EXHIBIT 10-1(C) - Amendment No. 2
dated as of December 1, 2000
to Credit Agreement
AMENDMENT NO. 2
Dated as of December 1, 2000
to
CREDIT AGREEMENT
Dated as of February 27, 1997
THIS AMENDMENT NO. 2 ("Amendment") is made as of December 1, 2000 by
and among GFSI, INC. (the "Borrower"), the financial institutions listed on the
signature pages hereof (the "Lenders") and BANK ONE, NA (formerly known as THE
FIRST NATIONAL BANK OF CHICAGO), in its individual capacity as a Lender and in
its capacity as contractual representative on behalf of itself and the other
Lenders ("Agent") under that certain Credit Agreement dated as of February 27,
1997 by and among the Borrower, the Lenders and the Agent, as amended by an
Amendment No. 1 dated as of September 17, 1997 (the "Credit Agreement"). Defined
terms used herein and not otherwise defined herein shall have the respective
meanings given to them in the Credit Agreement.
WHEREAS, the Borrower, the Lenders and the Agent are parties to the
Credit Agreement; and
WHEREAS, the Borrower has requested that the Agent and the requisite
number of Lenders under Section 8.3 of the Credit Agreement amend the Credit
Agreement on the terms and conditions set forth herein; and
WHEREAS, the Borrower, the requisite number of Lenders under Section
8.3 of the Credit Agreement and the Agent have agreed to amend the Credit
Agreement on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties have agreed to the following amendments to the Credit Agreement:
1. Amendments to the Credit Agreement. Effective as of the Effective
Date (as defined below) and subject to the satisfaction of the condition
precedent set forth in Section 2 below, the Credit Agreement is hereby amended
as follows:
1.1. The definition of "Aggregate Revolving Loan Commitment" appearing
in Section 1.1 of the Credit Agreement is amended in its entirety
to read as follows:
"Aggregate Revolving Loan Commitment" means the
aggregate of the Revolving Loan Commitments of all the
Lenders, as reduced from time to time pursuant to the
terms hereof. The Aggregate Revolving Loan Commitment (in
the absence of any reduction pursuant to Section 2.5 or
2.6, or any amendment pursuant to Section 8.3) is Forty
Million and 00/100 Dollars ($40,000,000).
1.2. The definition of "Applicable L/C Fee Percentage" appearing in
Section 1.1 of the Credit Agreement is amended in its entirety to
read as follows:
"Applicable L/C Fee Percentage" means, as of any date
of determination, a rate per annum: (i) for standby
Letters of Credit, equal to the Applicable Eurodollar
Margin for Revolving Loans in effect on such date, and
(ii) for commercial Letters of Credit, equal to one half
of the Applicable Eurodollar Margin for Revolving Loans in
effect on such date.
1.3. Subclause (g) of the definition of "Permitted Holdings
Indebtedness" appearing in Section 1.1 of the Credit Agreement is
amended in its entirety to read as follows:
(g) Indebtedness to any shareholder of Holdings incurred
at a time when no Default has occurred and is continuing
in connection with the repurchase, redemption or other
acquisition or retirement for value of any Equity
Interests of Holdings ("Repurchase Indebtedness") owned by
(i) any member of the Borrower's management, pursuant to
the Stockholders Agreement as in effect on the Closing
Date, or (ii) any of the Borrower's "Employees" or their
"Permitted Transferees" (as such terms are defined in the
Amended and Restated Stockholders Agreement), pursuant to
the Amended and Restated Stockholders Agreement or any
similar agreement entered into after the Closing Date with
any "Employee" or its "Permitted Transferee" (as such
terms are defined in the Amended and Restated Stockholders
Agreement) of the Borrower or any Restricted Subsidiary
acquired after the Closing Date, provided, that such
Indebtedness shall be subordinated to the Secured
Obligations and Indebtedness evidenced by the Senior
Subordinated Notes on terms and conditions reasonably
acceptable to the Agent and the Required Lenders (it being
understood and agreed that the subordination terms
contained in the Non-Negotiable Promissory Notes attached
as Exhibit C to the Stockholders Agreement as in effect as
of the Closing Date shall be acceptable);
1.4. The following new definition of "Amended and Restated
Stockholders Agreement" shall be inserted alphabetically in
Section 1.1 of the Credit Agreement:
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"Amended and Restated Stockholders Agreement" means any
agreement entered into by Holdings and each of its
stockholders with respect to the capital stock of Holdings
on substantially the terms set forth in the draft Amended
and Restated Subscription and Stockholders Agreement
(draft dated December 4, 2000, document reference
704040.21), delivered to the Agent on December 4, 2000,
and otherwise as is reasonably acceptable to the Agent
upon execution thereof, as in effect on the execution date
thereof and without giving effect to any amendment,
restatement, supplement or other modification thereto
after such date.
