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Exhibit 4.3
FIRST AMENDMENT TO CREDIT AGREEMENT
AND
CONSENT, RELEASE AND WAIVER
This FIRST AMENDMENT TO CREDIT AGREEMENT AND CONSENT, RELEASE AND WAIVER
(this "Amendment") is entered into as of April 3, 1998 among GERBER
CHILDRENSWEAR, INC. ("Gerber"), a Delaware corporation and AUBURN HOSIERY XXXXX,
INC., ("Auburn"), a Kentucky corporation (collectively the "Borrowers"); GCIH,
INC., a Delaware corporation (the "Parent") and the Subsidiaries of the Parent
(other than the Borrowers) and the Borrowers as Guarantors, the Lenders party
hereto and NATIONSBANK, N.A., as Administrative Agent for the Lenders (the
"Administrative Agent"). Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Credit Agreement (as defined below).
RECITALS
WHEREAS, the Borrowers, the Guarantors, the Lenders and the Administrative
Agent entered into that certain Credit Agreement dated as of December 17, 1997
(the "Credit Agreement");
WHEREAS, Gerber wishes to effectuate an initial public offering (the
"Offering") of its Common Stock to be accomplished as follows:
a. The certificate of incorporation of Gerber will be amended and restated
to provide for an increase of its authorized share capital and the division of
its common stock into two classes with different voting rights;
b. The Parent will be merged into Gerber with Gerber being the surviving
entity;
c. The outstanding shares of common stock and preferred stock of the
Parent held by CVC, members of the management of the Parent, and CMP will be
converted into shares of Common Stock of Gerber (some of such shares will
subsequently be converted by CVC into shares of Common Stock) or exchanged for
cash; and
x. Xxxxxx will offer to sell shares of its Class A Common Stock pursuant
to an initial public offering governed by the Securities Exchange Act of 1933,
as amended.
WHEREAS, the Borrowers also wish to amend or have the Lenders waive
certain terms of the Credit Agreement not related to the Offering; and
WHEREAS, the Administrative Agent and the Lenders have agreed to (a)
consent to the Offering, (b) release their lien on shares of Gerber in
connection with the Offering and (c) amend and waive certain terms of the Credit
Agreement, in each case, on the terms, and subject to the conditions, set forth
below.
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NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
1. Amendments to Credit Agreement.
(a) Definitions:
(i) The pricing grid set forth in the definition of "Applicable
Percentage" in Section 1.1 of the Credit Agreement is amended and
restated in its entirety to read as follows:
================================================================================
Applicable Applicable Applicable
Percentage Applicable Percentage Percentage
For Percentage for Standby For
Pricing Leverage Eurodollar For Base Letter of Commitment
Level Ratio Loans Rate Loans Credit Fees Fees
--------------------------------------------------------------------------------
I <1.0 to 1.0 .500% 0% .500% .200%
--------------------------------------------------------------------------------
<1.5 to 1.0
but
II => 1.0 to 1.0 .625% 0% .625% .200%
--------------------------------------------------------------------------------
< 2.0 to 1.0
but
III => 1.5 to 1.0 .750% 0% .750% .250%
--------------------------------------------------------------------------------
< 2.5 to 1.0
but
IV => 2.0 to 1.0 1.00% 0% 1.00% .250%
--------------------------------------------------------------------------------
< 3.0 to 1.0
but
V => 2.5 to 1.0 1.25% 0% 1.25% .250%
--------------------------------------------------------------------------------
VI => 3.0 to 1.0 1.50% .25% 1.50% .375%
================================================================================
Due to changes in the pricing grid, it is understood and agreed that the
initial Applicable Percentage in effect from the Closing Date until the first
Calculation Date subsequent to December 31, 1997 shall be based on Pricing Level
VI of the pricing grid set forth above.
(ii) The definition of "Change of Control" in Section 1.1 of the Credit
Agreement is amended and restated in its entirety to read as
follows:
"Change of Control" means (a) prior to the Offering, Citicorp
Venture Capital Group shall own (on a fully diluted, as if converted,
basis) less than 51% of the Voting Stock of GCIH, Inc., (b) subsequent to
the Offering, any "person" or "group" (within the meaning of Section 13(d)
or 14(d) of the Exchange Act), other than the Citicorp Venture Capital
Group, has become, directly or indirectly, the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
Person shall be deemed to have "beneficial ownership" of all shares that
any such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), by way of
merger, consolidation or otherwise, of 20% or more of the Voting Stock of
Gerber
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Childrenswear, Inc. on a fully-diluted basis, after giving effect to the
conversion and exercise of all outstanding warrants, options and other
securities of Gerber Childrenswear, Inc. (whether or not such securities
are then currently convertible or exercisable) or (c) a change in control
(as defined in the documentation evidencing the Subordinated Debt) occurs.
