EXHIBIT 10.3
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the "Second Amendment")
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dated as of December 29, 1999, is to that Credit Agreement dated as of October
14, 1998, as amended by a First Amendment to Credit Agreement dated May 21, 1999
(as may be subsequently amended and modified from time to time, the "Credit
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Agreement"; terms used but not otherwise defined herein shall have the meanings
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provided in the Credit Agreement), by and among ▇▇▇ RIVER INC., a Georgia
corporation (the "Borrower"), the Guarantors identified therein, the several
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banks and other financial institutions identified therein (the "Lenders") and
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FIRST UNION NATIONAL BANK, as administrative agent for the Lenders thereunder
(in such capacity, the "Agent"), BANK ONE, formerly The First National Bank of
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Chicago, as syndication agent, and WACHOVIA BANK, N.A., as documentation agent.
W I T N E S S E T H:
WHEREAS, the Lenders have established a credit facility for the
benefit of the Borrower pursuant to the terms of the Credit Agreement;
WHEREAS, the Borrower wishes to amend the Credit Agreement to modify
certain provisions contained therein; and
WHEREAS, the Required Lenders have agreed to the requested amendment
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
A. The Credit Agreement is amended in the following respects:
1. Section 1.1 is amended by adding the following definitions
thereto in the appropriate alphabetical order:
"Apparel Joint Venture" shall mean that certain foreign
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joint venture between a wholly-owned subsidiary of the
Borrower, as the minority holder and Grupo Industrial Zaga,
S.A. de C.V., as the majority holder.
"Textile Joint Venture" shall mean that certain foreign
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joint venture between a wholly-owned subsidiary of the
Borrower, as the majority holder and Grupo Industrial Zaga,
S.A. de C.V., as the minority holder.
2. The definition of "Permitted Liens" in Section 1.1 is hereby
amended by adding the following as subclause (xi):
(xi) Liens on assets of the Textile Joint Venture arising in
connection with Indebtedness permitted pursuant to Section
6.1(k) hereof; provided, however that no additional Liens,
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other than Liens in favor of the Borrower, shall be
permitted
in connection with any assets which are collateral for
intercompany Indebtedness of the Textile Joint Venture to
the Borrower.
3. The definition of "Permitted Investments" in Section 1.1 is
hereby amended by adding the following subclause (ix)
thereto:
(ix) Investments in the Apparel Joint Venture in an amount
not to exceed $8,000,000 in the aggregate.
4. Section 2.7(b)(ii) is hereby amended by making the additions
and deletions set forth in bold below:
(ii) Asset Dispositions. Promptly following any Asset
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Disposition or series of Asset Dispositions (excluding for
the purposes hereof, the Asset Disposition by the Borrower
to the Textile Joint Venture permitted pursuant to Section
6.5(a)(vi)) in an aggregate amount in excess of $10,000,000
in any fiscal year, the Borrower shall prepay the Loans in
an aggregate amount equal to the Net Cash Proceeds derived
from such Asset Dispositions (such prepayment to be applied
as set forth in clause (v) below).
5. Section 5.1(a) is hereby amended by making the additions and
deletions set forth in bold below:
(a) Annual Financial Statements. As soon as available,
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but in any event within ninety (90) days after the end of
each fiscal year of the Borrower, a copy of the consolidated
and consolidating balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such fiscal year
and the related consolidated and consolidating statements of
income and retained earnings and of cash flows of the
Borrower and its consolidated Subsidiaries for such year
audited by a firm of independent certified public
accountants of nationally recognized standing reasonably
acceptable to the Required Lenders, setting forth in each
the case of consolidated reports, in comparative form the
figures for the previous year, reported on without a "going
concern" or like qualification or exception, or
qualification indicating that the scope of the audit was
inadequate to permit such independent certified public
accountants to certify such financial statements without
such qualification, provided that for the purposes of this
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subsection 5.1(a), the term "consolidating" shall be
understood to mean the segregation of the financial
information of the Borrower and the Guarantors from the
financial information of the Subsidiaries which are not
Guarantors hereunder;
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6. Section 5.1(b) is hereby amended by making the additions and
deletions set forth in bold below:
(b) Quarterly Financial Statements. As soon as
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available and in any event within forty-five (45) days after
the end of each of the first three fiscal quarters of the
Borrower, company-prepared consolidated and consolidating
balance sheets of the Borrower and its consolidated
Subsidiaries as at the end of such period and related
company-prepared statements of income and retained earnings
and of cash flows (year-to-date) on both a consolidated and
consolidating basis for the Borrower and its consolidated
Subsidiaries for such quarterly period and for the portion
of the fiscal year ending with such period setting forth in
comparative form consolidated figures for the corresponding
period or periods of the preceding fiscal year (subject to
normal recurring year-end audit adjustments), provided that
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for the purposes of this subsection 5.1(b), the term
"consolidating" shall be understood to mean the segregation
of the financial information of the Borrower and the
Guarantors from the financial information of the
Subsidiaries which are not Guarantors hereunder; and
7. Section 5.9 is hereby amended by adding the word
"Restricted" immediately before the word "Subsidiaries" in
the second line thereof.
