SECOND AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Second Amendment"), dated as of July 28, 1998, is entered into among PILLOWTEX
CORPORATION, a Texas corporation (the "Borrower"), the institutions listed on
the signature pages hereof that are parties to the Credit Agreement defined
below (collectively, the "Lenders"), and NATIONSBANK, N.A. (successor by merger
to NationsBank of Texas, N.A.), as Administrative Agent (in said capacity, the
"Administrative Agent").
BACKGROUND
A. The Borrower, the Lenders and the Administrative Agent are parties to
that certain Amended and Restated Credit Agreement, dated as of December 19,
1997, amended by a First Amendment to Amended and Restated Credit Agreement,
dated as of June 19, 1998 (the "Credit Agreement"; the terms defined in the
Credit Agreement and not otherwise defined herein shall be used herein as
defined in the Credit Agreement).
B. The Borrower, the Lenders and the Administrative Agent desire to make
certain amendments to the Credit Agreement.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are all hereby acknowledged,
the Borrower, the Lenders and the Administrative Agent covenant and agree as
follows:
1. AMENDMENTS TO CREDIT AGREEMENT.
(a) Section 1.1 of the Credit Agreement is hereby amended by deleting the
definition of Applicable Base Rate Margin in its entirety and substituting the
following in lieu thereof:
"'APPLICABLE BASE RATE MARGIN' means the following per annum
percentages, applicable in the following situations:
Applicability Percentage
------------- ----------
(a) Initial Pricing Period 0.500%
(b) Subsequent Pricing Period
(1) The Leverage Ratio is greater
than or equal to 5.50 to 1 0.750%
(2) The Leverage Ratio is less
than 5.50 to 1 but greater
than or equal to 5.00 to 1 0.500%
(3) The Leverage Ratio is less
than 5.00 to 1 but greater
than or equal to 4.50 to 1 0.250%
(4) The Leverage Ratio is less
than 4.50 to 1 0.000%
During the Subsequent Pricing Period, the Applicable Base Rate Margin
payable by the Borrower on the Base Rate Advances outstanding hereunder
shall be subject to reduction or increase, as applicable and as set forth
in the table above, according to the performance of the Borrower as tested
by using the Leverage Ratio calculated (i) if not in respect of an
Acquisition, as of the end of each fiscal quarter or (ii) if in respect of
an Acquisition, upon receipt of a Compliance Certificate as required under
Section 7.6 (iii) hereof; provided, that each adjustment in the Base Rate
Basis as a result of a change in the Applicable Base Rate Margin shall
be effective (A) if not in respect of an Acquisition, on the date which is
two Business Days following receipt by the Administrative Agent of the
financial statements required to be delivered pursuant to Section 6.1 or
6.2 hereof, as applicable, and the corresponding Compliance Certificate
required pursuant to Section 6.3 hereof, and (B) if in respect of an
Acquisition, on the closing date of such Acquisition. If such financial
statements and Compliance Certificate are not received by the
Administrative Agent by the date required, the Applicable Base Rate Margin
shall be increased to the Applicable Base Rate Margin next higher than the
Applicable Base Rate Margin currently in effect until such time as such
financial statements and Compliance Certificate are received."
