EXHIBIT 10.26
CONSENT AND AMENDMENT
CONSENT AND AMENDMENT dated as of December 31, 2002, to the Credit
Agreement ("Credit Agreement"), dated as of March 28, 2002, between GFSI, Inc.,
a Delaware Corporation (the "Borrower"), GFSI Holdings, Inc., a Delaware
corporation ("Holdings"), each of the financial institutions a party to thereto
(such financial institutions, together with their successors and assigns, are
referred to herein each individually as a "Lender" and collectively as the
"Lenders"), and Bank of America, N.A., as agent for the Lenders (in its capacity
as agent, the "Agent").
Recitals
WHEREAS, Borrower and Holdings wish to engage in an exchange of notes with
a note holder as provided herein and;
WHEREAS, Borrower has issued $125,000,000 (aggregate principal amount) of
its Senior Subordinated Notes ("Senior Subordinated Notes") pursuant to its
Indenture dated as of February 27, 1997, as amended, for Series A & B 9 5/8%
Senior Subordinated Notes due 2007 with Fleet National Bank as original trustee
("GFSI Indenture");
WHEREAS, Borrower will issue an additional $9,900,000 (aggregate principal
amount) of senior subordinated notes (such notes, whether the initial
unregistered notes issued on December 31, 2002 or the notes expected to be
issued in a registered exchange offer for such unregistered notes, being the
"New Senior Subordinated Notes", and such notes pay interest on a current basis)
pursuant to its Indenture dated as of December 31, 2002 for Series A & B 9 5/8%
Senior Subordinated Notes due 2007 with State Street Bank and Trust Company as
trustee ("New GFSI Indenture");
WHEREAS, in connection with the issuance of the New Senior Subordinated
Notes pursuant to the New GFSI Indenture, Event 1, Inc., CC Products, Inc. and
GFSI Canada Company, all wholly owned by Borrower (collectively the
"Subsidiaries"), will each guarantee the payment of the New Senior Subordinated
Notes under a Subsidiary Guarantee or similar document as provided in the New
GFSI Indenture;
WHEREAS, Holdings has issued $108,467,780 (aggregate principal amount at
maturity) of its Senior Discount Notes ("Senior Discount Notes") pursuant to its
Indenture dated as of September 17, 1997, as amended, for 11 3/8% Senior
Discount Notes due 2009 with State Street Bank and Trust Company, as trustee
("Holdings Indenture");
WHEREAS, a holder ("Note Holder") of $24,000,000 (aggregate principal
amount at maturity) of Senior Discount Notes ("Acquired Senior Discount Notes")
will transfer and assign its Acquired Senior Discount Notes to Borrower in
exchange for the unregistered New Senior Subordinated Notes (and the
unregistered notes are expected to later be exchanged by the Note Holder for
registered notes of Borrower);
WHEREAS, Borrower may distribute all or part of the Acquired Senior
Discount Notes to Holdings in one or more transactions, now or from time to
time, and Holdings may retire any or all of the Acquired Senior Discount Notes
when and if it receives them, or Borrower may retain all or part of the Acquired
Senior Discount Notes for its own account or for possible later distribution of
all or a part of the Acquired Senior Discount Notes to Holdings;
WHEREAS, The foregoing transactions are herein collectively referred to as
the "Note Exchange" (and the Note Exchange includes the retention of all or part
of the Acquired Senior Discount Notes by Borrower or the distribution in one or
more transactions, now or from time to time, of all or part of the Acquired
Senior Discount Notes to Holdings by Borrower depending on the Borrower's
decision with respect to such possible actions), and in connection therewith
Borrower has requested that the Lenders and Agent execute and deliver this
Consent and Amendment;
WHEREAS, Lenders and Agent have requested an amendment fee of $40,000 in
return for their consent to the Note Exchange as provided herein.
NOW, THEREFORE, effective upon the execution hereof by the Borrower,
Holdings, Lenders, and Agent, it is hereby agreed as follows:
Section 1. Definitions. Capitalized terms used herein and not otherwise
defined herein are used as defined in the Credit Agreement.
Section 2. Amendment Fee. Borrower shall pay to Agent, on behalf of Agent
and Lenders, an amendment fee of $40,000 ("Amendment Fee"). The Amendment Fee
shall be payable upon the earlier of: (a) June 30, 2003, or (b) the date the
publicly registered New Senior Subordinated Notes are issued.
Section 3. Credit Agreement Consents.
