UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 2, 1994
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 1-8016
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TULTEX CORPORATION
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(Exact name of registrant as specified in its charter)
Virginia 54-0367896
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
101 Commonwealth Boulevard, P. O. Box 5191, Martinsville, Virginia 24115
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 703-632-2961
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
29,798,807 shares of Common Stock, $1 par value, as of May 10, 1994
- - - - ---------- -- ------------
PART I. FINANCIAL INFORMATION
Item 1.
Tultex Corporation
Consolidated Statement of Income (Unaudited - $000's omitted except in
shares and per share data)
April 2, 1994 (and April 3, 1993)
Three Months Ended
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April 2, 1994 April 3, 1993
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Net Sales and Other Income $ 86,294 $ 91,022
Cost and Expenses:
Cost of Products Sold 62,019 63,880
Depreciation 6,191 5,526
Selling, General and Administrative 22,137 20,242
Interest 3,863 3,669
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Total Cost and Expenses 94,210 93,317
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Income (Loss) Before Income Taxes (7,916) (2,295)
Provision for Income Taxes (Note 3) (3,008) (852)
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Net Income (Loss) (4,908) (1,443)
Preferred Dividend Requirement (284) (284)
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Balance Applicable to Common Stock $ (5,192) $ (1,727)
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Weighted Average Number of Common
Shares Outstanding 29,322,906 28,878,193
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Net Income (Loss) Per Common Share $ ( .18) $ ( .06)
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Dividends Per Common Share $ .05 $ .05
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Tultex Corporation
Consolidated Balance Sheet (Unaudited - $000's omitted)
April 2, 1994 (and January 1, 1994)
Assets April 2, 1994 January 1, 1994
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Current Assets:
Cash $ 5,403 $ 6,754
Accounts Receivable (Net of allowances
for doubtful accounts and returns of
$2,349 (April) and $2,374 (January) 86,350 116,383
Inventories (Note 2) 182,056 157,278
Prepaid Expenses 11,776 8,276
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Total Current Assets 285,585 288,691
Fixed Assets - Net Book Value 149,540 151,775
Intangible Assets 27,679 27,983
Other Assets 6,301 6,516
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Total Assets $ 469,105 $ 474,965
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Liabilities and Stockholders' Equity
- - - - ------------------------------------
Current Liabilities:
Notes Payable to Banks $ 2,000 $ -
Current Maturities of Long-Term Debt 9,335 8,524
Accounts Payable 21,360 18,170
Federal and State Income Taxes Payable
(Note 3) (1,705) 2,785
Other Accounts Payable and Accrued Expenses 14,190 15,659
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Total Current Liabilities 45,180 45,138
Long-Term Debt, Less Current Maturities 231,993 230,914
Other Liabilities 19,336 19,716
Stockholders' Equity:
Five Percent Cumulative Preferred Stock
(Note 4) 198 198
Series B Preferred Stock (Note 4) 15,000 15,000
Common Stock (Note 4) 29,799 29,053
Capital in Excess of Par Value 5,243 1,889
Retained Earnings 126,427 133,107
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176,667 179,247
Less Notes Receivable - Stockholders 4,071 50
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Total Stockholders' Equity 172,596 179,197
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Total Liabilities and Stockholders' Equity $ 469,105 $ 474,965
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Tultex Corporation
Consolidated Statement of Cash Flows (Unaudited - $000's omitted)
Three Months Ended April 2, 1994 (and April 3, 1993)
Three Months Ended
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Operations: April 2, 1994 April 3, 1993
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Net Income (Loss) $ (4,908) $ (1,443)
Items not Requiring (Providing) Cash:
Depreciation 6,191 5,526
Amortization of Intangible Assets 304 304
Other Deferrals (380) 73
Changes in Assets and Liabilities:
Accounts Receivable 30,033 37,395
Inventories (24,778) (29,916)
Prepaid Expenses (3,500) (632)
Accounts Payable and Accrued Expenses 1,721 3,686
Income Taxes Payable (4,490) (5,025)
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Cash Provided (Used) by Operations 193 9,968
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Investing Activities:
Additions to Property, Plant and Equipment (3,954) (9,056)
Additions to Other Assets 215 (302)
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Cash Provided (Used) by Investing Activities (3,739) (9,358)
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Financing Activities
Issuance of Short-Term Borrowings 2,000 2,950
Issuance of Long-Term Debt 4,019 -
Payments on Long-Term Debt (2,129) (51)
Cash Dividends Paid (1,774) (1,728)
Proceeds From Exercise of Stock Options 20 58
Proceeds From Employee Stock Plan 59 -
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Cash Provided (Used) by Financing Activities 2,195 1,229
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Net Increase (Decrease) in Cash (1,351) 1,839
Cash at End of Prior Year 6,754 3,603
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Cash at End of Period $ 5,403 $ 5,442
============== ==============
TULTEX CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
April 2, 1994
NOTE 1 - In the opinion of the Company, the accompanying consolidated
financial statements furnished in this quarterly 10-Q Report reflect all
adjustments, consisting only of normal recurring adjustments, which are, in
the opinion of management, necessary for a fair statement of the results of
the interim periods. This balance sheet, statement of income and statement
of cash flows have been prepared from the Company's records and are subject
to audit and year-end adjustments.
NOTE 2 - During the fourth quarter of 1993 the company changed its method of
valuing the majority of its inventories from the last-in, first-out (LIFO)
method to the first-in, first-out (FIFO) method. All prior periods have been
restated for comparative purposes. A summary by component follows.
(In thousands of dollars) April 2, 1994 January 1, 1994
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Raw Materials $ 29,359 $ 29,291
Supplies 3,278 3,735
Work-in-process 18,494 11,956
Finished Goods 130,925 112,296
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Total Inventory $ 182,056 $ 157,278
============= ===============
NOTE 3 - Income taxes are provided based upon income reported for financial
statement purposes. Deferred income taxes are provided for the temporary
differences between the financial reporting basis and the tax basis of the
company's assets and liabilities.
NOTE 4 - Five percent cumulative preferred stock is $100 par value, 22,000
shares authorized, shares issued and outstanding 1,975 shares (1994 and 1993).
Series B preferred stock issued in connection with the acquisition of Logo 7
is cumulative, convertible preferred stock, $7.50 Series B, $100 stated value,
150,000 shares authorized, issued and outstanding (1994 and 1993).
Common stock, $1 par value, 60,000,000 shares authorized, shares issued and
outstanding 29,798,807 (1994) and 29,053,126 (1993).
NOTE 5 - Earnings (loss) per common share are computed using the weighted
average number of common shares outstanding in the first three months of 1994
and 1993 of 29,322,906 and 28,878,193, respectively.
Tultex Corporation
Management's Discussion and Analysis of Financial Condition and Results
of Operations
April 2, 1994
Results of Operations
- - - - ---------------------
The company changed its method for determining cost of inventories from the
last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method
during the fourth quarter of 1993. This change has been applied by
retroactively restating all prior periods presented.
Income and Expenses as a Percentage of Sales
Three Months Ended
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04/02/94 04/03/93
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Net Sales and Other Income 100.0% 100.0%
Cost of Products Sold 71.9 70.2
Depreciation 7.2 6.1
Selling, General and Administrative 25.7 22.2
Interest 4.4 4.0
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Total Costs and Expenses 109.2 102.5
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Income Before Taxes (9.2) (2.5)
Provision for Income Taxes (3.5) ( .9)
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Net Income (5.7)% (1.6)%
======== ========
Net sales and other income for the three months ended April 2, 1994 decreased
$4.7 million, or 5%, compared to first quarter 1993. Both volume and average
selling prices of non-decorated apparel decreased 13% due to lower demand and
excess inventories throughout the activewear industry. First quarter sales of
our decorated licensed apparel were slightly down in 1994 which the company
believes is due to the lessened pull-through effect of the Dallas Cowboys'
repeat Super Bowl win in January 1994. Headwear sales are up 60% due to growth
in Super Bowl products, McDonald's "Nothing But Net" promotion and general
increases with the majority of our largest customers such as Target and K-Mart.
Cap sales in the first quarter were 23% of the company's total revenue versus
12% for the same period last year and less than 10% for all of 1993. The
company's nondecorated apparel order backlog at April 2, 1994 was $143 million
versus $196 million at April 3, 1993. At the same times decorated apparel
backlogs were $27 million and $18 million, respectively.
The company's results for the first quarter and lower nondecorated apparel
order backlog reflect softness throughout the activewear industry. This
downturn started late in the third quarter of 1993 and resulted in high
year-end inventories for most manufacturers. Consequently, the company's
operating schedules have been less than full during the first quarter of 1994
in an effort to bring supply in line with demand and generate higher returns on
our inventory investment. Presently, our apparel plants are running about 85%
of normal capacity for this time of year based on known demand. In the past,
the company would now be on full operating schedules based on both known and
anticipated customer orders, but management is committed to a more aggressive
program of inventory control and cost reduction in 1994. Due to the high
proportion of fixed manufacturing cost, knitted apparel margins will suffer
until full schedules are resumed.
Cost of products sold as a percentage of sales increased from 70% for the
first quarter of 1993 to 72% for the comparable period of 1994. This increase
is primarily due to a higher proportion of jersey sales, which traditionally
yield lower margins than fleece. Also, a significant portion of 1994 business
was booked at lower prices to meet increased competition due to industry wide
excess capacity and high inventories at the end of 1993. Further margin
pressure will likely result in the second half of 1994 from higher material
costs due to poor cotton crop yields and polyester price increases.
Depreciation as a percentage of net sales increased to 7% for the first three
months of 1994 from 6% for the same period of 1993 due to the combination of
lower sales and additional capital expenditures for yarn and jersey
manufacturing equipment. Depreciation expense increased $665 thousand or 12%
for the quarter ended April 2, 1994, compared to the same period of the
previous year.
As a percent of sales, selling, general and administrative expenses were 26%
and 22% for the first quarter of 1994 and 1993, respectively. The increase is
mainly due to higher promotion and advertising expenses for our premium lines
sold under the Logo Athleticr and Discus Athleticr brands and lower sales for
the first quarter of 1994 compared to the first quarter of 1993. Royalty and
sales commission expenses are higher in 1994 due to increased sales of licensed
headwear, and employee wages and salaries are up due to increased staffing in
our licensed apparel subsidiary, Logo 7, Inc.
Interest expense was approximately 4% of sales for both quarters under
comparison. In the first quarter of 1994 interest expense increased $194
thousand or 5% over the first quarter of 1993 due to higher average borrowings
and higher short-term rates. The company has experienced increased working
capital needs primarily due to higher inventory levels.
The effective rate for combined federal and state income tax was 38% for the
first three months of 1994 and 37% for 1993. The increase this year is due to
a change in the federal rate based on our expected pretax earnings for the
1994 fiscal year.
The company expects higher sales volume of undecorated jersey products
continuing during 1994. When combined with fall fleece programs this broader
product offering gives the company a year round presence with many of our
retail customers. More growth is expected for the company's upscale Discus
(registered trademark) and Logo Athletic (registered trademark) brands as a
result of aggressive marketing in the department store and specialty shop
channels. Revenues and profits from our basic nondecorated fleece products will
likely be down from the prior year for all of 1994 due to competitive price
point pressures and higher fiber costs, while overall unit volume is expected
to be comparable. Efforts to reduce seasonality are encouraging due to
continued growth of jersey products, headwear and windsuits. Despite this
improvement, 1994 is expected to follow the same general pattern of quarterly
sales and earnings as evidenced in past years due to the seasonal nature of
fleece products and its still dominant role in our company.
Although similar quarterly patterns are expected in 1994 as in prior years, we
expect to benefit from our Strategic Process Management and Quality Improvement
programs, which were initiated last year and continue to reveal cost reduction
opportunities and provide a focus on value-added customer service. Our ability
to better control inventories and sustain full operating schedules during the
seasonally strong second half will determine if management's expectations are
realized this year.
Financial Condition, Liquidity and Capital Resources
- - - - ----------------------------------------------------
Net working capital at April 2, 1994, decreased $3 million from year-end 1993
as higher inventories and prepaid expenses were more than offset by lower
receivables.
Accounts receivable decreased $30 million from January 1, 1994 to April 2, 1994
due to the seasonality of fleecewear shipments. Receivables normally peak in
September and October and begin to decline in December as shipment volume
decreases and cash is collected.
Inventories traditionally increase during the first half of the year to support
the second-half shipment volume and accordingly are up $25 million since
year-end 1993. The current ratio at the end of the first quarter of 6.3
remains substantially unchanged from year-end 1993. However, it is higher
than the comparable ratio from a year earlier of 2.0 due to the refinancing of
short-term debt. The refinanced borrowings, as described further below, are
classified as long-term debt on the balance sheet.
On October 7, 1993, the company began operating with a two-year $225 million
revolving credit facility. This facility replaced the company's short-term
credit lines. Average borrowings under this facility during the first quarter
were $129 million at an average annual rate of 4.1%. The highest single day
balance reached during the quarter was $140 million. Outstanding letters of
credit under this facility at April 2, 1994 were $25 million. Long-term debt
at this quarter end consist primarily of unsecured senior notes totaling $95
million, $123 million outstanding under the new revolver and $21 million due
under a term loan. The company has renegotiated certain loan covenants of its
long-term loan agreements to permit greater operating flexibility in 1994. At
quarter end, the company was in compliance with all debt covenants.
Stockholders' equity decreased $7 million during the first three months of 1994
primarily due to a net loss for the quarter of $5 and cash dividends of $2
million. A new employee stock purchase plan contributed $4 million of
additional equity but was entirely offset by stockholder loans to employees
to finance their purchases of the newly issued common shares. On April 21,
1994, the Board of Directors voted to suspend further dividend payments until
such time as cash flow and profitability are sufficient to support them.
For the first three months of 1994 net cash provided by operations was $193
thousand. Cash generated from the collection of receivables and depreciation
expense was offset by increased inventories, higher prepaid expenses, lower
federal and state income taxes payable and the net loss for the period. Cash
used by investing activities of $4 million was primarily used to finance
purchases of machinery and equipment. Cash provided by financing activities of
$2 million was derived principally from additional borrowings of $6 million
offset by cash dividends and debt repayments totaling approximately $4 million.
Capital expenditures for the balance of 1994 are budgeted at $10 million and
scheduled debt repayments are $7 million for the next three quarters. The
company expects that annual cash flows from income and non-cash items,
supplemented by the revolving credit facility, will be adequate to support
requirements for the remainder of 1994. Starting in June of 1995 and
continuing for four years thereafter until fully repaid, annual principal
payments of $19 million are due on the $95 million notes. The $21 million
term loan is being repaid at approximately $2 million per quarter through
September 1996. The $225 million revolver has an initial two-year term which
expires in November 1995 and is renewable annually for three additional
one-year terms.
TULTEX CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In April, 1994 a suit alleging trademark infringement was filed in U.S.
District Court in Los Angeles against the company's subsidiary Logo 7,
Inc. by L.A. Gear,Inc.
The suit alleges that the logo for the Logo Athletic line of apparel infringes
on a L.A. Gear logo. The suit seeks injunctive relief and unspecified damages.
Management believes the suit is without merit and plans to contest it
vigorously. Although the suit is in the early stages and the outcome is
impossible to determine, management does not believe it will have a material
impact on the consolidated finanical position, results of operations or
liquidity of the company.
The nature of the company's business ordinarily results in litigation which is
considered immaterial and incidental.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.19 Intercreditor Agreement dated as of March 1, 1994 among Tultex
Corporation, Dominion Stores, Inc., Logo 7, Inc., Universal
Industries, Inc., the Noteholders, Wachovia Bank of North
Carolina, N.A., NationsBank of North Carolina, N.A. and the other
banks named in the Credit Agreement dated as of September 30, 1993
10.20 Second Amendment to Note Agreements, dated as of March 1, 1994,
among Tultex Corporation and certain institutional investors
10.21 Amended and Restated Term Loan Agreement between Tultex Corporation
and Wachovia Bank of North Carolina, N.A. dated as of March 1, 1994
10.22 First Amendment and Waiver to the Credit Agreement dated as of
March 1, 1994 to the Credit Agreement dated as of October 6, 1993
among Tultex, those subsidiaries and credit parties thereto and
NationsBank of North Carolina, N.A.
(b) Reports on Form 8-K
None
Items 2, 3, 4 and 5 are inapplicable and are omitted.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
TULTEX CORPORATION
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(Registrant)
Date May 16, 1994 /s/ C. W. Davies, Jr.
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C. W. Davies, Jr., President and
Chief Operating Officer
Date May 16, 1994 /s/ D. P. Shook
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Vice President -
Human and Financial Services
EXHIBIT 10.19
Intercreditor Agreement
Dated as of March 1, 1994
Intercreditor Agreement
Intercreditor Agreement dated as of March 1, 1994 between NationsBank of North
Carolina, N.A., individually and as Co-Agent and Administrative Agent (the
"Agent Bank"), Philadelphia National Bank, individually and as Co-Agent, First
Union National Bank of North Carolina, individually and as Co-Agent, Fleet
Bank of Massachusetts, N.A., Signet Bank/Virginia, NBD Bank, N.A. (as
successor by merger to INB National Bank), Crestar Bank, First National Bank
of Maryland, National City Bank, Kentucky, Bank of Tokyo Trust, The Sanwa Bank
Ltd. and Bank Hapoalim B.M. (each Bank is referred to herein as a "Lender" and
the Agent Bank and the Banks are collectively referred to herein as the
"Lenders"), Wachovia Bank of North Carolina, N.A. (formerly known as Wachovia
Bank and Trust Company, N.A.) ("Wachovia") and Principal Mutual Life Insurance
Company, Massachusetts Mutual Life Insurance Company, Aid Association for
Lutherans, Connecticut Mutual Life Insurance Company, Great Northern Insured
Annuity Corporation, Saxon & Co., The Manhattan Life Insurance Company, Central
Life Assurance Company, National Life Insurance Company, The Ohio Life
Insurance Company and West American Insurance Company (each institution is
referred to herein as a "Noteholder" and the institutions are collectively
referred to herein as the "Noteholders"; the Noteholders, Wachovia and the
Lenders are collectively referred to herein as the "Creditors").
R e c i t a l s:
A. Under and pursuant to those separate and several Note Agreements dated as
of June 1, 1992, as amended (the "Note Agreements"), between Tultex
Corporation, a Virginia corporation (the "Company"), and each of the
Noteholders, the Company has issued and sold to the Noteholders $95,000,000
aggregate principal amount of its 8.875% Senior Notes, due June 1, 1999
(the "Notes"), all of which remain outstanding on the date hereof.
B. Under and pursuant to that certain Agreement for Amended and Restated Term
Loan Agreement, dated as of March 1, 1994 (which Agreement amended and
restated in its entirety that certain Term Loan Agreement dated September 11,
1989, as amended) (such Agreement for Amended and Restated Term Loan
Agreement being hereinafter referred to as the "Term Loan Agreement"), between
the Company and Wachovia, Wachovia made two loans to the Company, one in the
principal amount of $20,833,333.33 (the "Term Note") and the second in the
principal amount of $2,019,000.00 (the "Swap Note" and collectively referred
to herein as the "Promissory Notes").
C. Under and pursuant to that certain Credit Agreement dated as of September
30, 1993 (the "Bank Credit Agreement") between the Company and the Lenders,
the Lenders have made available to the Company certain credit facilities in
an aggregate principal amount of $225,000,000 (all amounts outstanding in
respect of said credit facilities being hereinafter collectively referred to
as the "Loans").
D. In connection with the execution of the Bank Credit Agreement and as
security for the Loans made thereunder, certain subsidiaries of the Company
(the "Subsidiary Guarantors") have guaranteed to the Lenders the payment of
the Loans and all other obligations of the Company under the Bank Credit
Agreement (the "Lender Guaranty"). The execution and delivery of the Lender
Guaranty resulted in an Event of Default (as defined in the Note Agreements)
under the provisions of the Note Agreements and an Event of Default (as
defined in the Term Loan Agreement) under the Term Loan Agreement.
