Exhibit 4.3(j) EXECUTION COUNTERPART
Cone Xxxxx Corporation
0000 Xxxxx Xxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
As of February 14, 1998
The Prudential Insurance Company of America
c/o The Prudential Capital Group
Xxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000-0000
Re: Modification to Note Agreement dated as of August 13, 1992
Ladies and Gentlemen:
The undersigned, CONE XXXXX CORPORATION (the "Company") and you entered
into a Note Agreement dated as of August 13, 1992, as modified by letter
agreements dated as of September 11, 1992, July 19, 1993, June 30, 1994,
November 14, 1994, March 15, 1995, June 30, 1995, March 30, 1996, January 31,
1997, March 24, 1997, and July 31, 1997 (as it has been and may be modified, the
"Note Agreement").
Subject to the terms and conditions of this modification, you have
agreed to amend certain financial covenants of the Note Agreement and the
Company has agreed to increase the rate of interest on the Note.
Pursuant to paragraph 11C of the Note Agreement and subject to your
written acceptance as hereinafter provided, the undersigned request your
agreement to the following amendment to the Note Agreement. Capitalized terms
used herein but not defined herein have the meanings ascribed to them in the
Note Agreement, as amended hereby.
The date of effectiveness of this modification is February 14, 1998 (as
used in this Modification, the "Effective Date").
The Company hereby agrees with you as follows:
1. MODIFICATION OF THE NOTE AGREEMENT. The Company and you agree
to hereby amend the Note Agreement as follows:
30
1A. Paragraph 5. Paragraph 5 shall be amended by adding the
following new Paragraph 5L at the end thereof.
5L. Other Covenants. If (in the reasonable opinion of the
Required Holders) at any time and from time to time, after the date
hereof, any of the covenants, representations and warranties or events
of default, or any other material term or provision (other than any
term or provision relating to payment terms, interest rates or
penalties), contained in the Bank Facility, or in any document,
agreement or instrument from time to time entered into by the Company
in respect thereof, is more favorable to the banks under the Bank
Facility than are the terms of this Agreement to the holders of the
Notes, this Agreement shall be amended to contain each such more
favorable covenant, representation and warranty, event of default, term
or provision, and the Company hereby agrees promptly to amend this
Agreement and to execute and deliver all such documents requested by
the Required Holder(s) to reflect such amendment. Prior to the
execution and delivery of such documents by the Company, this Agreement
shall be deemed to contain each such more favorable covenant,
representation and warranty, event of default, term or provision for
purposes of determining the rights and obligations hereunder.
1B. Paragraph 0X. Xxxxxxxxx 0X xxxxx xx deleted in its
entirety and the following shall be inserted in lieu thereof:
6A. Financial Covenants. Until the Company shall meet
the Ratings Requirement, it covenants that:
6A(1) Debt. (i) The Adjusted Debt to Capital Ratio on
the last day of any fiscal quarter of the Company ended after the
Effective Date will not exceed 61%.
(ii) The Company will not permit any Subsidiary to
incur, Guarantee, assume, issue or at any time be liable with respect
to any Debt except that any International Subsidiary may incur, assume
or be liable with respect to any Non-Recourse International Subsidiary
Debt.
6A(2) Minimum Consolidated Tangible Net Worth.
Consolidated Tangible Net Worth will at no time be less than an amount
equal to the sum of (i) $136,000,000, (ii) an amount equal to 25% of
Consolidated Net Income for each fiscal quarter ending after March 30,
1997 but before the date of determination, in each case, for which
Consolidated Net Income is positive (but with no deduction on account
of negative Consolidated Net Income for any fiscal quarter of the
Company), and (iii) an amount equal to 50%
31
of the aggregate net proceeds, including the fair market value of
property other than cash (as determined in good faith by the Company's
Board of Directors), received by the Company from the issuance and sale
after the date hereof of any capital stock of the Company (other than
the proceeds of any issuance and sale of any capital stock which
capital stock does not result in an increase to Consolidated Net Worth
in the determination thereof at any date) or in connection with the
conversion or exchange of any Debt of the Company into capital stock of
the Company after March 30, 1997.