8. Section 5.12 is hereby amended by adding the phrase "(other
than the Textile Joint Venture)" immediately following the
phrase "each of its Subsidiaries" in the first and sixth
lines thereof.
9. Section 6.1 is hereby amended by adding the following clause
(k) to the end thereof:
(k) Indebtedness of the Textile Joint Venture which is not
Recourse Debt.
10. Section 6.3 is hereby amended by making the additions and
deletions set forth in bold below:
The Borrower will not, nor will it permit any Subsidiary to,
enter into or otherwise become or be liable in respect of
any Guaranty Obligations (excluding specifically therefrom
endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) other than
(i) those in favor of the Lenders in connection herewith,
(ii) Guaranty Obligations by the Borrower or its
Subsidiaries of Indebtedness permitted under Section 6.1(g)
(except, as regards Indebtedness under subsection (b)
thereof, only if and to the extent such Indebtedness was
guaranteed on the Closing Date) and (iii) Guaranty
Obligations by the Textile Joint Venture permitted under
Section 6.1(k).
11. Section 6.5(a) is hereby amended by making the additions and
deletions set forth in bold below:
(a) dissolve, liquidate or wind up its affairs, sell,
transfer, lease or otherwise dispose of its property or
assets or agree to do so at a future time except the
following, without duplication, shall be expressly
permitted:
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(i) Specified Sales;
(ii) the sale, transfer, lease or other
disposition of property or assets (a) to an unrelated party
not in the ordinary course of business (other than Specified
Sales), where and to the extent that they are the result of
a Recovery Event or (b) the sale, lease, transfer or other
disposition of machinery, parts and equipment no longer used
or useful in the conduct of the business of the Borrower or
any of its Subsidiaries, as appropriate, in its reasonable
discretion, so long as the net proceeds therefrom are used
to repair or replace damaged property or to purchase or
otherwise acquire new assets or property, provided that such
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purchase or acquisition is committed to within 180 days of
receipt of the net proceeds and such purchase or acquisition
is consummated within 270 days of receipt of such proceeds;
(iii) the sale, lease or transfer of property or
assets (at fair value) between the Borrower and any
Guarantor;
(iv) the sale, lease or transfer of property or
assets from a Credit Party other than the Borrower to
another Credit Party;
(v) the sale, lease or transfer of property or
assets not to exceed $10,000,000 in the aggregate in any
fiscal year; and
(vi) the sale, lease or transfer of property
comprising approximately 46% of the Borrower's U.S. apparel
fabrics manufacturing capacity as of December 28, 1999 to
the Textile Joint Venture, provided that the sale, lease or
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transfer is for fair market value and consideration;
provided, that in the case of each of (i) through (v)
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above (other than the liquidation of all or substantially
all of the assets of the Acquired Business into the Borrower
which shall be excluded for purposes hereof) at least 75% of
the consideration received therefor by the Borrower or any
such Subsidiary is in the form of cash or Cash Equivalents;
or
12. Section 6.7 is hereby amended by making the additions set
forth in bold below:
Except (i) as permitted in subsection (iv) of the
definition of Permitted Investments, (ii) in the case of the
transactions between the Borrower and the Textile Joint
Venture, (iii) in the case of the transactions between the
Borrower and the Apparel Joint Venture and (iv) otherwise to
an extent not judged material by the Required Lenders in
their discretion, the Borrower will not, nor will it permit
any Subsidiary to, enter into any transaction or series of
transactions, whether or not in the ordinary course of
business, with any officer, director, shareholder or
Affiliate other than on terms and conditions substantially
as favorable as would be obtainable in a comparable arm's-
length transaction with a Person other than an officer,
director, shareholder or Affiliate.
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13. Section 6.8 is hereby amended by making the additions set
forth in bold below:
The Borrower will not, nor will it permit any
Subsidiary to, create, form or acquire any Subsidiaries,
except for (i) Domestic Subsidiaries which are joined as
Additional Credit Parties in accordance with the terms
hereof, (ii) the Textile Joint Venture and (iii) an indirect
wholly-owned Subsidiary which, if formed, shall be a Dutch
holding company which will be the majority holder in the
Textile Joint Venture and the minority holder in the Apparel
Joint Venture. The Borrower will not sell, transfer, pledge
or otherwise dispose of any Capital Stock or other equity
interests in any of its Subsidiaries, nor will it permit any
of its Subsidiaries to issue, sell, transfer, pledge or
otherwise dispose of any of their Capital Stock or other
equity interests, except in a transaction permitted by
Section 6.5.
