SECOND AMENDMENT AND WAIVER AGREEMENT
THIS SECOND AMENDMENT AND WAIVER AGREEMENT (this "Agreement" or
the Second Amendment and Waiver), dated as of December 20,
1996, is entered into by and among Delta Woodside Industries, Inc.
(the "Borrower"), the guarantorsidentified as such on the signature
pages attached hereto (the "Subsidiary Guarantors;" collectively,
the Borrower and the Subsidiary Guarantors are referred to as the
"Credit Parties"), the lenders identified as such on the signature
pages hereto (the "Lenders"), NationsBank, N.A., as Agent (the
"Agent") for the Lenders, and Bank of America National Trust and Savings
Association and The Bank of New York, as Co-Agents (the "Co-Agents")
for the Lenders.
RECITALS
A. The Borrower, the Lenders, the Agent and the Co-Agents
entered into that certain Amended and Restated Credit Agreement
dated as of March 15, 1996, as amended from time to time thereafter
(the "Existing Credit Agreement").
B. The Subsidiary Guarantors and the Agent entered into that
certain Amended and Restated Guaranty Agreement dated as of March 15, 1996
(the "Subsidiary Guaranty").
C. Pursuant to that certain Amendment and Waiver Agreement,
dated as of May 20, 1996, among the Borrower, the Subsidiary Guarantors,
the Lenders, the Agent and the Co-Agents, the Lenders temporarily
waived the Borrower's failure to comply with Sections 9.1(a) and 9.1(d) of
the Existing Credit Agreement for the Fiscal Quarter ended March
31, 1996 (the "Initial Financial Covenant Defaults").
D.The Borrower has also failed to comply with: (1) Sections
9.1(a), (b) and (d) of the Existing Credit Agreement for the
Fiscal Quarter ended June 29, 1996, and Sections 9.1(a) and (b)
of the Existing Credit Agreement for the Fiscal Quarter ended
September 28, 1996, respectively (the Subsequent Financial
Covenant Defaults); and (2) Section 4.4(a)(i) governing the
mandatory prepayment of outstanding Loans in excess of the
Borrowing Base (the Mandatory Payment Default) (the Initial
Financial Covenant Defaults, the Subsequent Financial Covenant
Defaults and the Mandatory Payment Default shall be referred to
collectively as the Existing Defaults)
E. The Borrower has requested that the Lenders (i) permanently
waive their right to enforce any of their rights and remedies
under the Existing Credit Agreement with respect to the Existing
Defaults and (ii) amend certain provisions of the Existing Credit
Agreement and the other Loan Documents in connection therewith.
F.The Lenders have agreed to execute and deliver this Agreement
on the terms and conditions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1 General Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Agreement,
including the preamble and recitals, have the meanings provided in the
Amended Credit Agreement.
SUBPART 1.2 Certain Definitions. Unless the context otherwise
requires, the following terms used in this Agreement shall have the indicated
definitions:
Amended Credit Agreement means the Existing Credit Agreement as
amended hereby.
Amendment No. 2 Execution Date means the date upon which the
Agent has received duly executed signature pages to this Second Amendment
and Waiver from each of the Credit Parties, the Lenders, and the Co-Agents.
Amendment No. 2 Effective Date has the meaning ascribed to such
term in Subpart 6.1 of this Second Amendment and Waiver.
PART II
AMENDMENTS TO EXISTING CREDIT AGREEMENT
The Existing Credit Agreement is hereby amended in accordance
with this Part II. Except as so amended, the Existing Credit Agreement shall
continue in full force and effect.
SUBPART 2.1 Amendments to Section 1.1. Section 1.1 of the
Existing Credit Agreement is hereby amended by:
(a) amending in their entirety each of the following
definitions to read as follows:
"Collateral Documents" means, collectively, the Borrower Security
Agreement, the Subsidiaries Security Agreement, the Pledge
Agreement, the Leasehold Mortgage, any Mortgage, any assignments
of factoring proceeds and such other documents executed and
delivered in connection with the attachment and perfection of the
Agent's security interests and liens, for the benefit of the
Lenders, arising thereunder, including without limitation, UCC
financing statements.
"Loan Documents" means, collectively, this Agreement, the
Amendment and Waiver, the Second Amendment and Waiver, the Notes,
the Subsidiary Guaranty, the Applications, the Collateral
Documents and each of the other documents, instruments and
agreements referred to herein or contemplated hereby.
