Initial Public Offering (IPO): Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1 Gerber Childrenswear, Inc. 131 744K
2: EX-4.2 Credit Agreement 108 427K
3: EX-10.1 Stock Purchase Agreement 51 215K
11: EX-10.10 Subordination and Interceditor Agreement 17 68K
12: EX-10.11 Junior Subordinated Note 25 100K
13: EX-10.13 License Agreement 28 91K
14: EX-10.14 License Agreement 31 73K
15: EX-10.15 Trademark License Agreement 33 127K
16: EX-10.16 Lease Agreement 7 31K
17: EX-10.17 Lease Agreement 6 28K
18: EX-10.18 Lease Agreement 6 28K
19: EX-10.19 Lease Agreement 11 37K
4: EX-10.2 Form of Executive Stock Purchase Agreement 21 90K
20: EX-10.20 Lease Agreement 40 120K
21: EX-10.21 Severance Agreement 2 14K
5: EX-10.3 Form of Manager Securities Purchase Agreement 17 69K
6: EX-10.4 Securities Purchase Agreement 13 60K
7: EX-10.5 Form of Director Stock Purchase Agreement 12 44K
8: EX-10.7 Stock Purchase Agreement 54 224K
9: EX-10.8 Share Purchase Agreement 52 242K
10: EX-10.9 Amended and Restated Credit Agreement 54 238K
22: EX-21.1 Subsidiaries of the Registrant 1 8K
23: EX-23.1 Consent of Ernst & Young LLP 1 10K
24: EX-23.2 Consent of Jc Holland & Co Psc 1 8K
25: EX-23.3 Consent Price Waterhouse 1 8K
26: EX-27.1 Financial Data Schedule 1 10K
Exhibit 10.9
AMENDED AND RESTATED
SENIOR SUBORDINATED CREDIT AGREEMENT
dated as of
December 17, 1997
by and among
GERBER CHILDRENSWEAR, INC.,
AUBURN HOSIERY MILLS, INC.
as Borrowers,
GCIH, INC.,
THE DOMESTIC SUBSIDIARIES (AS DEFINED HEREIN)
as Guarantors,
and
CITICORP MEZZANINE PARTNERS, L.P.
as Lender
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS.......................................................1
SECTION 1.1 Certain Defined Terms....................................1
SECTION 1.2 Accounting Terms........................................17
ARTICLE 2. AMOUNT AND TERMS OF NOTE AND LOAN................................17
SECTION 2.1 Loan and Note...........................................17
SECTION 2.2 Interest on the Loans...................................18
SECTION 2.3 Prepayments and Payments................................18
SECTION 2.4 Use of Proceeds.........................................21
ARTICLE 3. CONDITIONS TO LOAN...............................................21
SECTION 3.1 Conditions..............................................21
ARTICLE 4. REPRESENTATIONS AND WARRANTIES...................................23
SECTION 4.1 Organization and Good Standing..........................23
SECTION 4.2 Authorization and Power.................................23
SECTION 4.3 No Conflicts or Consents................................23
SECTION 4.4 Enforceable Obligations.................................23
SECTION 4.5 Title to Properties; Liens..............................23
SECTION 4.6 Financial Condition.....................................24
SECTION 4.7 No Default..............................................24
SECTION 4.8 Contractual Obligations.................................24
SECTION 4.9 No Litigation...........................................24
SECTION 4.10 Use of Proceeds; Margin Stock...........................24
SECTION 4.11 No Financing of Regulated Corporate Takeovers...........24
SECTION 4.12 Compliance with Law.....................................24
SECTION 4.13 Capital Structure and Subsidiaries......................24
SECTION 4.14 Licenses, Trademarks, etc...............................25
SECTION 4.15 Permits and Licenses....................................25
SECTION 4.16 ERISA...................................................25
SECTION 4.17 Investment Company Act..................................26
SECTION 4.18 Public Utility Holding Company Act......................26
SECTION 4.19 Environmental and Safety Matters........................26
SECTION 4.20 Financial Condition.....................................27
SECTION 4.21 Senior Credit Documents.................................28
SECTION 4.22 Auburn Acquisition; Ireland Acquisition.................28
SECTION 4.23 Subordinated Indebtedness...............................28
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ARTICLE 5. AFFIRMATIVE COVENANTS............................................28
SECTION 5.1 Financial Statements and Other Reports..................28
SECTION 5.2 Corporate Existence, Etc................................30
SECTION 5.3 Payment of Taxes; Tax Consolidation.....................31
SECTION 5.4 Maintenance of Properties; Insurance....................31
SECTION 5.5 Inspection..............................................31
SECTION 5.6 No Further Negative Pledges.............................31
SECTION 5.7 Compliance with Laws, Etc...............................31
SECTION 5.8 Maintenance of Accurate Records, Etc....................31
SECTION 5.9 Lender Meeting..........................................32
SECTION 5.10 ERISA Compliance........................................32
SECTION 5.11 Environmental Matters...................................32
ARTICLE 6. NEGATIVE AND FINANCIAL COVENANTS.................................32
SECTION 6.1 Indebtedness............................................32
SECTION 6.2 Transactions with Shareholders and Affiliates...........32
SECTION 6.3 Restricted Junior Payments..............................33
SECTION 6.4 Liens...................................................34
SECTION 6.5 Mergers.................................................34
SECTION 6.6 Limitation on Sale of Less Than Substantially All
Assets..................................................34
SECTION 6.7 Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries..................................35
SECTION 6.8 Investments.............................................35
SECTION 6.9 Restrictions on Additional Subordinated Indebtedness;
Amendments to Preferred Stock and Seller Notes..........35
SECTION 6.10 No Amendment of Organizational Documents................35
SECTION 6.11 Conduct of Business.....................................35
SECTION 6.12 No Creation of New Subsidiaries.........................35
SECTION 6.13 Compliance with ERISA...................................35
SECTION 6.14 Material License Agreements.............................36
SECTION 6.15 Amendments with Respect to Senior Debt..................36
SECTION 6.16 Leverage Ratio..........................................36
SECTION 6.17 Capitalization Ratio....................................36
SECTION 6.18 Fixed Charge Ratio......................................37
ARTICLE 7. EVENTS OF DEFAULT................................................37
SECTION 7.1 Failure To Make Payments When Due.......................37
SECTION 7.2 Default in and Acceleration of Other Agreements.........37
SECTION 7.3 Breach of Certain Covenants and Agreements..............37
SECTION 7.4 Breach of Warranty......................................37
SECTION 7.5 Involuntary Bankruptcy; Appointment of Receiver, Etc....37
SECTION 7.6 Voluntary Bankruptcy; Appointment of Receiver, Etc......38
SECTION 7.7 Judgments and Attachments...............................38
SECTION 7.8 Other Agreements........................................38
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SECTION 7.9 Change in Control.........................................38
ARTICLE 8. SUBORDINATION....................................................39
ARTICLE 9. GUARANTEE........................................................39
SECTION 9.1 Guarantee...............................................39
SECTION 9.2 Obligations Unconditional...............................39
SECTION 9.3 Reinstatement...........................................40
SECTION 9.4 Subrogation.............................................40
SECTION 9.5 Remedies................................................40
ARTICLE 10. MISCELLANEOUS...................................................40
SECTION 10.1 Participations in Loan and Note........................40
SECTION 10.2 Expenses...............................................41
SECTION 10.3 Indemnity..............................................42
SECTION 10.4 Set-Off................................................43
SECTION 10.5 Amendments and Waivers.................................43
SECTION 10.6 Independence of Covenants..............................43
SECTION 10.7 Notices................................................43
SECTION 10.8 Survival of Warranties and Certain Agreements..........45
SECTION 10.9 Failure or Indulgence Not Waiver; Remedies Cumulative..45
SECTION 10.10 Severability...........................................45
SECTION 10.11 Heading................................................45
SECTION 10.12 Applicable Law.........................................45
SECTION 10.13 Successors and Assigns; Subsequent Holders of Notes....45
SECTION 10.14 Consent to Jurisdiction and Service of Process.........46
SECTION 10.15 Waiver of Jury Trial...................................46
SECTION 10.16 Counterparts; Effectiveness............................47
SECTION 10.17 Entirety...............................................47
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Exhibit A - Form of the Note
Exhibit B - Subordination Agreement
Schedule 1.1(b) - License Agreements
Schedule 4.5 - Title to Properties; Liens
Schedule 4.9 - No Litigation
Schedule 4.13(a) - Capital Structure
Schedule 4.13(b) - Subsidiaries
Schedule 4.14 - Licenses; Trademarks
Schedule 4.16 - ERISA
Schedule 4.19 - Environmental and Safety Matters
Schedule 6.8 - Investments
Schedule 6.14 - Material License Agreements
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AMENDED AND RESTATED SENIOR SUBORDINATED CREDIT AGREEMENT (the
"Agreement"), dated as of December 17, 1997, by and among GERBER CHILDRENSWEAR,
INC. (as successor by merger of GCIH Merger Sub, Inc.), a Delaware corporation
(the "Company"), AUBURN HOSIERY MILLS, INC., a Kentucky corporation ("Auburn"),
GCIH, INC., a Delaware corporation ("Holding"), each of the Domestic
Subsidiaries (as defined below) of Holding, the Company and Auburn, and CITICORP
MEZZANINE PARTNERS, L.P., a Delaware limited partnership (the "Lender").
WHEREAS, the Company, Holding and the Lender entered into a Senior
Subordinated Credit Agreement, dated as of January 22, 1996 (the "Original
Agreement") pursuant to which, among other things, the Lender provided
$22,500,000 of senior subordinated financing to the Company in connection with
the Acquisition;
WHEREAS, the Company and Holding have requested the Lender's consent
to (i) the acquisition (the "Auburn Acquisition") by Holding of Auburn and Sport
Socks Company Limited, a company registered under the laws of England and Wales
("Sport Socks UK") pursuant to the Stock Purchase Agreement, dated as of
November 12, 1997, by and among Holding and the stockholders of Auburn and Sport
Socks UK signatory thereto (as amended from time to time, the "Auburn Purchase
Agreement") and (ii) the acquisition (the "Ireland Acquisition") by Holding of
Sports Socks Co. (Ireland) Limited ("Sport Socks Ireland") pursuant to the Stock
Purchase Agreement dated as of December 16, 1997, by and among Holdings and the
stockholders of Sport Socks Ireland signatory thereto (as amended from time to
time the "Ireland Purchase Agreement");
WHEREAS, the Guarantors (as defined below) are willing to guaranty
all of the Obligations of the Borrowers (as defined below) to Lender under the
Loan Documents; and
WHEREAS, the Credit Parties and the Lender desire to amend and
restate in its entirety the Original Agreement in order to, among other things,
provide Lender's consent to the Auburn Acquisition, the Ireland Acquisition and
the financing thereof;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Credit Parties and the Lender
agree as follows:
ARTICLE 1. DEFINITIONS
SECTION 1.1 Certain Defined Terms.
The following terms used in this Agreement shall have the following
meanings:
"Acquisition" means the acquisition by GCIH Merger Sub, Inc. of the
Company from the Seller on the Closing Date pursuant to the terms of the
Purchase Agreement.
"Affiliate", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling" "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise. None of the Lender, any Senior Lender
nor any of the parents of Lender or any Senior Lender, any of the respective
Subsidiaries (other than, with respect to Lender, CVC), nor Seller, shall be
treated as an Affiliate of any Credit Party or shall be deemed to be a holder of
5% or more of any class of equity securities of any Credit Party.
"Agent" means NationsBank, N.A., as administrative agent under the
Senior Credit Agreement, and its successors and assigns.
"Asset Sale" means the sale, transfer or other disposition by any
Credit Party or any of its Subsidiaries to any Person other than any Credit
Party or any of its Subsidiaries of (i) any of the stock of any Credit Party's
Subsidiaries, and (ii) any other assets having a value in excess of $100,000 (it
being understood that if the value thereof exceeds $100,000, the entire value
and not just the portion in excess of $100,000 shall be subject to Section
2.3(a)(ii)). Notwithstanding the foregoing, an Asset Sale shall not include (A)
inventory sales in the ordinary course of business, (B) sales or other
dispositions of obsolete or excess equipment or damaged, obsolete or slow-moving
inventory and (C) licensing of trademarks and other intellectual property for
fair value in the ordinary course of business to third parties.
"Auburn" has the meaning set forth in the recitals hereto.
"Auburn Acquisition" has the meaning set forth in the recitals
hereto.
"Auburn Purchase Agreement" has the meaning set forth in the
recitals hereto.
"Bankruptcy Code" means Title 11 of the United States Code, as now
and hereafter in effect, or any successor statute.
"Bankruptcy Event" has the meaning set forth in the Subordination
Agreement.
"Board of Directors" means the Board of Directors of any Credit
Party or any of their respective Subsidiaries, as applicable, or any duly
authorized committee of that Board.
"Borrowers" means, collectively, the Company and Auburn, in each
case together with any successors and permitted assigns. All Obligations of the
Borrowers referred to herein shall be deemed to be on a joint and several basis
among the Borrowers.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or is a day on
which banking institutions located in such state are authorized or required by
law or other governmental action to close.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, or any
successor federal statute.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System.
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"CVC" means Citicorp Venture Capital, Ltd., a New York corporation.
"CVC Group" means CVC, its Affiliates, officers and directors of CVC
and its Affiliates appointed to such position by CVC, and independent directors
of Holding appointed by CVC.
"Capital Expenditures" means all expenditures of the Credit Parties
and their Subsidiaries which, in accordance with GAAP, would be classified as
capital expenditures, including, without limitation, Capital Leases.
"Capital Lease" means as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
accordance with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person and the amount of such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
"Capital Stock" of any Person means any and all shares, interests,
participations, or other equivalents (however designated, including stock
appreciation rights) of its capital stock and any rights (other than debt
securities convertible into capital stock), warrants or options to acquire such
capital stock.
"Capitalization Ratio" means the ratio of (a) Funded Debt to (b)
Total Capitalization.
"Cash Equivalents" means: (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition; (b) U.S. dollar denominated
time and demand deposits and certificates of deposit of (i) any Senior Lender,
(ii) any domestic commercial bank having capital and surplus in excess of
$500,000,00 or (iii) any bank whose short-term commercial paper rating from S&P
is at least A-1 or the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank being an "Approved Bank"), in each case with
maturities of not more than 270 days from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any Approved Bank
(or by the parent company thereof) or any variable rate notes issued by, or
guaranteed by, any domestic corporation rated A-1 (or the equivalent thereof) or
better by S&P or P-1 (or the equivalent thereof) or better by Moody's and
maturing within six months of the date of acquisition, (d) repurchase agreements
with a bank or trust company (including any of the Senior Lenders) or recognized
securities dealer having capital and surplus in excess of $500,000,000 for
direct obligations issued by or fully guaranteed by the United States of America
in which a Borrower hall have a perfected first priority security interest
(subject to no other Liens) and having, on the date of purchase thereof, a fair
market value of at least 100% of the amount of the repurchase obligations and
(e) Investments, classified in accordance with GAAP as current assets, in money
market investment programs registered under the Investment Company Act of 1940,
as amended, which are administered by reputable financial institutions having
capital of at least $500,000,000 and the portfolios of which consist
substantially of Investments of the character described in the foregoing
subdivisions (a) through (d).