E. The Subsidiary Guarantors are entering into a Guaranty Agreement (the
"Noteholder Guaranty") on the date hereof pursuant to which the Subsidiary
Guarantors shall guarantee to the Noteholders the payment of the principal of,
premium, if any, and interest on the Notes and the payment and performance of
all other obligations of the Company under the Note Agreements and a Guaranty
Agreement (the "Wachovia Guaranty") pursuant to which the Subsidiary Guarantors
shall guarantee to Wachovia the payment of all obligations of the Company
under the Term Loan Agreement. The Lender Guaranty, the Noteholder Guaranty
and the Wachovia Guaranty are each hereinafter referred to as a "Subsidiary
Guaranty."
F. All principal of, and interest on, the Notes, the Promissory Notes and the
Loans are hereinafter collectively referred to as the "Subject Obligations."
G. As consideration for the forebearance of the Noteholders and Wachovia from
the exercise of remedies (including the acceleration of the Notes and the
Promissory Notes, respectively) as a result of the above-referenced Events
of Default, the Lenders have agreed to enter into this Agreement.
Section 1. Sharing Of Recoveries.
Each Creditor hereby agrees with each other Creditor that payments (including
payments made through set off of deposit balances or otherwise) made pursuant
to the terms of a Subsidiary Guaranty (a "Guaranty Payment") following (x) a
filing by or against any Subsidiary Guarantor for relief of debtors under any
bankruptcy or similar law or (y) the acceleration of the principal of any of
the Subject Obligations and any Guaranty Payment made in violation of the terms
of the Note Agreements, the Term Loan Agreement or the Bank Credit Agreement
which gives rise to an acceleration shall be shared so that each Creditor shall
receive its Pro Rata Share of Guaranty Payments. Accordingly, each Creditor
hereby agrees that in the event (i) the principal of all or any one of the
Subject Obligations shall have been accelerated, (ii) any Creditor (including
the Agent Bank on behalf of any Lender) shall receive a Guaranty Payment (a
"Receiving Creditor"), and (iii) any other Creditor shall not concurrently
receive its Pro Rata Share of Guaranty Payments from the same Subsidiary
Guarantor, then the Receiving Creditor shall promptly remit the Excess
Guaranty Payment to each other Creditor (or the Agent Bank on behalf of any
Lender), who shall then be entitled thereto so that after giving effect to
such payment (and any other payments then being made by any other Receiving
Creditor pursuant to this Section 1) each Creditor shall have received its
Pro Rata Share of Guaranty Payments.
- - - - -2-
Any such payments shall be deemed to be and shall be made in consideration of
the purchase for cash at face value, but without recourse, ratably from the
other Creditors such amount of Notes, Loans, or Promissory Notes (or interest
therein), as the case may be, to the extent necessary to cause such Creditor
to share such Excess Guaranty Payment with the other Creditors as hereinabove
provided; provided, however, that if any such purchase or payment is made by
any Receiving Creditor and if such Excess Guaranty Payment or part thereof is
thereafter recovered from such Receiving Creditor by any Subsidiary Guarantor
(including, without limitation, any trustee in bankruptcy of any Subsidiary
Guarantor or any creditor thereof), the related purchase from the other
Creditors shall be rescinded ratably and the purchase price restored as to the
portion of such Excess Guaranty Payment so recovered, but without interest; and
provided further nothing herein contained shall obligate any Creditor to
resort to any setoff, application of deposit balance or other means of payment
under any Subsidiary Guaranty or avail itself of any recourse by resort to
any property of the Company or any Subsidiary Guarantor, the taking of any
such action to remain within the absolute discretion of such Creditor without
obligation of any kind to the other Creditors to take any such action.
"Excess Guaranty Payment" shall mean as to any Creditor an amount equal to the
Guaranty Payment received by such Creditor less the Pro Rata Share of
Guaranty Payments to which such Creditor is then entitled.
"Pro Rata Share of Guaranty Payments" shall mean as of the date of any
Guaranty Payment to a Creditor under a Subsidiary Guaranty an amount equal to
the product obtained by multiplying (x) the amount of all Guaranty Payments
made by the Subsidiary Guarantor to all Creditors concurrently with the
payments to such Creditor less all costs incurred by such Creditors in
connection with the collection of such Guaranty Payments by (y) a fraction,
the numerator of which shall be the Specified Amount owing to such Creditor
(or the Agent Bank on behalf of such Creditor), and the denominator of which
is the aggregate amount of all outstanding Subject Obligations (without
giving effect in the denominator to the application of any Guaranty Payments).
Section-2. Agreements Among The Creditors.
Section-2.1. Independent Actions by Creditors. Nothing contained in this
Agreement shall prohibit any Creditor (of the Agent Bank on behalf of the
Lenders) from accelerating the maturity of, or demanding payment from any
Subsidiary Guarantor on, any Subject Obligation of the Company to such
Creditor or from instituting legal action against the Company or any
Subsidiary Guarantor to obtain a judgment or other legal process in respect of
such Subject Obligation, but any funds received in connection with any
recovery therefrom shall be subject to the terms of this Agreement.
Section-2.2. Relation of Creditors. This Agreement is entered into solely for
the purposes set forth herein, and no Creditor assumes any responsibility to any
other party hereto to advise such other party of information known to such other
party regarding the financial condition of the Company or any Subsidiary
Guarantor or of any other circumstances bearing upon the risk of nonpayment of
any Subject Obligation. Each
- - - - -3-
Creditor specifically acknowledges and agrees that nothing contained in this
Agreement is or is intended to be for the benefit of the Company or any
Subsidiary Guarantor and nothing contained herein shall limit or in any way
modify any of the obligations of the Company or any Subsidiary Guarantor to
the Creditors.
Section-2.3. Acknowledgment of Guaranties. The Lenders and Wachovia hereby
expressly acknowledge the existence of the Noteholder Guaranty, the Lenders
and the Noteholders hereby expressly acknowledge the existence of the Wachovia
Guaranty and Wachovia and the Noteholders hereby expressly acknowledge the
existence of the Lender Guaranty.
Section-2.4. No Defaults. After giving effect to the Second Amendment to
Note Agreements dated as of March 1, 1994, the Noteholders are not aware of
any Defaults or Events of Default (as such terms are defined in the Note
Agreements) under the Note Agreements. After the Term Loan Agreement (as
amended and restated) becomes effective on the date hereof, Wachovia is not
aware of any Defaults or Events of Default (as such terms are defined in the
Term Loan Agreement) thereunder. The Lenders are not aware of any defaults or
Events of Default (as such term is defined in the Bank Credit Agreement) under
the Bank Credit Agreement, as amended by the First Amendment and Waiver to
Credit Agreement.
Section 3. Miscellaneous.
Section 3.1. Entire Agreement. This Agreement represents the entire Agreement
among the Creditors and, except as otherwise provided, this Agreement may not
be altered, amended or modified except in a writing executed by all the parties
to this Agreement.
Section 3.2. Notices. Notices hereunder shall be given to the Creditors at
their addresses as set forth in the Note Agreements, the Term Loan Agreement
or the Bank Credit Agreement, as the case may be, or at such other address as
may be designated by each in a written notice to the other parties hereto.
Section 3.3. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of each of the Creditors and their respective successors
and assigns, whether so expressed or not, and, in particular, shall inure to the
benefit of and be enforceable by any future holder or holders of any Subject
Obligations, and the term "Creditor" shall include any such subsequent holder of
Subject Obligations, wherever the context permits.
Section 3.4. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Virginia.
Section 3.5. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one Agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart.
- - - - -4-
Section 3.6. Sale of Interest. No Creditor will sell, transfer or otherwise
dispose of any interest in the Subject Obligations unless such purchaser or
transferee shall agree, in writing, to be bound by the terms of this Agreement.
Section 3.7. In case any one or more of the provisions contained in this
Agreement shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
- - - - -5-
In Witness Whereof, each of the parties hereto has
caused this Agreement to be executed as of the date first above
written.
NationsBank of North Carolina, N.A.,
individually in its capacity as a Bank
and in its capacity as Co-Agent and
Administrative Agent
By /s/ J. Lance Walton
-------------------
Its Vice-President
Philadelphia National Bank,
incorporated as CoreStates Bank, N.A.,
individually in its capacity as a Bank
and in its capacity as a Co-Agent
By /s/ John Richards
------------------
Its Vice-President
First Union National Bank of North
Carolina, individually in its capacity as
a Bank and in its capacity as Co-Agent
By /s/ Michael T. Grady
--------------------
Its Vice-President
Fleet Bank of Massachusetts, N.A.
By /s/ Maryann S.Smith
-------------------
Its Vice-President
Signet Bank/Virginia
By /s/ Kevin W. Walsh
------------------
Its Vice-President
- - - - -6-
NBD Bank, N.A. (successor by merger to
INB National Bank)
By /s/ Mark L. Wasden
----------------------------
Its Assistant Vice-President
Crestar Bank
By /s/ T. Patrick Collins
----------------------
Its Vice-President
First National Bank of Maryland
By /s/ Roy A. Smith
----------------
Its
National City Bank, Kentucky
By /s/ Don R. Pullen, Jr.
----------------------
Its Vice-President
Bank of Tokyo Trust
By /s/ George Stweart
------------------
Its Vice-President
The Sanwa Bank Ltd.
By /s/ John E. Hansen
-----------------------
Its S. V. P. & A. G. M.
- - - - -7-
Bank Hapoalim B.M.
By /s/ Andrew J. Niesen
--------------------
Its Vice-President
Wachovia Bank of North Carolina, N.A.
By /s/ Charlene A. Johnson
-----------------------
Its Vice-President
Principal Mutual Life Insurance Company
By /s/ Jon M. Davidson
---------------------------------
Its Assistant Director-Securities
Investment
By /s/ Clint Woods
---------------
Its Counsel
Massachusetts Mutual Life Insurance Company
By /s/ William E. Lord
-------------------------
Its Second Vice-President
Aid Association for Lutherans
By /s/ James Abittz
-------------------------------
Its Vice-President - Securities
By /s/ R. Jerry Scheel
--------------------------------------
Its Second Vice-President - Securities
-8-
Connecticut Mutual Life Insurance Company
By /s/ Mary Ann McCarthy
-----------------------------
Its Senior Investment Officer
Great Northern Insured Annuity Corporation
By /s/ William D. Koski
----------------------------
Its Assistant Vice-President
Saxon & Co.
By /s/ Joseph A. Wacker, III
-------------------------
Its Assistant Treasurer
The Manhattan Life Insurance Company
By /s/ J. N. Kotsonis
-------------------------------
Its Senior Vice-President & CFO
Central Life Assurance Company
By /s/ Robert B. Lindstrom
---------------------------------------
Its Vice-President - Private Placements
National Life Insurance Company
By /s/ R. Scott Higgins
--------------------
Its Vice President
National Life Investment Management
Company, Inc.
- - - - -9-
The Ohio Life Insurance Company
By /s/ Richard B. Kelly
-----------------------------
Its Senior Investment Officer
West American Insurance Company
By /s/ Richard B. Kelly
-----------------------------
Its Senior Investment Officer
The undersigned hereby acknowledge and agree to the
foregoing Agreement.
Tultex Corporation
By /s/ D. P. Shook
------------------
Its Vice-President
Dominion Stores, Inc.
By /s/ D. P. Shook
------------------
Its Vice-President
Logo 7, Inc.
By /s/ D. P. Shook
------------------
Its Vice-President
Universal Industries, Inc.
By /s/ D. P. Shook
------------------
Its Vice-President
- - - - -10-
EXHIBIT 10.20
Tultex Corporation
22 East Church Street
Martinsville, Virginia 24112
Second Amendment to Note Agreements
Dated as of March 1, 1994
Re: Note Agreements Dated as of June 1, 1992
And
$95,000,000 8.875% Senior Notes
Due June 1, 1999
To the Noteholders named in
Schedule I hereto which are also
signatories to this Second Amendment
to Note Agreement.
Ladies and Gentlemen:
Reference is made to the separate Note Agreements each dated as of June
1, 1992 (the "Original Note Agreements"), as amended by the Amendment No. 1 to
Note Agreement dated as of September 1, 1993 (the Original Note Agreements as
so amended are hereinafter referred to as the"Note Agreements"), between
Tultex Corporation, a Virginia corporation (the"Company"), and each of the
institutions named in Schedule I hereto, under and pursuant to which
$95,000,000 aggregate principal amount of 8.875% Senior Notes due June 1, 1999
of the Company (the "Notes") were originally issued. Terms used but not
otherwise defined herein shall have the meanings set forth in the Note
Agreements.
The Company hereby requests that you accept each of the amendments set
forth below in the manner herein provided:
Article 1. Waiver
Section 1.1. Waiver of Events of Default under Sections 5.7(c) and
5.12. The Noteholders hereby waive the Events of Default which have occurred
under Sections 5.7(c) and 5.12 of the Note Agreements as a result of the
guarantee by the Restricted Subsidiaries of the payment and performance of the
Company's obligations under the Credit Agreement.
Section-1.2. Waiver of Compliance with Section 5.8. The Noteholders
hereby waive the Company's compliance with the Fixed Charges Coverage Ratio
contained in Section 5.8 of the Note Agreements for the four consecutive
fiscal quarters ending on January 1, 1994; provided that such Fixed Charges
Coverage Ratio for the four consecutive fiscal quarters ending on January 1,
1994 is not less than 1.32 to 1.00.
Tultex Corporation Second Amendment to Note Agreements
Section 1.3. Waiver of Event of Default under Section 5.10. The
Noteholders hereby waive the Event of Default which occurred under Section 5.10
of the Note Agreements as a result of the payment by the Company on April 1,
1994 of a dividend with respect to its common stock and preferred stock.
Section 1.4. Waiver of Compliance with Section 5.16(b). The Noteholders
hereby waive the Company's compliance with Section 5.16(b) of the Note
Agreements with respect to delivery of its annual statements for the fiscal
year ended January 1, 1994; provided that such annual statements are delivered
not later than April 22, 1994.
Article-2.--Amendments of Note Agreements
Section 2.1. Amendment of Section 5.6(b). Section 5.6(b) of the Note
Agreements shall be amended in its entirety so that the same shall read
as follows:
(b) The Company will not permit Consolidated Tangible Net
Worth on April 3, 1993 and on the last day of each fiscal quarter
thereafter to be less than the sum of (i) the Consolidated Tangible Net
Worth required to be maintained on the last day of the immediately preceding
fiscal year, plus (ii) 33% of Consolidated Net Income for the immediately
preceding fiscal year of the Company (or if Consolidated Net Income is a
deficit figure for such year, then zero); provided, however, that on the
last day of the fiscal quarters ended April 2, 1994 and July 2, 1994, the
Company will not permit Consolidated Tangible Net Worth to be less than
the sum set forth below opposite such dates:
Date Amount
April 2, 1994 $133,000,000
July 2, 1994 $128,000,000
Section 2.2. Amendment of Section 5.7. Section 5.7 of the Note
Agreements shall be amended in its entirety so that the same shall read as
follows:
Section 5.7. Limitations on Debt. (a) On each Determination Date
which shall occur during the periods hereinafter set forth the Company
will not permit the Consolidated Funded Debt Ratio to exceed the ratio
set forth opposite such period:
- - - - -2-
Tultex Corporation Second Amendment to Note Agreements
Period Ratio
Closing Date through
January 2, 1993 .60 to 1
January 3, 1993 through
January 1, 1994 .55 to 1
January 2, 1994 through
April 2, 1994 .70 to 1
April 3, 1994 through
July 2, 1994 .60 to 1
July 3, 1994 through
October 1, 1994 .55 to 1
October 2, 1994 through
December 31, 1994 .65 to 1
January 1, 1995
and thereafter .50 to 1
(b) On each Determination Date which shall occur during the
periods hereinafter set forth the Company will not permit the ratio of the
aggregate outstanding principal amount of Consolidated Debt to Consolidated
Total Capitalization to exceed the ratio set forth opposite such period:
Period Ratio
Closing Date through September 26, 1992, and
for the periods beginning July 4, 1993 and
ending October 31, 1993 and beginning
April 3, 1994 and ending October 1, 1994 .70 to 1
September 27, 1992 and thereafter except for
the periods set forth above .65 to 1
(c) The Company will not permit any Restricted Subsidiary to be
or become liable for any Debt other than (w) Debt owing to the Company or
any Wholly-owned Restricted Subsidiary, (x) Debt of any Restricted
Subsidiary outstanding on March 1, 1994, (y) the Specified Guaranties and
(z) any Debt incurred by a corporation which becomes a Restricted
Subsidiary after the date hereof but which Debt was incurred prior to and
not in anticipation of such corporation becoming a Restricted Subsidiary.
(d) Any corporation which becomes a Restricted Subsidiary after
the date hereof shall for all purposes of this Section 5.7 be deemed to
have created, assumed or
- - - - -3-
Tultex Corporation Second Amendment to Note Agreements
incurred at the time it becomes a Restricted Subsidiary all Debt of such
corporation existing immediately after it becomes a Restricted Subsidiary.
Section 2.3. Amendment of Section 5.8. Section 5.8 of the Note
Agreements shall be amended in its entirety so that the same shall read as
follows:
Section 5.8. Fixed Charges Coverage Ratio. The Company will keep and
maintain the ratio of Net Income Available for Fixed Charges to Fixed Charges
for each period of four consecutive fiscal quarters which shall end within the
periods hereinafter set forth at not less than the ratio set opposite each
period in the table below:
Period Ratio
Closing Date through
June 27, 1992 1.40 to 1
June 28, 1992 through
January 1, 1994 1.32 to 1
January 2, 1994 through
April 2, 1994 .95 to 1
April 3, 1994 through
July 2, 1994 .85 to 1
July 3, 1994 through
October 1, 1994 1.20 to 1
October 2, 1994 through
December 31, 1994 1.65 to 1
January 1, 1995
and thereafter 1.75 to 1
Section 2.4. Amendment of Section 5.9. Section 5.9 of the Note
Agreements shall be amended by deleting clause "(m)" thereto and deleting the
"and" in the last line of clause "(l)" and inserting a "." in lieu thereof.
Section 2.5. Amendment of Section 5.10. Section 5.10 of the Note
agreements shall be amended in its entirety so that the same shall read as
follows:
Section 5.10. Restricted Payments;. The Company will not except as
hereinafter provided:
- - - - -4-
Tultex Corporation Second Amendment to Note Agreements
(a) Declare or pay any dividends, either in cash or property,
on any shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of capit
(b) Directly or indirectly, or through any Subsidiary,
purchase, redeem or retire any shares of its capital stock of any class or
any warrants, rights or options to purchase or acquire any shares of its
capital stock (other than in exchange for other shares of capital stock of
the Company or warrants, rights or options to purchase or acquire any
shares of its capital stock); or
(c) Make any other payment or distribution, either directly
or indirectly or through any Subsidiary, in respect of its capital stock;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options and all such
other payments or distributions being herein collectively called "Restricted
Payments"), if after giving effect thereto (i) any Event of Default shall have
occurred and be continuing, (ii) the Company would not be in compliance with
each and every covenant set forth in Section 5 of the Original Note Agreement,
or (iii) the Company could not incur at least $1.00 of additional Debt within
the limitations of %5.7(b). In addition, the Company will not make any
Restricted Payment if after giving effect thereto the aggregate amount of
Restricted Payments made during the period from and after December 28, 1991 to
and including the date of the making of the Restricted Payment in question
would exceed the sum of (i) $10,000,000, (ii) 33-1/3% of Consolidated Net
Income for such period, computed on a cumulative basis for such entire period
(or if such Consolidated Net Income is a deficit figure, then minus 100% of
such deficit), and (iii) the net proceeds to the Company from the issue or
sale of capital stock of the Company on or after the Closing Date to the
extent such net proceeds are not used to prepay or retire outstanding
Consolidated Debt.
