Exhibit 10.89

 

SIXTH AMENDMENT AND CONSENT TO REVOLVING

CREDIT AND GUARANTY AGREEMENT

 

SIXTH AMENDMENT AND CONSENT, dated as of February 9, 2004 (the “Amendment and
Consent”), to the REVOLVING CREDIT AND GUARANTY AGREEMENT, dated as of February
20, 2002, among GALEY & LORD, INC., a Delaware corporation (the “Borrower”), a
debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code, the
Guarantors named therein (the “Guarantors”), WACHOVIA BANK, NATIONAL ASSOCIATION
(formerly known as First Union National Bank), a national banking corporation
(“Wachovia”), each of the other financial institutions from time to time party
thereto (together with Wachovia, the “Banks”) and WACHOVIA BANK, NATIONAL
ASSOCIATION, as Agent for the Banks (in such capacity, the “Agent”):

 

W I T N E S S E T H:

 

WHEREAS, the Borrower, the Guarantors, the Banks and the Agent are parties to
that certain Revolving Credit and Guaranty Agreement, dated as of February 20,
2002 (as the same has been and may be further amended, modified or supplemented
from time to time, the “Credit Agreement”); and

 

WHEREAS, the Borrower and the Guarantors have requested that from and after the
(i) DIP Extension Effective Date (as hereinafter defined), the Banks agree to
extend maturity of the Credit Agreement as set forth herein and (ii) Consent
Effective Date (as hereinafter defined), the Banks consent to certain
transactions as set forth herein, subject to and upon the terms and conditions
set forth in this Amendment and Consent.

 

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

1. As used herein, all terms that are defined in the Credit Agreement shall have
the same meanings herein.

 

2. Consent. Notwithstanding anything to the contrary contained in the Credit
Agreement or the other Loan Documents, the Banks hereby (a) consent to the
inter-company payment of $1 million from Swift Textiles to Drummondville
Services Inc. in exchange for the purchase of, and release of the liens of
Congress Financial Corporation on, the 31 Drummondville looms in connection with
the transactions described in the Summary of Drummondville Transaction attached
hereto as Exhibit A (referred to herein as the “Drummondville Restructuring”),
(b) consent to the restructuring of the foreign subsidiaries of the Borrower and
the Guarantors as contemplated by the Debtors’ Motion for an Order Authorizing
Restructuring of Certain Non-Debtor Foreign Subsidiaries and approved by order
of the Bankruptcy Court entered on January 6, 2004, copies of which are attached
hereto as Exhibit B (referred to herein as the “Tax Restructuring”), (c) agree
to release any existing liens in favor of the Agent on stock of the Borrower’s
foreign subsidiaries necessary to effectuate the Tax

 

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Restructuring, and (d) waive any Default or Event of Default that may arise
under the Credit Agreement or any other Loan Documents as a result of the
consummation of the Drummondville Restructuring or the Tax Restructuring.
Schedule 3.05 of the Credit Agreement shall be deemed modified to reflect the
Tax Restructuring.

 

3. Amendment to Section 1.01. Section 1.01 of the Credit Agreement is hereby
amended by deleting the definition for “Maturity Date” and inserting in lieu
thereof the following new definition:

 

“Maturity Date” shall mean February 23, 2004.

 

4. Covenant. In order to induce the Banks to enter into this Amendment, the
Borrower and the Guarantors hereby agree to the following covenant, the failure
to perform such covenant will be an Event of Default under the Credit Agreement:

 

(a) Upon the sale of the capital stock of Klopman International S.r.l. (Italy),
Klopman A.G. (Switzerland), Klopman GmbH (Germany) and Klopman España S.A.
(Spain) (collectively, the “Klopman Entities”) and certain intellectual property
rights thereof (referred to herein as the “Klopman Sale”) for an amount no less
than $22,000,000, the Net Proceeds from such sale will be repatriated to the
Borrower and the Borrower shall apply such repatriated funds in accordance with
Section 2.13(b) of the Credit Agreement and with applicable orders entered by
Bankruptcy Court. This covenant shall supersede and replace in their entirety
the covenants contained in Section 9(c) of the Third Amendment to the Credit
Agreement, dated as of July 29, 2003, Section 7 of the Fourth Amendment to the
Credit Agreement, dated as of September 25, 2003 and Section 4(a) of the Fifth
Amendment to the Credit Agreement, dated as of October 29, 2003.

 

5. Conditions to Effectiveness. (a) Paragraph 3 of this Amendment and Consent
shall not become effective until the date (the “DIP Extension Effective Date”)
(i) on which this Amendment and Consent shall have been executed by the
Borrower, the Guarantors and the Banks, and the Agent shall have received
evidence satisfactory to it of such execution and (ii) the Bankruptcy Court
shall have entered an interim order, in form and substance satisfactory to the
Agent, approving the terms of this Amendment. Notwithstanding the occurrence of
the DIP Extension Effective Date, in the event that a final order, in form and
substance satisfactory to the Agent, approving the terms of this Amendment and
Consent shall not have been entered by the Bankruptcy Court by February 23,
2004, (i) other than as provided in clause (ii) below, this Amendment shall
terminate and be of no further force and effect, and (ii) the Maturity Date of
the Credit Agreement shall be deemed extended to the earlier to occur of
February 23, 2004 or the Consummation Date; provided that in the event that the
Consummation Date has occurred prior to February 23, 2004, no final order
approving this Amendment and Consent shall be required.

