EXHIBIT 10.3
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EXECUTION VERSION
FOURTH AMENDMENT AND WAIVER
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This FOURTH AMENDMENT AND WAIVER (this "Fourth Amendment and Waiver")
is dated as of August 18, 2004 and is entered into by and between DAN RIVER
INC., a Georgia corporation, as debtor and debtor in possession (the
"Borrower") and DEUTSCHE BANK TRUST COMPANY AMERICAS, in its capacity as
the Agent for the Lenders under the Credit Agreement referred to below (in
such capacity, the "Agent").
RECITALS:
WHEREAS, pursuant to that certain Post-Petition Credit Agreement,
dated as of April 1, 2004, by and among (among others) the Borrower, the
Agent and the lenders from time to time party thereto (collectively, the
"Lenders") (as amended by the Amendment thereto, dated May 27, 2004, the
Second Amendment thereto, dated July 20, 2004, the Third Amendment thereto,
dated July 31, 2004, and as further amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), the Lenders
have agreed to make certain Loans and issue certain Letters of Credit to
and for the benefit of the Borrower;
WHEREAS, certain Defaults and Events of Default have occurred and are
continuing (or will occur and will be continuing) under Section 9.1(b) of
the Credit Agreement due to the Borrower's failure to satisfy the financial
covenant set forth in Section 8.1(a) regarding minimum Operating EBITDA
(the "EBITDA Default");
WHEREAS, the Agent, upon the written consent of the Majority Lenders,
is willing to waive the EBITDA Default for a limited period of time and
agree to certain amendments to the Credit Agreement, provided that the
Borrower complies with the terms of this Fourth Amendment and Waiver and
the Credit Documents; and
WHEREAS, unless otherwise defined herein, capitalized terms used in
this Fourth Amendment and Waiver shall have the same definitions as are
contained in the Credit Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and incorporating the
foregoing recitals herein, the parties hereto agree as follows.
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SECTION I.
ACKNOWLEDGMENTS
1.1 Acknowledgment of Events of Default; Enforceability of Credit
Agreement and Credit Documents; Waiver of Defenses. The Borrower
acknowledges that: (i) the EBITDA Default has occurred and is continuing
under the Credit Agreement and constitutes a Default and Event of Default
thereunder; (ii) to the extent that the Final Order, the Credit Agreement
or any of the other Credit Documents require notification by the Agent or
the Lenders of the existence of a Default or Event of Default and of an
opportunity for the Borrower to cure such Default or Event of Default, such
notice and period for cure have been properly given or such requirements
have been or are hereby waived by the Borrower; (iii) as a result of the
EBITDA Default, and but for the waiver provided for in this Fourth
Amendment and Waiver, the Agent, on behalf of the Secured Parties, and/or
the other Secured Parties, without the need for further notice or
declaration with respect to the EBITDA Default to the Borrower or any other
entity, would be entitled to exercise any and all of their rights and
remedies under the Credit Agreement and the other Credit Documents (subject
to the Final Order); (iv) the Credit Agreement and the other Credit
Documents are valid legal agreements, enforceable against the Borrower and
each of its Subsidiaries that is a party to any such Credit Document in
every respect and all of the terms and conditions thereof are binding upon
the Borrower and such Subsidiaries (subject to the Final Order); (v) the
Loans and other Obligations owing to the Lenders under the Credit Agreement
and the other Credit Documents represent the legal obligations of the
Borrower without defense, offset or counterclaim, and (vi) no defenses, set-
offs or counterclaims exist with respect to the enforcement by the Agent or
any Secured Party of their respective rights under the Credit Agreement or
any other Credit Document; provided, however, to the extent that any such
defenses, set-offs or counterclaims exist, the Borrower and each such
Subsidiary hereby waive any and all such defenses, set-offs and
counterclaims which either the Borrower or any such Subsidiary may have or
claim to have relating to or arising from the transactions reflected in the
Credit Documents or to the enforcement by the Agent or the other Secured
Parties of their respective rights and remedies under the Credit Agreement,
the other Credit Documents and applicable law. Nothing contained in this
Fourth Amendment and Waiver shall be interpreted to effect a waiver of any
notification requirement, defense, set-off or counterclaim, if any, arising
after the date of this Fourth Amendment and Waiver.