The Company will not declare any dividend which constitutes a Restricted
Payment payable more than 80 days after the date of declaration thereof. For
the purposes of this Section 5.10, the amount of any Restricted Payment
declared, paid or distributed in property shall be deemed to be the greater of
the book value or fair market value (as determined in good faith by the Board
of Directors of the Company) of such property at the time of the making of the
Restricted Payment in question.
Section 2.6. Amendment of Section 5.11. Section 5.11 of the Note
Agreements shall be amended in its entirety so that the same shall read as
follows:
Section 5.11. Mergers, Consolidations and Sales of Assets. (a) The
Company will not, and will not permit any Restricted Subsidiary to, (i)
consolidate with or be a party to a merger with any other corporation or (ii)
make a Significant Disposition or sell, lease or otherwise dispose of all or
any substantial part (as defined in paragraph (d) of this Section 5.11) of the
assets of the Company and its Restricted Subsidiaries; provided, however, that:
- - - - -5-
Tultex Corporation Second Amendment to Note Agreements
(1) any Restricted Subsidiary may merge or consolidate with
or into the Company or any Wholly-owned Restricted Subsidiary so long as
in any merger or consolidation involving the Company, the Company shall
be the surviving or continuing corporation;
(2) the Company may consolidate or merge with any other
corporation if (i) the Company shall be the surviving or continuing corporation,
(ii) at the time of such consolidation or merger and after giving effect
thereto no Default or Event of Default shall have occurred and be continuing,
and (iii) after giving effect to such consolidation or merger the Company
would be permitted to incur at least $1.00 of additional Consolidated Funded
Debt under the provisions of Section 5.7(a); and
(3) any Restricted Subsidiary may sell, lease or otherwise
dispose of all or any substantial part of its assets to the Company or any
Wholly-owned Restricted Subsidiary.
(b) The Company will not permit any Restricted Subsidiary to issue or
sell any shares of stock of any class (including as "stock" for the purposes
of this %5.11, any warrants, rights or options to purchase or otherwise
acquire stock or other Securities exchangeable for or convertible into stock)
of such Restricted Subsidiary to any Person other than the Company or a
Wholly-owned Restricted Subsidiary, except for the purpose of qualifying
directors, or except in satisfaction of the validly pre-existing preemptive
rights of minority shareholders in connection with the simultaneous issuance
of stock to the Company and/or a Restricted Subsidiary whereby the Company
and/or such Restricted Subsidiary maintain their same proportionate interest
in such Restricted Subsidiary.
(c) The Company will not sell, transfer or otherwise dispose of any
shares of stock of any Restricted Subsidiary (except to qualify directors) or
any Debt of any Restricted Subsidiary, and will not permit any Restricted
Subsidiary to sell, transfer or otherwise dispose of (except to the Company or
a Wholly-owned Restricted Subsidiary) any shares of stock or any Debt of any
other Restricted Subsidiary, unless:
(1) simultaneously with such sale, transfer, or disposition,
all shares of stock and all Debt of such Restricted Subsidiary at the time
owned by the Company and by every other Restricted Subsidiary shall be
sold, transferred or disposed of as an entirety;
(2) the Board of Directors of the Company shall have
determined, as evidenced by a resolution thereof, that the proposed sale,
transfer or disposition of said shares of stock and Debt is in the best
interests of the Company;
(3) said shares of stock and Debt are sold, transferred or
otherwise disposed of to a Person, for a cash consideration and on terms
reasonably deemed by the Board of Directors to be adequate and
satisfactory;
- - - - -6-
Tultex Corporation Second Amendment to Note Agreements
(4) the Restricted Subsidiary being disposed of shall not have
any continuing investment in the Company or any other Restricted Subsidiary
not being simultaneously disposed of; and
(5) such sale or other disposition does not involve a
substantial part (as hereinafter defined) of the assets of the Company and
its Restricted Subsidiaries.
(d) As used in this Section 5.11, a sale, lease or other disposition
of assets shall be deemed to be a "substantial part" of the assets of the
Company and its Restricted Subsidiaries if the book value of such assets,
when added to the book value of all other assets sold, leased or otherwise
disposed of by the Company and its Restricted Subsidiaries (other than in the
ordinary course of business) (i) during the 12-month period ending with the
date of such sale, lease or other disposition, exceeds 5% of Consolidated
Assets, determined as of the end of the immediately preceding fiscal year, or
(ii) during the period beginning on the date of this Agreement and ending on
the date of such sale, lease or other disposition, exceeds an amount equal to
15% of Consolidated Assets determined as of March 28, 1992.
(e) The Company will not, and will not permit any Restricted
Subsidiary to, sell, lease or otherwise dispose of any assets (other than in
the ordinary course of business) if at the time of such sale, lease or other
disposition and after giving effect thereto a Default or Event of Default
shall have occurred and be continuing. Notwithstanding the foregoing provisions
of this Section 5.11, the Company may make a Significant Disposition if (i)
such Significant Disposition shall be for an amount not less than the fair
market value of such assets as determined in good faith by the board of
directors of the Company, (ii) after giving effect to such Significant
Disposition, no Default or Event of Default shall exist under this Agreement,
(iii) all of the proceeds of such Significant Disposition are received in cash
and are held in a segregated account with a bank or financial institution
having capital and surplus in excess of $250,000,000, and (iv) within 30 days
of the date of such Significant Disposition an amount equal to the Net
Proceeds are used pro rata (based on the unpaid principal amount thereof then
outstanding together with any applicable prepayment premium) to (x) prepay the
Notes, together with a premium equal to the Make-Whole Amount, as if such
Notes were prepaid in accordance with Section 2.2, and (y) retire Funded Debt
of the Company owing to Wachovia Bank of North Carolina, N.A., pursuant to the
Term Loan Agreement.
"Net Proceeds" as used herein, shall mean with respect to any Significant
Disposition the proceeds received by the Company and its Restricted
Subsidiaries from such Significant Disposition after deducting therefrom sales,
income, capital gain and other federal, state and local taxes, and selling fees
and expenses associated therewith.
Section 2.7. Addition of Section 5.18. Section 5 of the Note
Agreements shall be amended by the addition thereto of a new Section 5.18 w
hich shall read as follows:
- - - - -7-
Tultex Corporation Second Amendment to Note Agreements
Section 5.18. Amendment of Bank Credit Agreements. (a) The
Company hereby agrees that prior to effecting any amendment or
modification of any Bank Credit Agreement, it will give written notice of
such fact to all holders of Notes then outstanding at least 15 days prior
to the execution and delivery of such amendment or modification, and the
Company agrees that, upon the request of not less than 66-2/3% in aggregate
principal amount of the Notes then outstanding it will promptly execute
and deliver an amendment satisfactory to such holders incorporating similar
changes into the provisions of this Agreement; provided that without the
prior written consent of 66-2/3% in aggregate principal amount of the
Notes then outstanding, no such amendment or modification shall be
executed which will change the time of payment of principal, premium, if
any, or interest or any other obligation owing under the Bank Credit
Agreements, or change the principal amount thereof, change the rate of
interest thereon or increase the fee payable to the Bank Lenders under
the Bank Credit Agreements.
(b) The Company will not, directly or indirectly, pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any Bank Lender as consideration for or as
an inducement to entering into any waiver, amendment or modification of any
of the terms or provisions of the Bank Credit Agreements, unless such
remuneration is concurrently offered on the same terms ratably (based on
the unpaid principal amount thereof then outstanding) to the holders of
all Notes then outstanding.
Section 2.8. Addition of Section 5.19. Section 5 of the Note Agreements
shall be amended by the addition thereto of a new Section 5.19 which shall
read as follows:
Section 5.19. New Guarantors;. The Company shall cause any
Restricted Subsidiary which executes a Joinder Agreement to the Credit
Agreement or guarantees the Company's obligations under the Term Loan
Agreement from and after March 1, 1994 to enter into the Guaranty
Assumption Agreement attached as Exhibit 1 to the Noteholder Guaranty
Agreement.
Section 2.9. Amendment of Section 8.1. Section 8.1 of the
Note Agreements shall be amended by the addition thereto of definitions
which shall read as follows:
"Bank Credit Agreements" shall mean, collectively, the Credit
Agreement and the Term Loan Agreement.
"Bank Lenders" shall mean the banks, financial institutions and
any other enders which are from time to time parties to the Bank Credit
Agreements.
"Credit Agreement" shall mean the Credit Agreement dated as of
September 30, 1993, as amended from time to time, among the
Company, its Subsidiaries and related parties, NationsBank of
North Carolina, N.A., as Agent, and certain other banks
identified therein.
- - - - -8-
Tultex Corporation Second Amendment to Note Agreements
" Logo 7" shall mean the business and assets of Logo 7, Inc., a
Virginia corporation, and a direct Wholly-owned Subsidiary of the Company.
"Noteholder Guaranty Agreement" shall mean the Guaranty Agreement
dated as of March 1, 1994 from the Subsidiary Guarantors in favor of the
holders from time to time of the Notes.
"Significant Disposition" shall mean the sale, transfer and/or
other disposition of all or any part of the assets of Logo 7 or Universal,
including, without limitation, a transfer, sale and/or disposition which
shall be effected by (i) a sale, transfer and/or disposition to another
Person (including an Affiliate of the Company or a Restricted Subsidiary),
(ii) a distribution to shareholders of the Company (whether or not in
exchange, in whole or in part, for capital stock of the Company), and/or
(iii) a sale, transfer and/or disposition of capital stock (or other
equity interest) of Logo 7 or Universal.
"Specified Guaranties" shall mean the Noteholder Guaranty
Agreement, the Guaranty Agreement dated as of March 1, 1994 from the
Subsidiary Guarantors in favor of Wachovia Bank of North Carolina, N.A.
and the Guarantee set forth in the Credit Agreement from the Subsidiary
Guarantors in favor of the banks which are parties to the Credit Agreement.
"Subsidiary Guarantors" shall mean Logo 7, Inc., a Virginia
corporation, Dominion Stores, Inc., a Virginia corporation, and Universal
Industries, Inc., a Massachusetts corporation, and any Subsidiary which
enters into a Guaranty Assumption Agreement in the form attached to the
Noteholder Guaranty Agreement.
"Term Loan Agreement" shall mean the Agreement for Amended and
Restated Term Loan Agreement dated as of March 1, 1994 (which amends and
restates the Term Loan Agreement dated September 11, 1989, as amended
from time to time), among the Company, and Wachovia Bank of North
Carolina, N.A., (formerly known as Wachovia Bank and Trust Company, N.A.).
"Universal" shall mean the business and assets of Universal
Industries, Inc., a Massachusetts corporation, and a direct Wholly-owned
Subsidiary of the Company.
Article-3.--Miscellaneous
Section 3.1. No Legend Required. References in the Note Agreements or
in any Note, certificate, instrument or other document to the Note Agreements
shall be deemed to be references to the Note Agreements as amended hereby and
as further amended from time to time.
Section 3.2. Effect of Amendment. Except as expressly amended hereby,
the Company agrees that the Note Agreements, the Notes and all other documents
and agreements executed by the Company in connection with the Note Agreements
in favor of
- - - - -9-
Tultex Corporation Second Amendment to Note Agreements
the Noteholders are ratified and confirmed and shall remain in full force and
effect and that it has no set-off, counterclaim or defense with respect to any
of the foregoing.
Section 3.3. Successors and Assigns. This Second Amendment to Note
Agreements shall be binding upon the Company and its successors and assigns and
shall inure to the benefit of the Noteholders and to the benefit of the
Noteholders' successors and assigns, including each successive holder or
holders of any Notes.
Section 3.4. Amendments to Bank Credit Agreements. The Company
represents and warrants that it has delivered, or concurrently with the
execution and delivery of this Second Amendment to Note Agreements is
delivering, to all holders of the outstanding Notes and their special counsel,
true and correct copies of the most recent amendments to the Bank Credit
Agreements which have been approved by the holders of at least 66-2/3% of the
aggregate principal amount of the outstanding Notes. The Company further
represents and warrants that, except as described on Exhibit A attached
hereto, it has not paid or promised to pay, any remuneration, whether by way of
additional or supplemental interest, fee or otherwise, to any Bank Lender as
consideration for or as an inducement to entering into any waiver, amendment
or other modification of any of the terms or provisions of the Bank Credit
Agreements.
Section 3.5. Requisite Approval; Fees and Expenses. This Second
Amendment to Note Agreements shall not be effective until (a) the Company and
the holders of 66-2/3% in aggregate principal amount of all Notes outstanding
on the date hereof shall have executed this Second Amendment to Note
Agreements, (b) the Company, the Subsidiary Guarantors, each of the holders of
the Notes and each of the parties to the Bank Credit Agreements shall have
executed the Intercreditor Agreement dated as of March 1, 1994, (c) the
Company shall have fully complied with the provisions of Section 3.4, (d) each
Noteholder shall have received its pro rata share (based on the unpaid
principal amount of its Notes outstanding) of the fee in the aggregate amount
of $190,000 as consideration for and as an inducement to enter into this
Second Amendment to Note Agreements, and (e) the Company shall have paid all
out-of-pocket expenses incurred by the Noteholders in connection with the
consummation of the transactions contemplated by this Second Amendment to
Note Agreements, including, without limitation, the fees, expenses and
disbursements of Chapman and Cutler which are reflected in statements of such
counsel rendered on or prior to the effective date of this Second Amendment to
Note Agreements.
Section 3.6. Counterparts. This Second Amendment to Note Agreements
may be executed in any number of counterparts, each executed counterparts
constituting an original but all together only one agreement.
- - - - -10-
Tultex Corporation Second Amendment to Note Agreements
IN WITNESS WHEREOF, the Company has executed this Second Amendment to
Note Agreements as of the day and year first above written.
Tultex Corporation
By /s/ D. P. Shook
------------------
Its Vice-President
- - - - -11-
Tultex Corporation Second Amendment to Note Agreements
This Second Amendment to Note Agreements is accepted and agreed to as of
the day and year first above written.
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By /s/ Jon M. Davidson
---------------------------------
Its Assistant Director-Securities
Investment
By /s/ Clint Woods
---------------
Its Counsel
- - - - -12-
Tultex Corporation Second Amendment to Note Agreements
This Second Amendment to Note Agreements is accepted and agreed to as of
the day and year first above written.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By /s/ William E. Lord
-------------------------
Its Second Vice-President
- - - - -13-
Tultex Corporation Second Amendment to Note Agreements
This Second Amendment to Note Agreements is accepted and agreed to as of
the day and year first above written.
AID ASSOCIATION FOR LUTHERANS
By /s/ James Abitz
-----------------------------
Its Vice-President-Securities
By /s/ R. Jerry Scheel
-------------------------
Its Second Vice-President
-Securities
- - - - -14-
Tultex Corporation Second Amendment to Note Agreements
This Second Amendment to Note Agreements is accepted and agreed to as of
the day and year first above written.
CONNECTICUT MUTUAL LIFE
INSURANCE COMPANY
By /s/ Mary Ann McCarthy
--------------------------
Its Sr. Investment Officer
- - - - -15-
Tultex Corporation Second Amendment to Note Agreements
This Second Amendment to Note Agreements is accepted and agreed to as of
the day and year first above written.
GREAT NORTHERN INSURED ANNUITY
CORPORATION
By /s/ William D. Koski
----------------------------
Its Assistant Vice-President
- - - - -16-
Tultex Corporation Second Amendment to Note Agreements
This Second Amendment to Note Agreements is accepted and agreed to as of
the day and year first above written.
SAXON & CO.
By /s/ Josepy A. Tucker, III
-------------------------
Its Assistant Treasurer
- - - - -17-
Tultex Corporation Second Amendment to Note Agreements
This Second Amendment to Note Agreements is accepted and agreed to as of
the day and year first above written.
THE MANHATTAN LIFE INSURANCE
COMPANY
By /s/ J. N. Kotsonis
-------------------------
Its Senior Vice-President
& CFO
- - - - -18-
Tultex Corporation Second Amendment to Note Agreements
This Second Amendment to Note Agreements is accepted and agreed to as of
the day and year first above written.
CENTRAL LIFE INSURANCE COMPANY
By /s/ Robert B. Lindstrom
--------------------------
Its Vice-President-Private
Placements
- - - - -19-
Tultex Corporation Second Amendment to Note Agreements
This Second Amendment to Note Agreements is accepted and agreed to as of
the day and year first above written.
NATIONAL LIFE INSURANCE COMPANY
By /s/ R. Scott Higgins
--------------------
Its Vice-President
National Life Investment Management
Company, Inc.
- - - - -20-
Tultex Corporation Second Amendment to Note Agreements
This Second Amendment to Note Agreements is accepted and agreed to as of
the day and year first above written.
THE OHIO LIFE INSURANCE COMPANY
By /s/ Richard B. Kelly
-----------------------------
Its Senior Investment Officer
- - - - -21-
Tultex Corporation Second Amendment to Note Agreements
This Second Amendment to Note Agreements is accepted and agreed to as of
the day and year first above written.
WEST AMERICAN INSURANCE COMPANY
By /s/ Richard B. Kelly
-----------------------------
Its Senior Investment Officer
- - - - -22-
Tultex Corporation Second Amendment to Note Agreements
Schedule I
Principal Amount
Noteholder of Notes
Principal Mutual Life Insurance Company $30,000,000
Massachusetts Mutual Life Insurance Company $15,000,000
Aid Association for Lutherans $10,000,000
Connecticut Mutual Life Insurance Company $10,000,000
Great Northern Insured Annuity Corporation $10,000,000
Saxon & Co. $ 5,000,000
The Manhattan Life Insurance Company $ 1,000,000
Central Life Assurance Company $ 5,000,000
National Life Insurance Company $ 5,000,000
The Ohio Life Insurance Company $ 1,000,000
West American Insurance Company $ 3,000,000
-----------
Total $95,000,000
- - - - -23-
EXHIBIT 10.21
AGREEMENT FOR AMENDED AND RESTATED
TERM LOAN AGREEMENT
THIS AGREEMENT is made as of the 1st day of March,
1994, by and among TULTEX CORPORATION, a Virginia corporation
(the "Borrower"), and WACHOVIA BANK OF NORTH CAROLINA, N.A., a
national banking association (formerly known as Wachovia Bank
and Trust Company, N.A. and hereinafter called the "Bank").
BACKGROUND
The Borrower, Tulstar Factors, Inc., a New York
corporation ("Tulstar"), and the Bank have entered into a
certain Term Loan Agreement dated September 11, 1989 (the
"Original Term Loan Agreement").
The Original Term Loan Agreement has been amended
pursuant to (i) a First Amendment to Term Loan Agreement dated
as of January 30, 1992 (the "First Amendment") between the
Borrower, Tulstar and the Bank, (ii) a Second Amendment to Term
Loan Agreement dated as of April 23, 1992 (the "Second
Amendment") between the Borrower, Tulstar and the Bank, (iii) a
Third Amendment to Term Loan Agreement dated as of October 2,
1992 (the "Third Amendment") between the Borrower, Tulstar and
the Bank, (iv) a Fourth Amendment to Term Loan Agreement dated
as of November 30, 1992 (the "Fourth Amendment") between the
Borrower, Tulstar and the Bank; and (v) a Fifth Amendment to
Term Loan Agreement dated as of July 4, 1993 (the "Fifth
Amendment") between the Borrower, Tulstar and the Bank (the
Original Term Loan Agreement, as amended by the First Amendment,
the Second Amendment, the Third Amendment, the Fourth Amendment
and the Fifth Amendment, being hereinafter referred to as the
"Existing Loan Agreement").
The Borrower has requested certain waivers with
respect to the Existing Loan Agreement. The Borrower has also
requested certain further amendments to the Existing Loan
Agreement, including without limitation the deletion of Tulstar
as a party thereto, and the Bank is willing to grant such
waivers and make such amendments to the Existing Loan Agreement.
