FOURTH AMENDMENT
TO 1994 AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO 1994 AMENDED AND RESTATED CREDIT
AGREEMENT, dated as of March 6, 1995, (the "Amendment" or "Fourth
Amendment") is made by and between
CULP, INC., a North Carolina corporation with its principal
office in High Point, North Carolina (the "Borrower"); and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, N.A., a
national banking association, as Agent (the "Agent"); and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, N.A., a
national banking association ("First Union") and WACHOVIA BANK OF
NORTH CAROLINA, N.A., a national banking association ("Wachovia"
and collectively with First Union, the "Banks"),
to the 1994 Amended and Restated Credit Agreement dated as
of April 15, 1994 (as amended, modified, restated or supplemented
from time to time, the "Loan Agreement"). All capitalized terms
not otherwise defined in this Amendment shall have the meanings
assigned to them in the Loan Agreement.
RECITALS
A. Pursuant to the Loan Agreement, the Banks have made
available to the Borrower Term Loans in the aggregate principal
amount of $44,000,000 evidenced by Term Notes of the Borrower in
the aggregate principal amount of $44,000,000, and a Revolving
Loan in the aggregate principal amount of $27,000,000 evidenced
by Revolving Credit Notes of the Borrower in the aggregate
principal amount of $27,000,000.
B. The Borrower has requested that the Banks (i) modify
certain terms and provisions of the Loan Agreement to permit a
Subsidiary of the Borrower to purchase the stock of a Canadian
corporation and to incur indebtedness in connection with such
acquisition, (ii) modify certain terms and provisions of the Loan
Agreement to permit the Borrower to guaranty the Subsidiary's
indebtedness in connection with such acquisition, (iii) change
and adjust certain covenants of the Loan Agreement, (iv) allow
for the proceeds of the Loans made available by the Banks
pursuant to the Loan Agreement to be used by the Subsidiary to
make such acquisition and for a possible prepayment of
indebtedness incurred in connection with the acquisition, (v)
increase the aggregate amount of the Revolving Loan to
$33,500,000 and (vi) make certain other conforming modifications
to the Loan Agreement.
C. The Borrower, the Agent and the Banks have agreed to
amend the Loan Agreement as set forth herein.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of these premises, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and
the Banks hereby agree as follows:
ARTICLE I
AMENDMENTS
The Loan Agreement is hereby amended as follows:
1.1. Definitions. Section 1 of the Loan Agreement is hereby
amended by making the following changes:
(a) Section 1.44 containing the definition of "Loan
Documents" is hereby amended by adding the following sentence to
the end of such section: "In addition, "Loan Documents" shall
refer to any Interest Rate Agreement that may exist between the
Borrower and any of the Banks."
(b) Section 1.53 containing the definition of "Permitted
Encumbrances" is hereby amended by deleting the word "and" at the
end of clause (i), deleting the period at the end of clause (j)
and inserting in its place "; and" and adding the following
clause to the end of the section: "(k) liens on the assets of
Canada or Rayonese granted to the former shareholders of Rayonese
securing the Rayonese Note."
(c) Section 1 is hereby amended by adding the following
definitions:
1.6.1. "Canada" means 3096726 Canada Inc., a Canadian
corporation and a wholly-owned Subsidiary of the
Borrower.
1.16.1 "Consolidated Shareholders' Equity" of the
Borrower and its Subsidiaries shall mean at any time as
of which the amount thereof is to be determined, the
sum of the following in respect of the Borrower and its
Subsidiaries (on a consolidated basis and excluding
intercompany items):
(i) the amount of issued and outstanding share
capital, plus
(ii) the amount of additional paid-in capital,
retained earnings (or, in the case of a deficit,
minus the amount of such deficit).
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1.39.1 "Interest Rate Agreement" shall mean any
interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, currency
hedge agreement or other similar agreement or
arrangement designed to protect the Borrower against
fluctuations in interest rates or currency exchange
rates, including, without limitation, any "swap
agreement" as defined in 11 U.S.C. [section mark] 101(55).
1.56.1. "Rayonese" means Rayonese Textile Inc., a
Canadian corporation.
1.56.2. "Rayonese Acquisition" means the acquisition of
the stock of Rayonese by Canada pursuant of the Share
Purchase Agreement dated as of December 22, 1994
between Canada and certain shareholders of Rayonese.
1.56.3. "Rayonese Note" means the promissory note or
notes evidencing indebtedness of Canada to the former
shareholders of Rayonese in partial payment for the
stock of Rayonese purchased by Canada in the Rayonese
Acquisition.
