Exhibit 99(c)
SECOND AMENDMENT TO NOTE PURCHASE AGREEMENTS
THIS SECOND AMENDMENT TO NOTE PURCHASE AGREEMENTS, dated as of the
6th
day of December, 2006 (this "Amendment"), is made by and between
Culp, Inc., a
North Carolina corporation (the "Company"), and the holders of
Notes (as defined
in the Note Purchase Agreements referred to below) listed on
Schedule A (the
"Noteholders").
RECITALS
A. The Company and certain financial institutions or entities have
heretofore
entered into separate and several Note Purchase Agreements, each
dated as of
March 4, 1998, as amended by that certain First Amendment to Note
Purchase
Agreements, dated as of January 31, 2002 (collectively, the "Note
Purchase
Agreements"), pursuant to which the Company has issued its
$20,000,000 7.76%
Series A Senior Notes due March 15, 2008 collectively (the "Series
A Notes") and
its $55,000,000 7.76% Series B Senior Notes due March 15, 2010
(collectively,
the "Series B Notes", and together with the Series A Notes, the
"Notes").
Capitalized terms used herein without definition shall have the
meanings given
to them in the Note Purchase Agreements.
B. The Company has requested that the Noteholders amend the Note
Purchase
Agreements as set forth herein, and the Noteholders have agreed to
effect such
amendments upon the terms and conditions set forth herein.
STATEMENT OF AGREEMENT
The parties hereto
agree as follows:
1.
Interest Rate.
Effective December 1,
2006, the principal amount of the
Notes will bear
interest at a rate equal to 8.80% per annum. Accordingly, all
references in the Note
Purchase Agreements to "7.76%" as the rate
of interest
applicable to the Notes shall be deemed to read "8.80%," and all references in
the Note Purchase
Agreements to "9.76%"
as the rate of interest applicable to
overdue payments of principal, interest or any Make-whole Amount
shall be deemed
to read "10.80%."
2.
Amendment to Section
5.15. Section 5.15 of each of the Note
Purchase
Agreements is amended
by replacing the
reference to "March 8,
1998" with "the
Second Amendment Effective Date".
3.
Amendment to Section 8. Section 8 of each of the Note Purchase
Agreements is
amended by adding a new Section 8.2A, immediately following
Section 8.2, as follows:
Section 8.2A Mandatory Offers of Prepayment.
(a)
Within five (5) Business Days after any Asset Disposition (other than
(i)
Asset Dispositions in
any fiscal year of the Company with an aggregate
value not to exceed $250,000 and (ii) other Asset Dispositions made
between
the
Second Amendment
Effective Date and the date of maturity of the Series
B
Notes with an
aggregate value not to
exceed $1,000,000),
the Company
<PAGE>
shall give written
notice of such
Asset Disposition to each holder of
Notes, which notice
shall contain and
constitute
an offer to prepay
the
Notes as described in subparagraph (d) below in an amount equal to
100% of
the
Net Cash Proceeds received by such Person in connection with such
Asset
Disposition. Nothing
contained in this
subparagraph (a) shall
permit the
Company or any of its Subsidiaries to make any Asset Disposition
other than
in
accordance with Section 10.5.
(b)
Within five (5) Business Days after the issuance or
incurrence by the
Company or any of its Subsidiaries of any Priority Debt (including
Priority
Debt
permitted under Section 10.2) or capital stock, the Company shall
give
written notice of such
issuance or incurrence
of Debt or capital stock to
each
holder of Notes, which notice shall contain and constitute an offer
to
prepay the Notes as described in subparagraph (d) below in an amount equal
to
100% of the Net Cash Proceeds received by such Person in connection
with
such
issuance or incurrence. The provisions of this subsection shall not
be
deemed to be implied
consent to any such
issuance or incurrence
of Debt
otherwise prohibited by the terms and conditions of this
Agreement.
(c)
Within fifteen (15)
Business Days after the end of each fiscal quarter
of
the Company, the
Company shall give
written notice to each holder of
Notes of an offer to prepay the Notes as described in subparagraph (d)
below in an
amount equal to the Excess Cash as of the last day of
such
fiscal quarter,
unless Excess Cash as of the last day of such fiscal
quarter does not exceed $250,000.
(d)
The offer to prepay Notes contemplated by subparagraphs (a) through
(c)
above shall be an offer to prepay, in accordance with and subject to this
Section, scheduled
principal installments of the Notes of both
Series in
chronological order (first to principal installments due on March
15, 2007,
second to principal
installments due on March 15, 2008, third to principal
installments due on
March 15, 2009 and finally to principal installments
due
on March 15, 2010) on
a date specified
in such offer (the
"Proposed
8.2A
Prepayment
Date"), which Proposed 8.2A Prepayment
Date shall be not
less
than 15 days and not
more than 30 days
after the date of the offer
(and
if the Proposed
Prepayment Date is not
specified in such offer, the
Proposed Prepayment Date shall be the first Business Day after the
30th day
after the date of such offer).