(a) Notwithstanding that the Note Exchange would cause the issuance of Debt
that exceeds the allowable amount of Debt permitted under the provisions of
Sections 6.9 and 7.13 of the Credit Agreement, the Lenders and Agent hereby
consent to the issuance of the unregistered New Senior Subordinated Notes and
then the exchange of them as a part of the Note Exchange for the Acquired Senior
Discount Notes, and the further issuance and exchange of the registered New
Senior Subordinated Notes for the unregistered New Senior Subordinated Notes,
subject to the consummation of each of the other transactions constituting the
Note Exchange.
(b) Notwithstanding the provisions of Section 7.15 of the Credit Agreement
that limit certain transactions with Affiliates (including distributions of
property to an Affiliate and investing in an Affiliate or purchasing an
Affiliate's indebtedness), and that the distribution of the Acquired Senior
Discount Notes from Borrower to Holdings is not a Permitted Holdings Payment,
the Lenders and Agent hereby consent to the distribution of the Acquired Senior
Discount Notes from Borrower to Holdings in one or more transactions, now or
from time to time, as well as the acquisition of the Acquired Senior Discount
Notes by Borrower from the Note Holder, subject to the consummation of each of
the other transactions constituting the Note Exchange.
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(c) Notwithstanding the provisions of Section 7.10 of the Credit Agreement
that limit Distributions, Capital Changes and Restricted Investments and that
the acquisition of the Acquired Senior Discount Notes is not an exception to the
definition of a Restricted Investment, including under subparagraph (k) of such
definition, the Lenders and Agent hereby consent to the issuance of the New
Senior Subordinated Notes, the acquisition of the Acquired Senior Discount Notes
by Borrower from the Note Holder in exchange for the unregistered New Senior
Subordinated Notes (and any later exchange offer by which the Note Holder
exchanges registered New Senior Subordinated Notes of Borrower in return for
unregistered New Senior Subordinated Notes), and any distribution of the
Acquired Senior Discount Notes by Borrower to Holdings (but not to any third
party that is not an Affiliate of Borrower) in one or more transactions, now or
from time to time, and the retirement of such Acquired Senior Discount Notes by
Holdings if they are distributed to it, subject to the consummation of each of
the other transactions constituting the Note Exchange.
(d) Notwithstanding the provisions of Section 7.12 of the Credit Agreement
that limit guarantees by subsidiaries of Borrower, the Lenders and Agent hereby
consent to the guarantee of the New Senior Subordinated Notes by the
Subsidiaries.
(e) Notwithstanding any other provision of the Credit Agreement or the Loan
Documents, and without limitation by the specific consents hereinabove granted,
the Lender and Agent consent to the Note Exchange.
Section 4. Amendments. The Credit Agreement is amended as follows:
(a) Schedule 6.9 to the Credit Agreement is amended in its entirety by
substituting a revised Schedule 6.9 which is attached hereto as Exhibit A.
(b) The definition of "Senior Notes" is amended in its entirety to read
"means the $125,000,000 (aggregate principal amount) Series A and Series B 9
5/8% Senior Subordinated Notes due 2007 issued pursuant to the Borrower
Indenture dated as of February 27, 1997, and the $9,900,000 (aggregate principal
amount) Series A & B 9 5/8% Senior Subordinated Notes due 2007, issued pursuant
to the Borrower Indenture dated as of December 31, 2002.
(c) Section 7.13 (e) of the Credit Agreement is amended in its entirety to
read: "(e) Debt evidenced by the Senior Notes in an aggregate principal amount
not to exceed $134,900,000".
(d) The definition of "Borrower Indenture" is amended in its entirety to
read: "means that certain Indenture dated as of February 27, 1997 between the
Borrower and Fleet National Bank, as Trustee (for which State Street Bank and
Trust Company is the successor trustee) and all Supplemental Indentures, and
that certain Indenture dated as of December 31, 2002, between Borrower and State
Street Bank and Trust Company, as Trustee, and all Supplemental Indentures
(although more than one Indenture, referred to together in the singular as
"Borrower Indenture")".
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Section 5. Miscellaneous. Except to the extent compliance therewith is
hereby expressly waived or consents are granted hereunder, the provisions of the
Credit Agreement shall remain unchanged and in full force and effect. This
Consent and Amendment may be executed in any number of counterparts, all of
which taken together shall constitute one and the same amendatory instrument and
any of the parties hereto may execute this Consent and Amendment by signing any
such counterpart and sending the same by telecopier, mail messenger or courier
to the Agent or counsel to the Agent. This Agreement shall be interpreted and
the rights and liabilities of the parties hereto determined in accordance with
the internal laws (as opposed to the conflict of laws provisions) of the State
of Illinois; provided that the Agent and the Lenders shall retain all rights
arising under federal law.