Permitted Indebtedness for Money Borrowed means
(a)Indebtedness for Money Borrowed of the Borrower represented by
the Loans and the Notes or arising under the Letters of Credit or
the related Applications;
(b)the Guaranteed Obligations;
(c)Intercompany Indebtedness;
(d)Existing Indebtedness;
(e) Indebtedness for recourse obligations incurred in connection
with any Permitted Receivables Financing (solely to the extent of
actual defaulted or delinquent receivables);
(f) Indebtedness for Money Borrowed owed by International Apparel
Marketing Corporation to the Borrower or any Subsidiary Guarantor
the aggregate principal amount of which outstanding at any time
does not exceed $1,000,000;
(g)Indebtedness for Money Borrowed representing obligations of
the Borrower or any Subsidiary Guarantor to General Electric
Capital Corporation for the financing of equipment leases, the
aggregate principal amount of which outstanding at any time does
not exceed $14,112,000, subject to review of the documentation
therefor satisfactory to the Agent and the Majority Lenders;
(h)Indebtedness for Money Borrowed comprised of term loan
financing secured by a mortgage on the distribution center owned
by Duck Head Apparel Company, Inc., located in ▇▇▇▇▇▇ County,
Georgia, the aggregate principal amount of which outstanding at
any time does not exceed $7,000,000, and the terms and conditions
of which are reasonably satisfactory to the Agent and the
Majority Lenders;
(i)other Indebtedness for Money Borrowed of the Borrower or any
of its Subsidiaries the aggregate principal amount of which
outstanding at any time does not exceed $10,000,000; and
(j)Guaranties of any Indebtedness for Money Borrowed described in
any of clauses (a) through (i) above.
provided, however, that the aggregate outstanding principal
amount of all Permitted Indebtedness for Money Borrowed
(exclusive of the obligations described in paragraph (g) above)
shall not exceed at any time an amount equal to $263,500,000
minus the aggregate amount of all reductions in the Commitments
from time to time pursuant to Section 4.3.
Permitted Liens means
(a)Liens securing taxes, assessments and other governmental
charges or levies (excluding any Lien imposed pursuant to any of
the provisions of ERISA) or the claims of materialmen, mechanics,
carriers, warehousemen or landlords for labor, materials,
supplies or rentals incurred in the ordinary course of business,
but in all cases only if payment shall not at the time be
required to be made in accordance with Section 7.6,
(b)Liens consisting of deposits or pledges made in the ordinary
course of business in connection with, or to secure payment of,
obligations under workers compensation, unemployment insurance or
similar legislation or obligations to utilities,
(c)Liens constituting encumbrances in the nature of zoning
restrictions, easements, and rights or restrictions of record on
the use of real property, which do not materially detract from
the value of such property as used by the Borrower or any of its
Subsidiaries, as applicable, or impair the use thereof in the
business of the Borrower or any Subsidiary,
(d)Liens existing on property of any Person at the time such
Person becomes a Subsidiary of the Borrower, but only if the
obligation secured by any such Lien is not in default and such
Lien is and remains confined to the property subject thereto at
the time such Person becomes a Subsidiary,
(e)Liens arising in connection with a Permitted Receivables
Financing, but (i) only to the extent of the applicable accounts
receivable subject to such Permitted Receivables Financing and
related property and, (ii) in the case of a Factoring Agreement,
only if the proceeds payable thereunder have been assigned to the
Agent for the benefit of the Lenders in a manner reasonably
acceptable to the Agent and the Majority Lenders,
(f)Existing Liens,
(g)Permitted Purchase Money Liens,
(h)Liens of an Issuer on goods or documents securing
reimbursement obligations with respect to a Letter of Credit
issued to insure the payment for such goods or documents,
(i)Liens created solely by the filing or recording of any
judgment in public records or by an attempt to execute on any
judgment, provided that in either such case no Event of Default
has occurred and is continuing under Section 10.1(j) with respect
to such judgment,
(j)Liens in favor of the Agent for the benefit of the Lenders or
the Lenders and the Issuers,
(k) Liens in favor of Carolina First Bank upon or against (i) the
distribution center in ▇▇▇▇▇▇ County, Georgia, owned by Duck Head
Apparel Company, Inc., in the nature of a security deed or
mortgage, provided that Carolina First Bank has executed and
delivered to the Agent a mortgagee lien waiver with respect to
the Collateral in favor of the Agent for the benefit of the
Lenders, such waiver to be in form and content reasonably
satisfactory to the Agent and the Majority Lenders, and (ii) a
certificate of deposit in a principal amount not to exceed
$500,000.00 held in the possession of Carolina First Bank, in
each case securing a term loan facility in an amount outstanding
at any one time not in excess of $7,000,000, and in each case on
such terms and conditions as are reasonably satisfactory to the
Agent and the Majority Lenders, and
(l)Any other Lien with respect to property of the Borrower or any
of its Subsidiaries which is subject to a Mortgage if such Lien
is consented to by the Agent and the Majority Lenders.
and (b) adding in the appropriate alphabetical order the
following definitions to read in their entirety as follows:
Amendment No. 2 Execution Date means the date upon which the
Agent has received duly executed signature pages to the Second
Amendment and Waiver from each of the Borrower, the Subsidiary
Guarantors, the Lenders, and the Co-Agents.
"Second Amendment and Waiver" means that certain Second Amendment
and Waiver Agreement, dated as of December 20, 1996, between the
Borrower, the Subsidiary Guarantors, the Lenders, the Agent and
the Co-Agents.