"Cash Proceeds" means, with respect to any financing, Asset Sale, or
Casualty Event, cash payments received from such financing, Asset Sale or
Casualty Event including any cash
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received by way of deferred payment pursuant to a note receivable or otherwise,
but only as and when so received.
"Casualty Event" means, with respect to any property of any Person,
any loss of or damage to, or any condemnation or other taking of, such property
for which such Person or any of its Subsidiaries receives insurance proceeds,
proceeds of a condemnation award or other compensation.
"Change in Control" means that any of the following shall have
occurred:
(a) Holding shall cease to own and control, beneficially and of
record, 100% of the issued and outstanding shares of Capital Stock of the
Borrowers;
(b) CVC Group (other than Lender) and Lawrence R. Glenn (the initial
holder of all Class C Common Stock of Holding) shall cease to own and control at
least 51% (or, on or after the consummation of a sale of stock of Holding
registered under the Securities Act of 1933, as amended, 30%) of the fully
diluted voting power represented by Capital Stock and other securities of
Holding, or shall cease to have the power to appoint directors holding a
majority of the voting power of the Board of Directors of Holding or CVC Group
shall cease to have an unencumbered cash investment of at least $6,250,000 in
Common Stock and Preferred Stock; or
(c) following the consummation of a sale of Capital Stock of Holding
registered under the Securities Act of 1933, as amended, any person or group
(within the meaning of sections 13(d) and 14(d)(2) of the Exchange Act, as
amended) other than CVC shall acquire a greater percentage of the fully diluted
voting power represented by the Capital Stock and other securities of Holding
than that owned and controlled by CVC.
"Chief Financial Officer" means the highest ranking officer of any
company then in charge of the financial matters of such company.
"Closing Date" means January 22, 1996.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Common Stock" means, collectively, the Class A Common Stock, par
value $0.01 per share, the Class B Common Stock, par value $0.01 per share, the
Class C Common Stock, par value $0.01 per share, the Class D Common Stock, par
value $0.01 per share, and any other shares of Capital Stock designated as
common stock, of Holding, and any Capital Stock issued with respect thereto in a
stock consolidation, reclassification or other recapitalization.
"Company" has the meaning set forth in the recitals hereto.
"Contested Claim" means any Tax, Indebtedness, Contingent Liability
or other claim or liability, (i) the validity or amount of which is being
contested in good faith by appropriate proceedings, (ii) which has been bonded
or for which adequate reserves, as required by GAAP, have been established and
(iii) with respect to which any right to execute upon or sell any assets of any
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Credit Party has not matured or has been and continues to be effectively
enjoined, superseded or stayed.
"Contingent Liabilities" means, as applied to any Person, any
guarantees, endorsements, agreements to purchase or provide funds for the
payment of obligations of others, or other liabilities which would be classified
as contingent in accordance with GAAP.
"Contractual Obligations" means, as applied to any Person, any
provision of any security issued by that Person or of any indenture, mortgage,
deed of trust, contract, undertaking, agreement, or other written instrument to
which that Person is a party or by which it or any of its owned properties is
bound or to which it or any of its owned properties is subject.
"Credit Party", and collectively, "Credit Parties" means and
includes, Holding, the Borrowers, each Domestic Subsidiary of Holding and the
Borrowers, and any Subsidiary of the Borrowers or Holding which is or becomes a
party to any Loan Document.
"Current Maturities of Long Term Debt" means all scheduled payments
required to be paid within one year from the date of determination with respect
to any Funded Debt (other than Revolving Loans or Swing Line Loans).
"Domestic Subsidiary" means all direct and indirect Subsidiaries of
Holding or a Borrower that are domiciled, incorporated or organized under the
laws of any state of the United States or the District of Columbia whether
existing as of the date hereof or hereafter created or acquired. As of the
Restatement Date, the Domestic Subsidiaries are as set forth on Schedule 4.13.
"EBITDA" means, for any period, with respect to the Credit Parties
and their Subsidiaries on a consolidated basis, the sum of (a) Net Income for
such period (excluding the effect of any extraordinary or other non-recurring
gains (including any gain from the sale of property) or non-cash losses plus (b)
an amount which, in the determination of Net Income for such period has been
deducted for (i) Interest Expense for such period, (ii) total Federal, state,
foreign or other income and franchise Taxes for such period, (iii) all
depreciation and amortization for such period, and (iv) all other non-cash
charges, including, without limitation, non-cash royalty payments under existing
License Agreements, all as determined in accordance with GAAP.
"EBITDAR" means, for any period, the sum of EBITDA for such period
plus an amount which in the determination of Net Income for such period has been
deducted for cash Rent Expense for such period, all as determined in accordance
with GAAP.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, or any successor statute.
"ERISA Affiliate" of any Person means any corporation or trade or
business which is a member of the same controlled group of corporations or under
common control with such Person (within the meaning of Section 414(b)(c)(m) or
(o) of the Code) as such Person.
"ERISA Event" with respect to any Person means (a) the occurrence of
a reportable event, within the meaning of Section 4043 of ERISA, with respect to
any Pension Plan of such
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Person, unless the 30-day notice requirement with respect to such event has been
waived by the PBGC; (b) the provision by the administrator of any Plan of such
Person of a notice of intent to terminate such Pension Plan pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a pension plan
amendment referred to in Section 4041(a)(2) of ERISA); (c) the cessation of
operations at a facility of such Person in the circumstances described in
Section 4068(a) of ERISA; (d) the withdrawal by such Person from a Pension Plan
during a plan year for which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA; (e) the failure by such Person to make a payment to
a Pension Plan required under Section 302(f)(1) of ERISA; (f) the adoption of an
amendment to a Pension Plan of such Person requiring the provision of security
to such Pension Plan pursuant to Section 307 of ERISA; or (g) the institution by
the PBGC of proceedings to terminate a Pension Plan of such Person pursuant to
Section 4042 of ERISA, or the occurrence of any event or condition described in
Section 4042 of ERISA that could constitute grounds for the termination of, or
the appointment of a trustee to administer, such Pension Plan.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained or contributed to by
any Credit Party or any ERISA Affiliate of any Credit Party, other than a
Multiemployer Plan or (b) has at any time within the preceding six (6) years
been maintained for the employees of any Credit Party or any current ERISA
Affiliate.
"Environmental and Safety Laws" means any and all present or future
federal, state, local and foreign statutes, laws, regulations, ordinances and
similar provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and common
law concerning public health or safety, worker health or safety or pollution or
protection of the environment, including, without limitation, those relating to
any emissions, discharges or Releases of Hazardous Materials to ambient air,
surface water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, control,
cleanup or handling of Hazardous Materials.
"Environmental Claim" means, with respect to any Person, any written
notice, claim, demand or other communication alleging or asserting such Person's
liability for investigatory costs, cleanup costs, governmental response costs,
damages to natural resources or other property, personal injuries, fines or
penalties arising out of, based on or resulting from (a) the presence, handling,
generation, treatment, storage, disposal, Release or threatened Release into the
environment of any Hazardous Material at any location, whether or not owned by
such Person, or (b) circumstances forming the basis of any violation, or alleged
violation, of any Environmental and Safety Law.
"Environmental Permit" has the meaning set forth in Section 4.19(a)
hereto.
"Event of Default" means each of the events set forth in Article 7.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"Fiscal Quarter" means the quarterly periods ending on March 31,
June 30, September 30, and December 31 of each Fiscal Year.
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"Fiscal Year" means each twelve month period ending on the last day
of December in each year.
"Fixed Charge Ratio" means the ratio of (a) EBITDAR less Capital
Expenditures made in cash to (b) cash Interest Expense plus Current Maturities
of Long Term Debt plus cash income Taxes plus cash Rent Expense.
"Foreign Subsidiary" means all subsidiaries of Holding or a Borrower
that are not Domestic Subsidiaries.
"Funded Debt" means, without duplication, the sum of (a) all
Indebtedness of the Credit Parties and their Subsidiaries for borrowed money,
(b) all purchase money Indebtedness of the Credit Parties and their
Subsidiaries, (c) the principal portion of all obligations of the Credit Parties
and their Subsidiaries under Capital Leases, (d) all obligations, contingent or
otherwise, relative to the face amount of all letters of credit (other than
letters of credit supporting inventory purchases in the ordinary course of
business), whether or not drawn, and banker's acceptances issued for the account
of a Credit Party or its Subsidiaries (it being understood that, to the extent
an undrawn letter of credit supports another obligation consisting of
Indebtedness, in calculating aggregated Indebtedness only such other obligation
shall be included), (e) all Guaranty Obligations of the Credit Parties and their
Subsidiaries with respect to Funded Debt of another Person, (f) all Funded Debt
of another entity secured by a Lien on any property of the Credit Parties and
their Subsidiaries whether or not such Funded Debt has been assumed by a Credit
Party or any of its Subsidiaries, (g) all Funded Debt of any partnership or
unincorporated joint venture to the extent a Credit Party or one of its
Subsidiaries is legally obligated or has a reasonable expectation of being
liable with respect thereto, net of any assets of such partnership or joint
venture and (h) the principal balance outstanding under any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease in
accordance with GAAP.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to Section 1.2.
"Guarantors" means Holding, each of the Domestic Subsidiaries of
Holding (other than the Borrowers) and the Borrowers and each other Person which
becomes a guarantor hereunder of the Restatement Date, together with their
successors and assigns.
"Guaranty Obligations" means, with respect to any Person, without
duplication, any obligations (other than endorsements in the ordinary course of
business of negotiable instruments for deposit or collection) guaranteeing any
Indebtedness of any other Person in any manner, whether direct or indirect, and
including without limitation any obligation, whether or not contingent, (a) to
purchase any such Indebtedness or other monetary obligation or any property
constituting security therefor, (b) to advance or provide funds or other support
for the payment or purchase of such Indebtedness or monetary obligation or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including, without limitation, maintenance agreements, comfort
letters, take or pay arrangements, put agreements or similar agreements or
arrangements) for the benefit of the holder of Indebtedness of such other
Person, (c) to lease or purchase property, securities or services primarily for
the purpose of assuring the owner of such Indebtedness or (d) to
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otherwise assure or hold harmless the owner of such Indebtedness or monetary
obligation against loss in respect thereof. The amount of any Guaranty
Obligation hereunder shall (subject to any limitations set forth therein) be
deemed to be an amount equal to the outstanding principal amount (or maximum
principal amount, if larger) of the Indebtedness in respect of which such
Guaranty Obligation is made.
"Hazardous Material" means all or any of the following: (a)
substances that are defined or listed in, or otherwise classified pursuant to,
any applicable Environmental and Safety Laws as "hazardous substances",
"hazardous materials", "hazardous wastes", "toxic substances" or any other
formulation intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity, "TLCP" toxicity or "EP" toxicity; (b)
oil, petroleum or petroleum derived substances, natural gas, natural gas liquids
or synthetic gas and drilling fluids, produced waters and other wastes
associated with the exploration, development or production of crude oil, natural
gas or geothermal resources; (c) any flammable substances or explosives or any
radioactive materials; (d) underground storage tanks, whether empty or
containing any substance or surface impoundments; and (e) asbestos in any form
or electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls.
"Hedging Agreements" means, collectively, interest rate protection
agreements, foreign currency exchange agreements, commodity purchase or option
agreements or other interest or exchange rate or commodity price hedging
agreements, in each case, entered into or purchased by a Credit Party.
"Holding" has the meaning set forth in the recitals hereto.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, or upon
which interest payments are customarily made, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person to the extent of the value of such property (other than
customary reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business), (d) all obligations, other
than intercompany items, of such Person issued or assumed as the deferred
purchase price of property or services purchased by such Person which would
appear as liabilities on a balance sheet of such Person, (e) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (f) all
Guaranty Obligations of such Person, (g) the principal portion of all
obligations of such Person under (i) Capital Leases and (ii) any synthetic
lease, tax retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product of such Person where such transaction is
considered borrowed money indebtedness for tax purposes but is classified as an
operating lease in accordance with GAAP, (h) all net obligations of such Person
in respect of Hedging Agreements, (i) the maximum amount of all performance and
standby letters of credit issued or bankers' acceptances facilities created for
the account of such Person and, without duplication, all drafts drawn thereunder
(to the extent unreimbursed), and (j) the aggregate amount of uncollected
accounts receivable of such Person subject at such time to a sale of receivables
(or similar transaction) regardless of
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whether such transaction is effected without recourse to such Person or in a
manner that would not be reflected on the balance sheet of such Person in
accordance with GAAP. The Indebtedness of any Person shall included the
Indebtedness of any partnership or unincorporated joint venture in which such
Person is legally obligated.
"Indemnified Liabilities" has the meaning set forth in Section 10.3
"Indemnitees" has the meaning set forth in Section 10.3.
"Indemnitors" has the meaning set forth in Section 10.3.
"Initial Interest Payment Date" means July 15, 1996.
"Interest Payment Date" means the last day of each Interest Period.
"Interest Period" means initially the period commencing on the
Closing Date and ending on the Initial Interest Payment Date, and, thereafter,
each six-month period; provided, that:
(i) if an Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; and
(ii) no Interest Period shall extend beyond the Maturity Date.
"Investment" in any Person means (a) the acquisition (whether for
cash, property, services, assumption of Indebtedness, securities or otherwise)
of assets, shares of capital stock, bonds, notes, debentures, partnership, joint
ventures or other ownership interests or other securities of such other Person
or (b) any deposits with, or advance, loan or other extension of credit to, such
Person (other than deposits made in connection with the purchase of equipment or
other assets in the ordinary course of business) or (c) any other capital
contribution to or investment in such Person, including, without limitation, any
Guaranty Obligation (including any support for letter of credit issued on behalf
of such Person) incurred for the benefit of such Person. The amount of any
Investment shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment.
"Ireland Acquisition" has the meaning set forth in the recitals
hereto.
"Ireland Purchase Agreement" has the meaning set forth in the
recitals hereto.
"Lender" has the meaning assigned to that term in the preamble to
this Agreement and shall include any assignees of the Loan or Notes pursuant to
Section 10.1.
"Letters of Credit" has the meaning set forth in the Senior Credit
Agreement as in effect on the Restatement Date.
"Leverage Ratio" means, as of the end of each fiscal quarter, a
ratio of (a) total Funded Debt on such date to (b) EBITDA for the twelve month
period ending on such date.
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"License Agreements" means those license agreements listed in
Schedule 1.1(b) hereto.
"Lien" means any lien, mortgage, pledge, security interest, charge
or encumbrance of any kind, whether voluntary or involuntary (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"Litigation" means any proceeding, claim, lawsuit and/or
investigation conducted or overtly threatened by or before any Tribunal.
"Loan" has the meaning set forth in Section 2.1.
"Loan Documents" means, collectively, this Agreement, the Note, the
Warrant, the Warrant Agreement, the Subordination Agreement, the Stockholders
Agreement, the Registration Rights Agreement and all other documents,
instruments and agreements executed and/or delivered in connection herewith and
therewith, each as amended, supplemented or modified from time to time.
"Margin Stock" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"Material Adverse Effect" means, with respect to any Person, a
material adverse effect on (a) the business, assets, condition (financial or
otherwise), operations, properties or prospects of such Person or (b) the
ability of such Person to perform its obligations under any Loan Document to
which it is a party or of Lender to enforce or collect any of the Obligations.
