GMAC COMMERCIAL FINANCE LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
September 30, 2005
DELTA XXXXX, INC.
000 Xxxxx Xxxxx Xxxxx
Xxxxxxxx Xxx, XX 00000
Re: Waiver and Amendments
Gentlemen:
Reference is made to the Revolving Credit and Security Agreement, dated
as of March 31, 2000 (as the same now exists or may hereafter be amended,
restated, renewed, replaced, substituted, supplemented, extended, or otherwise
modified, the "Credit Agreement"), by and between DELTA XXXXX, INC. ("Borrower")
and GMAC COMMERCIAL FINANCE LLC, as successor by merger with GMAC COMMERCIAL
CREDIT LLC, as a lender and as agent for the lenders party to the Credit
Agreement from time to time (in such capacity, "Agent").
Borrower has advised Agent that Borrower anticipates that the annual
financial statements for Borrower's fiscal year ended July 2, 2005 to be
furnished to Agent pursuant to Section 9.7 of the Credit Agreement will include
a qualified report by Borrower's independent accountants and that, as a result,
it is not anticipated that such financial statements will meet the requirements
therefor set forth in Section 9.7.
Borrower has requested that Agent and Lenders agree to waive the Event
of Default that would arise from Borrower's anticipated failure to furnish Agent
with annual financial statements that satisfy the requirements of Section 9.7,
and make certain amendments to the Credit Agreement as hereinafter provided.
Agent and Lenders have agreed to accommodate Borrower's request subject to the
terms and conditions set forth herein, all as more particularly set forth below.
In consideration of the foregoing, and for good and other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used in this Letter re: Waiver and
Amendments (this "Agreement") and not otherwise defined shall have the meanings
ascribed to such terms, respectively, in the Credit Agreement.
2. WAIVER.
A. AGREEMENT TO WAIVE. Subject to the terms and conditions set
forth herein, Agent and Lenders hereby waive the Event of Default that would
arise under Section 9.7 of the Credit Agreement solely from Borrower's
furnishing Agent with financial statements for the fiscal year ended July 2,
2005 that include a qualified report of Borrower's accountants; provided, that
no other Default or Event of Default exists or is continuing.
B. RESERVATION OF RIGHTS. Agent and Lenders hereby reserve all
rights and remedies granted to Agent and Lenders under the Credit Agreement, the
Other Documents, applicable law or otherwise and nothing contained herein shall
be construed to limit, impair or otherwise affect the right of Agent to declare
a Default or an Event of Default with respect to any non-compliance with the
Credit Agreement or the Other Documents of which Agent does not have knowledge
as of the date hereof and any future non-compliance with any covenant, term or
provision of the Credit Agreement, the Other Documents or any other document now
or hereafter executed and delivered in connection therewith. Without limiting
the foregoing, nothing herein contained shall, or shall be deemed to, waive any
Default or Event of Default that Borrower has failed to disclose to Agent as of
the date hereof.
3. APPLICABLE MARGIN FOR DOMESTIC RATE LOANS. The definition of
"Applicable Margin for Domestic Rate Loans" set forth in Section 1.2 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
"Applicable Margin for Domestic Rate Loans" shall mean two and
seventy-five hundredths percent (2.75%)."
4. APPLICABLE MARGIN FOR EURODOLLAR RATE LOANS. The definition of
"Applicable Margin for Eurodollar Rate Loans" set forth in Section 1.2 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
"Applicable Margin for Eurodollar Rate Loans" shall mean five
percent (5.00%)."
5. EBITDA COVENANT. Section 6.9 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
"6.9 EBITDA. Maintain, as of the last day of each fiscal quarter
of Borrower in its fiscal year ending July 1, 2006, EBITDA (calculated
quarterly on a trailing 12-month basis) of not less than the following:
Fiscal Quarter 1: ($5,115,000)
Fiscal Quarter 2: ($3,720,000)
Fiscal Quarter 3: ($2,265,000)
Fiscal Quarter 4: ($1,340,000).
The failure of Agent and Borrower to execute a written amendment hereto
establishing an EBITDA covenant for the period subsequent to Borrower's
2006 Fiscal Year shall constitute an Event of Default hereunder. "
6. WAIVER AND ACCOMMODATION FEE. In consideration of the waiver and
amendments agreed to by Agent hereunder, Borrower shall pay to Agent a waiver
and accommodation fee in the amount of $50,000 (the "Waiver and Accommodation
Fee"). The Waiver and Accommodation Fee shall be fully earned and due on the
date hereof, and shall not be subject to refund, rebate or proration for any
reason whatsoever. Agent shall charge the Waiver and Accommodation Fee to
Client's account as of the date hereof.
7. INVENTORY APPRAISAL. Borrower agrees that within forty-five (45)
days of the date hereof, Borrower shall, at its sole expense, furnish Agent with
an updated appraisal of Borrower's Inventory conducted by an appraiser
acceptable to Agent in its sole and absolute discretion.