The Bank has agreed to grant such waivers and the Borrower and
the Bank have agreed to effect such amendments by amending and
restating the Existing Loan Agreement in its entirety, all upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and
the mutual promises contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Borrower and the Bank, intending to be
legally bound hereby, agree as follows:
A. The Bank hereby confirms and agrees to a waiver of
any default or event of default under the Existing Loan
Agreement which existed or may have existed prior to the date
hereof on account of a violation of the Fixed Charges Coverage
Ratio contained or incorporated by reference in the Existing
Loan Agreement. The Borrower shall, however, from and after the
date hereof, comply with the terms and provisions of this
Agreement including without limitation the maintenance of the
Fixed Charges Covenant Ratio contained herein.
B. The Bank hereby waives the Borrower's compliance
with any provision contained or incorporated by reference in the
Existing Loan Agreement which prohibits guaranties by the
Borrower in order to permit each of the Restricted Subsidiaries
to guarantee the payment and performance of the Borrower's
obligations under the Notes, the Note Agreements and the Credit
Agreement.
C. The Bank hereby confirms and agrees to a waiver of
any default or event of default under the Existing Loan
Agreement which existed or may have existed prior to the date
hereof on account of a failure by the Borrower to deliver to the
Bank within 90 days after the close of each fiscal year of the
Borrower (1) copies of annual financial statements of the
Borrower and its Restricted Subsidiaries and (2) certificates of
the accountants with respect to such annual financial statements.
D. The Bank hereby confirms and agrees to a waiver of
any default or event of default under any provision of the
Existing Loan Agreement restricting payment of dividends which
default or event of default existed or may have existed prior to
the date hereof as a result of the payment by the Company on
April 1, 1994 of a dividend with respect to its common stock and
preferred stock.
E. The Existing Loan Agreement is hereby amended and
restated in itsentirety to read as follows:
AMENDED AND RESTATED TERM LOAN AGREEMENT
THIS AMENDED AND RESTATED TERM LOAN AGREEMENT, dated
as of March 1, 1994, by and among TULTEX CORPORATION, a Virginia
corporation (the "Borrower") and WACHOVIA BANK OF NORTH
CAROLINA, N.A., a national banking association (hereinafter
called the "Bank").
BACKGROUND
The Borrower and the Bank desire to enter into this
Amended and Restated TermLoan Agreement in order to amend and
restate in its entirety that certain Term Loan Agreement, dated
September 11, 1989, by and among the Borrower, Tulstar Factors,
Inc. ("Tulstar") and the Bank, as amended by (i) a First
Amendment to Term Loan Agreement dated as of January 30, 1992
(the "First Amendment") between the Borrower, Tulstar and the
Bank, (ii) a Second Amendment to Term Loan Agreement dated as of
April 23, 1992 (the "Second Amendment") between the Borrower,
Tulstar and the Bank, (iii) a Third Amendment to Term Loan
Agreement dated as of October 2, 1992 (the "Third Amendment")
between the Borrower, Tulstar and the Bank, (iv) a Fourth
Amendment to Term Loan Agreement dated as of November 30, 1992
(the "Fourth Amendment") between the Borrower, Tulstar and the
Bank; and (v) a Fifth Amendment to Term Loan Agreement dated as
of July 4, 1993 (the "Fifth Amendment") between the Borrower,
Tulstar and the Bank;
NOW, THEREFORE, the parties agree as follows:
- - - - -2-
1. REPRESENTATIONS.
1.1 Representations. The Borrower represents and
warrants to the Bank (which representations and warranties will survive
the delivery of the Notes and this Agreement that:
(a) The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction in which it was incorporated, and has the corporate
power and legal authority to own its property and to carry on
its business as now being conducted and is duly qualified to do
business in every jurisdiction where such qualification is
necessary. The Borrower has the corporate power and authority
to execute and perform this Agreement, to borrow hereunder and
to execute and deliver the Notes herein referred to and that to
do so will not violate any law, its charter or by-laws or any
other agreement or instrument to which it is a party.
(b) This Agreement and the Notes have been duly
executed and delivered by the Borrower and constitute the legal,
valid and binding obligations of the Borrower enforceable in
accordance with its terms.
2. NOTES.
2.1 Notes. The Borrower is justly indebted to the
Bank in the principal sum of $20,833,333.33, evidenced by a note
(the "Term Note") in the form of Exhibit "A" attached hereto of
even date herewith. The Term Note shall be payable to the order
of the Bank, shall be dated the date hereof, shall be payable as
provided in Section 2.2 hereof and shall bear interest as
provided in Section 2.3 hereof. The Borrower is also justly
indebted to the Bank in the principal sum of $2,019,000.00,
evidenced by a note (the "Swap Note") in the form of Exhibit "B"
attached hereto of even date herewith. The Swap Note shall be
payable to the order of the Bank, shall be dated the date
hereof, shall be payable as provided in Section 2.2 hereof and
shall bear interest as provided in Section 2.3 hereof. The Term
Note represents the unpaid principal balance of that certain
Note (as defined in the Existing Loan Agreement); and the Swap
Note represents the amount the Bank was required to pay and for
which the Borrower agreed to be liable as contemplated by a
letter agreement, dated February 24, 1994, a copy of which is
attached hereto as Exhibit "C" and incorporated herein by
reference (the "Letter Agreement"), between the Borrower and the
Bank, in order to unwind and settle the swap arrangements
entered into by the Bank in connection with the $50,000,000 loan
made by the Bank to the Borrower pursuant to the Original Loan
Agreement. The terms and conditions of this Agreement are
incorporated in the Term Note and the Swap Note by reference as
though the same were written therein. The Term Note and the
Swap Note shall hereinafter collectively be referred to as the
"Notes."
2.2 Repayment of Notes. The Borrower promises and
agrees to pay to the Bank the Notes as follows:
(a) Interest shall be paid in arrears on each Payment
Date and on the Maturity Date.
- - - - -3-
(b) Principal of the Term Note shall be paid in nine
(9) equal quarterly installments of $2,083,333.33 on each
Payment Date, commencing April 30, 1994, together withone final
installment on the Maturity Date equal to the unpaid principal
balance of, and accrued but unpaid interest on, the loan
evidenced by the Term Note. Principal of the Swap Note shall be
paid in nine (9) equal quarterly installments of $201,900.00 on
each Payment Date commencing April 30, 1994, together with one
final installment on the Maturity Date equal to the unpaid
principal balance of, and accrued but unpaid interest on, the
loan evidenced by the Swap Note.
2.3 Interest Rates. (a) The Notes shall bear
interest at the rate per annum equal to the Adjusted London
Interbank Offered Rate plus three-fourths of one percent (3/4 of
1%).
The "Adjusted London Interbank Offered Rate" means a
rate per annum equal to the quotient obtained (rounded, if
necessary, to the nearest 1/100th of 1%) by dividing (i) the
London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
The "London Interbank Offered Rate" means the rate
per annum determined on the basis of the offered rate for
deposits in Dollars of amounts equal or comparable to the
aggregate principal amount of the Notes offered for a ninety
(90) day term, which rates appear on the Reuters Screen LIBO
Page as of 11:00 a.m., London time, two (2) Euro-Dollar Business
Days prior to the date of the Notes (which rate shall apply
until the first Payment Date after the date hereof) and
thereafter prior to each Payment Date (which rate shall apply
for such period between such Payment Date and the next
succeeding Payment Date), provided that (i) if more than one
such offered rate appears on the Reuters Screen LIBO Page, the
"London Interbank Offered Rate" will be the arithmetic average
(rounded, if necessary, to the nearest 1/100th of 1%) of such
offered rates; (ii) if no such offered rates appear on such
page, the "London Interbank Offered Rate" will be the arithmetic
average (rounded, if necessary, to the nearest 1/100th of 1%) of
rates quoted by not less than two major banks in New York City,
selected by the Bank, at approximately 10:00 a.m., New York City
time, as of such dates, for deposits in Dollars offered to
leading European banks for comparable periods in an amount
comparable to the aggregate principal amount of the Notes.
"Euro-Dollar Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement for a member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" (or in respect
of any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar loans is
determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of the
Bank to United States residents). The Adjusted London Interbank
Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve
Percentage.
(b) Any overdue principal of and, to the extent
permitted by law, overdue interest on the Notes shall bear
interest, payable on demand, for each day until paid at a rate
per annum equal to 150% of the Prime Rate.
- - - - -4-
(c) Interest on the Notes shall be computed on the
basis of a year of 360 days and paid for the actual number of
days elapsed (including the first day but excluding the last
day).
2.4 General Provisions Concerning Payments. (a) All
payments of principal of, or interest on, the Notes shall be
made in Federal or other funds immediately available to the Bank
at its office in Winston-Salem, North Carolina, or at such other
place as the Bank shall direct in writing, not later than 12:00
noon, Winston-Salem, North Carolina time.
(b) Whenever during any periods that the Loans bear
interest at the rate described in paragraph (a) of Section 2.3,
any payment of principal of, or interest on, the Loans shall be
due on a day which is not a Euro-Dollar Business Day, the date
for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day. Whenever during any periods that the
Loans bear interest based upon the Prime Rate, any payment of
principal of, or interest on, the Loans shall be due on a day
which is not a Business Day, the date for payment thereof shall
be extended to the next succeeding Business Day. If the date
for any payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such extended
time.
2.5 Basis for Determining Interest Rate Inadequate or
Unfair. If on or as of any Payment Date:
(i) the Bank determines reasonably and in good faith
that deposits in Dollars (in the aggregate outstanding principal
amount of the Loans) are not then being offered in the
Euro-Dollar market for a 90-day term, or
(ii) the Bank determines reasonably and in good
faith that the London Interbank Offered Rate, as determined by
the Bank will not adequately and fairly reflect the cost to the
Bank of funding the Loans, the Bank shall forthwith give notice
thereof to the Borrower, whereupon until the Bank notifies the
Borrower that the circumstances giving rise to such suspension no
longer exist, the obligations of the Bank to carry the Loans at the
interest rate described in paragraph (a) of Section 2.3 shall be
suspended.
2.6 Illegality. If, after the date hereof, the
adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof (any such governmental authority, bank or
agency being referred to as an "Authority" and any such event
being referred to as a "Change of Law"), or compliance by the
Bank with any request or directive (whether or not having the
force of law) of any Authority shall make it unlawful or
impossible for the Bank to continue to carry the Loans at the
interest rate described in paragraph (a) of Section 2.3 and the
Bank shall so notify the Borrower, whereupon until the Bank
notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, the obligation of the Bank to carry
the Loans at the interest rate described in paragraph (a) of
Section 2.3 shall be suspended.
- - - - -5-
2.7 Increased Cost and Reduced Return. (a) If after
the date hereof, a Change of Law or compliance by the Bank with
any request or directive (whether or not having the force of
law) of any Authority:
(i) shall subject the Bank to any tax, duty or other
charge with respect to the Loans or the Notes or its obligation
to carry the Loans at the interest rate described in paragraph
(a) of Section 2.3, or shall change the basis of taxation of
payments to the Bank of the principal of or interest on the
Loans or any other amounts due under this Agreement in respect
of the Loans or its obligation to carry the Loans at the
interest rate described in paragraph (a) of Section 2.3 (except
for changes in the rate of tax on the overall net income of the
Bank imposed by the jurisdiction in which the Bank's principal
executive office is located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding any such
requirement included in an applicable Euro-Dollar Reserve
Percentage) against assets of, deposits with or for the account
of, or credit extended by, the Bank; or
(iii) shall impose on the Bank or the London
interbank market any other condition affecting the Loans, the
Notes or its obligation to carry the Loans at the interest rate
described in paragraph (a) of Section 2.3;
and the result of any of the foregoing is to increase
the cost to the Bank of carrying the Loans at the interest rate
described in paragraph (a) of Section 2.3, or to reduce the
amount of any sum received or receivable by the Bank under this
Agreement or under the Notes with respect thereto, by an amount
deemed by the Bank to be material, then, within 15 days after
demand by the Bank, the Borrower shall pay to the Bank such
additional amount or amounts as will compensate the Bank for
such increased cost or reduction.
(b) If the Bank shall have determined that after the
date hereof the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof, or
compliance by the Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) of any
Authority, has or would have the effect of reducing the rate of
return on the Bank's capital as a consequence of its obligations
under this Agreement to a level below that which the Bank could
have achieved but for such adoption, change or compliance
(taking into consideration the Bank's policies with respect to
capital adequacy) by an amount deemed by the Bank to be
material, then from time to time, within 15 days after demand by
the Bank, the Borrower shall pay to the Bank such additional
amount or amounts as will compensate the Bank for such reduction.
(c) The Bank will promptly notify the Borrower of any
event of which it has knowledge, occurring after the date
hereof, which will entitle the Bank to compensation pursuant to
this Section. A certificate of the Bank claiming compensation
under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the
- - - - -6-
absence of manifest error. In determining such
amount, the Bank may use any reasonable averaging and
attribution methods.
2.8 Conversion of Loans to Prime Rate Loans. If (i)
the obligation of the Bank to continue to carry the Loans at the
interest rate described in paragraph (a) of Section 2.3 has been
suspended pursuant to Section 2.5 or Section 2.6, or (ii) the
Bank has demanded compensation under Section 2.7, and the
Borrower, by at least one Business Day's prior notice to the
Bank shall have elected that the provisions of this Section
shall apply, then, unless and until the Bank notifies the
Borrower that the circumstances giving rise to such suspension
or demand for compensation no longer apply, the Loans shall bear
interest at the Prime Rate.
3. PREPAYMENTS.
3.1 Voluntary Prepayments. The Borrower may prepay
the indebtedness evidenced by either Note in whole or in part
without prepayment penalty, premium or fee.
3.2 Required Prepayments. In the event the Borrower
shall issue any stock or other securities other than to its
officers and employees pursuant to a currently existing stock
option plan ("Issuance") or shall sell or dispose of any of its
property or assets (including without limitation a sale of the
assets or stock of Logo 7, Inc.) other than in the ordinary
course of business ("Asset Sale"), the Borrower shall be
required to apply and pay to the Bank, as the holder of the
Notes, and to the holders of the "Notes" (as defined in the Note
Agreements), on a pro rata basis, on the date of such Issuance
or Asset Sale, as the case may be, as a prepayment thereof, in
whole or in part, the proceeds of such Issuance or Asset Sale,
as the case may be, after deducting therefrom all costs and
expenses incurred by the Borrower in connection therewith. Any
such prepayment of the Notes shall be applied to installments of
the Notes in inverse order of maturities.
4. CONDITIONS.
4.1 Conditions. The execution and delivery of this
Agreement by the Bank and the efficacy of this Agreement,
insofar as the Bank is concerned, are subject to satisfaction of
the following conditions precedent:
(a) Those conditions set forth in paragraphs (a),
(c), (d) and (h) of the Letter Agreement shall have been
satisfied;
(b) The Bank shall have received the Bank Guaranty
Agreement;
(c) The Borrower, the Subsidiary Guarantors, the
Bank, and each of the parties to the Note Agreements and the
Credit Agreement shall have executed and delivered the
Intercreditor Agreement dated as of March 1, 1994; and
(d) The Bank shall have received (i) a copy of the
resolutions of the Board of Directors of the Borrower, certified
as of the date hereof, authorizing the execution and delivery of
this Agreement and the Notes, (ii) a copy of the resolutions of
the Board of Directors of each
- - - - -7-
of Dominion Stores, Inc., Logo 7, Inc. and Universal
Industries, Inc., certified as of the date hereof, authorizing
the execution and delivery of the Guaranty Agreement, and (iii)
such additional documents as the Bank or counsel for the Bank
may reasonably request.
5. COVENANTS.
5.1 Corporate Existence, Etc. The Borrower will
preserve and keep in full force and effect, and will cause each
Restricted Subsidiary to preserve and keep in full force and
effect, (i) its corporate existence; provided, however, that the
foregoing shall not prevent any transaction permitted by Section
5.11, and (ii) all licenses and permits necessary to the proper
conduct of its business; provided, however, that the foregoing
shall not require the Borrower to maintain licenses and permits
if the failure to maintain such licenses or permits would not
have a material adverse effect on the business, prospects,
profits, properties or condition (financial or otherwise) of the
Borrower and its Restricted Subsidiaries taken as a whole or on
the ability of the Borrower to perform its obligations under the
Notes and this Agreement.
5.2 Insurance. The Borrower will maintain, and will
cause each Restricted Subsidiary to maintain, insurance coverage
by financially sound and reputable insurers accorded a rating by
A.M. Best Company, Inc. of A:XII or higher at the time of
issuance of any such policy and in such forms and amounts and
against such risks as are customary for corporations of
established reputation engaged in the same or a similar business
and owning and operating similar properties; provided, however,
that if during the term of any such insurance policy, the rating
accorded the insurer shall be less than A:XII, the Borrower, on
the date of renewal of any such policy (or, if such change in
rating shall occur within 90 days prior to such renewal date,
within 90 days of the date of such change in rating), will
obtain such insurance policy from an insurer accorded such a
rating.
5.3 Taxes, Claims for Labor and Materials, Compliance
with Laws. The Borrower will promptly pay and discharge, and
will cause each Restricted Subsidiary promptly to pay and
discharge, all lawful taxes, assessments and governmental
charges or levies imposed upon the Borrower or such Restricted
Subsidiary, respectively, or upon or in respect of all or any
part of the property or business of the Borrower or such
Restricted Subsidiary, all trade accounts payable in accordance
with usual and customary business terms, and all claims for
work, labor or materials, which if unpaid might become a Lien
upon any property of the Borrower or such Restricted Subsidiary;
provided, however, that the Borrower or such Restricted
Subsidiary shall not be required to pay any such tax,
assessment, charge, levy, account payable or claim if (i) the
validity, applicability or amount thereof is being contested in
good faith by appropriate actions or proceedings which will
prevent the forfeiture or sale of any property of the Borrower
or such Restricted Subsidiary or any material interference with
the use thereof by the Borrower or such Restricted Subsidiary,
and (ii) the Borrower or such Restricted Subsidiary shall set
aside on its books, reserves deemed by it to be adequate with
respect thereto. The Borrower will promptly comply and will
cause each Subsidiary to comply with all laws, ordinances or
governmental rules and regulations to which it is subject
including, without limitation, the Occupational Safety and
Health Act of 1970, as amended, ERISA and all laws, ordinances,
governmental rules and regulations relating to environmental
protection in all applicable jurisdictions, the violation of
which could (i) materially and adversely affect the properties,
business, prospects, profits or
- - - - -8-
condition of the Borrower and its Restricted
Subsidiaries, (ii) result in any Lien not permitted under
Section 5.9 or (iii) have a material adverse effect on the
ability of the Borrower to perform its obligations under the
Notes and this Agreement.
5.4- Maintenance, Etc. The Borrower will maintain,
preserve and keep, and will cause each Restricted Subsidiary to
maintain, preserve and keep, its properties which are used and
useful in the conduct of its business (whether owned in fee or a
leasehold interest) in good repair and working order and from
time to time will make all necessary repairs, replacements,
renewals and additions so that at all times the efficiency
thereof shall be maintained.
5.5 Nature of Business. Neither the Borrower nor any
Restricted Subsidiary will engage in any business if, as a
result, the general nature of the business, taken on a
consolidated basis, which would then be engaged in by the
Borrower and its Restricted Subsidiaries would be substantially
changed from the activewear manufacturing and licensed apparel
business engaged in by the Borrower and its Restricted
Subsidiaries on the date of this Agreement.
5.6 Consolidated Tangible Net Worth. (a) The
Borrower will not permit Consolidated Tangible Net Worth on each
of the respective dates hereinafter set forth to be less than
the amount set opposite such date:
DATE AMOUNT
April 2, 1994 $133,000,000
July 2, 1994 $128,000,000
October 1, 1994 $136,301,000
December 31, 1994 $136,301,000
(b) The Borrower will not permit Consolidated
Tangible Net Worth on the last day of each fiscal quarter after
December 31, 1994 to be less than the sum of (i) the
Consolidated Tangible Net Worth required to be maintained on the
last day of the immediately preceding fiscal year, plus (ii) 33%
of Consolidated Net Income for the immediately preceding fiscal
year of the Borrower (or if Consolidated Net Income is a deficit
figure for such year, then zero).