(iii) The definition of "EBITDA" in Section 1.1 of the Credit Agreement is
amended and restated in its entirety to read as follows:
"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 or franchise
taxes for such period, (iii) all depreciation and amortization for such
period and (iv) all other non-cash charges, including, without limitation,
royalty payments under existing License Agreements, all as determined in
accordance with GAAP; it being understood and agreed that EBITDA shall
include the EBITDA from Auburn Hosiery Xxxxx, Inc. and its Subsidiaries,
Sports Socks Co. (Ireland) Limited, or any other Subsidiaries acquired by
the Credit Parties and their Subsidiaries for the applicable period
whether such EBITDA was earned prior to or subsequent to their acquisition
by GCIH, Inc.
(iv) The following new definitions are added to Section 1.1 of the Credit
Agreement in the appropriate alphabetical order:
"Offering" means the initial public offering of the shares of common
stock of Gerber Childrenswear, Inc. as set forth in the preliminary Form
S-1 filed with the Securities Exchange Commission on March 4, 1998 (as
such terms may be amended).
"Reorganization" means, in connection with the Offering (a) the
conversion of all of the outstanding shares of Preferred Stock into either
common stock of GCIH, Inc. or the right to receive cash, (b) the merger of
GCIH, Inc. into and with Gerber Childrenswear, Inc., with Gerber
Childrenswear, Inc. being the surviving entity and (c) in connection with
such merger, the exchange of all of the outstanding shares of all classes
of common stock and warrants to purchase common stock of GCIH, Inc. for
shares of common stock or warrants of Gerber Childrenswear, Inc.
(b) Section 3.3(b)(ii). Section 3.3(b)(ii) of the Credit Agreement is
amended and restated in its entirety to read as follows:
Within 10 days after the date the audited financial statements are
required to be delivered pursuant to Section 7.1(a) for each fiscal year,
commencing with the fiscal year ending December 31, 1999, the Borrowers
shall, if there is any principal amount outstanding with respect to the
Term Loans, make a prepayment of the Loans in an
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amount equal to 33% of the Excess Cash Flow earned during the preceding
fiscal year (to be applied as set forth in Section 3.3(c) below).
(c) Section 3.3(b)(iv). Section 3.3(b)(iv) of the Credit Agreement is
amended and restated in its entirety to read as follows:
Issuances of Equity. Immediately upon receipt by a Credit Party or
any of its Subsidiaries of proceeds from any Equity Issuance (other than
(A) an Equity Issuance consisting of the issuance of shares of Gerber
Childrenswear, Inc. to employees of the Credit Parties substantially
contemporaneous with the repurchase of shares of Gerber Childrenswear,
Inc. from other employees of Gerber Childrenswear, Inc. and (B) Equity
Issuances consisting of the issuance of shares of Gerber Childrenswear,
Inc. to management of the Credit Parties or their Subsidiaries not to
exceed a value of $25,000, in the aggregate, during any calendar year),
the Borrowers shall forward 100% of the Net Cash Proceeds of such Equity
Issuance to the Lenders as a prepayment of the Loans (to be applied as set
forth in Section 3.3(c) below); provided, however, that the Net Cash
Proceeds from the Offering shall be applied first to redeem all of the
Subordinated Debt, second, to the extent available, to prepay all existing
Preferred Stock (plus accrued dividends thereon) up to an aggregate amount
of $375,000 and third, to the extent available, to prepay the Term Loan,
first to the next four quarterly Principal Amortization Payments and then
to the remaining Principal Amortization Payments on a pro rata basis.
(d) Section 8.8. Section 8.8 of the Credit Agreement is amended and
restated in its entirety to read as follows:
No Credit Party will, nor will it permit its Subsidiaries to, directly or
indirectly, (a) declare or pay any dividends or make any other distribution upon
any shares of its capital stock of any class or (b) purchase, redeem or
otherwise acquire or retire or make any provisions for redemption, acquisition
or retirement of any shares of its capital stock of any class or any warrants or
options to purchase any such shares; provided that (i) any Subsidiary of a
Borrower may pay dividends to its parent, (ii) Gerber Childrenswear, Inc. may
repurchase its stock to the extent it constitutes a Permitted Investment, (iii)
any Credit Party may, and may permit its Subsidiaries to, pay a dividend solely
in shares of the class of stock on which such dividend is declared as long as no
Change in Control occurs and (iv) each of Gerber Childrenswear, Inc. and GCIH,
Inc. may issue, repurchase or exchange shares of its capital stock in connection
with the Reorganization.
