1998 AMENDMENT TO THE FOURTH AMENDED AND RESTATED
LOAN AGREEMENT AND OTHER DOCUMENTS
THIS 1998 AMENDMENT TO THE FOURTH AMENDED AND RESTATED LOAN AGREEMENT
AND OTHER DOCUMENTS ("1998 Amendment") is made as of this 4th day of March, 1998
between XXXXXX COLOR-FI, INC., a South Carolina corporation ("MCF"), STAR FIBERS
CORP., a South Carolina special purpose corporation ("Star Fibers") and XXXXXXXX
INDUSTRIES, INC., a South Carolina corporation ("BI") (MCF, Star Fibers and BI
are individually or collectively, as the context requires, referred to as
"Borrower" or "Borrowers") and NATIONSBANK, N.A. ("Bank").
Factual Background
A. Bank has extended to Borrowers various loans and credit facilities
(collectively, the "Loans") pursuant to the terms of that certain Fourth Amended
and Restated Loan and Security Agreement (as amended, modified or restated, the
"Loan Agreement") between Borrower and the Bank dated as of September 30, 1997.
The Loans are secured inter alia by a perfected first priority lien on all real
and personal property of the Borrowers pursuant to various mortgages, deeds to
secure debt, assignments and security agreements (collectively, the "Security
Documents").
B. Bank, at Borrowers' request, has agreed to extend to Borrowers an
overline (the "Overline") to the Revolving Credit Loan (as such term is defined
in the Loan Agreement). The Overline shall be in the maximum principal amount of
$2,500,000 and shall be evidenced by an Overline Promissory Note (as amended or
modified, the "Overline Note") dated of even date, executed and delivered by
Borrower to Bank.
C. Borrowers and Bank now desire to execute this 1998 Amendment to
modify and amend the provisions of the Loan Agreement and the Security Documents
in the manner hereinafter set forth, with the specific understanding and
agreement that, except as herein modified and amended, the terms and provisions
of the Loan Agreement, the Security Documents and all documents related thereto
shall remain unchanged and continue in full force and effect as therein written.
D. All capitalized terms used, but not defined, in this 1998 Amendment
shall have the meaning ascribed to such term in the Loan Agreement.
NOW, THEREFORE, in consideration of the foregoing, to induce the Bank
to extend the Overline, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
1. All terms, conditions and provisions of the Factual Background are
incorporated in, and shall be a part of, the agreement between Borrowers and
Bank.
2. The Borrowers specifically agree that the Overline shall be subject
to and governed by the Loan Agreement.
3. The Loan Agreement is hereby amended as follows:
(i) By including the following provision at the end of the definition
of the term "Collateral Certificate" appearing in Section 1.1:
; provided, during the period of time in which the Overline is
available to Borrowers, the term "Collateral Certificate" shall
also include the Overline Collateral Certificate, in the form
established by Bank, as may be amended from time to time;
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(ii) By deleting the definition of the term "Loan" or "Loans"
appearing in Section 1.1 and substituting in lieu thereof the
following:
"Loan" or "Loans" shall mean the individual or collective
reference, as the context requires, to the Revolving Credit, the
Overline, the Term Loan and the 1997 Term Loan.
(iii)By including the following provision at the end of the definition
of the term "Monthly Borrowing Base Certificate" appearing in
Section 1.1:
; provided, during the period of time in which the Overline is
available to Borrowers, the term "Monthly Borrowing Base
Certificate" shall also include the Overline Monthly Borrowing
Base Certificate, in the form established by Bank, as may be
amended from time to time;
(iv) By deleting the definition of the term "Notes" appearing in
Section 1.1 and substituting in lieu thereof the following:
"Note" or "Notes" shall mean the individual or collective
reference, as the context requires, to the Revolving Credit Note,
the Overline Note, the Term Note, the 1997 Term Note and any
other notes as may be outstanding from time to time, under this
Agreement, which are properly executed, completed and delivered
to Bank, as the same may be amended from time to time and all
other notes delivered in substitution, addition or exchange for
any thereof.
(v) By inserting the following definitions in Section 1.1 after the
term "Obligations":
"Overline" shall mean the Overline to the Revolving Credit Loan
in the maximum principal amount of up to $2,500,000 pursuant to
the terms of and as more particularly set forth in Article 2A of
this Agreement.
"Overline Documents" shall mean and refer to, collectively, all
those certain documents and instruments executed in connection
with the Overline, including this Agreement, the Overline Note,
the Mortgages, the Security Agreements, the Assignment of Leases,
the Assignment of Contracts, the Financing Statements and any
other documents executed in connection with the Overline as such
documents and instruments may be amended, substituted or renewed
from time to time.
