EIGHTH AMENDMENT TO THE THIRD
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 25, 2000
EIGHTH 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
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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) Pursuant to the terms and conditions set forth in that
certain Seventh Amendment to the Third Amended and Restated Credit Agreement,
dated as of April 28, 2000 (the "Seventh Amendment"), the Lenders agreed that,
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
set forth in the Seventh Amendment.
(8) In order to provide the Loan Parties with additional
liquidity, the Loan Parties have requested and the Lenders, subject to the terms
and conditions of the Credit Agreement as amended hereby, have consented (a) to
increase the Available Amount of Letters of Credit and the available amount of
Working Capital Loans for the limited purposes and for the limited period
hereinafter set forth, and (b) to the issuance by the Lenders, in their
discretion, of Standby Letters of Credit in the limited amounts, for the limited
purposes and for the limited period 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 (provided that on the date of such
request, the Borrower and Subsidiaries shall not collectively have in their
possession or under their control cash and Cash Equivalents in an aggregate
amount greater than $1,000,000 (net of undrawn and outstanding checks of such
date)) and the Agent, in its discretion (unless otherwise instructed by the
Majority Working Capital Lenders (as defined herein)), 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 $5.314 million less the aggregate Letter of Credit Advances at
such time, (b) issued and outstanding Standby Letters of Credit shall not at any
time exceed $1,000,000 in the aggregate, (c) the sum of Working Capital Advances
and Swing Line Advances shall not at any time exceed $46.6 million; and,
provided further that nothing contained herein shall in any way limit, impair or
modify the requirements of Section 2.06(b)(iii) of the Credit Agreement.
SECTION 2. Amendments. The Credit Agreement is, effective as
of the date hereof and subject to the satisfaction of the conditions precedent
in Section 3 below, hereby amended as follows:
(a) During the Amendment Period, Schedule I to the Credit
Agreement is hereby amended to increase Letter of Credit Commitment of
the Issuing Bank from $5,000,000 to $5,314,000.
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(b) During the Amendment Period, Section 2.01(e) of the Credit
Agreement shall be amended by deleting the last sentence thereof and
adding the following language at the end of such Section:
Anything to the contrary set forth in the Loan
Documents notwithstanding, two Business Days prior to the
issuance of any Trade Letter of Credit, the Borrower shall
provide, with respect to all Letters of Credit, documentation
to the Agent describing the recipient, amount and purpose of
such Letter of Credit, including, without limitation, with
respect to Trade Letters of Credit, 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.
(c) Section 2.06(b) of the Credit Agreement shall be amended
by adding a new subsection (viii) as follows:
(viii) Anything to the contrary set forth in the Loan
Documents notwithstanding, if, on any consecutive
three (3) Business Days, the Borrower and its
Subsidiaries shall collectively have in their
possession or under their control cash and/or Cash
Equivalents in aggregate amount in excess of
$1,000,000 (net of undrawn and outstanding checks as
of such date) (such excess, on any given day, the
"Cash Surplus"), the Borrower shall, before the end
of such third consecutive Business Day, prepay the
Working Capital Advances in an amount equal to the
Cash Surplus for such day.
(d) Section 2.06(b)(v) shall be amended by deleting the words
"or (iii)" in the second line thereof and replacing the same by ",(iii)
or (viii)".
(e) During the Amendment Period, Section 5.02(f)(viii) of the
Credit Agreement shall be amended by adding after the words "Cash
Equivalents", the following: "(excluding actual cash held in Blocked
Accounts with Blocked Account Banks (as such terms are defined in the
Third Amended and Restated Security Agreement))
(f) The Credit Agreement shall be amended by adding a new
Section 5.02(p) as follows:
(p) Cash Holdings. None of the Loan Parties shall at
any time hold, or permit any of its Subsidiaries to hold,
other than in Blocked Accounts with Blocked Account Banks (as
such terms are defined in the Third Amended and Restated
Security Agreement), any cash which, when combined with the
cash held by all other Loan Parties and their Subsidiaries,
would aggregate more than $750,000.
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:
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(a) The Agent shall have received counterparts of this
Amendment executed by the Borrower, the Agent and the required number
of Lenders.
(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
(including the outstanding bill in the amount of $30,548.34) and Kramer
Levin Naftalis & Frankel, LLC ("Kramer Levin") in their capacity as
counsel to the Agent, and (b) Zolfo Cooper LLP, in its capacity as
consultant to the Agent's counsel ("Zolfo Cooper").
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
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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.
(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. Definitions. For the purposes of this Amendment,
"Majority Working Capital Lenders" shall mean at any time, Lenders owed or
holding at least 51% of the sum of (a) the aggregate principal amount of the sum
of all Working Capital Advances, Swing Line Advances and Letter of Credit
Advances outstanding at such time, (b) the aggregate Available Amount of all
Letters of Credit outstanding at such time, and (c) the aggregate Unused Working
Capital Commitments at such time.
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.
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(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 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/ Thomas J. O'Gorman
---------------------------------------
Name: Thomas J. O'Gorman
Title: President and Chief Executive Officer
AGENT
BANQUE NATIONALE DE PARIS,
as Agent and as a Lender
By /s/ David Barcus
---------------------------------------
Name: David Barcus
Title: Director
By /s/ Richard Cushing
---------------------------------------
Name: Richard Cushing
Title: Director
LENDERS
BOEING CAPITAL CORPORATION
By /s/ David Nelson
---------------------------------------
Name: David Nelson
Title: Special Credits Officer
CENTURA BANK
By /s/ Lowry D. Perry
---------------------------------------
Name: Lowry D. Perry
Title: Bank of Filer
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COMERICA
By /s/ David W. Day
---------------------------------------
Name: David W. Day
Title: Vice President
DEUTSCHE FINANCIAL SERVICES
By /s/ Philip G. Porcher, IX
---------------------------------------
Name: Philip G. Porcher, IX
Title: Vice President
FIRST SOURCE FINANCIAL LLP,
By First Source Financial, Inc., as its
Agent/Manager
By /s/ John P. Thacker
---------------------------------------
Name: John P. Thacker
Title: Senior Vice President
FLEET BANK, N.A.
By /s/ Michael S. Haines
---------------------------------------
Name: Michael S. Haines
Title: Senior Vice President
INVESCO
By /s/ Gregory Stoeckle
---------------------------------------
Name: Gregory Stoekle
Title: Authorized Signatory
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LASALLE BANK NATIONAL ASSOCIATION
By /s/ Margaret P. Heger
---------------------------------------
Name: Margaret P. Heger
Title: First Vice President
KZH ING-1 LLC
By /s/ Peter Chin
---------------------------------------
Name: Peter Chin
Title: Authorized Agent
KZH ING-2 LLC
By /s/ Peter Chin
---------------------------------------
Name: Peter Chin
Title: Authorized Agent
KHZ ING-3 LLC
By /s/ Peter Chin
---------------------------------------
Name: Peter Chin
Title: Authorized Agent
METROPOLITAN LIFE
INSURANCE COMPANY
By /s/ James R. Dingher
---------------------------------------
Name: James R. Dingher
Title: Director
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VAN KAMPEN SENIOR FLOATING
RATE FUND
By /s/ Darvin D. Pierce
---------------------------------------
Name: Darvin D. Pierce
Title: Vice President
VAN KAMPEN PRIME RATE
INCOME TRUST
By /s/ Darvin D. Pierce
---------------------------------------
Name: Darvin D. Pierce
Title: Vice President
FLEET BUSINESS CREDIT CORPORATION
By /s/ Stephen Y. McGehee
---------------------------------------
Name: Stephen Y. McGehee
Title: Senior Vice President
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