Exhibit 10.1
RATIFICATION AND AMENDMENT AGREEMENT
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This RATIFICATION AND AMENDMENT AGREEMENT ("Ratification Agreement") dated
as of October 13, 2006, is by and among DELTA XXXXX, INC., a Delaware
corporation, as Debtor and Debtor-in-Possession ("Borrower"), DELTA XXXXX
MARKETING, INC., a Delaware corporation, as Debtor and Debtor-in-Possession
("Guarantor" and together with Borrower, each individually, a "Debtor" and
collectively, the "Debtors"), the undersigned financial institutions
(collectively, the "Lenders" and each individually a "Lender"), and GMAC
COMMERCIAL FINANCE LLC, a Delaware limited liability company, as agent for the
Lenders (in such capacity, "Agent") and as factor (in such capacity, "Factor").
W I T N E S S E T H:
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WHEREAS, each Debtor has commenced a case under Chapter 11 of Title 11 of
the United States Code in the United States Bankruptcy Court for the District of
Delaware and Borrower and Guarantor have retained possession of their respective
assets and each is authorized under the Bankruptcy Code (as hereinafter defined)
to continue the operation of its businesses as debtor-in-possession;
WHEREAS, prior to the commencement of the Chapter 11 Cases (as hereinafter
defined), Agent and the Lenders made loans, advances and other financial
accommodations to Borrower secured by certain assets and properties of Borrower
and Guarantor as set forth in the Existing Financing Agreements (as hereinafter
defined) and the Existing Guarantor Documents (as hereinafter defined);
WHEREAS, prior to the commencement of the Chapter 11 Cases (as hereinafter
defined), Factor provided factoring arrangements to Borrower secured by certain
assets and properties of Borrower as set forth in the Existing Factoring
Agreements (as hereinafter defined);
WHEREAS, the Bankruptcy Court (as hereinafter defined) has entered a
Financing Order (as hereinafter defined) pursuant to which (i) Agent and the
Lenders may make post-petition loans, advances and other financial
accommodations to Borrower secured by substantially all the assets and
properties of Borrower and Guarantor and (ii) Factor may provide post-petition
factoring arrangements to Borrower secured by substantially all the assets and
properties of Borrower, in each case as set forth in the Financing Order and the
Financing Agreements (as hereinafter defined) and Factoring Agreements (as
hereinafter defined);
WHEREAS, the Financing Order provides that as a condition to the making of
such post-petition loans, advances and other financial accommodations and
factoring arrangements, Borrower and Guarantors shall execute and deliver this
Ratification Agreement;
WHEREAS, Borrower and Guarantor desire to reaffirm their respective
obligations pursuant to the Existing Financing Agreements and the Existing
Factoring Agreements and acknowledge their continuing liabilities to Agent, the
Lenders and Factor thereunder in order to induce Agent and the Lenders to make
such post-petition loans, advances and other financial accommodations to
Borrower and to induce Factor to provide such post-petition factoring
arrangements to Borrower;
WHEREAS, Borrower and Guarantor have requested that Agent and the Lenders
make post-petition loans, advances and other financial accommodations to
Borrower and that Agent and the Lenders make certain amendments to the Credit
Agreement (as hereinafter defined) and Agent and the Lenders are willing to do
so subject to the terms and conditions contained herein; and
WHEREAS, Borrower has requested that Factor provide post-petition factoring
arrangements to Borrower and that Factor make certain amendments to the
Factoring Agreement (as hereinafter defined) and Factor is willing to do so
subject to the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Borrower, Guarantor,
the Lenders, Agent and Factor mutually covenant, warrant and agree as follows:
1. DEFINITIONS.
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1.1 Additional Definitions. As used herein, the following terms shall
have the respective meanings given to them below and the Existing Financing
Agreements and Existing Factoring Agreements shall be deemed and are hereby
amended to include, in addition and not in limitation, each of the following
definitions:
(a) "Assignment of Indenture" shall mean the Collateral Assignment of
Interest Under Indenture, dated as of even date herewith, made by Borrower in
favor of Agent.
(b) "Bankruptcy Code" shall mean the United States Bankruptcy Code,
being Title 11 of the United States Code as enacted in 1978, as the same has
heretofore been or may hereafter be amended, recodified, modified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
(c) "Bankruptcy Court" shall mean the United States Bankruptcy Court
or the United States District Court for the District of Delaware.
(d) "Budget" shall mean the budget attached hereto and delivered to
and approved by Agent prior to the execution hereof, setting forth the Projected
Information for the periods covered thereby, together with any subsequent or
amended budget(s) thereto delivered to Agent, in form and substance satisfactory
to Agent, in accordance with the terms and conditions hereof.
(e) "Chapter 11 Cases" shall mean the Chapter 11 cases of Borrower and
Guarantor which are being jointly administered under the Bankruptcy Code and are
pending in the Bankruptcy Court.
(f) "Collateral" shall mean, collectively, the Pre-Petition Collateral
and the Post-Petition Collateral.
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(g) "Credit Agreement" shall mean the Amended and Restated Revolving
Credit, Term Loan and Security Agreement, dated as of May 30, 2006, by and among
Borrower, the Lenders and Agent, as the same now exists or may hereby or
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
(h) "Existing Factoring Agreements" shall mean the Factoring
Agreements, as in effect immediately prior to the Petition Date.
(i) "Existing Financing Agreements" shall mean the Financing
Agreements, as in effect immediately prior to the Petition Date.
(j) "Existing Guarantor Documents" shall mean the Guarantor Documents,
as in effect immediately prior to the Petition Date.
(k) "Factoring Agreement" shall mean, collectively, (i) the Amended
and Restated Factoring Agreement (Collection) bearing the effective date of May
30, 2006 between Borrower and Factor and (ii) the Amended and Restated Factoring
Agreement (Maturity) bearing the effective date of May 30, 2006 between Borrower
and Factor, in each instance as the same now exists or may hereby or hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced.
(l) "Factoring Agreements" shall mean collectively, (i) the Factoring
Agreement and (ii) the Amended and Restated Assignment of Factoring Proceeds
dated May 30, 2006, by and among Borrower, Factor and Agent, together with all
riders, supplements, agreements, notes, documents, instruments and guarantees at
any time executed or delivered in connection therewith or related thereto, in
each instance as the same now exists or may hereby or hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
(m) "Factoring Collateral" shall mean, collectively, the Pre-Petition
Factoring Collateral and the Post-Petition Factoring Collateral.
(n) "Financing Agreements" shall mean the Credit Agreement and the
Other Documents (as defined in the Existing Credit Agreement), including,
without limitation, the Guarantor Documents, in each instance as the same now
exists or may hereby or hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
(o) "Financing Order" shall mean the Interim Financing Order, the
Permanent Financing Order and such other orders relating thereto or authorizing
the granting of credit by Agent, the Lenders and Factor to Borrower on an
emergency, interim or permanent basis pursuant to Section 364 of the Bankruptcy
Code as may be issued or entered by the Bankruptcy Court in the Chapter 11
Cases.
(p) "Guarantor Documents" shall mean, collectively, (i) the Guaranty,
dated March 31, 2000, by Guarantor in favor of Agent, (ii) the General Security
Agreement, dated March 31, 2000, by Guarantor in favor of Agent, and (iii) the
Letter Re: Ratification of Guaranty and General Security Agreement, dated May
30, 2006, by Guarantor in favor of Agent, in each instance as the same now
exists or may hereby or hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
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(q) "Interim Financing Order" shall have the meaning set forth in
Section 9.8 hereof.
(r) "Leasehold Mortgage" shall mean the Open End Leasehold Mortgage,
Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated on
or about the date hereof, by Borrower in favor of Agent and Factor with respect
to the Real Property and related assets of Borrower which are leased and located
in Greenville County and Marlboro County, South Carolina.
(s) "Material Budget Deviation" shall have the meaning set forth in
Section 5.3(b) hereof.
(t) "Mortgage" shall mean the Open End Mortgage, Assignment of Rents
and Leases, Security Agreement and Fixture Filing, dated on or about the date
hereof, by Borrower in favor of Agent and Factor with respect to the Real
Property and related assets of Borrower which are owned and located in Xxxxxxxx
County, Greenville County and Marlboro County, South Carolina.
(u) "Permanent Financing Order" shall have the meaning set forth in
Section 9.9 hereof.
(v) "Petition Date" shall mean the date of the commencement of the
Chapter 11 Cases.