"Mortgages" means the fully executed and notarized mortgages,
security deeds, and deeds of trusts which secure the liabilities
of a Subsidiary Guarantor arising under the Subsidiary Guaranty,
and encumbering the fee interest and/or leasehold interest of any
of the Credit Parties in each real property asset designated on
Schedule 1 to the Second Amendment and Waiver, substantially in
the form of the applicable mortgage or deed of trust attached as
Exhibit A to the Second Amendment and Waiver.
SUBPART 2.2. Amendment to Section 2.3. Section 2.3 of the
Existing Credit Agreement is amended by adding a new Section
2.3(g), which reads in its entirety as follows:
(g) Notwithstanding any other provision of this Agreement, and
subject only to the provisions of Section 4.1, from and after
the Amendment No. 2 Execution Date, the interest rate applicable
to all Loans and other Obligations arising under the Loan
Documents shall be the Base Rate.
SUBPART 2.3. Amendment to Section 4.3. Section 4.3(b) of the
Existing Credit Agreement is
amended to read in its entirety as follows:
(b)Mandatory Reductions.
(i)The aggregate Commitments of the Lenders shall be reduced
ratably as of the last day of Fiscal Year 1996 and each Fiscal
Year thereafter by an amount equal to $15,000,000 minus the
aggregate amount of Commitment reductions pursuant to Section
4.3(a) during the Fiscal Year then ended.
(ii)The aggregate Commitments of the Lenders shall be reduced
ratably by an amount equal to the amount of any prepayment of
principal of the Committed Loans pursuant to Section 4.4(a)(ii).
SUBPART 2.4. Amendment to Section 4.4(a). Section 4.4(a)(ii)
of the Existing Credit Agreement is amended to read in its
entirety as follows:
(ii)If at any time on or after the Agreement Date the Borrower or
any of its Subsidiaries shall receive Net Disposition Proceeds
which in the aggregate exceed $5,000,000, then the Borrower shall
promptly prepay the Loans by an amount equal to such excess,
together with accrued and unpaid interest on the principal amount
prepaid to the date of prepayment; provided, however,
notwithstanding the foregoing, upon the sale and leaseback of the
distribution center and/or the equipment permitted by Section
9.11, the Borrower and its Subsidiaries shall not be required to
make such mandatory prepayment to the extent that the Net
Disposition Proceeds thereof are used by the Borrower or its
Subsidiaries for general working capital purposes.
SUBPART 2.5. Amendment to Section 4.15. Section 4.15 of the
Existing Credit Agreement is amended by adding new Sections
4.15(e) and (f), which read in their entirety as follows:
(e) Second Amendment Fee. The Borrower shall pay to the Agent
for the account of each Lender on the Amendment No. 2 Execution
Date, in consideration of the agreements of the Lenders in the
Second Amendment and Waiver, an amendment fee of 0.125% of each
Lenders Commitment.
(f) Supplemental Fees. In the event that any of the Loans
remain outstanding as of March 31, 1997, then the Borrower shall
pay to the Agent, on or before April 4, 1997, for the account of
each Lender a supplemental fee in the amount of 0.125% of each
Lenders Commitment (or if the Commitments have been terminated,
of each Lenders outstanding Loans). In the event that any of the
Loans remain outstanding as of June 30, 1997, then the Borrower
shall pay to the Agent, on or before July 3, 1997, for the
account of each Lender a supplemental fee in the amount of 0.125%
of each Lenders Commitment (or if the Commitments have been
terminated, of each Lenders outstanding Loans). Such fees shall
be fully earned when due.
SUBPART 2.6. Addition of a New Section 7.13. The Existing
Credit Agreement is further amended by adding a new Section 7.13
which reads in its entirety as follows:
Section 7.13. Depository Accounts. Except as provided herein,
the Borrower shall, and shall cause each of its Subsidiaries to,
maintain its primary depository and disbursement accounts
(accounts with a depository in which funds of more than $25,000
in the aggregate at any time are on deposit) with the Agent or
one of the Lenders; provided, however, that the Borrower and its
Subsidiaries may maintain such depository and disbursement
accounts with any bank or other financial institution other than
the Agent or the Lenders if such bank or other institution has
executed and delivered to the Agent a bank agency agreement, in
form and content reasonably satisfactory to the Agent and the
Majority Lenders, pursuant to which such other bank or
institution agrees to hold all such deposits for the benefit of
the Lenders and subject to the security interest of the Agent for
the benefit of the Lenders; provided, further, the Borrower and
its Subsidiaries shall be permitted to maintain a certificate of
deposit with Carolina First Bank in a principal amount not to
exceed $500,000.00 for so long as the Borrower or its
Subsidiaries have Permitted Indebtedness for Money Borrowed
outstanding to Carolina First Bank.