14. Section 6.10 is hereby amended by adding the phrase
"except as may be required by the Textile Joint Venture
pursuant to its Members Agreement" immediately after the
phrase "permit any Subsidiary to" in the first line thereof.
15. Section 6.11 is hereby amended by making the additions and
deletions set forth in bold below:
The Borrower will not, nor will it permit any Subsidiary to,
directly or indirectly, declare, order, make or set apart
any sum for or pay any Restricted Payment, except (a) to
make dividends payable solely in the same class of Capital
Stock of such Person, (b) to make dividends or other
distributions payable to any Credit Party or in the case of
the Textile Joint Venture, to each of its partners (directly
or indirectly through Subsidiaries), (c) as permitted by
Section 6.12, (d) provided that no Default or Event of
Default has occurred and is continuing at such time or would
be directly or indirectly caused as a result thereof, the
Borrower may pay cash dividends or repurchase shares of its
Capital Stock in an aggregate amount not to exceed
$5,000,000 in any fiscal year and (e) distributions by the
Textile Joint Venture to pay the partnership tax liabilities
of its partners.
16. Section 6.12 is hereby amended by adding the following
proviso to the end thereof:
provided, however that the Textile Joint Venture may prepay
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Indebtedness permitted hereunder at any time.
B. Except as modified hereby, all of the terms and provisions of the
Credit Agreement (and Exhibits) remain in full force and effect.
C. The Credit Parties hereby represent and warrant that (a) the
representations and warranties contained in Article III of the Credit Agreement,
as amended hereby are correct in all material respects on and as of the date
hereof as though made on and as of such date and after giving effect to the
amendments contained herein and (b) no Default or Event of Default exists on and
as of the date hereof and after giving effect to the amendments contained
herein.
D. The Guarantors acknowledge and consent to all of the terms and
conditions of this Second Amendment and agree that this Second Amendment and all
documents executed in connection herewith do
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not operate to reduce or discharge the Guarantors' obligations under the Credit
Agreement or the other Credit Documents. The Guarantors further acknowledge and
agree that the Guarantors have no claims, counterclaims, offsets, or defenses to
the Credit Documents and the performance of the Guarantors' obligations
thereunder or if the Guarantors did have any such claims, counterclaims, offsets
or defenses to the Credit Documents or any transaction related to the Credit
Documents, the same are hereby waived, relinquished and released in
consideration of the Required Lenders' execution and delivery of this Second
Amendment.
E. This Second Amendment may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an original and it
shall not be necessary in making proof of this Second Amendment to produce or
account for more than one such counterpart.
F. This Second Amendment and the Credit Agreement, as amended hereby,
shall be deemed to be contracts made under, and for all purposes shall be
construed in accordance with the laws of the State of North Carolina.
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Second Amendment to be duly executed and delivered as of the date and year
first above written.
BORROWER: ▇▇▇ RIVER, INC.,
-------- a Georgia corporation
By: ______________________________________
Name:
Title:
THE ▇▇▇▇ COMPANY,
a Delaware corporation
By: ______________________________________
Name:
Title:
▇▇▇ RIVER FACTORY STORES, INC.,
a Georgia corporation
By: ______________________________________
Name:
Title:
AGENTS AND LENDERS: FIRST UNION NATIONAL BANK,
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as Administrative Agent and as a Lender
By: ______________________________________
Name:
Title:
BANK ONE,
formerly The First National Bank of Chicago,
as Syndication Agent and as a Lender
By: ______________________________________
Name:
Title:
WACHOVIA BANK, N.A.,
as Documentation Agent and as a Lender
By: ______________________________________
Name:
Title:
LENDERS: SUNTRUST BANK,
as a Lender
By: ______________________________________
Name:
Title:
THE BANK OF NOVA SCOTIA,
as a Lender
By: ______________________________________
Name:
Title:
COMERICA BANK,
as a Lender
By: ______________________________________
Name:
Title:
COOPERATIVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK
BRANCH, as a Lender
By: ______________________________________
Name:
Title:
CENTURA BANK,
as a Lender
By: ______________________________________
Name:
Title:
FLEET BANK, N.A.,
as a Lender
By: ______________________________________
Name:
Title:
ABN AMRO BANK N.V.,
as a Lender
By: ______________________________________
Name:
Title:
THE BANK OF NEW YORK,
as a Lender
By: ______________________________________
Name:
Title:
NATIONAL BANK OF CANADA,
as a Lender
By: ______________________________________
Name:
Title:
SOUTHTRUST BANK, N.A.,
as a Lender
By: ______________________________________
Name:
Title:
NATIONAL CITY BANK OF KENTUCKY,
as a Lender
By: ______________________________________
Name:
Title:
