Exhibit 10.2.2
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT
AND CONSENT
THIS FIRST AMENDMENT TO SECOND
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT AND CONSENT (this
“Amendment”) is made and entered into this 2nd day of
October, 2006, by and among DELTA APPAREL, INC. , a Georgia
corporation (“Delta”), M.J. SOFFE CO. , a North
Carolina corporation (“Soffe”), JUNKFOOD CLOTHING
COMPANY , a Georgia corporation (“JCC”; Delta,
Soffe and JCC being hereinafter collectively called
“Borrowers” and individually a “Borrower”),
the Required Lenders (as defined in the Loan Agreement (defined
below)), and WACHOVIA BANK, NATIONAL ASSOCIATION , a
national banking association, in its capacity as agent for Lenders
(in such capacity, “Agent”).
Recitals :
Borrowers are parties to a certain
Second Amended and Restated Loan and Security Agreement dated
August 22, 2005 (as at any time amended, restated, modified or
supplemented, the “Loan Agreement”) with Agent and the
various financial institutions party from time to time thereto
(“Lenders”), pursuant to which Agent and Lenders have
made certain loans and other financial accommodations available to
Borrowers.
Borrowers have advised Agent and
Lenders of the proposed purchase by Delta of substantially all of
the tangible and intangible assets of Fun-Tees, Inc., a North
Carolina corporation (“Fun-Tees”), pursuant to the
terms of that certain Asset Purchase Agreement dated
August 17, 2006, between Delta and Fun-Tees (the
“Fun-Tees Asset Purchase Agreement”) for an aggregate
purchase price of approximately $20,000,000 (the “Fun-Tees
Asset Acquisition”).
Borrowers acknowledge that
Section 9.10 of the Loan Agreement prohibits Borrowers from
purchasing all or a substantial part of the assets or property of
any person, subject to certain limited exceptions, none of which
apply to the Fun-Tees Asset Acquisition. In light of the
prohibition contained in Section 9.10 of the Loan Agreement,
Borrowers have requested that Agent and the Required Lenders
consent to the proposed Fun-Tees Asset Acquisition.
The Lenders having acknowledged that
this Amendment and the transactions consented to herein and
contemplated hereby require, pursuant to the terms of the Loan
Agreement, only the consent of the Required Lenders, (i) Agent
and the Required Lenders have agreed to provide such consent, and
(ii) the Borrowers, Agent and the Required Lenders have agreed
to amend the Loan Agreement, in each case as set forth herein and
subject to the terms and conditions contained herein, with the
effectiveness of such consent and amendments to be binding,
pursuant to the terms of the Loan Agreement, on all parties to the
Loan Agreement, including all Lenders.
NOW, THEREFORE, for TEN DOLLARS
($10.00) in hand paid and other good and valuable consideration,
the receipt and sufficiency of which are hereby severally
acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
1.
Definitions . All capitalized terms used in
this Amendment, unless otherwise defined herein, shall have the
meaning ascribed to such terms in the Loan Agreement.
2. Amendments to
Loan Agreement . The Loan Agreement is hereby
amended as follows:
(a) By
adding the following new definitions to Section 1 of the Loan
Agreement in proper alphabetical sequence:
“Alternate Excess
Availability” shall mean the amount, as determined by Agent,
calculated at any time, equal to: (a) the Borrowing Base
minus (b) the sum of: (i) the amount of all then
outstanding and unpaid Obligations, plus (ii) the aggregate
amount of all then outstanding and unpaid trade payables and other
obligations of Borrowers which are more than sixty (60) days
past due as of such time, plus (iii) the amount of
checks issued by Borrowers to pay trade payables and other
obligations which are more than sixty (60) days past due as of
such time, but not yet sent.
“First Amendment Date”
shall mean October 2, 2006.
“M&E Loan Amortization
Amount” shall mean (A) $0 on any date prior to November 1,
2006, and (B) on or after November 1, 2006, the product
of (i) $75,000 multiplied by (ii) the cumulative number of
months that have elapsed as of such date since the First Amendment
Date (a month being deemed to have elapsed on the first day of each
calendar month, beginning on, and including, November 1,
2006).
“RE Loan Amortization
Amount” shall mean (A) $0 on any date prior to November 1,
2006, and (B) on or after November 1, 2006, the product
of (i) $87,500 multiplied by (ii) the cumulative number of
months that have elapsed as of such date since the First Amendment
Date (a month being deemed to have elapsed on the first day of each
calendar month, beginning on, and including, November 1,
2006).
“Unfinanced Capital
Expenditures” shall mean Capital Expenditures made and not
financed with the proceeds of money borrowed.