5.7 Limitations on Debt. (a) On each Determination
Date which shall occur during the periods hereinafter set forth
the Borrower will not permit the Consolidated Funded Debt Ratio
to exceed the ratio set forth opposite such period:
- - - - -9-
PERIOD RATIO
The date hereof through April 2, 1994 .70 to 1
April 3, 1994 through July 2, 1994 .60 to 1
July 3, 1994 through October 1, 1994 .55 to 1
October 2, 1994 through December 31, 1994 .65 to 1
After December 31, 1994 .50 to 1
(b) On each Determination Date which shall occur
during the periods hereinafter set forth the Borrower will not
permit the ratio of the aggregate outstanding principal amount
of Consolidated Debt to Consolidated Total Capitalization to
exceed the ratio set forth opposite such period:
PERIOD RATIO
The date hereof through October 1, 1994 .70 to 1
After October 1, 1994 .65 to 1
(c) The Borrower will not permit any Restricted
Subsidiary to be or become liable for any Debt other than (w)
Debt owing to the Borrower or any Wholly-owned Restricted
Subsidiary, (x) Debt of any Restricted Subsidiary outstanding on
March 1, 1994, (y) the Specified Guaranties, and (z) any Debt
incurred by a corporation which becomes a Restricted Subsidiary
after the date hereof but which Debt was incurred prior to and
not in anticipation of such corporation becoming a Restricted
Subsidiary.
(d) Any corporation which becomes a Restricted
Subsidiary after the date hereof shall for all purposes of this
Section 5.7 be deemed to have created, assumed or incurred at
the time it becomes a Restricted Subsidiary all Debt of such
corporation existing immediately after it becomes a Restricted
Subsidiary.
5.8 Fixed Charges Coverage Ratio. The Borrower will
keep and maintain the ratio of Net Income Available for Fixed
Charges to Fixed Charges for each period of four consecutive
fiscal quarters which shall end within the periods hereinafter
set forth at not less than the ratio set opposite each period in
the table below:
PERIOD RATIO
The date hereof through April 2, 1994 .95 to 1
April 3, 1994 through July 2, 1994 .85 to 1
- - - - -10-
July 3, 1994 through October 1, 1994 1.20 to 1
October 2, 1994 through December 31, 1994 1.65 to 1
After December 31, 1994 1.75 to 1
5.9 Limitation on Liens. The Borrower will not, and
will not permit any Restricted Subsidiary to, create or incur,
or suffer to be incurred or to exist, any Lien on its or their
property or assets, whether now owned or hereafter acquired, or
upon any income or profits therefrom, or transfer any property
for the purpose of subjecting the same to the payment of
obligations in priority to the payment of its or their general
creditors, or acquire or agree to acquire, or permit any
Restricted Subsidiary to acquire, any property or assets upon
conditional sales agreements or other title retention devices,
except:
(a) Liens for property taxes and assessments or
government charges or levies and Liens securing claims or
demands of mechanics and materialmen, provided payment thereof
is not at the time required by Section 5.3;
(b) Liens of or resulting from any judgment or award,
the time for the appeal or petition for rehearing of which shall
not have expired, or in respect of which the Borrower or a
Restricted Subsidiary shall at any time in good faith be
prosecuting an appeal or proceeding for a review and in respect
of which a stay of execution pending such appeal of proceeding
for review shall have been secured;
(c) Liens incidental to the conduct of business
(including Liens in connection with worker's compensation,
unemployment insurance and other like laws, warehousemen's and
attorneys' liens and statutory landlords' liens) and Liens to
secure the performance of bids, tenders or trade contracts, or
to secure statutory obligations, surety or appeal bonds or other
Liens of like general nature incurred in the ordinary course of
business and not in connection with the borrowing of money;
provided in each case, the obligation secured is not overdue or,
if overdue, is being contested in good faith by appropriate
actions or proceedings and in respect of which adequate reserves
have been established;
(d) Liens incidental to the ownership of properties
and assets incurred in the ordinary course of business and not
in connection with the borrowing of money and which do not
materially impair the use of such properties and assets in the
operation of the business of the Borrower and its Restricted
Subsidiaries or materially detract from the value of the
properties of the Borrower and its Restricted Subsidiaries;
(e) easements, rights-of-way, zoning and similar
restrictions or other similar charges or encumbrances on real
properties which do not interfere with the conduct of the
business of the Borrower and its Restricted Subsidiaries;
(f) Liens on assets of the Borrower or any Restricted
Subsidiary arising (i) on account of leases and subleases in
which the Borrower or a Restricted Subsidiary is the lessor or
sublessor and pursuant to which property which is no longer used
or useful in the business of
- - - - -11-
the Borrower or its Restricted Subsidiaries is being
leased, and (ii) on account of the grant of licenses and
sublicenses to third parties in the ordinary course of business;
provided that any such lease, sublease, license or sublicense
shall not materially interfere with the conduct of the business
of the Borrower and its Restricted Subsidiaries;
(g) Liens securing Debt of a Restricted Subsidiary to
the Borrower or to another Restricted Subsidiary;
(h) Liens existing as of June 20, 1992 and reflected
in Schedule II to the Note Agreements, as originally executed
and without amendment.
(i) Liens incurred after the date of this Agreement
arising in connection with the leasing of equipment by the
Borrower or its Restricted Subsidiaries, as lessee, under a
lease which is not a Capitalized Lease; provided that any such
Lien shall attach solely to the equipment which shall have been
financed under such lease;
(j) Liens existing on fixed assets of any business
entity acquired by the Borrower or a Restricted Subsidiary so
long as such Liens (and any related Debt) were not incurred,
extended or renewed in contemplation of such acquisition;
provided that (i) the Lien shall attach solely to the fixed
assets of the business entity so acquired, (ii) at the time of
acquisition of such business entity, the aggregate amount
remaining unpaid on all Debt secured by Liens on fixed assets of
such business entity whether or not assumed by the Borrower or a
Restricted Subsidiary shall not exceed an amount equal to 100%
of the lesser of the total purchase price or fair market value
at the time of acquisition of such fixed assets (as determined
in good faith by the Board of Directors of the Borrower), and
(iii) all such Debt is permitted by the applicable limitations
provided in Section 5.7;
(k) Liens on fixed assets useful and intended to be
used in carrying on the business of the Borrower or a Restricted
Subsidiary and which are acquired or constructed on or after the
Closing Date (including Liens existing on fixed assets at the
time of acquisition thereof so long as they were not incurred,
extended or renewed in contemplation of such acquisition);
provided that (i) the Lien shall attach solely to the fixed
assets acquired or constructed and any unimproved real estate
upon which such fixed assets have been constructed, (ii) the
Lien shall attach not later than one year following the
acquisition or completion of the construction of such fixed
assets, (iii) at the time of acquisition or construction of such
fixed assets, the aggregate amount remaining unpaid on all Debt
secured by Liens on such fixed assets whether or not assumed by
the Borrower or a Restricted Subsidiary shall not exceed 100% of
the lesser of the total purchase price or fair market value at
the time of acquisition or construction of such fixed assets (as
determined in good faith by the Board of Directors of the
Borrower), and (iv) all such Debt is permitted by the applicable
limitations provided in Section 5.7;
(l) Liens renewing, extending or refunding any Lien
permitted by paragraphs (h), (i), (j) or (k) of this Section
5.9; provided that (i) such Lien shall attach solely to the
property secured prior to such renewal, extension or refunding,
(ii) the principal amount of Debt secured by such lien is not
increased; and (iii) Debt secured by such Liens is permitted by
the applicable limitations provided in Section 5.7; and
- - - - -12-
(m) in addition to Liens permitted by the preceding
paragraphs (a) through (l), Liens securing Debt incurred after
the date of this Agreement; provided that the sum of (i) the
aggregate unpaid principal amount of such Debt together with all
other Debt secured by Liens permitted by this Section 5.9(m),
plus (ii) to the extent not included in the preceding clause (i)
the aggregate amount of Capitalized Rentals of the Borrower and
its Restricted Subsidiaries, plus (iii) to the extent not
included in the preceding clauses (i) or (ii) the Capitalized
Value of Sale and Leaseback Rentals shall not exceed 15% of
Consolidated Tangible Net Worth on each Determination Date.
5.10 Restricted Payments. The Borrower will not
except as hereinafter provided:
(a) Declare or pay any dividends, either in cash or
property, on any shares of its capital stock or any class
(except dividends or other distributions payable solely in
shares of capital stock of the Borrower);
(b) Directly or indirectly, or through any
Subsidiary, purchase, redeem or retire any shares of its capital
stock of any class or any warrants, rights or options to
purchase or acquire any shares of its capital stock (other than
in exchange for other shares of capital stock of the Borrower or
warrants, rights or options to purchase or acquire any shares of
its capital stock); or
(c) Make any other payment or distribution, either
directly or indirectly or through any Subsidiary, in respect of
its capital stock;
(such declarations or payments of dividends,
purchases, redemptions or retirements of capital stock and
warrants, rights or options and all such other payments or
distributions being herein collectively called "Restricted
Payments"), if after giving effect thereto (i) any Event of
Default shall have occurred and be continuing, (ii) the Borrower
would not be in compliance with each and every covenant set
forth in Section 5 of this Agreement, or (iii) the Borrower
could not incur at least $1.00 of additional Debt within the
limitations of Section 5.7(b). In addition, the Borrower will
not make any Restricted Payment if after giving effect thereto
the aggregate amount of Restricted Payments made during the
period from and after December 28, 1991, to and including the
date of the making of the Restricted Payment in question would
exceed the sum of (i) $10,000,000, (ii) 33-1/3% of Consolidated
Net Income for such period, computed on a cumulative basis for
such entire period (or if such Consolidated Net Income is a
deficit figure, then minus 100% of such deficit), and (iii)
subject to the provisions of Section 3.2, the net proceeds to
the Borrower from the issue or sale of capital stock of the
Borrower on or after the Closing Date (as defined in the Note
Agreements).
The Borrower will not declare any dividend which
constitutes a Restricted Payment payable more than 80 days after
the date of declaration thereof.
For the purposes of this Section 5.10, the amount of
any Restricted Payment declared, paid or distributed in property
shall be deemed to be the greater of the book value or fair
- - - - -13-
market value (as determined in good faith by the
Board of Directors of the Borrower) of such property at the time
of the making of the Restricted Payment in question.
5.11 Mergers, Consolidations and Sales of Assets.
(a) The Borrower will not, and will not permit any Restricted
Subsidiary to, (i) consolidate with or be a party to a merger
with any other corporation or (ii) sell, lease or otherwise
dispose of all or any substantial part (as defined in paragraph
(d) of this Section 5.11) of the assets of the Borrower and its
Restricted Subsidiaries; provided, however, that:
(1) any Restricted Subsidiary may merge or
consolidate with or into the Borrower or any Wholly-owned
Restricted Subsidiary so long as in any merger or consolidation
involving the Borrower, the Borrower shall be the surviving or
continuing corporation;
(2)- the Borrower may consolidate or merge with any
other corporation if (i) the Borrower shall be the surviving or
continuing corporation, (ii) at the time of such consolidation
or merger and after giving effect thereto no Default or Event of
Default shall have occurred and be continuing, and (iii) after
giving effect to such consolidation or merger the Borrower would
be permitted to incur at least $1.00 of additional Consolidated
Funded Debt under the provisions of Section 5.7(a); and
(3) any Restricted Subsidiary may sell, lease or
otherwise dispose of all or any substantial part of its assets
to the Borrower or any Wholly-owned Restricted Subsidiary.
(b) The Borrower will not permit any Restricted
Subsidiary to issue or sell any shares of stock of any class
(including as "stock" for the purposes of this Section 5.11, any
warrants, rights of options to purchase or otherwise acquire
stock or other Securities exchangeable for or convertible into
stock) of such Restricted Subsidiary to any Person other than
the Borrower or a Wholly-owned Restricted Subsidiary, except for
the purpose of qualifying directors, or except in satisfaction
of the validly pre-existing preemptive rights of minority
shareholders in connection with the simultaneous issuance of
stock to the Borrower and/or a Restricted Subsidiary whereby the
Borrower and/or such Restricted Subsidiary maintain their same
proportionate interest in such Restricted Subsidiary.
(c) The Borrower will not sell, transfer or otherwise
dispose of any shares of stock of any Restricted Subsidiary
(except to qualify directors) or any Debt of any Restricted
Subsidiary, and will not permit any Restricted Subsidiary to
sell, transfer or otherwise dispose of (except to the Borrower
or a Wholly-owned Restricted Subsidiary) any shares of stock or
any Debt of any other Restricted Subsidiary, unless:
(1) simultaneously with such sale, transfer, or
disposition, all shares of stock and all Debt of such Restricted
Subsidiary at the time owned by the Borrower and by every other
Restricted Subsidiary shall be sold, transferred or disposed of
as an entirety;
- - - - -14-
(2) The Board of Directors of the Borrower shall
have determined, as evidenced by a resolution thereof, that the
proposed sale, transfer or disposition of said shares of stock
and Debts is in the best interests of the Borrower;
(3) said shares of stock and Debt are sold,
transferred or otherwise disposed of to a Person, for a cash
consideration and on terms reasonably deemed by the Board of
Directors of the Borrower to be adequate and satisfactory;
(4) the Restricted Subsidiary being disposed of shall
not have any continuing investment in the Borrower or any other
Restricted Subsidiary not being simultaneously disposed of; and
(5) such sale or other disposition does not involve a
substantial part (as hereinafter defined) of the assets of the
Borrower and its Restricted Subsidiaries.
(d) As used in this Section 5.11, a sale, lease or
other disposition of assets shall be deemed to be a "substantial
part" of the assets of the Borrower and its Restricted
Subsidiaries if the book value of such assets, when added to the
book value of all other assets sold, leased or otherwise
disposed of by the Borrower and its Restricted Subsidiaries
(other than in the ordinary course of business) (i) during the
12-month period ending with the date of such sale, lease or
other disposition, exceeds 10% of Consolidated Assets,
determined as of the end of the immediately preceding fiscal
year, or (ii) during the period beginning on the date of this
Agreement and ending on the date of such sale, lease or other
disposition, exceeds an amount equal to 25% of Consolidated
Assets determined as of March 28, 1992.
(e) The Borrower will not, and will not permit any
Restricted Subsidiary to, sell, lease or otherwise dispose of
any assets (other than in the ordinary course of business) if at
the time of such sale, lease or other disposition and after
giving effect thereto a Default or Event of Default shall have
occurred and be continuing.
Notwithstanding the foregoing provisions of this
Section 5.11, the Borrower may make a Significant Disposition if
(i) such Significant Disposition shall be for an amount not less
than the fair market value of such assets as determined in good
faith by the Board of Directors of the Borrower, (ii) after
giving effect to such Significant Disposition, no Default or
Event of Default shall exist under this Agreement, (iii) all of
the proceeds of such Significant Disposition are received in
cash and are held in a segregated account with a bank or
financial institution having capital and surplus in excess of
$250,000,000, and (iv) within 30 days of the date of such
Significant Disposition an amount equal to the Net Proceeds are
used pro rata (based on the unpaid principal amount thereof then
outstanding together with any applicable prepayment premium) to
(x) prepay the Notes and (y) retire Funded Debt of the Borrower
owing pursuant to the Note Agreements.
Net Proceeds" as used herein, shall mean with respect
to any Significant Disposition the proceeds received by the
Borrower and its Restricted Subsidiaries from such Significant
Disposition after deducting therefrom sales, income, capital
gain and other federal, state and local taxes, and selling fees
and expenses associated therewith.
- - - - -15-
5.12 Guaranties. The Borrower will not, and will not
permit any Restricted Subsidiary to, become or be liable in
respect of any Guaranty, except Guaranties by the Borrower which
are limited in amount to a stated maximum dollar exposure or
which constitute Guaranties of obligations incurred by any
Restricted Subsidiary in compliance with the provisions of this
Agreement, except Guaranties by Dominion Stores, Inc., Logo 7,
Inc. and Universal Industries, Inc. of Debt of the Borrower
outstanding as of the date hereof pursuant to the Note
Agreements and the Credit Agreement and except Debt of the
Borrower outstanding to the Bank.
5.13 Transactions with Affiliates. The Borrower will
not, and will not permit any Restricted Subsidiary to, enter
into or be party to any transaction or arrangement with any
Affiliate (including, without limitation, the purchase from,
sale to or exchange of property with, or the rendering of any
service by or for, any Affiliate), except in the ordinary course
of and pursuant to the reasonable requirements of the Borrower's
or such Restricted Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such
Restricted Subsidiary than would obtain in a comparable
arm's-length transaction with a Person other than an Affiliate.
5.14 Termination of Pension Plans. The Borrower will
not and will not permit any Subsidiary to withdraw from any
Multiemployer Plan or permit any employee benefit plan
maintained by it to be terminated if such withdrawal or
termination could result in withdrawal liability (as described
in Part 1 of Subtitle E of Title IV of ERISA) or the imposition
of a Lien on any property of the Borrower or any Subsidiary
pursuant to Section 4068 of ERISA.