1.2 Acknowledgment of Indebtedness. The Borrower acknowledges that
as of August 17, 2004, the Borrower was indebted to the Secured Parties in
the aggregate principal amount of $104,946,393.64, in the form of
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outstanding Loans and Letters of Credit under the Credit Agreement
(together with interest thereon and certain fees payable in connection
therewith, but exclusive of any expenses and other amounts payable
thereunder), as more particularly set forth on Schedule 1.2 attached
hereto. The Borrower acknowledges such amounts are outstanding under the
Credit Agreement and continue to be owed to the Secured Parties along with
all other amounts for accrued interest, fees, costs and expenses and that
such other amounts shall continue to accrue under the Credit Agreement.
1.3 Acknowledgment of Liens and Grant of Security Interests. The
Borrower acknowledges that it has granted the Agent, for the benefit of the
Secured Parties, security interests in and liens upon the Collateral
pursuant to the Collateral Documents and the Final Order, which security
interests and liens are perfected and, except where otherwise permitted
thereunder, of the first priority and which security interests and liens
secure the obligations of the Borrower and the other Credit Parties to the
Secured Parties under the Credit Documents. The Borrower further
acknowledges the prior execution and delivery of the Collateral Documents
to the Agent, for the benefit of the Secured Parties, and that,
notwithstanding the execution and delivery of this Fourth Amendment and
Waiver, the Collateral Documents and the Final Order remain in full force
and effect and the rights and remedies of the Agent and the Secured Parties
thereunder, the obligations of the Borrower and the other Credit Parties
thereunder, and the liens and security interests created and provided for
thereunder remain in full force and effect and shall not be affected,
impaired or discharged hereby.
SECTION II.
WAIVER COVENANTS
2.1 Waiver. The Agent, upon the consent of the Majority Lenders,
hereby agrees to waive during the period (the "Waiver Period") commencing
on the date hereof and ending on the earlier to occur of (i) November 6,
2004 or (ii) the occurrence of a Waiver Event of Default (as defined in
Section 6.1 below); in each case subject to each of the conditions set
forth below.
(a) Interest Rate. During the Waiver Period, (i) interest on any
amount of overdue interest on or overdue principal of the Loans, and
interest on the amount of principal under the Loans outstanding at any time
during the Waiver Period, shall be payable on demand at a rate per annum
equal to the rate at which the Loans are bearing interest pursuant to
Sections 4.1 and 4.2 of the Credit Agreement, plus one percent (1.0%) and
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(ii) the L/C Fee payable under Section 4.6 of the Credit Agreement shall be
equal to one percent (1.0%) per annum above the Applicable Margin
applicable to Revolving Loans that are LIBOR Rate Loans. In the event of
any change in said applicable interest rate, the rate and fee hereunder
shall change, effective as of the day the applicable interest rate changes,
so as to remain one percent (1.0%) per annum above the then applicable
interest rate.
(b) Cash Flow Budget. Notwithstanding anything to the contrary set
forth in Section 7.1(k)(ii) of the Credit Agreement, the delivery by the
Borrower of the budget for the period ending November 6, 2004 as set forth
on Annex I hereto (the "August 11 Budget") shall satisfy the Borrower's
obligations under Section 7.1(k)(ii) for such period; provided that
notwithstanding anything contained in the August 11 Budget or in the Credit
Agreement to the contrary, for the period commencing on the date hereof and
ending on November 6, 2004, (i) the aggregate amount of outstanding
Revolving Loans shall at no time exceed $75,000,000 and (ii) the aggregate
amount of Letters of Credit Obligations plus the aggregate amount of
outstanding Revolving Loans shall at no time exceed $82,000,000, it being
acknowledged and agreed that the failure by the Borrower to comply with the
requirements set forth above shall constitute an immediate Event of Default
under Section 9.1 of the Credit Agreement. For the avoidance of doubt, for
purposes of determining compliance with Section 8.23 of the Credit
Agreement, all references to the "Budget" in Section 8.23 shall be deemed
to be references to the August 11 Budget.
