EXHIBIT 2.3.6
SIXTH AMENDMENT TO SECURITIZATION AGREEMENTS
THIS SIXTH AMENDMENT TO SECURITIZATION AGREEMENTS (this
"Amendment"), made and entered into as of December 12, 2000, by and between CONE
RECEIVABLES II LLC, a North Carolina limited liability company ("CRLLC"), CONE
MILLS CORPORATION, a North Carolina corporation ("Cone Mills"), CONE FOREIGN
TRADING LLC, a North Carolina limited liability company ("CFT"; each of CRLLC,
Cone Mills and CFT a "Company" and, collectively, the "Companies"), REDWOOD
RECEIVABLES CORPORATION, a Delaware corporation ("Redwood"), and GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation ("GECC"), in its capacities
as Operating Agent, Collateral Agent, Letter of Credit Provider and Letter of
Credit Agent.
W I T N E S E T H:
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WHEREAS, Cone Mills and CRLLC are parties to a certain Receivables
Transfer Agreement, dated as of September 1, 1999 (as amended to the date
hereof, the "Transfer Agreement"; capitalized terms used herein and not
otherwise defined herein shall have the meanings given such terms in Annex X to
the Transfer Agreement as amended through this Amendment), whereby Cone Mills
has agreed (and each Subsidiary of Cone Mills which thereafter becomes an
Originator will agree) to sell, contribute or otherwise transfer to CRLLC, and
CRLLC has agreed to purchase or otherwise acquire from such Originators, all of
the right, title and interest of such Originators in the Receivables; and
WHEREAS, CRLLC, as Seller, Redwood, as Purchaser, Cone Mills, as
Servicer, and GECC, as Operating Agent and as Collateral Agent, are parties to a
certain Receivables Purchasing and Servicing Agreement, dated as of September 1,
1999 (as amended to the date hereof, the "Purchase Agreement"), whereby
Purchaser has agreed, among other things, to purchase from CRLLC from time to
time the Receivables sold or contributed to CRLLC pursuant to the Transfer
Agreement; and
WHEREAS, Redwood and GECC, as Liquidity Agent and the sole Liquidity
Lender, are parties to that certain Liquidity Loan Agreement, dated as of
September 1, 1999 (the "Liquidity Loan Agreement"); and
WHEREAS, Redwood and GECC, as Letter of Credit Provider and Letter of
Credit Agent, are parties to that certain Reimbursement Agreement Supplement,
dated as of September 1, 1999 (the "RFC Supplement"; the Transfer Agreements,
the Liquidity Loan Agreement and the RFC Supplement, collectively, the
"Securitization Agreements"); and
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WHEREAS, the Securitization Agreements were amended pursuant to that
certain First Amendment and Waiver to Securitization Agreements, dated as of
November 16, 1999, among the parties hereto, that certain Second Amendment to
Securitization Agreements, dated as of January 28, 2000, among the parties
thereto, that certain Third Amendment to Securitization Agreements, dated as of
March 31, 2000, among the parties thereto, that certain Fourth Amendment to
Securitization Agreements and Additional Originator Joinder Agreement, dated as
of April 24, 2000, among such parties, and that certain Fifth Amendment to
Securitization Agreements, dated as of June 30, 2000, among such parties; and
WHEREAS, Cone Mills has requested that the Securitization Agreements be
further amended in certain respects as set forth in this Amendment, and the
parties hereto are willing to agree to such amendment subject to the terms and
conditions of this Amendment.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendment of Securitization Agreements. Subject to the terms and
conditions of this Amendment, including without limitation the fulfillment of
the conditions precedent specified in Section 6 below, the Securitization
Agreements are hereby amended as follows:
(a) Annex G to the Purchase Agreement shall be deleted in its
entirety and the revised Annex G attached to this Amendment shall be
substituted in lieu thereof.
(b) Annex X to the Securitization Agreements shall be amended
by adding the following new definition thereto:
"Sixth Amendment Effective Date" shall mean December 12,
2000.
2. No Other Amendments. Except for the amendment of the Securitization
Agreements expressly set forth and referred to in Section 1 above, the
Securitization Agreements shall remain unchanged and in full force and effect.
