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EXHIBIT 4.7
[EXECUTION COPY]
AMENDMENT NO. 1 AND CONSENT AND WAIVER
DATED AS OF FEBRUARY 28, 1997 TO
LOAN AND SECURITY AGREEMENT
DATED AS OF MARCH 19, 1996
CMI INDUSTRIES, INC., a Delaware corporation (the "Borrower"),
the financial institutions set forth on the signature pages hereof (the
"Lenders") and THE FIRST NATIONAL BANK OF BOSTON, a national banking
association, as Agent for the Lenders (the "Agent"), agree as follows:
PRELIMINARY STATEMENT
The Borrower, the Lenders and the Agent are parties to the Loan
Agreement (as hereinafter defined). The Borrower wishes to reorganize its
business by creating three new wholly-owned Subsidiaries, Chatham Fabrics, LLC,
Elastic Fabrics of America, LLC and Chatham Consumer Products, LLC, each a
Delaware limited liability company, (individually a "New Subsidiary" and
collectively the "New Subsidiaries") and transferring on a tax-free basis
certain assets of the Borrower's (i) Chatham Manufacturing division, including
the operations located in Boonville and Elkin, North Carolina (excluding the
Consumer Products group and Automotive group assets) to Chatham Fabrics LLC,
(ii) Elastic Fabrics of America division, including the operations based in
Greensboro, North Carolina and Stuart, Virginia, to Elastic Fabrics of America,
LLC and (iii) Consumer Products group of the Chatham Manufacturing division,
including the "Fiberwoven" plant located in Elkin, North Carolina, to Chatham
Consumer Products, LLC, such transferred assets to exclude Receivables (the
"Reorganization"). Such transactions require the consent of the Lenders under
the Loan Agreement. The Lenders are willing to consent to the Reorganization and
the parties desire to amend the Loan Agreement to permit the Reorganization and
otherwise reflect the restructuring of the Borrower's business resulting
therefrom.
STATEMENT OF AGREEMENT
NOW, THEREFORE, for and in consideration of the preliminary statement
and the mutual agreements hereinafter set forth, the parties hereto hereby agree
as follows:
SECTION 1. Cross-References and Definitions.
(a) Reference is made to the Loan and Security Agreement, dated as of
March 19, 1996, among the Borrower, the Lenders and the Agent (the "Loan
Agreement"). Upon and after the Amendment Effective Date (as hereinafter
defined) all references to the Loan Agreement in that document, or in any other
Loan Document or related document, shall mean the Loan Agreement as amended
by this Amendment. Except as expressly provided in this Amendment, the
execution and delivery of this Amendment does not and will not amend, modify or
supplement
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any provision of, or constitute a consent to or a waiver of any noncompliance
with the provisions of, the Loan Agreement or any other Loan Document, and,
except as specifically provided in this Amendment, the Loan Agreement and all
other Loan Documents shall remain in full force and effect.
(b) Unless otherwise defined herein, terms used in this Amendment which
are defined in the Loan Agreement shall have the same meaning herein as therein.
SECTION 2. Amendments. Effective on the Amendment Effective Date,
(a) Article I, Appendix I Amendment. Appendix I referred to in Section
1.1 of the Loan Agreement is hereby amended as follows:
(i) By substituting in their entirety the following definitions
for the corresponding existing definitions therein:
"Applicable Margin" means, for any Loans bearing
interest at the Base Rate, zero percent (0%), and for any
Loans bearing interest at the Eurodollar Rate, one and
one-half percent (1.5%)
"EBIT" for any period means the consolidated net
income of the Borrower and its consolidated Subsidiaries for
such period (without deduction of income and franchise taxes)
plus interest expense paid or accrued during such period.
"Fiscal Quarter" means each accounting period of the
Borrower consisting of approximately three months constituting
a fiscal quarter.
"Interest" means, with respect to any period,
interest expense of the Borrower and its consolidated
Subsidiaries (other than interest due but not payable on the
Senior Subordinated Notes under the terms of the Indenture)
during such period, minus any amortization of debt issuance
costs during such period and minus any amounts received or
accrued during such period by Borrower or a Subsidiary
pursuant to any interest cap, swap or collar agreement to
which Borrower or a Subsidiary is a party on the Agreement
Date or thereafter.