6A(3) Interest Coverage Ratio. (a) As of the last day
of the fiscal quarter of the Company ending most nearly on the last day
each of the periods set forth below, the ratio of Consolidated EBITDA
to Consolidated Net Interest Expense for such period will not be less
than the ratio set forth below opposite such period:
Period Ratio
March 31, 1997 - June 30, 1997 1.40:1
March 31, 1997 - September 30, 1997 1.40:1
March 31, 1997 - December 31, 1997 1.40:1
(b) As of the last day of each fiscal quarter of the Company
ending most nearly on each of the dates set forth below, the ratio of
Consolidated EBITDA to Consolidated Net Interest Expense for the period
of four consecutive fiscal quarters then ended will not be less than
the ratio set forth below:
Fiscal Quarter Ending
Most Nearly On Ratio
March 31, 1998 1.85:1
June 30, 1998 2.15:1
September 30, 1998 2.40:1
December 31, 1998 2.75:1
March 31, 1999 2.75:1
June 30, 1999 2.75:1
September 30, 1999 3.00:1
December 31, 1999 3.00:1
March 31, 2000 and thereafter 3.25:1
1C. Xxxxxxxxx 0X. Xxxxxxxxx 6B shall be deleted in its
entirety and the following shall be inserted in lieu thereof:
6B. Contingent Obligations. The Company covenants that
it will not, and will not permit any Subsidiary to, incur, create,
32
assume, make or at any time be liable with respect to any Contingent
Obligation other than (i) Trade Letters of Credit, (ii) other
Contingent Reimbursement Obligations of the Company incurred in the
ordinary course of its business in an aggregate amount not to exceed
$12,000,000 at any time and (iii) Guarantees by the Company of Debt of
its Subsidiaries.
1D. Paragraph 6C(3). Paragraph 6C(3) shall be deleted in its
entirety and the following shall be inserted in lieu thereof:
6C(3) Investments. Neither the Company nor any
Consolidated Subsidiary will make or acquire any Investment in any
Person other than:
(a) Temporary Cash Investments;
(b) Investments consisting of Acquisitions;
(c) Advances by the Company or a Subsidiary to
officers, directors and employees for reasonable moving expenses and
business expenses incurred in the ordinary course of business of the
Company or any Subsidiary and consistent with past practice;
(d) Investments by the Company in Parras Cone in an
aggregate amount at any time not in excess of the aggregate amount of
such Investments as of the date of the Bank Facility; and
(e) Investments by the Company not permitted by the
foregoing clauses in an aggregate amount (determined at any time in
accordance with generally acceptable accounting principles) at any time
not to exceed $55,000,000.
1E. Paragraph 6. Paragraph 6 shall be amended by adding the
following new Paragraph 6I at the end thereof.
6I. Ratings Maintenance. The Company covenants that
upon satisfying the Ratings Requirement it will maintain such
Ratings Requirement at all times thereafter.
1F. Paragraph 10B. Paragraph 10B shall be amended by deleting
therefrom the definitions of each of the terms Consolidated Net Earnings;
Consolidated Net Earnings before Interest, Taxes and Rents; Consolidated Net
Tangible Assets; Fixed Charge Coverage; Fixed Charge Expense; Subsidiary and
Total Capitalization.
1G. Paragraph 10B. Paragraph 10B shall be amended by adding
the following definitions in alphabetical order:
33
"Adjusted Debt to Capital Ratio" means as of any date the
ratio of Adjusted Total Consolidated Debt as of such date to Adjusted
Total Consolidated Capitalization as of such date, expressed as a
percentage.
"Adjusted Total Consolidated Capitalization" means as of
any date (i) Total Consolidated Capitalization as of such date plus
(ii) eight times Consolidated Operating Lease Expense for the period of
four consecutive fiscal quarters of the Company ended on or most
recently prior to such date.
"Adjusted Total Consolidated Debt" means as of any date
(i) Total Consolidated Debt as of such date plus (ii) eight times
Consolidated Operating Lease Expense for the period of four consecutive
fiscal quarters of the Company ended on or most recently prior to such
date.
"Acquisition" means the acquisition by the Company or any
Subsidiary of (i) any asset of any Person, whether by purchase, merger
or otherwise, which, or which together with other such acquisitions,
constitutes one or more businesses or substantially all of the assets
of one or more businesses or (ii) any shares of capital stock of any
Person which, immediately after such acquisition is made and as a
result thereof, becomes a Subsidiary.
