AMENDMENT NO. 2 TO THE
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of June 29, 1999
AMENDMENT NO. 2 TO THE THIRD AMENDED AND RESTATED CREDIT
AGREEMENT dated as of February 12, 1999 among Glenoit Corporation, a Delaware
corporation (the "Borrower"), the banks, financial institutions and other
institutional lenders listed on the signature pages thereof as the Restatement
Lenders (the "Lenders"), the bank listed on the signature pages thereof as the
Issuing Bank (the "Issuing Bank"), Banque Nationale de Paris, as the swing line
bank (the "Swing Line Bank") and as administrative agent (the "Agent") for the
Lender Parties and the arranger (the "Arranger"), Fleet National Bank, as
syndication agent (the "Syndication Agent"), and LaSalle Bank National
Association, as documentation agent (the "Documentation Agent"; together with
the Agent and the Syndication Agent, the "Agents") and the THIRD AMENDED AND
RESTATED SECURITY AGREEMENT dated as of February 12, 1999 from the Borrower and
the other Grantors as defined therein to the Agent.
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders and the Agents have entered into
a Third Amended and Restated Credit Agreement dated as of February 12, 1999 (as
amended by Amendment No. 1 dated as of April 14, 1999, and as further amended,
supplemented or modified to date, the "Credit Agreement"). Capitalized terms not
otherwise defined in this Amendment have the same meanings as specified in the
Credit Agreement.
(2) The Borrower and the other Loan Parties propose that (a)
Ex-Cell be permitted to replace the Ex-Cell Factoring Program, (b) the Borrower
be permitted to (i) enter into a factoring arrangement on terms and conditions
acceptable to the Agent to factor Accounts Receivable arising from its fabric
division (the "Fabric Factoring Program") and (ii) sell certain equipment
located in Jacksboro, Tennessee and certain real property located in
Bentonville, Arkansas, the proceeds of such sales being used to make prepayments
of the Term Borrowings. The Borrower requests that the Required Lenders amend
the Credit Agreement to permit the foregoing.
(3) The Borrower, the other Loan Parties and the Lenders have
agreed to amend the Credit Agreement and the Third Amended and Restated Security
Agreement as hereinafter set forth.
SECTION 1. Waiver to the Credit Agreement. The Borrower hereby
requests that the Required Lenders waive, and by their signature on the
signature pages hereto, the Required Lenders hereby waive as of the date hereof
and subject to the satisfaction of the conditions precedent set forth in Section
4: (a) maintenance of the Total Leverage Ratio less than or equal to the ratio
set forth in Section 5.04(a) for the Rolling Period ending in June 1999; (b)
maintenance of the Senior Leverage Ratio less than or equal to the ratio set
forth in Section 5.04(a) for the Rolling Period ending in June 1999; and (c)
maintenance of the Interest Coverage Ratio less than or equal to the ratio set
forth in Section 5.04(c) for the Rolling Period ending in June 1999.