(c) Long Term Business Plan. On or before September 15, 2004, the
Borrower shall deliver to the Agent and the Lenders a long-term business
plan in form and substance satisfactory to, and subject to the approval of,
the Agent and the Majority Lenders in their sole discretion.
(d) Collateral Liquidation Analysis. On or before September 15, 2004,
the Borrower shall deliver to the Agent and the Lenders a collateral
liquidation analysis (including, without limitation, a timeline), which
analysis and timeline shall be in form and substance satisfactory to, and
subject to the approval of, the Agent and the Majority Lenders in their
sole discretion.
(e) Acceptable Exit Financing. The Borrower shall (i) deliver to the
Agent and the Lenders a list of all financiers contacted by the Borrower
and its advisors to provide exit financing on or before August 20, 2004 and
shall thereafter provide weekly status reports to the Agent of progress
made with respect to obtaining such exit financing and (ii) on or before
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September 30, 2004, deliver to the Agent and the Lenders a commitment
letter in respect of such exit financing (containing such terms and
conditions for the extension of credit as are customary for commercial
lenders in the provision of exit financing to companies emerging from
Chapter 11), which commitment letter shall be in form and substance
satisfactory to, and subject to the approval of, the Agent and the Majority
Lenders in their sole discretion.
(f) EBITDA Covenant. During the Waiver Period, Section 8.1 of the
Credit Agreement is hereby amended as set on Exhibit A hereto so that the
Borrower shall not permit Operating EBITDA as of the last day of each of
the applicable fiscal periods to be less than the amount set forth on
Exhibit A hereto.
2.2 Limitation. Nothing in this Fourth Amendment and Waiver, nor in
any communication between the Agent and/or any of the other Secured Parties
and the Borrower or any other Credit Party or any officer, agent, employee,
or representative of the Borrower or any Credit Party, shall be construed
as a waiver of or acquiescence to any Default or Event of Default (except
as expressly set forth herein). Except as expressly provided herein, the
execution and delivery of this Fourth Amendment and Waiver shall not (i)
constitute an extension, modification or waiver of any aspect of the Credit
Agreement or the other Credit Documents; (ii) extend the terms of the
Credit Agreement or any other Credit Document or the due date of any of the
Obligations; (iii) give rise to any obligation on the part of the Agent or
the other Secured Parties to extend, modify or waive any term or condition
of the Credit Agreement or any of the other Credit Documents; or (iv) give
rise to any rights of setoff, defenses or counterclaims to the right of the
Agent and the other Secured Parties to compel payment and performance of
the Obligations or to otherwise enforce any of their respective rights and
remedies under the Credit Agreement and the other Credit Documents. Except
as expressly limited herein, the Agent and the other Secured Parties hereby
expressly reserve all of their defenses, rights and remedies under the
Credit Documents and under applicable law or otherwise with respect to any
Default or Event of Default including, without limitation, the EBITDA
Default or any Waiver Event of Default. From and after the expiration of
the Waiver Period, the Agent and the other Secured Parties shall be
entitled to enforce the Credit Documents without giving effect to the
provisions of this Fourth Amendment and Waiver and to enforce any and all
of their rights and remedies with respect thereto, whether arising under
the Credit Documents, pursuant to applicable law, in equity or otherwise.