1.2. Loans Evidenced by Revolving Credit Notes.
(a) Section 4 of the Loan Agreement is hereby amended by
deleting "$27,000,000" each time it appears in Section 4 and
replacing it with "$33,500,000."
(b) Section 4.4 is hereby amended by adding the following
paragraph to the end of such section:
"(g) Notwithstanding the foregoing, the Bankers'
Acceptances option described in this Section 4.4 shall
be available to the Borrower only in the event that,
and so long as, the ratio of Consolidated Funded Debt
to Operating Cash Flow shall be no greater than 2.25 to
1.0."
1.3. Facility Fee. Section 5 of the Loan Agreement is
hereby amended by deleting "$81,000" each time it appears in
Section 5 and replacing it with "100,500."
1.4. Use of Proceeds. Section 6 of the Loan Agreement is
hereby amended by deleting it in its entirety and replacing it
with the following:
SECTION 6. Use of Proceeds.The proceeds of the
Revolving Loans shall be used by the Borrower for
Capital Expenditures, for normal working capital
requirements, to finance the Rayonese Acquisition
(including the possible prepayment of the Rayonese Note
in accordance with its terms) and to repay from time to
time Accepted Drafts.
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The proceeds of the Term Loans, other than the proceeds
made available by the Banks pursuant to the Third
Amendment, shall be used by the Borrower to refinance
and restructure existing indebtedness of the Borrower
to First Union and Wachovia and for ongoing corporate
purposes, and the additional Term Loan proceeds made
available by the Banks pursuant to the Third Amendment
shall be used, at such time or times as the Borrower may
determine, to prepay in whole or in part certain
subordinated indebtedness evidenced by a promissory note
dated November 1, 1993 in the principal amount of
$9,632,724 from the Borrower to Rossville Investments,
Inc.
1.5. Affirmative Covenants.Section 9 of the Loan Agreement
is hereby amended as set forth below:
(a) Section 9.16 of the Loan Agreement is hereby amended by
deleting such Section in its entirety and replacing it with the
following:
9.16. Shareholders' Equity. Maintain Consolidated
Shareholders' Equity of not less than $67,500,000 from
and after April 30, 1995 through that date which is one
day prior to the last day of the Borrower's Fiscal Year
ending in 1996; on the last day of the Borrower's
Fiscal Year ending in 1996 and on the last day of each
subsequent Fiscal Year of the Borrower (the
"Computation Date") and continuing in each period from
the applicable Computation Date through that date which
is one day prior to the end of the next Fiscal Year,
the Borrower shall maintain Consolidated Shareholders'
Equity of not less than the previous period's required
Consolidated Shareholders' Equity plus fifty percent
(50%) of Net Income (excluding for purposes of this
Section 9.16 any net loss) of the Borrower for the
Fiscal Year ending on such Computation Date
(hereinafter referred to as the "Required Shareholders'
Equity"); provided, that in the event for any
Computation Date the Borrower's Consolidated
Shareholders' Equity on such Computation Date exceeds
the Required Shareholders' Equity on such Computation
Date by more than $4,000,000, the Required
Shareholders' Equity shall be increased for the period
beginning on such Computation Date to that amount which
is $4,000,000 less than the Borrower's Consolidated
Shareholders' Equity on such Computation Date.
(b) Section 9.19 of the Loan Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
9.19. Operating Cash Flow to Interest Expense.
Maintain a ratio of (x) Operating Cash Flow less
Capital Expenditures for such period, to (y) Interest
Expense for
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such period, of at least 2.0 to 1.0 for each Fiscal
Quarter from the Fiscal Quarter ending April 30, 1995
through and including the Fiscal Quarter ending January,
1996; 2.5 to 1.0 for each Fiscal Quarter thereafter
through and including the Fiscal Quarter ending October,
1996; and 3.0 to 1 for each Fiscal Quarter thereafter.
(c) Section 9.20 of the Loan Agreement is hereby amended by
deleting such Section in its entirety and replacing it with the
following:
9.20. Consolidated Funded Debt to Total
Capitalization. Maintain a ratio of Consolidated
Funded Debt to Total Capitalization not in excess of 1
to 1.67 (60%) for each Fiscal Quarter from the Fiscal
Quarter ending April 1995 through and including the
Fiscal Quarter ending October, 1995; 1 to 1.82 (55%)
for each Fiscal Quarter from the Fiscal Quarter ending
January, 1996 through and including the Fiscal Quarter
ending October, 1996; and 1 to 2.0 (50%) for each
Fiscal Quarter thereafter.
