Exhibit 10.16
SEVENTH AMENDMENT TO THE THIRD
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of April 26, 2000
SEVENTH AMENDMENT TO THE THIRD AMENDED AND RESTATED CREDIT
AGREEMENT (this "Amendment") among Glenoit Corporation (the "Borrower"), the
Lenders named in the Credit Agreement (defined below) (the "Lenders"), Banque
Nationale de Paris (the "Agent"), as Agent, Arranger, Issuing Bank and Swing
Line Bank, Fleet National Bank, as Syndication Agent, and LaSalle National Bank,
as Documentation Agent.
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders, the Agent, the Arranger, the
Issuing Bank, the Swing Line Bank, the Syndication Agent and the Documentation
Agent have entered into a Third Amended and Restated Credit Agreement, dated as
of February 12, 1999 (as the same has been and in the future may be amended and
modified from time to time, the "Credit Agreement"). Capitalized terms not
otherwise defined in this Amendment have the same meanings as specified in the
Credit Agreement as amended hereby.
(2) Section 2.06(b)(iii) of the Credit Agreement provides that
the Borrower is obligated to prepay an aggregate principal amount of Working
Capital Advances, Swing Line Advances and Letter of Credit Advances in an amount
by which such Advances plus the Available Amount of all Letters of Credit then
outstanding (together with such Advances, the "Outstanding Amount") exceeds the
Loan Value of Eligible Collateral, based upon the most recent Borrowing Base
Certificate.
(3) On February 23, 2000, Borrower delivered to the Agent a
Borrowing Base Certificate dated February 23, 2000 (the "February BB
Certificate") reflecting that the Outstanding Amount exceeded the Loan Value of
Eligible Collateral. The Borrower was then obligated under Section 2.06(b)(iii)
of the Credit Agreement to make a principal prepayment in the approximate amount
of $2,000,000, which the Borrower failed to make.
(4) The failure of the Borrower to make the principal
prepayment required by Section 2.06(b)(iii) of the Credit Agreement as aforesaid
constitutes on Event of Default under Section 6.01(a) of the Credit Agreement
(the "Section 2.06(b)(iii) Event of Default"), which the Borrower has
acknowledged by its letter to the Agent, dated February 23, 2000.
(5) Section 5.04 of the Credit Agreement sets forth the
financial covenants of the Borrower. On April 9, 2000, the Borrower delivered a
letter to the Agent confirming that the Borrower is in breach of the Section
5.04 covenants as of April 1, 2000. The breach of such covenants constitutes an
Event of Default under Section 6.01(c) of the Credit Agreement (the "Covenant
Events of Default").
(6) On April 14, 2000, the Agent delivered to the Borrower and
United States Trust Company of New York, the Indenture Trustee under the
Subordinated Debt Documents (the "Indenture Trustee"), a letter (the
"Subordinated Debt Notice") (i) confirming that, as a result of the Section
2.06(b)(iii) Event of Default, the Borrower was prohibited from making any
payments whatsoever in respect of the Subordinated Notes, and (ii) notifying the
Company and the Indenture Trustee that if, but only if, the Section 2.06(b)(iii)
Event of Default is determined not to be a payment default and the Borrower is
not otherwise in payment default under the Credit Agreement, the Subordinated
Debt Notice shall constitute a Blockage Notice (as defined in the Subordinated
Debt Documents) based on the Covenant Events of Default.
(7) Provided the Borrower is working diligently to devise a
restructuring plan acceptable to its creditors and equity holders, the Lenders
may, in their discretion, continue to provide Working Capital Advances and issue
Letters of Credit on the conditions, for the limited period and for the limited
purposes hereinafter set forth.
SECTION 1. Working Capital Advances and Letters of Credit.
Subject to the conditions precedent set forth in Section 3 hereof, the Lenders
hereby agree that the Borrower may request and the Lenders, in their discretion,
may provide Working Capital Advances and issue Letters of Credit from the date
hereof through and including June 15, 2000 (the "Amendment Period"); provided,
however, that (a) the aggregate Available Amount of all Letters of Credit
outstanding shall not at any time exceed an amount equal to $48.314 million less
the sum of (x) the Working Capital Advances, (y) the Swing Line Advances, and
(z) the Letter of Credit Advances at the time outstanding and (b) Working
Capital Advances shall not at any time exceed $45 million.
SECTION 2. AMENDMENTS.
(a) During the Amendment Period, Section 5.01(m) of the Credit
Agreement shall be amended by replacing all references to "15 days",
"30 days" and "60 days" therein to "10 days".