(e) A holder of Notes
may accept the offer to prepay made pursuant to this
Section by
causing a notice of
such acceptance
to be delivered to the
Company at least five days prior to the Proposed 8.2A Prepayment Date. If
the
offer is rejected by any holder of Notes (either explicitly or through
the
absence of an
acceptance delivered
in accordance
with the preceding
sentence), the
Company at least four days prior to the Proposed 8.2A
Prepayment Date shall
give written notice to each holder of Notes that has
accepted the offer to prepay (the "Accepting Holders"), in which
notice the
Company shall (i) state the aggregate outstanding principal amount
of Notes
in
respect of which the offer has been rejected (the "Rejected
2
<PAGE>
Prepayment"), and (ii) offer to increase the prepayment of the
Notes of the
Accepting Holders
by an amount
equal to the
Rejected Prepayment, such
further prepayment to be
applied to scheduled principal installments of the
Notes held by the Accepting Holders in chronological order.
(f)
Prepayment of the Notes to be prepaid pursuant to this Section
shall be
made, together with interest accrued on the amount so prepaid,
but without
Make-Whole Amount
or other premium, on the applicable Proposed 8.2A
Prepayment Date.
4.
Amendment to Section 8.4. Section 8.4 of each of the Note
Purchase
Agreements is hereby replaced in its entirety with the
following:
Section 8.4
Allocation
of Partial Prepayments. In the case of partial
prepayment of the Notes (other than a prepayment pursuant to
Section 8.2 or
Section 8.2A),
the principal amount of the Notes to be prepaid
shall be
allocated among all of the Notes of both Series at the time
outstanding in
proportion, as nearly
as practicable, to the
respective unpaid
principal
amounts thereof not
theretofore called for
prepayment. In the
case of an
offer of partial
prepayment of the
Notes pursuant to
Section 8.2A,
the
principal amount of
the Notes offered
to be prepaid
shall be allocated
among all of the Notes (or if the offer is made under Section
8.2A(e), all
of
the Notes of the Accepting Holders) of both Series at the time
outstanding in
proportion,
as nearly as
practicable,
to the respective
scheduled principal
installments
on such Notes
next due and
payable in
chronological order,
and with respect to each scheduled principal payment,
shall be allocated pro rata among the holders, or the Accepting
Holders, as
appropriate, to whom such scheduled payment is due.
5.
Amendment to Section
10.1. Section 10.1 of each of the Note
Purchase
Agreements is hereby replaced in its entirety with the
following:
Section 10.1. Certain
Financial Limits. The
Company shall not at any time
permit:
(a)
Tangible Net Worth to be less than the sum
of (i) $60,000,000,
plus
(ii)
an aggregate amount
equal to 50% of its Consolidated Net Income (but,
in
each case, only if a positive number) for each completed fiscal
quarter
beginning with the
fiscal quarter ended
January 27, 2002,
plus (iii) an
amount equal to
Restructuring Charges
for each completed
fiscal quarter
beginning with the fiscal quarter ended January 28, 2007; or
(b)
Capital Expenditures
of the Company and its Subsidiaries to exceed (i)
$3,000,000 in the aggregate during the Company's 2007 fiscal year, (ii)
$4,000,000 in the aggregate during the Company's 2008 fiscal year
and (iii)
for
any fiscal year of the Company thereafter, the sum of (A) $4,000,000
and
(B) such additional amount of Capital Expenditures that may be
incurred
without causing the Company to have a Fixed Charge Coverage Ratio
(measured
3
<PAGE>
for
the most recently
ended four fiscal
quarters of the Company for which
financial statements
have been delivered to the holders of the
Notes and
giving pro
forma effect to the incurrence of such additional Capital
Expenditures as if
they had been incurred during such period) of less than
2.25:1.0.
6.
Amendment to Section 10.2(a). Section 10.2(a) of each of the Note
Purchase Agreements is
hereby amended by (a) replacing the reference to "10% of
Consolidated Net
Worth" in subparagraph (3)(ii) thereof with "15% of
Consolidated Net
Worth" and (b) replacing subparagraph (4) thereof in its
entirety with the following:
(4)
Notwithstanding the
foregoing, (i)
Consolidated Funded Debt shall not
at
any time exceed: (A)
65% of Tangible
Capitalization during
the period
from
the Effective Date of the First Amendment (as defined therein)
through
April 30, 2003; (B) 57% of Tangible Capitalization during the period from
May
1, 2003 through April 30, 2004; and (C) 50% of Tangible
Capitalization
at
any time thereafter;
and (ii) from and
after the Effective Date of the
First Amendment (as
defined therein),
the Company will not,
and will not
permit any
Subsidiaries to,
declare or make,
or incur any
liability to
declare or make, any Restricted Payment, unless the Fixed Charge
Coverage
Ratio (measured
for the most recently
ended four fiscal
quarters of the
Company for which
financial statements
have been delivered to the holders
of
the Notes and giving pro forma effect to such Restricted Payment as if
it
had been paid during such period) is at least equal to
2.25:1.00.
