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EXHIBIT 10(a)
AMENDMENT NO. 2 TO
CREDIT AGREEMENT
THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT (this "Amendment") dated as
of July__, 1998, by and among DYERSBURG CORPORATION, a Tennessee corporation
("Parent"), DYERSBURG FABRICS LIMITED PARTNERSHIP, I, a Tennessee limited
partnership ("DFLP"), UNITED KNITTING LIMITED PARTNERSHIP, I, a Tennessee
limited partnership (UKLP"), IQUE LIMITED PARTNERSHIP, I, a Tennessee limited
partnership ("IQLP"), and ALAMAC KNIT FABRICS, INC., a Delaware corporation
("Alamac"; Parent, DFLP, UKLP, IQLP and Alamac referred to collectively herein
as the "Borrowers"), the banks and other financial institutions listed on the
signature pages hereof (such banks and other financial institutions referred to
collectively herein as the "Lenders"), SUNTRUST BANK, ATLANTA, in its capacity
as agent for the Lenders (the "Agent"), and SUNTRUST BANK, ATLANTA, in its
capacity as collateral agent for the Agent and the Lenders (the "Collateral
Agent").
W I T N E S S E T H:
WHEREAS, the Borrowers, the Lenders, the Agent and the Collateral
Agent are parties to a certain Credit Agreement dated as of August 27, 1997, as
amended by Amendment No. 1 to Credit Agreement dated as of September 26, 1997
(as so amended, the "Credit Agreement"; defined terms used herein without
definition shall have the meanings ascribed to such terms in the Credit
Agreement);
WHEREAS, the Borrowers have requested, and the Lenders have agreed,
that the Credit Agreement be amended to make certain modifications therein, all
as more specifically set forth below;
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. Subject to the satisfaction
of the conditions precedent set forth in Section 2 hereof, and effective as of
the Effective Date (as hereinafter defined), the Credit Agreement is hereby
amended as follows:
1.1 Section 1.01 of the Credit Agreement is hereby amended by adding
the following defined term and accompanying definition in proper alphabetical
order:
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"Year 2000 Issues" shall mean the actual and anticipated costs,
claims, losses, liabilities, delays, and other consequences associated with
the inability of certain computer applications to handle effectively data
that includes dates on and after January 1, 2000, as such inability in
respect of the Borrowers and the other Consolidated Companies and in
respect of their respective customers, suppliers and vendors affects the
business, operations, liabilities, prospects, and financial condition of
the Borrowers and the other Consolidated Companies.
1.2 Article VI of the Credit Agreement is hereby amended by adding an
additional Section 6.30 thereto as follows:
SECTION 6.30. YEAR 2000 ISSUES. The Borrowers and the other
Consolidated Companies have made a full and complete assessment of the Year
2000 Issues and have a realistic and achievable program for remediating the
Year 2000 Issues on a timely basis. Based on such assessment and program,
the Borrowers do not reasonably anticipate that Year 2000 Issues will have
a Materially Adverse Effect.
1.3 Section 7.07 of the Credit Agreement is hereby amended by (i)
deleting the word "and" at the end of subsection (s) thereof, (ii) re-lettering
existing subsection (t) thereof as subsection (u), and (iii) adding a new
subsection (t) as follows:
(t) (i) Simultaneously with the delivery of each set of annual and
quarterly financial statements referred to in Sections 7.07(a) and (b) in
respect of any period ending on or before March 31, 2000, a statement of
the president or chief financial officer of the Parent to the effect that
nothing has come to the Borrowers' attention to cause any of them to
believe that the hardware and software systems of the Borrowers and the
other Consolidated Companies will not be Year 2000 compliant on a timely
basis in accordance with the Year 2000 plan previously delivered to the
Lenders, (ii) within twenty (20) Business Days after any of the Borrowers
becomes aware of any deviations from the Year 2000 plan previously
delivered to the Lenders that would cause compliance with such plan to be
delayed or not achieved in any material respect, a statement of the
president or chief financial officer of the Parent setting forth the
details thereof and the action that the Borrowers are taking or propose to
take with respect thereto, and (iii) promptly upon the receipt thereof, a
copy of any third party assessments of the Year 2000 plan of any of the
Consolidated Companies, together with any recommendations made by such
third party with respect to Year 2000 compliance; and
1.4 Section 7.09 of the Credit Agreement is hereby amended by deleting
subsections (a), (b), and (c) thereof, and substituting in lieu thereof the
following subsections (a), (b), and (c):
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(a) Fixed Charge Coverage. Maintain as of the last day of each Fiscal
Quarter, commencing with the first Fiscal Quarter of Fiscal Year 1998, a
minimum Fixed Charge Coverage Ratio as shown below for each Fiscal Quarter
during the periods indicated:
Minimum Fixed Charge
Period Coverage Ratio
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3rd Fiscal Quarter of Fiscal 1.00:1.00
Year 1998 through the
3rd Fiscal Quarter of
Fiscal Year 1999
4th Fiscal Quarter of Fiscal 1.05:1.00
Year 1999 through the
3rd Fiscal Quarter of
Fiscal Year 2000
4th Fiscal Quarter of Fiscal 1.20:1.00
Year 2000 and thereafter
Notwithstanding the definition of Fixed Charge Coverage Ratio, for the
first three Fiscal Quarters of Fiscal Year 1998, the Fixed Charge Coverage
Ratio shall be calculated for the period commencing on October 4, 1997 and
ending on such date.
