EXHIBIT 99
Execution Version
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FIRST AMENDMENT AND WAIVER
This FIRST AMENDMENT AND WAIVER (this "First Amendment") is dated
as of October 10, 2003 and is entered into by and between XXX RIVER
INC., a Georgia corporation (the "Borrower") and DEUTSCHE BANK TRUST
COMPANY AMERICAS, in its capacity as the Agent for the Lenders under
the Credit Agreement referred to below (in such capacity, the
"Agent").
RECITALS:
WHEREAS, pursuant to that certain Credit Agreement, dated as of
April 15, 2003, by and among (among others) the Borrower, the Agent
and the lenders from time to time party thereto (collectively, the
"Lenders") (as amended, restated, supplemented or otherwise modified
from time to time, the "Credit Agreement"), the Lenders have agreed to
make certain Loans and issue certain Letters of Credit to and for the
benefit of the Borrower;
WHEREAS, an Event of Default has occurred and is continuing under
Section 9.1(b) of the Credit Agreement as a result of the Borrower's
failure to satisfy the maximum leverage covenant set forth in Section
8.1(b) of the Credit Agreement for the Fiscal Quarter ending September
27, 2003 (the "Existing Default");
WHEREAS, the Agent, upon the written consent of the Majority
Lenders, is willing to waive the Existing Default and agree to certain
amendments to the Credit Agreement, in each case on the terms and
subject to the conditions set forth in this First Amendment; and
WHEREAS, unless otherwise defined herein, capitalized terms used
in this First Amendment shall have the same definitions as are
contained in the Credit Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and incorporating
the foregoing recitals herein, the parties hereto agree as follows.
ARTICLE I.
ACKNOWLEDGMENTS
1.1 Acknowledgment of Events of Default; Enforceability of
Credit Agreement and Credit Documents; Waiver of Defenses. The
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Borrower acknowledges that: (i) the Existing Default has occurred
and is continuing under the Credit Agreement and constitutes a Default
and an Event of Default thereunder; (ii) to the extent that
the Credit Agreement or any of the other Credit Documents require
notification by the Agent or the Lenders of the existence of a Default
or Event of Default and of an opportunity for the Borrower to
cure such Default or Event of Default, such notice and period for cure
have been properly given or such requirements have been or are hereby
waived by the Borrower; (iii) as a result of the Existing Default, and
but for the waiver provided for in this First Amendment, the Agent, on
behalf of the Secured Parties, and/or the other Secured Parties,
without the need for further notice or declaration with respect to the
Existing Default to the Borrower or any other entity, would be
entitled to exercise any and all of their rights and remedies under
the Credit Agreement and the other Credit Documents; (iv) the Credit
Agreement and the other Credit Documents are valid legal agreements,
enforceable against the Borrower and each of its Subsidiaries that is
a party to any such Credit Document in every respect and all of the
terms and conditions thereof are binding upon the Borrower and such
Subsidiaries; (v) the Loans and other Obligations owing to the Lenders
under the Credit Agreement and the other Credit Documents represent
the legal obligations of the Borrower without defense, offset or
counterclaim, and (vi) no defenses, set-offs or counterclaims exist
with respect to the enforcement by the Agent or any Secured Party of
their respective rights under the Credit Agreement or any other Credit
Document; provided, however, to the extent that any such defenses, set-
offs or counterclaims exist, the Borrower and each such Subsidiary
hereby waive any and all such defenses, set-offs and counterclaims
which either the Borrower or any such Subsidiary may have or claim to
have relating to or arising from the transactions reflected in the
Credit Documents or to the enforcement by the Agent or the other
Secured Parties of their respective rights and remedies under the
Credit Agreement, the other Credit Documents and applicable law.
