SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 28,
1996
DELTA WOODSIDE INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
South Carolina 0-10095 57-0535180
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number
233 North Main Street
Hammond Square, Suite 200
Greenville, SC 29601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (864)232-8301
(Former name or former address, if changed since last
report)
Item 5. Other Events.
Delta Woodside Industries Inc. (together with its direct and
indirect wholly-owned subsidiaries, the "Company") entered
into an Amendment and Waiver Agreement (the "Amendment") and a
Pledge Agreement (the "Pledge") with certain banks, effective as of
May 20, 1996. On May 28, 1996, each of the Amendment and the
Pledge were executed by the requisite parties thereto. The
Amendment amended the Company's Amended and Restated Credit Agreement
dated as of March 15, 1996 (the "Credit Agreement"), with its
major lenders. Among other things, the Amendment waives, for a
period of forty-five (45) days from May 20, 1996, the Company's
noncompliance as of March 31, 1996, with the covenants contained in the
Credit Agreement respecting minimum consolidated tangible net worth
and the ratio of adjusted pretax income to interest expense.
During the 45-day period, an appraisal will be performed of certain
of the Company's assets. If the asset appraisal indicates that the
Borrowing Base (as defined in the Credit Agreement) (taking
into account the appraisal) as of the date of the appraisal
exceeds $263,500,000, the waiver will become permanent. Otherwise,
the waiver may be extended only upon the written consent of the
Majority Lenders (as defined in the Credit Agreement), and
without further action by the Majority Lenders the financial
covenant defaults described above will be and become events of
default under the Credit Agreement.
The Amendment revised the minimum consolidated tangible
net worth covenant and prohibits the Company from declaring any
dividends (other than stock dividends) without the prior
written consent of the Majority Lenders (as defined in the
Amendment). In addition, the Amendment granted the lenders a security
interest in the Company's intellectual property.
Pursuant to the Pledge, the Company and certain of its
subsidiaries have granted a security interest, for the
benefit of the lenders, in all of the Company's direct and indirect
wholly-owned domestic subsidiaries.
Reference is hereby made to the terms of the Amendment
and the Pledge Agreement, included as exhibits hereto, and the above
discussion is qualified in its entirety by reference to
these documents.
Item 7. Financial Statements and Exhibits
(a)-(b) Not Applicable
(c) 4.4.1 Amendment and Waiver Agreement dated as of
May 20, 1996, by and among Delta WoodsideIndustries,Inc., the
guarantors identified on the signature pages attached thereto
and the lenders and agents identified on the signature pages attached
thereto. The Company agrees to furnish supplementally to the
Securities and Exchange Commission a copy of any omitted schedule or
exhibit to such agreement upon request of the Commisson.
4.4.2 Pledge Agreement dated as of May 20, 1996,
by and among Delta Woodside Industries, Inc., the guarantors from
time to time party thereto and NationsBank, N.A., in its capacity
as agent for the lenders from time to time party to the Credit
Agreement described therein. The Company agrees to furnish
supplementally to the Securities and Exchange Commission a copy
of any omitted schedule or exhibit to such agreement upon request of
the Commission.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of1934, the registrant has duly caused this report to be
signed onits behalf by the undersigned hereunto duly authorized.
DELTA WOODSIDE INDUSTRIES,INC.
(Registrant)
By: /s/ Douglas J. Stevens
Name: Douglas J. Stevens
Title:Controller and Asst.Secretary
Date: June 5, 1996
Exhibit Index
4.4.1 AMENDMENT AND WAIVER AGREEMENT
4.4.2 PLEDGE AGREEMENT
AMENDMENT AND WAIVER AGREEMENT
THIS AMENDMENT AND WAIVER AGREEMENT (this "Agreement"),
dated as of May 20, 1996, is entered into among Delta
Woodside Industries, Inc. (the "Borrower"), the guarantors
identified as such on the signature pages attached hereto
(the "Subsidiary Guarantors;" collectively, the Borrower and
the Subsidiary Guarantors are referred to as the "Credit
Parties"), the lenders identified as such on the signature
pages hereto (the "Lenders"), NationsBank, N.A., as Agent
(the "Agent"), and Bank of America National Trust and
Savings Association and The Bank of New York, as Co-Agents
(the "Co-Agents"). Terms used but not otherwise defined
herein shall have the meanings provided in the Credit
Agreement (as defined below).
RECITALS
A. The Borrower, the Lenders, the Agent and the Co-
Agents entered into that certain Amended and Restated Credit
Agreement dated as of March 15, 1996 (the "Credit
Agreement").
B. The Subsidiary Guarantors and the Agent entered
into that certain Amended and Restated Guaranty Agreement
dated as of March 15, 1996 (the "Subsidiary Guaranty").
C. The Borrower and the Agent entered into that
certain Borrower Security Agreement dated as of March 15,
1996 (the "Borrower Security Agreement").
D. The Subsidiary Guarantors and the Agent entered
into that certain Subsidiaries Security Agreement dated as
of March 15, 1996 (the "Subsidiaries Security Agreement;"
together with the Borrower Security Agreement, the "Security
Agreements").
E. The Borrower has informed the Agent that an Event
of Default may exist under the terms of the Credit Agreement
due to the Borrower's failure to be in compliance with
Sections 9.1(a) and 9.1(d) of the Credit Agreement
for the Fiscal Quarter ended
March 31, 1996 (the "March 31 Financial Covenant Defaults").
F. The Borrower has requested that
the Lenders (i) waive their right to enforce any of their
rights and remedies under the Credit Agreement with respect
to the March 31 Financial Covenant Defaults and (ii) amend
certain provisions of the Credit Agreement in connection
therewith.
G. The Lenders have agreed to execute and deliver
this
Agreement on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, IN CONSIDERATION of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. Credit Agreement.
(i) The following definitions in Section 1.1 of
the Credit Agreement are amended in their entirety to
read as follows:
"Collateral Documents" means, collectively, the
Borrower Security Agreement, the Subsidiaries Security
Agreement, the Pledge Agreement, the Leasehold
Mortgage, any assignments of factoring proceeds and
such other documents executed and delivered in
connection with the attachment and perfection of the
Agent's security interests and liens, for the benefit
of the Lenders, arising thereunder, including without
limitation, UCC financing statements.
"Loan Documents" means, collectively, this
Agreement, the Amendment and Waiver, the Notes, the
Subsidiary Guaranties, the Applications, the Collateral
Documents and each of the other documents, instruments
and agreements referred to herein or contemplated
hereby.
(ii) Section 1.1 of the Credit Agreement is
amended to include the following definitions in their
proper alphabetical order:
"Amendment and Waiver" means that certain
Amendment and Waiver Agreement, dated as of May 20,
1996, between the Borrower, the Subsidiary Guarantors,
the Lenders, the Agent and the Co-Agents.
"Pledge Agreement" means the Pledge Agreement
executed by the Borrower and the Subsidiary Guarantors
(including pursuant to a Joinder Agreement) in favor of
the Agent for its benefit and the benefit of the
Lenders.
(iii) Subsection (a) of Section 9.1 of the Credit
Agreement is amended in its entirety to read as
follows:
Section 9.1 Financial Ratios. Permit:
(a) Minimum Consolidated Tangible Net Worth.
Consolidated Tangible Net Worth of the Borrower and its
Consolidated Subsidiaries as of the last day of any
Fiscal Quarter to be less than $235,000,000, increased
on a cumulative basis as of the last day of each Fiscal
Year (beginning with the last day of Fiscal Year 1996)
by 50% of Consolidated Net Income (if positive) of the
Borrower and its Consolidated Subsidiaries for the
Fiscal Year then ended.
(iv) Section 9.6 of the Credit Agreement is
amended in its entirety to read as follows:
Section 9.6. Restricted Dividend Payments.