"Material License Agreements" means (a) all license agreements set
forth on Schedule 6.14 hereto and (b) each other license agreement entered into
by a Credit Party in which the annual revenues derived from the sale of
inventory subject to such license agreement exceeds 5% of the total annual
revenues of the Credit Parties and their Subsidiaries.
"Maturity Date" means January 22, 2004.
"Moody's" means Moody's Investors Services, Inc., or any successor
or assignee of the business of such company in the business of rating
securities.
"Multiemployer Plan" means a Pension Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" means, with respect to any financing, Asset Sale
or Casualty Event, (a) the Cash Proceeds received by any Credit Party or any of
their respective Subsidiaries, minus (b) (i) reasonable brokerage commissions
and other reasonable fees and expenses (including reasonable fees and expenses
of counsel, certified public accountants and reasonable and customary fees of
investment bankers) related to such financing, Asset Sale or Casualty Event, and
(ii) the sum of (A) any Taxes incurred (after taking into account available
carryforwards and credits) by such Credit Party as a result of such financing,
Asset Sale or Casualty Event, plus (B) in the case of any Asset Sale, the
principal amount of any Indebtedness for borrowed money which is secured by the
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asset sold in such Asset Sale (other than any such Indebtedness for borrowed
money assumed by the purchaser of such asset).
"Net Income" shall mean, for any period, the net income after Taxes
for such period of the Credit Parties and their Subsidiaries on a consolidated
basis, determined in accordance with GAAP.
"Note" means one or more notes of the Borrowers issued pursuant to
Sections 2.1 or 12.1, substantially in the form of Exhibit A hereto.
"Note Register" has the meaning set forth in Section 10.1.
"Obligations" means all obligations of every nature of the Credit
Parties from time to time owed to the Lender under the Loan Documents, it being
understood that all such obligations of the Borrowers shall be joint and
several.
"Officer's Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its Chief Executive
Officer, its President or one of its Vice Presidents or its Chief Financial
Officer or its Treasurer; provided, that every Officer's Certificate with
respect to the compliance with a condition precedent to the making of a Loan
hereunder shall include (i) a statement that the officer or officers making or
giving such Officer's Certificate have read such condition and any definitions
or other provisions contained in this Agreement relating thereto, (ii) a
statement of the signers that they have made or have caused to be made such
examination or investigation as they deem necessary to enable them to certify
that such condition has been complied with, and (iii) a statement that such
condition has been complied with.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or any of the Pension Benefit Guaranty Corporation's functions
under ERISA.
"Pension Plan" means an employee Benefit Plan which is subject to
the provisions of Title IV of ERISA.
"Permits" has the meaning provided in Section 4.15.
"Permitted Acquisitions" means an acquisition of all or
substantially all of the assets or stock of another Person by a Credit Party or
its Subsidiaries; provided, that (a) such acquisition does not cause or would
not be reasonably expected to cause a Potential Event of Default or Event of
Default, (b) after giving effect to such acquisition, the Credit Parties would
be in compliance on a pro forma basis (as such pro forma compliance is computed
in accordance with Regulation S-X of the Securities Act) with all of the
financial covenants set forth in Sections 6.16 though 6.19, (c) such Person must
in all material respects engage in a business similar to or a logical extension
of the business of the Credit Parties and their Subsidiaries and (d) the
aggregate amount of all such acquisitions shall not exceed $10,000,000 during
the term of this Agreement.
"Permitted Investments" mans Investments which are (a) cash or Cash
Equivalents, (b) accounts receivable created, acquired or made in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms, (c) inventory, raw materials and general
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intangibles acquired in the ordinary course of business, (d) Investments by a
Credit Party in another Credit Party, (e) Investments by a Foreign Subsidiary in
a Credit Party or another Foreign Subsidiary, (f) a one-time Investment
(excluding the purchase price paid by Holding to acquire Sport Socks Ireland) by
a Credit Party in Sport Socks Ireland not to exceed $3,000,000 and additional
Investments by Credit Parties in Foreign Subsidiaries, not to exceed $1,000,000,
in the aggregate, at any one time, (g) loans to directors, officers or employees
in the ordinary course of business for reasonable business expenses, not to
exceed, in the aggregate, $500,000 at any one time, (h) Investments in Capital
Expenditures, (i) Investments by Holding in Capital Stock of Holding resulting
from the repurchase of such stock from employees who voluntarily or
involuntarily terminate their employment from Holding and its Subsidiaries not
to exceed $500,000 (net of any proceeds from the reissuance of any such shares
to other employees of Holding), in the aggregate, during the term of this
Agreement, (j) Investments in Permitted Acquisitions, (k) Investments received
in connection with the reorganization or bankruptcy of a customer or supplier of
a Credit Party or one of its Subsidiaries as consideration for prior
Indebtedness owed by such supplier or customer, (l) Investments consisting of
Guaranty Obligations otherwise permitted by Section 6.1, (m) non-cash proceeds
received in connection with an Asset Sale so long as the value of such non-cash
proceeds does not exceed, at any one time, $1,000,000, and (n) other Investments
(in addition to those set forth above) not to exceed, in the aggregate, $500,000
at any one time.
"Permitted Liens" means the following types of Liens:
(a) Liens (other than Liens relating to Environmental Claims or
ERISA) for Taxes not yet due and payable or which are Contested Claims;
(b) statutory Liens of landlords, carriers, warehousemen, mechanics,
materialmen and other similar liens imposed by law, which are incurred in the
ordinary course of business for sums not more than thirty (30) days delinquent;
(c) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(d) easements, rights-of-way, restrictions, and other similar
charges or encumbrances not interfering in any material respect with the
ordinary conduct of the business of any Credit Party or any of its Subsidiaries;
(e) Liens for purchase money obligations and under Capital Leases;
provided, that (i) the purchase or Capital Lease of the asset subject to any
such Lien is permitted under the Senior Credit Agreement and this Agreement,
(ii) the Indebtedness secured by any such Lien is permitted under the Senior
Credit Agreement and this Agreement, and (iii) such Lien encumbers only the
asset so purchased or leased and secures only Indebtedness incurred in
connection with the purchase or lease of such asset;
(f) Liens in favor Agent pursuant to the terms of the Senior Credit
Agreement; and
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(g) without duplication, other Liens permitted pursuant to the
Senior Credit Agreement.
"Permitted Refinancing" means any refinancing of Senior Debt which
refinancing does not (i) increase the amount of Senior Debt (except as permitted
by the definition of "Senior Debt" set forth herein), (ii) increase the margin
over the Base Rate (as defined in the Senior Credit Agreement as in effect on
the Restatement Date) or the Eurodollar Rate (as defined in the Senior Credit
Agreement as in effect on the Restatement Date) by more than 200 basis points
over what it is as of the date hereof (it being understood that the imposition
of a default rate of interest in accordance with subsection 3.1 of the Senior
Credit Agreement as in effect on the Restatement Date shall not be subject to
the restrictions contained in this clause (ii)), (iii) extend the maturity of
the Senior Debt beyond one year following the Maturity Date (as defined in the
Senior Credit Agreement as in effect on the Restatement Date) or (iv) change the
average weighted-life to maturity of the Senior Term Loans by more than one year
from that in effect on the Restatement Date (calculated as if such amendment was
entered into on the date hereof and taking into account all previous
amendments).
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
"Potential Event of Default" means a condition or event which, after
notice or lapse of time or both, would constitute an Event of Default if that
condition or event were not cured or removed within any applicable grace or cure
period.
"Preferred Stock" means 116,451.8 shares of Series A Preferred
Stock, par value $.01 per share, of Holding currently issued and outstanding and
up to 950.7 additional shares of such stock which are held in treasury as of the
Restatement Date.
"Purchase Agreement" means the Stock Purchase Agreement dated as of
December 14, 1995 by and between Seller and Holding, as amended, restated or
modified from time to time in accordance with the terms hereof.
"Qualified Sale" shall mean any sale or other disposition by any
Credit Party or any of their respective Subsidiaries, other than in the ordinary
course of business, of any equipment or property for (x) cash equal to at least
90% of the fair market value thereof, (y) "trade-in" or (z) "trade-up," if all
of the Net Cash Proceeds thereof (a) within 180 days after the date of such sale
shall be applied to the purchase of equipment to replace such sold equipment or
property, such purchased equipment or property to be used in the ordinary course
of business of such Credit Party or Subsidiary, and to have a fair market value
in the aggregate of not less than the amount of such Net Cash Proceeds, or (b)
shall be applied to the payment of Indebtedness incurred in connection with the
purchase of any equipment or property described in clause (a) above, and (c) in
the case of clause (a) above, pending such application, shall be (i) deposited
into an account in a domestic commercial Senior Lender which has capital and
surplus and undivided profits in excess of $250,000,000 or (ii) applied to
repayment of Senior Debt without reduction of the revolving loan commitments
therefor.
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"RCRA" means the Resource Conservation and Recovery Act of 1976, as
amended.
"Redeemable" means, with respect to any Capital Stock, Indebtedness
or other right or obligation, any such Capital Stock, Indebtedness, right or
obligation that (a) the issuer has undertaken to redeem at a fixed or
determinable date or dates, whether by operation of a sinking fund or otherwise,
or upon the occurrence of a condition not solely within the control of the
issuer or (b) is redeemable at the option of the holder.
"Registration Rights Agreement" means the Amended and Restated
Registration Rights Agreement, dated as of the Closing Date, by and among CVC,
the Lender, Holding and certain other stockholders of Holding signatory thereto,
as the same may be amended, modified or restated from time to time.
"Regulations G, T, U and X" means Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System as in effect from time to time.
"Release" means any "release" as such term is defined in 42 U.S.C.
ss. 9601(22), or any successor federal statute or analogous state law.
"Rent Expense" means, for any period, with respect to the Credit
Parties and their Subsidiaries on a consolidated basis, all rent payable under
an operating lease (whether a lease of real property, personal property or
mixed), as determined in accordance with GAAP.
"Restatement Date" means December 17, 1997.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of Capital Stock of
Holding or the Borrowers now or hereafter outstanding, except a dividend payable
solely in shares of the class of stock on which such dividend is declared to the
holders of that class, (ii) any redemption, conversion, exchange, retirement,
defeasance, sinking fund or similar payment, purchase or other acquisition for
value, direct or indi rect, of any shares of any Capital Stock of Holding, the
Borrowers or any of their respective Subsidiaries now or hereafter outstanding,
(iii) any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options, stock appreciation rights, phantom stock rights or other
rights to acquire, or participate in the appreciation in value of, shares of any
class of Capital Stock of any Credit Party or any of their respective
Subsidiaries now or hereafter outstanding, and (iv) any payment or prepayment of
principal, or premium, if any, redemption, conversion, exchange, purchase,
retirement prior to stated maturity, defeasance, sinking fund, or similar
payment with respect to any Subordinated Indebtedness or other Indebtedness
which ranks pari passu with the Note (other than in connection with any
refinancing thereof; provided, that the Indebtedness incurred in such
refinancing shall be at least as subordinated to the Note as the Subordinated
Indebtedness refinanced or rank pari passu with the Note, in the case of pari
passu Indebtedness refinanced).
"Revolving Loans" means the "Revolving Loans" made to the Borrowers
pursuant to Section 2.1 of the Senior Credit Agreement as in effect on the
Restatement Date.
"Revolving Loan Committed Amount" has the meaning set forth in the
Senior Credit Agreement as in effect on the Restatement Date.
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"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor or assignee of the business of
such division in the business of rating securities.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Seller" means Gerber Products Company, a Michigan corporation.
"Seller Note" means the Junior Subordinated Promissory Note due
January 22, 2006, dated the Closing Date, issued by Holding to Seller, in an
original aggregate principal amount of $12,500,000, and all "Junior Interest
Notes" issued pursuant to Section 4(e) thereof.
"Senior Credit Agreement" means the Credit Agreement dated as of the
date hereof by and among the Borrowers, the Guarantors, the Agent and the other
Senior Lenders, as such agreement may be amended, restated, supplemented or
otherwise modified from time to time (provided that any such amendment,
supplement or other modification of the Senior Credit Agreement effected in
contravention of Section 6.15 shall be disregarded and given no effect for
purposes of this definition), or any credit document which evidences any
Permitted Refinancing. As of any date of determination, unless otherwise
indicated in this Agreement, references to the Senior Credit Agreement shall
mean the form of Senior Credit Agreement as of such date, regardless of whether
the Senior Credit Agreement shall be in effect as of such date.
"Senior Credit Documents" means, collectively, the Senior Credit
Agreement, and other "Credit Documents" (as that term is defined in the Senior
Credit Agreement), and each other document or instrument executed by Agent, the
Senior Lenders, the Credit Parties or any of their respective Subsidiaries in
connection therewith.
"Senior Debt" means shall mean (i) all Credit Party Obligations
(including contingent obligations) (as defined in the Senior Credit Agreement as
in effect on the Restatement Date) now or hereafter incurred pursuant to and in
accordance with the terms of the Senior Credit Agreement, (ii) any additional
Indebtedness incurred under the Senior Credit Agreement whether such obligations
or additional Indebtedness involve principal prepayment charges, interest
(including, without limitation, interest accruing after the filing of a petition
initiating any proceeding under the Bankruptcy Code, whether or not allowed as a
claim in such proceeding), indemnities or reimbursement of fees, expenses or
other amounts, and (iii) any Indebtedness incurred for the purpose of
refinancing, restructuring, extending or renewing (collectively, "Refinancing")
the Credit Party Obligations of the Company under the Senior Credit Agreement as
set forth in clauses (i) and (ii) above; provided, that in no event shall the
principal amount of Senior Debt (for purposes of this Agreement) exceed the sum
of (A) the Senior Term Loan Committed Amount less any principal repayments made
with respect to the Senior Term Loans, plus, (B) the Revolving Committed Amount
less any permanent reductions in the Revolving Committed Amount plus (C)
$12,500,000.
"Senior Lenders" means, as at the Restatement Date, the "Lenders"
and the "Issuing Lenders" (each, as defined in the Senior Credit Agreement as in
effect on the Restatement Date) and thereafter the lenders from time to time
under the Senior Credit Agreement.
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"Senior Term Loan" means, the "Term Loan" made to the Borrowers
pursuant to Section 2.4 of the Senior Credit Agreement on or before the
Restatement Date.
"Sport Socks Ireland" has the meaning set forth in the recitals
hereto.
"Sport Socks UK" has the meaning set forth in the recitals hereto.
"Senior Term Loan Committed Amount" means the "Term Loan Committed
Amount" as defined in the Senior Credit Agreement as in effect on the
Restatement Date.
"Stockholders Agreement" means the Stockholders Agreement, dated as
of the date hereof, by and among CVC, Lender, Holding and certain other
stockholders of Holding signatory thereto, as the same may be amended, modified
or restated from time to time.
"Subordinated Indebtedness" means Indebtedness of the Credit Parties
and their respective Subsidiaries which by its terms is expressly subordinated
in right of payment to the Note, including, without limitation, the Seller Note.
"Subordination Agreement" means the Subordination and Intercreditor
Agreement dated as of the Restatement Date by and among the Credit Parties,
Agent and the Lender, substantially in the form of Exhibit B hereto.
"Subsidiary" means, with respect to any Person, corporation,
association or other business entity of which more than 50% of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by any Person or one
or more of the other Subsidiaries of that Person or a combination thereof.