(b) Section 1.1 of the Credit Agreement is hereby amended by deleting the
definition of Applicable LIBOR Rate Margin in its entirety and substituting the
following in lieu thereof:
"'Applicable LIBOR Rate Margin' means the following per annum
percentages, applicable in the following situations:
Applicability Percentage
------------- ----------
(a) Initial Pricing Period 2.000%
(b) Subsequent Pricing Period
(1) The Leverage Ratio is greater than or
equal to 5.50 to 1 2.250%
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(2) The Leverage Ratio is less than 5.50 to 1
but greater than or equal to 5.00 to 1 2.000%
(3) The Leverage Ratio is less than 5.00 to 1
but greater than or equal to 4.50 to 1 1.750%
(4) The Leverage Ratio is less than 4.50 to 1
but greater than or equal to 4.00 to 1 1.500%
(5) The Leverage Ratio is less than 4.00 to 1
but greater than or equal to 3.50 to 1 1.250%
(6) The Leverage Ratio is less than 3.50 to 1
but greater than or equal to 3.00 to 1 1.000%
(7) The Leverage Ratio is less than 3.00 to 1 0.750%
During the Subsequent Pricing Period, the Applicable LIBOR Rate Margin
payable by the Borrower on the LIBOR Advances outstanding hereunder shall
be subject to reduction or increase, as applicable and as set forth in the
table above, according to the performance of the Borrower as tested by
using the Leverage Ratio calculated (i) if not in respect of an
Acquisition, as of the end of each fiscal quarter or (ii) if in respect of
an Acquisition, upon receipt of a Compliance Certificate as required under
section 7.6(iii) hereof; provided, that each adjustment in the LIBOR Basis
as a result of a change in the Applicable LIBOR Rate Margin shall be
effective (A) if not in respect of an Acquisition, on the date which is
two Business Days following receipt by the Administrative Agent of the
financial statements required to be delivered pursuant to Section 6.1 or
6.2 hereof, as applicable, and the corresponding Compliance Certificate
required pursuant to Section 6.3 hereof, and (B) if in respect of an
Acquisition, on the closing date of such Acquisition. If such financial
statements and Compliance Certificate are not received by the
Administrative Agent by the date required, the Applicable LIBOR Rate
Margin shall be increased to the Applicable LIBOR Rate Margin next higher
than the Applicable LIBOR Rate Margin currently in effect until such
time as such financial statements and Compliance Certificate are received."
(c) Section 1.1 of the Credit Agreement is hereby amended by deleting the
definition of Pretax Cash Flow in its entirety and substituting the following
in lieu thereof:
"'PRETAX CASH FLOW' means, for any date of calculation, calculated for
the Borrower and its Subsidiaries on a consolidated basis (including
Fieldcrest Xxxxxx and its Subsidiaries on a pro forma basis with respect to
any period prior to the Agreement Date), an amount equal to the result of
(a) EBITDA, minus (b) the lesser of (i) Capital Expenditures and (ii)
depreciation."
3
(d) Section 1.1 of the Credit Agreement is hereby amended by deleting the
definition of Revolver Availability in its entirety and substituting the
following in lieu thereof:
"'REVOLVER AVAILABILITY' means an amount equal to the result of (a)
the Commitment minus (b) the sum of (i) the outstanding Revolving Credit
Advances, plus (ii) the outstanding Reimbursement Obligations, plus (iii)
the outstanding Swing Line Advances, plus (iv) the Fieldcrest Xxxxxx
Subordinated Debenture Reserve."
(e) Section 1.1 of the Credit Agreement is hereby amended by adding the
following definition in proper alphabetical order:
"'FIELDCREST XXXXXX SUBORDINATED DEBENTURE RESERVE' means the
aggregate amount of cash consideration that may be requested, at any time
of determination, by the holders of Fieldcrest Xxxxxx Subordinated
Debentures in respect of a conversion thereof."
(f) Section 2.1(a) of the Credit Agreement is hereby amended by deleting
the last sentence thereof in its entirety and substituting the following in
lieu thereof:
"Notwithstanding any provision in any Loan Document to the contrary,
in no event shall (a) the sum of the principal amount of all outstanding
(i) Revolving Credit Advances, (ii) Reimbursement Obligations, (iii) Swing
Line Advances and (iv) Fieldcrest Xxxxxx Subordinated Debenture Reserve
exceed the Commitment."