(w) "Post-Petition Collateral" shall mean, collectively, all now
existing and hereafter acquired real and personal property of each Debtor's
estate, wheresoever located, of any kind, nature or description, including any
such property in which a lien is granted to Agent, for itself and the ratable
benefit of each Lender, pursuant to the Financing Agreements, the Financing
Order or any other order entered or issued by the Bankruptcy Court, and shall
include, without limitation:
(i) all of the Pre-Petition Collateral;
(ii) all Accounts;
(iii) all General Intangibles, including, without limitation, all
intellectual property;
(iv) all goods, including, without limitation, all Inventory and all
Equipment;
(v) all Real Property and fixtures;
(vi) all chattel paper, including, without limitation, all tangible
and electronic chattel paper;
(vii) all instruments, including, without limitation, all promissory
notes;
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(viii) all documents;
(ix) all deposit accounts;
(x) all letters of credit, banker's acceptances and similar
instruments and including all letter-of-credit rights;
(xi) all present and future supporting obligations and all present
and future liens, security interests, rights, remedies, title and interest in,
to and in respect of Receivables and other Collateral, including, without
limitation, (A) rights and remedies under or relating to guaranties, contracts
of suretyship, letters of credit and credit and other insurance related to the
Collateral, (B) rights of stoppage in transit, replevin, repossession,
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, (C) goods described in invoices, documents, contracts or instruments with
respect to, or otherwise representing or evidencing, Receivables or other
Collateral, including returned, repossessed and reclaimed goods, and (D)
deposits by and property of account debtors or other persons securing the
obligations of account debtors;
(xii) all (A) investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (B) monies, credit balances,
deposits and other property of Borrower and Guarantor now or hereafter held or
received by or in transit to any Lender or any of any Lender's affiliates or at
any other depository or other institution from or for the account of Borrower or
Guarantor, whether for safekeeping, pledge, custody, transmission, collection or
otherwise;
(xiii) all commercial tort claims;
(xiv) to the extent not otherwise described above, all Receivables;
(xv) all claims, rights, interests, assets and properties (recovered
by or on behalf of Borrower and Guarantor or any trustee of Borrower or
Guarantor (whether in the Chapter 11 Cases or any subsequent case to which any
of the Chapter 11 Cases is converted), including, without limitation, all
property recovered as a result of transfers or obligations avoided or actions
maintained or taken pursuant to Sections 544, 545, 547, 548, 549, 550, 551 and
553 of the Bankruptcy Code;
(xvi) all Records; and
(xvii) all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third parties for loss or
damage to or destruction of or other involuntary conversion of any kind or
nature of any or all of the other Collateral.
(x) "Post-Petition Factoring Collateral" shall mean, collectively, all
now existing and hereafter acquired real and personal property of each Debtor's
estate, wheresoever located, of any kind, nature or description, including any
such property in which a lien is granted to Factor pursuant to the Factoring
Agreements, the Financing Order or any other order entered or issued by the
Bankruptcy Court, and shall include, without limitation:
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(i) all of the Pre-Petition Factoring Collateral;
(ii) all Accounts;
(iii) all General Intangibles, including, without limitation, all
intellectual property;
(iv) all goods, including, without limitation, all Inventory and all
Equipment;
(v) all Real Property and fixtures;
(vi) all chattel paper, including, without limitation, all tangible
and electronic chattel paper;
(vii) all instruments, including, without limitation, all promissory
notes;
(viii) all documents;
(ix) all deposit accounts;
(x) all letters of credit, banker's acceptances and similar
instruments and including all letter-of-credit rights;
(xi) all present and future supporting obligations and all present
and future liens, security interests, rights, remedies, title and interest in,
to and in respect of Receivables and other Collateral, including, without
limitation, (A) rights and remedies under or relating to guaranties, contracts
of suretyship, letters of credit and credit and other insurance related to the
Collateral, (B) rights of stoppage in transit, replevin, repossession,
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, (C) goods described in invoices, documents, contracts or instruments with
respect to, or otherwise representing or evidencing, Receivables or other
Collateral, including returned, repossessed and reclaimed goods, and (D)
deposits by and property of account debtors or other persons securing the
obligations of account debtors;
(xii) all (A) investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (B) monies, credit balances,
deposits and other property of Borrower and Guarantor now or hereafter held or
received by or in transit to Factor or any of Factor's affiliates or at any
other depository or other institution from or for the account of Borrower or
Guarantor, whether for safekeeping, pledge, custody, transmission, collection or
otherwise;
(xiii) all commercial tort claims;
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(xiv) to the extent not otherwise described above, all Receivables;
(xv) all claims, rights, interests, assets and properties (recovered
by or on behalf of Borrower and Guarantor or any trustee of Borrower or
Guarantor (whether in the Chapter 11 Cases or any subsequent case to which any
of the Chapter 11 Cases is converted), including, without limitation, all
property recovered as a result of transfers or obligations avoided or actions
maintained or taken pursuant to Sections 544, 545, 547, 548, 549, 550, 551 and
553 of the Bankruptcy Code;
(xvi) all Records; and
(xvii) all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third parties for loss or
damage to or destruction of or other involuntary conversion of any kind or
nature of any or all of the other Collateral.
(y) "Post-Petition Factoring Obligations" shall mean all loans,
advances, debts, obligations, liabilities, covenants and duties of Borrower and
Guarantor to Factor of every kind and description, however evidenced, whether
direct or indirect, absolute or contingent, joint or several, secured or
unsecured, due or not due, primary or secondary, liquidated or unliquidated,
arising on and after the Petition Date and whether arising on or after the
conversion or dismissal of the Chapter 11 Cases, or before, during and after the
confirmation of any plan of reorganization in the Chapter 11 Cases, and whether
arising under or related to this Ratification Agreement, the Factoring
Agreements, a Financing Order, by operation of law or otherwise, and whether
incurred by Borrower or Guarantor as principal, surety, endorser, guarantor or
otherwise and including, without limitation, all principal, interest, financing
charges, letter of credit fees, unused line fees, servicing fees, line increase
fees, DIP facility fees, early termination fees, other fees, commissions, costs,
expenses and reasonable attorneys', accountants' and consultants' fees and
expenses incurred in connection with any of the foregoing.
(z) "Post-Petition Obligations" shall mean all Revolving Advances,
Letters of Credit and other loans, advances, letters of credit, debts,
obligations, liabilities, covenants and duties of Borrower and Guarantor to
Agent and the Lenders of every kind and description, however evidenced, whether
direct or indirect, absolute or contingent, joint or several, secured or
unsecured, due or not due, primary or secondary, liquidated or unliquidated,
arising on and after the Petition Date and whether arising on or after the
conversion or dismissal of the Chapter 11 Cases, or before, during and after the
confirmation of any plan of reorganization in the Chapter 11 Cases, and whether
arising under or related to this Ratification Agreement, the other Financing
Agreements, a Financing Order, by operation of law or otherwise, and whether
incurred by Borrower or Guarantor as principal, surety, endorser, guarantor or
otherwise and including, without limitation, all principal, interest, financing
charges, letter of credit fees, unused line fees, servicing fees, line increase
fees, DIP facility fees, early termination fees, other fees, commissions, costs,
expenses and reasonable attorneys', accountants' and consultants' fees and
expenses incurred in connection with any of the foregoing.
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(aa) "Pre-Petition Collateral" shall mean, collectively, (i) all
"Collateral" as such term is defined in the Credit Agreement as in effect
immediately prior to the Petition Date, exclusive of all "Term Loan Collateral"
as such term is defined in the Credit Agreement as in effect immediately prior
to the Petition Date, (ii) all "Collateral" as such term is defined in each of
the Existing Guarantor Documents, and (iii) all other security for the
Pre-Petition Obligations as provided in the Existing Financing Agreements.
(bb) "Pre-Petition Factoring Collateral" shall mean, collectively, (i)
all "Collateral" as such term is defined in the Factoring Agreement as in effect
immediately prior to the Petition Date and (ii) all other security for the
Pre-Petition Factoring Obligations as provided in the Existing Factoring
Agreements.