Without the prior written consent of the Majority
Lenders, declare or make any Restricted Dividend
Payment.
(v) Exhibit O to the Credit Agreement is
replaced in its entirety with Exhibit O attached
hereto.
2. Security Agreements.
(i) Section 2 of each of the Security Agreements
is amended to include the following subsection (e) in
its proper order and to reletter each subsection
thereafter as appropriate:
(e) All proprietary information, designs,
processes, inventions, licenses, know-how and trade
secrets, all letters patent of the United States or any
other country, now existing or hereafter arising, and
all improvement patents, reissues, reexaminations,
patents of addition,
renewals and extensions thereof, all applications for
letters patent of the United States or any other country,
now existing or hereafter arising, and all provisionals,
divisions, continuations and continuations-in-part and
substitutes thereof, all trademarks, trade names, service
marks, logos and other source or business identifiers,
now existing or hereafter acquired, together with the
good will of the business symbolized by said marks, all
registrations and recordings thereof, and all
applications in connection therewith, whether in the
United States Patent and Trademark Office or in any
similar office or agency of the United States, any
State thereof or any other country or any political
subdivision thereof, or otherwise, and all renewals
thereof, all copyrights, now existing or hereafter
created or acquired, all registrations and recordings
thereof, and all applications and registrations in
connection therewith, whether in the United States
Copyright Office or in any similar office or agency of
the United States, any State thereof or any country or
political subdivision thereof, or otherwise, and all
renewals thereof, and all actions for infringement
concerning any of the foregoing, including the right to
sue for and recover and retain all damages and profits
arising from past infringements (collectively, the
"Intellectual Property");
(ii) Section 5(d) of the Borrower Security
Agreement is amended in its entirety to read as
follows:
(d) Change in Location. Unless the Borrower
shall first provide the Agent with at least thirty (30)
days' prior written notice, keep the Borrower's chief
executive office and chief place of business (as well
as its books and records) at the locations set forth on
Schedule 1 attached hereto and, except as otherwise
permitted by the Loan Documents, keep all tangible
Collateral at the locations set forth on Schedule 2
attached hereto.
(iii) Section 5(f) of the Borrower Security
Agreement is amended in its entirety to read as
follows:
(f) Perfection of Security Interest. Execute and
deliver to the Agent such agreements, assignments or
instruments (including affidavits, notices,
reaffirmations and amendments and restatements of
existing documents, as the Agent may reasonably
request) and do all such other things as the Agent may
reasonably deem necessary or appropriate and so request
(i) to assure to the Agent its security interests, for
the benefit of the Lenders, hereunder, including (A)
such financing statements (including renewal
statements) or amendments thereof or supplements
thereto or other instruments as the Agent may from time
to time reasonably request in order to perfect and
maintain the security interests granted hereunder in
accordance with the UCC and (B) with regard the
Material Intellectual Property (as defined in the
Amendment and Waiver), a Notice of Grant of Security
Interest in Patents and Trademarks with the United
States Patent and Trademark Office in form and
substance reasonably acceptable to the Agent, (ii) to
consummate the transactions contemplated hereby and
(iii) to otherwise protect and assure the Agent of its
rights and interests hereunder. To that end, the
Borrower agrees that the Agent may file one or more
financing statements disclosing the Agent's security
interest, for the benefit of the Lenders, in any or all
of the Collateral without, to the extent permitted by
law, the Borrower's signature thereon, and further the
Borrower also hereby irrevocably makes, constitutes and
appoints the Agent, its nominee or any other person
whom the Agent may designate, as the Borrower's
attorney in fact with full power and for the limited
purpose to sign in the name of the Borrower any such
financing statements, or amendments and supplements to
financing statements, renewal financing statements,
notices or any similar documents which in the Agent's
reasonable discretion would be necessary, appropriate
or convenient in order to perfect and maintain
perfection of the security interests granted hereunder,
such power, being coupled with an interest, being and
remaining irrevocable so long as the Credit Agreement
is in effect or any amounts payable thereunder or under
any other Loan Document or any Letter of Credit shall
remain outstanding, and until all of the Commitments
thereunder shall have terminated. The Borrower hereby
agrees that a carbon, photographic or other
reproduction of this Security Agreement or any such
financing statement is sufficient for filing as a
financing statement without notice to the Borrower by
the Agent wherever the Agent may in its sole discretion
desire to file the same. In the event for any reason
the law of any jurisdiction other than North Carolina
becomes or is applicable to the Collateral or any part
thereof, or to any of the Secured Obligations, the
Borrower agrees to execute and deliver all such
instruments and to do all such other things as the
Agent in its sole discretion reasonably deems necessary
or appropriate to preserve, protect and enforce the
security interests of the Agent, for the benefit of the
Lenders, under the law of such other jurisdiction (and,
if the Borrower shall fail to do so promptly upon the
request of the Agent, then the Agent may execute any
and all such requested documents on behalf of the
Borrower pursuant to the power of attorney granted
hereinabove). If any Collateral is in the possession
or control of the Borrower's agents and the Agent so
requests, the Borrower agrees to notify such agents in
writing of the Agent's security interest therein, for
the benefit of the Lenders, and, upon the Agent's
request after and during the continuance of an Event of
Default, instruct them to hold all such Collateral for
the Lenders' account and subject to the Agent's
instructions. The Borrower agrees to mark its books
and records to reflect the security interest of the
Agent, for the benefit of the Lenders, in the
Collateral. Notwithstanding the foregoing, the Borrower
shall not be required to pay the costs associated with
(i) the perfection of any security interest outside of
the United States and (ii) except with respect to the
Material Intellectual Property, any filing with the
United States Patent and Trademark Office.
(iv) Section 5(d) of the Subsidiaries Security
Agreement is amended in its entirety to read as
follows:
(d) Change in Location. Unless such Subsidiary
Guarantor shall first provide the Agent with at least
thirty (30) days' prior written notice, keep such
Subsidiary Guarantor's chief executive office and chief
place of business (as well as its books and records) at
the locations set forth on Schedule 1 attached hereto
and, except as otherwise permitted by the Loan
Documents, keep all tangible Collateral of such
Subsidiary Guarantor at the locations set forth for
such Subsidiary Guarantor on Schedule 2 attached
hereto.