"Overline Note" shall mean and refer to that certain Overline
Promissory Note in the original principal amount of up to
$2,500,000 dated as of March 4, 1998 executed and delivered by
Borrowers to Bank, as the same may be amended, renewed or
substituted from time to time.
(vi) By deleting in its entirety the remainder of the portion of
Section 2.5 commencing with the words "provided, however" and
substituting in lieu thereof the following:
provided, however, that the aggregate principal amount
outstanding under the Revolving Credit Loan and the Overline
supported by Borrowers' and any Approved Subsidiaries' Eligible
Inventory shall not exceed, at any one time (i) except as
provided in (ii) below, 55% of the total principal amount
outstanding under the Revolving Credit Loan; and (ii) during the
period of time commencing on December 31, 1997 and ending on June
2, 1998, sixty percent (60%) of the total principal outstanding
under the Revolving Credit Loan and the Overline. The
availability under the Revolving Credit Loan and the Overline for
each week shall be determined by the then-current Collateral
Certificate delivered in accordance with Section 7.1(k) of this
Agreement.
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(vii) By inserting the following after Article 2:
2A. OVERLINE.
2.1.A. General Terms. During the period of time commencing on
March 4, 1998 and ending on June 2, 1998 and subject to the terms
of this Agreement, Bank will lend, on a revolving credit basis,
to Borrowers and Borrowers will borrow from Bank such sums as
Borrowers may from time to time request but which will not exceed
an aggregate principal amount outstanding at any one time, equal
to the lesser of (a) the amount available to be outstanding in
accordance with the margin requirements stated in Section 2.4.A.
hereof, or (b) Two Million Five Hundred Thousand and No/100
Dollars ($2,500,000). The proceeds of the Overline shall be used
for the same purposes as the proceeds of the Revolving Credit
Loan, and the proceeds of the Overline will be made available to
Borrowers only during such time that no availability exists under
the Revolving Credit Loan. Borrower will be required to make
repayments of principal outstanding under the Overline
immediately and as and when necessary to comply with the margin
requirements stated in Section 2.4.A., or upon demand by Bank in
connection with an acceleration of the Overline, or immediately
upon the termination of Article 2A of this Agreement in
accordance with Section 2.6.A. of this Agreement.
2.2.A. Disbursements of the Overline. Disbursements of principal
under the Overline may be made on any Business Day, provided
that, in addition to all other terms of this Agreement: (A)
Borrowers shall have delivered to Bank oral or written notice in
form and content acceptable to Bank no later than 11:00 a.m.
(Columbia, South Carolina time) on the proposed funding date,
which notice shall specify the proposed funding day, the amount
requested and contain other information required by Bank; (B)
Borrowers and any Approved Subsidiary shall have delivered to
Bank an executed, properly completed then current Monthly
Borrowing Base Certificate and Collateral Certificate with
respect to the Overline, with the then current Collateral
Certificate with respect to the Overline governing the
availability under the Overline for the period of time until
receipt by Bank of the next Collateral Certificate with respect
to the Overline; (C) no Event of Default or Default Condition has
occurred; and (d) no availability under the Revolving Credit Loan
exists. Each delivery of an executed and properly completed
Monthly Borrowing Base Certificate and Collateral Certificate
with respect to the Overline shall constitute a representation by
the Borrowers and any Approved Subsidiary that, as of the date of
such Monthly Borrowing Base Certificate or Collateral with
respect to the Overline (1) all material representations and
warranties made by the Borrowers and any Approved Subsidiary in
this Agreement are true and correct, unless otherwise disclosed
to Bank in writing and approved by Bank, (2) Borrowers or any
Approved Subsidiary have not failed to observe any of its
undertakings hereunder, (3) no Event of Default has occurred, and
(4) no fact, condition, or event has occurred or exists that,
with the giving of notice or the passage of time or both, could
become an Event of Default. Bank will credit the proceeds of all
disbursements under the Overline to the Collateral Account. Bank
shall not incur any liability to the Borrowers (x) for acting
upon any telephonic notice or other oral notice for a requested
disbursement that Bank believes in good faith was given by the
Controller, the Chief Financial Officer or another officer deemed
acceptable to Bank in its sole discretion, or (y) for otherwise
acting good faith in disbursing proceeds under the Overline.
2.3.A. Overline Note. The obligation to repay the Overline is
evidenced by the Overline Note.