(cc) "Pre-Petition Factoring Obligations" shall mean all loans,
advances, debts, obligations, liabilities, indebtedness, covenants and duties of
Borrower and Guarantor to Factor of every kind and description, however
evidenced, whether direct or indirect, absolute or contingent, joint or several,
secured or unsecured, due or not due, primary or secondary, liquidated or
unliquidated, arising before the Petition Date under or related to the Existing
Factoring Agreements, by operation of law or otherwise, and whether incurred by
Borrower or Guarantor as principal, surety, endorser, guarantor or otherwise and
including, without limitation, all principal, interest, financing charges,
letter of credit fees, unused line fees, servicing fees, line increase fees,
early termination fees, other fees, commissions, costs, expenses and attorneys',
accountants' and consultants' fees and expenses incurred in connection with any
of the foregoing.
(dd) "Pre-Petition Obligations" shall mean all Revolving Advances,
Letters of Credit and other loans, advances, letters of credit, debts,
obligations, liabilities, indebtedness, covenants and duties of Borrower and
Guarantor to Agent and the Lenders of every kind and description, however
evidenced, whether direct or indirect, absolute or contingent, joint or several,
secured or unsecured, due or not due, primary or secondary, liquidated or
unliquidated, arising before the Petition Date under or related to the Existing
Financing Agreements, by operation of law or otherwise, and whether incurred by
Borrower or Guarantor as principal, surety, endorser, guarantor or otherwise and
including, without limitation, all principal, interest, financing charges,
letter of credit fees, unused line fees, servicing fees, line increase fees,
early termination fees, other fees, commissions, costs, expenses and attorneys',
accountants' and consultants' fees and expenses incurred in connection with any
of the foregoing.
(ee) "Projected Information" shall have the meaning set forth in
Section 5.3(a) hereof.
(ff) "Ratification Agreement" shall mean this Ratification Agreement
by and among Borrower, Guarantor, Lender, Agent and Factor as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.2 Amendments to Definitions in Financing Agreements and Factoring
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Agreements.
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(a) All references to the term "Collateral" in any of the Existing
Financing Agreements or any other term referring to the security for the
Pre-Petition Obligations shall be deemed and each such reference is hereby
amended to mean, collectively, the Pre-Petition Collateral and the Post-Petition
Collateral.
(b) All references to the term "Collateral" in any of the Existing
Factoring Agreements or any other term referring to the security for the
Pre-Petition Factoring Obligations shall be deemed and each such reference is
hereby amended to mean, collectively, the Pre-Petition Factoring Collateral and
the Post-Petition Factoring Collateral.
(c) All references to the term "Credit Agreement" in any of the
Existing Financing Agreements, Existing Factoring Agreements, Financing
Agreements and Factoring Agreements shall be deemed, and each such reference is
hereby amended, to mean the Credit Agreement, as amended by this Ratification
Agreement and as ratified, assumed and adopted by Borrower and Guarantor
pursuant to the terms hereof and the Financing Order, as the same now exists or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
(d) All references to Debtors, including, without limitation, to the
terms "Borrower" or "Guarantor" in any of the Existing Financing Agreements and
the Existing Factoring Agreements, shall be deemed, and each such reference is
hereby amended, to mean and include the Debtors as defined herein, and their
successors and assigns (including any trustee or other fiduciary hereafter
appointed as its legal representative or with respect to the property of the
estate of such corporation whether under Chapter 11 of the Bankruptcy Code or
any subsequent Chapter 7 case and its successor upon conclusion of the Chapter
11 Cases of such corporation).
(e) All references to the term "Factoring Agreement" in any of the
Existing Financing Agreements, Existing Factoring Agreements, Financing
Agreements and Factoring Agreements shall be deemed, and each such reference is
hereby amended, to mean the Factoring Agreement, as amended by this Ratification
Agreement and as ratified, assumed and adopted by Borrower and Guarantor
pursuant to the terms hereof, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
(f) All references to the term "Factoring Obligations" in this
Ratification Agreement and all references to the term "Obligations" in any of
the Factoring Agreements shall be deemed, and each such reference in the
Factoring Agreements is hereby amended, to mean both the Pre-Petition Factoring
Obligations and the Post-Petition Factoring Obligations.
(g) All references to the term "Material Adverse Effect," "material
adverse effect" and "material adverse change" in this Ratification Agreement and
in any of the Existing Financing Agreements, shall be deemed, and each such
reference in the Existing Financing Agreements is hereby amended, to add at the
end thereof: "provided, that the commencement of the Chapter 11 Cases and the
immediate consequences thereof shall not constitute a material adverse effect".
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(h) All references to the term "Obligations" in this Ratification
Agreement and in any of the Financing Agreements shall be deemed, and each such
reference in the Financing Agreements is hereby amended, to mean both the
Pre-Petition Obligations and the Post-Petition Obligations.
(i) All references to the term "Other Documents" in any of the
Existing Financing Agreements shall be deemed, and each such reference is hereby
amended, to include, in addition and not in limitation, this Ratification
Agreement and all of the Existing Financing Agreements, as ratified, assumed and
adopted by Borrower and Guarantor pursuant to the terms hereof, as amended and
supplemented hereby, and the Financing Order, as each of the same now exists or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.3 Interpretation.
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(a) For purposes of this Ratification Agreement, unless otherwise
defined or amended herein, including, but not limited to, those terms used
and/or defined in the recitals hereto, all terms used herein shall have the
respective meanings assigned to such terms in the Credit Agreement.
(b) All references to the term "Lenders," "Agent," "Factor,"
"Borrower," "Guarantor," "Debtors" or any other person pursuant to the
definitions in the recitals hereto or otherwise shall include its respective
successors and assigns.
(c) All references to any term in the singular shall include the
plural and all references to any term in the plural shall include the singular
unless the context of such usage requires otherwise.
(d) All terms not specifically defined herein which are defined in the
Uniform Commercial Code, as in effect in the State of New York as of the date
hereof, shall have the meaning set forth therein, except that the term "Lien" or
"lien" shall have the meaning set forth in ss. 101(37) of the Bankruptcy Code.
2. ACKNOWLEDGMENT.
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2.1 Acknowledgement of Pre-Petition Obligations and Pre-Petition
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Factoring Obligations.
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(a) Borrower and Guarantor each hereby acknowledges, confirms and
agrees that, as of the close of business on October 12, 2006, Borrower is
indebted to Agent and the Lenders in respect of all Pre-Petition Obligations in
the aggregate principal amount of not less than $20,943,720, consisting of (i)
Revolving Advances made pursuant to the Existing Financing Agreements in the
aggregate principal amount of not less than $19,957,310, together with interest
accrued and accruing thereon, and (ii) Letters of Credit in the amount of not
less than $986,410, together with interest accrued and accruing thereon, and all
costs, expenses, fees (including attorneys' fees and legal expenses) and other
charges now or hereafter owed by Borrower to Agent and the Lenders, all of which
are unconditionally owing by Borrower to Agent and the Lenders without offset,
defense or counterclaim of any kind, nature and description whatsoever.
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(b) Borrower and Guarantor each hereby acknowledges, confirms and
agrees that, as of the close of business on October 12, 2006, Borrower is
indebted to Factor in respect of all Pre-Petition Factoring Obligations,
together with interest accrued and accruing thereon, and all costs, expenses,
fees (including attorneys' fees and legal expenses) and other charges now or
hereafter owed by Borrower to Factor, all of which are unconditionally owing by
Borrower to Factor without offset, defense or counterclaim of any kind, nature
and description whatsoever.
2.2 Guaranteed Obligations. Guarantor hereby acknowledges, confirms and
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agrees that:
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(a) all obligations of Guarantor under the Guarantor Documents are
unconditionally owing by Guarantor to Agent and the Lenders without offset,
defense or counterclaim of any kind, nature and description whatsoever,
(b) the absolute and unconditional guarantee of the payment of the
Pre-Petition Obligations by Guarantor pursuant to the Guarantor Documents
extends to all Post-Petition Obligations, and
(c) Guarantor absolutely and unconditionally guarantees the Factoring
Obligations as and to the same extent that the Obligations are guaranteed under
the Guarantor Documents.
2.3 Acknowledgment of Security Interests.
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(a) Borrower and Guarantor each hereby acknowledges, confirms and
agrees that Agent, for itself and the ratable benefit of each Lender, has and
shall continue to have valid, enforceable and perfected first priority and
senior security interests in and liens upon all Pre-Petition Collateral
heretofore granted to Agent, for itself and the ratable benefit of each Lender,
pursuant to the Existing Financing Agreements to secure all of the Obligations,
as well as valid and enforceable first priority and senior security interests in
and liens upon all Post-Petition Collateral granted to Agent, for itself and the
ratable benefit of each Lender, under the Financing Order or hereunder or under
any of the other Financing Agreements or otherwise granted to or held by Agent,
for itself and the ratable benefit of each Lender, in each case, subject only to
liens or encumbrances expressly permitted by the Credit Agreement and any other
liens or encumbrances expressly permitted by the Financing Order that may have
priority over the liens in favor of Agent, for itself and the ratable benefit of
each Lender.