1.6. Negative Covenants of the Borrower. Section 10 of the
Loan Agreement is hereby amended as set forth below:
(a) Section 10.2 of the Loan Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
10.2. Guarantee. Guarantee, assume, endorse or
otherwise become or remain directly or contingently
liable in connection with the obligations of any other
Person, excluding any Subsidiary, or permit any
Subsidiary to guarantee, assume, endorse or otherwise
become or remain directly or contingently liable in
connection with the obligations of any other Person,
excluding the Borrower, other than:
(i) the endorsement of negotiable instruments in the
ordinary course of business for deposit or
collection;
(ii) guaranties by the Borrower or any of its
Subsidiaries with respect to industrial revenue
bonds and the obligations listed on Exhibit 6
hereof and any extensions, modifications,
refinancings, refundings or replacements thereto
or thereof;
(iii) guaranties by the Borrower of the Rayonese Note;
(iv) guaranties of debts incurred by Globaltex LLC or
Globaltex S.A. de C.V. in amounts that do not
exceed $700,000 in the aggregate; and
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(v) other guaranties not exceeding $750,000 in the
aggregate.
(b) Section 10.7 of the Loan Agreement is hereby amended by
adding the following language at the end of the section:
"provided, however, that the Borrower may make investments in and
advances to Canada and Rayonese in an amount not to exceed
$17,000,000, which shall be used to consummate the Rayonese
Acquisition, to pay off debt of Rayonese, to purchase equipment
to be used by Rayonese in its operations, to prepay the Rayonese
Note if required in accordance with the terms of the Rayonese
Note and to provide working capital to Canada and Rayonese."
(c) Section 10.11 of the Loan Agreement is hereby amended
by deleting it in its entirety and replacing it with the
following:
10.11. Prepayments. Retire or prepay prior to its
stated maturity any Consolidated Funded Debt (other
than (i) non interest-bearing purchase money
obligations payable over a period of not to exceed two
(2) years, given to vendors of equipment, (ii) certain
subordinated indebtedness evidenced by a promissory
note dated December 14, 1994 in the principal amount of
$1,000,000 payable by the Borrower to Rossville
Investments, Inc., and (iii) certain indebtedness to be
evidenced by the Rayonese Note as contemplated by the
Rayonese Acquisition) having a term of repayment in
excess of one year, including any renewals, other than
indebtedness to either of the Banks arising hereunder
or obligations under industrial revenue bonds, or pay
rental obligations more than 30 days in advance of the
time for payment called for in the lease.
(d) Section 10.12 of the Loan Agreement is hereby amended
by deleting the parenthetical phrase beginning in the second line
of such section in its entirety and replacing it with the
following: "(other than (1) indebtedness existing as of the date
of this Agreement and any refinancings, refundings or extensions
thereof, (2) the Rayonese Note, and (3) non interest-bearing
purchase money obligations payable over a period not to exceed
two years given to vendors of equipment)."
1.7. Miscellaneous. Section 13.2 of the Loan Agreement is
hereby amended by adding the following sentence to the end of
such section:
"Each Bank further agrees that, after the occurrence of an
Event of Default and acceleration pursuant to Section 11.2
hereof, proceeds from any property securing the Loans shall
be applied pro rata to the indebtedness (if any) owing to
each Bank under Interest Rate Agreements between Borrower
and such Bank only at such time after all of the principal
and interest with respect to the Notes and other amounts due
to each Bank
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hereunder (including, without limitation, those due under
Section 4.4 hereof) shall have been paid in full."
1.8. Annex I. Annex I to the Loan Agreement is hereby
amended by deleting it in its entirety and replacing it with a
new Annex I in the form of Annex I attached hereto.
1.9. Exhibits. Exhibits 2-A, 2-B and 3 of the Loan Agreement
are hereby amended by deleting each exhibit in its entirety and
replacing them with new Exhibits 2-A, 2-B and 3 in the form of
Exhibits 2-A, 2-B and 3 attached hereto. Exhibit 5 of the Loan
Agreement is deleted and will be replaced by a form of quarterly
officers certificate in form and substance to be agreed upon by
the Borrower and the Banks, which shall be designed to set forth
the calculation of financial information required to be reported
by the Borrower to the Banks and to demonstrate the Borrower's
compliance with the financial covenants set forth in the Loan
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants that:
2.1. Compliance with Loan Agreement. As of the execution
of this Amendment, the Borrower and each of its Subsidiaries are,
and upon the closing of the Rayonese Acquisition will be, in
compliance with all terms and provisions set forth in the Loan
Agreement to be observed or performed, except where the failure
of the Borrower and each of its Subsidiaries to comply has been
waived in writing by the Agent and the Banks.