SUBPART 2.7. Amendment to Section 8.1. Section 8.1 of the
Existing Credit Agreement is amended by adding the following new
Section 8.1(c), immediately following subsection 8.1(b):
(c) Monthly Reports. (i) As soon as practicable and in any
event within 30 days after the end of each monthly accounting
period of each Fiscal Year of the Borrower, a company-prepared
Consolidated balance sheet of the Borrower and each of its
Consolidated Subsidiaries and a company-prepared consolidating
balance sheet of the Borrower and each of its Consolidated
Subsidiaries as at the end of such monthly period, together with
related Consolidated and consolidating statements of income and
retained earnings and of cash flows for such period, in each case
setting forth in comparative form figures (except in the case of
cash flows) as of the end of and for the corresponding period of
the preceding Fiscal Year, all in reasonable form and detail
acceptable to the Majority Lenders and the Agent, and accompanied
by a certificate of the chief financial officer of the Borrower
as being true and correct in all material respects and as having
been prepared in accordance with GAAP, subject to changes
resulting from normal year-end audit adjustments.
(ii) Within 30 days after the end of each monthly accounting
period of each Fiscal Year of the Borrower, a report of the
Borrower analyzing (A) the aging of the Borrowers receivables and
the inventory of Duck Head Apparel Company, Inc., each such
report in reasonable form and detail acceptable to the Majority
Lenders and the Agent, and accompanied by a certificate signed by
the chief financial officer of the Borrower as being true and
correct in all material respects, and (B) the amount of orders
received by the Borrower and/or its Subsidiaries which have not
been processed or for which shipments have not been made,
reported in a form and manner as currently provided to the Agent
and the Lenders.
(iii) Accompanying the reports specified in preceding clauses
(i) and (ii), an updated, revised monthly report, projecting for
the ensuing 90 days the cash position and availability of the
Borrower and its Consolidated Subsidiaries, including without
limitation a projection of weekly cash receipts and disbursements
and projected weekly changes in net cash position, such reports
to be in reasonable form and detail acceptable to the Majority
Lenders and the Agent.
SUBPART 2.8. Amendment to Section 8.10. Section 8.10 of the
Existing Credit Agreement is amended to read in its entirety as
follows:
Section 8.10. Borrowing Base Reports. On Thursday of each
calendar week, a Borrowing Base Report as of the end of the
immediately preceding calendar week, substantially in the form of
Exhibit N hereto and signed and certified by the chief financial
officer of the Borrower to be true and correct in all material
respects as of the date thereof. Each such Borrowing Base Report
shall contain weekly updates of Eligible Receivables and monthly
updates of Eligible Inventory and Eligible Equipment.
SUBPART 2.9. Addition of a New Section 8.11. The Existing
Credit Agreement is amended by adding a new Section 8.11 which
reads in its entirety as follows:
Section 8.11. Report of Consultant. As soon as practicable but
in any event by February 15, 1997, the Borrower shall provide to
the Agent and each of the Lenders a copy of each written report
and all recommendations of the third party consultant previously
described to the Agent and the Lenders concerning certain
operational issues of the Borrower, together with such financial
data and other financial information provided by such third party
consultant to the Borrower supporting the conclusions and
recommendations in such report. Upon the request of the Majority
Lenders, the Borrower shall convene a meeting no later than March
15, 1997 at which all Lenders may attend in order to review and
discuss in person such report, recommendations and other
information with the third party consultant. The Borrower agrees
to provide promptly to the Agent and each of the Lenders all
future similar reports, recommendations and information.
SUBPART 2.10. Amendment to Section 9.1(a). Section 9.1(a) of
the Existing Credit Agreement is amended to read in its entirety
as follows:
(a) Minimum Consolidated Tangible Net Worth. Consolidated
Tangible Net Worth of the Borrower and its Consolidated
Subsidiaries as of the last day of any Fiscal Quarter to be less
than $180,000,000, increased on a cumulative basis as of the last
day of each Fiscal Quarter (beginning with the last day of the
Fiscal Quarter ending March 31, 1997) by 90% of Consolidated Net
Income (if positive) of the Borrower and its Consolidated
Subsidiaries for the Fiscal Quarter then ending.
SUBPART 2.11. Amendment to Section 9.1(b). Section 9.1(b) of
the Existing Credit Agreement is amended to read in its entirety
as follows:
(b) Leverage Ratio. The Leverage Ratio as of the end of the
following Fiscal Quarters to be greater than the corresponding
following amounts:
Fiscal Quarter Ending December 28, 19962.00 to 1.00
Fiscal Quarter Ending March 29, 19971.90 to 1.00
Fiscal Quarter Ending June 28, 1997 and1.80 to 1.00
as of the end of each Fiscal Quarter
thereafter
SUBPART 2.12. Amendment to Section 9.5. Section 9.5 of the
Existing Credit Agreement is amended to read in its entirety as
follows:
Section 9.5. Capital Expenditures. From and after November 29,
1996 through and including September 30, 1997, incur any Capital
Expenditure, except for Capital Expenditures of the Borrower or
any Subsidiary which, together with all other Capital
Expenditures by the Borrower and its Consolidated Subsidiaries
incurred during such period, do not exceed in the aggregate
$15,000,000.