(b) Borrower and Guarantor each hereby acknowledges, confirms and
agrees that Factor has and shall continue to have valid, enforceable and
perfected first priority and senior security interests in and liens upon all
Pre-Petition Factoring Collateral heretofore granted to Factor pursuant to the
Existing Factoring Agreements to secure all of the Factoring Obligations, as
well as valid and enforceable first priority and senior security interests in
and liens upon all Post-Petition Factoring Collateral granted to Factor under
the Financing Order or hereunder or under any of the other Factoring Agreements
or otherwise granted to or held by Factor, in each case, subject only to liens
or encumbrances expressly permitted by the Factoring Agreement and any other
liens or encumbrances expressly permitted by the Financing Order that may have
priority over the liens in favor of Factor.
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2.4 Binding Effect of Documents.
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(a) Borrower and Guarantor each hereby acknowledges, confirms and
agrees that: (i) each of the Existing Financing Agreements to which it is a
party was duly executed and delivered to Agent and the Lenders by Borrower and
Guarantor and each is in full force and effect as of the date hereof, (ii) the
agreements and obligations of Borrower and Guarantor contained in the Existing
Financing Agreements constitute the legal, valid and binding obligations of
Borrower and Guarantor enforceable against Borrower and Guarantor in accordance
with its respective terms and Borrower and Guarantor has no valid defense,
offset or counterclaim to the enforcement of such obligations, and (iii) Agent
and the Lenders are and shall be entitled to all of the rights, remedies and
benefits provided for in the Financing Agreements and the Financing Order.
(b) Borrower and Guarantor each hereby acknowledges, confirms and
agrees that: (i) each of the Existing Factoring Agreements to which it is a
party was duly executed and delivered to Factor by Borrower and Guarantor and
each is in full force and effect as of the date hereof, (ii) the agreements and
obligations of Borrower and Guarantor contained in the Existing Factoring
Agreements constitute the legal, valid and binding obligations of Borrower and
Guarantor enforceable against Borrower and Guarantor in accordance with its
respective terms and Borrower and Guarantor has no valid defense, offset or
counterclaim to the enforcement of such obligations, and (iii) Factor is and
shall be entitled to all of the rights, remedies and benefits provided for in
the Factoring Agreements and the Financing Order.
3. ADOPTION AND RATIFICATION.
-------------------------
3.1 Borrower and Guarantor each hereby (a) ratifies, assumes, adopts and
agrees to be bound by the Existing Financing Agreements applicable to it and (b)
agrees to pay all of the Pre-Petition Obligations in accordance with the terms
of such Existing Financing Agreements and the Financing Order. All of the
Existing Financing Agreements are hereby incorporated herein by reference and
hereby are and shall be deemed adopted and assumed in full by Borrower and
Guarantor, each as Debtor and Debtor-in-Possession, and considered as agreements
between Borrower or Guarantor and Agent and the Lenders, as applicable. Borrower
and Guarantor each hereby ratifies, restates, affirms and confirms all of the
terms and conditions of the Existing Financing Agreements, as amended and
supplemented pursuant hereto and to the Financing Order, and Borrower and
Guarantor each agree to be fully bound, as Debtor and Debtor-in-Possession, by
the terms of the Financing Agreements to which Borrower or Guarantor is a party.
3.2 Borrower and Guarantor each hereby (a) ratifies, assumes, adopts and
agrees to be bound by the Existing Factoring Agreements applicable to it and (b)
agrees to pay all of the Pre-Petition Factoring Obligations in accordance with
the terms of such Existing Factoring Agreements and the Financing Order. All of
the Existing Factoring Agreements are hereby incorporated herein by reference
and hereby are and shall be deemed adopted and assumed in full by Borrower and
Guarantor, each as Debtor and Debtor-in-Possession, and considered as agreements
between Borrower or Guarantor and Factor, as applicable. Borrower and Guarantor
each hereby ratifies, restates, affirms and confirms all of the terms and
conditions of the Existing Factoring Agreements, as amended and supplemented
pursuant hereto and to the Financing Order, and Borrower and Guarantor each
agree to be fully bound, as Debtor and Debtor-in-Possession, by the terms of the
Factoring Agreements to which Borrower or Guarantor is a party.
12
4. GRANT OF SECURITY INTEREST.
--------------------------
4.1 As collateral security for the prompt performance, observance and
payment in full of all of the Obligations (including the Pre-Petition
Obligations and the Post-Petition Obligations), Borrower and Guarantor each, as
Debtor and Debtor-in-Possession, hereby grants, pledges and assigns to Agent,
for itself and the ratable benefit of each Lender, and also confirms, reaffirms
and restates the prior grant to Agent, for itself and the ratable benefit of
each Lender, of, continuing security interests in and liens upon, and rights of
setoff against, all of the Collateral.
4.2 As collateral security for the prompt performance, observance and
payment in full of all of the Factoring Obligations (including the Pre-Petition
Factoring Obligations and the Post-Petition Factoring Obligations), Borrower and
Guarantor each, as Debtor and Debtor-in-Possession, hereby grants, pledges and
assigns to Factor, and also confirms, reaffirms and restates the prior grant to
Factor of, continuing security interests in and liens upon, and rights of setoff
against, all of the Factoring Collateral.
5. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
----------------------------------------------------
In addition to the continuing representations, warranties and covenants
heretofore and hereafter made by Borrower and Guarantor to Agent, each of the
Lenders and Factor, whether pursuant to the Financing Agreements, the Factoring
Agreements or otherwise, and not in limitation thereof, Borrower and Guarantor
each hereby represents, warrants and covenants to Agent, each of the Lenders and
Factor the following (which shall survive the execution and delivery of this
Ratification Agreement), the truth and accuracy of which, or compliance with, to
the extent such compliance does not violate the terms and provisions of the
Bankruptcy Code, shall be a continuing condition of the making of Advances by
the Lenders and the provision of factoring arrangements by Factor:
5.1 Financing Order. The Financing Order has been duly entered, is
valid, subsisting and continuing and has not been vacated, modified, reversed on
appeal, or vacated or modified by any order of the Bankruptcy Court (other than
as consented to by Agent, the Lenders and Factor) and is not subject to any
pending appeal or stay.
5.2 Use of Proceeds. All Revolving Advances and Letters of Credit
provided by Agent and the Lenders to Borrower pursuant to the Financing Orders,
the Credit Agreement or otherwise and all proceeds of factoring arrangements
provided by Factor to Borrower pursuant to the Financing Orders, the Factoring
Agreement or otherwise, shall be used by Borrower for general operating and
working capital purposes in the ordinary course of business of Borrower. Unless
authorized by the Bankruptcy Court and approved by Agent, the Lenders and Factor
in writing, no portion of any administrative expense claim or other claim
relating to the Chapter 11 Cases shall be paid with the proceeds of such
Revolving Advances and Letters of Credit provided by Agent and the Lenders to
Borrower or the proceeds of such factoring arrangements provided by Factor to
Borrower, other than those administrative expense claims and other claims
relating to the Chapter 11 Cases incurred after the Petition Date and directly
attributable to the operation of the business of Borrower or Guarantor in the
ordinary course of such business in accordance with the Financing Agreements. In
no event shall Borrower use the proceeds of such Revolving Advances and Letters
of Credit provided by Agent and the Lenders to Borrower or the proceeds of such
factoring arrangements provided by Factor to Borrower to pay any claim arising
prior to the Petition Date (including, without limitation, any pre-petition
vendor claims or reclamation claims), other than the Pre-Petition Obligations
and the Pre-Petition Factoring Obligations in accordance with the terms of the
Financing Agreements, the Factoring Agreements and the Financing Order, without
the prior written consent of Agent.