1.2 Acknowledgment of Indebtedness. The Borrower acknowledges
that as of October 8, 2003, the Borrower was indebted to the Secured
Parties in the aggregate principal amount of $97,022,776.58 in the
form of outstanding Loans and Letters of Credit under the Credit
Agreement (together with interest thereon and certain fees payable in
connection therewith, but exclusive of any expenses and other amounts
payable thereunder), as more particularly set forth on Schedule 1.2
attached hereto. The Borrower acknowledges such amounts are
outstanding under the Credit Agreement and continue to be owed to the
Secured Parties along with all other amounts for accrued interest,
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fees, costs and expenses and that such other amounts shall continue to
accrue under the Credit Agreement.
1.3 Acknowledgment of Liens and Grant of Security Interests.
The Borrower acknowledges that it has granted the Agent, for the
benefit of the Secured Parties, security interests in and liens upon
the Collateral pursuant to the Collateral Documents, which security
interests and liens are perfected and, except where otherwise
permitted thereunder, of the first priority and which security
interests and liens secure the obligations of the Borrower and the
other Credit Parties to the Secured Parties under the Credit
Documents. The Borrower further acknowledges the prior execution and
delivery of the Collateral Documents to the Agent, for the benefit of
the Secured Parties, and that, notwithstanding the execution and
delivery of this First Amendment, the Collateral Documents remain in
full force and effect and the rights and remedies of the Agent and the
Secured Parties thereunder, the obligations of the Borrower and the
other Credit Parties thereunder, and the liens and security interests
created and provided for thereunder remain in full force and effect
and shall not be affected, impaired or discharged hereby.
ARTICLE II.
LIMITED WAIVER
2.1 Waiver. Subject to the terms and conditions set forth in
this First Amendment (including, without limitation, Article VI), the
Agent, upon the consent of the Majority Lenders, hereby waives the
Existing Default.
2.2 Limitation. Nothing in this First Amendment, nor in any
communication between the Agent and/or any of the other Secured
Parties and the Borrower or any other Credit Party or any officer,
agent, employee, or representative of the Borrower or any Credit
Party, shall be construed as a waiver of or acquiescence to any
Default or Event of Default, except as otherwise expressly set forth
in this First Amendment. The execution and delivery of this First
Amendment shall not (i) constitute an extension, modification or
waiver of any aspect of the Credit Agreement or the other Credit
Documents (except as expressly provided herein); (ii) extend the terms
of the Credit Agreement or any other Credit Document or the due date
of any of the Obligations; (iii) give rise to any obligation on the
part of the Agent or the other Secured Parties to extend, modify or
waive any term or condition of the Credit Agreement or any of the
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other Credit Documents (except as expressly provided herein); or (iv)
give rise to any rights of setoff, defenses or counterclaims to the
right of the Agent and the other Secured Parties to compel payment and
performance of the Obligations or to otherwise enforce any of their
respective rights and remedies under the Credit Agreement and the
other Credit Documents. The Agent and the other Secured Parties
hereby expressly reserve all of their defenses, rights and remedies
under the Credit Documents and under applicable law or otherwise with
respect to any Default or Event of Default (except as expressly
provided herein with respect to the Existing Default).
ARTICLE III.
AMENDMENT
Subject to the terms and conditions set forth in this First
Amendment (including, without limitation, Article VI) and in reliance
upon the representations and warranties of the Borrower set forth
herein, the Credit Agreement is hereby amended as follows:
3.1 Amendments to Defined Terms. Section 1.1 of the Credit
Agreement is hereby amended by deleting clause (s) of the definition
of "Eligible Accounts Receivable" in its entirety and replacing it
with the following new clause (s):
"(s) any Account in respect of Kmart Corporation or any
Affiliate thereof, when aggregated with all other Eligible Accounts in
respect of Kmart Corporation and its Affiliates, exceeds the lesser of
ten percent (10%) in face value of all Eligible Accounts of the
Borrower combined then outstanding or $5,000,000, to the extent of
such excess, provided that any such Accounts supported or secured by
an Approved Backstop shall be excluded to the extent of the value of
such Approved Backstop for the purposes of such calculation."