(v) Section 5(f) of the Subsidiaries Security
Agreement is amended in its entirety to read as
follows:
(f) Perfection of Security Interest. Execute and
deliver to the Agent such agreements, assignments or
instruments (including affidavits, notices,
reaffirmations and amendments and restatements of
existing documents, as the Agent may reasonably
request) and do all such other things as the Agent may
reasonably deem necessary or appropriate and so request
(i) to assure to the Agent its security interests, for
the benefit of the Lenders, hereunder, including (A)
such financing statements (including renewal
statements) or amendments thereof or supplements
thereto or other instruments as the Agent may from time
to time reasonably request in order to perfect and
maintain the security interests granted hereunder in
accordance with the UCC and (B) with regard to the
Material Intellectual Property (as defined in the
Amendment and Waiver), a Notice of Grant of Security
Interest in Patents and Trademarks with the United
States Patent and Trademark Office in form and
substance reasonably acceptable to the Agent, (ii) to
consummate the transactions contemplated hereby and
(iii) to otherwise protect and assure the Agent of its
rights and interests hereunder. To that end, each
Subsidiary Guarantor agrees that the Agent may file one
or more financing statements disclosing the Agent's
security interest, for the benefit of the Lenders, in
any or all of the Collateral of such Subsidiary
Guarantor without, to the extent permitted by law, such
Subsidiary Guarantor's signature thereon, and further
each Subsidiary Guarantor also hereby irrevocably
makes, constitutes and appoints the Agent, its nominee
or any other person whom the Agent may designate, as
such Subsidiary Guarantor's attorney in fact with full
power and for the limited purpose to sign in the name
of such Subsidiary Guarantor any such financing
statements, or amendments and supplements to financing
statements, renewal financing statements, notices or
any similar documents which in the Agent's reasonable
discretion would be necessary, appropriate or
convenient in order to perfect and maintain perfection
of the security interests granted hereunder, such
power, being coupled with an interest, being and
remaining irrevocable so long as the Credit Agreement
is in effect or any amounts payable thereunder or under
any other Loan Document or any Letter of Credit shall
remain outstanding, and until all of the Commitments
thereunder shall have terminated. Each Subsidiary
Guarantor hereby agrees that a carbon, photographic or
other reproduction of this Security Agreement or any
such financing statement is sufficient for filing as a
financing statement without notice to such Subsidiary
Guarantor by the Agent wherever the Agent may in its
sole discretion desire to file the same. In the event
for any reason the law of any jurisdiction other than
North Carolina becomes or is applicable to the
Collateral of any Subsidiary Guarantor or any part
thereof, or to any of the Secured Obligations, such
Subsidiary Guarantor agrees to execute and deliver all
such instruments and to do all such other things as the
Agent in its sole discretion reasonably deems necessary
or appropriate to preserve, protect and enforce the
security interests of the Agent, for the benefit of the
Lenders, under the law of such other jurisdiction (and,
if a Subsidiary Guarantor shall fail to do so promptly
upon the request of the Agent, then the Agent may
execute any and all such requested documents on behalf
of such Subsidiary Guarantor pursuant to the power of
attorney granted hereinabove). If any Collateral is in
the possession or control of a Subsidiary Guarantor's
agents and the Agent so requests, such Subsidiary
Guarantor agrees to
notify such agents in writing of the Agent's security
interest therein, for the benefit of the Lenders, and,
upon the Agent's request after and during the continuance
of an Event of Default, instruct them to hold all such
Collateral for the Lenders' account and subject to the
Agent's instructions. Each Subsidiary Guarantor agrees to
mark its books and records to reflect the security
interest of the Agent, for the benefit of the Lenders, in
the Collateral. Notwithstanding the foregoing, no
Subsidiary Guarantor shall be required to pay the costs
associated with (i) the perfection of any security
interest outside of the United States and (ii) except with
respect to the Material Intellectual Property, any filing
with the United States Patent and Trademark Office.
3. Grant of Security Interest in the Collateral. To
secure the prompt payment and performance in full when
due, whether by lapse of time, acceleration or otherwise,
of the Secured Obligations (as defined in Section 3 of the
Security Agreements), each Credit Party hereby grants to
the Agent, for the benefit of the Lenders, a continuing
security interest in, and a right to set off against, any
and all right, title and interest of such Credit Party in
and to such Credit Party's Intellectual Property, and all
proceeds and products of the foregoing and all insurance
relating thereto and all proceeds thereof (including,
without limitation, insurance proceeds payable on account
of business interruption), whether now existing or
hereafter arising.
4. Representations and Warranties. Each Credit Party hereby
represents and warrants to the Agent and to each Lender
that:
(i) with regard to the trademarks of such Credit
Party listed on Schedule 1 attached hereto (the "Material
Trademarks") and the letters patent of such Credit Party
listed on Schedule 2 attached hereto (the "Material
Patents;" collectively, the Material Trademarks and the
Material Patents are referred to as the "Material
Intellectual Property"), (a) such Credit Party is the
present owner of the entire right, title and interest in
and to such Material Intellectual Property (except as has
been limited by license agreements in which such Credit
Party is licensor) and has good and indefeasible title
thereto with the rights of use free and clear of the
infringement by, or of the rights of, others, (b) all
Material Intellectual Property licenses are valid,
subsisting, unexpired and enforceable, (c) all Material
Intellectual Property licenses are capable of having a
security interest attached thereto and, upon foreclosure
of such security interest, the Material Intellectual
Property and Material Intellectual Property licenses are
freely assignable by the licensor of such Material
Intellectual Property, (d) the trademark and service mark
applications and registrations of such Credit
Party listed on Schedule 1 constitute all of the material
applications and registrations of trademarks and service
marks owned by such Credit Party, (e) the letters patent
and applications for letters patent of such Credit Party
listed on Schedule 2 constitute all of the material
letters patent and applications for letters patent owned
by such Credit Party, (f) such Credit Party has not and
will not make any assignment or agreement in conflict with
the security interest in the Material Intellectual
Property of such Credit Party under the Security
Agreements, and (g) all applications pertaining to
Material Intellectual Property of such Credit Party have
been duly and properly filed, and all registrations or
letters pertaining to such Material Intellectual Property
have been duly and properly filed and issued, and all of
such Material Intellectual Property are valid and
enforceable;
(ii) such Credit Party owns no material copyright
registrations or copyright applications;
(iii) each of the representations and warranties of
the Borrower contained in the Credit Agreement or in any
other Loan Document is true as of the date hereof (after
giving effect to this Agreement);
(iv) no Default or Event of Default exists and is
continuing under the Credit Agreement, except as waived
hereby; and
(v) since the date of the last financial statements
of the Borrower delivered to Lenders, no material adverse
change has occurred in the business, financial condition,
operations or prospects of the Borrower other than as
previously disclosed to the Lenders.
5. Covenants of the Credit Parties.
(i) No Credit Party will take or fail to take any
action, or permit any action to be taken by others that
are subject to such Credit Party's control, which would
adversely affect the validity and enforcement of such
Credit Party's rights in its Material Intellectual
Property, or impair the value of such Material
Intellectual Property.
(ii) Each Credit Party will (a) (1) continue to use
each of its Material Trademarks in such a manner as to
maintain such Material Trademarks in full force free from
any claim of abandonment for non-use, (2) maintain as in
the past the quality of products and services offered
under such Material Trademarks, (3) employ such Material
Trademarks with the appropriate notice of registration or
notice of trademark or service mark, as applicable,
sufficient to protect such Material Trademarks, (4) not
adopt or use any trademark or service mark which is
confusingly similar or a colorable imitation of such
Material Trademarks unless the Agent, for the ratable
benefit of the Lenders, shall obtain a perfected security
interest in such trademark or service mark pursuant to the
Security Agreements, and (5) not (and not permit any
licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any Material
Trademark may be lost; (b) not do any act, or knowingly
omit to do any act, whereby any Material Patent may become
abandoned or dedicated to the public; (c) notify the Agent
promptly if it knows that any application or registration
relating to any Material Intellectual Property may become
abandoned or dedicated to the public, or of any adverse
determination or development (including, without limitation,
the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark
Office or any court or tribunal in any country), regarding
such Credit Party's ownership of any such Material
Intellectual Property or its right to register the same or to
keep and maintain the same; (d) take all reasonable and
necessary steps, including, without limitation, in any
proceeding before the United States Patent and Trademark
Office, or any similar office or agency in any other country
or any political subdivision thereof, to maintain and pursue
each application (and to obtain the relevant registration)
and to maintain each registration of its Material
Intellectual Property, including, without limitation, filing
of applications for renewal, affidavits of use and affidavits
of incontestability; (e) promptly notify the Agent after it
learns that any Material Intellectual Property is infringed,
misappropriated or diluted in any material manner by a third
party, and take such actions as it shall reasonably deem
appropriate under the circumstances to protect such Material
Intellectual Property, including, where it shall reasonably
deem appropriate, the bringing of suit for infringement,
misappropriation or dilution, seeking injunctive relief where
appropriate and seeking to recover any and all damages for
such infringement, misappropriation or dilution; and (f) not
make any assignment in conflict with or any agreement adverse
to the security interest in the patents, trademarks or
service marks of such Credit Party (it being agreed that any
licensing agreements entered into in the ordinary course of
business shall not be considered adverse to such security
interest).