SUBPART 2.13. Amendment to Section 9.11. Section 9.11 of the
Existing Credit Agreement is amended to read in its entirety as
follows:
Section 9.11. Sales and Leasebacks. Enter into any arrangement
with any Person providing for its leasing from such Person of
real or personal property which has been or is to be sold or
transferred, directly or indirectly, by the Borrower or any of
its Subsidiaries to such Person; provided, however, that Duck
Head Apparel Company, Inc. may enter into a sale and leaseback of
its distribution center located in ▇▇▇▇▇▇ County, Georgia
provided that (i) such transaction is consummated on or before
March 31, 1997 and (ii) such transaction is on terms and
conditions reasonably satisfactory to the Agent and the Majority
Lenders, including without limitation that the aggregate amount
of Indebtedness for Money Borrowed in connection with such
transaction shall not exceed $9,000,000; and provided further,
that any lease described in paragraph (g) of the definition of
Permitted Indebtedness for Money Borrowed may be the result of or
structured as a sale and leaseback of the subject equipment.
SUBPART 2.14. Amendment to Section 10.1(d). Section 10.1(d)
of the Existing Credit Agreement is amended to read in its
entirety as follows:
(d) Default in Performance. The Borrower shall fail to perform
or observe any term, covenant, condition or agreement contained
in
(i) Article 9 (other than Section 9.4 or 9.8) or Section 7.1
(insofar as it requires the preservation of the corporate
existence of the Borrower or any Significant Subsidiary), 7.9,
7.13, or 8.6; or
(ii) this Agreement or any other Loan Document (other than a
default in the performance or observance of which is dealt with
specifically elsewhere in this Section 10.1) and such default
shall continue for a period of 15 days after written notice
thereof has been given to the Borrower by the Agent.
PART III
AMENDMENTS TO BORROWER SECURITY AGREEMENT
The Borrower Security Agreement is hereby amended in accordance
with this Part III. Except as so amended, the Borrower Security
Agreement shall continue in full force and effect.
SUBPART 3.1. Amendment to Section 2. Section 2 of the Borrower
Security Agreement is amended to read in its entirety as follows:
2. Grant of Security Interest in the Collateral. To secure the
prompt payment and performance in full when due, whether by lapse
of time, acceleration or otherwise, of the Secured Obligations
(as defined in Section 3 hereof), the Borrower hereby grants to
the Agent, for the benefit of the Lenders, a continuing security
interest in, and a right to set off against, any and all right,
title, and interest of the Borrower in and to the following,
whether now owned or existing or owned, acquired or arising
hereafter (collectively the Collateral):
(a) All machinery, equipment, furniture and fixtures of every
kind and description including, without limitation, all fixtures,
accessories, tools, office furniture, furnishings, office
equipment and trade fixtures;
(b) All accounts, all accounts receivable and all goods
represented by or securing such accounts;
(c) All inventory, including, without limitation, all raw
materials, all work in process and all goods held by the Borrower
for sale or lease;
(d) All instruments, documents and chattel paper that arise from
a sale of goods or services by the Borrower;
(e) The industrial revenue bond (the Bond) issued in connection
with that certain indenture, dated as of May 26, 1994, among
▇▇▇▇▇▇▇▇ County, South Carolina, Greenville County, South
Carolina and Marlboro County, South Carolina and the Borrower, as
Purchaser thereunder;
(f) All contract rights under the Factoring Agreements and the
Bond Documents (collectively, the Contracts);
(g) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now
existing or hereafter arising, including, without limitation, all
property conveyed to the Borrower pursuant to that certain escrow
agreement, dated as of May 26, 1994, among the Escrow Agent, as
named therein, ▇▇▇▇▇▇▇▇ County, South Carolina, Greenville
County, South Carolina, Marlboro County, South Carolina, the
Borrower and Delta ▇▇▇▇▇, Inc.;
(h) All cash, deposits, deposit account balances, money,
currency, legal tender, and cash equivalents of any kind or
nature; and
(i) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof
(including, without limitation, insurance proceeds payable on
account of business interruption), whether now existing or
hereafter arising.
PART IV
AMENDMENT TO SUBSIDIARIES SECURITY AGREEMENT
The Subsidiaries Security Agreement is hereby amended in
accordance with this Part IV. Except as so amended, the
Subsidiaries Security Agreement shall continue in full force and
effect.
SUBPART 4.1. Amendments to Section 2. Section 2 of the
Subsidiaries Security Agreement is amended to read in its
entirety as follows:
2. Grant of Security Interest in the Collateral. To secure the
prompt payment and performance in full when due, whether by lapse
of time, acceleration or otherwise, of the Secured Obligations
(as defined in Section 3 hereof), each Subsidiary Guarantor
hereby grants to the Agent, for the benefit of the Lenders, a
continuing security interest in, and a right to set off against,
any and all right, title, and interest of such Subsidiary
Guarantor in and to the following, whether now owned or existing
or owned, acquired or arising hereafter (collectively the
Collateral):
(a) All machinery, equipment, furniture and fixtures of every
kind and description including, without limitation, all fixtures,
accessories, tools, office furniture, furnishings, office
equipment and trade fixtures;
(b) All accounts, all accounts receivable and all goods
represented by or securing such accounts;
(c) All inventory, including, without limitation, all raw
materials, all work in process and all goods held by such
Subsidiary Guarantor for sale or lease;
(d) All instruments, documents and chattel paper that arise from
a sale of goods or services by such Subsidiary Guarantor;
(e) All contract rights under the Factoring Agreements and the
Bond Documents (collectively, the Contracts);
(f) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now
existing or hereafter arising, including, without limitation, all
property conveyed to Delta ▇▇▇▇▇, Inc. pursuant to that certain
escrow agreement, dated as of May 26, 1994, among the Escrow
Agent, as named therein, ▇▇▇▇▇▇▇▇ County, South Carolina,
Greenville County, South Carolina, Marlboro County, South
Carolina, the Borrower and Delta ▇▇▇▇▇, Inc.;
(g) All cash, deposits, deposit account balances, money,
currency, legal tender, and cash equivalents of any kind or
nature; and
(h) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof
(including, without limitation, insurance proceeds payable on
account of business interruption), whether now existing or
hereafter arising.