(e) Section 8.11. Section 8.11 of the Credit Agreement is deleted in its
entirety.
(f) Section 8.15. The first sentence of Section 8.15 of the Credit
Agreement is amended and restated in its entirety to read as follows:
Except as permitted by Section 3.3(b)(iv), no Credit Party will, nor
will it permit its Subsidiaries to, (a) make or offer to make any voluntary or
optional principal payments with respect to the Subordinated Debt, (b) redeem or
offer to redeem any of the Subordinated Debt, or
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(c) deposit any funds intended to discharge or defease any or all of the
Subordinated Debt except, with respect to (b) and (c), as permitted in
accordance with the terms and conditions of the Senior Subordinated Credit
Agreement and the Intercreditor Agreement; provided that, notwithstanding the
foregoing, the Parent may repay up to $1,500,000 of principal owing under the
Junior Subordinated Note in exchange for amounts owed from Gerber Products
Company to GCIH, Inc.
2. Consent. Notwithstanding any terms in the Credit Documents to the contrary,
subject to the conditions set forth below, the Lenders hereby consent to the
Offering and the Reorganization (including any amendments to articles of
incorporation, bylaws or formation documents and any intercompany transactions
in the ordinary course, in each case consistent with the terms of the Offering
and the Reorganization):
(a) the Offering and Reorganization occur prior to June 1, 1998.
(b) the Reorganization occurs on terms identical to those described
herein and in the Form S-1 filed with the Securities and Exchange
Commission on March 4, 1998.
(c) Simultaneously with the consummation of the Offering and the
Reorganization the Borrowers provide to the Administrative Agent:
(i) certified copies of all amendments and articles of merger
filed by any Credit Party in connection with the
Reorganization, in form and substance reasonably satisfactory
to the Administrative Agent;
(ii) an updated Schedule 6.15 to the Credit Agreement;
(iii) an updated Schedule 2(a) to the Pledge Agreement, along with
any new stock certificates and executed stock powers as the
Administrative Agent may reasonably request; and
(iv) such other information, documents, filings or opinions as the
Administration Agent may reasonably request in connection with
the Offering and the Reorganization.
(d) Net Cash Proceeds from the Offering are greater than or equal to
$37,500,000.
3. References to the Parent, the Subordinated Debt and the Preferred Stock.
(a) Subsequent to the Reorganization and the Offering, GCIH, Inc. will no
longer exist and all references to the "Parent" or the "Parent and its
Subsidiaries" appearing in the Credit Agreement and the other Credit Documents
shall be replaced with references to Gerber Childrenswear, Inc. and Gerber
Childrenswear, Inc. and its Subsidiaries, respectively, except that references
to the "Parent" set forth in (i) the definitions of "Domestic Subsidiary",
"Foreign Subsidiary" and "Guarantor" in Section 1.1 of the Credit Agreement,
(ii) Section 8.4 of the Credit Agreement and (C) Section 11.6 shall be
disregarded.
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(b) Subsequent to the Reorganization and the Offering, (i) the Preferred
Stock will no longer exist and (ii) the Subordinated Debt will have been
satisfied in full, and all references to the "Preferred Stock", the
"Intercreditor Agreement", the "Junior Subordinated Note", the "Senior
Subordinated Credit Agreement" and the "Subordinated Debt" appearing in the
Credit Agreement and the other Credit Documents shall be disregarded.
4. Waivers.
(a) Notwithstanding anything to the contrary contained in Section 7.1(a)
of the Credit Agreement, the Lenders hereby waive the requirement that the
Credit Parties provide to the Agent and each of the Lenders, consolidating
financial statements for the fiscal year ended December 31, 1997. This is a one
time waiver and shall not be construed as a waiver to provide such financial
information for future periods.
(b) The Lenders hereby waive through April 30, 1998 any Default resulting
from the failure to comply with the requirements set forth in Section 7.16 of
the Credit Agreement. This is a one-time waiver and shall expire automatically
and without further notice to the Credit Parties on April 30, 1998.
5. Release of Gerber Childrenswear, Inc. Common Stock. The Administrative Agent
and the Lenders agree that in connection with the Offering and the
Reorganization, they will release their lien on the 10 shares of common stock of
Gerber Childrenswear, Inc. pledged by GCIH, Inc. pursuant to the Pledge
Agreement. The Lenders authorize the Administrative Agent to take such action as
appropriate in order to effectuate such release, including, without limitation,
the return of stock certificates.