13
5.3 Budget.
------
(a) Borrower has prepared and delivered to Agent a thirty (30) week
Budget. The Budget has been thoroughly reviewed by Borrower and its management
and sets forth: (i) projected weekly operating cash receipts for each week
commencing with the week ending October 21, 2006; (ii) projected weekly
operating cash disbursements for each week commencing with the week ending
October 21, 2006; (iii) projected aggregate principal amount of outstanding
Revolving Advances and Letters of Credit for each week commencing with the week
ending October 21, 2006; and (iv) projected weekly amounts of Revolving Advances
and Letters of Credit available to Borrower under the terms, conditions and
formulae of the Credit Agreement for each week commencing with the week ending
October 21, 2006 (collectively, the "Projected Information"). In addition to the
initial Budget, Borrower shall furnish to Agent by no later than 11:59 p.m. (New
York City time) on the Monday of each week commencing with the week ending
October 28, 2006, a report that sets forth for the immediately preceding week a
comparison of the actual cash receipts, disbursements, loan availability and
loan balances to the projected cash receipts, disbursements, loan availability
and loan balances for such weekly periods set forth in the Budget on a
cumulative, weekly roll-forward basis, together with a certification from the
chief financial officer of Borrower that no Material Budget Deviation has
occurred. The Debtors covenant and agree that the Budget and the Projected
Information and other projections set forth therein are achievable and will
allow the Debtors to operate at all times during the Chapter 11 Cases without
the accrual of unpaid administrative expenses that would be required to be paid
in accordance with the Bankruptcy Code in the ordinary course of the Debtors'
businesses, subject, however, to Section 5.2 hereof and the other terms and
conditions of the Financing Agreements, the Factoring Agreements and the
Financing Order.
(b) Borrower and Guarantor each hereby confirms, acknowledges and
agrees that an additional Event of Default under the Credit Agreement shall
occur if (i) Borrower fails to deliver any Budget or any reports with respect to
any Budget, in form and substance satisfactory to Agent, as provided in Section
5.3(a) hereof, or (ii) the aggregate cumulative actual results for any period
covered in the Budget adversely deviate by more than ten percent (10%) from the
aggregate cumulative Projected Information for such period (a "Material Budget
Deviation").
14
(c) Notwithstanding any approval by Agent of the initial Budget or any
subsequent or amended Budget(s), Agent and the Lenders will not, and shall not
be required to, provide any Revolving Advances or Letters of Credit to Borrower
pursuant to the Budget, but shall only provide Revolving Advances and Letters of
Credit in accordance with the terms and conditions set forth in the Credit
Agreement as amended by this Ratification Agreement, the other Financing
Agreements and the Financing Order. Agent, each of the Lenders and Factor is
relying upon the Borrower's delivery of, and compliance with, the Budget in
accordance with this Section 5.3 in determining to enter into the post-petition
financing arrangements provided for herein.
5.4 Deposit Accounts. To the extent Agent deems it necessary in its
discretion and upon Agent's request, Borrower and Guarantors shall promptly
provide Agent with evidence, in form and substance satisfactory to Agent, that
the deposit account arrangements provided for under Section 4.2 of the Credit
Agreement have been established and/or ratified and amended by the parties
thereto, or their respective successors in interest, in form and substance
satisfactory to Lender, to reflect the commencement of the Chapter 11 Cases,
that Borrower and Guarantor, each as Debtor and Debtor-in-Possession, is the
successor in interest to Borrower or Guarantor, that the Obligations include
both the Pre-Petition Obligations and the Post-Petition Obligations, that the
Collateral includes both the Pre-Petition Collateral and the Post-Petition
Collateral as provided for herein and the other terms and conditions of this
Ratification Agreement.
5.5 ERISA. (a) There are no liens, security interests or encumbrances
upon, in or against any assets or properties of Borrower or Guarantor arising
under ERISA, whether held by the Pension Benefit Guaranty Corporation (the
"PBGC") or the contributing sponsor of, or a member of the controlled group
thereof, any pension benefit plan of Borrower or Guarantor and (b) no notice of
lien has been filed by the PBGC (or any other Person) pursuant to ERISA against
any assets or properties of Borrower or Guarantor.
5.6 No Foreclosure or Exercise of Rights under FILOT Indenture;
Consent under FILOT Indenture. Borrower, in its capacity as assignee of Delta
Woodside Industries, Inc. relating to the Indenture dated as of May 20, 1994,
between Borrower, Greenville County, Xxxxxxxx County and Marlboro County, South
Carolina (as amended or otherwise modified from time to time, the "FILOT
Indenture"), hereby agrees and consents (a) that it will not foreclose on, or
exercise its rights with respect to, the FILOT Indenture without first obtaining
Agent's prior written consent; and (b) to the filing by Agent of the Leasehold
Mortgage and fixture filings related thereto, in form and substance satisfactory
to Agent and Factor and in form appropriate for recording, in the real estate
records of the jurisdiction in which such Real Property is located.
6. DIP FACILITY FEE.
----------------
Borrower shall pay Agent, for itself and the ratable benefit of the
Lenders, a closing fee in respect of the financing provided by Agent and the
Lenders to Borrower in the Chapter 11 Cases in the amount of $400,000, which
shall be fully earned and payable on the date hereof and shall not be subject to
refund, rebate or proration for any reason whatsoever.
15
7. AMENDMENTS.
----------
7.1 Definitions. Section 1.2 of the Credit Agreement is hereby amended
as follows
(a) The definition of "Availability Block" set forth in Section 1.2 of
the Credit Agreement is hereby deleted in its entirety and the following
substituted therefor:
""Availability Block" shall mean $3,000,000."
(b) The definition of "Maximum Loan Amount" set forth in Section 1.2
of the Credit Agreement is hereby deleted in its entirety and the following
substituted therefor:
""Maximum Loan Amount" shall mean $20,000,000."
(c) The definition of "Maximum Revolving Advance Amount" set forth in
Section 1.2 of the Credit Agreement is hereby deleted in its entirety and the
following substituted therefor:
""Maximum Revolving Advance Amount" shall mean $20,000,000."
(d) The definition of "Maximum Term Loan Amount" set forth in Section
1.2 of the Credit Agreement is hereby deleted in its entirety and the following
substituted therefor:
""Maximum Term Loan Amount" shall mean $0."
(e) The definition of "Reserves" set forth in Section 1.2 of the
Credit Agreement is hereby deleted in its entirety and the following substituted
therefor:
""Reserves" shall mean the sum, from time to time, of all
ineligible Receivables, ineligible Inventory, disputes, deductions,
allowances, credits, retention, standby and documentary Letters of
Credit, airway releases, steamship guarantees, and any other offsets
asserted or granted and such additional reserves, including, without
limitation, reserves in respect of any existing or future Obligations
due or to become due, the Collateral, results of operations, changes
in business plan or performance, as are deemed appropriate in Agent's
sole discretion, and the reserve provided for in Section 2.4 of the
Financing Order. The Reserves may be increased or decreased by Agent
at any time and from time to time in the exercise of its reasonable
discretion. Borrower consents to any such increases or decreases and
acknowledges that increasing the Reserves may limit or restrict
Advances requested by Borrower."
16
(f) The definition of "Term Loan Reserve" set forth in Section 1.2 of
the Credit Agreement is hereby deleted in its entirety.
(g) The definition of "Value of Term Loan Collateral" set forth in
Section 1.2 of the Credit Agreement is hereby deleted in its entirety.
7.2 Limits and Sublimits. Section 2 of the Credit Agreement is hereby
amended by adding the following new Section 2.17 at the end thereof:
"2.17 All limits and sublimits set forth in the Credit Agreement
shall be determined on an aggregate basis considering together both
the Pre-Petition Obligations and the Post-Petition Obligations and in
respect thereof or with respect to any formula or other provision to
which a limit or sublimit may apply."
7.3 Security Interest. Section 4.1 of the Credit Agreement is hereby
deleted in its entirety and the following substituted therefor:
"4.1 Security Interest in the Collateral. To secure the prompt
payment and performance to Agent and each Lender of the Obligations,
Borrower hereby assigns, pledges and grants to Agent, for itself and
the ratable benefit of each Lender, a continuing, exclusive (except
for Receivables factored and assigned to Factor), first priority
security interest in and to all of its Collateral (including, without
limitation, the Term Loan Collateral), whether now owned or existing
or hereafter acquired or arising and wheresoever located, except that
the security interest in and to the Receivables granted by Borrower to
Factor shall be senior to the security interests of Agent in and to
such Receivables. Borrower shall xxxx its books and records as may be
necessary or appropriate to evidence, protect and perfect Agent's
security interest ("Agent's security interest") and shall cause its
financial statements to reflect such security interest."
