SECOND SUPPLEMENTAL INDENTURE
Dated as of May 7, 1999
among
TULTEX CORPORATION,
as Issuer,
AKOM, LTD.
DOMINION STORES, INC.
LOGO 7, INC.
(renamed Tultex Subsidiary (Va), Inc.)
SWEATJET, INCORPORATED
TULTEX CANADA, INC.
TULTEX INTERNATIONAL, INC.
UNIVERSAL INDUSTRIES, INC.
(renamed Tultex Subsidiary (Mass), Inc.)
and
CALIFORNIA SHIRT SALES, INC.
as Guarantors,
and
U.S. BANK NATIONAL ASSOCIATION
as Successor Trustee.
-------------------
$75,000,000
9-5/8% Senior Notes Due 2007
SECOND SUPPLEMENTAL INDENTURE dated as of May 7, 1999, among Tultex
Corporation, as Issuer, Akom, Ltd., Dominion Stores, Inc., Logo 7, Inc. (renamed
Tultex Subsidiary (Va), Inc.), Sweatjet, Inc., Tultex Canada, Inc., Tultex
International, Inc., Universal Industries, Inc. (renamed Tultex Subsidiary
(Mass), Inc.) and California Shirt Sales, Inc., as Guarantors, and U.S. Bank
National Association, as Successor Trustee under the Indenture dated as of April
15, 1997, as supplemented, relating to the Issuer's $75,000,000 principal amount
of 9-5/8% Senior Notes due 2007.
RECITALS:
A. The Issuer has completed an invitation for tenders and
consent solicitation from the holders of the Notes and obtained
consents from the requisite majority of holders of the Notes to enter
into this Second Supplemental Indenture.
B. The Issuer has satisfied the conditions to effectiveness of
this Second Supplemental Indenture.
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C. The Issuer, the Guarantors and the Successor Trustee desire
to enter into this Second Supplemental Indenture to amend the
Indenture.
D. The Successor Trustee has been instructed by the holders of
the Notes to enter into an intercreditor agreement with NationsBank,
N.A., the agent bank under the Senior Credit Facility, as defined
herein.
AGREEMENT:
NOW, THEREFORE, the Issuer, the Guarantors and the Successor
Trustee agree as follows:
1. Revised Terms. The following provisions in the Indenture
are amended as follows:
a. The definition of "Interest Payment Date" in Section 101 of the
Indenture is struck in its entirety and the following definition is
substituted therefor:
"Interest Payment Date", notwithstanding the Interest Payment Dates set
forth in Exhibit A to the Indenture, means January 15, April 15, July
15 and October 15 in each year, commencing July 15, 1999 and,
notwithstanding the Record Dates set forth in such Exhibit A, the
Record Dates for the payment of interest shall be January 1, April 1,
July 1 and October 1 (whether or not a business day), as the case may
be, next preceding such Interest Payment Date."
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b. Clause (ii) of the definition of "Net Available Proceeds" in Section
101 of the Indenture is struck in its entirety and the following clause
(ii) is substituted therefor:
(ii) all payments made by such Person or its Subsidiaries on any
Indebtedness which is secured by such assets in accordance with the
terms of any Lien upon or with respect to such assets or which must by
the terms of such Lien, or by applicable law, be repaid out of the
proceeds from such Asset Disposition,
c. The following definitions shall be added to Section 101 of the
Indenture:
"Pari Passu Securities" means the Securities and the 10-5/8% Senior
Notes due 2005 issued under the Pari Passu Indenture.
"Pari Passu Indenture" means the Indenture, dated as of March 15, 1995,
among the Company, certain of its Subsidiaries, and the predecessor to
the Successor Trustee.
"Security Documents" means, collectively, the Master Collateral and
Security Agreement, dated as of May 7, 1999 (the "MCSA"), among the
Company, the Guarantors, certain other Subsidiaries of the Company
(collectively, the "Obligors") and the Trustee, the Financing
Statements (as defined in the MCSA), the Patent Assignment (as defined
in the MCSA), the Trademark Assignment (as defined in the MCSA), the
Mortgages (as defined in the MCSA), and each other writing executed and
delivered by any one or more of the Obligors securing the payment and
performance of all or any part of the obligations of the Company and
the Obligors arising under the Securities, the Indenture and/or any
other Financing Document (as defined in the MCSA).
