EX-10.1 AMENDMENT NO. 3 TO MASTER SECURITY AGREEMENT

Contract Categories: Business Finance - Security Agreements
EX-10.1 2 g99058exv10w1.txt EX-10.1 AMENDMENT NO. 3 TO MASTER SECURITY AGREEMENT EXHIBIT 10.1 [CIT LOGO] EQUIPMENT RENTAL AND FINANCE - US 1540 W. FOUNTAINHEAD PKWY. TEMPE, AZ 85282 December 28, 2005 Avondale Mills, Inc. 506 South Broad Street Monroe, GA 30655-2172 Attention: Jack R. Altherr, Jr. Re: Amendment #3: Financial Reports and Covenant Rider (the "Rider") to Master Security Agreement (the "Agreement") dated July 30, 2002 between Avondale Mills, Inc. as Debtor, and The CIT Group/Equipment Financing, Inc. as Secured Party. Mr. Altherr: Debtor has notified Secured Party that Debtor will fail to comply with the Fixed Charge Coverage Ratio, and the Consolidated Adjusted Tangible Net Worth Covenant under the Rider to the Agreement, during the fiscal years of 2006 and 2007, which failure would result in an Event of Default under Section 9(b) of the Agreement. Secured Party agrees to amend the covenants as follows: COVENANT : FIXED CHARGE COVERAGE RATIO
QUARTER EXISTING PROPOSED - -------------------------------------------------- --------------------------- ----------------------------- 1st Quarter, Fiscal Year 2006 =/>1.50x =/>1.25x 2nd Quarter, Fiscal Year 2006 =/>1.50x =/>1.00x 3rd Quarter, Fiscal Year 2006 =/>1.50x =/>1.00x 4th Quarter, Fiscal Year 2006 =/>1.50x =/>1.00x 1st Quarter, Fiscal Year 2007 =/>1.50x =/>1.25x 2nd Quarter, Fiscal Year 2007 =/>1.50x =/>1.50x
COVENANT : MINIMUM TANGIBLE NET WORTH
QUARTER EXISTING PROPOSED - -------------------------------------------------- --------------------------- ----------------------------- 1st Quarter, Fiscal Year 2006 $100MM $85MM 2nd Quarter, Fiscal Year 2006 $100MM $75MM 3rd Quarter, Fiscal Year 2006 $100MM $75MM 4th Quarter, Fiscal Year 2006 $100MM $75MM 1st Quarter, Fiscal Year 2007 $100MM $75MM 2nd Quarter, Fiscal Year 2007 $100MM $75MM
Provided, however, (i) the amendment set forth in this letter shall not constitute an amendment of any other covenant, or of any other Event of Default or event which with notice or the passage of time or both would be an Event of Default under the Agreement, (ii) the Agreement shall remain in full force and effect, and unchanged except as set forth in this letter amendment and (iii) notwithstanding the amendment of the financial covenants in this letter, Debtor is hereby advised that the Secured Party shall demand strict compliance by the Debtor with the terms of the Agreement at all times and the Secured Party reserves all rights and remedies with respect thereto. The effectiveness of this amendment shall be subject to the Secured Party's receipt of a $30,000.00 amendment fee. Please indicate your agreement with the foregoing by executing this letter and returning it to the undersigned with the amendment fee no later than December 31, 2005. THE CIT GROUP/EQUIPMENT FINANCING, INC. By: ---------------------------------- Title: Senior Credit Analyst AGREED TO: Debtor: Avondale Mills, Inc. Guarantor: Avondale Incorporated By By ------------------------------------- --------------------------------- Title Title ----------------------------------- ---------------------------------