(iii) Upon any Credit Party being awarded any new
patents, trademarks, service marks, tradenames or copyrights
of a material nature (the "New Intellectual Property"), such
Credit Party will promptly deliver to the Agent such
documents (all in form and substance reasonably acceptable to
the Agent) as the Agent shall reasonably request in order to
grant to the Lenders a perfected lien on and perfected
security interest in such New Intellectual Property.
(iv) Each Credit Party will permit representatives
appointed by the Agent, including, without limitation,
independent accountants, agents, attorneys and appraisers, to
perform, at the Borrower's expense, an asset appraisal and/or
audit of the books and records, accounts receivable and
inventory, equipment, facilities and other business assets of
such Credit Party; provided, however, that any such appraisal
or audit shall be performed in such a manner as (i) shall be
satisfactory to the Majority Lenders and (ii) to not unduly
interfere with any Credit Party's business operations.
(v) As soon as practicable after the date of this
Agreement and in any event not later than 21 days from the
date hereof, each Credit Party shall deliver, or cause to be
delivered, satisfactory evidence to the Majority Lenders that
no liens or other infringements exist on any of the Material
Intellectual Property.
6. Waiver. The Lenders agree to waive the March 31
Financial Covenant Defaults for a period of forty-five (45)
days from the date hereof, during which period
representatives of the Agent will perform the asset appraisal
described in Section 5(iv) hereof. In the event
that such asset appraisal indicates that the Borrowing Base
(determined on the basis of the appraised value, rather than
the book value, of the appraised Collateral and on the book
value of all other Collateral) as of the date of such
appraisal is in excess of $263,500,000, this waiver shall
become permanent. Otherwise, this waiver may be extended only
upon the written consent of the Majority Lenders and, without
further action by the Majority Lenders, the March 31
Financial Covenant Defaults shall be and become Events of
Default. This waiver does not constitute a waiver of any
Default or Event of Default other than the March 31 Financial
Covenant Defaults for the time period specified herein.
7. Conditions Precedent. The effectiveness of this
Agreement is subject to the satisfaction of each of the
following conditions (including, without limitation, that
each document to be delivered under this Section 7 shall be
in form and substance satisfactory to the Majority Lenders):
(a) Corporate Action. The Agent shall have received
certified copies of all corporate action taken by each Credit
Party approving this Agreement and each of the documents
delivered in connection herewith (including, without
limitation, a certificate setting forth the resolutions of
the Board of Directors of each Credit Party adopted in
respect of the transactions contemplated by this Agreement).
(b) Opinion of Counsel. The Agent shall have received
an opinion of Wyche, Burgess, Freeman & Parham, P.A., counsel
to the Credit Parties, reasonably satisfactory in form and
substance to the Majority Lenders.
(c) Agreement. The Agent shall have received copies of
this Agreement duly executed by each of the parties hereto
and dated as of the date hereof.
(d) Collateral. Each Credit Party shall have executed
and delivered to the Agent a pledge agreement, stock
certificates, stock powers, UCC financing statements and such
other documents (all in form and substance acceptable to the
Majority Lenders in their reasonable sole discretion) as the
Agent shall reasonably request in order to grant to the
Lenders a perfected lien on and perfected security interest
in (a) all stock of any Wholly Owned Domestic Subsidiary of
any Credit Party and (b) all of the Intellectual Property of
each Credit Party.
(e) Other Documents. The Agent shall have received
such other documents relating to the transactions
contemplated hereby as the Agent or any Lender or counsel to
the Agent may reasonably request.
8. Liens. The Credit Parties affirm the liens and security
interests created and granted pursuant to the Credit
Agreement and other Loan Documents and agree that this
Agreement shall in no manner adversely affect or impair such
liens and security interests.
9. Acknowledgment of Subsidiary Guarantors. The Subsidiary
Guarantors acknowledge and consent to all of the terms and
conditions of this Agreement and agree that this Agreement
and all documents executed in connection herewith do not
operate to reduce or discharge the Subsidiary Guarantors'
obligations under the Subsidiary Guaranty or the other Loan
Documents.
10. Perfection Costs. The Agent hereby agrees that it shall not,
without the written consent of the Majority Lenders,
undertake (i) the perfection of any security interest outside
of the United States and (ii) except with respect to the
Material Intellectual Property, any filing with the United
States Patent and Trademark Office.
11. No Other Changes. Except as expressly modified and amended
in this Agreement, all of the terms, provisions and
conditions of the Loan Documents shall remain unchanged.
12. Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate
counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken
together shall constitute one and the same instrument.
13. ENTIRETY. THIS AGREEMENT AND THE LOAN DOCUMENTS EMBODY THE
ENTIRE AGREEMENT BETWEEN THE PARTIES AND SUPERSEDE ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS, IF ANY, RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF. THIS AGREEMENT AND THE
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
14. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NORTH CAROLINA.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
COMPANY:
DELTA WOODSIDE INDUSTRIES, INC.
By: /s/ Bettis C. Rainsford
Title: Exec VP, Treasurer & CRO
SUBSIDIARY GUARANTORS:
ALCHEM CAPITAL CORPORATION
By:/s/ Bettis C. Rainsford
Title: Exec VP, Treasurer & CRO
DELTA MILLS, INC.
By: /s/ Bettis C. Rainsford
Title: Exec VP, Treasurer & CRO
DUCK HEAD APPAREL COMPANY, INC.
By: /s/ Bettis C. Rainsford
Title: Exec VP, Treasurer & CRO
CARGUD, SOCIEDAD ANONIMA
By: /s/ Bettis C. Rainsford
Title: Exec VP, Treasurer & CRO
ARMONIA TEXTIL, SOCIEDAD ANONIMA
By Bettis C. Rainsford
Title: Exec VP, Treasurer & CFO
NAUTILUS ITERNATIONAL, INC.
By /s/ Bettis C. Rainsford
Title: Exec VP, Treasurer & CFO
NAUTILUS DIRECT, INC.
By /s/ Bettis C. Rainsford
Title: Exec VP, Treasurer & CFO
[Signatures Continue]
DELTA CONSOLIDATED CORPORATION
By /s/Bettis C. Rainsford
Title: Exec VP, Treasurer & CFO
DELTA MERCHANDISING,INC.
By /s/ Bettis C. Rainsford
Title: Exec VP, Treasurer & CFO
DELTA APPAREL HONDURAS, S.A.
By /s/ Bettis C. Rainsford
Title: Exec VP, Treasurer & CFO
[Signatures Continue]
AGENT:
NATIONSBANK, N.A.
By:/s/ E. Phifer Helms
Title: Senior Vice-President
CO-AGENTS:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Michael J. McKenney
Title: Vice President
THE BANK OF NEW YORK
By: /s/ H. Stephen Griffith
Title: Senior Vice President
LENDERS:
NATIONSBANK, N.A
By: /s/ E. Phifer Helms
Title: Senior Vice-President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Michael J. McKenney
Title: Vice President
THE BANK OF NEW YORK
By: /s/ H. Stephen Griffith
Title: Senior Vice President
FIRST UNION NATIONAL BANK OF
SOUTH CAROLINA
By: /s/ Harry C. Farthing
Title: Vice President
WACHOVIA BANK OF SOUTH CAROLINA
By:
_ Title:
[Signatures Continue]
THE CHASE MANHATTAN BANK, N.A.
By:
Title:
THE BANK OF NOVA SCOTIA
By:
Title:
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Rose M. Crump
Title: Vice President
FLEET BANK, N.A.
By:
Title:
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement"), dated as
of May 20, 1996, made by DELTA WOODSIDE INDUSTRIES, INC., a
South Carolina corporation (the "Borrower"), THE GUARANTORS
FROM TIME TO TIME PARTY HERETO (each a "Guarantor", and
collectively the "Guarantors", and together with the Borrower,
each a "Pledgor", and collectively the "Pledgors") and
NATIONSBANK, N.A., in its capacity as agent (the "Agent") for
the lenders from time to time party to the Credit Agreement
described below (the "Lenders").