1.5. Section 2.5(B)(i)(b) of the Credit Agreement is amended to delete
the phrase "Level 4, Level 5 or Level 6" now appearing therein,
and to substitute the following therefor: "Level 4, Xxxxx 0,
Xxxxx 0 or Level 7".
1.6. Section 2.15(D)(ii) of the Credit Agreement is amended to delete
the pricing grid now appearing therein and to substitute the
following therefor:
APPLICABLE MARGINS/FEES FOR OBLIGATIONS
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LEVERAGE RATIO APPLICABLE APPLICABLE APPLICABLE APPLICABLE APPLICABLE
FLOATING RATE EURODOLLAR FLOATING EURODOLLAR COMMITMENT FEE
MARGIN FOR RATE MARGIN RATE RATE MARGIN PERCENTAGE
OBLIGATIONS FOR MARGIN FOR FOR B TERM
OTHER THAN B OBLIGATIONS B TERM LOANS
TERM LOANS OTHER THAN LOANS
TERM LOANS
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LEVEL 1 > 5.0 to 1.0 2.75% 3.75% 3.25% 4.25% 0.625%
-
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> 4.50 to 1.00 and
-
LEVEL 2 < 5.00 to 1.00 2.50% 3.50% 3.00% 4.00% 0.625%
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> 4.00 to 1.00 and
-
LEVEL 3 < 4.50 to 1.00 2.25% 3.25% 2.75% 3.75% 0.500%
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> 3.50 to 1.00 and
-
LEVEL 4 < 4.00 to 1.00 2.00% 3.00% 2.50% 3.50% 0.500%
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> 3.00 to 1.00 and
-
LEVEL 5 < 3.50 to 1.00 1.75% 2.75% 2.25% 3.25% 0.500%
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XXXXX 0 > 2.50 to 1.00 and
-
< 3.00 to 1.00 1.50% 2.50% 2.00% 3.00% 0.375%
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XXXXX 0 < 2.50 to 1.00 1.25% 2.25% 1.75% 2.75% 0.375%
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1.7. Section 6.3(D)(x) of the Credit Agreement is amended and restated
in its entirety as follows:
(x) Investments by the Borrower or any Restricted Subsidiary
in other Persons which do not in the aggregate exceed the
applicable Aggregate Acquisition and Investment Basket at
any time; provided, that at no time shall the aggregate
amount of Investments by the Borrower constituting the
purchase of capital stock of Holdings under this clause (x)
(which purchases shall be permitted under this clause (x)
only if, as of such date of purchase, the Borrower may make
a Restricted Payment to Holdings to fund the repurchase of
such capital stock under Section 6.3(F)(iii)(b)), together
with the aggregate amount of Restricted Payments made under
Section 6.3(F)(iii)(b), exceed $4,000,000, it being
understood that such dollar limitation set forth in this
proviso shall be increased up to a maximum amount of
$4,000,000 on a dollar-for-dollar basis equal to the sum of
(a) the cash proceeds received by the Borrower from the
re-sale of capital stock of Holdings previously purchased by
the Borrower as an Investment permitted under this clause
(x) plus (b) any capital contribution made by Holdings to
the equity of the Borrower from the cash proceeds from the
re-issuance of capital stock of Holdings previously
purchased with distributions permitted under Section
6.3(F)(iii)(b).