7.4 Amendment of Senior Notes Indenture; Pledge of Term Loan Collateral.
Section 6.8 of the Credit Agreement is hereby deleted in its entirety and the
following substituted therefor:
"6.8 [Intentionally omitted]."
7.5 Merger, Consolidation, Acquisition and Sale of Assets.
Notwithstanding anything to the contrary contained in Section 7.1 of the Credit
Agreement or any other provision of the Credit Agreement or the other Financing
Agreements, Borrower and Guarantor shall not directly or indirectly sell,
transfer, lease, encumber, return or otherwise dispose of any portion of the
Collateral or any other assets of Borrower and Guarantor, including, without
limitation, assume, reject or assign any leasehold interest or enter into any
agreement to return Inventory to vendor, whether pursuant to section 546 of the
Bankruptcy Code or otherwise, without the prior written consent of Agent (and no
such consent shall be implied, from any other action, inaction or acquiescence
by Agent) except for sales of Borrower's and Guarantor's Inventory in the
ordinary course of their business.
17
7.6 Consummation of the Offer. Section 7.19 of the Credit Agreement is
hereby deleted in its entirety and the following substituted therefor:
"7.19 [Intentionally omitted]."
7.7 Additional Financial Reporting Requirements. Section 9.10 of the
Credit Agreement is hereby deleted in its entirety and the following substituted
therefor:
"Furnish Agent and each of the Lenders as soon as available, but
in any event within ten (10) days after the issuance thereof, with (a)
copies of such financial statements, reports and returns as Borrower
shall send to its stockholders, and (b) copies of all notices sent to
the Securities and Exchange Commission. Borrower and each Guarantor
shall also provide Lender with copies of all financial reports,
schedules and other materials and information at any time furnished by
or on behalf of Borrower or any Guarantor to the Bankruptcy Court, or
the U.S. Trustee or to any creditors' committee or such Borrower's or
Guarantor's shareholders, concurrently with the delivery thereof to
the Bankruptcy Court, creditors' committee, U.S. Trustee or
shareholders, as the case may be. In addition to and not in limitation
of the foregoing, Borrower shall cause Guarantors to furnish Agent
with annual financial statements requested by Agent from time in form
and substance satisfactory to Agent."
7.8 Events of Default. Section 10 of the Credit Agreement is hereby
amended as follows:
(a) Section 10.7 of the Credit Agreement is hereby deleted in its
entirety.
(b) Section 10 of the Credit Agreement is hereby amended by adding the
following new Sections at the end thereof:
"10.22 the occurrence of any condition or event which permits
Agent or the Lenders to exercise any of the remedies set forth in the
Financing Order, including, without limitation, any "Event of Default"
(as defined in the Financing Order).
18
10.23 the termination or non-renewal of the Financing Agreements
as provided for in the Financing Order.
10.24 Borrower or any Guarantor suspends or discontinues or is
enjoined by any court or governmental agency from continuing to
conduct all or any material part of its business (other than the
orderly wind down of its business on terms and conditions acceptable
to Agent in its sole discretion), or a trustee, receiver or custodian
is appointed for Borrower or any Guarantor, or any of their respective
properties.
10.25 any act, condition or event occurring after the date of the
commencement of the Chapter 11 Cases that has or would reasonably
expect to have a Material Adverse Effect upon the assets of Borrower
or any Guarantor, or the Collateral or the rights and remedies of
Agent and the Lenders under the Credit Agreement or any other
Financing Agreements or the Financing Order.
10.26 conversion of any Chapter 11 Case to a Chapter 7 case under
the Bankruptcy Code.
10.27 dismissal of any Chapter 11 Case or any subsequent Chapter
7 case either voluntarily or involuntarily.
10.28 the grant of a lien on or other interest in any property of
Borrower or any Guarantor other than a lien or encumbrance permitted
by Section 7.2 hereof or by the Financing Order or an administrative
expense claim other than such administrative expense claim permitted
by the Financing Order or the Ratification Agreement by the grant of
or allowance by the Bankruptcy Court which is superior to or ranks in
parity with Agent's security interest, for itself and the ratable
benefit of each Lender, in or lien upon the Collateral or Agent's
Superpriority Claim (as defined in the Financing Order).
10.29 the Financing Order shall be modified, reversed, revoked,
remanded, stayed, rescinded, vacated or amended on appeal or by the
Bankruptcy Court without the prior written consent of Agent (and no
such consent shall be implied from any other authorization or
acquiescence by Agent).
19
10.30 the appointment of a trustee pursuant to Sections
1104(a)(1) or 1104(a)(2) of the Bankruptcy Code.
10.31 the appointment of an examiner with special powers pursuant
to Section 1104(a) of the Bankruptcy Code.
10.32 the filing of a plan of reorganization by or on behalf of
Borrower or any Guarantor, to which Agent has not consented in
writing, which does not provide for payment in full of all Obligations
on the effective date thereof in accordance with the terms and
conditions contained herein.
10.33 the confirmation of any plan of reorganization in the
Chapter 11 Case of Borrower or any Guarantor, to which Agent has not
consented to in writing, which does not provide for payment in full of
all Obligations on the effective date thereof in accordance with the
terms and conditions contained herein."
7.9 Governing Law. The first sentence of Section 15.1 of the Credit
Agreement is hereby deleted in its entirety and the following substituted
therefor:
"THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLIED TO CONTRACTS TO BE
PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, EXCEPT TO THE EXTENT
THAT THE PROVISIONS OF THE BANKRUPTCY CODE ARE APPLICABLE AND
SPECIFICALLY CONFLICT WITH THE FOREGOING."
7.10 Payments. Section 15.4 of the Credit Agreement is hereby amended by
adding the following at the end thereof:
"Without limiting the generality of the foregoing, Lender may, in
its discretion, apply any such payments or proceeds first to the
Pre-Petition Obligations (as such term is defined in this Agreement)
until such Pre-Petition Obligations are paid and satisfied in full."
7.11 Notices. Section 15.6 of the Credit Agreement is hereby amended by
adding that any notices, requests and demands also be sent to the following
parties:
"If to Agent at: GMAC Commercial Finance LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department/CSD
Telecopier: (000) 000-0000
20
with a copy to: Otterbourg, Steindler, Houston & Xxxxx, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
If to a Lender other than Agent, as specified on the signature pages
of the Credit Agreement
If to Borrower: Delta Xxxxx, Inc.
000 Xxxxx Xxxxx Xxxxx
Xxxxxxxx Xxx, Xxxxx Xxxxxxxx 00000
Attention: Chief Financial Officer
Telecopier: (000) 000-0000
with a copy to: Xxxxxxx Xxxxxx & Xxxxxx, P.A.
The Carillon
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: C. Xxxxxxx Xxxxxxx
Telecopier: (000) 000-0000
- and -
Wyche, Burgess, Xxxxxxx & Xxxxxx, P.A.
00 Xxxx Xxxxxxxxxx Xxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telecopier: (000) 000-0000"
8. RELEASE.
-------
8.1 Release of Pre-Petition Claims.
------------------------------
(a) Upon the earlier of (i) the entry of the Permanent Financing Order
or (ii) upon entry of an Order extending the term of the Interim Financing Order
beyond sixty (60) calendar days after the date of the Interim Financing Order,
in consideration of the agreements of Agent, the Lenders and Factor contained
herein and the making of any Advances by the Lenders and the providing of any
factoring arrangements by Factor, each of Borrower and Guarantor, pursuant to
the Credit Agreement and the Factoring Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, on behalf of itself and its respective successors, assigns, and
other legal representatives, hereby absolutely, unconditionally and irrevocably
releases, remises and forever discharges Agent, the Lenders and Factor, their
respective successors and assigns, and their respective present and former
shareholders, affiliates, subsidiaries, divisions, predecessors, directors,
officers, attorneys, employees and other representatives (Agent, the Lenders,
Factor and all such other parties being hereinafter referred to collectively as
the "Releasees" and individually as a "Releasee"), of and from all demands,
actions, causes of action, suits, covenants, contracts, controversies,
agreements, promises, sums of money, accounts, bills, reckonings, damages and
any and all other claims, counterclaims, defenses, rights of set-off, demands
and liabilities whatsoever (individually, a "Pre-Petition Released Claim" and
collectively, "Pre-Petition Released Claims") of every name and nature, known or
unknown, suspected or unsuspected, both at law and in equity, which Borrower and
Guarantor, or any of their respective successors, assigns, or other legal
representatives may now or hereafter own, hold, have or claim to have against
the Releasees or any of them for, upon, or by reason of any nature, cause or
thing whatsoever which arises at any time on or prior to the day and date of
this Ratification Agreement, including, without limitation, for or on account
of, or in relation to, or in any way in connection with the Credit Agreement, as
amended and supplemented through the date hereof, and the other Financing
Agreements and the Factoring Agreement.