5.15 Reports and Rights of Inspection. The Borrower
will keep, and will cause each Restricted Subsidiary to keep,
proper books of record and account in which full and correct
entries will be made of all dealings or transactions of, or in
relation to, the business and affairs of the Borrower or such
Restricted Subsidiary, in accordance with GAAP consistently
applied (except for changes disclosed in the financial
statements furnished to Bank pursuant to this Section 5.15 and
concurred in by the independent public accountants referred to
in Section 5.15(b) hereof), and will furnish to the Bank:
(a) Quarterly Statements. As soon as available and
in any event within 45 days after the end of each quarterly
fiscal period (except the last) of each fiscal year, copies of:
(1) consolidated and consolidating balance sheets of
the Borrower and its Restricted Subsidiaries as of the close of
such quarterly fiscal period, setting forth in comparative form
the consolidated figures for the fiscal year then most recently
ended,
(2) consolidated and consolidating statements of
income of the Borrower and its Restricted Subsidiaries for such
quarterly fiscal period and for the portion of the fiscal year
ending with such quarterly fiscal period, in each case setting
forth in comparative form the consolidated figures for the
corresponding periods of the preceding fiscal year, and
- - - - -16-
(3) consolidated and consolidating statements of cash
flows of the Borrower and its Restricted Subsidiaries for the
portion of the fiscal year ending with such quarterly fiscal
period, setting forth in comparative form the consolidated
figures for the corresponding period of the preceding fiscal
year,
all in reasonable detail and certified as complete
and correct by an authorized financial officer of the Borrower;
(b) Annual Statements. As soon as available and in
any event within 90 days after the close of each fiscal year
(except fiscal year 1993) of the Borrower and for fiscal year
1993, on or before April 22, 1994, copies of:
(1) consolidated and consolidating balance sheets of
the Borrower and its Restricted Subsidiaries as of the close of
such fiscal year, and
(2) consolidated and consolidating statements of
income and retained earnings and cash flows of the Borrower and
its Restricted Subsidiaries for such fiscal year,
in each case setting forth in comparative form the
consolidated figures for the preceding fiscal year, all in
reasonable detail and accompanied by a report thereon of a firm
of independent public accountants of recognized national
standing selected by the Borrower to the effect that the
consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the
Borrower and its Restricted Subsidiaries as of the end of the
fiscal year being reported on and the consolidated results of
the operations and cash flows for said year in conformity with
GAAP and that the examination of such accountants in connection
with such financial statements has been conducted in accordance
with generally accepted auditing standards and included such
tests of the accounting records and such other auditing
procedures as said accountants deemed necessary in the
circumstances;
(c) Audit Reports. Promptly upon receipt thereof,
one copy of each interim or special audit made by independent
accountants of the books of the Borrower or any Restricted
Subsidiary and any management letter received from such
accountants;
(d) SEC and Other Reports. Promptly upon their
becoming available, one copy of each financial statement,
report, notice or proxy statement sent by the Borrower to
stockholders generally and of each regular or periodic report,
and any registration statement or prospectus filed by the
Borrower or any Subsidiary with any securities exchange or the
Securities and Exchange Commission or any successor agency, and
copies of any orders in any proceedings to which the Borrower or
any of its Subsidiaries is a party, issued by any governmental
agency, Federal or state, having jurisdiction over the Borrower
or any of its Subsidiaries;
(e) ERISA Reports. Promptly upon the occurrence
thereof, written notice of (i) a material Reportable Event with
respect to any Plan; (ii) the institution of any steps by the
Borrower, any ERISA Affiliate, the PBGC or any other person to
terminate any Plan; (iii) the institution of any steps by the
Borrower or any ERISA Affiliate to withdraw from any Plan; (iv)
- - - - -17-
a non-exempt "prohibited transaction" within the
meaning of Section 406 of ERISA in connection with any Plan; (v)
any failure by the Borrower or any ERISA Affiliate to make a
timely contribution to any Plan if such failure gives rise to a
Lien under Section 302(f)(i) of ERISA; (vi) any material
increase in the contingent liability of the Borrower or any
Restricted Subsidiary with respect to any post-retirement
welfare liability; or (vii) the taking of any action by, or the
threatening of the taking of any action by, the Internal Revenue
Service, the Department of Labor or the PBGC with respect to any
of the foregoing which notice shall specify the action which the
Borrower proposes to take or is required to take under ERISA
with respect to such event;
(f) Officer's Certificates. Within the periods
provided in paragraphs (a) and (b) above, a certificate of the
Treasurer or Chief Financial Officer of the Borrower stating
that such officer has reviewed the provisions of this Agreement
and setting forth: (i) that in the opinion of such officer the
financial statements then being furnished present fairly the
financial position of the Borrower and its Subsidiaries as of
such dates and the results of their operations and changes in
their financial position or cash flows for such periods,
subject, however, to changes from normal interim audit
adjustments in the case of quarterly statements, (ii) the
information and computations (in sufficient detail) required in
order to establish whether the Borrower was in compliance with
the requirements of Section 5.6 through Section 5.14 at the end
of the period covered by the financial statements then being
furnished, and (iii) whether there existed as of the date of
such financial statements and whether, to the best of such
officer's knowledge, there exists on the date of the certificate
or existed at any time during the period covered by such
financial statements any Default or Event of Default and, if any
such condition or event exists on the date of the certificate,
specifying the nature and period of existence thereof and the
action the Borrower is taking and proposes to take with respect
thereto;
(g) Accountant's Certificates. Within the period
provided in paragraph (b) above, a certificate of the
accountants who render an opinion with respect to such financial
statements, stating that they have reviewed this Agreement and
stating further whether, in making their audit, such accountants
have become aware of any Default or Event of Default under any
of the terms of provisions of this Agreement insofar as any such
terms or provisions pertain to or involve accounting matters or
determinations, and if any such condition or event then exists,
specifying the nature and period of existence thereof;
(h) Unrestricted Subsidiaries. Within the respective
periods provided in paragraphs (a) and (b) above, financial
statements of the character and for the dates and periods as in
said paragraphs (a) and (b) provided covering each Unrestricted
Subsidiary (or groups of Unrestricted Subsidiaries on a
consolidated basis); and
(i) Requested Information. With reasonable
promptness, such other data and information as the Bank may
reasonably request.Without limiting the foregoing, the Borrower
will permit the Bank (or such Persons as the Bank may designate)
to visit and inspect, under the Borrower's guidance, any of the
properties of the Borrower or any Restricted Subsidiary, to
examine all of their books of account, records, reports and
other papers, to make copies and extracts therefrom and to
discuss their respective affairs,
- - - - -18-
finances and accounts with their respective officers,
employees, and independent public accountants (and by this
provision the Borrower authorizes said accountants to discuss
with the Bank the finances and affairs of the Borrower and its
Restricted Subsidiaries) all at such reasonable times and as
often as may be reasonably requested.
5.16 Investments. The Borrower will not, and will
not permit any Restricted Subsidiary to, make any Investments,
other than:
(a) Investments by the Borrower and its Restricted
Subsidiaries in and to Restricted Subsidiaries, including any
Investment in a corporation which, after giving effect to such
Investment, will become a Restricted Subsidiary;
(b Investments in commercial paper maturing in 270
days or less from the date of issuance which, at the time of
acquisition by the Borrower or any Restricted Subsidiary, is
accorded the highest rating by Standard & Poor's Corporation,
Moody's Investors Service, Inc. or other nationally recognized
credit rating agency of similar standing;
(c) Investments in direct obligations of the United
States of America or any agency or instrumentality of the United
States of America, the payment or guarantee of which constitutes
a full faith and credit obligation of the United States of
America, in either case, maturing in twelve months or less from
the date of acquisition thereof;
(d) Investments in certificates of deposit maturing
within one year form the date of issuance thereof, issued by a
bank or trust company organized under the laws of the United
States or any state thereof, having capital, surplus and
undivided profits aggregating at least $100,000,000 and whose
long-term certificates of deposit are, at the time of
acquisition thereof by the Borrower or a Restricted Subsidiary,
rated AA or better by Moody's Investors Service, Inc.;
(e) loans or advances in the usual and ordinary course
of business to officers, directors and employees for expenses
(including moving expenses related to a transfer) incidental to
carrying on the business of the Borrower or any Restricted
Subsidiary;
(f) receivables arising from the sale of goods and
services in the ordinary course of business of the Borrower and
its Restricted Subsidiaries; and
(g) other Investments (in addition to those permitted
by the foregoing provisions of this Section 5.16), provided that
the aggregate amount of all such other Investments at any time
owned by the Borrower and its Restricted Subsidiaries shall not
exceed an amount equal to 10% of Consolidated Tangible Net Worth.
In valuing any Investments for the purpose of
applying the limitations set forth in this Section 5.16, such
Investments shall be taken at the original cost thereof, without
allowance for any subsequent write-offs or appreciation or
depreciation therein, but less any amount repaid or recovered on
account of capital or principal.
- - - - -19-
For purposes of this Section 5.16, at any time when a
corporation becomes a Restricted Subsidiary, all Investments of
such corporation at such time shall be deemed to have been made
by such corporation, as a Restricted Subsidiary, at such time.
5.17 Favored Nations Clause. In the event that at
any time this Agreement is in effect the Borrower or any
Subsidiary shall enter into any agreement, guarantee, indenture
or other instrument governing, relating to, providing for
commitments to advance or guaranteeing any Financing or to amend
any terms and conditions applicable to any Financing which
agreement, guarantee, indenture or other instrument includes
covenants, terms, conditions or defaults not substantially as,
or in addition to those, provided in this Agreement, or more
favorable to the lender or other counterpart thereunder than
those provided in this Agreement, the Borrower shall promptly so
advise the Bank. Thereupon, if the Bank shall request, upon
notice to the Borrower, the Borrower and the Bank shall enter
into an amendment to this Agreement providing for substantially
the same such covenants, terms, conditions and defaults as those
provided for in such agreement, guarantee, indenture or other
instrument, mutatis mutandis, to the extent required and as may
be selected by the Bank, such amendment to remain in effect,
unless otherwise specified in writing by the Bank, for the
entire duration of the stated term to maturity of such Financing
(to and including the date to which the same may be extended at
the Borrower's or such Subsidiary's option), notwithstanding
that such Financing might be earlier terminated by prepayment,
refinancing, acceleration or otherwise, provided that if any
such agreement, guarantee, indenture or other instrument shall
be modified, supplemented, amended or restated so as to modify,
amend or eliminate from such agreement, guarantee, indenture or
other instrument any such covenant, term, condition or default
so made a part of this Agreement, then unless required by the
Bank pursuant to this Section 5.17, such modification,
supplement or amendment shall not operate to modify, amend or
eliminate such covenant, term, condition or default as so made a
part of this Agreement. As used herein, "Financing" means (i)
any transaction or series of transactions for the incurrence by
the Borrower or any Subsidiary of any Debt or for the
establishment of a commitment to make advances which would
constitute Debt of the Borrower or any Subsidiary, which Debt is
not by its terms subordinate and junior to other Debt of the
Borrower or any Subsidiary, (ii) an obligation incurred in a
transaction or series of transactions in which assets of the
Borrower or a Subsidiary are sold and leased back, or (iii) a
sale of accounts or other receivables or any interest therein.
5.1 New Guarantors. The Borrower shall cause any
Restricted Subsidiary which executes a Joinder Agreement to the
Credit Agreement or guarantees the Borrower's obligations under
the Note Agreements from and after March 1, 1994, to enter into
the Guaranty Assumption Agreement attached as Exhibit 1 to the
Bank Guaranty Agreement.
6. EVENTS OF DEFAULT.
6.1 Events of Default. The occurrence of any one or
more of the following Events of Default will constitute a
default by the Borrower under this Agreement, whereupon the
Notes and all indebtedness of the Borrower to the Bank will, at
the option of the Bank, immediately become due and payable
without presentation, demand, protest, or note of any kind, all
of which are hereby expressly waived, and the Borrower will pay
the reasonable attorney's fee
- - - - -20-
incurred by the Bank in connection with such default
or recourse against any collateral held by the Bank as security
for the indebtedness owed by the Borrower:
(a) Non-payment when due, whether by acceleration or
otherwise, of any principal payment on the Notes;
(b) Non-payment within ten days after due date of
interest on the Notes, or of any premium, fee or other charge
under this Agreement;
(c) A breach or failure of performance by the
Borrower (or Subsidiary) of any provision of this Agreement;
(d) A representation or warranty by the Borrower is
false or erroneous;
(e) The Borrower (or a Subsidiary): (i) files a
petition or has a petition filed against it under the Bankruptcy
Code or any proceeding for the relief of insolvent debtors; (ii)
generally fails to pay its debts as such debts become due; (iii)
has a custodian appointed for the Borrower or its assets; (iv)
benefits from or is subject to the entry of an order for relief
by any court of insolvency; (v) makes an admission of insolvency
seeking the relief provided in the ankruptcy Code or any other
insolvency law; (vi) makes an assignment for the benefit of
creditors; (vii) has a receiver appointed, voluntarily or
otherwise, for its property; (viii) suspends business; (ix)
permits a judgment in the amount of $5,000 or more to be
obtained against it which is not promptly paid or promptly
appealed and secured pending appeal; (x) becomes insolvent,
however otherwise evidenced; or (xi) defaults in payment of any
other indebtedness, or permits the time of payment of any other
indebtedness to be accelerated;
(f) Either (i) any "person" or "group" of persons (as
said terms are defined in Section 13(d) of the Securities and
Exchange Act of 1934, as amended) shall have acquired, directly
or indirectly, beneficial ownership of thirty-five percent (35%)
or more of the outstanding voting stock of the Borrower, or (ii)
persons who are directors of the Borrower on the date of this
Agreement (together with any replacement or additional directors
whose election was recommended by or who were elected by a
majority of directors of the Borrower in office at the time of
this Agreement) shall cease to constitute at least a majority of
the members of the Board of Directors of the Borrower;
(g) Any event or condition (A) shall occur which
results in the acceleration of the maturity of any Debt
exceeding $3,000,000 individually or in the aggregate of the
Borrower or any Subsidiary or (B) shall occur and be continuing
which enables the holder of such Debt or any person acting on
such holder's behalf to accelerate the maturity thereof;
(h) An Event of Default shall have occurred under the
Note Agreements or the Credit Agreement.
- - - - -21-
7. INTERPRETATION OF AGREEMENT; DEFINITIONS.
7.1 Definitions. Unless the context otherwise
requires, the terms hereinafter set forth when used herein shall
have the following meanings and the following definitions shall
be equally applicable to both the singular and plural forms of
any of the terms herein defined:
"Affiliate" shall mean any Person (other than a
Restricted Subsidiary) (i) which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is
under common control with, the Borrower, (ii) which beneficially
owns or holds 5% or more of any class of the Voting Stock of the
Borrower or (iii) 5% or more of the Voting Stock (or in the case
of a Person which is not a corporation, 5% or more of the equity
interest) of which is beneficially owned or held by the Borrower
or a Subsidiary. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether
through the ownership of Voting Stock, by contract or otherwise.
"Agreement" shall mean this Amended and Restated Term
Loan Agreement.
"Bank Guaranty Agreement" means the Guaranty
Agreement dated of even date with this Agreement executed by
Dominion Stores, Inc., Logo 7, Inc. and Universal Industries,
Inc. pursuant to which those Restricted Subsidiaries guaranteed
the payment by the Borrower of the Loans.
"Borrower" shall mean Tultex Corporation, a Virginia
corporation, and any person who succeeds to all, or
substantially all, of the assets and business of Tultex
Corporation.
"Business Day" shall mean any day except a Saturday,
Sunday or other day on which commercial banks in North Carolina
are authorized by law to close.
"Capitalized Lease" shall mean any lease the
obligation for Rentals with respect to which is required to be
capitalized on a consolidated balance sheet of the lessee and
its subsidiaries in accordance with GAAP.
"Capitalized Rentals" of any Person shall mean as of
the date of any determination thereof the amount at which the
aggregate Rentals due and to become due under all Capitalized
Leases under which such Person is a lessee would be reflected as
a liability on a consolidated balance sheet of such Person.
"Capitalized Value of Sale and Leaseback Rentals" as
at any Determination Date shall mean all future Rentals
(discounted to their then present value at the rate of 8.875%
per annum, compounded with the periodicity of the payment of
such Rentals) payable by the Borrower or a Restricted Subsidiary
in connection with any arrangement whereby the Borrower or any
Restricted Subsidiary shall sell or transfer any property owned
by the Borrower or a Restricted Subsidiary and thereupon the
Borrower or any Restricted Subsidiary shall lease, as lessee,
the same property.
- - - - -22-
"Code" shall mean the Internal Revenue Code of 1986,
as amended.
"Consolidated Assets" shall mean as of the date of
any determination thereof the total amount of all assets of the
Borrower and its Restricted Subsidiaries on a consolidated basis
determined in accordance with GAAP.
"Consolidated Current Debt" shall mean all Current
Debt of the Borrower and its Restricted Subsidiaries on a
consolidated basis determined in accordance with GAAP.
"Consolidated Debt" shall mean all Debt of the
Borrower and its Restricted Subsidiaries on a consolidated basis
determined in accordance with GAAP.
"Consolidated Funded Debt" shall mean all Funded Debt
of the Borrower and its Restricted Subsidiaries on a
consolidated basis determined in accordance with GAAP.
"Consolidated Funded Debt Ratio" shall mean as of any
Determination Date the ratio of (i) the sum of (x) the aggregate
outstanding principal amount of Consolidated Funded Debt, plus
(y) the lowest average unpaid principal amount of Consolidated
Current Debt which shall have been outstanding for a period of
30 consecutive days during the 12 month period immediately
preceding the Determination Date, to (ii) Consolidated Total
Capitalization. For purposes of calculating the Consolidated
Funded Debt Ratio (a) except as provided in the next succeeding
clause (b), Current Debt of Logo 7, Inc. which was outstanding
(i) prior to the acquisition of Logo 7, Inc. by the Borrower,
and (ii) during the 12 month period immediately preceding the
Determination Date shall be included for purposes of
calculations pursuant to clause (i)(y) of the immediately
preceding sentence, (b) Consolidated Current Debt which was
outstanding during the 30 day period utilized in the
calculations pursuant to clause (i)(y) of the immediately
preceding sentence shall be reduced to the extent that such
Consolidated Current Debt has been refunded directly out of the
proceeds of Consolidated Funded Debt included in clause (i)(x)
of the immediately preceding sentence and (c) Funded Debt
outstanding pursuant to a revolving credit agreement shall be
calculated on the basis of the lowest average unpaid principal
amount of Debt outstanding under such revolving credit agreement
fora period of 30 consecutive days (which shall be the same 30
day period as the period used to calculate Consolidated Current
Debt pursuant to clause (i)(y) of the immediately preceding
sentence) during the 12 month period immediately preceding the
Determination Date.
"Consolidated Net Income" for any period shall mean
the gross revenues of the Borrower and its Restricted
Subsidiaries for such period less all expenses and other proper
charges (including taxes on income), determined on a
consolidated basis in accordance with GAAP after eliminating
earnings or losses attributable to outstanding Minority
Interests, but excluding in any event:
(a) any extraordinary gains or losses on the sale or
other disposition of assets, and any taxes on such excluded
gains and any tax deductions or credits on account of any such
excluded losses;
(b) the proceeds of any life insurance policy;
- - - - -23-
(c) net earnings of any business entity (other than a
Restricted Subsidiary) in which the Borrower or any Restricted
Subsidiary has an ownership interest unless such net earnings
shall have actually been received by the Borrower or such
Restricted Subsidiary in the form of cash distributions; and
(d) any portion of the net earnings of any Restricted
Subsidiary which for any reason is unavailable for payment of
dividends to the Borrower or any other Restricted Subsidiary.
"Consolidated Tangible Net Worth" shall mean as of
any Determination Date Tangible Assets less all obligations of
the Borrower and its Restricted Subsidiaries which in accordance
with GAAP shall be classified upon a consolidated balance sheet
of the Borrower as liabilities. For purposes of calculating
Consolidated Tangible Net Worth, treasury stock shall be
excluded.
"Consolidated Total Capitalization" shall mean as of
any Determination Date the sum of (i) Consolidated Debt, plus
(ii) Consolidated Tangible Net Worth.
"Credit Agreement" shall mean that certain
$225,000,000 Credit Agreement dated as of September 30, 1993, by
and among the Borrower, its Subsidiaries and related parties,
NationsBank of North Carolina, N.A., as Administrative Agent and
certain other banks identified therein, as amended.
"Current Debt" of any Person shall mean as of the
date of any determination thereof (i) all Debt of such Person
for borrowed money other than Funded Debt of such Person and
(ii) Guaranties by such Person of Current Debt of others.
"Debt" of any Person shall mean and include (without
duplication) all of the following obligations of such Person
which in accordance with GAAP shall be classified upon a balance
sheet of such Person as liabilities of such Person:
(i) obligations of such Person for borrowed money or which has
been incurred in connection with the acquisition of property or
assets, (ii) obligations secured by any Lien upon property or
assets owned by such Person, even though such Person has not
assumed or become liable for the payment of such obligations,
(iii) obligations created or arising under any conditional sale
or other title retention agreement with respect to property
acquired by such Person, notwithstanding the fact that the
rights and remedies of the seller, lender or lessor under such
agreement in the event of default are limited to repossession or
sale of property, (iv) Capitalized Rentals and (v) Guaranties of
obligations of others of the character referred to in this
definition. For purposes of calculations pursuant to this
Agreement, Debt shall not include obligations under
reimbursement agreements pursuant to which Documentary Letters
of Credit have been issued prior to any draw under such
Documentary Letters of Credit.
"Default" shall mean any event or condition the
occurrence of which would, with the lapse of time or the giving
of notice, or both, constitute an Event of Default.
- - - - -24-
"Determination Date" shall mean the last day of each
quarterly fiscal period of the Borrower and each other date upon
which the Borrower or a Restricted Subsidiary shall incur or
otherwise become liable for Consolidated Funded Debt.
"Documentary Letters of Credit" shall mean letters of
credit issued in favor of suppliers and customers of the
Borrower and its Subsidiaries in the ordinary course of business
of the Borrower and such Subsidiaries.
"Dollars" or "$" shall mean dollars in lawful
currency of the United States of America.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor statute of
similar import, together with the regulations thereunder, in
each case as in effect from time to time. References to
sections of ERISA shall be construed to also refer to any
successor sections.
"ERISA Affiliate" shall mean any corporation, trade
or business that is, along with the Borrower, a member of a
controlled group of corporations or a controlled group of trades
or businesses, as described in Sections 414(b) and 414(c),
respectively, of the Code or Section 4001 of ERISA.
"Euro-Dollar Business Day" shall mean any Business
Day on which dealings in Dollar deposits are carried out in the
London interbank market.
"Event of Default" shall have the meaning set forth
in Section 6.