IN WITNESS WHEREOF, the parties hereto have caused this Consent and
Amendment to be duly executed as of the day and year first above written.
"BORROWER"
GFSI, Inc.
By: /s/ Xxxxx Xxxxxxx
---------------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
"HOLDINGS"
GFSI Holdings, Inc.
By: /s/ Xxxxx Xxxxxxx
---------------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
[This is one of the signature pages to the Consent and Amendment dated as of
December 31, 2002.]
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"AGENT"
BANK OF AMERICA, N.A., as the Agent
By: /s/ Xxx Xxxxxx
-----------------------------------------
Xxx Xxxxxx, Vice President
"LENDERS"
BANK OF AMERICA, N.A., as a Lender
By: /s/ Xxx Xxxxxx
-----------------------------------------
Xxx Xxxxxx, Vice President
[This is one of the signature pages to the Consent and Amendment dated as of
December 31, 2002.]
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THE CIT GROUP/COMMERCIAL
SERVICES, INC., as a Lender
By: /s/ Xxxx Xxxx Xxxxxxxxxx
--------------------------------------------
Xxxx Xxxx Xxxxxxxxxx, Vice President
[This is one of the signature pages to the Consent and Amendment dated as of
December 31, 2002.]
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U.S. BANK NATIONAL ASSOCIATION, as a Lender
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------------------
Xxxxxx Xxxxxxxx, Vice President
[This is one of the signature pages to the Consent and Amendment dated as of
December 31, 2002.]
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EXHIBIT A
SCHEDULE 6.9
(DEBT)
In addition to the Revolving Loans under the Credit Agreement with Bank of
America, N.A. as Agent, to be made on the Closing Date, the Borrower and its
Subsidiaries have the debt evidenced by the following items:
GFSI, INC.
o Promissory Note with the City of Chillicothe, Missouri dated January
15, 2002 for $50,000.
o Promissory Note between GFSI, Inc. and N. W. Development
Corporation, Inc. dated March 12, 2002 for $250,000, and related
Loan Agreement.
o Promissory Note between GFSI, Inc. and Farmers Electric Cooperative,
Inc. dated September 23, 2002 for $450,000, and related Security
Agreement, Loan Agreement and other documents.
o Promissory Note between GFSI, Inc. and the City of Bedford dated
April 28, 1998 for $300,000 and constituting a Forgivable Loan; CEBA
Department of Economic Development Loan Number 98-PRO-07.
o Promissory Note between GFSI, Inc. and the City of Bedford, Iowa
dated June 1, 1998 for $553,000.00.
o Industrial New Jobs Training Agreement between Xxxxxxxxxxxx
Xxxxxxxxx Xxxxxxx, Xxxxxxx, Xxxx and GFSI, Inc. dated May 11, 1999
relating to $420,000 Xxxxxxxxxxxx Xxxxxxxxx Xxxxxxx, Xxxxxxx, Xxxx
Industrial New Jobs Training Certificates (GFSI, Inc. Project Series
1999).
o Series A & B 9 5/8% Senior Subordinated Notes in the principal
amount of $125,000,000 due 2007, issued pursuant to the Indenture
dated February 27, 1997, between GFSI, Inc. and Fleet National Bank,
as Trustee, as amended by the First Supplemental Indenture dated as
of June 22, 2001, and by the Second Supplemental Indenture dated as
of February 28, 2002 and by the Third Supplemental Indenture dated
as of June 11, 2002 (the "GFSI Indenture").
o Series A & B 9 5/8% Senior Subordinated Notes in the principal
amount of $9,900,000 due 2007, issued pursuant to the Indenture
dated December 31, 2002, between GFSI, Inc. and State Street Bank
and Trust Company, as Trustee (the "New GFSI Indenture").
o Capital Lease or purchase money debt related to the Financing
Statement between GFSI, Inc. as debtor and Iowa Department of
Economic Development Bureau of Business Finance as secured party,
filed with the county Recorder, Xxxxxx County, Iowa for four (4)
embroidery machines described therein.
o Capital lease or purchase money debt related to the Financing
Statement between GFSI, Inc. as debtor and Fleet Leasing Corporation
as secured party; UCC-1 P062206 filed December 7, 1999 for a leased
586 Microm Computer #1963371-0001.*
o Capital lease or purchase money debt related to the Financing
Statement between GFSI, Inc. as debtor and Fleet Leasing Corporation
as secured party; UCC-1 3105902 filed December 27, 1999 for a leased
586 Microm Laptop #1963398-0001.*
o Capital lease or purchase money debt related to the Financing
Statement between GFSI, Inc. as debtor and Fleet Leasing Corporation
as secured party; UCC-1 3105903 filed December 27, 1999 for a leased
586 Microm Laptop #1963401-0001.*
o Capital lease or purchase money debt related to the Financing
Statement between Gear for Sports as debtor and Fuji Photo Film USA
Inc. as secured party; UCC-1 2516997 filed December 24, 1998 for a
FG550E Film Processor #9406-303.