"Bank Facility" means that certain Credit Agreement dated
as of August 7, 1997 among the Company, the banks listed therein and
Xxxxxx Guaranty Trust Company of New York, as Agent, as it has been and
may be amended, modified or supplemented from time to time in
accordance with its terms.
"Consolidated EBITDA" means, for any period, the sum of
(i) Consolidated Net Income for such period and (ii) to the extent
deducted in determining Consolidated Net Income for such period, the
aggregate amount of (x) Consolidated Net Interest Expense, (y) income
tax expense and (z) depreciation, amortization and other similar
non-cash charges.
"Consolidated Interest Expense" means, for any period,
the interest expense of the Company and its Consolidated Subsidiaries,
determined on a consolidated basis, for such period.
"Consolidated Net Income" means, for any period, the net
income of the Company and its Consolidated Subsidiaries for such
period, excluding non-cash equity earnings or losses from
unconsolidated foreign affiliates and all other non-recurring items
related to reserves or losses for write-downs of inventory, accounts
34
receivable, fixed assets, and investments outside of the ordinary
course of business.
"Consolidated Net Interest Expense" means, for any
period, the excess of (i) Consolidated Interest Expense for such period
over (ii) consolidated interest income of the Company and its
Consolidated Subsidiaries for such period; provided that in no event
shall the amount of such consolidated interest income deducted in
arriving at Consolidated Net Interest Expense for any period exceed
$250,000 multiplied by the number of fiscal quarters in such period.
"Consolidated Net Worth" means at any date the sum of the
consolidated stockholders' equity of the Company and its Consolidated
Subsidiaries determined as of such date.
"Consolidated Operating Lease Expense" means, for any
period, the aggregate rental expense of the Company and its
Consolidated Subsidiaries (other than with respect to capital leases),
determined on a consolidated basis, for such period.
"Consolidated Subsidiary" means, at any date, any
Subsidiary or other entity the accounts of which would be consolidated
under generally accepted accounting principles with those of the
Company in its consolidated financial statements as of such date.
"Consolidated Tangible Net Worth" means at any date
Consolidated Net Worth less the consolidated Intangible Assets of the
Company and its Consolidated Subsidiaries, all determined as of such
date. As used herein "Intangible Assets" means the amount (to the
extent reflected in determining such Consolidated Net Worth) of (i) all
write-ups (except write-ups resulting from foreign currency
translations and write-ups of assets of a going concern business made
within twelve months after the acquisition of such business) after
March 30, 1997 in the book value of any asset owned by the Company or a
Consolidated Subsidiary and (ii) all unamortized debt discount and
expense, unamortized deferred charges, goodwill, patents, trademarks,
service marks, trade names, anticipated future benefit of tax loss
carry-forwards, copyrights, organization or development expenses and
other intangible assets.
"Contingent Reimbursement Obligation" of any Person means
as of any date any contingent obligation of such Person to reimburse,
directly or indirectly, any bank or other Person in respect of amounts
paid under a letter of credit or similar instrument.
35
"Effective Date" means February 14, 1998.
"Non-Recourse International Subsidiary Debt" means, with
respect to any International Subsidiary, Debt of such International
Subsidiary (x) incurred in the ordinary course of its business and with
respect to which (i) neither the Company nor any other Subsidiary has
any liability, absolute or contingent and (ii) recourse is expressly
limited to such Subsidiary and the tangible assets of such Subsidiary
(and no property or assets of the Company or any other Subsidiary) that
are the subject of the relevant financing, and (y) either (A)
outstanding or undrawn under a facility existing at such time such
Person becomes an International Subsidiary and not created in
contemplation of such event, (B) incurred or assumed for the purpose of
financing all or any part of the cost of acquiring plant, property or
equipment and working capital needs in connection therewith or (C) any
extensions and refinancings of any such Debt referred to in (A) or (B)
above; provided that the principal amount of such Debt is not increased
pursuant to such extension or refinancing.
"Outstanding Receivables Financing Amount" means, as of
any date, the aggregate financing amount with respect to the Purchase
Agreement, equal to the aggregate amount advanced by third-party
purchasers or lenders with respect thereto for the purchase or
financing of assets transferred pursuant thereto, net of repayments or
recoveries by such purchasers or lenders through liquidation of such
assets.