3.2 Additional Defined Terms. Section 1.1 of the Credit
Agreement is hereby amended by inserting the following defined terms
in appropriate alphabetical order:
(a) ""Borrower's Financial Advisor" shall mean a nationally
recognized financial advisor with expertise in the areas of corporate
restructuring and crisis management, which financial advisor shall be
reasonably satisfactory to the Agent."
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(b) ""Operating EBITDA" shall mean, for any fiscal or
calendar period, without duplication, (a) consolidated operating
income before corporate items of the Consolidated Entities for such
period, plus (b) the amount of all depreciation and amortization,
including amortization of any goodwill or other intangibles, for such
period, to the extent deducted in determining consolidated operating
income in clause (a) above, all determined in a manner consistent with
the projections prepared by the Borrower and presented to the Lenders
on October 2, 2003 and otherwise consistent with the historical
accounting practices of the Borrower."
(c) ""Restructuring Plan" shall mean a detailed financial
plan to be prepared by the Borrower in consultation with Borrower's
Financial Advisor, which plan shall (a) set forth a proposal for
amendments, if any, to the Credit Documents and any other applicable
debt documents of the Borrower and (b) propose changes to the
Borrower's business plan and operations, in each case, as may be
necessary to optimize the Borrower's financial performance and to
ensure ongoing compliance with the terms and conditions of the Credit
Agreement and the Borrower's other debt facilities, which financial
plan shall be in form and substance reasonably satisfactory to the
Agent."
3.3 Mandatory Prepayments. (a) Section 2.4(b)(iii)(A) is
hereby amended by deleting the parenthetical clause at the end thereof
and replacing it with the following parenthetical clause: "(other
than, subject to Section 8.19, any such Net Asset Sale Proceeds not to
exceed $5,000 individually or $50,000 in the aggregate that are,
within 180 days of such Asset Sale, reinvested in the business of the
Borrower)".
(b) Section 2.4(b)(iii)(B) of the Credit Agreement is
hereby amended by deleting the parenthetical clause at the end
thereof.
3.4 Additional Affirmative Covenants. Article 7 of the Credit
Agreement is hereby amended by adding the following new section at the
end thereof:
"Section 7.20. Financial Advisor; Restructuring Plan. The
Borrower shall (a) engage the Borrower's Financial Advisor on or
before October 31, 2003, and thereafter retain the Borrower's
Financial Advisor until otherwise consented to by the Agent and (b)
deliver the Restructuring Plan to the Lenders on or before December 1,
2003."
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3.5 Additional Financial Covenant. Section 8.1 of the Credit
Agreement is hereby amended by adding the following new clause (c) at
the end thereof:
"(c) Minimum Operating EBITDA. The Borrower shall not
permit Operating EBITDA as of the last day of each of the following
fiscal periods to be less than the amount set forth below opposite
each such fiscal period on a cumulative basis:
Fiscal Period Minimum Operating EBITDA
------------- ------------------------
One month period ending
November 1, 2003: -$1,500,000
Two month period ending
November 29, 2003: -$2,750,000
Three month period ending
January 3, 2004: -$6,800,000
"
3.6 Events of Default. (a) Article 9 of the Credit Agreement
is hereby amended by deleting the words "or 7.19" in the fourth line
of Section 9.1(b) and replacing them with the words ", 7.19 or 7.20".
(b) Article 9 of the Credit Agreement is hereby further
amended by deleting the word "or" at the end of Section 9.1(j)
thereof, deleting the period and replacing it with the phrase "; or"
at the end of Section 9.1(k) thereof and inserting the following
clause (l) at the end thereof:
"(l) Excess Availability shall at any time be less than
$15,000,000."
ARTICLE IV.