"Fixed Charges" for any period shall mean on a
consolidated basis the sum of (i) all Rentals (other than
Rentals on Capitalized Leases) payable during such period by the
Borrower and its Restricted Subsidiaries, and (ii) all Interest
Charges on all Debt (including the interest component of Rentals
on Capitalized Leases) of the Borrower and its Restricted
Subsidiaries. For purposes of calculating Fixed Charges,
Rentals and Interest Charges of Logo 7, Inc. incurred prior to
the acquisition of Logo 7, Inc. by the Borrower, shall be
included in the Fixed Charges of the Borrower to the extent that
such charges were incurred by Logo 7, Inc. during the applicable
determination period.
"Funded Debt" of any Person shall mean (i) all Debt
of such Person for borrowed money or which has been incurred in
connection with the acquisition of assets in each case having a
final maturity of one or more than one year from the date of
origin thereof (or which is renewable or extendible at the
option of the obligor for a period or periods more than one year
from the date of origin), (ii) all Capitalized Rentals of such
Person, and (iii) all Guaranties by such Person of Funded Debt
of others. Funded Debt shall include payments in respect of
Funded Debt which constitute current liabilities of the obligor
under GAAP.
"GAAP" shall mean generally accepted accounting
principles at the time in the United States.
- - - - -25-
"Guaranties" by any Person shall mean all obligations
(other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing, or in effect guaranteeing, any Debt, dividend or
other obligation of any other Person (the "primary obligor") in
any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement,
contingent or otherwise, by such Person: (i) to purchase such
Debt or obligation or any property or assets constituting
security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of such Debt or obligation, (y) to maintain
working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of
such Debt or obligation, (iii) to lease property or to purchase
Securities, supplies, materials or other property or services
primarily for the purpose of assuring the owner of such Debt or
obligation of the ability of the primary obligor to make payment
of the Debt or obligation, or (iv) otherwise to assure the owner
of the Debt or obligation of the primary obligor against loss in
respect thereof. For the purposes of all computations made
under this Agreement, a Guaranty in respect of any Debt for
borrowed money shall be deemed to be Debt equal to the principal
amount of such Debt for borrowed money which has been
guaranteed, and a Guaranty in respect of any other obligation or
liability or any dividend shall be deemed to be Debt equal to
the maximum aggregate amount of such obligation, liability or dividend.
"Institutional Holder" shall mean any insurance
company, bank, savings and loan association, trust company,
investment company, charitable foundation, employee benefit plan
(as defined in ERISA) or other institutional investor or
financial institution.
"Interest Charges" for any period shall mean all
interest and all amortization of debt discount and expense on
any particular Debt for which such calculations are being made.
"Investments" shall mean all investments, in cash or
by delivery of property made, directly or indirectly in any
Person, whether by acquisition of shares of capital stock,
indebtedness or other obligations or Securities or by loan,
advance, capital contribution or otherwise; provided, however,
that "Investments" shall not mean or include routine investments
in property to be used or consumed in the ordinary course of
business.
"Letter Agreement" shall have the meaning given such
term in Section 2.1.
"Lien" shall mean any interest in property securing
an obligation owed to, or a claim by, a Person other than the
owner of the property, whether such interest is based on the
common law, statute or contract, and including but not limited
to the security interest lien arising from a mortgage,
encumbrance, pledge, conditional sale or trust receipt or a
lease, consignment or bailment for security purposes. The term
"Lien" shall include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including,
with respect to stock, stockholder agreements, voting trust
agreements, buy-back agreements and all similar arrangements)
affecting property. For the purposes of this Agreement, the
Borrower or a Restricted Subsidiary shall be deemed to be the
owner of any property which it has acquired or holds subject to
a conditional sale agreement, Capitalized Lease or other
arrangement pursuant to which title to the property has been
retained
- - - - -26-
by or vested in some other Person for security
purposes and such retention or vesting shall constitute a Lien.
"Loans" shall mean the loans evidenced by the Notes.
"Logo 7" shall mean the business and assets of Logo
7, Inc., a Virginia corporation and a direct Wholly-owned
Subsidiary of the Borrower.
"Maturity Date" shall mean the 31st day of July, 1996.
"Minority Interests" shall mean any shares of stock
of any class of a Restricted Subsidiary (other than directors'
qualifying shares as required by law) that are not owned by the
Borrower and/or one or more of its Restricted Subsidiaries.
Minority Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary
liquidating value of such preferred stock, whichever is greater,
and by valuing Minority Interests constituting common stock at
the book value of capital and surplus applicable thereto
adjusted, if necessary, to reflect any changes from the book
value of such common stock required by the foregoing method of
valuing Minority Interests in preferred stock.
"Multiemployer Plan" shall have the same meaning as
in ERISA.
"Net Income Available for Fixed Charges" for any
period shall mean the sum of Consolidated Net Income during such
period plus (to the extent deducted in determining Consolidated
Net Income) (i) all provisions for any Federal, state or other
income taxes made by the Borrower and its Restricted
Subsidiaries during such period, (ii) Fixed Charges of the
Borrower and its Restricted Subsidiaries during such period, and
(iii) amortization of the acquisition cost of license agreements
and goodwill by the Borrower and its Restricted Subsidiaries
(including any such charges deducted in determining the net
income of Logo 7, Inc. during the applicable period). For
purposes of calculating Net Income Available for Fixed Charges,
net income of Logo 7, Inc. earned prior to the acquisition of
Logo 7, Inc. by the Borrower shall be included in the Net Income
Available for Fixed Charges to the extent that such income was
earned during the applicable determination period.
"Note Agreements" shall mean those certain Note
Agreements, dated as of June 1, 1992, by and among the Borrower
and Principal Mutual Life Insurance Company, et al., as amended.
"Notes" shall mean the Term Note and the Swap Note,
together.
"Payment Date" shall mean the last day of January,
April, July and October of each year.
"PBGC" means the Pension Benefit Guaranty Corporation
and any entity succeeding to any or all of its functions under
ERISA.
- - - - -27-
"Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, and a
government or agency or political subdivision thereof.
"Plan" means a "pension plan," as such term is
defined in ERISA, established or maintained by the Borrower or
any ERISA Affiliate or as to which the Borrower or any ERISA
Affiliate contributed or is a member or otherwise may have any
liability.
"Prime Rate" shall mean that interest rate so
denominated and set by the Bank from time to time as an
interest rate basis for borrowings. The Prime Rate is one of
several interest rate bases used by the Bank. The Bank lends at
interest rates above and below the Prime Rate.
"Rentals" shall mean and include as of the date of
any determination thereof all fixed payments (including as such
all payments which the lessee is obligated to make to the lessor
on termination of the lease or surrender of the property)
payable by the Borrower or a Restricted Subsidiary, as lessee or
sublessee under a lease of real or personal property, but shall
be exclusive of any amounts required to be paid by the Borrower
or a Restricted Subsidiary (whether or not designated as rents
or additional rents) on account of maintenance, repairs,
insurance, taxes and similar charges. Fixed rents under any
so-called "percentage leases" shall be computed solely on the
basis of the minimum rents, if any, required to be paid by the
lessee regardless of sales volume or gross revenues.
"Reportable Event" shall have the same meaning as in
ERISA.
"Restricted Subsidiary" shall mean any Subsidiary
(i) which is organized under the laws of the United States or
any State thereof; (ii) which conducts substantially all of its
business and has substantially all of its assets within the
United States; and (iii) of which more than 50% (by number of
votes) of the Voting Stock is beneficially owned, directly or
indirectly, by the Borrower. In addition, notwithstanding the
provisions of clauses (i) and (ii) of the immediately preceding
sentence, AKOM, Ltd., a corporation organized under the laws of
the Cayman Islands, and Tultex Canada, Inc., a corporation
organized under the laws of Canada, and any other corporation
which fails to qualify under clauses (i) and (ii) of the
immediately preceding sentence shall be Restricted Subsidiaries so
long as the portion of Consolidated Net Income attributable to the net
income of such companies (taken in the aggregate) shall be less
than 5% of Consolidated Net Income for the immediately preceding
fiscal year and so long as the assets of such companies (taken
in the aggregate) shall be less than 5% of the consolidated
assets of the Borrower and its Restricted Subsidiaries.
"Security" shall have the same meaning as in
Section 2(1) of the Securities Act of 1933, as amended.
"Significant Disposition" shall mean the sale,
transfer and/or other disposition of all or any part of the
assets of Logo 7 or Universal, including, without limitation, a
transfer, sale and/or disposition which shall be effected by (i)
a sale, transfer and/or disposition to another Person (including
an Affiliate of the Borrower or a Restricted Subsidiary), (ii) a
distribution to shareholders of the Borrower (whether or not in
exchange, in whole or in part, for capital stock
- - - - -28-
of the Borrower), and/or (iii) a sale, transfer
and/or disposition of capital stock (or other equity
interest) of Logo 7 or Universal.
"Specified Guaranties" shall mean the Bank Guaranty
Agreement, the Guaranty Agreement dated as of March 1, 1994 from
the Subsidiary Guarantors in favor of the lenders who are
parties to the Note Agreements and the Guarantee set forth in
the Credit Agreement from the Subsidiary Guarantors in favor of
the banks which are parties to the Credit Agreement.
The term "subsidiary" shall mean as to any particular
parent corporation any corporation of which more than 50% (by
number of votes) of the Voting Stock shall be beneficially
owned, directly or indirectly, by such parent corporation. The
term "Subsidiary" shall mean a subsidiary of the Borrower.
"Subsidiary Guarantors" shall mean Logo 7, Inc., a
Virginia corporation, Dominion Stores, Inc., a Virginia
corporation, and Universal Industries, Inc., a Massachusetts
corporation, and any Subsidiary which enters into a Guaranty
Assumption Agreement in the form attached to the Noteholder
Guaranty Agreement.
"Tangible Assets" shall mean as of the date of any
determination thereof the total amount of all assets of the
Borrower and its Restricted Subsidiaries (less depreciation,
depletion and other properly deductible valuation reserves)
after deducting good will, patents, trade names,trade marks,
copyrights, franchises, experimental expense, organization
expense, unamortized debt discount and expense, deferred assets
other than prepaid insurance and prepaid taxes, the excess of
cost of shares acquired over book value of related assets and
such other assets as are properly classified as "intangible
assets" in accordance with GAAP.
"Tulstar" shall mean Tulstar Factors, Inc., a New
York corporation.
"Universal" shall mean the business and assets of
Universal Industries, Inc., a Massachusetts corporation and a
Wholly-owned Subsidiary of the Borrower.
"Unrestricted Subsidiary" shall mean any Subsidiary
which is not a Restricted Subsidiary.
"Voting Stock" shall mean Securities of any class or
classes, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate
directors (or Persons performing similar functions).
"Wholly-owned" when used in connection with any
Subsidiary shall mean a Subsidiary of which all of the issued
and outstanding shares of stock (except shares required as
directors' qualifying shares) and all Debt shall be owned by the
Borrower and/or one or more of its Wholly-owned Subsidiaries.
7.2 Accounting Principles. Where the character or
amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other
accounting computation is required to be made for the purposes
of this Agreement, the same
- - - - -29-
shall be done in accordance with GAAP, to the extent
applicable, except where such principles are inconsistent with
the requirements of this Agreement.
7.3 Directly or Indirectly. Where any provision in
this Agreement refers to action to be taken by any Person, or
which such Person is prohibited from taking, such provision
shall be applicable whether the action in question is taken
directly or indirectly by such Person.
8. MISCELLANEOUS.
8.1 Supporting Documents. The Borrower shall furnish
at the reasonable request of the Bank opinions of legal counsel
and certificates of its officers, satisfactory to the Bank
regarding matters incident to this Agreement. In addition, the
Borrower shall give the Bank prompt written notice of the
occurrence of any Default and of the occurrence of any default
or failure of performance under any other agreement or contract
to which it is a party or by which it is bound, provided that
this undertaking shall not require the Borrower to calculate the
financial covenants contained in this Agreement more frequently
than as of the end of each fiscal quarter.
8.2 No Waivers. No failure or delay by the Bank in
exercising any right, power or privilege hereunder or under
either Note shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided
by law.
8.3 Expenses; Documentary Taxes. The Borrower shall
pay (i) all out-of-pocket expenses of the Bank, including fees
and disbursements of counsel for the Bank, in connection with
the preparation of this Agreement, any waiver or consent
hereunder or thereunder or any amendment hereof or thereof or
any Default or alleged Default hereunder or thereunder and
(ii) if an Event of Default occurs, all out-of-pocket expenses
incurred by the Bank, including fees and disbursements of
counsel, in connection with such Event of Default and collection
and other enforcement proceedings resulting therefrom, including
out-of-pocket expenses incurred in enforcing this Agreement and
the Notes. The Borrower shall indemnify the Bank against any
transfer taxes, documentary taxes, assessments or charges made
by any governmental authority by reason of the execution and
delivery of this Agreement or the Notes.
8.4 Successors and Assigns. The provisions of this
Agreement shall be binding upon the parties hereto and their
respective successors and assigns, and extend to and be
available to any subsequent holder of the Notes, as well as to
the Bank; provided that the Borrower may not assign or otherwise
transfer any of its rights under this Agreement.
8.5 Applicable Law. The Agreement and the Notes
shall be deemed to be contracts made under, and for all purposes
shall be construed in accordance with, the laws of the State of
North Carolina.
- - - - -30-
8.6 Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto
were upon the same instrument.
8.7 Severability. If any provision of this Agreement
shall be held invalid under any applicable laws, such invalidity
shall not affect any other provision of this Agreement that can
be given effect without the invalid provision, and, to this end,
the provisions hereof are severable.
[End of Amended and Restated Term Loan Agreement - Signatures Omitted]
F. The Borrower and Tulstar are hereby released from
liability under that certain Indemnification Agreement, dated as
of July 1, 1992, by and between the Borrower, Tulstar and the
Bank.
G. This Agreement for Amended and Restated Loan
Agreement shall be binding upon and shall inure to the benefit
of the successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed as of the year and day first above
written.
BORROWER:
TULTEX CORPORATION
By:/s/ D. P. Shook
---------------
Name:Don P. Shook
------------
Title: Vice-President
--------------
BANK:
WACHOVIA BANK OF NORTH CAROLINA, N.A
By: /s/ Charlene A. Johnson
-----------------------
Vice President
- - - - -31-
Exhibits
Exhibit A Term Note
Exhibit B Swap Note
Exhibit C Letter Agreement
- - - - -32-
Exhibit A
TERM NOTE
$20,833,333.33 _________________, 1994
Winston-Salem, North Carolina
FOR VALUE RECEIVED, TULTEX CORPORATION, a Virginia
corporation (the "Borrower"), promises to pay to the order of
WACHOVIA BANK OF NORTH CAROLINA, N.A. (hereinafter referred to
as the "Bank") the principal sum of TWENTY MILLION EIGHT HUNDRED
THIRTY-THREE THOUSAND THREE HUNDRED THIRTY-THREE AND 33/100
DOLLARS ($20,833,333.33) in accordance with the terms and
provisions of the Loan Agreement (as defined below) and in
installments, on the dates and in the amounts provided in such
Loan Agreement. The Borrower promises to pay interest on the
unpaid principal amount of this Note on the dates and at the
rate or rates provided for in the Loan Agreement. All such
payments of principal and interest shall be made not later than
12:00 noon (Winston-Salem, North Carolina time) on the date when
due in lawful money of the United States in Federal or other
immediately available funds at the office of the Bank at 301
North Main Street, Winston-Salem, North Carolina 27101, or at
such other place as the holder of this Note shall direct in
writing. The entire principal amount of this Note and all
accrued interest thereon shall be due and payable in full on the
Maturity Date.
This Note is the Term Note referred to in that
certain Agreement for Amended and Restated Term Loan Agreement,
dated as of even date herewith (as the same may be modified or
amended from time to time, the "Loan Agreement"), between the
Borrower and the Bank. Terms defined in the Loan Agreement are
used herein with the same meanings. Reference is made to the
Loan Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
All parties to this Note, including endorsers,
sureties, and guarantors, if any, hereby waive presentment for
payment, demand, protest, notice of nonpayment or dishonor and
of protest, and any and all other notices and demands
whatsoever, and agree to remain bound until the principal and
interest are paid in full, notwithstanding any extensions of
time for payment which may be granted even though the period or
periods of extension be indefinite and notwithstanding any
inaction by, or failure to assert any legal rights available to
the holder of this Note.
IN WITNESS WHEREOF, the Borrower has caused this
instrument to be executed under seal by its duly authorized
officers on this ______ day of April, 1994, as of, however, the
day and year first above written.
TULTEX CORPORATION
By:_______________________________________
Name:_____________________________________
Title:____________________________________
ATTEST:________________________________
Secretary
[CORPORATE SEAL]
- - - - -2-
Exhibit B
SWAP NOTE
$2,019,000.00 _________________, 1994
Winston-Salem, North Carolina
FOR VALUE RECEIVED, TULTEX CORPORATION, a Virginia
corporation (the "Borrower"), promises to pay to the order of
WACHOVIA BANK OF NORTH CAROLINA, N.A. (hereinafter referred to
as the "Bank") the principal sum of TWO MILLION NINETEEN
THOUSAND AND NO/100 DOLLARS ($2,019,000.00) in accordance with
the terms and provisions of the Loan Agreement (as defined
below) and in installments, on the dates and in the amounts
provided in such Loan Agreement. The Borrower promises to pay
interest on the unpaid principal amount of this Note on the
dates and at the rate or rates provided for in the Loan
Agreement. All such payments of principal and interest shall be
made not later than 12:00 noon (Winston-Salem, North Carolina
time) on the date when due in lawful money of the United States
in Federal or other immediately available funds at the office of
the Bank at 301 North Main Street, Winston-Salem, North Carolina
27101, or at such other place as the holder of this Note shall
direct in writing. The entire principal amount of this Note and
all accrued interest thereon shall be due and payable in full on
the Maturity Date.
This Note is the Swap Note referred to in that
certain Agreement for Amended and Restated Term Loan Agreement,
dated as of even date herewith (as the same may be modified or
amended from time to time, the "Loan Agreement"), between the
Borrower and the Bank. Terms defined in the Loan Agreement are
used herein with the same meanings. Reference is made to the
Loan Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
All parties to this Note, including endorsers,
sureties, and guarantors, if any, hereby waive presentment for
payment, demand, protest, notice of nonpayment or dishonor and
of protest, and any and all other notices and demands
whatsoever, and agree to remain bound until the principal and
interest are paid in full, notwithstanding any extensions of
time for payment which may be granted even though the period or
periods of extension be indefinite and notwithstanding any
inaction by, or failure to assert any legal rights available to
the holder of this Note.
IN WITNESS WHEREOF, the Borrower has caused this
instrument to be executed under seal by its duly authorized
officers on this ______ day of April, 1994, as of, however, the
day and year first above written.
TULTEX CORPORATION
By:_______________________________________
Name:____________________________________
Title:_____________________________________
ATTEST:________________________________
Secretary
[CORPORATE SEAL]
- - - - -2-
Exhibit C
February 24, 1994
Tultex Corporation
Tulstar Factors, Inc.