(b) Interest Coverage. Maintain as of the last day of each Fiscal
Quarter, commencing with the first Fiscal Quarter of Fiscal Year 1998, a
minimum Interest Coverage Ratio as shown below for each Fiscal Quarter
during the periods indicated:
Minimum Interest
Period Coverage Ratio
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3rd Fiscal Quarter of Fiscal 1:20:1.00
Year 1998 through the
3rd Fiscal Quarter of
Fiscal Year 1999
4th Fiscal Quarter of Fiscal 1.20:1.00
Year 1999 through the
3rd Fiscal Quarter of
Fiscal Year 2000
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4th Fiscal Quarter of Fiscal 1.40:1.00
Year 2000 through the
3rd Fiscal Quarter of
Fiscal Year 2001
4th Fiscal Quarter of Fiscal 1.50:1.00
Year 2001 and thereafter
Notwithstanding the definition of Interest Coverage Ratio, for the first
three Fiscal Quarters of Fiscal Year 1998, the Interest Coverage Ratio
shall be calculated for the period commencing on October 4, 1997 and ending
on such date.
(c) Adjusted Funded Debt Coverage. Maintain as of the last day of
each Fiscal Quarter, commencing with the first Fiscal Quarter of
Fiscal Year 1998, a maximum Adjusted Funded Debt Coverage Ratio
as shown below for each Fiscal Quarter during the periods
indicated:
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Maximum Adjusted Funded
Debt Coverage
Period Ratio
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3rd Fiscal Quarter of Fiscal 4.90:1.00
Year 1998 through the
3rd Fiscal Quarter of
Fiscal Year 1999
4th Fiscal Quarter of Fiscal 4.50:1.00
Year 1999 through the
3rd Fiscal Quarter of
Fiscal Year 2000
4th Fiscal Quarter of Fiscal 4.00:1.00
Year 2000 through the
3rd Fiscal Quarter of
Fiscal Year 2001
4th Fiscal Quarter of Fiscal 3.50:1.00
Year 2001 and thereafter
Notwithstanding the definition of Adjusted Funded Debt Coverage Ratio, for
the first three Fiscal Quarters of Fiscal Year 1998, Consolidated EBITDAR
shall be calculated on an annualized basis for the period commencing on
October 4, 1997 and ending on such date (i.e., for the calculation on the
last day of the first Fiscal Quarter of Fiscal Year 1998, Consolidated
EBITDAR shall be calculated for such period and multiplied by four, for the
calculation on the last day of the second Fiscal Quarter of Fiscal Year
1998, Consolidated EBITDAR shall be calculated for such period and
multiplied by two, and for the calculation on the last day of the third
Fiscal Quarter of Fiscal Year 1998, Consolidated EBITDAR shall be
calculated for such period and multiplied by 4/3rds).
1.5 Article VII of the Credit Agreement is hereby amended by adding a
new Section 7.14 thereto as follows:
SECTION 7.14. YEAR 2000 COMPLIANCE. Take, and cause the other
Consolidated Companies to take, all actions reasonably necessary to
implement the Year 2000 plan previously delivered to the Lenders and
otherwise to avoid the existence or occurrence of a Materially Adverse
Effect as a result of Year 2000 Issues. Upon request by any Lender or the
Agent, the Borrowers will provide the Lenders a written updated description
of the Year 2000 compliance program for the Consolidated Companies. The
Borrowers will promptly advise the Lenders and the Agent of any reasonably
anticipated Materially Adverse Effect as a result of any Year 2000 Issues.