"Revolving Facility Amount" means $65,000,000, less
the sum of (a) Stated Amount of any outstanding Letter of
Credit from time to time and (b) the Interest Rate Exposure,
as reduced pursuant to the provisions of Section 2.6.
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"Revolving Facility Percentage Amount" means: as to
The First National Bank of Boston, $28,260,700; as to
NationsBank, N.A., $21,195,850; and as to Wachovia Bank of
South Carolina, N.A., $15,543,450 or such other amount as may
from time to time be reflected on the records of the Agent as
a result of an assignment by a Lender pursuant to Section 14.9
hereof.
"Termination Date" means January 15, 2000 or such
earlier date as all Secured Obligations shall have been
irrevocably paid in full and the Revolving Credit Facility
terminated or such later date to which the same may be
extended by agreement of the Borrower and all of the Lenders.
"Total Facility" means $65,000,000, as reduced
pursuant to the provisions of Section 2.6.
(ii) By adding the following definitions in the
appropriate alphabetical order:
"Fixed Charge Coverage Ratio" means, as of the last
day of any Fiscal Quarter of the Borrower, the result obtained
by dividing (i) the sum of EBITDA minus cash outlays for
income taxes and Capital Expenditures of the Borrower and its
consolidated Subsidiaries for the specified measurement period
by (ii) the sum of Interest plus scheduled principal payments
on long term Indebtedness (including scheduled payments of
capitalized lease obligations) of the Borrower and its
consolidated Subsidiaries during such measurement period.
"New Subsidiary" means one of Chatham Fabrics, LLC,
Elastic Fabrics of America, LLC or Chatham Consumer Products,
LLC, each a Delaware limited liability company and each a
Restricted Subsidiary wholly-owned, directly or indirectly, by
the Borrower.
"New Subsidiary Factoring Agreement" means each
nonrecourse accounts receivable purchase agreement between the
Borrower and a New Subsidiary providing for the purchase by
the Borrower of Receivables of such New Subsidiary from time
to time free of all Liens.
"Purchased Receivables" means Receivables purchased
by the Borrower from the New Subsidiaries from time to time
pursuant to the New Subsidiary Factoring Agreement at a
purchase price not greater than the face amount thereof.
"Reorganization" means the transfer by the Borrower
pursuant to the Reorganization Documents, on a tax-free basis,
of the assets of the Borrower's (i) Chatham Manufacturing
Division, including the operations
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located in Boonville and Elkin, North Carolina (excluding
the Consumer Products group and Automotive group assets)
to Chatham Fabrics LLC, (ii) Elastic Fabrics of America
division, including the operations based in Greensboro,
North Carolina and Stuart, Virginia, to Elastic Fabrics
of America, LLC, and (iii) Consumer Products group of
the Chatham Manufacturing division, including the
"Fiberwoven" plant located in Elkin, North Carolina, to
Chatham Consumer Products, LLC, excluding, however, assets
consisting of Receivables.
"Reorganization Documents" means the agreements and
documents listed on Appendix II hereto.
(iii) By amending the definition of "Eligible Receivable" by
inserting in clause (j) thereof the phrase "or a New Subsidiary's" immediately
after the word "Borrower's" appearing therein and by inserting in clause (k)
thereof immediately before the semicolon at the end thereof the phrase "other
than as a result of a purchase thereof by the Borrower pursuant to the New
Subsidiary Factoring Agreement."
(iv) By amending the definition of "Permitted Investments" by
deleting the "and" at the end of clause (a)(vi), substituting "; and" for the
period at the end of clause (a)(vii), and adding a new clause (a)(viii) to the
end thereof as follows:
"(viii) Investments contemplated by the
Reorganization."
(v) By amending the definition of "Permitted Liens" by
substituting ", and" for the period at the end of clause (h) and adding a new
clause (i) to the end thereof as follows:
"(i) Financing Statements filed by the Borrower, as
purchaser, against the New Subsidiaries, as sellers, in
connection with the acquisition by the Borrower of the
Purchased Receivables."