o Capital lease or purchase money debt related to the Financing
Statement between Gear for Sports as debtor and Fuji Photo Film USA
Inc. as secured party; UCC-1 2547619 filed April 14, 1999 for a
FG550E Film Processor #9406-338.
o Capital lease or purchase money debt related to the Financing
Statement between Gear for Sports as debtor and Fuji Photo Film USA
Inc. as secured party; UCC-1 3105913 filed December 15, 1999 for a
FG550E Film Processor #9406-303, Colorart CA680T Laminator #5482214,
CA600P Processor #5462873.
o Capital lease or purchase money debt related to the Financing
Statement between Gear for Sports, Inc. as debtor and Primesource
Corporation as secured party; UCC-1 2407311 filed December 1, 1997
for lithographic equipment.
Exhibit A
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o Capital lease or purchase money debt related to the Financing
Statement between Gear for Sports, Inc. as debtor and Xerox
Corporation as secured party; UCC-1 2465179 filed June 18, 1998 for
a Xerox D Color 40F and ZX-40; Cust. No. 955829957.
o Capital lease or purchase money debt related to the Financing
Statement between Winning Ways, Inc. as debtor and Fuji Photo Film
USA Inc. as secured party; UCC-1 2048042 filed August 1, 1994,
continued by filing Xx. 0000000 dated April 14, 1999 for CA600PIIILX
Processor #5462878 and CA680TIII Thermoprinter #5482214.
o Capital lease or purchase money debt related to the Financing
Statement between Winning Ways, Inc. as debtor and IBM Credit
Corporation as secured party; UCC-1 2286624 filed April 10, 1997,
for IBM equipment referenced on IBM sup. #278734, dated September 3,
1996.
o Capital lease or purchase money debt related to the Financing
Statement between Winning Ways, Inc. as debtor and IBM Credit
Corporation as secured party; UCC-1 2343353 filed April 10, 1997,
for IBM equipment referenced on IBM sup. #278734, dated September 3,
1996.
o Debt under the following additional capital leases (and we
understand that obligations under operating leases are not Debt):
- IBM Lease--Tape Library
- Microm Leasing--4 leases for various computer equipment
- Xxxxxxx Leasing Corporation--Forklifts lease
- GE Capital Corporation--Screen print machine lease
- GE Capital Corporation--Lease on 6 four-head embroidery
machines
*The debtor address on the UCC-1 does not match GFSI, Inc.'s Lenexa
address.
EVENT 1, INC.
o Subsidiary Guarantee by Event 1, Inc. and Second Supplemental
Indenture dated as of February 28, 2002 pursuant to the GFSI
Indenture, and the Subsidiary Guarantee by Event 1, Inc. pursuant
to the New GFSI Indenture.
Exhibit A
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CC PRODUCTS, INC.
o Subsidiary Guarantee by CC Products, Inc. and First Supplemental
Indenture dated as of June 22, 2001 pursuant to the GFSI Indenture,
and the Subsidiary Guarantee by CC Products, Inc. pursuant to the
New GFSI Indenture.
GFSI CANADA COMPANY
o Subsidiary Guarantee by GFSI Canada Company and Third Supplemental
Indenture dated as of June 11, 2002 pursuant to the GFSI Indenture,
and the Subsidiary Guarantee by GFSI Canada Company pursuant to the
New GFSI Indenture.
GFSI HOLDINGS, INC.
o Series A&B 11 3/8% Senior Discount Notes Indenture due 2009, with
State Street Bank and Trust Company as trustee, issued by GFSI
Holdings, Inc. and dated September 17, 1997 with an accreted balance
of $76,086,944 as of June 29, 2001; as amended by the First
Supplemental Indenture dated as of October 11, 1999.
In addition, Borrower and its Subsidiaries have obligations under the leases
referred to on Schedule 6.11. Borrower and its Subsidiaries also have
obligations, indemnities and contingent obligations under license agreements,
operating leases, purchase money security agreements and other agreements
entered into in the ordinary course of business; the Licensing Agreements
described on Schedule 6.12; and the material agreements described on Schedule
6.26.
Exhibit A
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