2.2. Representations in Loan Agreement. The
representations and warranties of the Borrower set forth in the
Loan Agreement are true and correct in all material respects
except (a) to the extent that such representations and warranties
relate solely to or are specifically expressed as of a particular
date or period which has passed or expired as of the date hereof,
(b) as may have been disclosed in writing by the Borrower to the
Banks prior to the date hereof, and (c) any changes in the nature
of the Borrower's business that have occurred since the date of
the Loan Agreement that would render any such representation or
warranty inaccurate or incomplete, so long as such changes (i)
have occurred in the ordinary course of the Borrower's business
and have not had, and will not have, a material adverse effect on
the business, prospects or condition (financial or otherwise) of
the Borrower, (ii) have been consented to in writing by the
Banks, or (iii) are expressly permitted by the Loan Agreement, as
amended.
2.3. No Event of Default. No Event of Default, nor any
event that upon notice, lapse of time or both would become an
Event of
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Default is continuing other than those, if any, waived
in writing by the Agent and the Banks.
ARTICLE III
MODIFICATION OF LOAN DOCUMENTS AND CONDITIONS
3.1. Loan Documents. The other Loan Documents, as defined
in the Loan Agreement, are amended as follows:
Any individual or collective reference to any of the Loan
Documents in any of the other Loan Documents to which the
Borrower or any of its Subsidiaries is a party shall mean,
unless otherwise specifically provided, such Loan Document
as amended by this Fourth Amendment to 1994 Amended and
Restated Credit Agreement, and as it is further amended,
restated, supplemented or modified from time to time and any
substitute or replacement therefor or renewals thereof,
including without limitation, all references to the Loan
Agreement, which shall mean the Loan Agreement as amended
hereby and as further amended from time to time.
3.2. Conditions. The effectiveness of this Amendment is
conditioned upon payment by the Borrower to the Agent for the
ratable benefit of the Banks, of an amendment fee in the amount
of $25,000 and an additional facility fee in the amount of
$2,167.
ARTICLE IV
GENERAL
4.1. Full Force and Effect. As expressly amended hereby,
the Loan Agreement shall continue in full force and effect in
accordance with the provisions thereof. As used in the Loan
Agreement, "hereinafter," "hereto," "hereof," and words of
similar import shall, unless the context otherwise requires, mean
the Loan Agreement as amended by this Amendment.
4.2. Applicable Law. This Amendment shall be governed by
and construed in accordance with the internal laws and judicial
decisions of the State of North Carolina.
4.3. Counterparts. This Amendment may be executed in two
or more counterparts, each of which shall constitute an original,
but all of which when taken together shall constitute but one
instrument.
4.4. Further Assurance. The Borrower shall execute and
deliver to the Agent and the Banks such documents, certificates
and opinions as the Agent may reasonably request to effect the
amendment contemplated by this Amendment.
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4.5. Headings. The headings of this Amendment are for the
purposes of reference only and shall not affect the construction
of this Amendment.
4.6. Valid Amendment. The parties acknowledge that this
Amendment complies in all respects with Section 13.1 of the Loan
Agreement, which sets forth the requirements for amendments
thereto.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered by their duly authorized
officers to be effective as of the date first above written.
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, N.A., individually and as
Agent
By: /s/ Kent L. Phillips
Title: Vice President
WACHOVIA BANK OF NORTH CAROLINA, N.A.
By: /s/ Pete T. Callahan
Title: Vice President
CULP, INC.
By: /s/ Franklin N. Saxon
Title: Vice President and Chief
Financial Officer
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Annex I
Commitment Amount Commitment Amount Percentage of
Name of Banks Term Loans Revolving Loans Aggregate Commitments
First Union National $26,400,000 $20,100,000 60.0%
Bank of North Carolina
209 North Main Street
High Point, NC 27260
Wachovia Bank of North $17,600,000 $13,400,000 40.0%
Carolina, N.A.
