thereof.
(f) Rules of Construction Concerning Financial Covenants.
Unless otherwise specifically provided therein, any accounting term used in any
Related Document shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations thereunder shall be
computed in accordance with GAAP consistently applied. That certain items or
computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing. If any Accounting Changes
occur and such changes result in a change in the calculation of the financial
covenants, standards or terms used in any Related Document, then the parties
thereto agree to enter into negotiations in order to amend such provisions so as
to equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the financial condition of such Persons and their
Subsidiaries shall be the same after such Accounting Changes as if such
Accounting Changes had not been made. If the parties thereto agree upon the
required amendments thereto, then after appropriate amendments have been
executed and the underlying Accounting Change with respect thereto has been
implemented, any reference to GAAP contained therein shall, only to the extent
of such Accounting Change, refer to GAAP consistently applied after giving
effect to the implementation of such Accounting Change. If such parties cannot
agree upon the required amendments within 30 days following the date of
implementation of any Accounting Change, then all financial statements delivered
and all calculations of financial covenants and other standards and terms in
accordance with the Related Documents shall be prepared, delivered and made
without regard to the underlying Accounting Change.