(g) Section 2.1(b) of the Credit Agreement is hereby amended by deleting
the first sentence thereof in its entirety and substituting the following
in lieu thereof:
"(b) Swing Line Advances. The Borrower may request the Swing Line
Bank to make, and the Swing Line Bank shall make, on the terms and
conditions hereinafter set forth, advances ("Swing Line Advances") to the
Borrower from time to time on any Business Day during the period from the
Agreement Date to the Maturity Date in an aggregate principal amount not
to exceed at any time outstanding the lesser of (a) $25,000,000 and (b) an
amount equal to the Commitment minus (i) the aggregate principal amount of
Revolving Credit Advances then outstanding, (ii) the aggregate amount of
all Reimbursement Obligations then outstanding and (iii) the Fieldcrest
Xxxxxx Subordinated Debenture Reserve (the "Swing Line Facility")."
(h) Section 2.5(b) of the Credit Agreement is hereby amended by deleting
it in its entirety and substituting the following in lieu thereof:
"(b) MANDATORY PREPAYMENT. On or before the date of any reduction of
the Commitment, the Borrower shall first, prepay applicable outstanding
Revolving Credit Advances and second, prepay Swing Line Advances in an
amount necessary to reduce the sum of outstanding Revolving Credit
Advances, Swing Line Advances and Reimbursement Obligations plus the
4
Fieldcrest Xxxxxx Subordinated Debenture Reserve to an amount less than or
equal to the Commitment as so reduced. To the extent required by the
immediately preceding sentence, the Borrower shall first prepay all Base
Rate Advances and shall thereafter prepay LIBOR Advances. To the extent
that any prepayment requires that a LIBOR Advance be repaid on a date
other than the last day of its Interest Period, the Borrower shall
reimburse each Lender in accordance with Section 2.9 hereof. To the
extent that outstanding Revolving Credit Advances, Swing Line Advances,
and Reimbursement Obligations plus the Fieldcrest Xxxxxx Subordinated
Debenture Reserve exceeds the Commitment after any reduction thereof, the
Borrower shall repay any such excess amount and all accrued interest
attributable to such excess Revolving Credit Advances and Swing Line
Advances on the date of such reduction."
(i) Section 2.15(a) of the Credit Agreement is hereby amended by deleting
the first sentence thereof in its entirety and substituting the following in
lieu thereof:
"(a) THE LETTER OF CREDIT FACILITY. The Borrower may request the
Issuing Bank, on the terms and conditions hereinafter set forth, to issue,
and the Issuing Bank shall, if so requested, issue, one or more Letters of
Credit for the account of the Borrower and/or any of its Subsidiaries
(provided that, if any Letter of Credit is issued for the account of any
Subsidiary, the Borrower shall be jointly and severally liable with respect
to such Letter of Credit pursuant to the terms of the Letter of Credit
Agreement (as defined below) governing such Letter of Credit) from time to
time on any Business Day from the date of the initial Advance until the
Maturity Date in an aggregate maximum amount (assuming compliance with all
conditions to drawing) not to exceed, at any time outstanding, the lesser
of (i) $55,000,000 (the "Letter of Credit Facility") and (ii) an amount
equal to the Commitment minus the aggregate principal amount of Revolving
Credit Advances and Swing Line Advances then outstanding and the
Fieldcrest Xxxxxx Subordinated Debenture Reserve."