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1.6 Section 8.06 of the Credit Agreement is hereby amended by deleting
such Section in its entirety and substituting in lieu thereof the following
Section 8.06:
SECTION 8.06. SALE AND LEASEBACH TRANSACTIONS. Sale or transfer any
property, real or personal, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property which any
Consolidated Company intends to use for substantially the same purpose or
purposes as the property being sold or transferred, except for such
transactions (i) occurring after the date of this Agreement as are (x)
described in Section 8.01(g), or (y) permitted by Section 8.01(c), or (ii)
in respect of textile manufacturing equipment purchased after the date of
this Agreement in an amount not to exceed $5,000,000.
1.7 Section 11.02 of the Credit Agreement is hereby amended by
deleting clause (vi) of the first sentence of such Section in its entirety and
substituting in lieu thereof the following clause (vi) in the first sentence of
Section 11.02:
(vi) agree to release any of the Collateral from the Lien of the
Security Documents or any funds in the L/C Cash Collateral Account, to the
extent securing the Obligations, or to release any Guarantor from its
obligations under any Guaranty Agreement (provided, that no agreement to
any such release shall be required from any Lenders in connection with (x)
any sale and leaseback transaction permitted by Section 8.06, or (y) the
transactions described in connection with an Asset Sale (including a sale
of Pledged Stock) that is made at a time when Borrower has satisfied the
requirements set forth in Section 8.03 with respect to such sale), or
SECTION 2. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective as of the date first above written (the "Effective Date") when this
Amendment shall have been executed and delivered by the Borrowers, Lenders
constituting the Required Lenders as provided in the Credit Agreement, the Agent
and the Collateral Agent.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. Each of
the Borrowers, without limiting the representations and warranties provided in
the Credit Agreement, represents and warrants to the Lenders and the Agents as
follows:
3.1 The execution, delivery and performance by the Borrowers of this
Amendment are within the Borrowers' organizational powers, have been duly
authorized by all necessary organizational action (including any necessary
shareholder or partner action) and do not and will not (a) violate any provision
of any law, rule or regulation, any judgment, order or ruling of any court or
governmental agency, the organizational documents of any Borrower or any
indenture, agreement or other instrument to which any Borrower is a party or by
which any Borrower or any of its properties is bound or (b) be in conflict with,
result in a breach of, or constitute with notice or lapse of time or both a
default under any such indenture, agreement or other instrument.
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3.2 This Amendment constitutes the legal, valid and binding obligation
of the Borrowers, enforceable against the Borrowers in accordance with its
terms.
3.3 No Default or Event of Default has occurred and is continuing as
of the Effective Date.
SECTION 4. SURVIVAL. Each of the foregoing representations and
warranties and each of the representations and warranties made in the Credit
Agreement shall be made at and as of the Effective Date. Each of the foregoing
representations and warranties shall constitute a representation and warranty of
the Borrowers under the Credit Agreement, and it shall be an Event of Default if
any such representation and warranty shall prove to have been incorrect or false
in any material respect at the time when made. Each of the representations and
warranties made under the Credit Agreement (including those made herein) shall
survive and not be waived by the execution and delivery of this Amendment or any
investigation by the Lenders or the Agent or the Collateral Agent.
SECTION 5. NO WAIVER, ETC. The Borrowers hereby agree that nothing
herein shall constitute a waiver by the Lenders of any Default or Event of
Default, whether known or unknown, which may exist under the Credit Agreement.
The Borrowers hereby further agree that no action, inaction or agreement by the
Lenders, including without limitation, any indulgence, waiver, consent or
agreement altering the provisions of the Credit Agreement which may have
occurred with respect to the non-payment of any obligation under the terms of
the Credit Agreement or any portion thereof, or any other matter relating to the
Credit Agreement, shall require or imply any future indulgence, waiver, or
agreement by the Lenders. In addition, the Borrowers acknowledge and agree that
they have no knowledge of any defenses, counterclaims, offsets or objections
against any Lender with regard to any of the obligations due under the terms of
the Credit Agreement as of the date of this Amendment.
SECTION 6. AFFIRMATION OF COVENANTS. The Borrowers hereby affirm and
restate as of the date hereof all covenants set forth in the Credit Agreement,
as amended hereby, and such covenants are incorporated by reference herein as if
set forth herein directly.
SECTION 7. RATIFICATION OF CREDIT AGREEMENT. Except as expressly
amended herein, all terms, covenants and conditions of the Credit Agreement and
the other Credit Documents shall remain in full force and effect, and the
parties hereto do expressly ratify and confirm the Credit Agreement as amended
herein. All references to the Credit Agreement contained in all Credit Documents
shall be deemed to refer to the Credit Agreement as amended hereby.