Post Office Box 5191
Martinsville, VA 24115
Attention: Mr. John Franck
Re: Term Loan Agreement dated September 11, 1989 (the
"Unamended Term Loan Agreement") among Tultex Corporation and
Tulstar Factors, Inc. (collectively called the "Borrower") and
Wachovia Bank of North Carolina, N.A., formerly Wachovia Bank
and Trust Company, N.A. (the "Bank"), as amended pursuant to (i)
a First Amendment to Term Loan Agreement dated as of January 30,
1992 (the "First Amendment") between the Borrower and the Bank,
(ii) a Second Amendment to Term Loan Agreement dated as of April
23, 1992 (the "Second Amendment") between the Borrower and the
Bank, (iii) a Third Amendment to Term Loan Agreement dated as of
October 2, 1992 (the "Third Amendment") between the Borrower and
the Bank, (iv) a Fourth Amendment to Term Loan Agreement dated
as of November 30, 1992 (the "Fourth Amendment") between the
Borrower and the Bank, and (v) a Fifth Amendment to Term Loan
Agreement dated as of July 4, 1993 (the "Fifth Amendment")
between the Borrower and the Bank (the Unamended Term Loan
Agreement, as amended by the First Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment and the
Fifth Amendment hereinafter referred to as the "Loan Agreement")
Gentlemen:
Paragraph 5(a) of the Loan Agreement states that the
Borrower shall observe and perform all of the covenants and
agreements contained in Sections 5.1 through 5.17, inclusive, of
those certain Note Agreements each dated as of June 1, 1992
between Tultex Corporation and the various purchasers named
therein (collectively, the "Note Agreement"). The Borrower has
requested that the Bank waive compliance with the Fixed Charges
Coverage Ratio contained in Section 5.8 of the Note Agreement
for the four (4) consecutive fiscal quarters ended on January 1,
1994. The Borrower has also requested that the Bank amend the
Loan Agreement in certain respects.
Subject to satisfaction of the conditions
hereinafter stated, the Bank hereby agrees that, on the Closing
Date (as hereinafter defined), (1) the Bank shall waive for the
four (4) consecutive fiscal quarters ended on January 1, 1994,
the Fixed Charges Coverage Ratio contained in Section 5.8 of the
Note Agreement and (2) the Bank shall amend as of January 1,
1994, the financial covenants contained or incorporated by
reference in the Loan Agreement so that they are mutually
acceptable to the Bank and the Borrower (which amendment shall
include a step-down of the Funded Debt to Capitalization
covenant contained in the Note Agreement). These agreements of
the Bank are subject to satisfaction of the following conditions
precedent:
Page 2
(a) Payment by the Borrower to the Bank on a date
mutually agreed to by the Borrower and the Bank, which date
shall not be later than fifteen (15) days from the date of this
letter (the "Closing Date"), of a non_refundable waiver fee
equal to the sum of $50,000 in immediately available funds;
(b) Execution and delivery to the Bank by the
Borrower of a copy of this letter signifying Borrower's consent
and agreement to its terms;
(c) Receipt by the Bank of evidence, reasonably
satisfactory to the Bank, that the Borrower has received on or
prior to the Closing Date waivers with respect to any and all
financial covenants then in default (including without
limitation Section 5.8 of the Note Agreement) from all of
Borrower's creditors whose debts are governed by loan or credit
agreements;
(d) Receipt, review and approval by the Bank of
amendments to the financial covenants contained in the loan or
credit agreements of all of the Borrower's creditors whose debts
are governed by loan or credit agreements, which amendments
shall be consistent with those amendments to financial covenants
agreed to by the Bank pursuant to this letter;
(e) The execution and delivery by the Borrower to the
Bank as of the Closing Date of a written agreement pursuant to
which the Borrower agrees for the benefit of the Bank to execute
and deliver to the Bank, on that date within ten (10) days of
the Closing Date as the Bank may request, a promissory note
payable to the order of the Bank in a principal amount equal to
the payments which the Bank shall be required to pay to unwind
and settle any swap agreement or arrangement entered into by the
Bank in connection with the loan (as originally extended in the
amount of $50,000,000). Such promissory note shall bear
interest at an annual rate equal to 90-day LIBOR (adjusted for
reserve requirements) plus 3/4 of 1%, shall be payable in
substantially equal quarterly principal payments (with interest)
over the term of the Note (as defined in the Loan Agreement),
and shall contain as events of default thereunder the failure to
pay principal plus interest when due and the occurrence of an
Event of Default under the Loan Agreement. Upon the execution
and delivery of such promissory note, (i) the Borrower shall be
released from any and all liability under that certain
Indemnification Agreement, dated as of July 1, 1992, by and
between the Borrower and the Bank, (ii) the Borrower shall be
released from any obligation under the Loan Agreement or
otherwise to pay to the Bank a prepayment premium, penalty or
fee in connection with any prepayment of the loan, (iii) the per
annum interest rate of the Note (as defined in the Loan
Agreement) shall be changed to 90-day LIBOR (adjusted for
reserve requirements) plus 3/4 of 1%, and (iv) Paragraph 3 of
the Loan Agreement shall be amended and restated in its entirety
to read as follows:
Page 3
"3. The Borrower may prepay the indebtedness
evidenced by the Note in whole or in part at any time without
prepayment penalty, premium or fee."
The amendments to the Loan Agreement and Note
contemplated by the precedingsentence may at the Bank's option
be accomplished through the execution and delivery of amended
and restated documents which incorporate those amendments and
also amends and restates the Loan Agreement and Note in their
entirety.
(f) Execution and delivery by the Borrower and the
Bank as of the Closing Date of a Sixth Amendment to the Loan
Agreement (or at the Bank's option of an Amended and Restated
Loan Agreement) which, in addition to amending the financial
covenants contained or incorporated by reference in the Loan
Agreement, accomplishes the following:
(i) The Loan Agreement shall be amended to add
thereto a new paragraph, which new paragraph shall be designated
as Paragraph 3-A and shall read as follows:
"3-A. In the event the Borrower shall issue any stock
or other securities other than to its officers and employees
pursuant to a currently existing stock option plan ("Issuance")
or shall sell or dispose of any of its property or assets
(including without limitation a sale of the assets or stock of
Logo 7, Inc.) other than in the ordinary course of business
("Asset Sale"), the Borrower shall be required to apply and pay
to all holders (including the Bank) of Borrower's term debt, on
a pro rata basis, on the date of such Issuance or Asset Sale, as
the case may be, as a prepayment of the indebtedness evidenced
by the Note (as defined in the Loan Agreement) and/or the
promissory note referred to in paragraph (e) of this letter, in
whole or in part, the proceeds of such Issuance or Asset Sale,
as the case may be, after deducting therefrom all costs and
expenses incurred by the Borrower in connection therewith. Any
such prepayment shall be applied to installments of the Note (as
defined in the Loan Agreement) and/or the promissory note
referred to in paragraph (e) of this letter in inverse order of
maturities.
(ii) Paragraph 5 of the Loan Agreement shall be
amended to add thereto, immediately following subparagraph (b)
thereof, the following subparagraph (c):
"(c) In the event that at any time this Agreement is
in effect the Borrower or any Subsidiary shall enter into any
agreement, guarantee, indenture or other instrument governing,
relating to, providing for commitments to advance or
guaranteeing any Financing or to amend any terms and conditions
applicable to any Financing which agreement, guarantee,
indenture or other instrument includes covenants, terms,
conditions or defaults not substantially as, or in addition to
those, provided in this Agreement, or more favorable to the
lender or other counterpart thereunder than those provided in
this Agreement, the Borrower shall promptly so advise the Bank.
Thereupon, if the Bank shall request, upon notice
Page 4
to the Borrower, the Borrower and the Bank shall
enter into an amendment to this Agreement providing for
substantially the same such covenants, terms, conditions and
defaults as those provided for in such agreement, guarantee,
indenture or other instrument, mutatis mutandis, to the extent
required and as may be selected by the Bank, such amendment to
remain in effect, unless otherwise specified in writing by the
Bank, for the entire duration of the stated term to maturity of
such Financing (to and including the date to which the same may
be extended at the Borrower's or such Subsidiary's option),
notwithstanding that such Financing might be earlier terminated
by prepayment, refinancing, acceleration or otherwise, provided
that if any such agreement, guarantee, indenture or other
instrument shall be modified, supplemented, amended or restated
so as to modify, amend or eliminate from such agreement,
guarantee, indenture or other instrument any such covenant,
term, condition or default so made a part of this Agreement,
then unless required by the Bank pursuant to this paragraph,
such modification, supplement or amendment shall not operate to
modify, amend or eliminate such covenant, term, condition or
default as so made a part of this Agreement. As used herein,
"Financing" means (i) any transaction or series of transactions
for the incurrence by the Borrower or any Subsidiary of any Debt
or for the establishment of a commitment to make advances which
would constitute Debt of the Borrower or any Subsidiary, which
Debt is not by its terms subordinate and junior to other Debt of
the Borrower or any Subsidiary, (ii) an obligation incurred in a
transaction or series of transactions in which assets of the
Borrower or a Subsidiary are sold and leased back, or (iii) a
sale of accounts or other receivables or any interest therein."
(g) Receipt by the Bank of evidence satisfactory to
the Bank regarding the authority of the Borrower to execute and
deliver the documents and perform the obligations contemplated
by this letter.
(h) The Borrower shall pay the reasonable attorneys'
fees and expenses incurred by the Bank in connection with this
transaction.
All of the provisions of the Loan Agreement shall be
and remain in full force and effect. If the
Page 5
terms of this letter are satisfactory to the
Borrower, the Borrower should immediately sign and
retain a copy of this letter to the Bank.
Very truly yours,
WACHOVIA BANK OF NORTH CAROLINA, N.A.
By:_______________________________________
Title:______________________________________
Consented and agreed to as of
the _______ day of
______________________, 1994.
TULTEX CORPORATION
By:____________________________
Title:___________________________
TULSTAR FACTORS, INC.
By:____________________________
Title:___________________________
EXHIBIT 10.22
FIRST AMENDMENT AND WAIVER TO CREDIT AGREEMENT
THIS FIRST AMENDMENT AND WAIVER (the "First
Amendment") dated as of March 4, 1994, is to that Credit
Agreement dated as of October 6, 1993 (as amended and modified
hereby and as further amended and modified from time to time
hereafter, the "Credit Agreement"; terms used but not otherwise
defined herein shall have the meanings assigned in the Credit
Agreement), by and among TULTEX CORPORATION, a Virginia
corporation (the "Borrower"), and THOSE SUBSIDIARIES AND CREDIT
PARTIES party thereto and identified on the signature pages
hereof (together with the Borrower sometimes being referred to
as the "Credit Parties"), as Guarantors and Credit Parties, the
Banks and Co-Agents identified therein, and NATIONSBANK OF NORTH
CAROLINA, N.A., as Administrative Agent (the "Administrative
Agent").
W I T N E S S E T H
WHEREAS, the Banks have, pursuant to the terms of
the Credit Agreement, made available to the Borrower a
$225,000,000 credit facility;
WHEREAS, the Borrower has requested certain waivers
and modifications relating to the financial covenants contained
therein; and
WHEREAS, the Banks have agreed to the requested
changes on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
A. The Banks hereby confirm and agree to a waiver of
any Default or Event of Default which existed or may have
existed prior to the date of this First Amendment on account of
a violation of the Fixed Charges Coverage Ratio contained in
Section 6.11(d) of the Credit Agreement. The Borrower shall,
however, hereafter keep and maintain such Fixed Charges Coverage
Ratio in accordance with the terms of Section 6.11(d) of the
Credit Agreement, as amended hereby.
B. The Credit Agreement is amended in the following
respects:
1. The definition of "Applicable Margin" in Section
1.01 is amended and restated to read as follows:
"Applicable Margin" means (i) in the case of Base
Rate Loans, 1/8%, (ii) in the case of Eurodollar Loans, 3/4%,
and (iii) in the case of Adjusted CD Loans, 7/8%, subject,
however, in each case to adjustment as provided in Section 2.22.
2. The definitions of "Clawback Fee", "Estimated
Commitment Usage Amount", "Total Credit Usage" and "Unused
Estimated Commitment Usage Amount" are deleted in their entirety.
3. The third, fourth and fifth sentences of Section
2.01 relating to requests for extension of the Termination Date
by the Borrower are amended and modified to read as follows:
The Borrower may, by notice to the Administrative
Agent, make written request of the Banks to extend the
Termination Date for an additional one year period, but not in
any event to a date later than October 6, 1998, any such request
being made, in the case of the first such request for extension,
on or after November 1, 1994, and thereafter within 90 days
prior to an anniversary date of the Closing Date. The
Administrative Agent will give prompt notice to each of the
Banks of its receipt of any such request for extension of the
Termination Date. Each Bank shall make a determination not
later than 60 days after receipt of any such notice of request
for extension from the Administrative Agent, as to whether or
not it will agree to extend the Termination Date as requested;
provided, however, that failure by any Bank to make a timely
response to the Borrower's request for extension of the
Termination Date shall be deemed to constitute a refusal by the
Bank to extend the Termination Date.
4. Section 2.11(b) regarding the Commitment Fee is
amended and restated in its entirety to read as follows:
(b) Commitment Fee. In consideration for the
Commitments by the Banks hereunder, the Borrower agrees to pay
to the Administrative Agent quarterly in arrears on the 15th day
following the last day of each of the Borrower's fiscal quarters
for the ratable benefit of the Banks a commitment fee (the
"Commitment Fee") of one-fourth of one percent (-%) per annum on
the average daily unused amount of the Revolving Committed
Amount for such prior quarter. For purposes of computation of
the Commitment Fee, Committed Revolving Loans and LOC
Obligations shall be considered as usage, but Competitive Loans
shall not be considered as usage.
5. The Financial Covenants of Section 6.11 of the
Credit Agreement are amended and restated to read as follows:
6.11 Financial Covenants.
(a) Consolidated Current Ratio. The Borrower will
maintain at all times a Consolidated Current Ratio of at least
2.0 to 1.0.
(b) Consolidated Tangible Net Worth. The Borrower
will not permit Consolidated Tangible Net Worth on each
Determination Date to be less than:
Minimum
Consolidated Tangible Net Worth
End of Fourth Quarter 1993
to Third Quarter 1994 $129,000,000
End of Third Quarter 1994
and thereafter $133,000,000
;provided, however, the minimum Consolidated Tangible
Net Worth required hereunder shall increase on each
Determination Date to occur after the Closing Date to an amount
equal to the sum of (i) the Consolidated
- - - - -2-
Tangible Net Worth required to be maintained on the last day of the
immediately preceding fiscal year, plus (ii) for Determination Dates
occurring on and after the end of the Borrower's Fourth Quarter
1994, 50% of Consolidated Net Income for the fiscal year ending
as of such Determination Date, in the case of a Determination
Date occurring at the end of the Borrower's Fourth Quarter, and
for the immediately preceding fiscal year in all other cases (or
if Consolidated Net Income is a deficit figure for such year,
then zero), plus (iii) 100% of the net proceeds received by the
Borrower or any Restricted Subsidiary pursuant to any Equity
Transaction from and after the Closing Date.
(c) Leverage Ratio. On each Determination Date the
Borrower will not permit the ratio of the aggregate outstanding
principal amount of Consolidated Funded Debt to Consolidated
Total Capitalization to exceed:
Determination Date Occurring Leverage Ratio
Last day of the first quarter
of fiscal year 1994 .65 to 1.0
Last day of the second and third
quarters of fiscal year 1994 .70 to 1.0
Last day of the fourth quarter
of fiscal year 1994 and thereafter .65 to 1.0
(d) Fixed Charges Coverage Ratio. The Borrower will
keep and maintain as of each Determination Date for a period of
four consecutive fiscal quarters then ending a ratio of Net
Income Available for Fixed Charges to Fixed Charges of not less
than the following:
Determination Date Occurring Coverage Ratio
Last day of the first and second .60 to 1.0
quarters of fiscal year 1994
Last day of the third quarter of .75 to 1.0
fiscal year 1994
Last day of the last quarter of 1.0 to 1.0
fiscal year 1994
Last day of the first quarter of 1.5 to 1.0
1995 and thereafter
(e) Capital Expenditures. The Borrower and its
Restricted Subsidiaries will not make, incur or permit Capital
Expenditures in excess of (i) $15,000,000 for its fiscal year
1994, or (ii) $30,000,000 for its fiscal year 1995 and each
fiscal year thereafter.
6. The reference in subpart (i) of the definition
of "substantial part" in Section 7.05(a) to "10% of Consolidated
Assets" is hereby decreased and amended to read "5% of
Consolidated Assets".
C. The Borrower hereby represents and warrants that:
(i) any and all representations and warranties made
by the Borrower and contained in the Credit Agreement (other
than those which expressly relate to a prior period) are true
and correct in all material respects as of the date of this
First Amendment; and
- - - - -3-
(ii) No Default or Event of Default currently
exists and is continuing under the Credit Agreement as of the
date of this First Amendment.
D. This First Amendment shall not be effective until
receipt by the Administrative Agent of the following in form and
substance satisfactory to the Banks:
1. Executed Documents. Executed copies of this
First Amendment.
2. Amendment Fee. Payment to the Administrative
Agent for the ratable benefit of the Banks of an amendment fee
of $225,000 (representing 10 b.p. on the total aggregate
Revolving Committed Amount).
3. Legal Opinion. The favorable legal opinion of
Hunton & Williams, counsel to the Borrower and other Credit
Parties, addressed to the Administrative Agent and the Banks and
satisfactory to Moore & Van Allen, special counsel to the
Administrative Agent and the Banks.
4. Corporate Resolutions. Resolutions of the Board
of Directors of Tultex certified by its secretary or assistant
secretary, each dated as of the date of this First Amendment,
approving and adopting this First Amendment, and the related
documentation referred to in (1) above, and authorizing the
execution and delivery thereof.
5. Other Information. Such other information and
documents as the Administrative Agent may reasonably request.
E. The Borrower will execute such additional
documents as are reasonably requested by the Administrative
Agent to reflect the terms and conditions of this First
Amendment.
F. Except as modified hereby, all of the terms and
provisions of the Credit Agreement (and Exhibits) remain in full
force and effect.
G. The Borrower agrees to pay all reasonable costs
and expenses in connection with the preparation, execution and
delivery of this First Amendment, including without limitation
the reasonable fees and expenses of the Administrative Agent's
legal counsel.
H. This First Amendment may be executed in any
number of counterparts, each of which when so executed and
delivered shall be deemed an original and it shall not be
necessary in making proof of this First Amendment to produce or
account for more than one such counterpart.
I. This First Amendment and the Credit Agreement, as
amended hereby, shall be deemed to be contracts made under, and
for all purposes shall be construed in accordance with the laws
of the State of North Carolina.
- - - - -4-
IN WITNESS WHEREOF, each of the parties hereto has
caused a counterpart of this First Amendment to Credit Agreement
to be duly executed under seal and delivered as of the date and
year first above written.
BORROWER:
TULTEX CORPORATION,
a Virginia corporation
By____________________________
Title_________________________
GUARANTORS:
DOMINION STORES, INC.,
a Virginia corporation
By____________________________
Title_________________________
LOGO 7, INC.,
a Virginia corporation
By____________________________
Title_________________________
UNIVERSAL INDUSTRIES, INC.,
a Massachusetts corporation
By____________________________
Title_________________________
- - - - -5-
Signature Pages to
Tultex Corporation First Amendment
dated as of March ___, 1994
BANKS:
NATIONSBANK OF NORTH CAROLINA, N.A.,
individually in its capacity as a
Bank and in its capacity as Co-Agent and
Administrative Agent
By_____________________________
Title__________________________
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
individually in its capacity as a Bank and in
its capacity as a Co-Agent
By_____________________________
Title__________________________
PHILADELPHIA NATIONAL BANK,
incorporated as CoreStates Bank, N.A.,
individually in its capacity as a Bank
and in its capacity as a Co-Agent
By_____________________________
Title__________________________
SIGNET BANK/VIRGINIA
By_____________________________
Title__________________________
CRESTAR BANK
By_____________________________
Title__________________________
FIRST NATIONAL BANK OF MARYLAND
By_____________________________
Title__________________________
- - - - -6-
Signature Pages to
Tultex Corporation First Amendment
dated as of March ___, 1994
FLEET BANK OF MASSACHUSETTS, N.A.
By_____________________________
Title__________________________
NATIONAL CITY BANK, KENTUCKY
By_____________________________
Title__________________________
BANK HAPOALIM B.M.
By_____________________________
Title__________________________
BANK OF TOKYO TRUST
By_____________________________
Title__________________________
NBD BANK, N.A. (successor by merger
to INB National Bank)
By_____________________________
Title__________________________
THE SANWA BANK LTD.
By_____________________________
Title__________________________
- - - - -7-