1.8. Section 6.3(F)(iii) of the Credit Agreement is amended and
restated in its entirety as follows:
(iii) the Borrower may make distributions to Holdings to
fund (a) payments required to be made by and actually made
by Holdings in respect of interest due on an unaccelerated
basis on the Holdings Senior Notes; provided, however, the
Borrower may make such distributions with respect to the
Holdings Senior Notes only on March 15 and September 15 of
each year (or the Business Day immediately prior thereto
if such date is not a Business Day), commencing March 15,
2005; and; (b) (1) payments made by Holdings to repurchase
its common stock made pursuant to Section 7.1(b), 7.2,
7.3, 7.4 or 7.7 of the Stockholders Agreement and
concurrently to repurchase Holdings' preferred stock (at a
purchase price not greater than the par value thereof plus
any accrued and unpaid dividends thereon) from the holder
of such common stock, (2) payments made by Holdings to
repurchase its common stock or Series A Preferred Stock
made pursuant to Section 7.1(b), 7.2, 7.3, 7.4, 7.5 or 7.8
of the Amended and Restated Stockholders Agreement and (3)
payments required to be made by and actually made by
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Holdings in respect of amounts due on an unaccelerated
basis on the Repurchase Indebtedness unless such payments
are prohibited by the subordination terms applicable to
such Repurchase Indebtedness, in an aggregate amount for
all such payments under clauses (1), (2) and (3), together
with all Investments by the Borrower under the proviso in
Section 6.3(D)(x), not to exceed $4,000,000, such
distributions to be made not earlier than one Business Day
prior to the date on which Holdings is to make such
payments; provided, that, Holdings shall first satisfy any
such payment obligation by canceling Indebtedness under
the Management Note, if any, of the Person to whom
Holdings is obligated to make such payment; provided,
further, that the dollar limitation set forth in this
clause (b) shall be increased up to a maximum amount of
$4,000,000 on a dollar-for-dollar basis equal to the sum
of (a) the cash proceeds received by the Borrower from the
re-sale of capital stock of Holdings previously purchased
by the Borrower as an Investment permitted under Section
6.3(D)(x) plus (b) any capital contribution made by
Holdings to the equity of the Borrower from the cash
proceeds from the re-issuance of capital stock of Holdings
previously purchased with distributions permitted under
this clause (b); and (c) mandatory payments of dividends
due on the Preferred Stock to the extent Indebtedness for
such payments is Permitted Holdings Indebtedness under
clause (c) of the definition thereof, such distributions
to be made not earlier than one Business Day prior to the
date on which Holdings is required to make such payments;
1.9. Clause (ix) of Section 6.3(O) of the Credit Agreement is amended
and restated in its entirety as follows:
(ix) modifies the Persons obligated with respect to such
Indebtedness (other than to cause any Restricted
Subsidiary to guarantee such Indebtedness to the extent
such guarantee is permitted under Section 6.3(E)).
1.10. The definition of "EBITDA" now appearing in Section 6.4(A) of the
Credit Agreement is amended by inserting the following new
clauses (xiii) and (xiv) at the end thereof:
, plus (xiii) Restricted Payments permitted under
subsections (i)(a)(1) and (i)(b) of Section 6.3(F) during
such period to the extent deducted in computing
Consolidated Net Income, plus (xiv) Restricted Payments
made pursuant to that certain Noncompetition Agreement,
dated as of February 27, 1997, between Holdings and Xxxxxx
X. Xxxxx, as in effect on the Closing Date, and permitted
under Section 6.3(F)(iv) during such period to the extent
deducted in computing Consolidated Net Income
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1.11. Section 6.4(C) of the Credit Agreement is amended and restated in
its entirety as follows:
(C) Fixed Charge Coverage Ratio. The Borrower shall maintain a
ratio ("Fixed Charge Coverage Ratio") of: (i) EBITDA minus Capital
Expenditures to (ii) the sum of the amounts, without duplication of (a)
Interest Expense, plus (b) Fees, plus (c) Taxes, plus (d) Restricted
Payments of the type referred to in clauses (i), (ii), (iii) and (iv)
of the definition of Restricted Payments, plus (e) cash payments under
the Incentive Compensation Plan, plus (f) scheduled amortization of the
principal portion of the Term Loans and scheduled amortization of the
principal portion of all other Indebtedness of the Borrower and its
Restricted Subsidiaries during such period of at least:
(1) 1.04 to 1.00 for the fiscal quarter ending December 31,
2000;
(2) 1.05 to 1.00 for the fiscal quarter ending March 31,
2001;
(3) 1.02 to 1.00 for the fiscal quarter ending June 30,
2001;
(4) 1.02 to 1.00 for the fiscal quarter ending September 30,
2001; and
(5) 1.00 to 1.00 for each fiscal quarter thereafter until
the Termination Date.
In each case the Fixed Charge Coverage Ratio shall be
determined as of the last day of each fiscal quarter for the
four-quarter period ending on such day; provided, further, that the
Fixed Charge Coverage Ratio shall be calculated with respect to
Permitted Acquisitions, on a pro forma basis using unadjusted
historical audited and reviewed unaudited financial statements obtained
from the seller, broken down by fiscal quarter in the Borrower's
reasonable judgement).
