Exhibit 10.1
WAIVER, CONSENT AND SECOND AMENDMENT TO
TERM LOAN AGREEMENT
THIS WAIVER, CONSENT AND SECOND AMENDMENT TO TERM LOAN AGREEMENT (this
"Amendment"), dated to be effective as of September 27, 2002, is entered into
among PILLOWTEX CORPORATION, a Delaware corporation (the "Borrower"), the
lenders that are parties to the Loan Agreement defined below (collectively, the
"Lenders"), and BANK OF AMERICA, N.A., as Administrative Agent for itself and
the Lenders (in said capacity, the "Administrative Agent").
BACKGROUND
A. The Borrower, the Lenders and the Administrative Agent are parties to
that certain Term Loan Agreement, dated as of May 24, 2002 (as amended through
the date hereof, the "Loan Agreement"). Terms defined in the Loan Agreement and
not otherwise defined herein shall be used herein as defined in the Loan
Agreement.
B. The Borrower, the Lenders and the Administrative Agent desire to make
certain amendments to the Loan Agreement.
C. The Borrower has requested a limited waiver of compliance with certain
financial covenants under the Loan Agreement.
D. The Borrower has requested that the Lenders consent to the sale of
certain Subject Assets.
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. WAIVER. Subject to the satisfaction of the conditions of effectiveness
set forth in Section 7 of this Amendment and the other conditions contained
herein, the Lenders hereby waive compliance by the Borrower with (a) the
required Interest Coverage Ratio set forth in Section 10.1 of the Loan Agreement
at the end of the fiscal quarter ending on September 28, 2002, and (b) the
required Leverage Ratio set forth in Section 10.2 of the Loan Agreement at the
end of the fiscal quarter ending on September 28, 2002. The waiver provided in
this Section 1 shall not be and shall not be deemed to be a waiver of any other
covenant or requirement under the Loan Agreement.
2. CONSENT. Borrower desires to sell (a) the Plant 7 Sheeting Mill located
in Salisbury, North Carolina, (b) the Manufacturing Facility located in Rocky
Mount, North Carolina, and (c) the Yarn Mill located in Tarboro, North Carolina,
each of which is a Subject Asset (collectively, the "Subject Asset Sales").
Subject to the satisfaction of the conditions of effectiveness set forth in
Section 7 of this Amendment and the other conditions contained herein, the
Lenders hereby consent to the Subject Asset Sales, which consent is expressly
conditioned on the following: (i) Net Cash Proceeds received from the Subject
Asset Sales shall be used to prepay the Term Loan in accordance with Section 3.3
of the Loan Agreement; and
(ii) the Subject Asset Sales shall be consummated on substantially the same
material terms and conditions (with no changes as to amount or terms of payment)
set forth in the respective purchase contracts set forth in Exhibit A to this
Amendment. The consent provided hereby (A) is limited to the extent specifically
set forth above and no other terms, covenants or provisions of the Loan
Agreement or any Loan Document are intended to be effected hereby, and (B) shall
not constitute and shall not be deemed to constitute a waiver of future
compliance by Borrower with any provision of the Loan Agreement or any Loan
Document.
3. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is hereby amended as
follows:
(a) New clauses (q) and (r) are added to Section 8.1 immediately
following clause (p) of such Section 8.1, as follows:
(q) As soon as practical, but in any event not later than
November 27, 2002, financial statement projections for the Borrower
and its Subsidiaries for fiscal years 2003, 2004, and 2005, showing
budgeted performance for each such fiscal year, in form and detail
reasonably satisfactory to the Administrative Agent.
(r) As soon as practical, but in any event no later than 30 days
after the end of each fiscal month of the Borrower, beginning with the
fiscal month ending September 28, 2002 and continuing through and
including the fiscal month ending December 28, 2002, a certificate of
the vice president and controller, the vice president and treasurer or
the chief financial officer of the Borrower, in form and detail
satisfactory to the Administrative Agent, demonstrating compliance
with Section 10.3 and Section 10.4 as of the end of such fiscal month.
