GMAC COMMERCIAL FINANCE LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
August 9, 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 hereby acknowledges, confirms and agrees that Borrower has
failed to comply with Section 6.9 of the Credit Agreement ( EBITDA) for the four
quarter period ended as of the last day of Borrower's Fourth Quarter Fiscal Year
2005 and as a result of such noncompliance, an Event of Default had occurred and
is continuing under Section 10.5 of the Credit Agreement (the "Existing
Default")
Borrower has requested that Agent and Lenders agree to waive the
Existing Default 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 hereby 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 in the Credit Agreement.
2. WAIVER.
A. MINIMUM EBITDA. Agent and Lenders hereby waive the Event of
Default occurring under Section 10.5 of the Credit Agreement arising solely from
Borrower's failure to comply with the provisions of Section 6.9 of the Credit
Agreement as of the last day of Borrower's Fourth Quarter of Fiscal Year 2005,
subject to the terms and conditions set forth herein and 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. WAIVER FEE. In consideration of the waiver agreed to by Agent
hereunder, Borrower shall pay to Agent a waiver fee in the amount of $10,000
(the "Waiver Fee"). The Waiver 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 Fee to Client's account as of the date
hereof.
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 to read in its entirety as
follows:
"Applicable Margin for Eurodollar Rate Loans" shall mean
four percent (4%)."
5. SUPPLEMENTAL AMOUNT. Section 1.2 of the Credit Agreement is hereby
amended by the addition thereto of the following term:
"Supplemental Amount" means (i) $3,000,000 through and until
February 28, 2006, and (ii) $0 thereafter.
6. TOTAL REVOLVING ADVANCES. The first two sentences of Section 2.1(a)
of the Credit Agreement are hereby amended to read in their entirety as follows:
"2.1 (a) Total Revolving Advances. Subject to the terms and
conditions set forth in this Agreement, each Lender, severally and
not jointly, shall make Revolving Advances to Borrower in
aggregate amounts outstanding at any time not greater than such
Lender's Commitment Percentage of the lesser of (x) the Maximum
Loan Amount, less the aggregate undrawn amount of outstanding
Letters of Credit, and (y) an amount equal to the sum of:
(i) ninety percent (90%) ("Receivables Advance Rate") of
Eligible Receivables; plus
(ii) fifty percent ("Inventory Advance Rate", and, together
with the Receivables Advance Rate, the "Advance Rates") of the
value of Eligible Inventory, it being acknowledged by Borrower
that Agent may, in its sole and absolute discretion, establish
from time to time limits on the maximum amount of Revolving
Advances made in respect of Eligible Inventory; plus
(iii) the Supplemental Amount; minus
(iv) the aggregate undrawn amount of outstanding Letters of
Credit; minus
(v) Reserves.
The amount derived from the sum of 2.1(a)(y)(i), plus
2.1(a)(y)(ii), plus 2.1(a)(y)(iii), minus 2.1(a)(y) (iv) and
minus 2.1(a)(y)(v) at any time and from time to time shall be
referred to herein as the "Formula Amount"."
7. ACCOMMODATION FEE. The Credit Agreement is hereby amended by the
addition of the following as paragraph (b) of Section 3.3 thereof and
the amendment of the title of Section 3.3 to read "Commitment Fee;
Accommodation Fee":
"(b) Borrower shall pay Agent, for the ratable benefit of the Lenders,
a fee of Thirty Thousand Dollars ($30,000) for each calendar month (or
portion thereof) during the Term (but not in excess of $30,000 for any
calendar month) in which the outstanding Revolving Advances exceed, on
any three or more days during such month, the following: the sum of
Section 2.1(a)(y)(i), plus Section 2.1(a)(y)(ii), minus Section
2.1(a)(y)(iv) and minus Section 2.1(a)(y)(v). Agent shall charge such
fee to Borrower's account on the first day of each calendar month for
the preceding month, if applicable."
8. EBITDA COVENANT. Section 6.9 of the Credit Agreement is hereby
amended and restated to read in its entirety as follows:
"6.9 EBITDA. Maintain, as of the last day of each
fiscal quarter of Borrower in Fiscal Year 2006, EBITDA (calculated
quarterly on a trailing 12-month basis) of not less than the following:
Fiscal Quarter 1: ($3,100,000)
Fiscal Quarter 2: ($1,000,000)
Fiscal Quarter 3: $900,000
Fiscal Quarter 4: $2,400,000.
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."
9. VARIANCES FROM OPERATING BUDGET. Section 9.13 of the Credit
Agreement is hereby amended in its entirety to read as follows:
"9.13 Variances from Operating Budget. Furnish Agent and each of the
Lenders, concurrently with the delivery of the financial statements
referred to in Sections 9.7, 9.8 and 9.9, respectively, a written
report summarizing all material variances from budgets submitted by
Borrower pursuant to Section 9.12 and a discussion and analysis by
management with respect to such variances."
10. TERMINATION OF DEFERRED COMPENSATION PLAN. Borrower has requested
that Agent and Lender consent to the termination of, and payout of all accounts
under, the deferred compensation plan of Borrower and Guarantor (the "Deferred
Compensation Plan"). Borrower represents to Agent and the Lenders that the
balances allocable to the employees of Borrower under the Deferred Compensation
Plan as of July 2, 2005 were as set forth on the list of "Delta Woodside
Deferred Compensation Balances as of 7/2/05" submitted by Borrower to Agent.
Subject to the representation of Borrower in the preceding sentence being
materially correct, Agent, in its capacity both as Agent and as Lender, consents
to the termination and payout, by Borrower and Guarantor, of all accounts under
the Deferred Compensation Plan.
11. 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.
12. 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 respective grant to
Agent, on behalf 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 on behalf 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.
13. NO EVENT OF DEFAULT. Borrower represents and warrants to Agent
that, except as provided herein with respect to the violation of the EBITDA
covenant set forth in Section 6.9 of the Credit Agreement, no Default or Event
of Default has occurred and is continuing.
14. 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.
15. 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.
16. 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.
17. 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.
18. 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.
19. 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/ Xxxx Xxxxxx
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Title:
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ACKNOWLEDGED AND AGREED:
DELTA XXXXX, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Title: CEO
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