6. Conditions Precedent. The effectiveness of this Amendment is subject to
receipt by the Administrative Agent of the following:
(a) copies of this Amendment duly executed by the Credit Parties and the
Lenders;
(b) certified copies of resolutions or authorization of each Credit
Party approving and adopting this Amendment, the transactions
contemplated herein and authorizing execution and delivery hereof;
(c) an opinion or opinions from counsel to the Credit Parties, in form
and substance satisfactory to the Administrative Agent, addressed to
the Administrative Agent on behalf of the Lenders and dated as of
the date hereof; and
(d) the payment of expenses, including without limitation reasonable
attorneys fees, incurred in connection with the preparation of the
Amendment.
7. Ratification of Credit Agreement. The term "Credit Agreement" as used in each
of the Credit Documents shall hereafter mean the Credit Agreement as amended and
modified by this
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Amendment. Except as herein specifically agreed, the Credit Agreement is hereby
ratified and confirmed and shall remain in full force and effect according to
its terms.
8. Authority/Enforceability. Each of the Credit Parties, the Administrative
Agent and the Lenders represents and warrants as follows:
(a) It has taken all necessary action to authorize the execution,
delivery and performance of this Amendment.
(b) This Amendment has been duly executed and delivered by such
Person and constitutes such Person's legal, valid and binding obligations,
enforceable in accordance with its terms, except as such enforceability
may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting creditors'
rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in
equity).
(c) No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or governmental authority or
third party is required in connection with the execution, delivery or
performance by such Person of this Amendment.
9. No Default. The Credit Parties represent and warrant to the Lenders that (a)
the representations and warranties of the Credit Parties set forth in Section 6
of the Credit Agreement (as amended by this Amendment) are true and correct as
of the date hereof and (b) no event has occurred and is continuing which
constitutes a Default or an Event of Default.
10. Counterparts. This Amendment may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument.
11. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NORTH CAROLINA.
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment to be duly executed and delivered and this Amendment shall be
effective as of the date first above written.
BORROWERS:
GERBER CHILDRENSWEAR, INC., a Delaware
corporation
By:_______________________________________________
Name: Xxxxxxx Solar
Title: Senior Vice President
AUBURN HOSIERY XXXXX, INC.,
a Kentucky corporation
By:_______________________________________________
Name: Xxxxxxx Solar
Title: Senior Vice President
[Signatures continue]
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GUARANTORS:
GCIH, INC.,
a Delaware corporation
By:_______________________________________________
Name: Xxxxxxx Solar
Title: Senior Vice President
COSTURA DOMINICANA, INC.,
a Delaware corporation
By:_______________________________________________
Name: Xxxxxxx Solar
Title: Senior Vice President
AUBURN HOLDINGS, INC.,
a Delaware corporation
By:_______________________________________________
Name: Xxxxxxx Solar
Title: Senior Vice President
GCI IP SUB, INC.,
a Delaware corporation
By:_______________________________________________
Name: Xxxxxxx Solar
Title: Senior Vice President
AUBURN MERGER CO,
a Delaware corporation
By:_______________________________________________
Name: Xxxxxxx Solar
Title: Senior Vice President
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Signature Page to First Amendment to Credit Agreement and Consent, Release
and Waiver dated as of April 3, 1998
LENDERS:
NATIONSBANK, N.A., acting in its capacity
as Administrative Agent and Collateral Agent and
individually as a Lender
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
NATIONSBANK OF TENNESSEE, N.A., solely in its
capacity as an Issuing Lender in connection with
certain Existing Letters of Credit
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
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Signature Page to First Amendment to Credit Agreement and Consent, Release
and Waiver dated as of April 3, 0000
XXXX XX XXXXXXX, FSB
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
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Signature Page to First Amendment to Credit Agreement and Consent, Release
and Waiver dated as of April 3, 1998
THE CHASE MANHATTAN BANK
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
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Signature Page to First Amendment to Credit Agreement and Consent, Release
and Waiver dated as of April 3, 1998
FLEET BANK, N.A.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
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Signature Page to First Amendment to Credit Agreement and Consent, Release
and Waiver dated as of April 3, 1998
SUNTRUST BANK, ATLANTA
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
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Signature Page to First Amendment to Credit Agreement and Consent, Release
and Waiver dated as of Xxxxx 0, 0000
XXXXXXXX BANK, N.A.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
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Signature Page to First Amendment to Credit Agreement and Consent, Release
and Waiver dated as of April 3, 1998
BANK BOSTON, N.A.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