"Swing Line Loans" means the "Swing Line Loans" made to the
Borrowers pursuant to Section 2.3 of the Senior Credit Agreement as in effect on
the Restatement Date.
"Taxes" means all taxes, assessments, fees, levies, imposts, duties,
penalties, deductions, withholdings or other charges of any nature whatsoever
from time to time or at any time imposed by any law or any Tribunal.
"Total Capitalization" means the sum of (a) all stockholder's equity
(including Preferred Stock and accrued but unpaid dividends thereon) of Holding
and its Subsidiaries on a consolidated basis, as determined in accordance with
GAAP, plus (b) all Funded Debt of Holding and its Subsidiaries on a consolidated
basis.
"Transactions" has the meaning specified in Section 4.3.
"Transaction Documents" means all documents executed and delivered
in connection with the Transactions, including, without limitation, this
Agreement, the Note, the Senior Credit Documents, the Auburn Purchase Agreement
and the Ireland Purchase Agreement.
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"Tribunal" means any government, any arbitration panel, any court or
any governmental department, commission, board, bureau, agency or
instrumentality of the United States of America or any state, province,
commonwealth, nation, territory, possession, county, parish, town, township,
village or municipality, whether now or hereafter constituted and/or existing.
"Warrant" means, collectively, one or more warrants initially
exercisable for 191,250 shares of Class D Common Stock, issued by Holding to the
Lender on the Closing Date pursuant to the Warrant Agreement.
"Warrant Agreement" means the Warrant Agreement, dated as of the
Closing Date, by and between Holding and the Lender.
"Wholly-Owned" means, with respect to a Subsidiary, any corporation,
association or other business entity of which 100% of the total voting power of
shares of stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by any Person or one or more
of the other Subsidiaries of that Person or a combination thereof.
SECTION 1.2 Accounting Terms. Except as otherwise expressly provided
herein, all accounting terms used herein shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to be
delivered to the Lender hereunder shall be prepared in accordance with GAAP. All
calculations made for the purposes of determining compliance with this Agreement
shall (except as otherwise expressly provided herein) (a) be made by application
of GAAP as of the Restatement Date, (b) eliminate all transaction costs, not to
exceed $1,750,000, in the aggregate, incurred by the Credit Parties and their
Subsidiaries in (i) acquiring all of the shares of Auburn and Sport Socks
Ireland, (ii) entering into the Senior Credit Documents and (iii) repaying the
Indebtedness owing under the "Senior Credit Agreement" (as defined in the
Original Agreement) in effect immediately prior to the Restatement Date and (c)
be made net of the effect of any purchase price accounting adjustment as set
forth in Accounting Principles Board Opinion Nos. 16 and 17.
ARTICLE 2. AMOUNT AND TERMS OF NOTE AND LOAN
SECTION 2.1 Loan and Note.
(a) Loan. On the Closing Date, the Lender provided the Company
with a loan in the initial principal amount of $22,500,000 (the "Loan").
(b) Original Issue Discount. The parties hereto agree that any
original issue discount attributable, as a result of the delivery of the
Warrant, to any Note issued by the Borrowers in accordance with the terms and
conditions of this Agreement is less than the product of:
(i) one-quarter of one percent (0.25%) of the stated
redemption price at maturity (as such term is defined in Section 1273(a)
of the Code) of such Note, multiplied by
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(ii) the number of complete years to maturity of such Note.
The parties hereto agree to use the foregoing for all United States federal,
state and local income tax purposes with respect to the transactions
contemplated by this Agreement, the Warrant Agreement and the other Loan
Documents. The parties hereto acknowledge that such original issue discount
represents the fair market value of the Warrant as of the Closing Date.
(c) Payment of Loan. The unpaid principal amount of the Loan
and the Note plus all accrued interest thereon and all other amounts owed
hereunder and thereunder with respect thereto shall be paid in full in cash on
the Maturity Date. The Borrowers shall make a scheduled payment of the
outstanding principal amount of the Loan on January 22, 2003 in an amount equal
to 50% of the then outstanding principal amount of the Loan.
(d) Note. Upon tender to the Company of any and all Notes
currently held by the Lender, the Borrowers shall jointly execute and deliver to
the Lender on the Restatement Date a new Note (in the form attached hereto as
Exhibit A) dated the Restatement Date, to evidence the outstanding Loan, in the
aggregate principal amount of $22,500,000 and to reflect appropriate amendments
made hereby.
SECTION 2.2 Interest on the Loans.
(a) Rate of Interest. The Loan shall bear interest on the
unpaid principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate equal to 12.00% per annum.
(b) Interest Payments.Accrued and unpaid interest shall be
payable with respect to the Loan, in arrears on and to each Interest Payment
Date commencing on the Initial Interest Payment Date, and upon any prepayment of
the Loan and at maturity of the Loan.
(c) Post-Maturity Interest. Any principal payments on the Loan
not paid when due (including by reason of operation of the Subordination
Agreement) and, to the extent permitted by applicable law, any interest payment
on the Loan not paid when due, whether at stated maturity, by notice of
prepayment, by acceleration or otherwise, shall thereafter bear interest payable
upon demand at a rate which is 2.00% per annum in excess of the rate of interest
otherwise payable under this Agreement for the Loan.
(d) Computation of Interest. Interest on the Loan shall be
computed on the basis of a 360-day year for the actual number of days elapsed in
the period during which it accrues. In computing such interest, the date of the
making of the Loan shall be included and the date of payment shall be excluded.
SECTION 2.3 Prepayments and Payments.
(a) Prepayments.
(i) Voluntary Prepayments. (A) The Borrowers may, upon not
less than five (5) Business Days and not more than thirty-five (35)
Business Days prior written notice
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to the Lender (which notice shall be irrevocable), at any time and from
time to time, prepay the Loan, in whole or in part, in an aggregate
minimum amount of $500,000 and integral multiples of $500,000 in excess of
that amount; provided, that in connection with any such voluntary
prepayment, the Borrowers shall prepay the Loan at the prepayment price
set forth below:
[Download Table]
% of Principal
Prepayment Date During the Period Being Paid
--------------------------------- --------------
The Restatement Date through and including 5%
January 21, 1998
January 22, 1998 through and including January 21, 4%
1999
January 22, 1999 through and including January 21, 3%
2000
January 22, 2000 through and including January 21, 2%
2001
January 22, 2001 through and including January 21, 1%
2002
January 22, 2002 through but not including the Maturity 0%
Date
(B) Voluntary prepayments shall be credited against the Loan
pursuant to the terms of Section 2.3(a)(iii). Amounts so prepaid may not
be reborrowed. For purposes of this Section 2.3(a), amounts paid pursuant
to Article 7 as a result of a Change in Control shall be deemed to be a
voluntary prepayment at a prepayment price equal to 101% of the aggregate
principal amount of the Loan being so prepaid.
(ii) Mandatory Prepayments.
(A) Asset Sale. To the extent not (1) required by the Senior
Credit Agreement to prepay the Senior Debt (or to provide cash
collateral for Letters of Credit included in Senior Debt), or (2)
voluntarily used by the Borrowers to prepay or repay the Senior
Debt, or (3) in connection with a Qualified Sale, in each case
within thirty (30) days after receipt by Holding, the Borrowers, or
any of their respective Subsidiaries, as the case may be, of Cash
Proceeds of any Asset Sales, Holding, the Borrowers and their
respective Subsidiaries shall apply an amount equal to 100% of the
Net Cash Proceeds that Holding, the Borrowers, or any of their
respective Subsidiaries so receives to the prepayment of the Loan as
provided in Section 2.3(a)(iii) below. Concurrently with the making
of any prepayment pursuant to this subsection 2.3(a)(ii)(A), the
Borrowers shall deliver to the Lender an Officer's Certificate
demonstrating the derivation of Net Cash Proceeds from the gross
sales price of any correlative Asset Sale.
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(B) Casualty Events. Except to the extent that a Casualty
Event results in Net Cash Proceeds (1) in an amount less than
$100,000 individually or in the aggregate, or (2) which are
deposited with Agent (in the event the Senior Debt is still
outstanding), or with the Lender (in the event there is no Senior
Debt outstanding) and which are subsequently applied toward
replacement, restoration, rebuilding or repair of the damaged
property within 180 days after the receipt of the proceeds for such
Casualty Event, or (3) which are used by the Borrowers to prepay the
Senior Debt (or to provide cash collateral for Letters of Credit
included in Senior Debt), promptly (and in any event within five (5)
Business Days) following the receipt by Holding, the Borrowers, or
any of their respective Subsidiaries, as the case may be, of Cash
Proceeds in respect of any Casualty Event, Holding, the Borrowers
and their respective Subsidiaries shall apply an amount equal to
100% of the Net Cash Proceeds that Holding, the Borrowers, or any of
their respective Subsidiaries so receives to the prepayment of the
Loan as provided in Section 2.3(a)(iii) below. Concurrently with the
making of any prepayment pursuant to this subsection 2.3(a)(ii)(B),
the Borrowers shall deliver to Lender an Officer's Certificate
demonstrating the derivation of Net Cash Proceeds of the Casualty
Event.
(C) Equity Issuance. To the extent not required by the Senior
Credit Agreement to prepay the Senior Debt (or to provide cash
collateral for Letters of Credit included in Senior Debt), upon any
issuance of Capital Stock of any of the Credit Parties in connection
with an underwritten public offering thereof and the receipt by
Holding, the Borrowers, or any of their respective Subsidiaries, as
the case may be, of Cash Proceeds in respect of any such issuance,
Holding, the Borrowers and their respective Subsidiaries shall apply
an amount equal to 100% of the Net Cash Proceeds that Holding, the
Borrowers, or any of their respective Subsidiaries so receives to
the prepayment of the Loan as provided in Section 2.3(a)(iii) below.
(D) Notice. The Borrowers shall notify the Lender of any
prepayment to be made pursuant to this Section 2.3(a)(ii) at least
ten (10) Business Days prior to such prepayment date (unless shorter
notice is satisfactory to the Lender).
(iii) Application of Prepayments. All prepayments
(whether voluntary or mandatory) shall (A) include payment of accrued
interest on the principal amount so prepaid, and (B) be applied to payment
of interest before application to principal.
(b) Manner and Time of Payment. All payments by the Borrowers
under the Note of principal, interest, premium and fees hereunder shall be made
without defense, set off or counterclaim, and in same day funds and delivered to
the Lender not later than 12:00 noon (New York time) on the date due at 399 Park
Avenue, New York, New York for the account of the Lender; funds received by the
Lender after that time shall be deemed to have been paid by the Borrowers on the
next succeeding Business Day.
(c) Payments on Non-Business Days. Whenever any payment to be
made hereunder or under the Note shall be stated to be due on a day which is not
a Business Day, the
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payment shall be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the payment of interest hereunder
or under the Note.
(d) Notation of Payment. The Lender agrees that before
disposing of the Note held by it, or any part thereof (other than by granting
participations therein), the Lender will make a notation thereon of all
principal payments previously made thereon and of the date to which interest
thereon has been paid and will notify the Borrowers of the name and address of
the transferee of the Note; provided, that the failure to make (or any error in
the making of) a notation of the Loan made under the Note or to notify the
Borrowers of the name and address of a transferee shall not limit or otherwise
affect the obligation of any Credit Party hereunder or under the Note with
respect to the Loan and payments of principal or interest on the Note.
SECTION 2.4 Use of Proceeds. No portion of the proceeds of the Loan
shall be used by any Credit Party in any manner which might cause the borrowing
or the application of such proceeds to violate Regulations G, T, U or X or any
other regulation of the Board of Governors of the Federal Reserve System, or to
violate the Exchange Act, in each case as in effect on the date or dates of such
borrowing and such use of proceeds.
ARTICLE 3. CONDITIONS TO LOAN.
SECTION 3.1 Conditions. This Agreement shall be effective upon the
satisfaction or waiver of all of the following conditions:
(a) Organizational Documents. On or before the Restatement
Date, the Lender shall have received the following items, each of which shall be
in form and substance satisfactory to the Lender and, unless otherwise noted,
dated the Restatement Date:
(i) Resolutions of each of the Credit Parties'
respective Board of Directors and, if necessary, shareholders, approving
and authorizing the execution, delivery and performance of this Agreement,
the Note and any other documents, instruments and certificates required to
be executed by such Credit Party in connection therewith and approving and
authorizing the execution, delivery and payment of the Note, certified as
of the Restatement Date by the Secretary or an Assistant Secretary of the
relevant Credit Party as being in full force and effect without
modification or amendment.
(ii) Signature and incumbency certificates of the
officers of each of the Credit Parties executing this Agreement and the
Note.
(iii) Executed copies of this Agreement and the Note.
(iv) Such other documents as the Lender may reasonably
request.
(b) Proceedings Satisfactory. On or before the Restatement
Date, all corporate and other proceedings taken or to be taken in connection
with the Transactions and all
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documents incidental thereto not previously found acceptable by the Lender shall
be reasonably satisfactory in form and substance to the Lender and the Lender
shall have received all such counterpart originals or certified copies of such
documents as the Lender may reasonably request.
(c) Representations and Warranties. Concurrently with the
making of the Loan, each of the Credit Parties shall have delivered to the
Lender an Officer's Certificate in form and substance satisfactory to the Lender
to the effect that the representations and warranties in Article 4 hereof are
true, correct and complete in all respects on and as of the Restatement Date to
the same extent as though made on and as of such date.
(d) Performance of Agreements. Each of the Credit Parties
shall have performed in all material respects all agreements which this
Agreement provides shall be performed on or before the Restatement Date (except
as otherwise consented to in writing by the Lender).
(e) Potential Event of Default; Event of Default. No event
shall have occurred and be continuing or would result from the consummation of
the Transactions which would constitute an Event of Default or Potential Event
of Default.
(f) No Injunction, etc. No order, judgment or decree of any
court, arbitrator or governmental authority shall enjoin or restrain the Lender
from entering into this Agreement or consummating the Transactions.
(g) No Litigation, etc. There shall not be existing, or to the
knowledge of any Credit Party threatened, any action, suit, proceeding,
governmental investigation or arbitration against or affecting any Credit Party
or any property of any Credit Party, which, in the opinion of the Lender, could
reasonably be expected to have a Material Adverse Effect. No injunction or other
restraining order shall have been issued and no hearing to cause an injunction
or other restraining order to be issued shall be pending or noticed with respect
to any action, suit or proceeding seeking to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result of, the
Transactions.
(h) Fees and Expenses. The Lender shall have received payment
in full for all expenses (including reasonable attorney's fees) incurred in
connection with the negotiation and execution of this Agreement, the Note and
the Subordination Agreement.
(i) Senior Credit Documents. The Lender shall have received
certified copies of each of the Senior Credit Documents (including, without
limitation, the Subordination Agreement), and all of such Senior Credit
Documents (including, without limitation, the Subordination Agreement) shall be
satisfactory, in form and substance, to the Lender. All of the conditions to the
initial borrowing under the Senior Credit Agreement as in effect on the
Restatement Date will have been satisfied or waived with the consent of the
Lender.
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ARTICLE 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to amend and restate the Original
Agreement and to enter into this Agreement, each of the Credit Parties
represents and warrants to the Lender that:
SECTION 4.1 Organization and Good Standing. Each Credit Party is a
corporation, duly organized and existing in good standing under the laws of its
jurisdiction of incorporation. Each Credit Party has the corporate power and
authority to own its properties and assets and to transact the business in which
it is engaged and is duly qualified as a foreign corporation and is in good
standing in all states in which it is doing business, except where failure to be
so qualified will not have a Material Adverse Effect.