3. Representations and Warranties. Each Company hereby represents and
warrants to Redwood, the Operating Agent and the Collateral Agent that (i) this
Amendment has been duly authorized, executed and delivered by each Company, (ii)
after giving effect to this Amendment, no Termination Event, Incipient
Termination Event, Event of Servicer Termination or Incipient Servicer
Termination Event has occurred and is continuing as of the date of this
Amendment, and (iii) all of the
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representations and warranties made by each Company in the Securitization
Agreements are true and correct in all material respects on and as of the date
of this Amendment (except to the extent that any such representation or warranty
expressly referred to a specific prior date). Any breach in any material respect
by any Company of any of its representations and warranties contained in this
Section 3 shall be a Termination Event and an Event of Servicer Termination for
all purposes of the Securitization Agreements.
4. Ratification. Each Company hereby ratifies and reaffirms each and
every term, covenant and condition set forth in the Securitization Agreements
and all other documents delivered by such Company in connection therewith
(including without limitation the other Related Documents to which each Company
is a party), effective as of the date hereof.
5. Waiver by the Companies. Each of the Companies hereby waives any
claim, defense, demand, action or suit of any kind or nature whatsoever against
the Purchaser, the Operating Agent or the Collateral Agent arising on or prior
to the date of this Amendment in connection with any of the Securitization
Agreements or the transactions contemplated thereunder.
6. Condition Precedent to Effectiveness. This Amendment shall become
effective, upon the Effective Date, subject to the satisfaction of the following
conditions on or prior to such date:
(a) the receipt by the Operating Agent of this Amendment, duly
executed, completed and delivered by each of the Companies, Redwood,
the Collateral Agent and the Operating Agent; and
(b) the receipt by the Operating Agent of all fees and
expenses payable to Redwood, the Collateral Agent or the Operating
Agent, respectively, in connection with this Amendment including
without limitation the reasonable legal fees and other reasonable out
of pocket expenses of Redwood, the Collateral Agent or the Operating
Agent incurred in connection with this Amendment.
7. Reimbursement of Expenses. Each Company hereby agrees that it shall
reimburse Redwood, the Collateral Agent and the Operating Agent on demand for
all reasonable costs and expenses (including without limitation reasonable
attorney's fees) incurred by such parties in connection with the negotiation,
documentation and consummation of this Amendment and the other documents
executed in connection herewith and therewith and the transactions contemplated
hereby and thereby.
8. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK FOR CONTRACTS TO BE PERFORMED
ENTIRELY WITHIN SAID STATE.
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9. Severability of Provisions. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. To the extent
permitted by Applicable Law, each Company hereby waives any provision of law
that renders any provision hereof prohibited or unenforceable in any respect.
10. Counterparts. This Amendment may be executed in any number of
several counterparts, all of which shall be deemed to constitute but one
original and shall be binding upon all parties, their successors and permitted
assigns.
11. Entire Agreement. The Securitization Agreements as amended and
supplemented by this Amendment embody the entire agreement between the parties
hereto relating to the subject matter hereof and supersede all prior agreements,
representations and understandings, if any, relating to the subject matter
hereof.
12. Cone Mills' and GECC's Capacities. Cone Mills is executing and
delivering this Amendment both in its capacity as an Originator under the
Transfer Agreement and as the Servicer under the Purchase Agreement and all
references herein to "Cone Mills" shall be deemed to include it in both such
capacities unless otherwise expressly indicated. GECC is executing and
delivering this Amendment both in its capacity as the Operating Agent for
Redwood and as the Collateral Agent for Redwood and the Purchaser Secured
Parties, and all references herein to "GECC" shall be deemed to include it in
both such capacities unless otherwise expressly indicated.
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IN WITNESS WHEREOF, the parties have caused this Amendment to
be duly executed by their respective officers thereunto duly authorized, as of
the date first above written.