(j) Section 7.6 of the Credit Agreement is hereby amended by deleting it
in its entirety and substituting the following in lieu thereof:
" Section 7.6 Acquisitions. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make any Acquisitions; provided,
however, if (a) immediately prior to and after giving effect to the
proposed Acquisition there shall not exist a Default or Event of Default
and (b) immediately after giving effect to the proposed transaction the
Revolver Availability shall be no less than (i) $40,000,000 if the
Acquisition occurs in a fiscal quarter ending March 31, (ii) $25,000,000
if the Acquisition occurs in a fiscal quarter ending June 30, (iii)
$15,000,000 if the Acquisition occurs in a fiscal quarter ending September
30, or (iv) $20,000,000 if the Acquisition occurs in a fiscal quarter
ending December 31, the Borrower or any of its Subsidiaries may make
Acquisitions so long as (i) such Acquisition shall not be opposed by the
board of the directors of the Person being acquired, (ii) the Lenders
shall have received written notice thereof at least 15 Business Days prior
5
to the date of such Acquisition, (iii) the Administrative Agent shall have
received at least 10 Business Days prior to the date of such Acquisition a
Compliance Certificate setting forth the covenant calculations both
immediately prior to and after giving effect to the proposed Acquisition,
(iv) the assets, property or business acquired shall be in the business
described in Section 4.1(d) hereof and the Administrative Agent for the
benefit of the Lenders shall have a first priority Lien (subject to the
Intercreditor Agreement) in substantially all of such assets (or, if less
than substantially all of such assets, such assets required by the
Determining Lenders to be pledged), except for Permitted Liens, (v) if
such Acquisition results in a Domestic Subsidiary, (A) such Subsidiary
shall execute a Subsidiary Guaranty of the Obligations and Collateral
Documents granting a first priority Lien (subject to the Intercreditor
Agreement) in substantially all of such assets (or, if less than
substantially all of such assets, all assets required by the Determining
Lenders to be pledged), except for Permitted Liens to secure the
Obligations, (B) 100% of such Subsidiary's Capital Stock shall be pledged
to secure the Obligations and (C) the Administrative Agent on behalf of
the Lenders shall have received such board resolutions, officer's
certificates and opinions of counsel as the Administrative Agent shall
reasonably request in connection with the actions described in clauses (A)
and (B) above, and (vi) if such Acquisition results in a direct Foreign
Subsidiary, (A) 65% of such Subsidiary's Capital Stock shall be pledged to
secure the Obligations and (B) the Administrative Agent on behalf of the
Lenders shall have received such board resolutions, officer's certificates
and opinions of counsel as the Administrative Agent shall reasonably
request in connection with clause (A) immediately preceding."
(k) The Compliance Certificate is hereby amended to be in the form of
Exhibit D attached to this Second Amendment.
2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its
execution and delivery hereof, the Borrower represents and warrants that, as of
the date hereof and after giving effect to the amendments contemplated by the
foregoing Section 1:
(a) the representations and warranties contained in the Credit Agreement
and the other Loan Documents are true and correct on and as of the date hereof
as made on and as of such date;
(b) no event has occurred and is continuing which constitutes a Default
or an Event of Default;
(c) the Borrower has full power and authority to execute and deliver this
Second Amendment, and this Second Amendment constitutes the legal, valid and
binding obligations of the Borrower, enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable Debtor
Relief Laws and by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and except as rights
to indemnity may be limited by federal or state securities laws;
6
(d) neither the execution, delivery and performance of this Second
Amendment nor the consummation of any transactions contemplated herein will
conflict with any Law, the articles of incorporation, bylaws or other
governance document of the Borrower or any of its Subsidiaries, or any
indenture, agreement or other instrument to which the Borrower or any of its
Subsidiaries or any of their respective property is subject; and
(e) no authorization, approval, consent, or other action by, notice to, or
filing with, any governmental authority or other Person (including the Board of
Directors of the Borrower or any Guarantor), is required for the execution,
delivery or performance by the Borrower of this Second Amendment or the
acknowledgment of this Second Amendment by any Guarantor.
3. CONDITIONS OF EFFECTIVENESS. This Second Amendment shall be effective
as of July 28, 1998, subject to the following:
(a) the Administrative Agent shall receive counterparts of this Second
Amendment executed and/or consented to by the Required Lenders (as defined in
the Intercreditor Agreement);
(b) the Administrative Agent shall receive counterparts of this Second
Amendment executed by the Borrower and acknowledged by each Guarantor;
(c) the Administrative Agent shall have received a certificate of
incumbency setting forth the name, title and signature of the officers of the
Borrower authorized to execute and deliver the Loan Documents; and
(d) the Administrative Agent shall receive, in form and substance
satisfactory to the Administrative Agent and its counsel, such other documents,
certificates and instruments as the Administrative Agent shall reasonably
require.