(b) Section 1.2 Amendment. Section 1.2 is hereby amended by
adding to the end thereof the following:
"Wherever in this Agreement there shall be a reference to
articles of incorporation or bylaws or shareholder agreements
with respect to a Subsidiary which is a limited liability
company, the reference shall be deemed to include articles of
organization, operating agreements and any other agreement
among members and managers, as such."
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(c) II Amendment. Article II is hereby amended by adding to the end
thereof a new Section 2.6 as follows:
"Section 2.6 Reduction of Revolving Credit Facility.
The Borrower shall have the right, at any time and from time
to time, upon at least three Business Days' prior irrevocable,
written notice to the Agent, to reduce permanently all or a
portion of the Revolving Facility Amount; provided, however,
that any such reduction shall be made in an amount not less
than $2,000,000 or increments of $1,000,000 in excess thereof
and shall not reduce the Revolving Credit Facility below the
sum of the amount of the aggregate Stated Amount of all
Letters of Credit outstanding at such time. As of the date of
reduction set forth in such notice, the Revolving Facility
Amount and the Total Facility shall be permanently reduced to
the amount stated in the Borrower's notice for all purposes
herein, and the Borrower shall pay the amount necessary to
reduce the amount of the Revolving Credit Loans outstanding
under the Revolving Credit Facility to the Revolving Facility
Amount as so reduced, together with accrued interest on the
amounts so prepaid. In the event of such reduction, each
Lender's Revolving Facility Percentage Amount shall be reduced
in an amount equal to such Lender's Revolving Facility
Percentage of the amount of such reduction."
(d) 9.9 Amendment. Section 9.9 is hereby amended by inserting
immediately before the period at the end of clause (a)(ii) the phrase "and the
purchase of Purchased Receivables."
(e) 10.1 Amendment. Section 10.1 is hereby amended to read in
its entirety as follows:
"Section 10.1 Financial Statements.
(a) Audited Year-End Statements. As soon as
available, but in any event within one hundred twenty
(120) days after the end of each Fiscal Year of the
Borrower, copies of the consolidating and
consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as at the end of such
Fiscal Year and the related consolidating and
consolidated statements of earnings, shareholders'
equity and cash flows for such Fiscal Year, in each
case, if applicable, setting forth in comparative
form the consolidating and consolidated figures for
the previous year of the Borrower and its
consolidated Subsidiaries, reported on, as to the
consolidated statements only, without qualification
as to the scope of the audit, by independent
certified public accountants of nationally recognized
standing; and
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(b) Monthly Financial Statements. As soon as
available after the end of each fiscal month
(commencing with the fiscal month ending February 29,
1996) but in any event within 30 days after the end
of each fiscal month, copies of (i) the unaudited
consolidating and consolidated balance sheets of the
Borrower and its consolidated Subsidiaries as at the
end of such month and the related unaudited
consolidating and consolidated statement of earnings
for the Borrower and its consolidated Subsidiaries
for such month, and for the portion of the Fiscal
Year of the Borrower through such month, certified by
a Financial Officer of the Borrower as presenting
fairly, in all material respects, the consolidating
and consolidated financial condition and results of
operations of the Borrower and its consolidated
Subsidiaries (subject to normal year-end audit
adjustments and the omission of footnotes), (ii) if
such month is the last month of a Fiscal Year, a
forecast of consolidating and consolidated cash flow
from operations for the ensuing twelve months, and
(iii) if such month is the last month of a Fiscal
Year, a forecast of consolidating and consolidated
sales and operating earnings for the next succeeding
Fiscal Year; and, upon the request of the Agent, if
such month is the last month of a Fiscal Quarter, a
forecast of consolidating and consolidated sales and
operating earnings for the next succeeding Fiscal
Quarter;
all such financial statements (other than forecasts) to
present fairly, in all material respects, the financial
condition of the Borrower and its consolidated Subsidiaries
and be prepared in accordance with GAAP (except, with respect
to interim financial statements, for the omission of footnotes
and for the effect of normal year-end audit adjustments)
applied consistently throughout the periods reflected therein,
and the financial statements and forecasts described in
subsection (b) of this Section 10.1 to be prepared in good
faith and in such form and substance as has been approved by
the Agent on behalf of the Lenders prior to the Effective
Date, or as may be requested by the Agent and agreed to by the
Borrower."