(b) During the Amendment Period, Section 2.01(e) of the Credit
Agreement shall be amended by adding the following language at the end
of such Section:
Anything to the contrary set forth in the Loan Documents
notwithstanding, (i) no Standby Letters of Credit shall be issued
hereunder and issuance of Letters of Credit shall be limited solely to
Trade Letters of Credit, and (ii) two Business Days prior to the
issuance of any Trade Letter of Credit, the Borrower shall provide,
with respect to such Trade Letter of Credit, documentation to the Agent
describing the recipient, amount and purpose of such Trade Letter of
Credit, including, without limitation, the customer for whose benefit
the Inventory (the payment for which is to be secured by the proposed
Trade Letter of Credit) is being ordered.
SECTION 3. Conditions of Effectiveness of Amendment. This
Amendment shall become effective as of the date first above written when, and
only when, the following conditions precedent shall have been satisfied:
(a) The Agent shall have received counterparts of this
Amendment executed by the Borrower, the Agent and the required number
of Lenders.
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(b) The Borrower shall have reimbursed or otherwise paid all
reasonable costs and expenses of the Agent paid or incurred in
connection with the Borrower or the Credit Agreement, and theretofore
presented to the Borrower for payment, including, without limitation,
in connection with the preparation, execution, delivery and
administration of this Amendment (including, without limitation, (a)
all outstanding fees and disbursements of (a) Shearman & Sterling and
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP ("Xxxxxx Xxxxx") in their capacity
as counsel to the Agent, and (b) Zolfo Xxxxxx LLP, in its capacity as
consultant to the Agent's counsel ("Zolfo Xxxxxx").
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
Borrower represents and warrants as follows:
(a) Each Loan Party is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization.
(b) The execution, delivery and performance by the Borrower of
this Amendment and the Loan Documents, as amended hereby, to which it
is or is to be a party, is within the Borrower's corporate powers, has
been duly authorized by all necessary corporate action and does not (i)
contravene the Borrower's charter or by-laws, (ii) violate any law
(including, without limitation, the Securities Exchange Act of 1934, as
amended, and the Racketeer Influenced and Corrupt Organizations Chapter
of the Organized Crime Control Act of 1970), rule or regulation
(including, without limitation, Regulation X of the Board of Governors
of the Federal Reserve System), or any order, writ, judgment,
injunction, decree, determination or award, binding on or affecting the
Borrower or any of its Subsidiaries or any of their properties, (iii)
conflict with or result in the breach of, or constitute a default
under, any contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument binding on or affecting the Borrower,
any of its Subsidiaries or any of their properties or (iv) except for
the Liens created under the Loan Documents, result in or require the
creation or imposition of any Lien upon or with respect to any of the
properties of the Borrower or any of its Subsidiaries.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
or any other third party is required for the due execution, delivery,
recordation, filing or performance by the Borrower of this Amendment or
any of the Loan Documents, as amended hereby, to which it is or is to
be a party.
(d) With the exception of the Section 2.06(b)(iii) Event of
Default and the Covenant Events of Default described herein, there are
no other Defaults or Events of Default by Borrower as of the date
hereof.
(e) This Amendment has been duly executed and delivered by the
Borrower. This Amendment and each of the Loan Documents, as amended
hereby, to which the Borrower is a party are legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or limiting creditors' rights or by equitable
principles generally.
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(f) There is no action, suit, investigation, litigation or
proceeding affecting the Borrower or any of its Subsidiaries
(including, without limitation, any Environmental Action) pending or
threatened before any court, governmental agency or arbitrator that (i)
would be reasonably likely to have a Material Adverse Effect or (ii)
purports to affect the legality, validity or enforceability of this
Amendment or any of the Loan Documents, as amended hereby.
SECTION 5. Covenants of the Borrower. In consideration of the
agreements of the Lenders contained herein, the Borrower covenants and agrees as
follows:
(a) Both during and after the Amendment Period, the Borrower
shall, and shall cause each other Loan Party to, fully cooperate with
Zolfo Xxxxxx in Xxxxx Xxxxxx'x performance of its duties under the
retention agreement between Xxxxxx Xxxxx and Xxxxx Xxxxxx; offer Zolfo
Xxxxxx reasonable access to its facilities, books and records; furnish
promptly to Zolfo Xxxxxx all information concerning its business,
properties, personnel and financial performance as Zolfo Xxxxxx shall
reasonably request; and make available to Zolfo Xxxxxx such of its
personnel and its professional advisors as Zolfo Xxxxxx shall
reasonably request for the understanding of the business, property,
personnel and financial performance of the Borrower and the other Loan
Parties.
(b) During the Amendment Period, the Borrower shall continue
to employ Price Waterhouse Coopers L.L.P. ("PWC") as its financial
advisor, shall provide PWC with access to such information and
personnel of the Borrower and its Subsidiaries as PWC shall reasonably
require to perform its engagement and shall consult with and be advised
by PWC on the matters within the scope of the PWC engagement.
(c) During the Amendment Period, the Borrower shall, and shall
cause each other Loan Party to, conduct its business, only in the
regular and ordinary course of business consistent with past practice.