RELEASE AND INDEMNITY
4.1 Recognizing and in consideration of the Agent's agreement
(upon the consent of the Majority Lenders) to waive the Existing
Default and agree to the amendments set forth in this First Amendment,
the Borrower, on its own behalf and on behalf of all persons or
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entities claiming by, through, or under the Borrower, does hereby
waive and release each of the Secured Parties and their respective
officers, attorneys, agents, and employees from any liability, suit,
damage, claim, loss or expense of any kind or nature whatsoever and
howsoever arising that the Borrower ever had or now has against any of
them arising out of or relating to any Secured Party's or the Agent's
acts or omissions with respect to this First Amendment, the Credit
Agreement, the other Credit Documents or any other matters described
or referred to herein or therein. The Borrower further agrees to
indemnify and hold the Agent and each Secured Party, and their
respective officers, attorneys, agents, and employees harmless from
any loss, damage, judgment, liability or expense (including counsel
fees) suffered by or rendered against the Agent, the other Secured
Parties or any of them on account of anything arising out of this
First Amendment, the Credit Agreement, the other Credit Documents or
any other document delivered pursuant hereto or thereto as of and
including the date of this First Amendment.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Agent and the
other Lenders as of the date hereof as follows:
5.1 Corporate Power. The Borrower has the requisite corporate
power and authority to execute and deliver this First Amendment and to
perform its obligations hereunder and under the Credit Documents (as
amended hereby). The execution, delivery and performance by the
Borrower of this First Amendment, and the performance by the Borrower
and by each other Credit Party of each Credit Document (as amended
hereby) to which it is a party have been duly approved by all
necessary corporate action of such Credit Party and no other corporate
proceedings on the part of such Credit Party are necessary to
consummate such transactions.
5.2 Authorization and Enforceability. This First Amendment has
been duly executed and delivered by the Borrower. Each of this First
Amendment and each Credit Document (as amended hereby) is the legal,
valid and binding obligation of each Credit Party party hereto and
thereto, enforceable against such Credit Party in accordance with its
terms, and is in full force and effect.
5.3 Defaults. Except for the Existing Default, no event has
occurred and is continuing that constitutes a Default or Event of
Default.
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5.4 Schedules and other Information. All information contained
in any schedule attached to this First Amendment or subsequently
delivered pursuant this First Amendment is or will be complete and
accurate as of the date hereof or thereof.
ARTICLE VI.
CONDITIONS TO EFFECTIVENSS
This Agreement shall not be effective until each of the following
conditions precedent shall have been satisfied.
6.1 Majority Lender Consent. The Majority Lenders shall have
consented in writing to the execution and delivery of this First
Amendment by the Agent (or the Agent shall have received evidence
satisfactory to it that such written consent has been provided).
6.2 Execution. The Agent, on behalf of the Lenders, shall have
executed this First Amendment and shall have received counterparts of
this First Amendment executed by the Borrower.
6.3 Representations and Warranties. Each of the representations
and warranties in Article V above shall be true and correct as of the
date of this First Amendment.
6.4 Payment of Fees and Expenses. The Borrower shall have paid
all of the accrued fees and expenses of the Agent and the Lenders
(including, without limitation, the fees and disbursements of counsel
for the Agent) for which invoices shall have been submitted.
6.5 Legal Opinion. The Agent and the Lenders shall have
received a legal opinion from appropriate counsel to the Borrower, in
form and substance reasonably satisfactory to the Administrative
Agent, dated as of the date hereof, as to certain customary matters,
including, without limitation, the due authorization, execution,
delivery and enforceability of this First Amendment, the
enforceability of the Credit Agreement, as amended hereby, and no
conflict with laws or material agreements.
6.6 Amendment Fee. In consideration of the waivers and
amendments contained in this First Amendment, the Borrower shall have
paid to the Agent, for the benefit of each Lender that has delivered
its written approval of this First Amendment prior to 5:00 p.m. (
New
York time) on October 10, 2003, an amendment fee equal to $250,000.
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ARTICLE VII.
MISCELLANEOUS.