21
(b) Upon the earlier of (i) the entry of the Permanent Financing Order
or (ii) upon entry of an Order extending the term of the Interim Financing Order
beyond sixty (60) calendar days after the date of the Interim Financing Order,
each of Borrower and Guarantor, on behalf of itself and its successors, assigns,
and other legal representatives, hereby absolutely, unconditionally and
irrevocably, covenants and agrees with each Releasee that it will not xxx (at
law, in equity, in any regulatory proceeding or otherwise) any Releasee on the
basis of any Pre-Petition Released Claim released, remised and discharged by
Borrower and each Guarantor pursuant to this Section 8.1. If Borrower or
Guarantor violates the foregoing covenant, Borrower and Guarantor agree to pay,
in addition to such other damages as any Releasee may sustain as a result of
such violation, all attorneys' fees and costs incurred by any Releasee as a
result of such violation.
8.2 Agreement to Release of Post-Petition Claims. Upon (a) the receipt
by (i) Agent and the Lenders of payment in full of all Obligations and (ii)
Factor of payment in full of the Factoring Obligations, in cash or other
immediately available funds, plus cash collateral or other collateral security
acceptable to Agent to secure any Obligations that survive or continue beyond
the termination of the Financing Agreements, and (b) the termination of the
Financing Agreements and the Factoring Agreements (the "Payment Date"), in
consideration of the agreements of Agent, the Lenders and Factor contained
herein and the making of any Advances by the Lenders and the providing of any
factoring arrangements by Factor, Borrower and Guarantor each hereby covenants
and agrees to execute and deliver in favor of Agent, each of the Lenders and
Factor a valid and binding termination and release agreement, in form and
substance satisfactory to Agent and Factor, pursuant to which, among other
things, (i) each of Borrower and Guarantor, on behalf of itself and its
respective successors, assigns, and other legal representatives, shall
absolutely, unconditionally and irrevocably release, remise and forever
discharge each Releasee, of and from all demands, actions, causes of action,
suits, covenants, contracts, controversies, agreements, promises, sums of money,
accounts, bills, reckonings, damages and any and all other claims,
counterclaims, defenses, rights of set-off, demands and liabilities whatsoever
(individually, a "Post-Petition Released Claim" and collectively, "Post-Petition
Released Claims") of every name and nature, known or unknown, suspected or
unsuspected, both at law and in equity, which each of Borrower and Guarantor, or
any of their respective successors, assigns, or other legal representatives may
now or hereafter own, hold, have or claim to have against the Releasees or any
of them for, upon, or by reason of any nature, cause or thing whatsoever which
arises at any time on or prior to the Payment Date, including, without
limitation, for or on account of, or in relation to, or in any way in connection
with the Credit Agreement or the Factoring Agreement, as amended and
supplemented through the Payment Date, and the other Financing Agreements and
Factoring Agreements or the Financing Order and (ii) Borrower and Guarantor each
shall absolutely, unconditionally and irrevocably, covenant and agree with each
Releasee that it will not xxx (at law, in equity, in any regulatory proceeding
or otherwise) any Releasee on the basis of any Post-Petition Released Claim
released, remised and discharged by each of Borrower and Guarantor pursuant to
such termination and release agreement. If Borrower or Guarantor violates such
covenant, Borrower and Guarantor agree to pay, in addition to such other damages
as any Releasee may sustain as a result of such violation, all attorneys' fees
and costs incurred by any Releasee as a result of such violation.
22
8.3 Releases Generally.
------------------
(a) Borrower and Guarantor each understands, acknowledges and agrees
that the releases set forth above in Sections 8.1 and 8.2 hereof may be pleaded
as a full and complete defense and may be used as a basis for an injunction
against any action, suit or other proceeding which may be instituted, prosecuted
or attempted in breach of the provisions of such releases.
(b) Borrower and Guarantor each agrees that no fact, event,
circumstance, evidence or transaction which could now be asserted or which may
hereafter be discovered shall affect in any manner the final and unconditional
nature of the releases set forth in Section 8.1 hereof and, when made, Section
8.2 hereof.
9. CONDITIONS PRECEDENT.
--------------------
In addition to any other conditions contained herein or in the Credit
Agreement or the Factoring Agreement, as in effect immediately prior to the
Petition Date, with respect to the Advances and other financial accommodations
and factoring arrangements available to Borrower (all of which conditions,
except as modified or made pursuant to this Ratification Agreement shall remain
applicable to the Advances and be applicable to other financial accommodations
and factoring arrangements available to Borrower), the following are conditions
to Agent's and each Lender's obligation to extend further loans, advances or
other financial accommodations to Borrower pursuant to the Credit Agreement and
to Factor's obligation to provide factoring arrangements to Borrower pursuant to
the Factoring Agreement:
9.1 Borrower and Guarantor shall furnish to Agent and Factor all
financial information, projections, budgets, business plans, cash flows and such
other information as Agent and Factor shall reasonably request from time to
time;
9.2 as of the Petition Date, the Existing Financing Agreements and the
Existing Factoring Agreements shall not have been terminated;
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9.3 no trustee, examiner or receiver or the like shall have been
appointed or designated with respect to Borrower or Guarantor, as Debtor and
Debtor-in-Possession, or its respective business, properties and assets and no
motion or proceeding shall be pending seeking such relief;
9.4 the execution and delivery of this Ratification Agreement and all
other Financing Agreements and Factoring Agreements to be delivered in
connection herewith, including, without limitation, the Assignment of Indenture,
by Borrower and Guarantor in form and substance satisfactory to Agent and
Factor;
9.5 the Interim Financing Order or other Order(s) of the Bankruptcy
Court shall ratify and amend the deposit account arrangements of Borrower and
Guarantor to reflect the commencement of the Chapter 11 Cases, that each Debtor,
as Debtor and Debtor-in-Possession, is the successor in interest to Borrower or
Guarantor, as the case may be, that the Obligations include both the
Pre-Petition Obligations and the Post-Petition Obligations, that the Collateral
includes both the Pre-Petition Collateral and the Post-Petition Collateral as
provided for herein and the other terms and conditions of this Ratification
Agreement;
9.6 the execution or delivery to Agent and the Lenders of all other
Financing Agreements, and other agreements, documents and instruments which, in
the good faith judgment of Agent, are necessary or appropriate and the execution
or delivery to Factor of all other Factoring Agreements, and other agreements,
documents and instruments which, in the good faith judgment of Factor, are
necessary or appropriate for the implementation of the terms of this
Ratification Agreement and the other Financing Agreements and Factoring
Agreements, as modified pursuant to this Ratification Agreement, all of which
contain provisions, representations, warranties, covenants and Events of
Default, as are satisfactory to Agent and Factor and their counsel;
9.7 satisfactory review by counsel for Agent of legal issues attendant
to the post-petition financing and factoring transactions contemplated
hereunder;
9.8 Borrower and Guarantor shall comply in full with the notice and
other requirements of the Bankruptcy Code and the applicable Bankruptcy Rules
with respect to any relevant Financing Order in a manner acceptable to Agent and
its counsel, and an Interim Financing Order shall have been entered by the
Bankruptcy Court (the "Interim Financing Order") authorizing the secured
financing under the Financing Agreements as ratified and amended hereunder on
the terms and conditions set forth in this Ratification Agreement and, among
other things, modifying the automatic stay, authorizing and granting the senior
security interest in liens in favor of Agent, for itself and the ratable benefit
of each Lender, and Factor described in this Ratification Agreement and in the
Financing Order, and granting super-priority expense claims to Agent and Factor
with respect to all obligations due Agent, the Lenders and Factor. The Interim
Financing Order shall authorize post-petition financing and factoring under the
terms set forth in this Ratification Agreement in an amount acceptable to Agent,
in its sole discretion, and it shall contain such other terms or provisions as
Agent and its counsel shall require;
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9.9 with respect to further credit after expiration of the Interim
Financing Order, on or before the expiration of the Interim Financing Order, the
Bankruptcy Court shall have entered a Permanent Financing Order authorizing the
secured financing on the terms and conditions set forth in this Ratification
Agreement, granting to Agent, for itself and the ratable benefit of each Lender,
and Factor the senior security interest and liens described above and
super-priority administrative expense claims described above (except as
otherwise specifically provided in the Interim Financing Order), and modifying
the automatic stay and other provisions required by Lender and its counsel
("Permanent Financing Order"). Agent and the Lenders shall not provide any
Advances (or other financial accommodations) other than those authorized under
the Interim Financing Order and Factor shall not provide any factoring
arrangements other than those authorized under the Interim Financing Order
unless, on or before the expiration of the Interim Financing Order, the
Permanent Financing Order shall have been entered, and there shall be no appeal
or other contest with respect to either the Interim Financing Order or the
Permanent Financing Order;
9.10 other than the voluntary commencement of the Chapter 11 Cases, no
material impairment of the priority of the security interests of Agent, for
itself and the ratable benefit of each Lender, and Factor in the Pre-Petition
Collateral and the Pre-Petition Factoring Collateral shall have occurred from
the date of the latest field examinations of Agent and Factor to the date
hereof;
9.11 no Event of Default shall have occurred or be existing under any of
the Financing Agreements or Factoring Agreements, as modified pursuant hereto,
and assumed by Borrowers and Guarantor; and
9.12 the recording of the Mortgage and the Leasehold Mortgage and
fixture filings related thereto, in form and substance satisfactory to Agent and
Factor and in form appropriate for recording, in the real estate records of the
jurisdiction in which such Real Property is located and the filing of UCC
financing statements, in form and substance satisfactory to Agent and Factor and
in form appropriate for filing, naming Debtors as debtor and Agent and Factor as
secured party, with the Secretary of State of the State of Delaware, and the
receipt by Agent and Factor of evidence satisfactory to Agent and Factor and
their counsel that the liens and security interests purported to be evidenced
thereby have been perfected in the manner prescribed by applicable law.