CONE RECEIVABLES II LLC
By /s/ Robert S. Dunaway
Name Robert S. Dunaway
Title: President
REDWOOD RECEIVABLES
CORPORATION
By /s/ Denis M. Creeden
Name: Denis M. Creeden
Title: Assistant Secretary
CONE MILLS CORPORATION, as an
Originator and as Servicer
By /s/ Gary L. Smith
Name: Gary L. Smith
Title: Executive Vice President & CFO
CONE FOREIGN TRADING LLC
By /s/ Gary L. Smith
Name: Gary L. Smith
Title: Executive Vice President & CFO
GENERAL ELECTRIC CAPITAL
CORPORATION, as Operating Agent and as
Collateral Agent
By /s/ Craig S. Winslow
Name: Craig S. Winslow
Title: Duly Authorized Signatory
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Annex G to Purchase Agreement
Financial Covenants
(a) Minimum Fixed Charge Coverage Ratio. Cone Mills and its
Subsidiaries shall have on a consolidated basis, as of the end of each fiscal
quarter set forth below, a Fixed Charge Coverage Ratio for the Rolling Period
then ended of not less than the applicable ratio set forth below:
Fiscal Quarter Minimum Fixed Charge
Ending: Coverage Ratio:
April 2, 2000 0.33 to 1.0
July 2, 2000 0.26 to 1.0
October 1, 2000 0.35 to 1.0
December 31, 2000 0.75 to 1.0
Each Fiscal Quarter thereafter 0.80 to 1.0
(b) Minimum Tangible Net Worth. Cone Mills and its
Subsidiaries on a consolidated basis shall have a Tangible Net Worth, as of the
Third Amendment Effective Date and as of the end of the fiscal quarter ending
April 2, 2000, July 2, 2000 or October 1, 2000, of not less than $120,000,000.
Thereafter, Cone Mills and its Subsidiaries on a consolidated basis shall have,
as of the end of each fiscal year ending on or after December 31, 2000 (each
such fiscal year herein called the "Subject Fiscal Year") and as of the end of
the first three fiscal quarters of the immediately succeeding fiscal year, a
Tangible Net Worth of not less than the sum of (i) the minimum Tangible Net
Worth required hereunder for the fiscal year which immediately preceded the
Subject Fiscal Year (or, where the Subject Fiscal Year is the fiscal year ending
December 31, 2000, the sum of $120,000,000) plus (ii) an amount equal to
twenty-five percent (25%) of the positive net income of Cone Mills and its
Subsidiaries on a consolidated basis for the Subject Fiscal Year plus (iii) an
amount equal to one hundred percent (100%) of the amount of any equity raised by
or capital contributed to Cone Mills during the Subject Fiscal Year.
(c) Receivable Performance Covenants. The Seller shall not
violate or fail to comply with any of the following covenants as of any
Settlement Date:
(i) Default Ratio shall be less than 5.5%;
(ii) Delinquency Ratio shall be less than 2.2%;
(iii) Gross Dilution Ratio shall be less than 4.0%;
(iv) Receivables Collection Turnover shall be less than 65
days; and
Annex G to Purchase Agreement
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(v) Seller's Net Worth Percentage shall not be less than
5.0%.
Capitalized terms used in this Annex G and not otherwise
defined below shall have the respective meanings ascribed to them in Annex X.
"Capital Expenditures" shall mean, with respect to any Person,
all expenditures (by the expenditure of cash or the incurrence of Debt) by such
Person during any measuring period for any fixed assets or improvements or for
replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP, but
excluding expenditures under Capital Leases and any expenditures financed by the
incurrence of Debt other than under the Purchase Agreement or the Credit
Facility. If the expenditures cannot be specifically identified and linked to
the incurrence of Debt (other than the incurrence of Debt other than under the
Purchase Agreement or Credit Facility), then such exclusion from this definition
of Capital Expenditures shall be determined by and based on the judgment of the
Operating Agent.