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2.3 Revolving Loans; Letters of Credit. So long as no Waiver Event
of Default shall have occurred and be continuing, and notwithstanding the
requirements of Section 5.2 of the Credit Agreement with respect to the
existence of any Default or Event of Default, which requirements are hereby
waived during the Waiver Period only as to the EBITDA Default, the Borrower
shall be entitled to (i) borrow Revolving Loans and (ii) receive Letters of
Credit, in each case at all times during the Waiver Period and subject to
the limitations in the proviso of Section 2.1(b) hereof. Revolving Loans
requested by the Borrower shall be made available to the Borrower according
to the procedures for such borrowing set forth in Sections 2.1(a)(ii) and
2.2 of the Credit Agreement (including with respect to any limitations on
Borrowings set forth therein). The Agent shall thereafter fund the
Revolving Loan request at the direction of the Borrower by same day
transfer in accordance with the Credit Agreement and the other Credit
Documents. Letters of Credit shall be issued according to the procedures
for issuance set forth in Article 3 of the Credit Agreement (including with
respect to any limitations on such issuances set forth therein).
SECTION III.
RELEASE AND INDEMNITY
3.1 Recognizing and in consideration of the Agent's agreement (upon
the consent of the Majority Lenders) to temporarily waive the EBITDA
Default as set forth in this Fourth Amendment and Waiver, the Borrower, on
its own behalf and on behalf of all persons or entities claiming by,
through, or under the Borrower, does hereby waive and release each of the
Secured Parties and their respective officers, attorneys, agents, and
employees from any liability, suit, damage, claim, loss or expense of any
kind or nature whatsoever and howsoever arising that the Borrower ever had
or now has against any of them arising out of or relating to any Secured
Party's or the Agent's acts or omissions with respect to this Fourth
Amendment and Waiver, the Credit Agreement, the other Credit Documents or
any other matters described or referred to herein or therein. The Borrower
further agrees to indemnify and hold the Agent and each Secured Party, and
their respective officers, attorneys, agents, and employees harmless from
any loss, damage, judgment, liability or expense (including counsel fees)
suffered by or rendered against the Agent, the other Secured Parties or any
of them on account of anything arising out of this Fourth Amendment and
Waiver, the Credit Agreement, the other Credit Documents or any other
document delivered pursuant hereto or thereto as of and including the date
of this Fourth Amendment and Waiver.
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SECTION IV.
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Agent and the other
Lenders as of the date hereof as follows:
4.1 Corporate Power. The Borrower has the requisite corporate power
and authority to execute and deliver this Fourth Amendment and Waiver and
to perform its obligations hereunder, thereunder and under the Credit
Documents. The execution, delivery and performance by the Borrower of this
Fourth Amendment and Waiver, and the performance by the Borrower and by
each other Credit Party of each Credit Document to which it is a party have
been duly approved by all necessary corporate action of such Credit Party
and no other corporate proceedings on the part of such Credit Party are
necessary to consummate such transactions.
4.2 Authorization and Enforceability. This Fourth Amendment and
Waiver has been duly executed and delivered by the Borrower. Each of this
Fourth Amendment and Waiver and each Credit Document is the legal, valid
and binding obligation of each Credit Party party hereto and thereto,
enforceable against such Credit Party in accordance with its terms, and is
in full force and effect.
4.3 Defaults. Except for the EBITDA Default, no event has occurred
and is continuing that constitutes a Default or Event of Default.
4.4 Schedules and other Information. All information contained in
any schedule attached to this Fourth Amendment and Waiver or subsequently
delivered pursuant to this Fourth Amendment and Waiver is or will be
complete and accurate as of the date hereof or thereof.
SECTION V.
CONDITIONS TO EFFECTIVENESS
This Fourth Amendment and Waiver shall not be effective until each of
the following conditions precedent shall have been satisfied.
5.1 Execution. The Agent, on behalf of the Lenders, shall have
executed this Fourth Amendment and Waiver and shall have received
counterparts of this Fourth Amendment and Waiver executed by the Borrower
and acknowledged by each Guarantor.