10. MISCELLANEOUS.
-------------
10.1 Amendments and Waivers. Neither this Ratification Agreement nor any
other instrument or document referred to herein or therein may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought.
10.2 Further Assurances. Borrower and Guarantor each shall, at its
expense, at any time or times duly execute and deliver, or shall cause to be
duly executed and delivered, such further agreements, instruments and documents,
including, without limitation, additional security agreements, collateral
assignments, UCC financing statements or amendments or continuations thereof,
landlord's or mortgagee's waivers of liens and consents to the exercise by Agent
and the Lenders of all the rights and remedies hereunder, under any of the other
Financing Agreements, Factoring Agreements, any Financing Order or applicable
law with respect to the Collateral, and do or cause to be done such further acts
as may be reasonably necessary or proper in Agent's opinion to evidence,
perfect, maintain and enforce the security interests of Agent, for itself and
the ratable benefit of each Lender, and the priority thereof, in the Collateral
and to otherwise effectuate the provisions or purposes of this Ratification
Agreement, any of the other Financing Agreements, Factoring Agreements or the
Financing Order. Upon the request of Agent, at any time and from time to time,
Borrower and Guarantor each shall, at its cost and expense, do, make, execute,
deliver and record, register or file, updates to the financing statements,
mortgages, deeds of trust, deeds to secure debt, and other instruments, acts,
pledges, assignments and transfers (or cause the same to be done) and will
deliver to Agent such instruments evidencing items of Collateral as may be
requested by Agent.
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10.3 Headings. The headings used herein are for convenience only and do
not constitute matters to be considered in interpreting this Ratification
Agreement.
10.4 Counterparts. This Ratification Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which shall together constitute one and the same agreement. In making proof
of this Ratification Agreement, it shall not be necessary to produce or account
for more than one counterpart thereof signed by each of the parties hereto.
Delivery of an executed counterpart of this Ratification Agreement by
telefacsimile or other electronic means of communication shall have the same
force and effect as delivery of an original executed counterpart of this
Ratification Agreement. Any party delivering an executed counterpart of this
Ratification Agreement by telefacsimile or other electronic means of
communication shall also deliver an original executed counterpart of this
Ratification Agreement, but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Ratification Agreement as to such party or any other party.
10.5 Additional Events of Default. The parties hereto acknowledge,
confirm and agree that the failure of Borrower or Guarantor to comply with any
of the covenants, conditions and agreements contained herein or in any other
agreement, document or instrument at any time executed by Borrower or Guarantor
in connection herewith shall constitute an Event of Default under the Financing
Agreements and the Factoring Agreements.
10.6 Costs and Expenses. Borrower shall pay to Agent on demand all costs
and expenses that Agent pays or incurs in connection with the negotiation,
preparation, consummation, administration, enforcement, and termination of this
Ratification Agreement and the other Financing Agreements, Factoring Agreements
and the Financing Order and the transactions contemplated thereby, including,
without limitation: (a) reasonable financial consultants', accountants',
attorneys', paralegals' and other professionals' fees and disbursements; (b)
costs and expenses (including reasonable attorneys' and paralegals' fees and
disbursements) for any amendment, supplement, waiver, consent, or subsequent
closing in connection with this Ratification Agreement, the other Financing
Agreements, the Factoring Agreements, the Financing Order and the transactions
contemplated thereby; (c) taxes, fees and other charges for recording any
agreements or documents with any governmental authority, and the filing of UCC
financing statements and continuations, and other actions to perfect, protect,
and continue the security interests and liens of Agent, for itself and the
ratable benefit of each Lender, in the Collateral; (d) sums paid or incurred to
pay any amount or take any action required of Borrower and Guarantor under the
Financing Agreements, the Factoring Agreements or the Financing Order that
Borrower and Guarantor fail to pay or take; (e) costs of appraisals, inspections
and verifications of the Collateral and the Factoring Collateral and including
travel, lodging, and meals for inspections of the Collateral, the Factoring
Collateral and the Debtors' operations by Agent or Factor or its respective
agents and to attend court hearings or otherwise in connection with the Chapter
11 Cases; (f) costs and expenses of preserving and protecting the Collateral and
the Factoring Collateral; (g) all out-of-pocket expenses and costs heretofore
and from time to time hereafter incurred by Agent or Factor during the course of
periodic field examinations of the Collateral, the Factoring Collateral and
Debtors' operations, plus a per diem charge at Agent's or Factor's, as
applicable, per diem rate then in effect per person per day for Agent's
examiners in the field and office; and (h) costs and expenses (including
attorneys' and paralegals' fees and disbursements) paid or incurred to obtain
payment of the Obligations or the Factoring Obligations, enforce the security
interests and liens of Agent, for itself and the ratable benefit of each Lender,
or Factor, sell or otherwise realize upon the Collateral and the Factoring
Collateral, and otherwise enforce the provisions of this Ratification Agreement
and the other Financing Agreements, Factoring Agreements and the Financing
Order, or to defend any claims made or threatened against Agent or any of the
Lenders or Factor arising out of the transactions contemplated hereby
(including, without limitation, preparations for and consultations concerning
any such matters). The foregoing shall not be construed to limit any other
provisions of the Financing Agreements and Factoring Agreements regarding costs
and expenses to be paid by Borrower. All sums provided for in this Section 10.6
shall be part of the Obligations or Factoring Obligations, as applicable, shall
be payable on demand, and shall accrue interest after demand for payment thereof
at the highest rate of interest then payable under the Financing Agreements or
Factoring Agreements, as applicable. Agent is hereby irrevocably authorized to
charge any amounts payable hereunder directly to any of the account(s)
maintained by Agent with respect to Borrower or Guarantor.
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10.7 Effectiveness. This Ratification Agreement shall become effective
upon the execution hereof by Debtors, Agent, Factor and each Lender and the
entry of the Interim Financing Order.
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IN WITNESS WHEREOF, the parties hereto have caused this Ratification
Agreement to be duly executed as of the day and year first above written.
DELTA XXXXX, INC.,
as Borrower
By:
-------------------------
Title:
----------------------
DELTA XXXXX MARKETING, INC.,
as Guarantor
By:
-------------------------
Title:
----------------------
GMAC COMMERCIAL FINANCE LLC,
as Lender, Agent and Factor
By:
-------------------------
Title:
----------------------