(f) Section 11.1 Amendment. Section 11.1 is hereby amended as follows:
(i) by deleting Section 11.1(b) in its entirety and
substituting the following therefor:
"(b) Net Worth. The consolidated Net Worth of the
Borrower and its consolidated Subsidiaries at any time
(i) during the period from February 28,
1997 through the 1997 Fiscal Year to be less than $30,000,000;
and
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(ii) during each Fiscal Year commencing
after the 1997 Fiscal Year, to be less than the minimum
consolidated Net Worth required under this Section 11.1(b) for
the immediately preceding Fiscal Year plus (if a positive
number) 50% of the consolidated net income of the Borrower and
its Restricted Subsidiaries for such immediately preceding
Fiscal Year."
(ii) by adding a new subsection (c) thereto as follows:
"(c) Fixed Charge Coverage Ratio The Fixed Charge
Coverage Ratio to be less than 1.0 to 1.0 for the nine-month
period ended September 30, 1997 or for any twelve-month period
ending at the end of any Fiscal Quarter ending thereafter."
(g) Section 11.2 Amendment. Section 11.2 in hereby amended by deleting
the "and" at the end of clause (d), substituting "; and" for the period at the
end of clause (e) and adding a new clause (f) as follows:
"(f) Indebtedness of the Borrower to a New Subsidiary
and Indebtedness of a New Subsidiary to the Borrower."
(h) Section 11.4 Amendment. Section 11.4 is hereby amended by inserting
immediately before the period at the end thereof the following phrase, "and
(iii) Investments of the Borrower or any Subsidiary in a New Subsidiary and
Investments of a Subsidiary in the Borrower."
(i) Section 11.5 Amendment. Section 11.5 is hereby amended by adding
the following phrase immediately before the period at the end thereof,
"except that this Section 11.5 shall not restrict loans by the
Borrower to a New Subsidiary or loans or distributions by a
New Subsidiary to the Borrower or the repayment of any such
loans from time to time on such terms as the parties shall
agree."
(j) Section 11.5 Amendment. Section 11.5 is hereby amended by adding
immediately before the period at the end thereof the following:
"provided, however, that the Borrower may, during any Fiscal
Year, make Restricted Dividend Payments and Restricted
Purchases aggregating up to $3,000,000."
SECTION 3. Consent and Waiver of Default; Collateral Release. Effective
on the Amendment Effective Date (as hereinafter defined) the Lenders hereby
consent to the Reorganization and waive any Default that may occur by reason of
the Reorganization and the
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Lenders authorize the Agent on their behalf to release the Security Interest in
the Inventory and certain trademarks transferred to the New Subsidiaries in the
Reorganization.
SECTION 4. Conditions to Effectiveness. This amendment shall be
effective as of the date hereof (the "Amendment Effective Date") upon receipt by
the Agent of the following, each in form and substance satisfactory to the
Agent, at which time the Agent shall issue a written notice to the Borrower and
each Lender that the Amendment Effective Date has occurred:
(a) counterparts of this Amendment, duly executed and delivered by the
Borrower and each Lender;
(b) copies of the Reorganization Documents to be executed prior to the
Amendment Effective Date;
(c) certified copies of all corporate action taken by the Borrower and
each New Subsidiary to authorize the execution, delivery and performance of this
Amendment, the Reorganization Documents and each other certificate, agreement or
other document to be executed by the Borrower and each New Subsidiary in
connection with this Amendment and the Reorganization;
(d) a certificate of the President of the Borrower stating that, to the
best of his knowledge and based on an examination sufficient to enable him to
make an informed statement,
(i) after giving effect to the waiver and consent set forth in
Section 3 of this Amendment and the transactions contemplated
by the Reorganization Documents, all of the representations
and warranties made or deemed to be made under the Loan
Agreement are true and correct as of the date hereof, and
(ii) after giving effect to the waiver and consent set forth
in Section 3 of this Amendment and the transactions
contemplated by the Reorganization Documents, no Default or
Event of Default exists, and the Agent shall be satisfied as
to the truth and accuracy thereof;
(e) a legal opinion from Xxxxxxxxxx, Xxxxxx & Xxxxxxx, counsel to the
Borrower, in form and substance satisfactory to the Agent and its counsel; and
(f) such other documents and instruments as the Agent or any Lender may
reasonably request.
