Exhibit 10.5
EXECUTION VERSION
LIMITED WAIVER
AGREEMENT
This LIMITED WAIVER AGREEMENT (this
“ Agreement ”), dated as of April 23, 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 period
ending December 31, 2008, (ii) Section 12(k) of the
Note Purchase Agreement for the fiscal quarter ending on
December 31, 2008 and (iii) Section 12(l) of the
Note Purchase Agreement for the fiscal quarter ending on
December 31, 2008 (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) May 8, 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 obligation under Section 1(d) with respect to
the engagement 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 period
ending December 31, 2008, (ii) Section 12(k) of the
Note Purchase Agreement for the fiscal quarter ending on
December 31, 2008 and (iii) Section 12(l) of the
Note Purchase Agreement for the fiscal quarter ending on
December 31, 2008. 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 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, (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
(other than (A) independent reports and analyses prepared by
the lenders under the BST 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 and (iii) on or before May 1, 2009, each item
listed on Schedule I attached hereto (such information and
materials under clauses (i), (ii) and (iii), the “
BST Materials ”). The Borrowers shall furthermore
cause the Purchasers to have access, at all times during 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
2
BST Credit Agreement.
(d) Restructuring Advisor .
The Borrower acknowledges that, if requested by the Collateral
Agent, a restructuring advisor (“ Restructuring
Advisor ”) acceptable to the Required Holders shall be
retained by the Collateral Agent to advise the Purchasers with
respect to the near-term and long-term business prospects of the
Borrower and its various Subsidiaries, the proposed restructuring
of the obligations of BST and various Subsidiaries of the Borrower
under the BST Credit Agreement and the obligations of the Borrower
under the Note Purchase Agreement and such other matters as the
Collateral Agent shall determine to be relevant or useful to the
protection of the rights and interests of the Purchasers under the
Note Purchase Agreement. All of the fees and expenses of such
Restructuring Advisor (or any replacement selected by the
Collateral Agent reasonably acceptable to the Required Holders) and
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 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
3
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.
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 (whether enforcement is sought by proceedings
in equity or at law), and that (x) no offsets, defenses or
counterclaims to the Obligations or any other causes of action with
respect to the Obligations or the Financing Documents exist and
(y) no portion of the Obligations is subject to avoidance,
disallowance, reduction or subordination pursuant to any
requirement of law, (iv) agrees that such ratification and
reaffirmation is not a condition to the continued effectiveness of
the Financing Documents, and (v) agrees that neither such
ratification and reaffirmation, nor any Purchaser’s
solicitation of such ratification and reaffirmation, constitutes a
course of dealing giving rise to any obligation or condition
requiring a similar or any other ratification or reaffirmation from
each party to the Note Purchase Agreement with respect to any
subsequent modifications, consent or waiver with respect to the
Note Purchase Agreement or other Financing Documents. The Borrower
acknowledges and agrees that any of the Financing Documents to
which it is a party or otherwise bound shall continue in full force
and effect and that all of its obligations thereunder shall be
valid and enforceable, 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
4
