Exhibit 10.7
EXECUTION VERSION
LIMITED WAIVER
AGREEMENT
This LIMITED WAIVER AGREEMENT (this
“Agreement ”), effective as of June 1, 2009
(the “Effective Date ”), is by and among
INTERNATIONAL TEXTILE GROUP, INC., a Delaware corporation (the
“ Borrower ”) and the Purchasers signatory
hereto. Unless otherwise specified herein, capitalized terms used
in this Agreement shall have the meanings ascribed to them in the
Note Purchase Agreement (as hereinafter defined).
RECITALS
WHEREAS, the Borrower and the
Purchasers are parties to that certain Senior Subordinated Note
Purchase Agreement, dated as of June 6, 2007 (as amended by
that certain Amendment No. 2 to Senior Subordinated Note
Purchase Agreement, dated as of December 24, 2008 (“
Amendment No. 2 ”) and as the same has been or
may be further amended, restated, supplemented or otherwise
modified from time to time, the “ Note Purchase
Agreement ”);
WHEREAS, the Borrower has requested
that the Purchasers waive solely during the Waiver Period (as
hereinafter defined) compliance with (i) Section 12(j) of
the Note Purchase Agreement for the four fiscal quarter periods
ending December 31, 2008 and March 31, 2009,
(ii) Section 12(k) of the Note Purchase Agreement for the
fiscal quarters ending on December 31, 2008 and March 31,
2009 and (iii) Section 12(1) of the Note Purchase
Agreement for the fiscal quarters ending on December 31, 2008
and March 31, 2009 (such waivers, collectively, the “
Specified Waiver ”); and
WHEREAS, the Borrower has requested
that the Purchasers agree to the Specified Waiver on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of
the premises and the agreements, provisions and covenants contained
herein, and subject to the terms and conditions hereof, the
Borrower and the Purchasers agree as follows:
1. Waiver and Related
Provisions .
(a) Waiver Period; Enforcement
Actions . Upon the satisfaction of the condition precedent set
forth in Section 3 of this Agreement and subject to the
terms hereof, the Purchasers hereby agree to the Specified Waiver
solely during the period beginning on the Effective Date and ending
immediately upon the earliest of (such period being referred to
herein as the “ Waiver Period ”):
(i) June 19, 2009 at 11:59 p.m. prevailing Eastern Time,
(ii) the occurrence of any Default or Event of Default not
subject to the Specified Waiver, (iii) any failure by the
Borrower to comply with any undertaking set forth in this Agreement
(including the reporting obligations in Section 1(c)
and the obligations under Section 1(d) with respect to
the engagement and payment of the Restructuring Advisor), or any
breach of any covenant, representation or warranty set forth in
this Agreement, (iv) the Senior Agent or any lender under the
Senior Loan Documents exercising any enforcement action with
respect to its claims against any Credit Party or with respect to
the Collateral, (vi) the agent or any lender under the BST
Credit Agreement exercising any enforcement action with respect to
its claims against BST or (vii) the occurrence following the
Effective Date of any change, event or occurrence that has or is
reasonably likely to have a material adverse effect on (w) the
business, assets, operations or financial condition of
the Credit Parties taken as a whole,
(x) the Credit Parties’ ability, taken as a whole, to
pay any of the Obligations in accordance with the terms of the Note
Purchase Agreement, (y) the Collateral or the Collateral
Agent’s Liens, on behalf of itself and the other Secured
Parties, taken as a whole or (z) the Collateral Agent’s
or any Purchaser’s rights and remedies under the Note
Purchase Agreement and the other Financing Documents, taken as a
whole. Notwithstanding anything to the contrary herein,
(i) any additional interest that would have become applicable
as a result of the occurrence of any Default or Event of Default
subject to the Specified Waiver shall at all times (including the
Waiver Period) accrue on the Notes in the same manner as if the
Specified Waiver had not been granted and (ii) during the
Waiver Period, the Purchasers shall have the inspection rights
under Section 8.3(b) of the Note Purchase Agreement that apply
when a Default or an Event of Default exists.