SUBPART 4.2. Amendments to Section 5. Section 5 of the
Subsidiaries Security Agreement is amended by adding a new
subsection (j) which reads in its entirety as follows:
(j) Subject to the Credit Agreement, maintain its primary
depository and disbursement accounts (accounts with a depository
in which funds of more than $25,000 in the aggregate at any time
are on deposit) with the Agent or one of the Lenders; provided,
however, that any Subsidiary Guarantor may maintain such
depository and disbursement accounts with any bank or other
financial institution other than the Agent or the Lenders if such
bank or other institution has executed and delivered to the Agent
a bank agency agreement, in form and content reasonably
satisfactory to the Agent and the Majority Lenders, pursuant to
which such other bank or institution agrees to hold all such
deposits for the benefit of the Lenders and subject to the
security interest of the Agent hereunder.
PART V
REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES
.Each Credit Party hereby represents and warrants to the Agent
and to each Lender that:
(i)each of the representations and warranties of the Borrower
contained in the Amended Credit Agreement and in each other Loan
Document is true as of the date hereof (after giving effect to
this Agreement);
(ii)no Default or Event of Default exists and is continuing ,
except the Existing Defaults; and
(iii)since the date of the last financial statements of the
Borrower delivered to Lenders, no material adverse change has
occurred in the business, financial condition, operations or
prospects of the Borrower other than as previously disclosed to
the Lenders.
PART VI
CONDITIONS TO EFFECTIVENESS
SUBPART 6.1. Effective Time of Amendments. The amendments and
waivers set forth in this Agreement shall be and become effective
as of the first Business Day upon which each of the conditions
set forth in this Subpart 6.1 shall have been completed to the
satisfaction of the Agent and the Lenders (the Amendment No. 2
Effective Date).
SUBPART 6.1.1. Execution of Agreement. The Agent shall have
received counterparts (or other evidence of execution, including
telephonic message, satisfactory to the Agent) of the due
execution of this Agreement on behalf of the Credit Parties and
each of the Lenders.
SUBPART 6.1.2. Mortgages. The Agent shall have received the
fully executed and notarized Mortgages for each of the real
property assets designated on Schedule 1 (the Mortgaged
Property) attached hereto and incorporated herein by reference,
each such Mortgage being
substantially in the form of the corresponding mortgage or deed
of trust form for the respective
State as contained in Exhibit A to this Agreement. Each such
Mortgage shall grant and
convey to the Agent for the benefit of the Lenders (or as
applicable, to a trustee for the benefit of
the Agent and the Lenders) a valid first priority lien on the
corresponding Mortgaged Property and shall be in recordable form,
subject only to (a) Liens securing taxes, assessments, and other
governmental charges or levies (excluding any Lien imposed
pursuant to any of the provisions of ERISA) which are not yet due
and payable; (b) Liens or claims of materialmen and mechanics,
incurred in the ordinary course of the Credit Parties business,
payment of which is not yet due; (c) Liens constituting
encumbrances in the nature of zoning restrictions, easements, and
rights or restrictions of record on the use of the Mortgaged
Property, which do not materially detract from the value of such
Mortgaged Property as used by any of the Credit Parties or impair
the use thereof in the business of any of the Credit Parties; and
(d) such other Liens as shall be reasonably acceptable to the
Agent and the Majority Lenders. With respect to any Mortgaged
Property that is a leasehold estate, unless in any such case the
Credit Parties are unable after good faith efforts to obtain the
same, the Agent shall have received (a) such estoppel letters,
consents, and waivers from the landlords on such real property as
may be reasonably required by the Agent, which estoppel letters
shall be in form and substance reasonably satisfactory to the
Agent and (b) evidence that the applicable lease, a memorandum of
lease with respect thereto, or other evidence of such lease in
form and substance reasonably satisfactory to the Agent has been
recorded in all places to the extent necessary or desirable, in
the reasonable judgment of the Agent, so as to enable the
Mortgage encumbering such leasehold interest to create a valid
and enforceable first priority lien on such leasehold interest in
favor of the Agent for the benefit of the Lenders.