SECTION 4.2 Authorization and Power. Each Credit Party, to the
extent it is a party thereto, has the corporate power and requisite authority,
and has taken all corporate action necessary, to execute, deliver and perform
the Loan Documents.
SECTION 4.3 No Conflicts or Consents. The execution, delivery and
performance of the Loan Documents, the consummation of any of the transactions
contemplated thereby (including, without limitation, the Auburn Acquisition, the
Ireland Acquisition and the incurrence of the Senior Debt in connection
therewith) (collectively, the "Transactions"), and compliance with the terms and
provisions hereof or thereof will not contravene or conflict with any provision
of law to which any Credit Party is subject or any material judgment, license,
order or permit applicable to any Credit Party, or any material contract, lease,
indenture, loan agreement, mortgage, deed of trust or other agreement or
instrument to which any Credit Party is a party or by which any Credit Party may
be bound, or to which any Credit Party may be subject, or violate any provision
of the charters or by-laws of any Credit Party, which would in any case have a
Material Adverse Effect. No consent, approval, authorization or order of any
Tribunal or other Person is required in connection with the consummation of the
Transactions, except for such required consents, approvals and authorizations
which (a) have been obtained by the Credit Parties or permanently waived in
writing, or (b) the failure to obtain would not have a Material Adverse Effect.
SECTION 4.4 Enforceable Obligations. The Loan Documents have been
duly executed and delivered by each Credit Party (to the extent such Credit
Party is a party thereto) and are, or will be, the legal and binding obligations
of each Credit Party (to the extent such Credit Party is a party thereto),
enforceable in accordance with their respective terms, subject to applicable
laws of bankruptcy, insolvency and similar laws affecting creditors' rights and
the application of general rules at equity.
SECTION 4.5 Title to Properties; Liens. Except for Permitted Liens
and except as set forth on Schedule 4.5, all of the assets owned or leased by
the Credit Parties and their Subsidiaries are free and clear of all Liens and
other adverse claims of any nature, each Credit Party has good and indefeasible
title to, or valid and subsisting interests in, all real property included in
such assets and good title to, or valid and subsisting interests in, all
personal property included in such assets, and there are no presently effective
financing statements, deeds of trust, mortgages and similar documents or
instruments of record in any jurisdiction covering any material tangible or
intangible assets of the Credit Parties.
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SECTION 4.6 Financial Condition. Since December 31, 1996, there has
occurred, through the Closing Date, no Material Adverse Effect.
SECTION 4.7 No Default. No event has occurred and is continuing
which constitutes a Potential Event of Default or an Event of Default.
SECTION 4.8 Contractual Obligations. No Credit Party is in default
under any Contractual Obligations to which it is a party or by which its
property is bound, where such default could reasonably be expected to have a
Material Adverse Effect.
SECTION 4.9 No Litigation. There are no actions, suits or
proceedings at law or in equity by or before any Tribunal now pending or, to any
Credit Party's best knowledge, threatened against or affecting any Credit Party
or its respective business, property or rights which could, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.
SECTION 4.10 Use of Proceeds; Margin Stock. None of the proceeds of
the Loan have been used to reduce or retire any Indebtedness which was
originally incurred to purchase or to carry a Margin Stock, or for any other
purpose which might constitute this transaction a "purpose credit" within the
meaning of Regulations G, T, U or X. No Credit Party has taken or will take any
action which might cause any of the Loan Documents to violate Regulations G, T,
U or X, or any other regulations of the Board of Governors of the Federal
Reserve System or to violate Section 8 of the Exchange Act or any rule or
regulation thereunder, in each case as now in effect or as the same may
hereafter be in effect.
SECTION 4.11 No Financing of Regulated Corporate Takeovers. No
proceeds of the Loan have been used to acquire any security in any transaction
which is subject to Section 13 or 14 of the Exchange Act, including particularly
(but without limitation) Sections 13(d) and 14(d) thereof.
SECTION 4.12 Compliance with Law. Each Credit Party is in compliance
with all laws, except where failure to so comply will not have a Material
Adverse Effect.
SECTION 4.13 Capital Structure and Subsidiaries. (a) As of the
Restatement Date, the authorized Capital Stock of Holding consists of (i)
750,000 shares of Class A Common Stock, par value $.01 per share, of which
638,155.1 shares are issued and outstanding, (ii) 250,000 shares of Class B
Common Stock, par value $.01 per share, of which 139,165.30 shares are issued
and outstanding and 28,929.6 shares are held in treasury, (iii) 2,500 shares of
Class C Common Stock, par value $.01 per share of which 2,500 shares are issued
and outstanding, (iv) 191,250 shares of Class D Common Stock, par value $.01 per
share, of which no shares are issued and outstanding, and (v) 117,402.5 shares
of Series A Preferred Stock, par value $.01 per share, of which 116,451.8 shares
are issued and outstanding and 950.7 shares are held in treasury. The Company's
authorized Capital Stock consists of 10 shares of Common Stock, par value $100
per share, of which 10 shares are issued and outstanding and held, beneficially
and of record, by Holding. Auburn's authorized Capital Stock consists of 2,680
shares of Common Stock, par value $100.00 per share, all of which are issued and
outstanding and held beneficially and of record by Holding after giving effect
to the Auburn Acquisition. All outstanding shares of each class of such Capital
Stock were duly authorized and validly issued, and are fully paid and
nonassessable. Except for the obligation to
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issue Class D Common Stock pursuant to the Warrant or as set forth in Schedule
4.13(a) hereto, there are no outstanding securities, rights or other agreements
of any nature that require any Credit Party or any of their Subsidiaries to
issue any of their Capital Stock.
(b) Set forth on Schedule 4.13(b) hereto is a true and
complete list of each Subsidiary of Holding or the Borrowers, setting forth each
such Subsidiary's jurisdiction of incorporation and the ownership of its Capital
Stock.
SECTION 4.14 Licenses, Trademarks, etc. Except as otherwise set
forth on Schedule 4.14 hereto, each Credit Party owns or holds valid licenses in
all necessary trademarks, copyrights, patents, patent rights and licenses to
conduct their respective businesses as operated on the date thereof. None of the
Credit Parties has been charged or, to their best knowledge, threatened to be
charged with any infringement of, nor, to their best knowledge, has any of them
infringed on, any unexpired trademark, patent, patent registration, copyright,
copyright registration or other proprietary right of any other Person.
SECTION 4.15 Permits and Licenses. All permits, licenses and other
governmental authorizations ("Permits") needed by each Credit Party to carry on
their respective businesses have been obtained and are in full force and effect
and have not been modified or amended, except for such Permits the failure of
which to have would not have a Material Adverse Effect. None of the Credit
Parties is in material breach of any such Permits except for breaches which,
considered individually or in the aggregate, would not have a Material Adverse
Effect.
SECTION 4.16 ERISA.
(a) No Credit Party maintains or contributes to any Pension
Plan or Multiemployer Plan other than those identified on Schedule 4.16 hereto.
(b) Each Credit Party is in compliance in all material
respects with all applicable provisions of ERISA and the Code with respect to
all Employee Benefit Plans. Each Employee Benefit Plan that is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter that it is so qualified and that each trust related to such
Employee Benefit Plan is exempt from federal income tax under Section 501(a) of
the Code. No material liability has been incurred by any Credit Party or any of
their ERISA Affiliates which remains unsatisfied for any Taxes, penalties or
other amount with respect to any Employee Benefit Plan or any Multiemployer Plan
and, to the best knowledge of the Credit Parties, no such liability is expected
to be incurred except to the extent any such liability could not be expected to
have a Material Adverse Effect.
(c) No Credit Party has: (i) engaged in a nonexempt prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code; (ii)
incurred any material liability to the PBGC which remains outstanding other than
the payment of premiums and there are no such premium payments which are due and
unpaid; (iii) failed to make a required contribution or payment to a
Multiemployer Plan; or (iv) failed to make a required installment or other
required payment under Section 412 of the Code.
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(d) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Employee Benefit Plan or Multiemployer Plan maintained
by any Credit Party the liability for which has not been paid in full.
(e) No material proceeding, claim, lawsuit and/or
investigation is existing or, to any Credit Party's knowledge, threatened,
concerning or involving any Employee Benefit Plan or Multiemployer Plan.
SECTION 4.17 Investment Company Act. No Credit Party is an
"investment company," or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
SECTION 4.18 Public Utility Holding Company Act. No Credit Party is
a "holding company," or an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
SECTION 4.19 Environmental and Safety Matters.
(a) Except as set forth on Schedule 4.19 hereto:
(i) The Credit Parties have obtained all material
permits, licenses and other authorizations which are required under
Environmental and Safety Laws and applicable to the conduct of the Credit
Parties' business (collectively, "Environmental Permits").
(ii) The Credit Parties have complied and are in
compliance in all material respects with the terms and conditions of all
such Environmental Permits and have complied and are in compliance in all
material respects with all Environmental and Safety Laws.
(iii) With respect to the Credit Parties, no notice,
notification, demand, request for information, citation, summons or order
has been issued, no complaint has been filed, no penalty has been assessed
and no investigation is pending or, to the Credit Parties' best knowledge,
threatened by any Person with respect to any alleged failure to obtain any
material Environmental Permits or any material violation of any
Environmental and Safety Laws, or with respect to the generation,
treatment, storage, recycling, transportation, discharge or disposal, or
any Release or threatened Release, of any Hazardous Materials.
(iv) No property or facility now or previously owned or
operated by the Credit Parties has been or is presently operated in a
manner which requires permitting as a hazardous waste treatment, storage
or disposal facility for purposes of RCRA or any analogous state law.
(v) None of the Credit Parties has transported or
arranged for the transportation of any Hazardous Material to any location
which is on the CERCLA National Priorities List (or proposed for such
listing), the CERCLIS List or any similar state list or
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which is the subject of federal, state or local enforcement actions or
other investigations which could lead to claims against any of the Credit
Parties under any Environmental and Safety Laws.
(vi) There has been no Release of Hazardous Materials
into the environment at or from any property or facility now or previously
owned or operated by any of the Credit Parties so as to give rise to any
material present or future liability or obligation under any Environmental
and Safety Laws.
(vii) No oral or written notification of a Release of a
Hazardous Material has been filed by or on behalf of the Credit Parties
and no property or facility now or previously owned or operated by any of
the Credit Parties is on the CERCLA National Priorities List (or proposed
for such listing), the CERCLIS List or any similar state list.
(viii) No Liens have arisen under or pursuant to any
Environmental and Safety Laws on any property or facility now owned by any
of the Credit Parties, no governmental actions have been taken or are in
process which could subject any such properties or facilities to such
Liens, and none of the Credit Parties would be required to place any
notice or restriction relating to the presence of Hazardous Materials in
any deed to such property or facility.
(ix) None of the Credit Parties has, either expressly or
by operation of law, assumed or undertaken any liability or corrective or
remedial obligation of any other Person relating to Environmental and
Safety Laws.
(x) Without limiting the generality of the foregoing,
there are no other facts, events or conditions relating to the past or
present operations, properties or facilities of any of the Credit Parties
which would give rise to any liability or investigatory, corrective or
remedial obligation under any Environmental and Safety Laws with respect
to the Credit Parties.
(b) Any breach of a representation contained in Section
4.19(a) by any Credit Party shall not be deemed false or incorrect in any
material respect or constitute an Event of Default under Article 7 unless the
event or condition giving rise to such breach could reasonably be expected to
result in liability to any Credit Party in excess of $250,000 or result in a
Material Adverse Effect.
SECTION 4.20 Financial Condition. The Credit Parties are not
entering into the arrangements contemplated by this Agreement and the other
Transaction Documents with actual intent to hinder, delay or defraud either
present or future creditors. On and as of the Restatement Date on a pro forma
basis after giving effect to the Transactions and to all debts incurred or to be
created in connection herewith:
(a) the present fair salable value of the assets of each
Credit Party (on a going concern basis) will exceed the probable liability of
such Credit Party on its debts (including its contingent obligations);
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(b) no Credit Party has incurred, nor does it intend to or
believe that it will incur, debts (including Contingent Liabilities) beyond its
ability to pay such debts as such debts mature (taking into account the timing
and amounts of cash to be received from any source, and of amounts to be payable
on or in respect of debts), and the amount of cash available to each such Credit
Party after taking into account all other anticipated uses of funds is
anticipated to be sufficient to pay all such amounts on or in respect of debts,
when such amounts are required to be paid; and
(c) each Credit Party will have sufficient capital with which
to conduct its present and proposed business and the property of such Credit
Party does not constitute unreasonably small capital with which to conduct its
present or proposed business.
For purposes of this Section 4.20 "debt" means any liability on a
(i) right to payment whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured, or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such a right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured,
or unsecured.
SECTION 4.21 Senior Credit Documents. The Company has delivered to
the Lender true and correct copies of the Senior Credit Documents as in effect
on the Restatement Date.
SECTION 4.22 Auburn Acquisition; Ireland Acquisition. The
transactions contemplated by the Auburn Purchase Agreement and the Ireland
Purchase Agreement have been consummated in accordance with the terms of the
Auburn Purchase Agreement and the Ireland Purchase Agreement, respectively, and
nothing has come to the Credit Parties' attention that would indicate that any
of the representations and warranties contained in such agreement are not true
and correct and none of the material terms thereof have been modified, amended
or waived.
SECTION 4.23 Subordinated Indebtedness. The Loan constitutes and
will continue to constitute "Senior Debt" within the meaning of the Seller Note.
ARTICLE 5. AFFIRMATIVE COVENANTS.