7.
Addition of New
Sections 10.2(c) and
10.2(d). Section 10.2
of each of
the Note Purchase
Agreements
is further
amended by inserting
the following
paragraphs (c) and (d) at the end of such Section:
(c)
Without limitation of the foregoing restrictions, the Company shall
not
at
any time permit Priority Debt to exceed 15% of Consolidated Net
Worth.
(d) The Net Cash
Proceeds of the
issuance or
incurrence
of any Priority
Debt
shall be applied in accordance with Section 8.2A(b).
8.
Amendment to Section
10.3. Section 10.3 of each of the Note
Purchase
Agreements is
amended by
replacing subparagraph (k) of such Section in its
entirety with the following:
(k)
other Liens not
otherwise permitted by paragraphs (a) through (j)
securing Debt other than the principal credit facilities of the
Company and
its
Subsidiaries
from time to time;
provided that after
giving effect to
the
imposition of such Lien and the incurrence of the obligation secured
thereby, Priority Debt shall not exceed 15% of Consolidated Net
Worth.
4
<PAGE>
9.
Amendment to Section
10.5. Section 10.5 of each of the Note
Purchase
Agreements is amended
by replacing such Section in its entirety with the
following:
Section 10.5 Sale of Assets, etc. Except as permitted under Section
10.4,
the
Company will not, and will not permit any of its Subsidiaries to, make
any
Asset Disposition unless:
(a)
in the good faith opinion of the Company, the Asset Disposition is in
exchange for
consideration
having a Fair Market
Value at least equal
to
that
of the property
exchanged and is in
the best interest of the Company
or
such Subsidiary; and
(b)
immediately prior to and after giving effect to the Asset
Disposition,
no
Default or Event of Default would exist; and
(c)
immediately
after giving effect to the Asset Disposition, the
Disposition Value
of all property that was the subject of any Asset
Disposition occurring
in the then current fiscal year of the Company would
not
exceed 15% of Consolidated Assets as of the end of the then most
recently ended fiscal quarter of the Company; and
(d)
the Net Cash Proceeds
from the Asset Disposition are applied in
accordance with Section 8.2A(a).
10.
Amendment to Section 10. Section 10 of each of the Note
Purchase
Agreements is amended
by adding the
following as new
Sections 10.7 through
10.11:
Section 10.7.
Sale and Lease-Back. The Company will not, and will not
permit any Subsidiary to, enter into or permit to remain in effect
any Sale
and
Leaseback Transaction with any Person.
Section 10.8. Sale or
Discount of
Receivables. The
Company will not, and
will
not permit any
Subsidiary to,
sell with recourse, or discount or
otherwise sell for
less than the face value thereof, any of its notes or
accounts receivable.
Section 10.9. Change in Business. The Company will not, and will
not permit
any
Subsidiary
to, enter into any business other than the business
presently conducted
by the Company and its
Subsidiaries
and businesses
reasonably related thereto.
Section 10.10. Loans,
Advances and Investments. The Company will not, and
will
not permit any Subsidiary to, make or permit to remain outstanding
any
loan
or advance to, or own,
purchase or acquire any stock, obligations or
securities of, or all
or a substantial
portion of the assets of, or any
other interest in, or make any capital contribution to, any Person (each,
an
"Investment"), except that the Company or any Subsidiary may:
5
<PAGE>
(i) make or permit
to remain outstanding Investments in or to any
Wholly-Owned
Subsidiary and
Investments
outstanding
on the Second
Amendment
Effective Date
and listed on Schedule 10.10 or any
Investments in
new Wholly-Owned Subsidiaries not in excess of
$2,000,000 in the aggregate;
(ii) acquire and own
stock, obligations
or securities received in
settlement of debts (created in the ordinary course of business)
owing
to the Company or any Subsidiary;
(iii) own,
purchase or acquire (A) prime commercial paper of, and time
deposits and
certificates of
deposit in, United
States commercial
banks (having
capital, surplus and undivided profits in excess of
$100,000,000) and
whose long-term
unsecured debt obligations (or the
long-term unsecured
debt obligations of the bank holding company
owning all of the capital stock of such bank) are rated in
one of the
top three rating classifications by at least one nationally
recognized
rating agency (a
"Qualifying Bank"),
in each case to the
extent due
within one year from the date of purchase and payable in the United
States in United States dollars, direct obligations of, or
obligations
guaranteed by the United States of America, or any agency acting as
an
instrumentality of the
United States of America pursuant to authority
granted by the
Congress of the United
States of America, so
long as
such obligation or
guarantee shall have the benefit of the full faith
and credit of the
United States of America which shall have been
pledged pursuant to
authority granted by the Congress of the
United
States of America and (B) money market accounts with any Qualifying
Banks, which accounts invest solely in assets of the type described
in
clause (A);
(iv) make or
permit to remain outstanding travel and other like
advances to officers and employees in the ordinary course of
business;
(v) Capital
Expenditures
permitted to be made pursuan