2.4.A. Margin Requirement Under Overline. In addition to the
limitations set forth in Section 2.1.A. of this Agreement, the
aggregate principal amount outstanding at any one
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time under the Overline as determined by the most recent
Collateral Certificate may not exceed the difference of:
(X) the sum of (i) ninety percent (90%) of the face amount
of Borrowers' and any Approved Subsidiary's Eligible
Accounts Receivable which are subject to factoring
agreements with NationsBanc Commercial Corporation and are
acceptable to Bank; plus (ii) eighty percent (80%) of the
face value of Borrowers' and any Approved Subsidiary's
Eligible Accounts Receivable which are not subject to
factoring agreements with NationsBanc Commercial Corporation
that are acceptable to Bank; plus (iii) fifty percent (50%)
of the value of Borrowers' and any Approved Subsidiary's
Eligible Inventory (provided, however, that the aggregate
principal amount outstanding under the Revolving Credit Loan
and the Overline supported by Borrowers' and any Approved
Subsidiary's Eligible Inventory shall not exceed, at any one
time sixty percent (60%) of the total principal outstanding
under the Revolving Credit Loan and the Overline), minus
(Y) principal outstanding under the Revolving Credit Loan.
2.5.A. Fees. In consideration of NationsBank extending the
Overline, Borrowers shall pay a commitment fee equal to $10,000,
which fee shall be due and payable upon the delivery of the
Overline Note. Additionally, Borrower further shall pay an "user
fee" under the Overline to be assessed and due and payable on
June 2, 1998, which fee will equal one-eighth of one percent
(0.125%) per annum of the average unused portion of the Overline
calculated on a daily basis.
2.6.A. Termination. This Agreement as it relates to the Overline
shall be terminated (a) by Bank or notice to Borrowers at any
time in connection with the acceleration pursuant to Section 9.2
hereof; or (b) have not sooner demanded, on June 2, 1998. The
termination of this Agreement as it relates to the Overline shall
in no way effect or impair any right of Bank arising prior
thereto or by reason thereof, nor shall any such termination
relieve Borrowers of any Obligations under the Overline until all
Obligations under the Overline are fully paid and performed, nor
shall any such termination effect any right or remedy of Bank
arising from any other Obligation. All agreements, warranties and
representations of Borrowers shall survive termination.
2.7.A. Additional Provisions. All other terms, conditions,
representations, warranties and covenants contained in Article 2
and elsewhere in the Loan Agreement, to the extent not in
consistent to the express provisions of this Article 2A., shall
apply to the Overline.
(viii) By deleting Section 7.1(aa) in its entirety and substituting in
lieu thereof the following:
(aa) Borrowers, on a consolidated basis, must maintain a Funded
Debt Ratio of less than or equal to (i) 4.00 to 1.00 for the
twelve (12) month period ending on December 31, 1998; and (ii)
3.00 to 1.00 for each twelve (12) month period ending on the
closing date of each of Borrowers' fiscal quarters commencing
with the first fiscal quarter of fiscal year 1999.
4. The Overline shall be secured by a perfected security interest in or
lien on any and all of Borrowers' real and personal property pursuant to the
Security Documents; the Borrowers hereby grant to Bank such security interests
and liens; and the Security Documents are amended as necessary to grant such
security interests in favor of Bank.
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5. Except as otherwise modified herein, the Security Documents shall
continue to secure the obligations of the Borrowers or other parties as
described therein with the same force and effect as when originally executed. It
is intended that this 1998 Amendment will not disturb the existing priority of
the liens granted pursuant to the Security Documents.
6. Except as provided herein, the Loan Agreement, the Security
Documents and the other Loan Documents shall remain unchanged and in full force
and effect.
7. All agreements of Borrower contained herein shall survive the
execution and delivery of this 1998 Amendment, and all representations,
warranties and covenants contain in the Loan Agreement and the Loan Documents
are true, accurate, satisfied and/or not breached as of the date of this 1998
Amendment.
8. This 1998 Amendment shall be governed by and construed in accordance
with the laws of the State of South Carolina.
9. Borrowers represent and warrant that they are represented by legal
counsel of their choice, are fully aware of the terms contained in this 1998
Amendment and the Overline Note and have voluntarily and without coercion or
duress of any kind entered into this 1998 Amendment, the Overline Note and any
documents executed in connection with this 1998 Amendment.
10. Borrowers acknowledge and agree that (A) they have (i)
independently reviewed and approved each and every provision of this 1998
Amendment, the Overline Note and any and all other documents and items as it or
its counsel have deemed appropriate, (ii) entered into this 1998 Amendment and
executed this 1998 Amendment and the other closing documents, including the
Overline Note, with the advice of its legal counsel, and (iii) not relied in any
way on any representation, warranty, statement of fact or opinion,
understanding, disclosure or nondisclosure of the Bank, and have not been
induced by the Bank in any way, except for the consideration recited herein, in
entering into this 1998 Amendment and executing this 1998 Amendment and the
other closing documents contemplated hereby, including the Overline Note, and
(B) the Bank has not made any warranties or representations of any kind in
connection with this transaction except as specifically set forth herein or in
the documents executed in conjunction with this 1998 Amendment.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
1998 Amendment as of the date first above written.
[SIGNATURES OMITTED]
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