1.12. Section 6.4(D) of the Credit Agreement is amended and restated in
its entirety as follows:
(D) Maximum Leverage Ratio. The Borrower shall not permit the
ratio ("Leverage Ratio") of (i) Indebtedness and Off Balance Sheet
Liabilities incurred pursuant to Section 6.3(J) (other than
Indebtedness in respect of commercial Letters of Credit) of the
Borrower and its Restricted Subsidiaries (calculated on a consolidated
basis) for borrowed money to (ii) EBITDA to exceed the ratio set forth
below at the end of the fiscal quarter ending on the corresponding date
set forth below:
Period Ending Maximum Leverage Ratio
-------------------- -------------------------
December 31, 2000 5.30 to 1.00
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Period Ending Maximum Leverage Ratio
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March 31, 2001 5.25 to 1.00
June 30, 2001 5.20 to 1.00
September 30, 2001 5.15 to 1.00
December 31, 2001 5.05 to 1.00
March 31, 2002 4.95 to 1.00
June 30, 2002 4.85 to 1.00
September 30, 2002 4.75 to 1.00
December 31, 2002 4.75 to 1.00
March 31, 2003 4.75 to 1.00
June 30, 2003 and each quarter
thereafter 4.65 to 1.00
The Leverage Ratio shall be calculated, in each case,
determined as of the last day of each fiscal quarter based upon (A) for
Indebtedness, Indebtedness as of the last day of each such fiscal
quarter; and (B) for EBITDA, the actual amount for the four-quarter
period ending on such day; provided, further, that EBITDA shall be
calculated with respect to Permitted Acquisitions on a pro forma basis
using unadjusted historical audited and reviewed unaudited financial
statements obtained from the Seller, broken down by fiscal quarter in
the Borrower's reasonable judgment).
1.13. Exhibit B to the Credit Agreement is amended by deleting
therefrom the section describing Revolving Loan Commitments and
substituting therefor the description of Revolving Loan
Commitments set forth on Exhibit B Amendment attached hereto.
2. Conditions of Effectiveness. The effectiveness of this Amendment is
subject to the condition precedent that the Agent shall have received the
following:
(i) duly executed copies of this Amendment from the Borrower,
the Required Lenders and the Agent;
(ii) duly executed copies of the Reaffirmation attached hereto
from each of Holdings and Event 1, Inc.;
(iii) duly executed copies of the Amendment No. 2 Fee Letter,
dated as of November 21, 2000, from the Borrower, together
with all fees and expenses in the amount separately agreed
between the Borrower and the Agent thereunder;
(iv) a copy of the draft Amended and Restated Stockholders
Agreement (draft dated December 4, 2000, document
reference 704040.21);
(v) the fees described in Section 3 of this Amendment; and
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(vi) such other documents, instruments and agreements as the
Agent may reasonably request.
Upon the satisfaction of the foregoing conditions precedent, this Amendment
shall be deemed effective as of December 1, 2000 for all other purposes (the
"Effective Date").
3. Amendment Fee. Each Lender that delivers a duly executed signature
page to this Amendment to Xxxxxx X. Xxxxx, Sidley & Austin (fax: 000-000-0000)
by 5:00 p.m. (Chicago time) on Monday, December 11, 2000, shall be entitled to
an Amendment Fee of 0.125% of the sum of (i) such Lender's Revolving Loan
Commitment (as defined in the Credit Agreement after giving effect to the
1reduction of the Aggregate Revolving Loan Commitment contemplated in this
Amendment) plus (ii) such Lender's Term Loans, provided this Amendment is
approved by the Required Lenders (including the Agent). The Amendment Fee shall
be due and payable by the Borrower on the date the Borrower executes this
Amendment.
4. Representations and Warranties and Reaffirmations of the Borrower.
(a) The Borrower hereby represents and warrants that this
Amendment, the Reaffirmation attached hereto and the Credit
Agreement, as previously executed and as amended hereby,
constitute legal, valid and binding obligations of each of
Holdings, the Borrower and Event 1, Inc. to the extent such
Persons are parties thereto, and are enforceable against the
Borrower in accordance with their terms (except as
enforceability may be limited by bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights
generally).
(b) Upon the effectiveness of this Amendment and after giving
effect hereto, (i) the Borrower hereby reaffirms all
covenants, representations and warranties made in the Credit
Agreement, as amended hereby, and agrees that all such
covenants, representations and warranties shall be true and
correct as of the Effective Date (unless such representation
and warranty is made as of a specific date, in which case such
representation and warranty shall be true and correct as of
such date), and (ii) no Default or Unmatured Default has
occurred and is continuing.
5. Reference to and Effect on the Credit Agreement.
(a) Upon the effectiveness of Section 1 hereof, each reference to
the Credit Agreement in the Credit Agreement and each other
Loan Document shall mean and be a reference to the Credit
Agreement as amended hereby.
(b) Except as specifically amended above, the Credit Agreement and
all other documents, instruments and agreements executed
and/or delivered in connection therewith, shall remain in full
force and effect and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of the Agent or the
Lenders, nor constitute a waiver of any provision of the
Credit Agreement or any other documents, instruments and
agreements executed and/or delivered in connection therewith.