d. The definition of "Senior Credit Facility" in Section 101 of the
Indenture is struck in its entirety and the following definition is
substituted therefor:
"Senior Credit Facility" means the Loan and Security Agreement dated as
of May 7, 1999, among the Company and certain of its Subsidiaries as
borrowers thereunder, all other Subsidiaries of the Company as
guarantors thereunder, the lenders from time to time parties thereto,
and NationsBank, N.A., as agent on behalf of itself and the other
lenders named therein, including any deferrals,
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renewals, extensions, replacements, refinancings or refundings thereof,
or amendments, modifications or supplements thereto and any agreement
providing therefor whether by or with the same or any other lenders,
creditors, group of lenders or group of creditors, as it may be secured
by a Lien over Permitted Collateral pursuant to Section 912(x) hereof.
e. The following definition is added to Section 101 of the Indenture:
"Permitted Collateral" means all of the Company's and its Subsidiaries'
accounts receivable, inventory and tax refund claims, all general
intangibles, intellectual property, contract rights, chattel paper,
instruments, documents, books, records, licenses, trademarks and
deposit accounts relating to such accounts receivable and inventory and
all equipment, fixtures and real estate of the Company and its
Subsidiaries, and all proceeds (including insurance proceeds) relating
thereto, excluding, however, all notes owned by the Company issued by
TKS Acquisition, Inc. in the original aggregate principal amount of
$12.5 million and notes receivable up to $6 million from vendors who
provide the Company with manufacturing services.
f. Clause (4) of Section 401 of the Indenture is struck and the
following is substituted therefor:
(4) the occurrence and continuance of any "Event of Default"
referred to in clause (v) of the definition of such term set forth
in the MCSA or failure to perform or to comply with any provision
of Section 701; or
g. A new Clause (11) is added to Section 401 of the Indenture as follows:
(11) failure to perform any covenant or agreement of the Company or
any applicable obligor set forth in the Security Documents or the
occurrence and continuance of any "Event of Default" referred to in
any of clauses (ii), (iii) and (iv) of the definition of such term
set forth in the MCSA; or
h. A new Section 514 is added to the Indenture to read as follows:
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SECTION 514. Action of Trustee under Security Documents.
The Trustee shall act as the secured party under the Security Documents
and shall have the rights and obligations specified therein. The
provisions of this Article Five apply to all actions or failures to act
of the Trustee thereunder.
i. Section 912 of the Indenture is struck in its entirety and the
following provisions are substituted therefor:
SECTION 912. Limitation on Liens.
The Company will not, and will not permit any of its Subsidiaries to,
Incur any Lien on or with respect to any property or assets of the
Company or any Subsidiary of the Company owned on the Issue Date or
thereafter acquired to secure Indebtedness without making, or causing
such Subsidiary to make, effective provision for securing the
Securities (and, if the Company shall so determine, any other
Indebtedness of the Company or such Subsidiary, including Indebtedness
which is subordinate in right of payment to the Securities, provided
that Liens securing the Securities and any Indebtedness pari passu with
the Securities are senior to such Liens securing such subordinated
Indebtedness) equally and ratably with such Indebtedness or, in the
event such Indebtedness is subordinate in right of payment to the
Securities, prior to such Indebtedness, as to such property or assets
for so long as such Indebtedness shall be so secured.
