Exhibit 10.2
AMENDMENT NO. 1
Dated as of September 17, 1997
to
CREDIT AGREEMENT
Dated as of February 27, 1997
THIS AMENDMENT NO. 1 ("Amendment") is made as of September 17, 1997 by
and among GFSI, INC. (the "Borrower"), the financial institutions listed on the
signature pages hereof (the "Lenders") and THE FIRST NATIONAL BANK OF CHICAGO,
in its individual capacity as a Lender and in its capacity as agent ("Agent")
under that certain Credit Agreement dated as of February 27, 1997 by and among
the Borrower, the Lenders and the Agent (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, GFSI Holdings, Inc. ("Holdings") intends to (i) issue $25.0
million in aggregate principal amount of 11.375% Subordinated Discount Notes due
2009 (the "New Holdings Subordinated Notes") and (ii) amend its Certificate of
Incorporation to provide for a new Series D Preferred Stock (the "Series D
Preferred Stock"); and
WHEREAS, the Holders of the Holdings Subordinated Notes and the
Preferred Stock intend to exchange their Holdings Subordinated Notes for New
Holdings Subordinated Notes and approximately 86.9% of their Series A, B and C
Preferred Stock for Series D Preferred Stock and to sell, in a private
placement, the New Holdings Subordinated Notes and the Series D Preferred Stock
as units ("Units") to unaffiliated third parties (the "Offering"); and
WHEREAS, the Units sold in the Offering will be exchangeable, at the
option of the Holdings, after 30 days from the closing of the Offering, for
11.375% Senior Discount Notes of Holdings (the "Holdings Senior Notes"); and
WHEREAS, the Borrower, the Lenders 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
Borrower, the Lenders and the Agent have agreed to the following amendments to
the Credit Agreement.
1. Amendment to Credit Agreement. Effective as of the Effective Date
(as defined below) and subject to the satisfaction of the condition precedent
set forth in Section 3 below, the Credit Agreement is hereby amended as follows:
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1.1 Section 1.1 of the Credit Agreement is amended (a) by adding
thereto the following defined terms:
"Exchange Date" means the date on which the Exchangeable Units
are exchanged for Holdings Senior Notes.
"Exchangeable Units" means the 50,000 exchangeable units, each
unit consisting of $500 principal amount of Holdings Subordinated
Notes and $500 liquidation preference of 11.375% Series D Preferred
Stock of Holdings, having the terms described in and offered pursuant
to the Offering Memorandum.
"Holdings Senior Notes" means the 11.375% Senior Discount Notes
due 2009 of Holdings in the aggregate principal amount (at maturity)
of $50,000,000 to be issued by Holdings in exchange for the
Exchangeable Units and having the terms described in the Offering
Memorandum, and all substitutions, modifications and renewals thereof,
provided such substitutions, modifications or renewals would be
permitted under the terms of Section 6.3(O) as if such Section (other
than clause (viii) thereof with respect to subordination provisions)
were applicable thereto (with all references therein to the Borrower
and the Restricted Subsidiaries being instead to Holdings, the
Borrower and the Restricted Subsidiaries).
"L/C Trigger Event" means the giving of notice by the Swing Line
Bank to the Lenders of its election to cause them to purchase
participations in all Swing Line Letters of Credit, whether such
notice is given before or after the occurrence, or during the
continuance, of a Default or Unmatured Default. An L/C Trigger Event
shall be deemed to occur on the date such notice is given.
"Offering Memorandum" means the Preliminary Offering Memorandum
dated September 12, 1997, prepared by Holdings with respect to the
Exchangeable Units, copies of which the Borrower has delivered to the
Lenders.
"Swing Line Letter of Credit" means each Letter of Credit issued
by the Swing Line Bank as an Issuing Lender pursuant to Section 2.21
and designated in the Borrower's notice referred to in such Section as
a "Swing Line Letter of Credit" if, immediately after giving effect to
such issuance, the aggregate amount of L/C Obligations in respect of
such Letter of Credit and all then outstanding Swing Line Letters of
Credit would not exceed $5,000,000, provided, however, that the status
of a Swing Line Letter of Credit as such shall automatically terminate
upon the occurrence of an L/C Trigger Event, after which time such
Letter of Credit shall remain a Letter of Credit but shall not be a
Swing Line Letter of Credit.
and (b) by amending the following defined terms:
(i) the definition of "Holdings Subordinated Notes" is amended in
its entirety to read as follows:
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"Holdings Subordinated Notes" means the 11.375% Subordinated
Discount Notes due 2009 of Holdings in the aggregate principal amount
of $25,000,000, having the terms described in the Offering Memorandum.
(ii) the definition of "Permitted Holdings Indebtedness" is amended by
deleting clause (a) thereof in its entirety and substituting therefor the
following:
(a) prior to the Exchange Date, the Holdings Subordinated Debt,
and from and after the Exchange Date, the Holdings Senior Notes;
and by amending clause (c) thereof to add after the words "Preferred Stock"
the parenthetical phrase "(other than Series D thereof)".