SECTION 2. Amendments to the Credit Agreement. The Credit
Agreement is, effective as of the date hereof and subject to the satisfaction of
the conditions precedent set forth in Section 3 below, hereby amended as
follows:
(a) Section 1.01 of the Credit Agreement is hereby
amended as follows:
(i) the following defined terms are hereby added
thereto in the proper alphabetic order and read, respectively,
as follows:
"'Approved Factoring Program' means each of the
Ex-Cell Factoring Program and the Fabric Factoring Program
(collectively, the 'Approved Factoring Programs'";
"'Approved Program Agreement' means each of the Ex-Cell
Program Agreement and the Fabric Program Agreement
(collectively, the 'Approved Factoring Program Agreements'.";
"'Approved Program Purchaser' means each of the Ex-Cell
Program Purchaser, the Fabric Program Purchaser and each other
Person who meets the definition of "Eligible Assignee" and is
a purchaser or factor approved by the Agent under an Approved
Program Agreement.";
"'Approved Program Receivable' means any Receivable that is a
Fabric Program Receivable or an Ex-Cell Program Receivable.";
"'Fabric Factoring Program' means, from time to time, a
factoring arrangement on terms and conditions satisfactory to
the Agent between the Borrower, as seller, and a Person
satisfactory to the Agent and who meets the definition of
"Eligible Assignee", as the factor or purchaser (such person
being, a "Fabric Program Purchaser") of Accounts Receivable
arising in the ordinary course of business of the Borrower's
fabric division.";
"'Fabric Program Agreement' means each agreement executed by
the Borrower and a Fabric Program Purchaser governing or in
connection with the Fabric Factoring Program, as such
agreement may be amended, supplemented or modified from time
to time solely in accordance with its terms, the terms and
conditions hereof and upon the Agent's prior written
consent.";
"'Fabric Program Purchaser' has the meaning specified in the
definition of "Fabric Factoring Program".";
"'Fabric Program Receivable' means any Receivable arising in
the ordinary course of business of the Borrower's fabric
division and that is (a) owned by the Borrower immediately
prior to such receivable being purchased under the Fabric
Factoring Program or (b) owned by the Borrower and eligible to
be purchased under the Fabric Factoring Program or (c) owned
by the Borrower and subject to a Lien in favor of an Fabric
Program Purchaser.";
(ii) each of the definitions of "Ex-Cell Factoring
Program", "Ex-Cell Program Agreement", "Ex-Cell Program
Purchaser" and "Ex-Cell Program Receivable" therein is hereby
amended and restated to read, respectively, as follows:
"'Ex-Cell Factoring Program' means, from time to
time, a factoring arrangement on terms and conditions
satisfactory to the Agent between Ex-Cell, as
seller, and a Person satisfactory to the Agent and who meets
the definition of "Eligible Assignee", as factor or purchaser
(such person being, an "Ex-Cell Program Purchaser").";
"'Ex-Cell Program Agreement' means each agreement executed by
Ex-Cell and an Ex-Cell Program Purchaser governing or in
connection with the Ex-Cell Factoring Program, as such
agreement may be amended, supplemented or modified from time
to time solely in accordance with its terms, the terms and
conditions hereof and upon the Agent's prior written
consent.";
"'Ex-Cell Program Purchaser' has the meaning specified in the
definition of "Ex-Cell Factoring Program".";
"'Ex-Cell Program Receivable' means any Receivable (a) owned
by Ex-Cell immediately prior to such receivable being
purchased under an Ex-Cell Factoring Program or (b) owned by
Ex-Cell and eligible to be purchased under an Ex-Cell
Factoring Program or (c) owned by Ex-Cell and subject to a
Lien in favor of an Ex-Cell Program Purchaser.";
(iii) Clause (b) of the definition of "Eligible
Inventory" is hereby amended by deleting therefrom the phrase
"Ex-Cell Program Receivable" and substituting therefor the
phrase "Approved Program Receivable";
(iv) Clause (m) of the definition of "Eligible
Receivables" is hereby amended by deleting therefrom the
phrase "Ex-Cell Program Receivables" and substituting therefor
the phrase "Approved Program Receivables";
(v) the definition of "Extraordinary Receipt" therein
is hereby amended by deleting the phrase "or (b)" from the
penultimate line thereof and substituting therefor, the
following phrase:
"(b) any tax refund for Fiscal Year 1998 or (c)";
(vi) the definition of "Funded Debt" therein is
hereby amended by deleting the phrase "any Debt arising
pursuant to the terms of the Accounts Receivable Management
Agreement" from the proviso clause of such definition and
substituting for such phrase, the phrase "any Debt arising
pursuant to the terms of any Approved Program Agreement".
(vii) the definition of "Related Documents" therein
is hereby amended by deleting the phrase "the Ex-Cell Program
Agreement" and substituting therefor the phrase "each Approved
Program Agreement".