(b) Reservation of Rights .
The Purchasers expressly reserve the right to exercise all remedies
under any Financing Document and under applicable law upon the
expiration or termination of the Waiver Period in respect of all
Defaults or Events of Default subject to the Specified Waiver and
any other Default or Events of Default then existing. The Borrower
hereby confirms that absent the Specified Waiver, Events of Default
would have occurred and be continuing as a result of the
Borrower’s failure to comply with (i) Section 12(j)
of the Note Purchase Agreement for the four fiscal quarter periods
ending December 31, 2008 and March 31, 2009,
(ii) Section 12(k) of the Note Purchase Agreement for the
fiscal quarters ending on December 31, 2008 and March 31,
2009 and (iii) Section 12(1) of the Note Purchase
Agreement for the fiscal quarters ending on December 31, 2008
and March 31, 2009. Nothing in this Agreement shall be deemed
to constitute a waiver by any Purchaser of any such Defaults and
Events of Default or any other Defaults or Events of Default,
whether now existing or hereafter arising, or of any right or
remedy that the Collateral Agent and the Purchasers may have under
any of the Financing Documents or applicable law, except to the
extent expressly set forth above.
(c) Information; Reporting
etc . The Borrower shall deliver to the Purchasers (i) all
statements, reports, analysis or findings of financial advisors and
other representatives of the company and all other written
materials and information provided by the Borrower or any of its
Subsidiaries or Affiliates to the agents or lenders under the BST
Credit Agreement or the Senior Credit Agreement substantially
contemporaneously with (and in any event within one calendar day
of) delivery of any such materials to any agents or lenders under
the BST Credit Agreement or the Senior Credit Agreement, and
(ii) all term sheets, waivers, forbearances, restructuring
proposals or other negotiation materials or correspondence related
to any waiver, restructuring or refinancing under the BST Credit
Agreement or the Senior Credit Agreement (other than
(A) independent reports and analyses prepared by the lenders
under the BST Credit Agreement or the Senior Credit Agreement or
their advisors to the extent the Borrower is prohibited from
disclosing such materials pursuant to confidentiality restrictions
which the Borrower entered into upon not less than two
(2) Business Days’ prior written notice to the
Collateral Agent and after making a good faith effort to exclude
the Purchasers from application thereof and (B) materials the
Borrower is prohibited from disclosing pursuant to confidentiality
restrictions entered into with the prior written consent of the
Required Holders) substantially contemporaneously with (and in any
event within one calendar day of) delivery of any such materials to
(or receipt of any such materials from) any agents or lenders under
the BST Credit Agreement or the Senior Credit Agreement (such
information and materials under clauses (i) and (ii) the
“ Specified Materials ”). The Borrowers shall
furthermore cause the Purchasers to have access, at all times
during
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reasonable business hours that the Collateral
Agent or Purchasers may request, to any physical or electronic data
room made available to the agent or lenders under the BST Credit
Agreement or the Senior Credit Agreement.
(d) Restructuring Advisor
.
(i) The Borrower acknowledges that
Kurt Salmon Associates, Inc. (the “Restructuring
Advisor ”) shall be retained by counsel to the Collateral
Agent to advise the Purchasers with respect to the matters
contemplated by that certain letter agreement, dated as of
June 11, 2009, among the Restructuring Advisor, the Borrower
and the Collateral Agent (the “ Engagement Letter
”).
(ii) All of the fees and expenses of
the Restructuring Advisor required to be paid under the Engagement
Letter shall be paid by the Borrower pursuant to the terms of the
Engagement Letter, including, without limitation, the fees and
expenses of the Restructuring Advisor payable prior to or
contemporaneous with the effectiveness of this Agreement in
accordance with Section 3(b) below. All other
out-of-pocket fees, costs and expenses (including attorneys’
fees and expenses) incurred by the Collateral Agent or any
Purchaser in connection with the enforcement of the Financing
Documents or otherwise reimbursable pursuant to the Financing
Documents (including, without limitation, in connection with the
negotiation, preparation, execution, delivery, and monitoring of
compliance with this Agreement) shall be promptly paid upon demand
and in any event within five (5) Business Days. The foregoing
shall be without prejudice to, and shall not otherwise impair in
any manner, any liability that the Borrower or Credit Parties may
have to the Collateral Agent or the Purchasers for such fees,
costs, and expenses or otherwise.