"EBITDA" shall mean, with respect to Cone Mills and its
Subsidiaries for any fiscal period, an amount equal to (a) consolidated Net
Income for such period, minus (b) the sum, without duplication, of (i) income
tax credits, (ii) interest income, (iii) gain from extraordinary items for such
period, (iv) any aggregate net gain (but not any aggregate net loss) during such
period arising from the sale, exchange or other disposition of capital assets by
such Person (including any fixed assets, whether tangible or intangible, all
inventory sold in conjunction with the disposition of fixed assets and all
securities), and (v) any other non-cash gains that have been added in
determining consolidated Net Income, in each case to the extent included in the
calculation of consolidated Net Income of such Person for such period in
accordance with GAAP, plus (c) the sum, without duplication, of (i) any
provision for income taxes, (ii) Interest Expense, (iii) loss from extraordinary
items for such period, (iv) depreciation and amortization for such period, (v)
amortized debt discount for such period, (vi) Restructuring Charges, and (vii)
the amount of any deduction to consolidated Net Income as the result of any
grant to any members of the management of such Person of any Stock, in each case
to the extent included in the calculation of consolidated Net Income of such
Person for such period in accordance with GAAP. For purposes of this definition,
the following items shall be excluded in determining consolidated Net Income of
a Person: (A) the income (or deficit) of any other Person accrued prior to the
date it became a Subsidiary of, or was merged or consolidated into, such Person
or any of such Person's Subsidiaries; (B) the income (or deficit) of any other
Person (other than a Subsidiary) in which such Person has an ownership interest,
except to the extent any such income has actually been received by such Person
in the form of cash dividends or distributions; (C) the undistributed earnings
of any Subsidiary of such Person to the extent that the declaration or payment
of dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (D) any restoration to income of any contingency
reserve,
Annex G to Purchase Agreement
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except to the extent that provision for such reserve was made out of income
accrued during such period; (E) any write-up of any asset; (F) any net gain from
the collection of the proceeds of life insurance policies; (G) any net gain
arising from the acquisition of any securities, or the extinguishment, under
GAAP, of any Debt, of such Person, (H) in the case of a successor to such Person
by consolidation or merger or as a transferee of its assets, any earnings of
such successor prior to such consolidation, merger or transfer of assets, and
(I) any deferred credit representing the excess of equity in any Subsidiary of
such Person at the date of acquisition of such Subsidiary over the cost to such
Person of the investment in such Subsidiary.
"Fixed Charges" shall mean, with respect to any Person for any
fiscal period, the aggregate of (a) all Interest Expense paid or accrued during
such period, plus (b) all cash income taxes paid during such period plus (c)
scheduled payments of principal with respect to Debt (other than Debt of a type
described in parts (f) or (g) of the definition of such term in Annex X) made or
due during such period, plus (d) cash dividends or other cash distributions on
such Person's Stock (common or preferred) made or paid during such period.
"Fixed Charge Coverage Ratio" shall mean, with respect to any
Person for any fiscal period, the ratio of (i) EBITDA less Capital Expenditures
to (ii) Fixed Charges.
"Interest Expense" shall mean, with respect to any Person for
any fiscal period, interest expense (whether cash or non-cash) of such Person
determined on a consolidated basis in accordance with GAAP for the relevant
period ended on such date, including (a) amortization of original issue discount
on any Debt and of all fees payable in connection with the incurrence of such
Debt (to the extent included in interest expense), (b) the interest component of
any Capital Lease Obligation, (c) with respect to Cone Mills and Seller only,
Redwood Yield and fees (other than servicing fees), (d) with respect to Cone
Mills only, amounts paid or payable by Cone Mills under the Morgan Swap
Agreement, and (e) with respect to Cone Mills only, net cash paid with respect
to interest, discount, yield, and fees owed by Cone Mills or any of its
Subsidiaries under the Existing Receivables Purchase Facility.
"Net Income" shall mean, with respect to Cone Mills and its
Subsidiaries on a consolidated basis and for any period, the after taxes net
income or loss of Cone Mills and its Subsidiaries as it would appear on a
consolidated statement of income of Cone Mills and its Subsidiaries for such
period prepared in accordance with GAAP (such net income or loss shall (a) be
net of extraordinary items and (b) include, to the extent the inclusion thereof
is in accordance with GAAP, the equity of Cone Mills or any Subsidiary in the
net income or loss of any other Person).
"Net Worth" shall mean, with respect to any Person as of any
date of determination, (a) the book value of the assets of such Person, minus
(b) reserves applicable thereto, minus (c) all of such Person's liabilities on a
consolidated basis
Annex G to Purchase Agreement
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(including accrued and deferred income taxes), all as determined in accordance
with GAAP.