4. GUARANTOR ACKNOWLEDGMENT. By signing below, each of the Guarantors
(i) acknowledges, consents and agrees to the execution and delivery of this
Second Amendment, (ii) acknowledges and agrees that its obligations in respect
of its Subsidiary Guaranty are not released, diminished, waived, modified,
impaired or affected in any manner by this Second Amendment or any of the
provisions contemplated herein, (iii) ratifies and confirms its obligations
under its Subsidiary Guaranty, and (iv) acknowledges and agrees that it has no
claims or offsets against, or defenses or counterclaims to, its Subsidiary
Guaranty as a result of this Second Amendment.
5. REFERENCE TO THE CREDIT AGREEMENT.
(a) Upon the effectiveness of this Second Amendment, each reference in the
Credit Agreement to "this Agreement", "hereunder", or words of like import shall
mean and be a reference to the Credit Agreement, as amended by this Second
Amendment.
7
(b) The Credit Agreement, as amended by this Second Amendment, and all
other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed.
6. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on demand all
reasonable costs and expenses of the Administrative Agent in connection with
the preparation, reproduction, execution and delivery of this Second Amendment
and the other instruments and documents to be delivered hereunder (including
the reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent with respect thereto and with respect to advising the
Administrative Agent as to its rights and responsibilities under the Credit
Agreement, as amended by this Second Amendment).
7. EXECUTION IN COUNTERPARTS. This Second Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
8. GOVERNING LAW: BINDING EFFECT. This Second Amendment shall be
governed by and construed in accordance with the laws of the State of Texas and
shall be binding upon the Borrower and each Lender and their respective
successors and assigns.
9. HEADINGS. Section headings in this Second Amendment are included
herein for convenience of reference only and shall not constitute a part of
this Second Amendment for any other purpose.
10. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS SECOND
AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
8
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as the date first above written.
PILLOWTEX CORPORATION
By:
-------------------------
Name:
Title:
NATIONSBANK, N.A. (successor by merger to
NationsBank of Texas, N.A.), as Administrative
Agent and as a Lender, Swing Line Bank and Issuing
Bank
By:
-------------------------
Xxxxxxx X. Xxxxx
Vice President
BANK OF AMERICA NT&SA
By:
-------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
ATLANTA AGENCY
By:
-------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
-------------------------
Xxxxx Xxxxxx
Vice President
COMERICA BANK
By:
-------------------------
Name:
Title:
9
CREDIT LYONNAIS NEW YORK BRANCH
By:
-------------------------
Name:
Title:
XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION
By:
-------------------------
Name:
Title:
THE BANK OF TOKYO-MITSUBISHI, LTD.
By:
-------------------------
Name:
Title:
BANK ONE, TEXAS, N.A.
By:
-------------------------
Name:
Title:
BANKBOSTON, N.A.
By:
-------------------------
Name:
Title:
BHF-BANK AKTIENGESELLSCHAFT
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
10
FIRST UNION NATIONAL BANK
By:
-------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
-------------------------
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
SOCIETE GENERALE, SOUTHWEST AGENCY
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
-------------------------
Name:
Title:
11
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION
EUROPEENNE
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
CREDITANSTALT CORPORATE FINANCE, INC.
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
FLEET BANK, N.A.
By:
-------------------------
Xxxxx X. Xxxxxxxx
Senior Vice President
THE FUJI BANK, LTD. - HOUSTON AGENCY
By:
-------------------------
Name:
Title:
NATIONAL BANK OF CANADA
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
00
XXXXXXXX XXXX XXXX XX XXXXXXXX
By:
-------------------------
Xxx X. Xxxxxx
Vice President
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By:
-------------------------
Name:
Title:
13
CONSENTED TO BY:
BANKERS TRUST COMPANY
By:
-------------------------
Name:
Title:
XXXXXX XXXXXXX XXXX XXXXXX
PRIME INCOME TRUST
By:
-------------------------
Name:
Title:
XXXXXXX XXXXX SENIOR FLOATING RATE
FUND, INC.
By:
-------------------------
Name:
Title:
SENIOR DEBT PORTFOLIO
By:
-------------------------
Name:
Title:
XXXXXXX XXXXX PRIME RATE PORTFOLIO
By:
-------------------------
Name:
Title:
AERIES FINANCE LTD.