RECITALS
WHEREAS, the Pledgors, certain Lenders named therein (the
"Lenders"), the Agent and Bank of America National Trust and
Savings Association and The Bank of New York, as co-agents (the
"Co-Agents"), entered into that certain Amendment and Waiver
Agreement, dated as of the date hereof, (the "Amendment"),
which modifies the terms of that certain Amended and Restated
Credit Agreement, dated as of March 15, 1996, among the
Borrower, the Lenders, the Agent and the Co-Agents (as further
amended by the Amendment and from time to time thereafter, the
"Credit Agreement"); and
WHEREAS, pursuant to the terms of the Amendment, the
Pledgors agreed to pledge their shares of capital stock in the
Wholly Owned Domestic Subsidiaries as security for the
performance by the Pledgors of the Secured Obligations (as
defined herein);
NOW, THEREFORE, in consideration of these premises and
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Definitions. Capitalized terms used herein but not
otherwise defined shall have the meanings ascribed to such terms
in the Credit Agreement.
2. Pledge and Grant of Security Interest. To secure
the
prompt payment and performance in full when due, whether by lapse
of time or otherwise, of the Secured Obligations (as defined in
Section 3 hereof), each Pledgor hereby pledges and assigns to the
Agent, for the benefit of the Lenders, and grants to the Agent,
for the benefit of the Lenders, a continuing security interest in
any and all right, title and interest of such Pledgor in and to
the following, whether now owned or existing or owned, acquired,
or arising hereafter (collectively, the "Pledged Collateral"):
(a) Pledged Shares. All of the issued and outstanding
shares of capital stock of the Wholly Owned Domestic Subsidiaries
of such Pledgor set forth on Schedule 1 attached hereto (all
certificates representing such shares and all options and other
rights, contractual or otherwise, with respect thereto,
collectively the "Pledged Shares").
(b) Additional Shares. All of the issued and
outstanding shares of capital stock of any Wholly Owned Domestic
Subsidiary which is hereafter formed or acquired by such Pledgor,
including without limitation, the certificates representing such
shares.
(c) Other Equity Interests. Any and all other equity
interests of such Pledgor in any direct or indirect Wholly
Owned Domestic Subsidiary of the Borrower.
(d) Proceeds. All proceeds and products of the
foregoing, however and whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that a Pledgor may or, pursuant
to the terms of this Pledge Agreement, shall from time to time
hereafter deliver additional shares of stock to the Agent as
collateral security for the Secured Obligations. Upon delivery to
the Agent, such additional shares of stock shall be deemed to be
part of the Pledged Collateral of such Pledgor and shall be subject
to the terms of this Pledge Agreement whether or not Schedule 1 is
amended to refer to such additional shares.
3. Security for Secured Obligations. The security
interest created hereby in the Pledged Collateral of each Pledgor
constitutes continuing collateral security for all of the following,
whether now existing or hereafter incurred (the "Secured
Obligations"):
(a) (i) In the case of the Borrower, the prompt
performance and observance by the Borrower of all obligations of the
Borrower under the Credit Agreement, the Notes, this Pledge
Agreement and the other Loan Documents to which the Borrower is a
party; or
(ii) In the case of any Pledgor which is a Guarantor,
the prompt performance and observance by such Guarantor of
all obligations of such Guarantor under the Subsidiary
Guaranty, this Pledge Agreement and the other Loan Documents
to which such Guarantor is a party; and
(b) All other indebtedness, liabilities and
obligations of any kind or nature, now existing or
hereafter arising, owing from any Credit Party to any
Lender or the Agent, arising under the Loan Documents,
whether primary, secondary, direct, contingent, or joint
and several.
4. Delivery of the Pledged Collateral. Each
Pledgor
hereby agrees that:
(a) Certificates. Such Pledgor shall deliver to the
Agent (i) simultaneously with or prior to the execution and
delivery of this Pledge Agreement, all certificates
representing the Pledged Shares of such Pledgor and (ii)
promptly upon the receipt thereof by or on behalf of such
Pledgor, all other certificates and instruments constituting
Pledged Collateral of such Pledgor.
Prior to delivery to the Agent, all such certificates and
instruments constituting Pledged Collateral of such Pledgor
shall be held in trust by such Pledgor for the benefit of the
Agent and the Lenders pursuant hereto. All such certificates
shall be delivered in suitable form for transfer by delivery or
shall be accompanied by duly executed undated instruments of
transfer or assignment in blank, in form provided in Schedule 2
attached hereto.
(b) Additional Securities. If such Pledgor shall
receive by virtue of its being or having been the owner of any
Pledged Collateral, any (i) stock certificate, including
without limitation, any certificate representing a stock
dividend or distribution in connection with any increase or
reduction of capital, reclassification, merger, consolidation,
sale of assets,
combination of shares, stock splits, spin-off or split-off,
promissory notes or other instrument; (ii) option or right,
whether as an addition to, a substitution for, or an exchange
for, any Pledged Collateral or otherwise; (iii) dividends
payable in securities; or (iv) distributions of securities in
connection with a partial or total liquidation, dissolution or
reduction of capital, capital surplus or paid-in surplus, then
such Pledgor shall receive such stock certificate, instrument,
option, right or distribution in trust for the benefit of the
Agent and the Lenders, shall segregate it from such Pledgor's
other property and shall deliver it forthwith to the Agent in
the exact form received together with any necessary endorsement
and/or appropriate undated stock power duly executed in blank
in the form provided in Schedule 2 attached hereto, to be held
by the Agent as Pledged Collateral and as further collateral
security for the Secured Obligations.
(c) Financing Statements. Such Pledgor shall
execute and deliver to the Agent such UCC (as hereinafter
defined) financing statements as may be reasonably requested
by the Agent in order
to perfect and protect the security interest created hereby
in the pledged Collateral of such Pledgor.
5. Representations and Warranties. Each Pledgor
hereby
represents and warrants to the Agent, for the benefit of the
Lenders, that so long as the Credit Agreement is in effect or any
amounts payable thereunder or under any other Loan Document or
any Letter of Credit shall remain outstanding, and until all of
the Commitments thereunder shall have terminated:
(a) Authorization of Pledged Shares. The Pledged
Shares of such Pledgor are duly authorized and validly
issued, are fully
paid and nonassessable and are not subject to the preemptive
rights of any Person. All other shares of stock
constituting Pledged Collateral will be duly authorized and
validly issued, fully paid and nonassessable and not subject
to the preemptive rights of any Person.
(b) Title. Such Pledgor has good and indefeasible
title to the Pledged Collateral of such Pledgor and will at all
times be
the legal and beneficial owner of such Pledged Collateral free
and clear of any Lien, except for the security interest created
by this Pledge Agreement and other Permitted Liens. There
exists no "adverse claim" within the meaning of Section 8-302
of the Uniform Commercial Code as in effect in the Commonwealth
of Virginia (the "UCC") with respect to the Pledged Shares of
such Pledgor.
(c) Exercising of Rights. The exercise by the Agent
of its rights and remedies hereunder will not violate any law or
governmental regulation, any judgment of any judicial authority
or any material contractual restriction binding on or affecting
such Pledgor or any of its Property.
(d) Pledgor's Authority. No authorization, approval
or action by, and no notice to or filing with, any Governmental
Authority or the issuer of any Pledged Stock of such Pledgor is
required either (i) for the pledge made by such Pledgor or for
the granting of the security interest by such Pledgor pursuant
to this Pledge Agreement; or (ii) for the exercise by the Agent
of its rights and remedies hereunder (except as may be required
by laws affecting the offering and sale of securities).