7.1 Reference to and Effect on Credit Documents. On and after
the effectiveness of this First Amendment, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof" or words
of similar import referring to the Credit Agreement, and each
reference in each of the other Credit Documents to "the Credit
Agreement", "thereunder", "thereof" or words of similar import
referring to the Credit Agreement, shall mean and be a reference to
the Credit Agreement as amended by this First Amendment. Except as
otherwise expressly set forth herein, the Credit Agreement and each
other Credit Document shall continue to be, and shall remain,
unaltered and in full force and effect in accordance with their terms
and are hereby confirmed and ratified. To the extent that any
existing provision of the Credit Agreement or any other Credit
Document is inconsistent with the specific provisions of this First
Amendment, the provisions of this First Amendment shall control.
7.2 No Novation. This First Amendment shall not be deemed or
construed to be a satisfaction, restatement, novation or release of
the Credit Agreement or of any of the other Credit Documents or a
waiver by the Agent or any Lender of any of the defenses, rights or
remedies of the Agent and the Lenders under the Credit Agreement or
any of the other Credit Documents or at law or in equity or otherwise.
7.3 Reaffirmation. The Borrower hereby reaffirms each and every
covenant, condition, obligation and provision set forth in the Credit
Documents.
7.4 Additional Action. The parties agree to take such further
action to execute and deliver to each other such additional
agreements, instruments and documents as may reasonably be required to
carry out the purposes and intent of this First Amendment.
7.5 Headings. Section and Article headings in this First
Amendment are included herein for convenience of reference only and
shall not constitute a part of this First Amendment for any other
purpose.
7.6 Severability. Any provision of this First Amendment which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
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7.7 Governing Law. THIS FIRST AMENDMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF
NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
7.8 Counterparts. This First Amendment may be executed in any
number of counterparts, and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall
constitute but one and the same instrument. Delivery of an executed
counterpart of a signature page to this First Amendment by facsimile
shall be effective as delivery of a manually executed counterpart of
this First Amendment.
7.9 Construction. The Borrower acknowledges that it has been
represented by its own legal counsel in connection with the
negotiation, execution and delivery of this First Amendment, that it
has exercised independent judgment with respect to this First
Amendment, and that it has not relied on the Agent or any Lender or on
the Agent's or any Lender's counsel for any advice with respect to
this First Amendment.
7.10 Lender Financial Advisor; Appraiser. The parties
acknowledge and agree that the Agent may, on behalf of itself and the
Lenders, (i) engage a nationally recognized financial advisor with
expertise in the areas of corporate restructuring and crisis
management (in addition to the Borrower's Financial Advisor) to advise
the Agent and the Lenders as to certain business and financial matters
relating to the Borrower and its subsidiaries and (ii) engage a
satisfactory appraiser to conduct an audit and appraisal of the
Borrower's machinery and equipment, in each case, the fees and
expenses of which shall be paid by the Borrower in accordance with
Section 4.7 of the Credit Agreement.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed and delivered by their proper and duly
authorized officers as of the date first set forth above.
BORROWER:
XXX RIVER INC., a Georgia corporation
By: _______________________________
Name:
Title:
AGENT:
DEUTSCHE BANK TRUST COMPANY AMERICAS, in
its capacity as Agent for and on behalf
of the Lenders
By: _______________________________
Name:
Title:
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SCHEDULE 1.2
PRINCIPAL, INTEREST AND UNUSED LINE FEES
ON LOANS AND LETTERS OF CREDIT
Term Loans $ 37,142,857.00
Revolving Loans $ 55,488,740.80
Letters of Credit $ 4,269,643.00
-----------------
PRINCIPAL AMOUNT OF
LOANS AND LETTERS OF
CREDIT OUTSTANDING: $ 96,901,240.80
Term Loan Interest $ 49,373.21
Revolving Loan Interest $ 61,421.40
Unused Line Fee(Revolving Commitments) $ 8,400.37
Letter of Credit Fees $ 2,340.80
-------------------
INTEREST AND UNUSED
LINE FEES OUTSTANDING: $ 121,535.78
----------------
TOTAL PRINCIPAL, INTEREST AND
UNUSED LINE FEES OUTSTANDING: $ 97,022,776.58
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