SUBPART 6.1.3. Legal Opinions. The Agent shall have received
(a) an opinion of Wyche, Burgess, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A., counsel
to the Credit Parties, reasonably satisfactory in form and
substance to the Agent and the Lenders, opining as to inter alia
the due authorization, validity, and enforceability of this
Agreement, and (b) an opinion of counsel (which counsel shall be
reasonably satisfactory to the Agent) in each state in which
Mortgaged Property is located with respect to the enforceability
of the form of Mortgage recorded in such state and such other
matters as the Agent and the Lenders may reasonably request, in
form and substance reasonably satisfactory to the Agent and the
Lenders.
SUBPART 6.1.4. Amendment Fees. The Agent shall have received
from the Borrower, on the Amendment No. 2 Execution Date, for the
account of each Lender, in immediately available funds, the
amendment fee of 0.125% of each Lenders Commitment set forth in
Section 4.15(e) of the Amended Credit Agreement.
SUBPART 6.1.5. Corporate Action. The Agent shall have received
certified copies of all corporate action taken by each Credit
Party approving this Agreement and each of the documents executed
and delivered in connection herewith (including, without
limitation, a certificate setting forth the resolutions of the
Board of Directors of each Credit Party adopted in respect of the
transactions contemplated by this Agreement.)
SUBPART 6.1.6. Other Documents. The Agent shall have received
such other documents relating to the transactions contemplated
hereby as the Agent or counsel to the Agent may reasonably
request of the Borrower in writing on or before the Amendment No.
2 Execution Date.
SUBPART 6.1.7. Expenses of Agent. The Borrower shall have (a)
reimbursed the Agent for all reasonable out-of-pocket expenses of
the Agent, including, without limitation, all reasonable fees and
expenses of its attorneys, incurred in connection with the
negotiation, preparation or execution of this Agreement, and (b)
paid to the Agent the estimated recording costs and fees (as
reasonably estimated by the Agent) for the filing and recordation
of the Mortgages.
SUBPART 6.1.8. Bank Accounts. The Agent shall have received
evidence which it deems of satisfactory form and content
demonstrating that (i) subject to 7.13 of the Amended Credit
Agreement, the Credit Parties have established and maintained in
bank accounts with one or more of the Lenders all of their
primary deposit and disbursement accounts, (ii) the Credit
Parties have made from their existing cash balances payments
sufficient to enable the Borrower to be in compliance with
Section 4.4(a)(i) of the Amended Credit Agreement, and (iii) that
none of the Credit Parties maintains any material cash balances
with any bank or other financial institution other than the
Lenders, unless such other bank or financial institution has
executed and delivered to the Agent for the benefit of the
Lenders a bank agency agreement in form and content reasonably
satisfactory to the Agent and the Majority Lenders. Together
with other reasonable due diligence measures, the Agent may rely
on a certificate of the chief financial officer of the Borrower
stating that all such material cash balances of the Credit
Parties have been deposited with one or more of the Lenders or
with a bank or other financial institution which has executed and
delivered a satisfactory bank agency agreement.
PART VII
WAIVER
Effective as of the Amendment No. 2 Effective Date, the Lenders
hereby waive each of the Existing Defaults. Such waiver is
effective only with respect to the Existing Defaults existing as
of the Amendment No. 2 Execution Date and does not relate to or
affect any prospective Default or Event of Default.
PART VIII
MISCELLANEOUS
SUBPART 8.1 Further Assurances. As soon as practicable after
receipt of a written request from the Agent, and in any event not
later than 30 days from the date such request is received by the
Borrower, the Credit Parties shall cause to be delivered to the
Agent, in form and content reasonably satisfactory to the Agent,
all documents or other instruments incident to the transactions
contemplated by this Agreement that in the reasonable judgment of
the Agent are necessary to effect such transactions.
SUBPART 8.2 . Reaffirmation of Liens and Subsidiary Guaranty.
The Credit Parties hereby reaffirm the liens and security
interests created and granted pursuant to the Amended Credit
Agreement and other Loan Documents and agree that this Agreement
shall in no manner adversely affect or impair such liens and
security interests. Each of the Subsidiary Guarantors hereby
acknowledges and consents to the amendments made to the Existing
Credit Agreement and the related Loan Documents, and further
hereby reaffirms and restates its unconditional guaranty fully to
the extent set forth in the Subsidiary Guaranty.
SUBPART 8.3. References. References in this Agreement to any
Part or Subpart are, unless otherwise specified, to such Part or
Subpart of this Agreement. As of the Amendment No. 2 Effective
Date, all references in the Loan Documents to the Credit
Agreement, the Borrower Security Agreement, or the Subsidiaries
Security Agreement shall be deemed to refer to such document as
amended by this Agreement.
SUBPART 8.4. Counterparts. This Agreement may be executed by
the parties hereto in several counterparts, each of which shall
be deemed to be an original and all of which constitute together
one and the same agreement.
SUBPART 8.5. Governing Law. This Agreement shall be deemed to
be a contract made under and governed by the internal laws and
judicial decisions of the State of North Carolina without giving
effect to the conflict of law principles thereof.