 

(b) Paragraphs 2 and 4 of this Amendment and Consent shall not become effective
until the date (the “Consent Effective Date”) on which (i) this Amendment and
Consent shall have been executed by the Borrower, the Guarantors and

 

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the Required Banks, and the Agent shall have received evidence satisfactory to
it of such execution, (ii) the Borrower shall execute an amendment to the
Security and Pledge Agreement (the “Security and Pledge Agreement Amendment”),
attached hereto as Exhibit C, to provide for a pledge to the Agent of 65% of the
outstanding voting stock of the newly created holding company Galey & Lord
Worldwide SCS (“SCS”) and (iii) the Borrower shall have delivered the stock
certificates evidencing stock of SCS required to be pledged under the Security
and Pledge Agreement (together with one or more duly executed stock powers by
the Borrower).

 

6. Survival. All covenants made by the Borrower or any Guarantor herein shall
continue in full force and effect so long as any amount due or to become due
under the Credit Agreement is outstanding and unpaid and so long as the
Commitments have not been terminated.

 

7. Ratification. Except to the extent hereby amended, the Credit Agreement and
each of the Loan Documents remain in full force and effect and are hereby
ratified and affirmed.

 

8. Costs and Expenses. The Borrower agrees that its obligations set forth in
Section 10.05 of the Credit Agreement shall extend to the preparation, execution
and delivery of this Amendment, including the reasonable fees and disbursements
of special counsel to the Agent.

 

9. References. This Amendment shall be limited precisely as written and shall
not be deemed (a) to be a consent granted pursuant to, or a waiver or
modification of, any other term or condition of the Credit Agreement or any of
the instruments or agreements referred to therein or (b) to prejudice any right
or rights which the Agent or the Banks may now have or have in the future under
or in connection with the Credit Agreement or any of the instruments or
agreements referred to therein. Whenever the Credit Agreement is referred to in
the Credit Agreement or any of the instruments, agreements or other documents or
papers executed or delivered in connection therewith, such reference shall be
deemed to mean the Credit Agreement as modified by this Amendment.

 

10. Counterparts. This Amendment may be executed in any number of counterparts
and by the different 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 but one and the same instrument. A fax copy of a
counterpart signature page shall serve as the functional equivalent of a
manually executed copy for all purposes.

 

11. Applicable Law. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.

 

[SIGNATURES TO FOLLOW]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and the year first written.

 

BORROWER:

 

GALEY & LORD, INC.

By:  

/s/ Leonard F. Ferro

   

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Name:

 

Leonard F. Ferro

Title:

 

Vice President, Secretary & Treasurer

 

GUARANTORS:

 

GALEY & LORD INDUSTRIES, INC.

 

G&L SERVICE COMPANY,

    NORTH AMERICA, INC.

 

SWIFT TEXTILES, INC.

 

SWIFT DENIM SERVICES, INC.

By:  

/s/ Leonard F. Ferro

   

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Name:

 

Leonard F. Ferro

Title:

 

Vice President, Secretary & Treasurer

GALEY & LORD PROPERTIES, INC.

 

SWIFT DENIM PROPERTIES, INC.

By:  

/s/ Anthony J. Forman

   

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Name:

 

Anthony J. Forman

Title:

 

Vice President & Treasurer

GREENSBORO TEXTILE

    ADMINISTRATION LLC

 

BRIGHTON WEAVING LLC

 

FLINT SPINNING LLC

 

SOCIETY HILL FINISHING LLC

MCDOWELL WEAVING LLC

By:  

/s/ Anthony J. Forman

   

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Name:

 

Anthony J. Forman

Title:

 

Manager

 

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WACHOVIA BANK, NATIONAL ASSOCIATION Individually and as Agent By:  

/s/ Ron R. Ferguson

   

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Name:

 

Ron R. Ferguson

Title:

 

Managing Director

 

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THE CIT/GROUP COMMERCIAL SERVICES, INC.

By:

 

/s/ Jeffrey Lew

   

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Name:

 

Jeffrey Lew

Title:

 

Vice President

 

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GENERAL ELECTRIC CAPITAL CORPORATION

By:

 

/s/ Patrick Flynn

   

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Name:

 

Patrick Flynn

Title:

 

Duly Authorized Signatory

 

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WELLS FARGO FOOTHILL, INC., (formerly known as FOOTHILL CAPITAL CORPORATION)

By:

 

/s/ Eunnie Kim

   

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Name:

 

Eunnie Kim

Title:

 

Asst. Vice President

 

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LASALLE BUSINESS CREDIT, LLC,

successor by merger to, LASALLE BUSINESS CREDIT, INC.

By:

 

/s/ Douglas Colletti

   

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Name:

 

Douglas Colletti

Title:

 

Senior Vice President

 

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MORGAN STANLEY SENIOR FUNDING, INC.

By:

 

/s/ Dawn Digianno

   

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Name:

 

Dawn Digianno

Title:

 

Vice President

 

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ARK CLO 2000-1 LIMITED

By:

  Patriarch Partners, LLC, its Collateral Manager

By:

 

/s/ Lynn Tilton

   

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Name:

 

Lynn Tilton

Title:

 

Manager

 

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ARK II CLO 2001-1 LIMITED

By:

 

Patriarch Partners, LLC, its Collateral Manager

By:

 

/s/ Lynn Tilton

   

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Name:

 

Lynn Tilton

Title:

 

Manager

 

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