The foregoing restrictions shall not apply to (i) Liens existing on the
Issue Date in respect of Indebtedness existing on the Issue Date; (ii)
Liens securing only the Securities; (iii) Liens in favor of the
Company; (iv) Liens to secure Indebtedness Incurred for the purpose of
financing all or any part of the purchase price or the cost of
construction or improvement of the property subject to such Liens;
provided that (a) the aggregate principal amount of any Indebtedness
secured by such a Lien does not exceed 100% of such purchase price or
cost, (b) such Lien does not extend to or cover any other property
other than such item of property and any improvements on such item, (c)
the Indebtedness secured by such Lien is Incurred by the Company or its
Subsidiary within 180 days of the acquisition, construction or
improvement of such property and (d) the Incurrence of such
Indebtedness is permitted by Sections 908 and 909; (v) Liens on
property existing immediately
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prior to the time of acquisition thereof (and not created in
anticipation or contemplation of the financing of such acquisition);
(vi) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with the Company or any Subsidiary
of the Company (and not created in anticipation or contemplation
thereof); (vii) Liens on property of the Company or any Subsidiary of
the Company in favor of the United States of America, any state thereof
or any instrumentality of either to secure payments pursuant to any
contract or statute; (viii) Liens securing an aggregate principal
amount of Indebtedness at any one time outstanding which, when taken
together with (A) all Capital Lease Obligations of the Company and its
Subsidiaries Incurred in compliance with Sections 908 and 909 and then
outstanding and (B) all other Indebtedness of Subsidiaries of the
Company Incurred in compliance with Sections 908 and 909 and then
outstanding, would not exceed 10% of Consolidated Net Tangible Assets;
(ix) Liens to secure Indebtedness incurred to extend, renew, refinance
or refund (or successive extensions, renewals, refinancings or
refundings), in whole or in part, any Indebtedness secured by Liens
referred to in the foregoing clause (i) so long as such Lien does not
extend to any other property and the principal amount of Indebtedness
so secured is not increased except for the amount of any premium
required to be paid in connection with such refinancing pursuant to the
terms of the Indebtedness refinanced or the amount of any premium
reasonably determined by the Company as necessary to accomplish such
refinancing by means of a tender offer, exchange offer or privately
negotiated repurchase, plus the expenses of the Company or such
Subsidiary Incurred in connection with such refinancing; and (x) any
Lien on Permitted Collateral directly or indirectly securing the
payment of any Indebtedness of the Company or any of its Subsidiaries
under the Senior Credit Facility and incurred pursuant to clause (ii)
of Section 908(a) of the Indenture, whether absolute, accrued,
contingent or based upon any contingency, provided, however, that any
such Lien on equipment, fixtures and real estate shall be subordinate
in right of payment to the Lien on such assets securing the Securities.
j. Section 916(a)(iii) of the Indenture is stricken in its entirety and
the following provisions are substituted therefor:
(a) The Company will not, and will not permit any of its Subsidiaries
to, make one or more Asset Dispositions except in
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accordance with the Security Documents and for aggregate consideration
of, or in respect of assets having an aggregate fair market value of,
$5 million or more in any 12-month period, unless:
* * *
(iii) all Net Available Proceeds, less any amounts invested within
360 days of such Asset Disposition in assets related to the
business of the Company (including the Capital Stock of another
Person (other than the Company or any Person that is a Subsidiary
of the Company immediately prior to such investment), provided that
immediately after giving effect to any such investment (and not
prior thereto) such Person shall be a Subsidiary of the Company),
are applied either (A) to an Offer to Purchase outstanding Pari
Passu Securities, ratably in accordance with their respective
principal amounts, at 100% of their principal amount plus accrued
interest to the Purchase Date or (B) prorata, based on the
principal amount outstanding of each of the following categories of
indebtedness, to (1) the permanent reduction and repayment of
Indebtedness then outstanding under the Senior Credit Facility, and
(2) to the purchase of Pari Passu Securities, ratably in accordance
with their respective principal amounts, pursuant to an Offer to
Purchase outstanding Pari Passu Securities at 100% of their
principal amount plus accrued interest to the Purchase Date,
provided that (x) any Net Available Proceeds not applied to the
repayment of Indebtedness under the Senior Credit Facility in
accordance with subclause (B) of this clause (iii) shall be added
to the Net Available Proceeds to be used for an Offer to Purchase
outstanding Pari Passu Securities and (y) the Company may defer
making any Offer to Purchase outstanding Pari Passu Securities
until there are aggregate unutilized Net Available Proceeds equal
to or in excess of $5 million resulting from one or more Asset
Dispositions (at which time, the entire unutilized Net Available
Proceeds, and not just the amount in excess of $5 million, shall be
applied as required pursuant to this paragraph).
k. A new Section 921 is added to the Indenture as follows:
SECTION 921. Minimum Fixed Charge Coverage Ratio.