SUBPART 8.6. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
SUBPART 8.7. Entire Agreement. The Amended Credit Agreement,
this Agreement, and the other Loan Documents, as amended hereby,
constitute the entire contract among the parties relative to the
subject matter hereof and thereof.
SUBPART 8.8. No Other Changes. Except as expressly modified and
amended in this Agreement, all of the terms, provisions and
conditions of the Loan Documents shall remain unchanged.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
COMPANY:
DELTA WOODSIDE INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
SUBSIDIARY GUARANTORS:
ALCHEM CAPITAL CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
DELTA ▇▇▇▇▇, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
DUCK HEAD APPAREL COMPANY, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
CARGUD, SOCIEDAD ANONIMA
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
ARMONIA TEXTIL, SOCIEDAD ANONIMA
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
NAUTILUS INTERNATIONAL, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
NAUTILUS DIRECT, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
DELTA CONSOLIDATED CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
DELTA MERCHANDISING, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
DELTA APPAREL HONDURAS, S.A.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
[Remainder of this Page Left Blank]
AGENT:
NATIONSBANK, N.A.
By: /s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
CO-AGENTS:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
THE BANK OF NEW YORK
By: /s/ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant Vice President
LENDERS:
NATIONSBANK, N.A.
By: /s/ E. ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
THE BANK OF NEW YORK
By: /s/ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant Vice President
FIRST UNION NATIONAL BANK OF SOUTH CAROLINA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
WACHOVIA BANK OF SOUTH CAROLINA
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Assistant Vice President
THE CHASE MANHATTAN BANK
as successor by merger to The Chase
Manhattan Bank, N.A.
By: /s/ ▇▇ ▇▇▇▇▇ Meer
Title: Vice President
THE BANK OF NOVA SCOTIA
By:
Title:
PNC BANK, NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
FLEET BANK, N.A.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Schedule 1
Mortgaged Properties
Approx.
Street Address City,State Utilization Sq. Ft.
Textile Segment
Delta Mill
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇ Spin/Weave 390,000
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇ Weave 116,000
Estes ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ Spin/weave 332,000
Delta 3 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ Dye/finish 555,000
Cypress ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇, ▇▇ Spin 144,000
Pamplico ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇, ▇▇ Spin/weave 275,000
Delta 2 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ Dye/finish 347,000
Catawba West Finger Street Maiden, NC Spin 115,000
Stevcoknit
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇, ▇▇ Dye/finish 485,000
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇, ▇▇ Knit/finish 224,000
Rainsford ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ Spin 296,000
▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ Spin 207,000
Apparel Segment
Delta Apparel
Maiden ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇, ▇▇ Knit/dye/
finish/cut 305,000
Washington ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ Sew 129,800
Sandersville ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ Sew 27,000
Distribution
Center ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ Distribution 550,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ Sew 75,000
Fitness
Equipment
Nautilus
Nautilus ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ Manufacturing 264,375
Total Estimated Value
Mortaged Properties
Owned
Approx Contact Phone or Estimated Book
Acreage Person Number Leased Value Value
Textile Segment
Delta ▇▇▇▇▇
▇▇▇▇▇▇▇ 112.00 ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇ Owned 8,200,000 9,641,000
▇▇▇▇▇▇ 21.00 ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇ Owned 2,100,000 2,380,000
Estes 114.00 ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇ Owned 5,000,000 163,000
Delta 3 527.00 ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇ Owned 8,200,000 1,023,000
Cypress 4.00 ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇ Owned 2,300,000 598,000
Pamplico 520.00 ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇ Owned 500,000 3,953,000
Delta 2 295.00 ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇ Owned 5,600,000 3,234,000
Catawba 34.00 ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇ Owned 1,500,000 918,000
Stevcoknit
▇▇▇▇▇▇ 72.00 ▇▇▇▇▇ ▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇ Owned 3,700,000 0
▇▇▇▇▇ 3.00 ▇▇▇▇▇ ▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇ Owned 2,700,000 0
Rainsford 43.00 ▇▇▇▇▇ ▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇ Owned 6,000,000 8,598,000
▇▇▇▇▇▇ 14.00 ▇▇▇▇▇ ▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇ Owned 5,000,000 5,809,000
Apparel Segment
Delta Apparel
Maiden 45.00 ▇. ▇▇▇▇▇▇▇▇▇▇ 770-806-6800-815 Owned 4,300,000 2,152,000
Washington 6.00 ▇. ▇▇▇▇▇▇▇▇▇▇ 770-806-6800-815 Owned 200,000 191,000
Sandersville 5.00 ▇. ▇▇▇▇▇▇▇▇▇▇ 770-806-6800-815 Owned 200,000 182,000
Distribution
Center 21.00 ▇. ▇▇▇▇▇▇▇▇▇▇ 770-806-6800-815 Owned 3,000,000 101,000
Decatur 11.00 ▇. ▇▇▇▇▇▇▇▇▇▇ 770-806-6800-815 Owned 1,396,000 1,176,000
Fitness Equipment
Nautilus
Nautilus 54.66 ▇▇▇▇▇ ▇▇▇▇ 540-773-2881-218 Owned 4,092,250 4,337,000
Total Estimated Value 63,988,250 44,456,000