(e) Prior Understandings .
This Agreement sets forth the entire understanding of the parties
relating to the subject matter hereof, and supersedes all prior
understandings and agreements, written or oral.
2. Representations and
Warranties; Covenants .
(a) Enforceability . The
Borrower hereby represents and warrants that this Agreement and the
Note Purchase Agreement as may be modified by this Agreement, are
the legal, valid and binding obligations of such party and are
enforceable against such party in accordance with their respective
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and
by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
(b) Authorization; No
Conflicts . The Borrower hereby represents and warrants that
its execution, delivery and performance of this Agreement and its
performance of the Note Purchase Agreement as modified by this
Agreement, (i) have been duly authorized by all necessary
action on the part of such party and are within such party’s
corporate or similar powers, (ii) do not (A) contravene
such party’s constituent documents, (B) violate any
applicable requirement of law or (C) result in the imposition
of any Lien upon any property of the Borrower or any of its
Subsidiaries and (iii) do not require any permit of, or filing
with, any Governmental
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Authority or any consent of, or notice to, any
Person, other than those that, if not obtained, would not, in the
aggregate, have a Material Adverse Effect.
(c) No Default; Representations
and Warranties in Financing Documents . The Borrower hereby
represents and warrants as of the date hereof that, (i) no
Default or Event of Default has occurred and is continuing other
than, to the extent in existence on the date hereof, Defaults or
Events of Default which are the subject of the Specified Waiver and
(ii) except solely by reason of any Defaults or Events of
Default which are the subject of the Specified Waiver, all of the
representations and warranties of such party contained in each
Financing Document to which it is a party are true and correct in
all material respects on and as of the date hereof, except to the
extent such representations and warranties specifically relate to
an earlier date, in which case such representations and warranties
shall have been true and correct in all material respects on and as
of such earlier date.
3. Condition Precedent
. This Agreement shall
become effective as of the Effective Date upon the satisfaction of
the following condition precedent in a manner satisfactory to the
Required Holders:
(a) execution and delivery by the
Borrower and the Purchasers sufficient to constitute Required
Holders of their respective counterparts of this Agreement;
and
(b) prior to or contemporaneous with
the effectiveness of this Agreement, the Borrower shall have
(i) reimbursed the Purchasers for all reasonable,
out-of-pocket expenses, including, without limitation,
attorneys’ and paralegals’ fees and expenses, incurred
or to be incurred by the Purchasers through the Effective Date in
connection with the preparation, negotiation and execution of this
Agreement or any document, instrument or other agreement delivered
pursuant to this Agreement or otherwise in connection with the Note
Purchase Agreement and (ii) paid to the Restructuring Advisor
(or to the Collateral Agent for the benefit of the Restructuring
Advisor) the first installment of professional fees due to the
Restructuring Advisor pursuant to the Engagement Letter in an
amount equal to $60,000.00.
4. Ratification and Release;
No Waiver .
(a) Ratification . The
Borrower hereby (i) ratifies and reaffirms all of its payment
and performance obligations, contingent or otherwise, and each
grant of security interests and liens in favor of the Collateral
Agent or the Purchasers, as the case may be, under each Financing
Document, (ii) agrees and acknowledges that the Liens in favor
of the Collateral Agent and the Purchasers under each Financing
Document constitute valid, binding, enforceable and perfected liens
and security interests and are not, except as permitted by the
terms thereof, subject to avoidance, disallowance or subordination
pursuant to any requirement of law, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity
or at law), (iii) agrees and acknowledges that the Obligations
(as defined in the Guaranty and Security Agreement) constitute
legal, valid and binding obligations of the Credit Parties, except
as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors’ rights generally and by general
equitable principles
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(w