"Parras Cone" means Parras Cone de Mexico, S.A. de C.V.,
a Mexico company, and its successors.
"Ratings Requirement" means the long-term debt of the
Company shall have received a rating of not less than (i) BBB-, by
Standard and Poor's Ratings Corporation, and (ii) Baa3, by Xxxxx'x
Investors Service, Inc.
"Subsidiary" means any corporation or other entity of
which securities or other ownership interests (i) having ordinary
voting power to elect a majority of the board of directors or other
persons performing similar functions, or (ii) otherwise having control
over the actions of the corporation or entity, are at the time directly
or indirectly owned by the Borrower.
"Temporary Cash Investment" means any Investment in (i)
direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, (ii)
time deposits with, including certificates of deposit
36
issued by, any office located in the United States of any bank or trust
company which is organized under the laws of the United States or any
state thereof and (A) which is a Bank or (B) whose short-term
certificates of deposit are rated at least A-1 by Standard & Poor's
Corporation or P-1 by Xxxxx'x Investors Service, Inc. and (iii)
investment grade commercial instruments.
"Total Consolidated Capitalization" means as of any date
the sum of (i) Total Consolidated Debt, plus (ii) the aggregate amount
of the consolidated long term deferred tax liabilities of the Company
and its Consolidated Subsidiaries, plus (iii) stockholders' equity of
the Company and its Consolidated Subsidiaries plus (iv) the aggregate
amount deducted in determining such stockholders' equity with respect
to minority interests in Subsidiaries (other than Parras Cone if Parras
Cone has any Non-Recourse International Subsidiary Debt) that are not
Wholly Owned Consolidated Subsidiaries, in each case determined on a
consolidated basis as of such date.
"Total Consolidated Debt" means as of any date the sum of
(i) all Debt of the Company and its Consolidated Subsidiaries
determined on a consolidated basis, as of such date, as the same is or
would be set forth in a consolidated balance sheet of the Company and
its Consolidated Subsidiaries as of such date (including, without
limitation all Current Debt and the current portion of all Funded
Debt), other than (x) Trade Letters of Credit as of such date and (y)
Non-Recourse International Subsidiary Debt of Parras Cone as of such
date in an aggregate amount not to exceed $87,000,000, plus (ii) the
Outstanding Receivables Financing Amount as such date.
"Trade Letters of Credit" means letters of credit issued
for the account of the Company or any of its Consolidated Subsidiaries
providing payment of trade accounts payable arising in the ordinary
course of business (but not including, in any event, any financing or
standby letters of credit).
2. CONDITIONS PRECEDENT.
Your obligation to enter into, execute and deliver this
Modification and the effectiveness of paragraph 1 is subject to the satisfaction
of the following conditions, as determined in your sole judgment:
2A. Documents. You shall have received (i) this Modification duly
executed and delivered by the parties thereto and (ii) the promissory notes, in
substantially the form of Exhibit A hereto, fully completed and duly executed
and delivered by the Company.
37
2B. Representations and Warranties; No Default. The
representations and warranties contained in paragraph 8 of the Note Agreement
shall be true on and as of the Effective Date, any reference in such paragraph 8
to the "Date of Closing" shall for purposes hereof be deemed to be a reference
to the "Effective Date" and any reference to the "Note Agreement", "this
Agreement" or words of like import shall mean and be a reference to the
Consolidated Note Agreement as amended hereby; there shall exist on the
Effective Date no Event of Default or Default; and the Company shall have
delivered to you an Officer's Certificate, dated the Effective Date, regarding
the foregoing.
2C. Proceedings. The Company shall deliver to you certified copies
(certified by its Secretary or Assistant Secretary) of all corporate action
taken by it to authorize the execution, delivery and performance of this
Modification.
2D. Other Agreements. You shall receive an executed copy
of the Bank Facility, certified as a true, correct and complete copy by
an authorized officer.
2E. Expenses. All your fees and disbursements (including
without limitation special counsel to you) shall have been paid in full.
2F. Other Documents. You shall have received such other
certificates, legal opinions and documents as you or your special counsel may
reasonably request, all in form and substance reasonably satisfactory to you.