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SECTION 8. BINDING NATURE. This Amendment shall be binding upon and
inure to the benefit of the parties hereto, their respective successors,
successors-in-titles, and permitted assigns.
SECTION 9. COSTS, EXPENSES AND TAXES. The Borrowers agree to pay on
demand all reasonable costs and expenses of the Agent and the Collateral Agent
in connection with the preparation, execution and delivery of this Amendment and
the other instruments and documents to be delivered hereunder, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Agent and the Collateral Agent with respect thereto and with respect to
advising the Agent and the Collateral Agent as to its rights and
responsibilities hereunder and thereunder. In addition, the Borrowers shall pay
any and all stamp and other taxes payable or determined to be payable in
connection with the execution and delivery of this Amendment and the other
instruments and documents to be delivered hereunder, and agrees to save the
Agent, the Collateral Agent, and each Lender harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes.
SECTION 10. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of Georgia.
SECTION 11. ENTIRE UNDERSTANDING. This Amendment sets forth the entire
understanding of the parties with respect to the matters set forth herein, and
shall supersede any prior negotiations or agreements, whether written or oral,
with respect thereto.
SECTION 12. COUNTERPARTS. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts and may
be delivered by telecopier. Each counterpart so executed and delivered shall be
deemed an original and all of which taken together shall constitute but one and
the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment
through their authorized officers as of the date first above written.
DYERSBURG CORPORATION
By: /s/ William S. Shropshire, Jr.
Name: William S. Shropshire, Jr.
Title: Executive Vice President and
Chief Financial Officer
DYERSBURG FABRICS LIMITED
PARTNERSHIP, I, A TENNESSEE LIMITED
PARTNERSHIP
By: Dyersburg Fabrics Inc., its sole general
partner
By: /s/ William S. Shropshire, Jr.
Name: William S. Shropshire, Jr.
Title: Executive Vice President and
Chief Financial Officer
UNITED KNITTING LIMITED
PARTNERSHIP, I, A TENNESSEE LMITED
PARTNERSHIP
By: United Knitting, Inc., its sole general
partner
By: /s/ William S. Shropshire, Jr.
Name: William S. Shropshire, Jr.
Title: Secretary and Treasurer
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IQUE LIMITED PARTNERSHIP, I, A
TENNESSEE LIMITED PARTNERSHIP
By: IQUE, Inc., its sole general partner
By: /s/ William S. Shropshire, Jr.
Name: William S. Shropshire, Jr.
Title: Executive Vice President and
Chief Financial Officer
ALAMAC KNIT FABRICS, INC.
By: /s/ William S. Shropshire, Jr.
Name: William S. Shropshire, Jr.
Title: Vice President and Secretary
SUNTRUST BANK, ATLANTA,
INDIVIDUALLY AND AS AGENT AND COLLATERAL
AGENT
By: /s/ Laura Kahn
Name: Laura Kahn
Title: Senior Vice President
By: /s/ Brenda Zino
Name: Brenda Zino
Title: Banking Officer
FIRST UNION NATIONAL BANK
By: /s/ D. C. Hauglid
Name: David C. Hauglid
Title: Vice President
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WACHOVIA BANK, N.A.
By: /s/ Timothy R. Hileman
Name: Timothy R. Hileman
Title: Senior Vice President
CENTURA BANK
By: /s/ Stephen B. Draper
Name: Stephen B. Draper
Title: Capital Markets Manager
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEEN BANK B.A.,
"RABOBANK NEDERLAND", NEW YORK
BRANCH
By: /s/ Theodore W. Cox
Name: Theodore W. Cox
Title: Vice President
By: /s/ W. Jeffrey Vollack
Name: W. Jeffrey Vollack
Title: Senior Vice President
NATIONAL CITY BANK OF KENTUCKY
By: /s/ Kevin L. Anderson
Name: Kevin L. Anderson
Title: Vice President
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NATIONSBANK, N.A.
By: /s/ E. Phifer Helms
Name: E. Phifer Helms
Title: Senior Vice President
THE FIJI BANK, LIMITED, NEW
YORK BRANCH
By:
Name:
Title:
THE BANK OF TOKYO-MITSUBISHI, LTD.
By: /s/ William L. Otott, Jr.
Name: William L. Otott, Jr.
Title: Vice President
THE CHASE MANHATTAN BANK
By: /s/ James A. Knight
Name: James A. Knight
Title: Vice President