5.2 Representations and Warranties. Each of the representations and
warranties in Section 4 above shall be true and correct as of the date of
this Fourth Amendment and Waiver.
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5.3 Payment of Fees and Expenses. The Borrower shall have paid all
of the accrued fees and expenses of the Agent and the Lenders (including,
without limitation, the fees and disbursements of counsel for the Agent)
for which invoices shall have been submitted.
5.4 Majority Lender Consent. The Majority Lenders shall have
consented in writing to the execution and delivery of this Fourth Amendment
and Waiver by the Agent (or the Agent shall have received evidence
satisfactory to it that such written consent has been provided).
SECTION VI.
DEFAULTS AND REMEDIES
6.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an event of default under this Fourth
Amendment and Waiver (a "Waiver Event of Default") and shall constitute an
immediate Event of Default under the Credit Agreement:
(a) the Borrower or any other Credit Party shall fail to comply
with any term, condition, undertaking or covenant contained in this Fourth
Amendment and Waiver or in any documents or instruments executed or
delivered by the Borrower or any other Credit Party in connection herewith;
(b) there shall have occurred and be continuing any Default or
Event of Default other than the EBITDA Default;
(c) the Borrower or any other Credit Party shall have instituted
or commenced any action or any legal or equitable proceeding seeking to
rescind, amend, alter, revoke, terminate, or otherwise modify the
provisions of this Fourth Amendment and Waiver, the Credit Agreement or any
other Credit Document or any documents or instruments executed or delivered
in connection herewith or therewith;
(d) the Borrower or any other Credit Party shall challenge, or
support or fail to oppose a challenge to, the perfection or priority of any
lien or security interest granted or purported to be granted to the Agent,
for the benefit of the Secured Parties, or shall challenge, or support or
fail to oppose a challenge to, the validity, binding nature or
enforceability of any term or provision of this Fourth Amendment and
Waiver, the Credit Agreement or any other Credit Document, or any term or
provision of the Credit Agreement or any other Credit Document shall be
found or declared to be invalid, avoidable or unenforceable by any court of
competent jurisdiction; or
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(e) an order of the Bankruptcy Court approving this Fourth
Amendment and Waiver shall not have been entered on or prior to August 31,
2004.
6.2 Remedies. Upon the occurrence of a Waiver Event of Default, or
on or following the expiration of the Waiver Period, the waiver hereunder
shall terminate and the Agent and the other Secured Parties shall
thereafter have and may exercise, in their sole discretion, all of the
rights and remedies set forth in the Credit Agreement and the other Credit
Documents and/or under applicable law.
SECTION VII.
MISCELLANEOUS.
7.1 Limited Effect. Except as otherwise expressly set forth herein,
the Credit Agreement and each other Credit Document shall continue to be,
and shall remain, unaltered and in full force and effect in accordance with
their terms and are hereby confirmed and ratified. To the extent that any
existing provision of the Credit Agreement or any other Credit Document is
inconsistent with the specific provisions of this Fourth Amendment and
Waiver, the provisions of this Fourth Amendment and Waiver shall control.
7.2 No Novation. This Fourth Amendment and Waiver shall not be
deemed or construed to be a satisfaction, restatement, novation or release
of the Credit Agreement or of any of the other Credit Documents or a waiver
by the Agent or any Lender of any of the defenses, rights or remedies of
the Agent and the Lenders under the Credit Agreement or any of the other
Credit Documents or at law or in equity or otherwise.
7.3 Reaffirmation. The Borrower hereby reaffirms each and every
covenant, condition, obligation and provision set forth in the Credit
Documents.
7.4 Additional Action. The parties agree to take such further action
to execute and deliver to each other such additional agreements,
instruments and documents as may reasonably be required to carry out the
purposes and intent of this Fourth Amendment and Waiver.