(e) Security Interest/Priority. This Pledge
Agreement creates a valid security interest in favor of the
Agent for the benefit of the Lenders, in the Pledged Collateral
of such
Pledgor. The taking possession by the Agent of the
certificates representing the Pledged Shares of such Pledgor
and all other certificates and instruments constituting Pledged
Collateral of such Pledgor will perfect and establish the first
priority of the Agent's security interest, for the benefit of
the Lenders, in the Pledged Shares of such Pledgor and in all
other Pledged Collateral of such Pledgor represented by such
Pledged Shares and instruments securing the Secured
Obligations. Except as set forth in this Section 5(e), no
action is necessary to perfect or otherwise protect such
security interest.
6. Covenants. Each Pledgor hereby covenants, that so
long
as the Credit Agreement is in effect or any amounts payable
thereunder or under any other Loan Document or any Letter of
Credit shall remain outstanding, and until all of the Commitments
thereunder shall have terminated, such Pledgor shall:
(a) Books and Records. Mark its books and records
(and shall cause the issuer of the Pledged Shares of such
Pledgor to mark its books and records) to reflect the security
interest granted to the Agent, for the benefit of the Lenders,
pursuant to this Pledge Agreement.
(b) Defense of Title. Warrant and defend title to
and ownership of the Pledged Collateral of such Pledgor at its
own expense against the claims and demands of all other parties
claiming an interest therein, keep the Pledged Collateral of
such Pledgor free from all Liens, except for those created
hereunder and the security interest created hereby and except
for Permitted Liens, and not sell, exchange, transfer, assign,
lease or otherwise dispose of Pledged Collateral of such Pledgor
or any interest therein, except as permitted under the Credit
Agreement.
(c) Further Assurances. Promptly execute and deliver
at its expense all further instruments and documents and take all
further action that may be necessary and desirable or that the
Agent may reasonably request in order to (i) perfect and protect
the security interest created hereby in the Pledged Collateral of
such Pledgor; (ii) enable the Agent to exercise and enforce its
rights and remedies hereunder in respect of the Pledged
Collateral of such Pledgor; and (iii) otherwise effect the
purposes of this Pledge Agreement, including, without limitation
and if requested by the Agent upon the occurrence and during the
continuance of an Event of Default, delivering to the Agent
irrevocable proxies in respect of the Pledged Collateral of such
Pledgor.
(d) Amendments. Not make or consent to any amendment
or other modification or waiver with respect to any of the
Pledged Collateral of such Pledgor or enter into any agreement or
allow to exist any restriction with respect to any of the Pledged
Collateral of such Pledgor other than pursuant hereto or as may
be permitted under the Credit Agreement.
(e) Compliance with Securities Laws. File all reports
and other information now or hereafter required to be filed by such
Pledgor with the United States Securities and Exchange Commission
and any other state, federal or foreign agency in connection with
the ownership of the Pledged Collateral of such Pledgor.
7. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of
attorney contained herein, each Pledgor hereby designates and
appoints the Agent and each of its designees or agents as attorney-
in-fact of such Pledgor, irrevocably and with power of
substitution, with authority to take any or all of the following
actions with respect to any of the Pledged Collateral upon the
occurrence and during the continuance of an Event of Default:
(i) to demand, collect, settle, compromise, adjust and give
discharges and releases, all as the Agent may reasonably
determine;
(ii) to commence and prosecute any actions at any court for
the purposes of collecting any of the Pledged Collateral of such
Pledgor and enforcing any other right in respect thereof;
(iii) to defend, settle or compromise any action brought
and, in connection therewith, give such discharge or release as
the Agent may reasonably deem appropriate;
(iv) to pay or discharge taxes, liens, security interests,
or other encumbrances levied or placed on or threatened against
the Pledged Collateral of such Pledgor;
(v) to direct any parties liable for any payment under any
of the Pledged Collateral of such Pledgor to make payment of any
and all monies due and to become due thereunder directly to the
Agent or as the Agent shall direct;
(vi) to receive payment of and receipt for any and all
monies, claims, and other amounts due and to become due at any
time in respect of or arising out of any Pledged Collateral of
such Pledgor;
(vii) to sign and endorse any drafts, assignments,
proxies, stock powers, verifications, notices and other documents
relating to the Pledged Collateral of such Pledgor;
(viii) to settle, compromise or adjust any suit, action
or proceeding described above and, in connection therewith, to
give such discharges or releases as the Agent may reasonably deem
appropriate;
(ix) to exchange any of the Pledged Collateral of such
Pledgor or other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer
thereof and in connection therewith, deposit any of the Pledged
Collateral of such Pledgor with any depository, transfer agent,
registrar or other designated agency upon such terms as
the Agent may reasonably determine; and
(x) to do and perform all such other acts and things as the
Agent may reasonably deem to be necessary, proper or convenient
in connection with the Pledged Collateral of such Pledgor.
This power of attorney is a power coupled with an interest and
shall be irrevocable. The Agent shall be under no duty to
exercise or withhold the exercise of any of the rights, powers,
privileges and options expressly or implicitly granted to the
Agent in this Pledge Agreement, and shall not be liable for any
failure to do so or any delay in doing so. The Agent shall not
be liable for any act or omission or for any error of judgment
or any mistake of fact or law in its individual capacity or its
capacity as attorney-in-fact except acts or omissions resulting
from its negligence or willful misconduct. This power of
attorney is conferred on the Agent solely to protect, preserve
and realize upon its security interest, for the benefit of the
Lenders, in
Pledged Collateral.
(b) Performance by the Agent of Pledgor's Obligations. If
any Pledgor fails to perform any agreement or obligation
contained herein, after the occurrence and during the continuance of
an Event of Default, the Agent itself may perform, or cause
performance of, such agreement or obligation, and the expenses of the
Agent incurred in connection therewith shall be payable by the
Pledgors on a joint and several basis pursuant to Section 11 hereof.
(c) Assignment by the Agent. To the extent permitted under
the Credit Agreement, the Agent may from time to time assign the
Pledged Collateral and any portion thereof, and the assignee
shall be entitled to all of the rights and remedies of the Agent
under this Pledge Agreement in relation thereto.
(d) The Agent's Duty of Care. Other than the exercise of
reasonable care to assure the safe custody of the Pledged Collateral
while being held by the Agent hereunder, the Agent shall have no duty
or liability to preserve rights pertaining thereto, it being
understood and agreed that each Pledgor shall be responsible for
preservation of all rights in the Pledged Collateral of such Pledgor,
and the Agent shall be relieved of
all responsibility for Pledged Collateral upon surrendering it or
tendering the surrender of it to such Pledgor. The Agent shall be
deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if such
Pledged Collateral is accorded treatment substantially equal to that
which the Agent accords its own property, it being understood that the
Agent shall not have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relating to any Pledged Collateral, whether
or not the Agent has or is deemed to have knowledge of such matters;
or (ii) taking any necessary steps (other than to reasonably cooperate
with any efforts of a Pledgor) to preserve rights against any parties
with respect to any Pledged Collateral.
(e) Voting Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have occurred and
be continuing, to the extent permitted by law, each Pledgor may
exercise any and all voting and other consensual rights
pertaining to the Pledged Collateral of such Pledgor or any part
thereof for any purpose not inconsistent with the terms of this
Pledge Agreement or the Credit Agreement;
(ii) Upon the occurrence and during the continuance of an
Event of Default, upon written notice from the Agent, all rights
of a Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to
paragraph (e)(i) of this Section shall cease and all such rights
shall thereupon become vested in the Agent which shall thereupon
have the sole right to exercise such voting and other consensual
rights.
(f) Dividend Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have occurred and
be continuing and subject to Section 4(b) hereof, each Pledgor
may receive and retain any and all dividends (other than stock
dividends and other dividends constituting Pledged Collateral of
such Pledgor which are addressed hereinabove) or interest paid in
respect of the Pledged Collateral of such Pledgor to the extent
they are not prohibited under the Credit Agreement.