(b) By
deleting the definitions of “Borrowing Base,”
“Fixed Charges” and “Inventory Loan Limit”
contained in Section 1 of the Loan Agreement and by
substituting in lieu thereof the following new definitions:
“Borrowing
Base” shall mean, at any time, an amount equal:
(a) the
sum of:
(i) eighty-five percent (85%) of the
Net Amount of the Eligible Accounts, plus
(ii) the lesser of (1) the
lesser of (A) eighty-five percent (85%) of the Amount Due From
Factor on such date that is attributable to Factored Accounts that
are not Client Risk Accounts or (B) $5,000,000, or (2) the
lesser of (X) eighty-five percent (85%) of the Net Amount of
Eligible Factored Accounts or (Y) $5,000,000, plus
(iii) the lesser of:
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(1) |
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the Inventory Loan Limit, or |
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(2) |
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the lesser of (A) sixty percent (60%) of the Value of
Eligible Inventory consisting of finished goods, Borrowers’
raw materials consisting of raw cotton and yarn for such finished
goods and finished yarn categorized as work-in-process; or
(B) eighty-five percent (85%) of the Net Orderly Liquidation
Value of such Eligible Inventory, plus |
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(iv) |
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to the extent greater than zero, the lesser of: |
| (1) |
(A) |
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the Fixed Asset Loan Limit, minus |
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(B) |
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the M&E Loan Amortization Amount plus the RE Loan
Amortization Amount, or |
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| (2) |
(A) |
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eighty-five percent (85%) of the appraised Net Orderly
Liquidation Value of Eligible Equipment plus eighty percent
(80%) of the appraised fair market value of the Eligible Real
Property determined from time to time by a qualified appraiser
acceptable to Agent (subject to the provisions of
Section 7.4), minus |
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(B) |
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the M&E Loan Amortization Amount plus the RE Loan
Amortization Amount, plus |
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(1) |
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the Tennessee Asset Loan Limit, minus |
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(2) |
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the Tennessee Asset Loan Amortization Amount, minus |
“Fixed Charges” for any
Person during any period shall mean the sum of, without
duplication, (a) cash interest paid during such period,
(b) all Unfinanced Capital Expenditures made during such
period, (c) all regularly scheduled (as determined at the
beginning of the respective period) principal payments of
Indebtedness for borrowed money and Indebtedness with respect to
the Capital Leases (and without duplicating in items (a) and
(c) of this definition, the interest component with respect to
Indebtedness under Capital Leases), (d) an amount equal to the
product of: (i) $265,278 (which represents the aggregate monthly
reduction of the Fixed Asset Loan Limit and the Tennessee Asset
Loan Limit in effect under this Agreement prior to the First
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Amendment Date)
multiplied by the (ii) the cumulative number of months that
elapsed during such period of determination prior to the First
Amendment Date, (e) an amount equal to the product of: (i) $177,778
(which represents the aggregate monthly reduction of the Fixed
Asset Loan Limit and the Tennessee Asset Loan Limit currently in
effect under this Agreement) multiplied by the (ii) the
cumulative number of months that elapsed during such period of
determination following the First Amendment Date and (f) the
amount of any taxes paid in cash, cash dividends to the equity
holders of such Person, other distributions to equity holders of
such Person, and redemptions with respect to the Capital Stock of
such Person (including, but not limited to stock repurchases)
during the period in question.
“Inventory
Loan Limit” shall mean $50,000,000.
(c) By
deleting the definition of “Fixed Asset Loan Amortization
Amount” contained in Section 1 of the Loan Agreement in its
entirety
(d) By
deleting Section 4.3 of the the Loan Agreement in its entirety
and by substituting the following in lieu thereof:
4.3 Conditions Subsequent to
All Loans and Letters of Credit . The obligation of Agent and
Lenders to continue to make Loans and/or provide Letters of Credit
to Borrowers is subject to the fulfillment, on or before the date
appliable thereto, of each of the conditions subsequent set forth
below (the failure by Borrowers to so perform or cause to be
performed constituting an Event of Default):
(a)
on or before November 15, 2006, Borrowers shall deliver to
Agent, in form and substance satisfactory to Agent, a duly executed
amendment to the Mortgage covering Real Property located in Fayette
County, Alabama (the “Alabama Mortgage”) which gives
effect to the transactions contemplated by this Agreement;
(b)
on or before November 15, 2006, Borrowers shall, if deemed
necessary by Agent, deliver to Agent a mortgage tax order from the
Alabama Department of Revenue with respect to recording taxes
payable in connection with the recordation of the amendment to the
Alabama Mortgage contemplated hereinabove; and
(c)
on or before November 15, 2006, Borrowers shall deliver to
Agent, in form and substance satisfactory to Agent, a valid,
effective and fully paid endorsement to Agent’s mortgagee
title insurance policy with respect to the Alabama Mortgage, which
endorsement shall give effect to the transactions contemplated by
this Agreement, shall “down-date” the effective date of
the title insurance policy to which it relates and shall not have a
specific survey exception.
(e) By
deleting clause (a) of Section 6.3 of the the Loan
Agreement and by substituting the following new clause (a) in
lieu thereof:
(a)
Borrowers shall establish and maintain, at its expense, blocked
accounts or lockboxes and related blocked accounts (in either case,
“Blocked Accounts”), as Agent may specify, with such
banks as are acceptable to Agent into which Borrowers shall
promptly deposit and direct their account debtors to directly
remit
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all payments on
Receivables and all payments constituting proceeds of Inventory or
other Collateral in the identical form in which such payments are
made, whether by cash, check or other manner. The banks at which
the Blocked Accounts are established shall enter into an agreement,
in form and substance satisfactory to Agent, providing that all
items received or deposited in the Blocked Accounts are the
property of Agent, that the depository bank has no lien upon, or
right to setoff against, the Blocked Accounts, the items received
for deposit therein, or the funds from time to time on deposit
therein and that the depository bank will wire, or otherwise
transfer, in immediately available funds, on a daily basis, all
funds received or deposited into the Blocked Accounts to such bank
account of Agent as Agent may from time to time designate for such
purpose (“Agent Payment Account”). Agent shall instruct
the depository banks at which the Blocked Accounts are maintained
to transfer the funds on deposit in the Blocked Accounts to such
operating bank account of Borrowers as Administrative Borrower may
specify in writing to Agent until such time as Agent shall notify
the depository bank otherwise. Agent may notify the depository
banks at which the Blocked Accounts are maintained that the Blocked
Account Agreem
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