(b) New Sections 10.3 and 10.4 are added immediately following Section
10.2, as follows:
Section 10.3 Asset Coverage Ratio. The Borrower will not permit
the ratio of (a) the sum of (i) cash on hand, plus (ii) the amount of
eligible accounts receivable and inventory in the "Borrowing Base"
described in the Revolving Credit Agreement, plus (iii) 50% of net
property, plant, and equipment book values, to (b) the outstanding
principal amount of all long term Debt, determined in accordance with
GAAP on a consolidated basis for the Borrower and its Subsidiaries, at
the end of each fiscal month, beginning with the fiscal month ending
September 28, 2002 and ending with the fiscal month ending December
28, 2002, to be less than 1.0 to 1.0, measured monthly in accordance
with the requirements of Section 8.1(r).
Section 10.4 Minimum Availability. Permit the minimum amount
available to be borrowed under the Revolving Credit Agreement to be
less than (a) $40,000,000 during the fiscal month of September 2002,
and (b) $45,000,000 during the fiscal months of October, November and
December 2002, measured monthly in accordance with the requirements of
Section 8.1(r).
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(c) Clause (e) of Section 13.1 is amended and restated in its
entirety, as follows:
(e) all other reasonable out-of-pocket costs and expenses incurred by
the Administrative Agent in connection with this Agreement or any
other Loan Document, including, without limitation, all reasonable
costs, expenses, and other charges incurred in connection with
obtaining any mortgagee title insurance policy, survey, audit, or
appraisal in respect of the Collateral, including such costs, expenses
and charges incurred in connection with the appraisal of the Subject
Assets (other than the Subject Assets described in Section 2 above)
undertaken in the fiscal quarter ending on December 28, 2002, by an
appraiser or appraisers chosen by the Administrative Agent in its sole
discretion.
4. AMENDMENT FEE. Borrower shall pay to the Administrative Agent, for the
pro rata benefit of the Lenders that execute and deliver this Amendment to the
Administrative Agent (or its counsel) not later than 5:00 p.m., Dallas time,
September 27, 2002, an amendment fee in an amount equal to the product of 0.25%
multiplied by the outstanding principal amount of the Term Loan owed to each
such Lender. Such amendment fee shall be paid in immediately available funds and
shall be due and payable only to each Lender eligible for payment pursuant to
the preceding sentence no later than two Business Days after the conditions set
forth in Section 7 of this Amendment have been satisfied. The Borrower agrees
that the failure to timely pay the amendment fee provided in this Section 4
shall constitute an immediate Event of Default under Section 11.1(a) of the Loan
Agreement with no grace or cure period.
5. RELEASE.
(a) The Borrower and each Guarantor hereby unconditionally and
irrevocably remises, acquits, and fully and forever releases and discharges
the Administrative Agent and the Lenders and all respective affiliates and
subsidiaries of the Administrative Agent and the Lenders, their respective
officers, servants, employees, agents, attorneys, financial advisors,
principals, directors and shareholders, and their respective heirs, legal
representatives, successors and assigns (collectively, the "Released Lender
Parties") from any and all claims, demands, causes of action, obligations,
remedies, suits, damages and liabilities (collectively, the "Borrower
Claims") of any nature whatsoever, whether now known, suspected or claimed,
whether arising under common law, in equity or under statute, which the
Borrower or any Guarantor ever had or now has against the Released Lender
Parties which may have arisen at any time on or prior to the date of this
Amendment and which were in any manner related to any of the Loan Documents
or the enforcement or attempted enforcement by the Administrative Agent or
the Lenders of rights, remedies or recourses related thereto.
(b) The Borrower and each Guarantor covenants and agrees never to
commence, voluntarily aid in any way, prosecute or cause to be commenced or
prosecuted against any of the Released Lender Parties any action or other
proceeding based upon any of the Borrower Claims which may have arisen at
any time on or prior to the date of this Amendment and were in any manner
related to any of the Loan Documents.
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(c) The agreements of the Borrower and each Guarantor set forth in
this Section 5 shall survive termination of this Amendment and the other
Loan Documents.