(ii) Upon the occurrence and during the
continuance of an Event of Default:
(A) all rights of a Pledgor to
receive the dividends and interest payments which
it would otherwise be authorized to receive and
retain pursuant to paragraph (f)(i) of this Section
shall cease and all such rights shall thereupon be
vested in the Agent which shall thereupon have the
sole right to receive and hold as Pledged
Collateral such dividends and interest payments;
and
(B) all dividends and interest
payments which are received by such Pledgor
contrary to the provisions of paragraph (A) of this
clause (ii) shall be received in trust for the
benefit of the Agent and the Lenders, shall be
segregated from other property or funds of such
Pledgor, and shall be forthwith paid over to the
Agent as Pledged Collateral in the exact form
received, to be held by the Agent as Pledged
Collateral and as further collateral security for
the Secured Obligations.
(g) Release of Pledged Collateral. The Agent may
release any of the Pledged Collateral from this Pledge Agreement
or may substitute any of the Pledged Collateral for other Pledged
Collateral without altering, varying or diminishing in any way
the force, effect, lien, pledge or security interest of this
Pledge Agreement as to any Pledged Collateral not expressly
released or substituted, and this Pledge Agreement shall continue
as a first priority lien, security interest, pledge and charge on
all Pledged Collateral not expressly released or substituted when
any of the Secured Obligations remain outstanding.
8. Advances by Agent. On failure of any Pledgor to
perform any of the covenants and agreements contained herein, the Agent
may, at its sole option and in its sole discretion, perform the same
and in so doing may expend such sums as the Agent may reasonably deem
advisable in the performance thereof, including, without limitation,
the payment of any taxes, a payment to obtain
a release of a Lien or potential Lien, expenditures made in
defending against any adverse claim and all other expenditures
which the Agent may make for the protection of the security
hereof or which it may be compelled to make by operation of
law. All such sums and amounts so expended shall be repayable
by the Pledgors on a joint and several basis promptly upon
notice thereof and demand therefor, shall constitute additional
Secured Obligations and shall bear interest from the date said
amounts are expended at the default rate provided in Section
4.1 of the Credit Agreement. No such performance of any
covenant or agreement by the Agent on behalf of any Pledgor,
and no such advance or expenditure therefor, shall relieve the
Pledgors of any default under the terms of this Pledge
Agreement or the other Loan Documents. The Agent may make any
payment hereby authorized in accordance with any bill,
statement or estimate procured from the appropriate public
office or holder of the claim to be discharged without inquiry
into the accuracy of such bill, statement or estimate or into
the validity of any tax assessment, sale, forfeiture, tax lien,
title or claim except to the extent such payment is being
contested in good faith by a Pledgor in appropriate proceedings
and against which adequate reserves are being maintained in
accordance with GAAP.
9. Events of Default. The occurrence of an Event
of Default under and as defined in the Credit Agreement shall be
an Event of Default hereunder ("Event of Default").
10. Remedies Upon Default. If any Event of Default shall
have occurred and be continuing:
(a) Rights and Remedies. The Agent may exercise in respect
of the Pledged Collateral of any Pledgor, in addition to other rights
and remedies provided for herein or otherwise available to it, all
rights and remedies of a secured party on default under
the UCC or any other applicable law.
(b) Sale of Pledged Collateral. Without limiting the
generality of this Section and without notice (except as provided
below), the Agent may, in its sole discretion, sell or otherwise
dispose of or realize upon the Pledged Collateral, or any part
thereof, in one or more parcels, at public or private sale, at any
exchange or broker's board or elsewhere, at such price or prices
and on such other terms as the Agent may deem commercially
reasonable, for cash, credit or for future delivery without
assumption of any credit risk or otherwise in accordance with
applicable law. To the extent permitted by law, any Lender may in
such event bid for the purchase of such securities. Each Pledgor
agrees that any requirement of reasonable notice shall be met if
notice, specifying the place of any public sale or the time after
which any private sale is to be made, shall be personally served
on or mailed, postage prepaid, to such Pledgor in accordance with
the notice provisions of Section 15 hereof at least 10 days before
time of such sale. The Agent shall not be obligated to make any
sale of Pledged Collateral of any Pledgor regardless of notice of
sale having been given. The Agent may adjourn any public or
private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(c) Private Sale. The Pledgors recognize that the Agent
may deem it impracticable to effect a public sale of all or any part
of the Pledged Shares or any of the securities constituting Pledged
Collateral and that the Agent may, therefore, determine to make one
or more private sales of any such securities to a restricted group
of purchasers who will be obligated to agree, among other things, to
acquire such securities for their own account, for investment and
not with a view to the distribution or resale thereof. Each Pledgor
acknowledges that any such private sale may be at prices and on
terms less favorable to the seller than the prices and other terms
which might have been obtained at a public sale and, notwithstanding
the foregoing, agrees that such private sale shall be deemed to have
been made in a commercially reasonable manner and that the Agent
shall have no obligation to delay sale of any such securities for
the period of time necessary to permit the issuer of such securities
to register such securities for public sale under the Securities Act
of 1933. Each Pledgor further acknowledges and agrees that any
offer to sell such securities which has been (i) publicly advertised
on a bona fide basis in a newspaper or other publication of general
circulation in the financial community of New York, New York (to the
extent that such offer may be advertised without prior registration
under the Securities Act of 1933), or (ii) made privately in the
manner described above shall be deemed to involve a "public sale"
under the UCC, notwithstanding that such sale may not constitute a
"public offering" under the Securities Act of 1933, and the Agent or
any Lender may, in such event, bid for the purchase of such
securities.
(d) Application of Proceeds. Upon the occurrence and
during the continuance of an Event of Default, any payments in
respect of the Secured Obligations and any proceeds of any Pledged
Collateral, when received by the Lenders in cash or its
equivalent, will be applied in reduction of the Secured
Obligations as follows: first, to all costs and expenses of the
Agent (including without limitation reasonable attorney's fees and
expenses) incurred in connection with the implementation and/or
enforcement of this Pledge Agreement and/or any of the other Loan
Documents; second, to all costs and expenses of the Lenders
(including without limitation reasonable attorneys' fees and
expenses) incurred in connection with the implementation and/or
enforcement of this Pledge Agreement and/or any of the other Loan
Documents; third, to such of the Secured Obligations consisting of
accrued but unpaid interest and fees; fourth, to the principal
amount of the Secured Obligations; fifth, to all other amounts
payable with respect to the Secured Obligations; and sixth, to the
payment of surplus, if any, to whomever may be lawfully entitled
to receive such surplus. Each Pledgor irrevocably waives the
right to direct the application of such payments and proceeds and
acknowledges and agrees that the Agent shall have the continuing
and exclusive right to apply and reapply any and all such payments
and proceeds notwithstanding any entry to the contrary upon any of
its books and records.
(e) Deficiency. In the event that the proceeds of any
sale, collection or realization are insufficient to pay all
amounts to which the Agent or the Lenders are legally entitled,
the Pledgors shall be jointly and severally liable for the
deficiency, together with interest thereon at the default rate
provided in Section 4.1 of the Credit Agreement, together with the
costs of collection and the reasonable fees of any attorneys
employed by the Agent to collect such deficiency. Any surplus
remaining after the full payment and satisfaction of the Secured
Obligations shall be returned to the appropriate Pledgors or to
whomsoever a court of competent jurisdiction shall determine to be
entitled thereto.
11. Costs of Counsel. If at any time hereafter, whether
after the occurrence and during the continuance of an Event of Default
or not, the Agent employs counsel to prepare or consider amendments,
waivers or consents with respect to this Pledge Agreement, or to take
action or make a response in or with
respect to any legal or arbitral proceeding relating to this
Pledge Agreement or relating to the Pledged Collateral, or to
protect the Pledged Collateral of any Pledgor or exercise any
rights or remedies under this Pledge Agreement or with respect
to any Pledged Collateral, then the Pledgors agree to promptly
pay upon demand any and all such reasonable costs and expenses
of the Agent and the Lenders, all of which costs and expenses
shall constitute Secured Obligations hereunder.