"Net Worth Percentage" shall mean, as of any date of
determination thereof, a fraction (expressed as a percentage) (a) the numerator
of which equals the excess of the Seller's assets over its liabilities, in each
case as determined in accordance with GAAP consistently applied, and (b) the
denominator of which equals the aggregate Outstanding Balance of the Transferred
Receivables.
"Restructuring Charges" shall mean, with respect to Cone Mills
and its Subsidiaries on a consolidated basis, (i) for any Rolling Period shown
below, any of the expenses related to Cone Mills' restructuring plans announced
in the fourth quarter of 1998 and first quarter of 1999 relating to closing its
Salisbury Plant, overhead downsizing and reorganization, the merger of the denim
and sportswear fabric businesses into one unit and the corresponding reduction
of the manufacturing staff, the closing of the Florence and Cliffside yarn
manufacturing facilities, the restructuring, downsizing and reorganization of
the Carlisle Plant, and inventory and related charges associated with these
product realignments and plant closings, but at no time will the aggregate of
the Restructuring Charges under this part (i) for any Rolling Period shown below
exceed the amount listed below for such period:
Rolling Period ending Amount
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July 4, 1999 $33,800,000
October 3, 1999 $36,800,000
January 2, 2000 $19,500,000
April 2, 2000 $5,000,000
July 2, 2000 $5,000,000
October 1, 2000 $2,000,000
Each fiscal quarter thereafter $0
; and (ii) solely with respect to the Rolling Period ending December 30, 2000,
any of the expenses related to Cone Mill's restructuring plans announced in the
fourth quarter of 2000 relating to restructuring, downsizing, and reorganization
of Cone Mill's Raytex Plant, but the amount of Restructuring Charges under this
part (ii) shall be calculated on a pretax basis and shall not exceed in the
aggregate the lesser of the actual pre-tax Restructuring Charges recorded or
$45,000,000 (of which not more than $2,500,000 of such Restructuring Charges
shall be cash charges at the time of the recording of the charge or in any
subsequent Rolling Period thereafter).
"Rolling Period" shall mean, as of the end of any fiscal
quarter of any person, the immediately preceding 4 fiscal quarters, including
the fiscal quarter then ending.
"Tangible Net Worth" shall mean, with respect to any Person at
any date, the Net Worth of such Person at such date, excluding, however, from
the determination of
Annex G to Purchase Agreement
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the total assets at such date, (a) all goodwill, capitalized organizational
expenses, capitalized research and development expenses, trademarks, trade
names, copyrights, patents, patent applications, licenses and rights in any
thereof, and other intangible items (excluding any intangible assets generated
pursuant to FASB 132 relating to pension liabilities), (b) all unamortized debt
discount and expense, (c) treasury Stock, and (d) any write-up in the book value
of any asset resulting from a revaluation thereof.
Rules of Construction Concerning Financial Covenants. Unless
otherwise specifically provided therein, any accounting term used in any Related
Document shall have the meaning customarily given such term in accordance with
GAAP, and all financial computations thereunder shall be computed in accordance
with GAAP consistently applied. That certain items or computations are
explicitly modified by the phrase "in accordance with GAAP" shall in no way be
construed to limit the foregoing. If any Accounting Changes occur and such
changes result in a change in the calculation of the financial covenants,
standards or terms used in any Related Document, then the parties thereto agree
to enter into negotiations in order to amend such provisions so as to equitably
reflect such Accounting Changes with the desired result that the criteria for
evaluating the financial condition of such Persons and their Subsidiaries shall
be the same after such Accounting Changes as if such Accounting Changes had not
been made. If the parties thereto agree upon the required amendments thereto,
then after appropriate amendments have been executed and the underlying
Accounting Change with respect thereto has been implemented, any reference to
GAAP contained therein shall, only to the extent of such Accounting Change,
refer to GAAP consistently applied after giving effect to the implementation of
such Accounting Change. If such parties cannot agree upon the required
amendments within 30 days following the date of implementation of any Accounting
Change, then all financial statements delivered and all calculations of
financial covenants and other standards and terms in accordance with the Related
Documents shall be prepared, delivered and made without regard to the underlying
Accounting Change.
Annex G to Purchase Agreement