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As of the end of any fiscal quarter, the Company will not permit the
ratio of (i) EBITDA plus cash received from Tax Refund Claims minus
Unfunded Capital Expenditures minus taxes actually paid in cash minus
distributions and dividends paid in cash to (ii) interest expense plus
scheduled payments of principal on Indebtedness for Money Borrowed, to
be less than 60% of the ratios set forth below, all measured as of the
end of each fiscal quarter for the preceding four fiscal quarters on a
Consolidated basis (except that in the case of the second fiscal
quarter of fiscal year 1999, such ratio shall be measured based on the
results of such fiscal quarter only, and in the case of the third
fiscal quarter of fiscal year 1999, such ratio shall be measured based
on the results of such fiscal quarter and the preceding fiscal quarter
only):
Fiscal Quarter Ending Ratio
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Second fiscal quarter of fiscal year 1999 .50 to 1
Third fiscal quarter of fiscal year 1999 .60 to 1
Fourth fiscal quarter of fiscal year 1999 1.10 to 1
Each fiscal quarter end thereafter 1.15 to 1
For purposes of this Section 921, defined terms not already defined in
the Indenture shall have the following definitions:
"Business Unit" means the assets constituting the business or a
division of operating unit thereof of any person.
"Capital Expenditures" means, with respect to any person, all
expenditures made and liabilities incurred for the acquisition of
assets (other than assets which constitute a Business Unit) which are
not, in accordance with GAAP, treated as expense items for such person
in the year made or incurred or as a prepaid expense applicable to a
future year or years.
"Consolidated" means, when used with reference to any accounting term
used herein, the sum of the applicable accounting term for the Company
and its consolidated Subsidiaries, as consolidated after the
elimination of intercompany items and, in
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the case of net income and tangible net worth, after appropriate
deductions for any minority interests in any Subsidiaries.
"EBITDA" means net income before provision for interest expense, income
taxes, depreciation expense and amortization. All calculations of
EBITDA shall exclude the results of Logo Athletic, Inc. and Logo
Athletic/Headwear, Inc. for all periods on or prior to July 15, 1998
"Money Borrowed" means, as applied to Indebtedness, (a) Indebtedness
for money borrowed, (b) Indebtedness, whether or
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not in any such case the same was for money borrowed (i) represented by
notes payable, and drafts accepted, that represent extensions of
credit, (ii) constituting obligations evidenced by bonds, debentures,
notes or similar instruments, or (iii) upon which interest charges are
customarily paid or that was issued or assumed as full or partial
payment for property (other than trade credit that is incurred in the
ordinary course of business), (c) Indebtedness that constitutes a
Capital Lease Obligation, (d) Indebtedness under hedging agreements,
and (e) Indebtedness that is such by virtue of clause (VII) of the
definition thereof, but only to the extent that the obligations
Guaranteed are obligations that would constitute Indebtedness for Money
Borrowed.
"Tax Refund Claims" means all tax refund claims and all rights with
respect thereto, including all rights to settle or compromise the
amount of such claims, to file amendments and other documents with
respect thereto, and to receive the proceeds thereof.
"Unfunded Capital Expenditures" means Capital Expenditures which are
paid for other than with proceeds of Indebtedness for Money Borrowed
(other than loans under the Senior Credit Facility) incurred to finance
such Capital Expenditures and other than those represented by Capital
Lease Obligations.
2. Counterparts. This Second Supplemental Indenture may be executed
in one or more counterparts, each of which shall constitute an original
but all of which when taken together shall constitute one contract.
3. Defined Terms. Capitalized terms not defined herein have the
meaning given them in the Indenture.
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IN WITNESS WHEREOF, the Issuer and the Guarantors have caused this
Second Supplemental Indenture to be duly executed by its authorized
officers, and the Successor Trustee, for the benefit and with the
consent of the Holders of the Securities, has caused the same to
accepted by its authorized officer, as of the day and year first above
written.
Issuer:
TULTEX CORPORATION
By ______________________
Name_____________________
Title ___________________
Guarantors:
AKOM, LTD.
By ______________________
Name_____________________
Title ___________________
DOMINION STORES, INC.
By ______________________
Name ____________________
Title ___________________
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TULTEX SUBSIDIARY (VA), INC.
By ______________________
Name_____________________
Title ___________________
SWEATJET, INC.
By ______________________
Name_____________________
Title ___________________
TULTEX CANADA, INC.
By ______________________
Name_____________________
Title ___________________
TULTEX INTERNATIONAL, INC.
By ______________________
Name_____________________
Title ___________________
TULTEX SUBSIDIARY (MASS), INC.
By ______________________
Name_____________________
Title ___________________
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CALIFORNIA SHIRT SALES, INC.
By ______________________
Name_____________________
Title ___________________
Successor Trustee:
U.S. BANK NATIONAL
ASSOCIATION
By ______________________
Name_____________________
Title ___________________
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