(b) Section 2.06(b)(ii)(A) is hereby amended by deleting the
reference "Section 5.02(e)" therein and substituting therefor the
reference "Sections 5.02(e)(i) through (vi)".
(c) Section 5.02(a)(ix) is hereby amended and restated in its
entirety to read as follows:
"(ix) Liens on Approved Program Receivables in favor of any
Approved Program Purchaser created under an Approved Factoring
Program.".
(d) Section 5.02(b)(iii)(G) is hereby amended and restated in
its entirety to read as follows:
"(G) Debt incurred by a Loan Party under an Approved Program
Agreement.".
(e) Section 5.02(e) is hereby amended by (i) deleting the word
"and" that follows subclause (v) thereof and (ii) deleting
subclause (vi) thereof and substituting for such subclause the
following:
"(vi) sales of Approved Program Receivables in
accordance with the terms and conditions of an
Approved Program Agreement; and
(vii) sales of the assets listed on
Schedule 5.02(e)(vii), in each case conducted on an
arm's-length basis for fair market value."
(f) Section 5.02(f)(vii) is hereby amended by deleting the
amount "$250,000" therein and substituting therefor the amount
"$500,000".
(g) Section 5.02(k)(i)(z) is hereby amended and restated in
its entirety to ready as follows:
"(z) upon the prior written consent of the Agent, the
prepayment of Debt under an Approved Program Agreement
(except, to the extent any repurchase of Accounts Receivable
is in accordance with the terms and conditions of the
applicable Approved Program Agreement, such repurchase may be
made without any further consent from the Agent), or".
(h) Section 5.02(m)(iv) is hereby amended and restated in its
entirety to read as follows:
"(iv) in favor of an Approved Program Purchaser in connection
with an Approved Factoring Program".
(i) Section 5.04(a) is hereby amended and restated in its
entirety to read:
"(a) Leverage Ratios. (i) Maintain a Total Leverage
Ratio as of the end of each Rolling Period ended during each
Fiscal Month of each Fiscal Year set forth below of not more
than the ratio set forth below for each Rolling Period ended
during each such Fiscal Month:
------------------------ ---------------
Fiscal Month Ratio
------------------------ ---------------
March 1999 5.85:1.00
------------------------ ---------------
June 1999 5.85:1.00
------------------------ ---------------
July 1999 6.25:1.00
------------------------ ---------------
August 1999 6.00:1.00
------------------------ ---------------
Sep 1999 5.85:1.00
------------------------ ---------------
Dec 1999 5.85:1.00
------------------------ ---------------
March 2000 5.85:1.00
------------------------ ---------------
June 2000 5.85:1.00
------------------------ ---------------
Sep 2000 5.85:1.00
------------------------ ---------------
Dec 2000 5.85:1.00
------------------------ ---------------
March 2001 5.85:1.00
------------------------ ---------------
June 2001 5.65:1.00
------------------------ ---------------
Sep 2001 5.65:1.00
------------------------ ---------------
Dec 2001 5.35:1.00
------------------------ ---------------
March 2002 5.35:1.00
------------------------ ---------------
June 2002 5.35:1.00
------------------------ ---------------
Sep 2002 5.10:1.00
------------------------ ---------------
Dec 2002 5.10:1.00
------------------------ ---------------
March 2003 4.85:1.00
------------------------ ---------------
June 2003 4.85:1.00
------------------------ ---------------
Sep 2003 4.60:1.00
------------------------ ---------------
Dec 2003 4.60:1.00
------------------------ ---------------
March 2004 4.35:1.00
------------------------ ---------------
(ii) Maintain a Senior Leverage Ratio as of the end
of each Rolling Period ended during each Fiscal Month of each Fiscal
Year set forth below of not more than the ratio set forth below for
each Rolling Period ended during each such Fiscal Month:
------------------------ ---------------
Fiscal Month Ratio
------------------------ ---------------
March 1999 3.70:1.00
------------------------ ---------------
June 1999 3.70:1.00
------------------------ ---------------
July 1999 3.80:1.00
------------------------ ---------------
August 1999 3.70:1.00
------------------------ ---------------
Sep 1999 3.70:1.00
------------------------ ---------------
Dec 1999 3.70:1.00
------------------------ ---------------
March 2000 3.70:1.00
------------------------ ---------------
June 2000 3.70:1.00
------------------------ ---------------
Sep 2000 3.70:1.00
------------------------ ---------------
Dec 2000 3.70:1.00
------------------------ ---------------
March 2001 3.70:1.00
------------------------ ---------------
June 2001 3.50:1.00
------------------------ ---------------
Sep 2001 3.50:1.00
------------------------ ---------------
Dec 2001 3.25:1.00
------------------------ ---------------
March 2002 3.25:1.00
------------------------ ---------------
June 2002 3.25:1.00
------------------------ ---------------
Sep 2002 3.00:1.00
------------------------ ---------------
Dec 2002 3.00:1.00
------------------------ ---------------
March 2003 2.75:1.00
------------------------ ---------------
June 2003 2.75:1.00
------------------------ ---------------
Sep 2003 2.50:1.00
------------------------ ---------------
Dec 2003 2.50:1.00
------------------------ ---------------
March 2004 2.25:1.00
------------------------ ---------------
(j) Schedule I is hereby amended and restated in its entirety
to read as set forth in Exhibit A hereto.
(k) Schedule 5.02(e)(vii) shall read as set forth in Exhibit B
hereto.
SECTION 3. Amendments to the Security Agreement. The Security
Agreement is, effective as of the date hereof and subject to the satisfaction of
the conditions precedent set forth in Section 3 below, hereby amended to delete
each of the addresses appearing under the signature blocks thereof and
substituting therefor the following addresses, respectively:
(a) for Glenoit Corporation, 000 X. Xxxxx Xxxxxx, Xxxxxxx, XX
00000;
(b) for Glenoit Universal, Ltd., 000 X. Xxxxx Xxxxxx, Xxxxxxx,
XX 00000;
(c) for Glenoit Assets Corp., 000 X. Xxxxx Xxxxxx, Xxxxxxx, XX
00000;
(d) for American Pacific Enterprises, Inc., 000 X. Xxxxx
Xxxxxx, Xxxxxxx, XX 00000;
(e) for Grand Avenue Corp., 000 X. Xxxxx Xxxxxx, Xxxxxxx, XX
00000;
(f) for Ex-Cell Home Fashions, Inc., 000 X. Xxxxx Xxxxxx,
Xxxxxxx, XX 00000;
(g) for Ex-Cell of Bentonville, Inc., 000 X. Xxxxx Xxxxxx,
Xxxxxxx, XX 00000; and
(h) for Ex-Cell Linde of Carolina, Inc., 000 X. Xxxxx Xxxxxx,
Xxxxxxx, XX 00000.
SECTION 4. Conditions of Effectiveness. This Amendment shall
become effective as of the date first above written when, and only when (a) the
Agent shall have received counterparts of this Amendment executed by the
Borrower and the Required Lenders or, as to any of the Lenders, advice
satisfactory to the Agent that such Lender has executed this Amendment, and the
consent attached hereto executed by each of the Guarantors and each of the
Grantors and (b) the Borrower shall have reduced, in accordance with Section
2.05(a), the total Working Capital Commitments to $65,000,000. Furthermore, this
Amendment is subject to the provisions of Section 8.01 of the Credit Agreement.
SECTION 5. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) the representations and warranties contained in each Loan
Document are correct on and as of the date hereof, after giving effect
to this Amendment, as though made on and as of the date hereof, other
than any such representations or warranties that by their terms, refer
to a specific date, in which case, as of such specific date; and
(b) no Default has occurred and is continuing under the Credit
Agreement, as amended hereby, or would result from this Amendment or
the consummation of the transactions contemplated hereby.