3. MISCELLANEOUS.
3A. Successors and Assigns. All covenants and other agreements in
this Modification contained by or on behalf of either of the parties hereto
shall bind and inure to the benefit of the respective successors and assigns of
the parties hereto (including, without limitation, any Transferee) whether so
expressed or not.
3B. Governing Law. This Modification shall be construed and
enforced in accordance with, and the rights of the parties shall be
governed by, the law of the State of New York.
3C. Severability. Any provision of this Modification 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
38
3D. Descriptive Headings. The descriptive headings of the
several paragraphs of this Modification are inserted for convenience only
and do not constitute a part of this Modification.
3E. Counterparts. This Modification may be executed in any
number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one instrument.
3F. No Other Amendment. Except as expressly amended hereby,
all of the terms, conditions and obligations of the Note Agreement shall
remain in full force and effect.
[Signatures on Next Page]
39
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
Company, whereupon this letter shall become a binding agreement among the
Company and you.
Very truly yours,
CONE XXXXX CORPORATION
By: _______________________________
Title:
The foregoing Modification
is hereby accepted as of the
Effective Date.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: ___________________________
Title:
40
Exhibit A
[FORM OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE OFFERED OR SOLD IN VIOLATION OF SUCH ACT.
CONE XXXXX CORPORATION
8.75% SENIOR NOTE DUE AUGUST 13, 2002
No. _______ February 14, 1998
$------------
FOR VALUE RECEIVED, the undersigned, CONE XXXXX CORPORATION (herein
called the "Company"), a corporation organized and existing under the laws of
the State of North Carolina, hereby promises to pay to
____________________________, or registered assigns, the principal sum of
______________________________ DOLLARS on August 13, 2002, with interest
(computed on the bases of a 360-day year having twelve 30-day months) (a) on the
unpaid balance thereof at the Coupon Rate (as defined below) from the date
hereof, payable semiannually on the 13th day of August and February in each
year, commencing with the August 13 or February 13 next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b) on
any overdue payment (including payment of interest and any overdue payment of
any Yield- Maintenance Amount (as defined in the Note Agreement referred to
below), payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate per annum from time to time equal or
greater of (i) 2.0% over the Coupon Rate or (ii) 2.0% over the rate of interest
publicly announced by Bank of New York from time to time in New York City as its
Prime Rate.
"Coupon Rate" means a rate of interest per annum equal to 8.75%;
provided, however, that if the Company shall satisfy the Ratings Requirement
(which shall be evidenced by the delivery of an Officer's Certificate duly
executed by the chief financial officer of the Company specifying the date of
such compliance), such rate of interest shall be reduced to 8.0% per annum
commencing with the date of such compliance.
41
Payments of principal of or interest on and any Yield-Maintenance
Amount payable with respect to this Note are to be made at the main office of
Bank of New York in New York City or at such other place as the holder hereof
shall designate to the Company in writing, in lawful money of the United States
of America.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Note Agreement, dated as of August 13, 1992 ( as
amended, herein called the "Agreement"), between the Company and The Prudential
Insurance Company of America and is entitled to the benefits thereof.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof such holder's attorney duly authorized in writing, a new Note for
a like principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the Company
shall not be affected by any notice to the contrary.
The Company agrees to make prepayments of principal on the dates and in
the amounts specified in the Agreement. This Note is also subject to optional
prepayment, in whole or from time to time in part, on the terms specified in the
Agreement.
In case an Event of Default, as defined in the Agreement, shall occur
and be continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner and with the effect provided in the
Agreement.
This Note is intended to be performed in the State of New York and
shall be construed and enforced in accordance with the law of such State. AS
PROVIDED IN PARAGRAPH 11L OF THE AGREEMENT, THE COMPANY SUBMITS TO THE
JURISDICTION OF THE SUPREME COURT OF NEW YORK COUNTY, NEW YORK AND THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, IN ANY ACTION OR
PROCEEDING RELATING TO THIS NOTE.
42
This Note is given in substitution for, and not in repayment of, the
promissory note dated August 13, 1992 made by the Company to the holder hereof
in connection with the Note Agreement.
CONE XXXXX CORPORATION
By: _____________________________
Title:
By: _____________________________
Title:
43