200 North Main Street
Post Office Box 631
High Point, NC 27261
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Exhibit 2-A
SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE
$20,100,000 High Point, North Carolina
March 6, 1995
FOR VALUE RECEIVED, CULP, INC,, a North Carolina corporation
(herein called the "Borrower") , promises to pay to the order of
FIRST UNION NATIONAL BANK OF NORTH CAROLINA (the "Bank"), or
order, on the Revolving Loan Termination Date (as defined in the
1994 Amended and Restated Credit Agreement dated as of April 15,
1994 between the Borrower, the Bank (for itself and as Agent) and
Wachovia Bank of North Carolina, N.A. (as amended, restated,
modified or supplemented, the "Credit Agreement")), at the office
of FIRST UNION NATIONAL BANK OF NORTH CAROLINA, High Point, North
Carolina, in lawful money of the United States of America, the
principal amount of Twenty Million One Hundred Thousand and
No/100 Dollars ($20,100,000). This Revolving Credit Note shall
bear interest on the outstanding principal balance from time to
time as provided in the Credit Agreement and interest shall be
payable at the times set forth in the Credit Agreement.
Notwithstanding the foregoing, the Borrower shall be liable
for payment to the Bank only for such principal amount of the
First Union Revolving Loan (as defined in the Credit Agreement)
as is outstanding, together with interest at the rate per annum
as aforesaid on the principal amount outstanding from the date of
advance.
This Note is the First Union Revolving Credit Note referred
to in the Credit Agreement and is entitled to the benefits
thereof and may be prepaid in whole or in part as provided
therein. Capitalized terms used herein without definition have
the meanings specified in the Credit Agreement.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, or in any other
document or instrument delivered in connection therewith, all
amounts then remaining unpaid on this Note may be declared to be
immediately due and payable as provided in the Credit Agreement.
In the event the indebtedness evidenced or secured hereby be
collected by or through an attorney at law after maturity, the
holder shall be entitled to collect reasonable attorneys' fees.
Demand, presentment, protest, notice of protest, and notice of
dishonor are hereby waived by all parties bound hereon.
[CORPORATE SEAL] CULP, INC.
ATTEST: By: _________________________
________ President
______________________
Secretary
Exhibit 2-B
SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE
$13,400,000 High Point, North Carolina
March 6, 1995
FOR VALUE RECEIVED, CULP, INC,, a North Carolina corporation
(herein called the "Borrower") , promises to pay to the order of
WACHOVIA BANK OF NORTH CAROLINA, N.A. (the "Bank"), or order, on
the Revolving Loan Termination Date (as defined in the 1994
Amended and Restated Credit Agreement dated as of April 15, 1994
between the Borrower, the Bank and First Union National Bank of
North Carolina (for itself and as Agent) (as amended, restated,
modified or supplemented, the "Credit Agreement")), at the office
of FIRST UNION NATIONAL BANK OF NORTH CAROLINA (as the Bank's
Agent and for the benefit of the Bank), High Point, North
Carolina, in lawful money of the United States of America, the
principal amount of Thirteen Million Four Hundred Thousand and
No/100 Dollars ($13,400,000). This Revolving Credit Note shall
bear interest on the outstanding principal balance from time to
time as provided in the Credit Agreement and interest shall be
payable at the times set forth in the Credit Agreement.
Notwithstanding the foregoing, the Borrower shall be liable
for payment to the Bank only for such principal amount of the
Wachovia Revolving Loan (as defined in the Credit Agreement) as
is outstanding, together with interest at the rate per annum as
aforesaid on the principal amount outstanding from the date of
advance.
This Note is the Wachovia Revolving Credit Note referred to
in the Credit Agreement and is entitled to the benefits thereof
and may be prepaid in whole or in part as provided therein.
Capitalized terms used herein without definition have the
meanings specified in the Credit Agreement.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, or in any other
document or instrument delivered in connection therewith, all
amounts then remaining unpaid on this Note may be declared to be
immediately due and payable as provided in the Credit Agreement.
In the event the indebtedness evidenced or secured hereby be
collected by or through an attorney at law after maturity, the
holder shall be entitled to collect reasonable attorneys' fees.
Demand, presentment, protest, notice of protest, and notice of
dishonor are hereby waived by all parties bound hereon.
[CORPORATE SEAL] CULP, INC.
ATTEST: By: _________________________
________President
______________________
Secretary
Exhibit 3
SUBSIDIARIES
1. Culp International, Inc.
2. Guilford Printers, Inc.
3. 3096726 Canada Inc.
4. Rayonese Textile Inc.