6. REPRESENTATIONS AND WARRANTIES. By its execution and delivery hereof,
the Borrower represents and warrants to the Lenders that, as of the date hereof:
(a) after giving effect to this Amendment, the representations and
warranties contained in the Loan Agreement and the other Loan Documents are
true and correct on and as of the date hereof as if made on and as of such
date, except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate in all
material respects on and as of such earlier date);
(b) after giving effect to this Amendment, no event has occurred and
is continuing which constitutes an Event of Default;
(c) the Borrower has legal power and authority to execute and deliver
this Amendment, and this Amendment constitutes the legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy or other
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;
(d) neither the execution, delivery and performance of this Amendment
nor the consummation of any transactions contemplated herein will violate
or conflict with, or result in a breach of, or constitute a default under,
or require any consent under (i) the articles of incorporation, bylaws or
other organizational documents of the Borrower, (ii) any applicable law,
rule, or regulation or any order, writ, injunction, or decree of any
Governmental Authority or arbitrator, or (iii) any agreement or instrument
to which the Borrower is a party or by which it or any of its property is
bound or 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 Borrower), is required for the execution,
delivery or performance by the Borrower of this Amendment.
7. CONDITIONS OF EFFECTIVENESS. This Amendment shall be effective as of
September 27, 2002 only after each of the following conditions precedent shall
have been satisfied:
(a) the Administrative Agent shall receive counterparts of this
Amendment executed by the Required Lenders and the Borrower;
(b) the representations and warranties set forth in Section 6 of this
Amendment shall be true and correct;
(c) all reasonable out-of-pocket fees and expenses in connection with
the Loan Documents, including this Amendment, including legal and other
professional fees
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and expenses incurred on or prior to the date of this Amendment by
Administrative Agent or any Lender, including, without limitation, the
reasonable fees and expenses of Winstead Sechrest & Minick P.C. and FTI
Consulting, shall have been paid; 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.
8. REFERENCE TO LOAN AGREEMENT. Upon the effectiveness of this Amendment,
each reference in the Loan Agreement to "this Agreement," "hereunder," or words
of like import shall mean and be a reference to the Loan Agreement, as affected
and amended by this Amendment.
9. COUNTERPARTS; EXECUTION VIA FACSIMILE. This Amendment may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Amendment may
be validly executed and delivered by facsimile or other electronic transmission.
10. GOVERNING LAW: BINDING EFFECT. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas and shall be binding
upon the Borrower, the Administrative Agent, each Lender and their respective
successors and assigns.
11. HEADINGS. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
12. LOAN DOCUMENT. This Amendment is a Loan Document and is subject to all
provisions of the Loan Agreement applicable to Loan Documents, all of which are
incorporated in this Amendment by reference the same as if set forth in this
Amendment verbatim.
13. NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT 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 OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Remainder of page intentionally blank.
Signature pages follow.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
BORROWER:
PILLOWTEX CORPORATION
By: /s/ Michael R. Harmon
--------------------------------------
Name: Michael R. Harmon
Title: Executive Vice President
& Chief Financial Officer
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A., as Administrative Agent and a Lender
By: /s/ William E. Livingstone, IV
-----------------------------------------------
William E. Livingstone, IV
Managing Director
Waiver, Consent and Second Amendment
Signature Page
Lender signature page to that certain Waiver, Consent and Second Amendment
to Term Loan Agreement dated to be effective as of September 27, 2002, by and
among Pillowtex Corporation, the Lenders party thereto, and Bank of America,
N.A., as Administrative Agent for the Lenders.
OCM ADMINISTRATIVE SERVICES II, L.L.C.
By: Oaktree Capital Management, LLC
Its: Manager
By: /s/ Richard Masson
---------------------------------
Name: Richard Masson
Title: Principal
By: /s/ Richard Ting
---------------------------------
Richard Ting
Vice President, Legal
Waiver, Consent and Second Amendment
Signature Page
Lender signature page to that certain Waiver, Consent and Second Amendment
to Term Loan Agreement dated to be effective as of September 27, 2002, by and
among Pillowtex Corporation, the Lenders party thereto, and Bank of America,
N.A., as Administrative Agent for the Lenders.
CONTINENTAL CASUALTY COMPANY
By: /s/ Marilou R. McGirr
-----------------------------------
Name: Marilou R. McGirr
Title: Vice President
Waiver, Consent and Second Amendment
Signature Page
Lender signature page to that certain Waiver, Consent and Second Amendment
to Term Loan Agreement dated to be effective as of September 27, 2002, by and
among Pillowtex Corporation, the Lenders party thereto, and Bank of America,
N.A., as Administrative Agent for the Lenders.