(d) Both during and after the Amendment Period, in addition to
any and all reporting by the Borrower required by the Loan Documents,
until otherwise directed by the Agent, the Borrower shall furnish to
the Agent as of the end of each calendar week not later than five
Business Days after the end of such calendar week, a summary of cash
disbursements and deposits for such week, as well as an accounts
receivable aging report as of the end of such week.
(e) The Borrower shall fully and promptly cooperate with the
Lenders' review of the Collateral and the perfection of the Lenders'
security interest therein, including, without limitation, promptly
responding to requests for information from the Agent and its counsel
concerning the Collateral.
(f) The Borrower shall promptly execute and file any and all
financing statements requested by the Agent and take other action
reasonably requested by the Agent to perfect or continue the perfection
of the Lenders' security interest in any Collateral (wherever located).
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(g) During the Amendment Period, the Borrower shall diligently
work to devise a restructuring plan for the Borrower and its
Subsidiaries, acceptable to the Borrower, creditors and equity holders,
such that the Borrower and its Subsidiaries will at all times have
adequate capital resources to conduct their businesses, fund their
capital expansion, provide for contingencies and pay their debts and
other obligations, including obligations under the Loan Documents, as
and when they become due. In connection therewith, the Borrower shall
consult and negotiate diligently and in good faith with its equity
holders, lenders, factors, trade creditors and other parties whose
approval is or may be required for any restructuring plan.
(h) The covenants contained in this Section 5 are in addition
to, and not in derogation or limitation of, any other covenants,
agreements or obligations of the Loan Parties under the Loan Documents.
SECTION 6. Reference to and Effect on the Credit Agreement,
the Loan Documents, and the Subordinated Notes.
(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) The Credit 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. Without limiting the generality of the
foregoing, the Collateral Documents and all of the Collateral described
therein do and shall continue to secure the payment of all Obligations
of the Loan Parties under the Loan Documents, in each case as amended
by this Amendment.
(c) The Borrower hereby agrees that (i) the Borrower is truly
and justly indebted to the Secured Parties, without defense,
counterclaim or offset of any kind in the full amount of the Secured
Obligations and (ii) the Secured Obligations are secured by valid,
perfected, enforceable and unavoidable first priority Liens and
security interests upon the Collateral senior to all other security
interests and liens upon the Collateral (except as set forth in the
Third Amended and Restated Security Agreement and the Credit
Agreement), granted by the Loan Parties to the Agent for the ratable
benefit of the Secured Parties.
(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 Party or the Agent
under any of the Loan Documents, nor constitute a waiver of any
provision of any of the Loan Documents.
(e) This Amendment shall not constitute a waiver of the
Section 2.06(b)(iii) Event of Default, the Covenant Events of Default
or any other Default or Event of
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Default existing as of the date hereof, nor shall this Amendment
authorize or be deemed to authorize any payment by the Borrower in
respect of the Subordinated Notes or terminate or be deemed to
terminate the payment block existing in respect of the Subordinated
Notes.
SECTION 7. Fees; Costs and Expenses. The Borrower agrees to
pay on demand all reasonable costs and expenses of the Agent in connection with
the preparation, execution, delivery and administration, modification and
amendment of this Amendment and the other instruments and documents to be
delivered hereunder (including, without limitation, the reasonable fees and
disbursements of counsel and financial advisor to the Agent) in accordance with
the terms of Section 8.04 of the Credit Agreement.
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.
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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. X'Xxxxxx
-------------------------------------
Name: Xxxxxx X. X'Xxxxxx
Title: President and Chief Executive Officer
AGENT
BANQUE NATIONALE DE PARIS,
as Agent and as a Lender
By /s/ Xxxxx Xxxxxx
-------------------------------------
Name: Xxxxx Xxxxxx
Title: Director
By /s/ Xxxx Xxxx
-------------------------------------
Name: Xxxx Xxxx
Title: Associate
LENDERS
BOEING CAPITAL CORPORATION
By
-------------------------------------------
Name:
Title:
CENTURA BANK
By /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
Title: Bank of Filer
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COMERICA
By /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: First 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/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
FLEET BANK, N.A.
By /s/ Xxxx Xxxx
-------------------------------------
Name: Xxxx Xxxx
Title: Senior Vice President
INVESCO
By /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Authorized Signatory
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LASALLE BANK NATIONAL ASSOCIATION
By /s/ Xxxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: First Vice President
KZH ING-1 LLC
By
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Name:
Title:
KZH ING-2 LLC
By
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Name:
Title:
KHZ ING-3 LLC
By
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Name:
Title:
METROPOLITAN LIFE
INSURANCE COMPANY
By
-------------------------------------------
Name:
Title:
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XXX XXXXXX SENIOR FLOATING
RATE FUND
By
-------------------------------------------
Name:
Title:
XXX XXXXXX PRIME RATE
INCOME TRUST
By
-------------------------------------------
Name:
Title:
FLEET BUSINESS CREDIT CORPORATION
By /s/Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President
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