By:
-------------------------
Name:
Title:
CRESCENT/MACH I PARTNERS, L.P.
By:
-------------------------
Name:
Title:
14
PAMCO CAYMAN LTD.
By: Highland Capital Management L.P.,
as Collateral Manager
By:
-------------------------
Name:
Title:
DEEP ROCK & COMPANY
By:
-------------------------
Name:
Title:
KZH-CRESCENT CORPORATION
By:
-------------------------
Name:
Title:
CYPRESSTREE INVESTMENT PARTNERS I, LTD.
By: CypressTree Investment Management Company, Inc.,
As Portfolio Manager
By:
-------------------------
Name:
Title:
KZH HOLDING CORPORATION III
By:
-------------------------
Name:
Title:
XXX XXXXXX CLO I, LIMITED
By: XXX XXXXXX AMERICAN CAPITAL
MANAGEMENT, INC.,
as Collateral Manager
By:
-------------------------
Name:
Title:
15
BALANCED HIGH-YIELD FUND I LTD.
By: BHF-BANK AKTIENGESELLSCHAFT,
acting through its New York Branch as
attorney-in-fact
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
INDOSUEZ CAPITAL FUNDING IV, L.P.
By: INDOSUEZ CAPITAL LUXEMBOURG,
as Collateral Manager
By:
-------------------------
Name:
Title:
XXX XXXXXX AMERICAN CAPITAL SENIOR
INCOME TRUST
By:
-------------------------
Name:
Title:
16
ACKNOWLEDGED AND AGREED:
PILLOWTEX, INC.
PTEX HOLDING COMPANY
PILLOWTEX MANAGEMENT SERVICES COMPANY
BEACON MANUFACTURING COMPANY
XXXXXXX HOME FASHIONS, INC.
TENNESSEE WOOLEN XXXXX
FIELDCREST XXXXXX, INC.
CRESTFIELD COTTON COMPANY
ENCEE, INC.
FCC CANADA, INC.
FIELDCREST XXXXXX FINANCING, INC.
FIELDCREST XXXXXX LICENSING, INC.
FIELDCREST XXXXXX INTERNATIONAL, INC.
FIELDCREST XXXXXX SURE FIT, INC.
FIELDCREST XXXXXX TRANSPORTATION, INC.
ST. MARYS, INC.
AMOSKEAG COMPANY
AMOSKEAG MANAGEMENT CORPORATION
DOWNEAST SECURITIES CORPORATION
BANGOR INVESTMENT COMPANY
XXXXX'X FALLS CORPORATION
By:
-------------------------
Name:
Title:
17
EXHIBIT D
COMPLIANCE CERTIFICATE
To: NationsBank, N.A., as Administrative Agent
From: Pillowtex Corporation
Date:
-------- --, ----
Re: Amended and Restated Credit Agreement, dated as of December 19, 1997 (as
amended or modified, "Credit Agreement"), among Pillowtex Corporation
(the "Borrower"), certain Lenders, and NationsBank, N.A., (successor by
merger to NationsBank of Texas, N.A.) as Administrative Agent.
This Compliance Certificate is delivered pursuant to Section 6.3 of the
Credit Agreement. All capitalized terms used herein and defined in the Credit
Agreement shall be used as so defined. For purposes hereof, section references
herein related to sections of the Credit Agreement and bracketed amounts or
ratios refer to the maximum or minimum amounts or ratios required under the
relevant sections of the Credit Agreement.