7.5 Headings. Section headings in this Fourth Amendment and Waiver
are included herein for convenience of reference only and shall not
constitute a part of this Fourth Amendment and Waiver for any other
purpose.
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7.6 Severability. Any provision of this Fourth Amendment and Waiver
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
7.7 Governing Law. THIS FOURTH AMENDMENT AND WAIVER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES.
7.8 Counterparts. This Fourth Amendment and Waiver may be executed
in any number of counterparts, and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed
an original, but all such counterparts together shall constitute but one
and the same instrument. Delivery of an executed counterpart of a
signature page to this Fourth Amendment and Waiver by facsimile shall be
effective as delivery of a manually executed counterpart of this Fourth
Amendment and Waiver.
7.9 Construction. The Borrower acknowledges that it has been
represented by its own legal counsel in connection with the negotiation,
execution and delivery of this Fourth Amendment and Waiver, that it has
exercised independent judgment with respect to this Fourth Amendment and
Waiver, and that it has not relied on the Agent or any Lender or on the
Agent's or any Lender's counsel for any advice with respect to this Fourth
Amendment and Waiver.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment and Waiver to be executed and delivered by their proper and
duly authorized officers as of the date first set forth above.
BORROWER:
DAN RIVER INC., a Georgia corporation,
as debtor and debtor in possession
By: /s/ Barry F. Shea
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Name: Barry F. Shea
Title: Executive Vice President-
Chief Financial Officer
AGENT:
DEUTSCHE BANK TRUST COMPANY AMERICAS,
in its capacity as Agent for and on
behalf of the Lenders
By: /s/Albert Fischetti
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Name: Albert Fischetti
Title: Director
ACKNOWLEDGED BY:
GUARANTORS:
DAN RIVER INTERNATIONAL LTD., a Virginia
corporation, as debtor and debtor in possession
By: /s/ Barry F. Shea
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Name: Barry F. Shea
Title: Executive Vice President-
Chief Financial Officer
DAN RIVER FACTORY STORES, INC., a
Georgia corporation, as debtor and debtor in possession
By: /s/ Barry F. Shea
--------------------------
Name: Barry F. Shea
Title: Executive Vice President-
Chief Financial Officer
[signature page continues]
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THE BIBB COMPANY LLC, a Delaware limited
liability company, as debtor and debtor in possession
By: /s/Barry F. Shea
-------------------------
Name: Barry F. Shea
Title: Executive Vice President-
Chief Financial Officer
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SCHEDULE 1.2
PRINCIPAL, INTEREST AND UNUSED LINE FEES
ON LOANS AND LETTERS OF CREDIT
Term Loans $29,647,703.85
Revolving Loans $68,600,111.10
Letters of Credit $ 6,539,522.20
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PRINCIPAL AMOUNT OF
LOANS AND LETTERS OF
CREDIT OUTSTANDING: $104,787,337.15
Term Loan Interest $ 26,568.61
Revolving Loan Interest $114,093.88
Unused Line Fee (Revolving Commitments) $ 7,491.99
Letter of Credit Fees $ 10,902.01
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INTEREST AND UNUSED
LINE FEES OUTSTANDING: $159,056.49
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TOTAL PRINCIPAL, INTEREST AND
UNUSED LINE FEES OUTSTANDING: $104,946,393.64
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EXHIBIT A
EBITDA Covenant
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EBITDA Covenant. During the Waiver Period, Section 8.1 of the Credit
Agreement is hereby amended as set forth below so that the Borrower shall
not permit Operating EBITDA as of the last day of each of the fiscal
periods set forth below to be less than the amount set forth below:
Fiscal Period Minimum Operating EBITDA
(in Dollars)
The 1 month fiscal period -$1,163,000
ending August 7, 2004
The 2 month fiscal period -$2,061,000
Ending September 4, 2004
The 3 month fiscal period -$2,748,000
ending October 2, 2004