SECTION 5. Representations and Warranties. The Borrower hereby makes
the following representations and warranties to the Agent and the Lenders, which
representations and warranties shall survive the delivery of this Amendment and
the making of additional Loans under the Loan Agreement as amended hereby:
(a) Organization; Power; Qualification. The Borrower and each New
Subsidiary is a corporation or limited liability company, as the case may be,
duly organized, validly existing and in good standing under the laws of its
jurisdiction of its organization, having the power and
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authority to own its properties and to carry on its business as now being and
hereafter proposed to be conducted and each is duly qualified and authorized to
do business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification or authorization and the
failure to so qualify would have a Materially Adverse Effect.
(b) Authorization of Agreements. The Borrower has the right and power,
and has taken all necessary action to authorize it, to execute, deliver and
perform this Amendment and each other agreement contemplated hereby to which it
is a party in accordance with their respective terms. This Amendment and each
other agreement contemplated hereby to which it is a party have been duly
executed and delivered by the duly authorized officers of the Borrower and each
is, or each when executed and delivered in accordance with this Amendment will
be, a legal, valid and binding obligation of the Borrower, enforceable in
accordance with its terms.
(c) Compliance of Agreements with Laws. The execution, delivery and
performance of this Amendment and each other agreement contemplated hereby,
including, without limitation the Reorganization Documents, to which the
Borrower or any New Subsidiary is a party in accordance with their respective
terms do not and will not, by the passage of time, the giving of notice or
otherwise,
(i) require any Governmental Approvals or violate any
Applicable Law relating to the Borrower or any New Subsidiary
(ii) conflict with, result in a breach of or constitute a
default under the articles or certificate of incorporation,
operating agreement, by-laws, or any agreement among the
members or shareholders of the Borrower or any New Subsidiary,
any material provisions of any indenture, agreement or other
instrument to which the Borrower or any New Subsidiary is a
party or by which any of them or any of their property may be
bound or any Governmental Approvals relating to the Borrower
or any New Subsidiary which conflict, breach or default could
have a Materially Adverse Effect, or
(iii) result in or require the creation or imposition of any
Lien upon or with respect to any property now owned or
hereafter acquired by the Borrower or any New Subsidiary other
than the Security Interest.
SECTION 6. Expenses. The Borrower agrees to pay or reimburse on demand
all costs and expenses, including, without limitation, reasonable fees and
disbursements of counsel, incurred by the Agent in connection with the
negotiation, preparation, execution and delivery of the Amendment.
SECTION 7. Governing Law. This Amendment shall be construed in
accordance with, and governed by the laws of, the State of Georgia.
SECTION 8. Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and shall be binding
upon all parties and their
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respective successors and assigns and all of which taken together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers or agents in several counterparts all
as of the day and year first above written.
AGENT: BORROWER:
THE FIRST NATIONAL CMI INDUSTRIES, INC.
BANK OF BOSTON, As Agent
By: By:
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Name: Name:
-------------------------- -----------------------------
Title: Title:
-------------------------- -----------------------------
LENDER:
THE FIRST NATIONAL BANK OF BOSTON
By:
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Name:
--------------------------
Title:
--------------------------
[SIGNATURES CONTINUED ON FOLLOWING PAGES]
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LENDER:
NATIONSBANK, N.A.
By:
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Name:
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Title:
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LENDER:
WACHOVIA BANK OF SOUTH CAROLINA, N.A.
By:
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Name:
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Title:
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APPENDIX II
1. Operating agreement
2. Xxxx of sale and assignment
3. Deed--Elkin plant (excluding Fiberwoven plant)
4. Deed--Boonville plan
5. Intellectual property license agreement
6. Nonrecourse accounts receivable purchase agreements
7. Management services agreement
8. Automotive division services agreement
9. Blanket division services agreement
10. Other documents in form and substance reasonably satisfactory to the
Agent and its counsel.
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