Each of the Credit Parties covenants and agrees that, until the Loan
and the Note and all other amounts due under this Agreement have been paid in
full, unless the Lender shall otherwise give prior written consent, the Credit
Parties shall jointly and severally perform all covenants in this Article 5:
SECTION 5.1 Financial Statements and Other Reports. Each of the
Credit Parties will maintain, and cause each of their Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of consolidated financial statements in
conformity with GAAP. The Credit Parties will deliver to the Lender:
(a) as soon as available and in any event within ninety (90)
days after the end of each fiscal year of the Credit Parties (except, after the
Fiscal Years ending on December 31, 1997, within 105 days), a consolidated and
consolidating balance sheet and income statement of
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Holding and its Subsidiaries as of the end of such year, together with the
related consolidated and consolidating income statements of operations, returned
earnings and cash flow for such fiscal year, setting forth in comparative form
the consolidated figures for the previous fiscal year, all in reasonable form
and detail and audited by independent certified public accountants of recognized
national standing acceptable to the Lender and whose opinion shall be to the
effect that such financial statements have been prepared in accordance with GAAP
(except for changes with which such accountants concur) and shall not be limited
as to the scope of the audit or qualified in any manner, and accompanied by a
certificate of such accountants conducting the annual audit stating that they
have reviewed this Agreement and stating further whether, in the course of their
audit, they have become aware of any Potential Event of Default or Event of
Default and, if any such Potential Event of Default or Event of Default exists,
specifying the nature and extent thereof;
(b) as soon as available and in any event within forty-five
(45) days after the close of each of the first three fiscal quarters of Holding,
(i) a consolidated and consolidating balance sheet and income statement of
Holding and its Subsidiaries as of the end of such fiscal quarter, together with
related consolidated and consolidating statements of operations and consolidated
statements of retained earnings and cash flows for such fiscal quarter, in each
case setting forth in comparative form consolidated and consolidating figures
for (A) the corresponding periods of the preceding fiscal year and (B)
management's proposed budget for such period, all such financial information
described above to be in reasonable form and detail and reasonably acceptable to
the Lender, and accompanied by a certificate of the Chief Financial Officer of
Holding to the effect that such quarterly financial statements fairly present in
all material respects the financial condition of Holding and its Subsidiaries
and have been prepared in accordance with GAAP, subject to changes resulting
from audit and normal year-end adjustments and (ii) a management discussion and
analysis of operating results for such fiscal quarter;
(c) together with each delivery of financial statements of
Holding and its Subsidiaries pursuant to clauses (a) and (b) above, (i) an
Officers' Certificate of each such Credit Party stating that the signers have
made or caused to be made under their supervision, a review in reasonable detail
of the transactions and condition of such Credit Party and its Subsidiaries
during the accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such accounting
period, and that the signers do not have knowledge of the existence as at the
date of the Officers' Certificate, of any condition or event which constitutes
an Event of Default or Potential Event of Default, or, if any such condition or
event existed or exists, specifying the nature and period of existence thereof
and what action such Credit Party has taken, is taking and proposes to take with
respect thereto; and (ii) an Officer's Certificate demonstrating in reasonable
detail compliance (as determined in accordance with GAAP) on the date of such
financial statements with the restrictions contained in Sections 6.16 through
6.19 hereof;
(d) prior to the end of each fiscal year, the Credit Parties
shall deliver to the Lender an annual business plan and budget of Holding and
its Subsidiaries on a consolidated basis containing among other things, pro
forma financial projections for the next fiscal year;
(e) promptly after the occurrence of any Event of Default or
Potential Event of Default, an Officer's Certificate of the Borrowers setting
forth the details thereof and the action which the Borrowers are taking or
propose to take with respect thereto;
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(f) promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or made
available by the Credit Parties to their security holders, all registration
statements (other than the exhibits thereto) and annual, quarterly or other
reports, if any, filed by any Credit Party with the Securities and Exchange
Commission and all press releases by any Credit Party concerning material
developments in the business of such Credit Party;
(g) promptly, upon any officer of a Credit Party obtaining
knowledge thereof, notice of all litigation or proceedings commenced or
threatened affecting any Credit Party in which there is a reasonable possibility
of an adverse decision and (x) which involves liability which could reasonably
be expected to have a Material Adverse Effect (in the aggregate), or (y) in
which injunctive or similar relief is sought which if obtained could reasonably
be expected to have a Material Adverse Effect;
(h) promptly following the end of each fiscal year of each
Credit Party, a report summarizing proceedings known to any officer of such
Credit Party commenced, threatened, affecting any Credit Party in which there is
a reasonable possibility of an adverse decision which could reasonably be
expected to have a Material Adverse Effect;
(i) promptly upon receipt thereof, copies of all final reports
or letters submitted to any Credit Party by its independent certified public
accountants in connection with each annual, interim or special audit of the
financial statements of any Credit Party made by such accountants, including,
without limitation, any management report, and the Borrowers agree to obtain
such a report in connection with each of its annual audits;
(j) promptly after the availability thereof, copies of all
material amendments to the charter or by-laws of any Credit Party;
(k) promptly after receiving oral or written notice thereof,
notice (along with all material documentation) of any of the following, to the
extent it could give rise to material liabilities, losses, costs or expenses:
(1) any violation by any Credit Party of any Environmental and Safety Laws; (2)
any Environmental Claim against any Credit Party; (3) imposition of any Lien
under Environmental and Safety Laws with respect to any property or facility of
any Credit Party; or (4) any past or current Release or threatened Release of
any Hazardous Material at or from any property or facility of any Credit Party;
and
(l) with reasonable promptness, such other information and
data with respect to any Credit Party as from time to time may be reasonably
requested by the Lender.
SECTION 5.2 Corporate Existence, Etc. Except as otherwise expressly
permitted herein, each of the Credit Parties and each Subsidiary thereof will at
all times preserve and keep in full force and effect its corporate existence and
rights and franchises material to its business.
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SECTION 5.3 Payment of Taxes; Tax Consolidation.
(a) Each of the Credit Parties and any consolidated group of
which any Credit Party is a member will, and will cause each of their respective
Subsidiaries to, pay all Taxes imposed upon it or any of its properties or
assets or in respect of any of its franchises, business, income or property
before any material penalty accrues thereon, prior to the time when any material
penalty or fine shall be incurred with respect thereto; provided, that no such
Taxes need be paid with respect to any Contested Claim.
(b) None of the Credit Parties will, or will permit any of its
Subsidiaries to, file or consent to the filing of any consolidated income tax
return with any Person other than the Credit Parties, or any of their
Subsidiaries or such other Person as may be reasonably acceptable to the Lender.
SECTION 5.4 Maintenance of Properties; Insurance. Except as
permitted by Section 6.6, each Credit Party will maintain or cause to be
maintained in the ordinary course of business, consistent with past custom and
practice and with those of other Persons in the same or similar businesses
similarly situated, all material properties used or useful in the business of
the Credit Parties, ordinary wear and tear excepted, and from time to time will
make or cause to be made all appropriate repairs, renewals and replacements
thereof. Each Credit Party will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
properties and business and the properties and business of its Subsidiaries
against loss or damage of the kinds customarily insured against by corporations
of established reputation engaged in the same or similar businesses and
similarly situated, of such types and in such amounts as are customarily carried
or maintained under similar circumstances by such other corporations.
SECTION 5.5 Inspection. Each Credit Party shall permit any
authorized representatives designated by the Lender (at such representative's
expense) to visit and inspect any of the properties of any Credit Party,
including its and their financial and accounting records, and to make copies and
take extracts therefrom, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants, all
upon reasonable notice and at such reasonable times during normal business hours
and as often as may be reasonably requested.
SECTION 5.6 No Further Negative Pledges. Except (i) as otherwise
expressly permitted by this Agreement or the Senior Credit Agreement, and (ii)
with respect to specific property encumbered to secure payment of particular
Indebtedness expressly permitted to be incurred by Section 6.1, the Credit
Parties and their respective Subsidiaries shall not enter into any agreement
prohibiting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired.
SECTION 5.7 Compliance with Laws, Etc. Each Credit Party shall
exercise all due diligence in order to comply with the requirements of all
applicable laws, rules, regulations and orders of any governmental authority,
noncompliance with which might have a Material Adverse Effect.
SECTION 5.8 Maintenance of Accurate Records, Etc. Each Credit Party
shall keep, and will cause each of its Subsidiaries to keep, true books and
records and accounts in which full
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and correct entries will be made of all its respective business transactions,
and will reflect, and cause each of its Subsidiaries to reflect, in its
respective financial statements adequate accruals and appropriations to
reserves.
SECTION 5.9 Lender Meeting. Each Credit Party will participate in a
meeting with the Lender once during each fiscal year to be held at a location
and a time selected by each Credit Party and reasonably acceptable to the
Lender.
SECTION 5.10 ERISA Compliance. Each of the Credit Parties and their
ERISA Affiliates will make prompt payment of all contributions which it is
obligated to make under all Pension Plans and Multiemployer Plans and which are
required to meet the minimum funding standard set forth in ERISA with respect to
each of the Pension Plans.
SECTION 5.11 Environmental Matters. The Credit Parties shall (i)
comply in all material respects with Environmental and Safety Laws; (ii) respond
promptly and diligently to any Environmental Claims or any other matters which
could give rise to material liabilities or material investigatory, corrective or
remedial obligations under Environmental and Safety Laws; and (iii) upon the
Lender's belief (in the Lender's sole but reasonable discretion), communicated
to the Borrowers in writing, that any of the Credit Parties has breached any
representation or warranty, covenant or other provision herein relating to
Environmental and Safety Laws, provide documentation reasonably satisfactory in
form and substance to the Lender that it has complied and is in compliance with
all Environmental and Safety Laws and that there are no facts or conditions
relating to its operations or facilities that could reasonably be expected to
give rise to liabilities or investigatory, corrective or remedial obligations
under Environmental and Safety Laws.
ARTICLE 6. NEGATIVE AND FINANCIAL COVENANTS
Each of the Credit Parties covenants and agrees that until the Loan
and the Note and all amounts due under this Agreement at the time of such
termination or payment have been paid in full, unless the Lender shall otherwise
give prior written consent, each of the Credit Parties will perform all
covenants in this Article 6:
SECTION 6.1 Indebtedness. Each of the Credit Parties shall not, and
shall not permit any of their respective Subsidiaries to, directly or indirectly
create, incur, assume, extend the maturity of, or otherwise become directly or
indirectly liable with respect to, any Indebtedness other than(i) Indebtedness
under the Loan Documents, (ii) Senior Debt, (iii) other Indebtedness permitted
by the Senior Credit Agreement as in effect on the Restatement Date and (iv) the
Seller Note.
SECTION 6.2 Transactions with Shareholders and Affiliates. The
Credit Parties shall not, and shall not permit any of their respective
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with any Affiliate of
any Credit Party (other than the Lender) or any officer, director or employee of
any Credit Party (other than an officer of the Lender), except for (i)
transactions in the ordinary course of and pursuant to the reasonable
requirements of such Credit Party's business and upon fair and reasonable terms
and which are no less favorable to such Credit Party than it would obtain in a
comparable arm's-length transaction
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with an unaffiliated Person (provided that the Lender shall receive full written
disclosure of any of the foregoing transactions which involve payments to any
Affiliate (other than the Lender) or officer, director or employee of any Credit
Party of greater than $100,000); (ii) transactions expressly permitted under
Section 6.3; and (iii) transactions contemplated by the Warrant Agreement, the
Stockholders Agreement and the Registration Rights Agreement.
SECTION 6.3 Restricted Junior Payments. The Credit Parties shall
not, and shall not permit any of their respective Subsidiaries to, directly or
indirectly, declare, order, pay, make or set apart any sum of any Restricted
Junior Payment, except that:
(a) Subsidiaries of the Borrowers may make Restricted Junior
Payments to its parents;
(b) The Borrowers may make Restricted Junior Payments to
Holding (i) to the extent necessary to permit Holding to, and Holding may, pay
cash interest on the Seller Note, but only to the extent Holding is permitted to
make such payment under the Senior Credit Agreement as in effect on the
Restatement Date, (ii) to pay off Indebtedness incurred to acquire Auburn, (iii)
for administrative expenses not to exceed $500,000 per fiscal year and (iv) to
allow for the payment of Taxes;
(c) Holding may make Restricted Junior Payments to repurchase
its Capital Stock to the extent it constitutes a Permitted Investment;
(d) Holding may redeem Warrant Shares (as defined in the
Warrant) or other securities sufficient to pay the Aggregate Exercise Price (as
defined in the Warrant) pursuant to the terms of the Warrant;
(e) Holding may make Restricted Junior Payments consisting of
dividend payments on the Preferred Stock in an amount not exceeding in any
Fiscal Year the lesser of (i) $500,000 and (ii) the amount, if any, by which
Excess Cash Flow (as defined in the Senior Credit Agreement as in effect on the
date hereof) for the immediately preceding Fiscal Year exceeded the sum of (x)
the prepayment required under subsection 3.3(b)(ii) of the Senior Credit
Agreement (as in effect on the date hereof) in respect of such immediately
preceding Fiscal Year plus (y) the amount of interest accrued (or deemed,
pursuant to the terms of the Seller Note, to have accrued) on the Seller Note in
the immediately preceding Fiscal Year, to the extent required to be paid in cash
in such Fiscal Year (that is the Fiscal Year in which such Restricted Junior
Payment is being made), (and Borrower may pay dividends to Holding to be use for
such purpose), so long as (1) no Event of Default or Potential Event of Default
is continuing or would arise as a result of such Restricted Junior Payment and
(2) such Restricted Junior Payment may be made under the terms of the Senior
Credit Agreement; and
(f) Holdings may offset any portion of the Seller Note with
any payments to be received from the Seller pursuant to the purchase price
adjustment provisions of the Purchase Agreement; provided, that such offset is
equal to or greater than the amount of such payments and does not involve any
cash payment to the Seller.
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SECTION 6.4 Liens. Except as set forth in Schedule 4.5 and except
for Permitted Liens, each of the Credit Parties shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien upon or with respect to any of its properties or
assets, whether now owned or hereafter acquired, or on any income or profits
therefrom, or assign or otherwise convey any right to receive income to secure
any Indebtedness.
SECTION 6.5 Mergers. Each of the Credit Parties shall not, and shall
not permit any of its Subsidiaries to, consolidate or merge with, or sell,
assign, transfer or lease all or substantially all of its assets in a single
transaction or a series of related transactions to, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or acquire by
purchase or otherwise all or substantially all of the business, property or
fixed assets or stock of, any Person; provided, that a Credit Party or a
Subsidiary of a Credit Party may merge or consolidate with or into another
Person if the following conditions are satisfied:
(a) the Lender is given prior written notice of such action;
(b) if the merger or consolidation involves a Credit Party,
the Person formed by such consolidation or into which a Credit Party is
merged shall either (i) be such Credit Party or (ii) be a Domestic
Subsidiary and expressly assume in writing all of the obligations of such
Credit Party under the Loan Documents; provided, that if the transaction
is between Holding or a Borrower and another Person, Holding or such
Borrower must be the surviving entity;
(c) the Credit Parties execute and deliver such documents,
instruments and certificates as the Lender may reasonably request;
(d) immediately after giving effect to such transaction, no
Potential Event of Default or Event of Default shall have occurred and be
continuing; and
(e) the Borrowers deliver to the Lender Agent an Officer's
Certificate demonstrating compliance with clause (b) above.
SECTION 6.6 Limitation on Sale of Less Than Substantially All
Assets. Except as permitted by the Senior Credit Agreement as in effect on the
Restatement Date, each of the Credit Parties shall not, and shall not permit any
of its Subsidiaries to, make any Asset Sale, unless (a) such Credit Party
receives consideration (including as a result of a "trade-in" or a "trade-up")
at the time of and for such Asset Sale at least equal to the fair value (which,
if greater than $100,000 shall be as determined in good faith by such Credit
Party's Board of Directors, including a valuation by such Credit Party's Board
of Directors of all non-cash consideration) of the assets disposed of in such
Asset Sale as of the date of such Asset Sale, (b) the Borrowers comply with
Section 2.3(a)(ii) or such sale is a Qualified Sale, (c) no Event of Default or
Potential Event of Default shall result from such Asset Sale and (d) after
giving effect to such Asset Sale (including any repayment of Indebtedness in
connection therewith), the Credit Parties are in compliance on a pro forma basis
with the covenants set forth in Sections 6.16 through 6.19 recomputed for the
most recently available quarter end for which information is available and is in
compliance with all other terms and conditions contained in this Agreement.
Notwithstanding any of the foregoing, except as required under the Senior Credit
Documents as in effect on the Restatement Date, the Borrowers will not, and
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will not permit any of their respective Subsidiaries to, directly or indirectly,
convey, assign or otherwise transfer any property or assets of the Borrowers or
any of their respective Subsidiaries to Holding whether now owned or hereafter
acquired, except as permitted by Section 6.3.