8. NO OTHER MODIFICATIONS. Except as specifically set forth herein, no
other changes or modifications to the Credit Agreement or the Other Documents
are intended or implied, and, in all other respects, the Credit Agreement and
the Other Documents shall continue to remain in full force and effect in
accordance with their respective terms as of the date hereof. Except as
specifically set forth herein, nothing contained herein shall evidence a waiver
by Agent or Lenders of any other provision of the Credit Agreement or the Other
Documents nor shall anything contained herein be construed as a consent by Agent
or Lenders to any transaction other than that specifically consented to herein.
9. ACKNOWLEDGEMENTS.
(a) Borrower hereby acknowledges, confirms and agrees that all
Obligations of Borrower in respect of Revolving Advances, Letters of Credit,
accrued and unpaid interest, and costs, fees, expenses and other sums and
charges incurred by Agent and the Lenders that are due and owing to Agent and
the Lenders under the Credit Agreement and the Other Documents (including
attorneys' fees and expenses) are owed by Borrower to Agent and the Lenders
without offset, defense or counterclaim of any kind, nature or description
whatsoever.
(b) Borrower hereby acknowledges, confirms and agrees that the
covenants, agreements and obligations of Borrower contained in or incurred under
the Credit Agreement and the Other Documents constitute the legal, valid and
binding obligations of Borrower, enforceable against Borrower in accordance with
the terms and conditions of the Credit Agreement and Other Documents, and
Borrower has no valid offset, defense or counterclaim to the enforcement of such
covenants, agreements and obligations.
(c) Borrower hereby ratifies and confirms its grant to Agent, for the
ratable benefit of the Lenders, of the first priority perfected liens upon, and
security interests in, its properties and assets located in the United States of
America heretofore mortgaged, pledged, granted or assigned to Agent for the
ratable benefit of the Lenders under the Credit Agreement and the Other
Documents (to the extent not heretofore released by Agent and Lenders in
writing), and acknowledges and confirms that such first priority perfected liens
and security interests secure, and shall continue to secure, the Obligations of
Borrower to Agent and the Lenders under the Credit Agreement and the Other
Documents, subject only to Permitted Encumbrances.
10. NO EVENT OF DEFAULT. Borrower represents and warrants to Agent that
no Default or Event of Default has occurred and is continuing.
11. RELEASES.
AS MATERIAL CONSIDERATION FOR THE EXECUTION OF THIS AGREEMENT BY
AGENT AND LENDERS (THE "RELEASED PARTIES") AND FOR OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED,
EFFECTIVE AS OF THE DATE HEREOF, BORROWER FOR ITSELF AND ON BEHALF OF ITS
RESPECTIVE DIRECTORS, OFFICERS, ADMINISTRATIVE AGENTS, EMPLOYEES,
REPRESENTATIVES, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE "RELEASORS") HEREBY
WAIVES, RELEASES, REMISES, ACQUITS AND DISCHARGES THE RELEASED PARTIES AND ALL
OF THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, ADMINISTRATIVE AGENTS,
EMPLOYEES, REPRESENTATIVES, SHAREHOLDERS, ATTORNEYS, ACCOUNTANTS, CONSULTANTS,
ADVISORS, SUCCESSORS, AND ASSIGNS (THE RELEASED PARTIES TOGETHER WITH THE
FOREGOING COLLECTIVELY, THE "RELEASEES") OF AND FROM ANY AND ALL CONTROVERSIES,
DAMAGES, COSTS, LOSSES, CAUSES OF ACTION, SUITS, JUDGMENTS, CLAIMS, RECOUPMENTS,
COUNTERCLAIMS OR DEMANDS, OF EVERY TYPE, KIND, NATURE, DESCRIPTION OR CHARACTER,
WHETHER NOW EXISTING OR THAT COULD, MIGHT, OR MAY BE CLAIMED TO EXIST, OF
WHATEVER KIND OR NAME, WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR UNLIQUIDATED,
FIXED OR CONTINGENT, FORESEEABLE OR UNFORESEEABLE, EACH AS THOUGH FULLY SET
FORTH HEREIN AT LENGTH.
12. NO THIRD PARTY BENEFICIARIES. The terms and provisions of this
Agreement shall be for the benefit of the parties hereto and their respective
successors and assigns; no other person, firm, entity or corporation shall have
any right, benefit or interest under this Agreement.
13. CONDITION TO EFFECTIVENESS. The terms and provisions of this
Agreement shall not be effective until this Agreement has been duly authorized,
executed and delivered by Borrower and Agent.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Agreement, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto. This Agreement may be executed and delivered via telecopier
with the same force and effect as if it were a manually executed and delivered
counterpart.
15. GOVERNING LAW. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York, but excluding any principles of
conflicts of law or other rule of law that would result in the application of
the law of any jurisdiction other than the laws of the State of New York.
16. MERGER. This Agreement sets forth the entire agreement and
understanding of the parties with respect to the matters set forth herein. This
Agreement cannot be changed, modified, amended or terminated except in a writing
executed by the party to be charged.
Very truly yours,
GMAC COMMERCIAL FINANCE LLC, as Agent and Lender
By: /s/ Xxxxxxxxx X. Xxxxxx
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Title: Vice President
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ACKNOWLEDGED AND AGREED:
DELTA XXXXX, INC.
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
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Title: Chief Financial Officer
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