I. Leverage Ratio
A. Total Debt, determined for the Borrower and its Subsidiaries on a
consolidated basis
1. Indebtedness for borrowed money $
-------
2. Obligations evidenced by bonds, debentures,
notes or other similar instruments $
-------
3. Non-contingent obligations to pay the deferred
purchase price of property or services other than
trade payables incurred in the ordinary course of
business $
-------
4. Capitalized Lease Obligations $
-------
5. Total Debt [(1) + (2) + (3) + (4)] $
-------
B. EBITDA, calculated for the four consecutive Fiscal
Quarters ending on the date of calculation (adjusted
on a pro forma basis to exclude from any period under
consideration personnel costs that have been eliminated
concurrent with, or during the twelve-month period
subsequent to, the Agreement Date)
1. Earnings from operations $
-------
2. Depreciation $
-------
3. Amortization $
-------
4. Other non-cash charges (to the extent included in
determining Earnings from operations) $
-------
5. EBITDA [(1) + (2) + (3) + (4)] $
-------
C. Leverage Ratio [(A) to (B)] to 1
---
II. COVENANT CALCULATIONS. [To be completed quarterly] Demonstration of
compliance with certain covenants contained in Article 7 of the Credit
Agreement for the period ended .
-----------------
A. Section 7.1(c) Indebtedness of the Borrower and its Domestic
Subsidiaries, including in respect of Capitalized Lease Obligations,
incurred to purchase, or to finance the purchase of, assets which
constitute property, plant and equipment $
----------
1. Maximum in aggregate principal amount outstanding, when
aggregated with Section 7.1(o) $35,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
B. Section 7.1(h) Indebtedness assumed in connection with
Acquisitions permitted under Section 7.6 (excluding the
Fieldcrest Xxxxxx Transaction)
1. Maximum in aggregate principal amount outstanding $20,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
C. Section 7.1(o) Other Indebtedness of the Borrower and its
Domestic Subsidiaries
1. Maximum in aggregate principal amount outstanding,
when aggregated with Section 7.1(c) $35,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
D. Section 7.3(g) Investments consisting of non-cash
consideration received in connection with a sale of
assets permitted by Section 7.5
1. Maximum in aggregate amount outstanding at any time $25,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
2
E. Section 7.3(i) Loans or advances to directors, officers
and employees of the Borrower or any of its Subsidiaries
1. Maximum in aggregate amount outstanding at any time $ 5,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
F. Section 7.3(j) Other Investments
1. Maximum in aggregate amount outstanding at any time $25,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
G. Section 7.5(c) Net Cash Proceeds from the disposition of
assets (to the extent not applied pursuant to Section 2.5(b))
outstanding and pending reinvestment pursuant to Section 7.5(c)
1. Maximum at any time $ 5,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
H. Section 7.7 Capital Expenditures
1. Maximum after the Agreement Date in aggregate
amount
a. 3.25% of cumulative net revenues of the
Borrower and its Subsidiaries from and
after the Agreement Date $
----------
b. Maximum [$175,000,000 + (a)] $
----------
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
I. Section 7.8(b) Dividends payable by the Borrower
1. Maximum in aggregate amount during any Fiscal Year $10,000,000
2. Actual $
----------
3. Difference [(1) - (2)] $
----------
3
J. Section 7.11 Maximum Leverage Ratio
1. Maximum
a. From and including the last Fiscal Quarter
of Fiscal Year 1997 to but not including
the last Fiscal Quarter of Fiscal Year 1998 5.75 to 1
b. From and including the last Fiscal Quarter
of Fiscal Year 1998 to but not including
the last Fiscal Quarter of Fiscal Year 1999 5.25 to 1
c. From and including the last Fiscal Quarter
of Fiscal Year 1999 to but not including
the last Fiscal Quarter of Fiscal Year 2000 4.75 to 1
d. From and including the last Fiscal Quarter
of Fiscal Year 2000 and thereafter 4.25 to 1
2. Actual (see I.C. above) to 1
-----
K. Section 7.12 Minimum Fixed Charge Coverage Ratio
1. Minimum at the end of each Fiscal Quarter