12. Continuing Agreement. This Pledge Agreement shall be
a continuing agreement in every respect and shall remain in
full force and effect so long as the Credit Agreement is in
effect or any amounts payable thereunder or under any other
Loan Document or any Letter of Credit shall remain outstanding,
and until all of the Commitments thereunder shall have
terminated. Upon such termination of this Pledge Agreement,
the Lenders shall, upon the request and at the expense of the
Obligors, forthwith release all of their liens, assignments and
security interests hereunder. Notwithstanding the foregoing all
releases and indemnities provided hereunder shall survive
termination of this Pledge Agreement.
13. Amendments; Waivers; Modifications. This Pledge
Agreement and the provisions hereof may be changed, discharged
or
terminated only by an instrument in writing signed by each of
the Pledgors and the Agent with the requisite consent of the
Lenders as provided in the Credit Agreement.
14. Successors in Interest. This Pledge Agreement shall
create a continuing security interest in the Collateral and
shall be binding upon the Pledgors, their successors and
assigns, and shall inure, together with the rights and remedies
of the Agent hereunder, to the benefit of the Agent and the
Lenders and their successors and assigns; provided, however,
that, except as otherwise provided in the Credit Agreement, no
Pledgor may assign its rights or delegate its duties hereunder
without the prior written consent of the Agent and all of the
Lenders. Without limiting the generality of the foregoing, and
subject to the provisions of Section 12.10 of the Credit
Agreement, any Lender may assign or otherwise transfer any
indebtedness held by it secured by this Security Agreement to
any other person or entity, and such other person or entity
shall thereupon become vested with all the benefits in respect
thereof granted to such Lender herein or otherwise, subject,
however, to the provisions of the Credit Agreement. Except as
provided in Section 7(d) hereof, the Pledgors hereby release
the Agent and the Lenders from any liability for any act or
omission relating to the Pledged Collateral or this Pledge
Agreement, except for any such liability resulting from gross
negligence or willful misconduct.
15. Notices. Any notice shall be conclusively deemed to
have been received by any party hereto and be effective on the
day on which delivered to such party at the address set forth
below or such other address as such party shall specify to the
other party in writing, or if sent prepaid by certified or
registered mail on the third Business Day after the day on
which mailed, addressed to such party at such address:
a. if to any Pledgor:
c/o Delta Woodside Industries, Inc.
233 N. Main Street
Suite 200
Hammond Square
Greenville, South Carolina 29601
Attention: President
with copies to:
Bettis C. Rainsford
P.O. Box 388
108-1/2 Courthouse Square
Edgefield, South Carolina 29824
Eric B. Amstutz, Esq.
Wyche, Burgess, Freeman & Parham, P.A.
P.O. Box 728
44 E. Camperdown Way
Greenville, South Carolina 29602
b. if to the Agent:
NationsBank, N.A.
NationsBank Corporate Center, 8th Floor
100 North Tryon Street
NC1-007-08-11
Charlotte, North Carolina 28255
Attention: E. Phifer Helms
This Section shall not be construed in any way to affect
or impair any waiver of notice or demand herein provided or to
require giving of notice or demand to or upon any Pledgor in
any situation or for any reason.
16. Counterparts. This Pledge Agreement may be executed
in any number of counterparts, each of which when so executed
and delivered shall be an original, but all of which shall
constitute one and the same instrument. It shall not be
necessary in making proof of this Pledge Agreement to produce
or account for more than one such counterpart.
17. Headings. The headings of the sections and
subsections hereof are provided for convenience only and shall
not in any way affect the meaning or construction of any
provision of this Pledge Agreement.
18. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NORTH CAROLINA. Any legal action or
proceeding with respect to this Pledge Agreement may be
brought in the courts of the State of North Carolina in
Mecklenburg County, or of the United States for the Western
District of North Carolina, and, by execution and delivery
of this Pledge Agreement, each of the Pledgors hereby
irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the nonexclusive
jurisdiction of such courts in any proceeding arising out of
or relating to this Pledge Agreement. Each of the Pledgors
further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address set
out for notices pursuant to Section 15 hereof, such service
to become effective 30 days after such mailing. Nothing
herein shall affect the right of the Agent to serve process
in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Pledgor in
any other jurisdiction.
(b) Each of the Pledgors hereby irrevocably waives any
objection which it may now or hereafter have to the laying
of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Pledge Agreement
brought in the courts referred to in subsection (a) hereof
and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an
inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT
AND EACH OF THE PLEDGORS HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS PLEDGE AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
19. Severability. If any provision of this Pledge
Agreement is determined to be illegal, invalid or unenforceable,
such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or
unenforceable provisions.
20. Entirety. This Pledge Agreement and the other Loan
Documents represent the entire agreement of the parties hereto
and thereto, and supersede all prior agreements and
understandings, oral or written, if any, of such parties,
including any commitment letters or correspondence relating to
the Loan Documents or the transactions contemplated herein and
therein.
21. Survival. All representations and warranties of the
Pledgors hereunder shall survive the execution and delivery of
this Pledge Agreement and the other Loan Documents, the
delivery of the Notes and the making of the Loans and the
issuance of the Letters of Credit under the Credit Agreement.
22. Other Security. To the extent that any of the
Secured Obligations are now or hereafter secured by property
other than the Collateral (including, without limitation, real
property and securities owned by a Pledgor), or by a guarantee,
endorsement or property of any other Person, then the Agent and
the Lenders shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence and
continuance of any Event of Default, and the Agent and the
Lenders have the right, in their sole discretion, to determine
which rights, security, liens, security interests or remedies
the Agent and the Lenders shall at any time pursue, relinquish,
subordinate, modify or take with respect thereto, without in
any way modifying or affecting any of them or any of the
Agent's and the Lenders' rights or the Secured Obligations
under this Pledge Agreement or under any other of the Loan
Documents.
23. Joint and Several Obligations of Pledgors. All
payment obligations of the Pledgors hereunder shall be joint
and several.
24. Rights of Majority Lenders. All rights of the Agent
hereunder, if not exercised by the Agent, may be exercised by
the Majority Lenders, subject in all respects to Section 12.11
of the Credit Agreement.
[remainder of page intentionally left blank]
Each of the Pledgors has caused a counterpart of this
Pledge Agreement to be duly executed and delivered as of the
date first above written.
BORROWER: DELTA WOODSIDE INDUSTRIES, INC.
By /s/ Bettis C. Rainsford
Title Exec VP, Treasurer & CFO
GUARANTORS: ALCHEM CAPITAL CORPORATION
By /s/ Bettis C. Rainsford
Title Exec VP, Treasurer & CFO
DELTA MILLS, INC.
By /s/ Bettis C. Rainsford
Title Exec VP, Treasurer & CFO
DUCK HEAD APPAREL COMPANY, INC.
By /s/ Bettis C. Rainsford
Title Exec VP, Treasurer & CFO
NAUTILUS INTERNATIONAL, INC.
By /s/ Bettis C. Rainsford
Title Exec VP, Treasurer & CFO
NAUTILUS DIRECT, INC
By /s/ Bettis C. Rainsford
Title Exec VP, Treasurer & CFO
DELTA CONSOLIDATED CORPORATION
By /s/ Bettis C. Rainsford Title
Exec VP, Treasurer & CFO
[Signatures Continued]
DELTA MERCHANDISING, INC.
By /s/ Bettis C. Rainsford
Title Exec VP, Treasurer & CFO
Accepted and agreed to as of the date first above written.
NATIONSBANK, N.A.,as Agent
By /s/ E. Phifer Helms
Title: Senior Vice-President