SECTION 6.7 Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries. Except as permitted by the Senior Credit Documents as in
effect on the Restatement Date and as set forth in Section 6.6, the Borrowers
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any of its Subsidiaries
to (a) pay dividends or make any other distributions on its Capital Stock or any
other interest or participation in, or measured by, its profits owned by, or pay
any Indebtedness owed to, the Borrowers or any of their respective Subsidiaries,
(b) pay any Indebtedness owed to the Borrowers or any of their respective
Subsidiaries, (c) make loans or advances to the Borrowers or any of their
respective Subsidiaries or (d) transfer any of its properties or assets to the
Borrowers or any of their Subsidiaries.
SECTION 6.8 Investments. No Credit Party will make or acquire, nor
suffer or permit any of its direct or indirect Subsidiaries to make or acquire,
any Investment in any Person other than Permitted Investments or Investments
existing on the Restatement Date and listed on Schedule 6.8 hereto.
SECTION 6.9 Restrictions on Additional Subordinated Indebtedness;
Amendments to Preferred Stock and Seller Notes. Each Credit Party covenants that
it will not, and will not permit any of its Subsidiaries to, create or suffer to
exist any Indebtedness which (i) provides that it is subordinate in right of
payment to the Senior Debt and (ii) is senior in right of payment to or pari
passu with the Loan. Holding shall not amend the terms of the Preferred Stock or
the Seller Notes if the effect thereof is to increase the obligations of Holding
thereunder or add additional restrictions on Holding or alter the subordination
provisions set forth therein.
SECTION 6.10 No Amendment of Organizational Documents. Each Credit
Party covenants that it will not, and will not permit any of its Subsidiaries
to, permit any amendment to or modification of the charter or by-laws of any of
such respective corporations which would materially and adversely affect the
interests of the Lender.
SECTION 6.11 Conduct of Business. No Credit Party will, nor will it
permit its Subsidiaries to, alter the character of its business from that
conducted as of the Restatement Date or engage in any business other than the
business conducted as of the Restatement Date and activities which are
substantially similar or related thereto or logical extensions thereof or
immaterial businesses which are acquired as part of a Permitted Acquisition.
SECTION 6.12 No Creation of New Subsidiaries. The Credit Parties
will not create, or permit any of their respective Subsidiaries to create, any
new Subsidiaries.
SECTION 6.13 Compliance with ERISA. Without the prior written
consent of the Lender, establish any new Employee Benefit Plan or amend any
existing Employee Benefit Plan if the liability or increased liability resulting
from such establishment or amendment is material, or fail to establish, maintain
and operate each Employee Benefit Plan in compliance in all material respects
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with the provisions of ERISA, the Code and all other applicable laws and the
regulations and interpretations thereof.
SECTION 6.14 Material License Agreements. The Credit Parties will
(a) comply with the material terms of any Material License Agreement, (b) keep
each Material License Agreement in full force and effect during the term of such
Material License Agreement unless such Material License Agreement has been
replaced by a license agreement that the Borrowers reasonably believe will
provide revenues and profitability to the Credit Parties at least equal to that
of the Material License Agreement to be terminated and (c) not make any
modification or amendment to any Material License Agreement that would
materially affect the rights of the Lender under the Loan Documents.
SECTION 6.15 Amendments with Respect to Senior Debt. No Credit Party
shall, nor shall it permit any of its Subsidiaries to, amend, modify or restate
the terms of Senior Debt if such amendment, modification or restatement would
(i) increase the amount of Senior Debt (except as permitted by the definition of
"Senior Debt" set forth herein), (ii) increase the margin over the Base Rate (as
defined in the Senior Credit Agreement as in effect on the Restatement Date) or
the Eurodollar Rate (as defined in the Senior Credit Agreement as in effect on
the Restatement Date) by more than 200 basis points (it being understood that
the imposition of a default rate of interest in accordance with subsection 3.1
of the Senior Credit Agreement as in effect on the Restatement Date shall not be
subject to the restrictions contained in this clause (ii)), (iii) extend the
final maturity of the Senior Debt beyond the date one year following the
"Maturity Date" (as such term is defined in the Senior Credit Agreement as in
effect on the Restatement Date) or (iv) change the average weighted-life to
maturity of the Senior Term Loans by more than one year from that in effect on
the Restatement Date (calculated as if such amendment was entered into on the
date hereof and taking into account all previous amendments).
SECTION 6.16 Leverage Ratio. The Leverage Ratio shall be less than
or equal to the ratios set forth below as of the last day of each fiscal quarter
within the period set forth below:
(i) From the Restatement Date to December 30, 1998, 3.575 to
1.0;
(ii) From December 31, 1998 to December 30, 1999, 3.30 to
1.0;
(iii) From December 31, 1998 to December 30, 2000, 3.025 to
1.0; and
(iv) From December 31, 2000 and thereafter, 2.75 to 1.0.
SECTION 6.17 Capitalization Ratio. The Capitalization Ratio shall be
less than or equal to the ratios set forth below as of the last day of each
fiscal quarter within the period set forth below:
(i) From the Restatement Date to December 30, 1998, .9350 to
1.0;
(ii) From December 31, 1998 to December 30, 1999, .825 to
1.0;
(iii) From December 31, 1999 to December 30, 2000, .715 to
1.0; and
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(iv) From December 1, 2000 and thereafter, .66 to 1.
SECTION 6.18 Fixed Charge Ratio. The Fixed Charge Ratio, for the
twelve month period ending on the last day of each fiscal quarter of Holding,
shall be greater than or equal to 1.08 to 1.0.
ARTICLE 7. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default")
shall occur and be continuing:
SECTION 7.1 Failure To Make Payments When Due. (a) Failure to pay
any installment of principal of the Loan when due, whether at stated maturity,
by acceleration, by notice of prepayment, by operation of Section 2.3 or
otherwise (whether or not such payment is prohibited by the terms of the
Subordination Agreement); or (b) failure to pay any interest on any Loan or any
other amount due under this Agreement (whether or not such payment is prohibited
by the terms of the Subordination Agreement) and such default continues for a
period of five (5) Business Days; or
SECTION 7.2 Default in and Acceleration of Other Agreements. (a)
Failure of any Credit Party to pay when due any principal of or interest on any
Funded Debt in excess of $500,000 in principal outstanding and the expiration of
any applicable grace periods or (b) any breach or default by any Credit Party
under any evidences of any Funded Debt in excess of $500,000; provided, that as
a result of any such failure to pay under clause (a) above, or any such breach
or default under clause (b) above, the Funded Debt thereunder shall have become
due and payable prior to its stated maturity; or
SECTION 7.3 Breach of Certain Covenants and Agreements. Failure of
any Credit Party to perform or comply with (a) any term or condition contained
in Section 2.3(a) or 5.1 (a), (b), (c), (d), or (e), 5.6, or Article 6, or (b)
any other term contained in this Agreement or the other Loan Documents and, in
the case of clause (b), such failure shall not have been remedied or waived
within thirty (30) days after receipt of written notice from the Lender of such
default (other than any occurrence described in the other provisions of this
Article 7 for which a different grace or cure period is specified or which
constitutes an immediate Event of Default); or
SECTION 7.4 Breach of Warranty. Any representation or warranty made
by any Credit Party in any Loan Document or in any statement or certificate at
any time given by such Credit Party in writing pursuant hereto or thereto or in
connection herewith or therewith shall be false in any material respect on the
date as of when made; or
SECTION 7.5 Involuntary Bankruptcy; Appointment of Receiver, Etc.
(a) A court having jurisdiction in the premises shall enter a decree or order
for relief in respect of any Credit Party in an involuntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, which decree or order is not stayed; or any other
similar relief shall be granted and remain unstayed under any applicable federal
or state law; or (b) an involuntary case is commenced against any Credit Party
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect; or a decree or order of a court having
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jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over any
Credit Party or over all or a substantial part of any of their respective
properties, shall have been entered; or an interim receiver, trustee or other
custodian of any Credit Party for all or a substantial part of their respective
properties is involuntarily appointed; or a warrant of attachment, execution or
similar process is issued against any substantial part of the property of any
Credit Party, and the continuance of any such events in this clause (b) for
sixty (60) days unless dismissed, bonded, stayed, vacated or discharged; or
SECTION 7.6 Voluntary Bankruptcy; Appointment of Receiver, Etc. Any
Credit Party shall have an order for relief entered with respect to it or
commence a voluntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or shall
consent to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law, or
shall consent to the appointment of or taking possession by a receiver, trustee
or other custodian for all or a substantial part of its property; the making by
any Credit Party of any assignment for the benefit of creditors; or the Board of
Directors of any Credit Party (or any committee thereof) adopts any resolution
or otherwise authorizes action to approve any of the foregoing; or
SECTION 7.7 Judgments and Attachments. Any money judgment, writ or
warrant of attachment, or similar process (other than such judgment, writ,
warrant or attachment or similar process described in Section 7.5(b)) involving
together with any other one or more money judgments, writs or warrants of
attachment or similar process, an aggregate an amount in excess of $1,000,000
(to the extent not paid or covered by insurance) shall be entered or filed
against any Credit Party or any of its assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period ending on the first to occur of (i)
the last day on which such judgment, order or decree becomes final and
unappealable or (ii) sixty (60) days; or
SECTION 7.8 Other Agreements. Any material provision of this
Agreement or any other Loan Document shall cease to be a valid and binding
obligation against any Credit Party except in accordance with its terms or any
Credit Party shall so state in writing; or
SECTION 7.9 Change in Control. A Change in Control shall occur;
THEN, subject to the terms of Article 8, (i) upon the occurrence of
any Event of Default described in the foregoing Section 7.5 or 7.6, the unpaid
principal amount of and accrued interest on the Loan shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the Credit
Parties, and the obligations of the Lender hereunder shall thereupon terminate
and (ii) upon the occurrence and during the continuance of any other Event of
Default, the Lender may, by written notice to the Credit Parties, declare the
Loan to be, and the same shall forthwith become, due and payable, as specified
below, together with accrued interest thereon, and if such Event of Default
results from a failure to comply with Section 2.3(a), together with the
prepayment premium applicable thereto, if any.
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ARTICLE 8. SUBORDINATION
The Obligations of the Credit Parties hereunder and under the Notes
are subject to the subordination and other provision set out in the
Subordination Agreement.
ARTICLE 9. GUARANTEE
SECTION 9.1 Guarantee. In order to induce the Lender to enter into
this Agreement and to extend credit hereunder in recognition of the direct
benefits to be received by the Guarantors from the making of the Loan, each
Guarantor hereby agrees with Lender as follows:
Each Guarantor hereby unconditionally guarantees, as primary obligor
and on a joint and several basis, to the Lender and its successors and assigns
the prompt payment in full when due (whether at stated maturity, by acceleration
or otherwise) of the principal of, and interest on the Loan and all other
Obligations of the Borrowers. Each Guarantor further agrees that if the
Borrowers shall fail to pay any of their respective Obligations in full when due
(whether at stated maturity, by acceleration or otherwise), each Guarantor will
promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Borrowers'
Obligations, the same will be promptly paid in full in cash when due (whether at
extended maturity, by acceleration or otherwise) in accordance with the terms of
such extension or renewal.
SECTION 9.2 Obligations Unconditional. The obligations of the
Guarantors under this Article 9 are absolute and unconditional irrespective of
the value, genuineness, validity, regularity or enforceability of this
Agreement, the Notes, any Loan Document, or any other agreement or instrument
referred to herein or therein, or any substitution, release or exchange of any
other guarantee of or security for any of the Borrowers' Obligations, and to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section 9.2 that the obligations of the Guarantors hereunder shall be absolute
and unconditional under any and all circumstances. Without limiting the
generality of the foregoing, it is agreed that the occurrence of any one or more
of the following shall not alter or impair the liability of the Guarantors
hereunder, which shall remain absolute and unconditional as provided above:
(i) at any time or from time to time, without notice to
Holding, the time for any performance of or compliance with any of the
Borrowers' Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of
this Agreement, the Notes or any Loan Document or any other agreement or
instrument referred to herein or therein shall be done or omitted;
(iii) the maturity of any of the Borrowers' Obligations shall
be accelerated, or any such Obligations shall be modified, supplemented or
amended in any respect, or any right under this Agreement, the Notes, any
Loan Document or any other agreement or instrument referred to herein or
therein shall be waived or any other guarantee of any such
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Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with; or
(iv) any Lien granted to, or in favor of the Lender as
security or any of the Borrowers' Obligations shall fail to be perfected.
Each Guarantor hereby expressly waives diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that the Lender
exhaust any right, power or remedy or proceed against the Borrowers under this
Agreement, the Notes, any Loan Document or any other agreement or instrument
referred to herein or therein, or against any other Person under any other
guarantee of, or security for, any of the Borrowers' Obligations.
SECTION 9.3 Reinstatement. The obligations of the Guarantors under
this Article 9 shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of the Borrowers in respect of the
Borrowers' Obligations is rescinded or must be otherwise restored by any holder
of any such Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees, on a joint and several
basis, that it will indemnify the Lender on demand for all reasonable costs and
expenses (including, without limitation, fees of counsel) incurred by the Lender
in connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
SECTION 9.4 Subrogation. Each Guarantor hereby waives all rights of
subrogation or contribution, whether arising by contract or operation of law
(including, without limitation, any such right arising under the Bankruptcy
Code) or otherwise by reason of any payment or performance by it pursuant to the
provisions of this Article 9.
SECTION 9.5 Remedies. Each Guarantor agrees that, as between such
Guarantor and the Lender, the Obligations of the Borrowers and the Notes may be
declared to be forthwith due and payable as provided in Article 7 of this
Agreement (and shall be deemed to have become automatically due and payable in
the circumstances provided in such Article 7) for purposes of Section 9.1
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such Obligations being deemed to have become automatically due
and payable), in which case such Obligations (whether or not due and payable by
the Borrowers) shall forthwith become due and payable by the Guarantor for
purposes of Section 9.1.
SECTION 9.6 Continuing Guarantee. The guarantee in this Article 9 is
a continuing guarantee, and shall apply to all of the Borrowers' Obligations
whenever arising.
ARTICLE 10. MISCELLANEOUS
SECTION 10.1 Participations in Loan and Note.
(a) The Lender shall have the right at any time, to sell,
assign, transfer or negotiate all or any part of the Loan or Note to one or more
Persons. In the case of any sale,
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assignment, transfer or negotiation of all or part of the Loan or Note
authorized under this Section 10.1(a), the assignee, transferee or recipient
shall have, to the extent of such sale, assignment, transfer or negotiation, the
same rights, benefits and obligations as it would if it were a Lender with
respect to the Loan or Note, including, without limitation, the right to approve
or disapprove actions which, in accordance with the terms hereof, require the
approval of the Lender. The Borrowers shall maintain a register on which it will
record the name and address of each Lender, the Loan or Notes held by each
Lender and each repayment in respect of the principal amount of such Loan or
Notes (the "Note Register"). Failure to make any such recordation, or any error
in such recordation, shall not affect the Borrowers' Obligations in respect of
such Loan or Notes. With respect to the Lender and any successor in interest
thereto, (a) the transfer of any such Person's interest in the Loan or Notes and
the rights to the principal of, and interest on, and premium (if any) on any
such Loan or Note shall not be effective until such transfer is recorded on the
Note Register and prior to such recordation all amounts owing to the transferor
with respect to such Loan or Notes shall remain so owing, and (b) the Borrowers
shall immediately record all such transfers when notified thereof by the
transferor and such transfer shall be made only through either (x) the surrender
of the Note and the reissuance of the Note by the Borrowers to the new Lender or
the issuance by the Borrowers of a new Note to the new Lender or (y) recordation
of such transfer on the Note Register.