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6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING WITHOUT LIMITATION 735 ILCS 105/5-1
ET SEQ., BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS) OF THE
STATE OF ILLINOIS.
7. Headings. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
8. Counterparts. This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first above written.
GFSI, INC.
By: /s/ Xxxxxx Xxxx
--------------------------------
Title: Vice President
BANK ONE, NA (formerly known as THE
FIRST NATIONAL BANK OF CHICAGO),
as Agent
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Title: First Vice President
SIGNATURE PAGE TO AMENDMENT NO. 2
LENDERS:
BANK ONE, NA (formerly known as THE FIRST
NATIONAL BANK OF CHICAGO), as a Lender
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Title: First Vice President
THE BANK OF NOVA SCOTIA, as a Lender
By: /s/ M. D. Xxxxx
-----------------------------
Title:_________________________
BNP PARIBAS, as a Lender
By ____________________________
Title:_________________________
CREDIT AGRICOLE INDOSUEZ, as a Lender
By: /s/ Xxxxxxx Xxxxx
------------------------------
Title: Vice President, Manager
CITY NATIONAL BANK, as a Lender
By: /s/ Xxxxxx Xxxxxxxxxx
-----------------------------
Title: Vice President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY, as a Lender
By ____________________________
Title:_________________________
SIGNATURE PAGE TO AMENDMENT NO. 2
FIRSTAR BANK, N.A., as a Lender
By: /s/ Xxxxxxxx Xxxxxxxxx
-------------------------------
Title: Vice President
SENIOR DEBT PORTFOLIO, as a Lender
By: Boston Management and Research as
Investment Advisor
By: /s/ Payson X. Xxxxxxxxx
-------------------------------
Title: Vice President
XXX XXXXXX PRIME RATE INCOME
TRUST, as a Lender
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Title: Vice President
XXX XXXXXX SENIOR FLOATING RATE
FUND, as a Lender
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Title: Vice President
IMPERIAL BANK, as a Lender
By: /s/ Xxx Xxxxxxx
-----------------------------
Title: Senior Managing Director
SIGNATURE PAGE TO AMENDMENT NO. 2
REAFFIRMATION
Each of the undersigned hereby acknowledges receipt of a copy of the
foregoing Amendment No. 2 to the Credit Agreement dated as of February 27, 1997
by and among GFSI, Inc., a Delaware corporation (the "Borrower"), the lenders
from time to time parties thereto (collectively, the "Lenders") and Bank One, NA
(formerly known as The First National Bank of Chicago), as one of the Lenders
and in its capacity as contractual representative (the "Agent") on behalf of
itself and the other Lenders, as amended by an Amendment No. 1 dated as of
September 17, 1997 (as amended and as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
which Amendment No. 2 is dated as of December 1, 2000 (the "Amendment").
Capitalized terms used in this Reaffirmation and not defined herein shall have
the meanings given to them in the Credit Agreement. Without in any way
establishing a course of dealing by the Agent or any Lender, each of the
undersigned reaffirms the terms and conditions of the Guaranty, Subsidiary
Security Agreement, any Pledge Agreement and any other Loan Document executed by
it and acknowledges and agrees that such agreement and each and every such Loan
Document executed by the undersigned in connection with the Credit Agreement
remains in full force and effect and are hereby reaffirmed, ratified and
confirmed. All references to the Credit Agreement contained in the
above-referenced documents shall be a reference to the Credit Agreement as so
modified by the Amendment and as the same may from time to time hereafter be
amended, modified or restated.
Dated as of December 1, 2000
GFSI HOLDINGS, INC.
By __________________________
Name:
Title:
EVENT 1, INC.
By __________________________
Name:
Title:
SIGNATURE PAGE TO AMENDMENT NO. 2
EXHIBIT B AMENDMENT
Revolving Loan Commitments
Amount of Revolving % of Aggregate Revolving
Lender Commitment Loan Commitment
------ ------------------- -------------------------
Bank One, NA $11,111,111.23 27.777 778 08%
THE BANK OF NOVA SCOTIA $5,333,333.33 13.333 333 32%
BNP PARIBAS $5,333,333.33 13.333 333 32%
CREDIT AGRICOLE INDOSUEZ $5,333,333.33 13.333 333 32%
CITY NATIONAL BANK $2,222,222.13 5.555 555 32%
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY $5,333,333.33 13.333 333 32%
FIRSTAR BANK, N.A. $5,333,333.33 13.333 333 32%
TOTAL $40,000,000 100.00%
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