commencing with the first Fiscal Quarter of
Fiscal Year 1998 1.10 to 1
2. Actual
a. Pretax Cash Flow, for the four consecutive
Fiscal Quarters ending on the date of
calculation
1. EBITDA (see I.B.5. above) $
----------
2. Lesser of (i) Capital Expenditures
And (ii) depreciation $
----------
3. Pretax Cash Flow [(1) - (2)] $
----------
b. Fixed Charges, calculated for the Borrower
and its Subsidiaries on a consolidated
basis; for the first three Fiscal Quarters
of Fiscal Year 1998, on an annualized
basis, and for each Fiscal Quarter
thereafter, for the four consecutive
Fiscal Quarters ending on the date of
calculation
(1) Scheduled principal payments
in respect of Indebtedness $
----------
4
(2) Cash interest expense
(including interest expense
pursuant to Capitalized Lease
Obligations) $
----------
(3) Cash Dividends paid $
----------
(4) Fixed Charges [(1) + (2) + (3)] $
----------
c. Fixed Charge Coverage Ratio
[(a) to (b)] to 1
-----
L. Section 7.13 Minimum Net Worth
1. Minimum
a. Fixed amount $
-----------
(1) From the Agreement Date to but not including
the last Fiscal Quarter of Fiscal Year 1998 $250,000,000
(2) From and including the last Fiscal Quarter
of Fiscal Year 1998 to but not including the
last Fiscal Quarter of Fiscal Year 1999 $260,000,000
(3) From and including the last Fiscal Quarter
of Fiscal Year 1999 to but not including the
last Fiscal Quarter of Fiscal Year 2000 $280,000,000
(4) From and including the last Fiscal Quarter
of Fiscal Year 2000 to but not including the
last Fiscal Quarter of Fiscal Year 2001 $300,000,000
(5) From and including the last Fiscal Quarter
of Fiscal Year 2001 to but not including the
last Fiscal Quarter of Fiscal Year 2002 $320,000,000
(6) From and including the last Fiscal Quarter
of Fiscal Year 2002 and thereafter $340,000,000
5
b. An amount equal to the net worth of any
Person that, on or after the Agreement
Date becomes a Subsidiary of the Borrower
or any of its Subsidiaries or is merged
into or consolidated with the Borrower or
any of its Subsidiaries or substantially
all of the assets of which are acquired
by the Borrower or any of its Subsidiaries
to the extent that the purchase price
therefor is paid in Capital Stock of the
Borrower or any of its Subsidiaries $
-----------
c. An amount equal to 100% of any increase in
Net Worth pursuant to offerings of Capital
Stock of the Borrower or any of its
Subsidiaries or pursuant to the conversion
or exchange of any convertible subordinated
debt or redeemable preferred stock into
Capital Stock of the Borrower or any of its
Subsidiaries $
-----------
(excluding any such increase in b. and c. above
as a result of the Fieldcrest Xxxxxx Transaction)
d. Minimum Net Worth [(a) + (b) + (c)] $
--------
2. Actual $
--------
3. Difference [(2) - (1)] $
--------
M. Section 7.14 Sale or Discount of Receivables
1. Maximum in aggregate amount during the Credit Agreement $
--------
2. Actual $
--------
3. Difference [(1) - (2)] $
--------
III. COMPLIANCE CERTIFICATE. [To be completed quarterly] The undersigned
hereby certifies to you as follows:
(a) I am the duly elected qualified and acting chief financial officer [or
chief accounting officer] of Borrower.
(b) I have reviewed the provisions of the Credit Agreement and the other
Loan Documents, and a review of the activities of Borrower during the
period from , to , (the "Reporting Period") has been made
under my supervision with a view toward determining whether, during
the Reporting Period, Borrower has kept, observed, performed and
6
fulfilled all its obligations under the Credit Agreement and such
other Loan Documents.
(c) The representations and warranties made in the Loan Documents are true
and correct in all material respects as of the date hereof as though
made at and of the date hereof, except for such representations and
warranties which relate to a particular date or which fail to be true
and correct as a result of events or occurrences permitted under the
Loan Documents, and no Default or Event of Default has occurred or is
continuing or is imminent.
This Compliance Certificate is executed and delivered on the day
of , .
PILLOWTEX CORPORATION
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
7