BANK OF AMERICA STRATEGIC SOLUTIONS, INC.
By: /s/ William E. Livingstone, IV
-----------------------------------
William E. Livingstone, IV
Managing Director
Waiver, Consent and Second Amendment
Signature Page
Lender signature page to that certain Waiver, Consent and Second
Amendment to Term Loan Agreement dated to be effective as of September 27, 2002,
by and among Pillowtex Corporation, the Lenders party thereto, and Bank of
America, N.A., as Administrative Agent for the Lenders.
CREDIT SUISSE FIRST BOSTON
By: /s/ Ian Landow
--------------------------------------------
Name: Ian Landow
Title: Assistant Vice President
By: /s/ Howard Shams
-----------------------------------
Name: Howard Shams
Title: Managing Director
Waiver, Consent and Second Amendment
Signature Page
Lender signature page to that certain Waiver, Consent and Second Amendment
to Term Loan Agreement dated to be effective as of September 27, 2002, by and
among Pillowtex Corporation, the Lenders party thereto, and Bank of America,
N.A., as Administrative Agent for the Lenders.
FRANKLIN FLOATING RATE TRUST
By: /s/ Richard D'Addario
--------------------------------------------
Name: Richard D'Addario
Title: Vice President
Waiver, Consent and Second Amendment
Signature Page
Lender signature page to that certain Waiver, Consent and Second
Amendment to Term Loan Agreement dated to be effective as of September 27, 2002,
by and among Pillowtex Corporation, the Lenders party thereto, and Bank of
America, N.A., as Administrative Agent for the Lenders.
CANPARTNERS INVESTMENTS IV, LLC
By: /s/ Joshua S. Friedman
-----------------------------------
Name: Joshua S. Friedman
Title: Managing Directors
Waiver, Consent and Second Amendment
Signature Page
Lender signature page to that certain Waiver, Consent and Second
Amendment to Term Loan Agreement dated to be effective as of September 27, 2002,
by and among Pillowtex Corporation, the Lenders party thereto, and Bank of
America, N.A., as Administrative Agent for the Lenders.
ARK CLO 2000-1, LIMITED
By: Patriarch Partners, LLC
Its Collateral Manager
By: /s/ Lynn Tilton
-----------------------------------
Name: Lynn Tilton
Title: Authorized Signatory
Waiver, Consent and Second Amendment
Signature Page
Lender signature page to that certain Waiver, Consent and Second
Amendment to Term Loan Agreement dated to be effective as of September 27, 2002,
by and among Pillowtex Corporation, the Lenders party thereto, and Bank of
America, N.A., as Administrative Agent for the Lenders.
CONTRARIAN FUNDS LLC
By: /s/ Jon Bauer
--------------------------------------------
Name: Jon Bauer
Title: Managing Member
Waiver, Consent and Second Amendment
Signature Page
Each of the undersigned hereby (a) consents and agrees to this Amendment's
execution and delivery, (b) ratifies and confirms its obligations under its
guaranty, (c) acknowledges and agrees that its obligations under its guaranty
are not released, diminished, impaired, reduced, or otherwise adversely affected
by this Amendment, and (d) acknowledges and agrees that it has no claims or
offsets against, or defenses or counterclaims to, its guaranty
GUARANTORS:
PTEX, INC.
PILLOWTEX MANAGEMENT SERVICES COMPANY
BEACON MANUFACTURING COMPANY
FC ONLINE, INC.
TENNESSEE WOOLEN MILLS, INC.
FIELDCREST CANNON, INC.
ENCEE, INC.
FCC CANADA, INC.
FIELDCREST CANNON LICENSING, INC.
FCI CORPORATE LLC
FIELDCREST CANNON TRANSPORTATION, INC.
FCI OPERATIONS LLC
THE LESHNER CORPORATION
OPELIKA INDUSTRIES, INC.
PILLOWTEX CANADA INC.
By: /s/ Michael R. Harmon
---------------------------------
Name: Michael R. Harmon
Title: Executive Vice President
& Chief Financial Officer
PTEX HOLDING COMPANY
FIELDCREST CANNON FINANCING, INC
By: /s/ Ralph John Wahoski
---------------------------------
Name: Ralph John Wahoski
Title: Vice President
Waiver, Consent and Second Amendment
Signature Page