SECTION 6. Reference to and Effect on the Loan Documents. (a)
On and after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the Notes and each of
the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement, as amended by this Amendment.
(b) On and after the effectiveness of this Amendment, each
reference in the Security Agreement to "this Agreement", "hereunder",
"hereof" or words of like import referring to the Security Agreement,
and each reference in each of the other Loan Documents to "the Security
Agreement", "thereunder", "thereof" or words of like import referring
to the Security Agreement, shall mean and be a reference to the
Security Agreement, as amended by this Amendment.
(c) The Credit Agreement, the Security Agreement, the Notes
and each of the other Loan Documents, as specifically amended by this Amendment,
are and shall continue to be in full force and effect and are hereby in all
respects ratified and confirmed.
(d) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender or the Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.
SECTION 7. Costs, Expenses and Taxes. The Borrower agrees to
pay on demand all costs and expenses of the Agent in connection with the
preparation, execution, delivery and administration, modification and amendment
of this Amendment, the Notes and the other instruments and documents to be
delivered hereunder (including, without limitation, the reasonable fees and
expenses of counsel for the Agent) in accordance with the terms of Section 8.04
of the Credit Agreement. In addition, the Borrower shall pay any and all stamp
and other taxes payable or determined to be payable in connection with the
execution and delivery of this Amendment and the other instruments and documents
to be delivered hereunder, and agree to save the Agent and each Lender harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.
SECTION 8. Execution in 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 all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
SECTION 9. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
GLENOIT CORPORATION
By /s/ Xxxxxx X. Xxxxx
-------------------
Title: EVP and CFO
GLENOIT UNIVERSAL, LTD.
By /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: EVP and CFO
GLENOIT ASSETS CORP.
By /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: EVP and CFO
AMERICAN PACIFIC ENTERPRISES, INC.
By /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: EVP and CFO
GRAND AVENUE CORP.
By /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: EVP and CFO
EX-CELL HOME FASHIONS, INC.
By /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: EVP and CFO
EX-CELL OF BENTONVILLE, INC.
By /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title:EVP and CFO
EX-CELL LINDE OF CAROLINA, INC.
By /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: EVP and CFO
AGENT
BANQUE NATIONALE DE PARIS,
as Agent
By /s/ Xxxx Xxxxxxxx
Title: Director
By /s/ Xxxx Xxxxxxxxx
Title: VP
LENDERS
BANQUE NATIONALE DE PARIS
By /s/ Xxxx Xxxxxxxx
Title: Director
By /s/ Xxxx Xxxxxxxxx
Title: VP
BOEING CAPITAL CORPORATION
By /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Special Credits Officer
CENTURA BANK
By /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: VP
COMERICA
By /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Assistant Vice President
DEUTSCHE FINANCIAL SERVICES
By /s/ Xxxxxx X. Xxxxxxx, IX
Name: Xxxxxx X. Xxxxxxx, IX
Title: Vice President
FIRST SOURCE FINANCIAL LLP,
By First Source Financial, Inc. as its
Agent/Manager
By /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
FLEET BANK, N.A.
By /s/ Xxxxxx Xxxxxxxxxx
Name: Xxxxxx Xxxxxxxxxx
Title: Senior Vice President
Floating Rate Porfolio
By: INVESCO Senior Secured Management,
Inc., as attorney in fact
By /s/ Xxxx X. XxXxxxxx
Name: Xxxx X. XxXxxxxx
Title: Authorized Signatory
LASALLE BANK NATIONAL
ASSOCIATION
By /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: Corporate Banking Officer
KZH ING-1 LLC
By /s/ Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title:Authorized Agent
KZH ING-2 LLC
By /s/ Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title:Authorized Agent
KZH ING-3 LLC
By /s/ Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title:Authorized Agent
METROPOLITAN LIFE INSURANCE
COMPANY
By /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Director
XXX XXXXXX SENIOR FLOATING RATE FUND
By /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and Director
XXX XXXXXX PRIME RATE INCOME TRUST
By Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and Director