(b) The Lender may grant Participations in all or any part of
the Loan or Note to one or more Persons.
(c) In connection with any sales, assignments or transfers of
any Loan or Note referred to in Section 10.1(a), the Lender shall give notice to
the Credit Party of such Loan or Note of the identity of such parties and the
Credit Parties shall be entitled to treat such parties as Lender for all
purposes hereunder. The Lender shall obtain agreements from the purchasers,
assignees and transferees, as the case may be, that all information given to
such parties will be held in strict confidence subject to customary exceptions.
(d) In the event of an assignment by the Lender, or any
subsequent assignment, the term "Lender" herein shall be deemed to refer to each
such Lender, the term "Note" shall be deemed to refer to each "Note", and any
action requiring the consent of the Lender shall, except as otherwise provided
in Section 10.5, be deemed to require the consent of Lenders holding in excess
of 50% of the outstanding principal amount of the Note.
SECTION 10.2 Expenses. Whether or not the transactions contemplated
hereby shall be consummated, the Credit Parties jointly and severally agree to
promptly pay (i) all the actual and reasonable costs and expenses of preparation
of the Loan Documents and all the costs of furnishing all opinions by counsel
for the Credit Parties (including, without limitation, any opinions requested by
the Lender as to any legal matters arising hereunder), and of the Credit
Parties' performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with, (ii) the
reasonable fees, expenses and disbursements of counsel to the Lender in
connection with the negotiation, preparation, execution and administration of
the Loan Documents, and the Loan hereunder, and any amendments and waivers
hereto or thereto, and (iii) after the occurrence of an Event of Default, all
costs and expenses (including reasonable attorneys' fees) incurred by the Lender
in enforcing any Obligations of or in collecting any payments due from any
Credit Party hereunder or under the Note by reason of such Event of Default or
in
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connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a workout, or of any insolvency
or bankruptcy proceedings.
SECTION 10.3 Indemnity. In addition to the payment of expenses
pursuant to Section 10.2, whether or not the transactions contemplated hereby
shall be consummated, each of the Credit Parties (each, an "Indemnitor") agrees
to indemnify, pay and hold the Lender and any holder of any Note, and the
officers, directors, employees, agents, and Affiliates of the Lender and such
holders (collectively called the "Indemnitees") harmless from and against any
and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of one counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto), which may
be imposed on, incurred by, or asserted against that Indemnitee, in any manner
relating to or arising out of this Agreement, the other Loan Documents, the
Lender's agreement to make the Loan or the use or intended use of the proceeds
of the Loan hereunder including without limitation any Environmental Claim or
any other liability or investigatory, corrective or remedial obligation arising
pursuant to CERCLA or any other Environmental and Safety Laws (the "Indemnified
Liabilities"); provided, that the Indemnitor shall not have any obligation to an
Indemnitee hereunder with respect to an Indemnified Liability to the extent that
such Indemnified Liability arises from the gross negligence or willful
misconduct of that Indemnitee. Each Indemnitee shall give the Indemnitor prompt
written notice of any claim that might give rise to Indemnified Liabilities
setting forth a description of those elements of such claim of which such
Indemnitee has knowledge; provided, that any failure to give such notice shall
not affect the obligations of the Indemnitor unless (and then solely to the
extent) the Indemnitor is prejudiced. The Indemnitor shall have the right at any
time during which such claim is pending to select counsel to defend and control
the defense thereof and settle any claims for which it is responsible for
indemnification hereunder (provided that no Indemnitor will settle any such
claim without (i) the appropriate Indemnitee's prior written consent which
consent shall not be unreasonably withheld or (ii) obtaining an unconditional
release of the appropriate Indemnitee from all claims arising out of or in any
way relating to the circumstances involving such claim) so long as in any such
event, the Indemnitor shall have stated in a writing delivered to the Indemnitee
that, as between the Indemnitor and the Indemnitee, the Indemnitor is
responsible to the Indemnitee with respect to such claim to the extent subject
to the limitations set forth herein; provided, that the Indemnitor shall not be
entitled to control the defense of any claim in the event that in the reasonable
opinion of counsel for the Indemnitee there are one or more material defenses
available to the Indemnitee which are not available to the Indemnitor; provided,
further, that with respect to any claim as to which the Indemnitee is
controlling the defense, the Indemnitor will not be liable to any Indemnitee for
any settlement of any claim pursuant to this Section 10.3 that is effected
without its prior written consent. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, each Credit
Party jointly and severally covenants (subject only to any maximums imposed on
any of them under applicable law), to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnitees or any of them.
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SECTION 10.4 Set-Off. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Event of Default with
respect to the Loan, subject to the terms of the Subordination Agreement, the
Lender and each subsequent holder of the Note is hereby authorized by the Credit
Parties at any time or from time to time, without notice to the Credit Parties
or to any other Person, any such notice being hereby expressly waived, to
set-off and to appropriate and to apply any and all deposits (general or
special, including, but not limited to, Indebtedness evidenced by certificates
of deposit, whether matured or unmatured but not including trust accounts) and
any other Indebtedness at any time held or owing by the Lender or that
subsequent holder to or for the credit or the account of any Credit Party
against and on account of the obligations and liabilities of the Credit Parties
(or any of them) to the Lender or that subsequent holder under this Agreement
and the Notes, including, but not limited to, all claims of any nature or
description arising out of or connected with this Agreement or any Note,
irrespective of whether or not (a) the Lender or that subsequent holder shall
have made any demand hereunder or (b) the Lender or that subsequent holder shall
have declared the principal or the interest on the Loan and Note, and other
amounts due hereunder to be due and payable as permitted by Article 8 and
although said obligations and liabilities, or any of them, may be contingent or
unmatured.
SECTION 10.5 Amendments and Waivers. No amendment, modification,
termination or waiver of any provision of this Agreement or any Note, or consent
to any departure by any Credit Party therefrom, shall in any event be effective
without the written concurrence of the Lender and each Credit Party and an
opinion of counsel of the Borrowers to the effect that such amendment,
modification, termination, or waiver does not violate the Senior Credit
Agreement; provided, that no amendment, modification, waiver or consent shall,
unless in writing and signed by the holder(s) of a two-thirds in aggregate
outstanding principal amount of the Notes, do any of the following: (a) increase
or subject the Lender to any additional obligations; (b) reduce the principal
of, or interest on any Note or any fees, premiums or other amounts payable
hereunder; (c) postpone any date fixed for any payment of principal of, or
premium or interest on, any Note or any fees or other amounts payable hereunder;
or (d) amend this Section 10.5. Any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given. No
notice to or demand on any Credit Party in any case shall entitle any Credit
Party to any further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance
with this Section 10.5 shall be binding upon each holder of the Note at the time
outstanding and each future holder of the Note.
SECTION 10.6 Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or be otherwise within the limitation of, another covenant
shall not avoid the occurrence of an Event of Default or Potential Event of
Default if such action is taken or condition exists.
SECTION 10.7 Notices. All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and delivered personally, mailed by certified or registered
mail, return receipt requested and postage prepaid, sent via a nationally
recognized overnight courier, or via facsimile. Such notices, demands and other
communications will be sent to the address indicated below:
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To Any Credit Party:
Gerber Childrenswear, Inc.
531 Main Street
Greenville, SC 29602
Attention: President
Telecopy No.: (803) 240-5977
With copies to:
Citicorp Venture Capital, Ltd.
399 Park Avenue, 14th Floor
New York, NY 10043
Attention: Richard Cashin
John Weber
Telecopy No.: (212) 888-2940
and
Kirkland & Ellis
153 East 53rd Street
New York, NY 10022-4675
Attention: Kirk A. Radke, Esq.
Telecopy No.: (212) 446-4900
To the Lender:
c/o Citicorp Capital Investors, Ltd.
399 Park Avenue, 14th Floor
New York, NY 10043
Attention: Byron Knief
Telecopy No.: (212) 888-2940
With a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, NY 10022-4675
Attention: Eunu Chun, Esq.
Telecopy No.: (212) 446-4900
or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party;
provided, that the failure to deliver copies of notices as indicated above shall
not affect the validity of any notice. Any such communication shall be deemed to
have been received (i) when delivered, if personally delivered, or sent by
nationally-recognized overnight courier or sent via facsimile or (ii) on the
third Business Day following the date on which the piece of mail containing such
communication is posted if sent by certified or registered mail.
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SECTION 10.8 Survival of Warranties and Certain Agreements. (a) All
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement, the making of the Loan hereunder and
the execution and delivery of the Note and shall continue (but, with respect to
representations and warranties, such representations and warranties are made
only as of the date when made pursuant to Section 4) until repayment of the Note
and the Obligations in full; provided, that if all or any part of such payment
is set aside, the representations and warranties in the Loan Documents shall
continue as if no such payment had been made.
(b) Notwithstanding anything in this Agreement or implied by
law to the contrary, the agreements of the Borrowers set forth in Sections 10.2
and 10.3 shall survive the payment of the Loans and the Notes and the
termination of this Agreement.
SECTION 10.9 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any Lender or any holder of any Note in the
exercise of any power, right or privilege hereunder or under the Note shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. All rights and remedies existing under this
Agreement or the Note are cumulative to and not exclusive of, any rights or
remedies otherwise available.
SECTION 10.10 Severability. In case any provision in or obligation
under this Agreement or any Note shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 10.11 Heading. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 10.12 Applicable Law. THIS AGREEMENT AND THE NOTE SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF
LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
SECTION 10.13 Successors and Assigns; Subsequent Holders of Notes.
This Agreement shall be binding upon the parties hereto and their respective
successors and assigns and shall inure to the benefit of the parties hereto and
the successors and assigns of the Lender. The terms and provisions of this
Agreement and all other certificates delivered pursuant to Section 3 shall inure
to the benefit of any assignee or transferee of a Note pursuant to Section
10.1(a), and in the event of such transfer or assignment, the rights and
privileges herein conferred upon the Lender shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof. The Credit Parties' rights or any interest therein hereunder may not be
assigned without the written consent of the Lender.
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SECTION 10.14 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY CREDIT PARTY WITH
RESPECT TO THIS AGREEMENT, ANY NOTE OR ANY WARRANT MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT EACH OF THE CREDIT PARTIES ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT
SUBJECT, HOWEVER, TO RIGHTS OF APPEAL. EACH CREDIT PARTY DESIGNATES AND APPOINTS
THE CORPORATION SERVICE COMPANY, 375 HUDSON STREET, NEW YORK, NEW YORK 10014 AND
SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY EACH CREDIT PARTY IRREVOCABLY
AGREEING IN WRITING TO SERVE, AS ITS AGENT TO RECEIVE ON ITS BEHALF, SERVICE OF
ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY EACH OF THE CREDIT PARTIES TO BE EFFECTIVE AND BINDING SERVICE
IN EVERY RESPECT, A COPY OF SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED
MAIL TO EACH OF THE CREDIT PARTIES AT ITS ADDRESS PROVIDED IN SECTION 10.7
HEREOF, EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO
MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT
APPOINTED BY ANY CREDIT PARTY REFUSES TO ACCEPT SERVICE, EACH CREDIT PARTY
HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE.
NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE LENDER TO BRING PROCEEDINGS
AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 10.15 Waiver of Jury Trial. EACH CREDIT PARTY HEREBY WAIVES,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN
ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR THE VALIDITY, PROTECTION, INTERPRETATION,
COLLECTION OR ENFORCEMENT THEREOF; AND EACH CREDIT PARTY HEREBY WAIVES, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO INTERPOSE ANY SET-OFF OR
COUNTERCLAIM OR CROSS-CLAIM IN CONNECTION WITH ANY SUCH LITIGATION, IRRESPECTIVE
OF THE NATURE OF SUCH SET-OFF, COUNTERCLAIM OR CROSS-CLAIM EXCEPT TO THE EXTENT
THAT THE FAILURE SO TO ASSERT ANY SUCH SET-OFF, COUNTERCLAIM OR CROSS-CLAIM
WOULD PERMANENTLY PRECLUDE THE PROSECUTION OF OR RECOVERY UPON SAME.
NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, NO CLAIM
MAY BE MADE BY ANY CREDIT PARTY AGAINST ANY LENDER FOR ANY LOST PROFITS OR ANY
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL
CONDUCT (OTHER THAN WILLFUL MISCONDUCT CONSTITUTING ACTUAL FRAUD) IN CONNECTION
WITH, ARISING OUT OF OR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED
HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS, OR ANY
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ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH; EACH CREDIT PARTY
HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM FOR ANY SUCH
DAMAGES. EACH CREDIT PARTY AGREES THAT THIS SECTION IS A SPECIFIC AND MATERIAL
ASPECT OF THIS AGREEMENT AND ACKNOWLEDGES THAT THE LENDER WOULD NOT EXTEND TO
ANY CREDIT PARTY ANY LOAN HEREUNDER IF THIS SECTION WERE NOT PART OF THIS
AGREEMENT.
SECTION 10.16 Counterparts; Effectiveness. This Agreement and any
amendments, waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto, and written or telephonic notification of such
execution and authorization of delivery thereof has been received by each of the
Credit Parties and the Lender.
SECTION 10.17 Entirety. This Agreement and the other Loan Documents
embody the entire agreement among the parties and supersede all prior agreements
and understandings, if any, relating to the subject matter hereof and thereof.
* * * * *
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IN WITNESS WHEREOF the due execution hereof by the respective duly
authorized officers of the undersigned as of the date first written above.
BORROWERS:
GERBER CHILDRENSWEAR, INC.
By: /s/ Richard L. Solar
------------------------------------
Name: RICHARD L. SOLAR
Title: Senior Vice President
AUBURN HOSIERY MILLS, INC.
By: /s/ Richard L. Solar
------------------------------------
Name: RICHARD L. SOLAR
Title: Senior Vice President
GUARANTORS:
GCIH, INC.
By: /s/ Richard L. Solar
------------------------------------
Name: RICHARD L. SOLAR
Title: Senior Vice President
COSTURA DOMINICANA, INC.
By: /s/ Richard L. Solar
------------------------------------
Name: RICHARD L. SOLAR
Title: Senior Vice President
AUBURN HOLDINGS, INC.
By: /s/ Richard L. Solar
------------------------------------
Name: RICHARD L. SOLAR
Title: Senior Vice President
GCI IP SUB, INC.
By: /s/ Richard L. Solar
------------------------------------
Name: RICHARD L. SOLAR
Title: Senior Vice President
AUBURN MERGER CO.
By: /s/ Richard L. Solar
------------------------------------
Name: RICHARD L. SOLAR
Title: Senior Vice President
CITICORP MEZZANINE PARTNERS, L.P.
By: Citicorp Capital Investors,
Ltd., its general partner
By: /s/ Byron H. Knief
------------------------------------
Name: BYRON H. KNIEF
Title: President
Dates Referenced Herein and Documents Incorporated by Reference
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