(iii) the definition of "Preferred Stock" is amended in its entirety
to read as follows:
"Preferred Stock" means the Series A, B and C 12% Cumulative
Preferred Stock, par value $0.01 per share, of Holdings issued to each
of the holders thereof listed on Schedule 5.8 attached hereto, and,
prior to the Exchange Date, the 11.375% Series D Preferred Stock, par
value $0.01 per share, of Holdings, having the terms described in the
Offering Memorandum.
(iv) the definition of "Pro Rata Share" is amended by adding in clause
(x) thereof immediately after the words "Swing Line Loans" and before the
comma the words "and Swing Line Letters of Credit";
(v) the definition of "Swing Line Bank" is amended in its entirety to
read as follows:
"Swing Line Bank" means First Chicago and its successors and
assigns.
and
(vi) the definition of "Swing Line Commitment" is amended in its
entirety to read as follows:
"Swing Line Commitment" means, (a) with respect to Swing Line
Loans, the obligation of the Swing Line Bank to make Swing Line Loans
up to a maximum aggregate principal amount of $2,000,000 at any one
time outstanding, and (b) with respect to Swing Line Letters of Credit
(in addition to the obligation to make Swing Line Loans), the
obligation of the Swing Line Bank to issue Swing Line Letters of
Credit up to a maximum
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aggregate amount of L/C Obligations with respect thereto not to
exceed $5,000,000 at any one time outstanding.
1.2 Section 2.22 of the Credit Agreement is amended by designating
the existing Section 2.22 as clause (a), by adding after the words "Letter of
Credit" the first place such words appear therein, the parenthetical phrase "(or
upon the occurrence of an L/C Trigger Event, in the case of a Swing Line Letter
of Credit)", and by adding thereto a new clause (b) to read as follows:
(b) No Lender shall purchase or be deemed to have purchased an
L/C Interest in any Swing Line Letter of Credit unless and until an
L/C Trigger Event shall have occurred with respect to such Swing Line
Letter of Credit, at which time each Lender with a Revolving Loan
Commitment greater than zero shall be deemed to have purchased an L/C
Interest in such Swing Line Letter of Credit pursuant to Section
2.22(a).
1.3 Section 2.25 of the Credit Agreement is amended by adding thereto
after the words "Pro Rata Shares," the first place such words appear therein the
phrase "or for the sole account of the Swing Line Bank, in the case of a Swing
Line Letter of Credit".
1.4 Schedule 5.8 to the Credit Agreement is amended by deleting
therefrom the description of the Preferred Stock of Holdings and substituting
therefor the description of Preferred Stock set forth on Schedule 5.8 Amendment
attached hereto and by deleting therefrom in its entirety the "Shareholder
Summary" attached to Schedule 5.8 and substituting therefor the "Shareholder
Summary" attached to Schedule 5.8 Amendment.
1.5 Section 6.3(F) of the Credit Agreement is amended (a) by amending
clause (iii)(a) thereof in its entirety to read as follows:
(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) by amending clause (d) of the proviso thereto to delete the words "Holdings
Subordinated Notes" and "Holdings Subordinated Debt" therein and to substitute
for such words in each case the words "Holdings Senior Notes".
1.6 Schedule 6.3(H) to the Credit Agreement is amended by adding
thereto the agreements set forth on Schedule 6.3(H) Supplement attached hereto.
1.7 Section 6.3(O) of the Credit Agreement is amended by adding after
the words "Holdings Subordinated Debt" therein the words "the Holdings Senior
Notes".
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1.8 Section 7.1 of the Credit Agreement is amended by adding a new
clause (y) thereto as follows:
(y) Exchange of Securities. Holdings shall fail to effect the
exchange of the Holdings Senior Notes for the Exchangeable Units on or
prior to November 30, 1997.
2. Consent. Effective as of the Effective Date and subject to the
satisfaction of the condition precedent set forth in Section 3 below, the
Lenders hereby consent to (i) the issuance by Holdings of the New Holdings
Subordinated Notes in exchange for the Holdings Subordinated Notes, (ii) the
amendment by Holdings of its Certificate of Incorporation to authorize the
Series D Preferred Stock and the issuance by Holdings of the Series D Preferred
Stock in exchange for a portion of the Preferred Stock, (iii) the issuance by
Holdings of the Holdings Senior Notes in exchange for the Exchangeable Units,
and (iv) the payment in cash to MCIT on the Effective Date of accrued interest
on the Holdings Subordinated Notes through the Effective Date in an amount not
to exceed $1,500,000.
3. Conditions of Effectiveness. The effectiveness of this Amendment
is subject to the condition precedent that the Agent shall have received
counterparts of this Amendment duly executed by the Borrower, the Required
Lenders and the Agent and the Consent attached hereto duly executed by Holdings.
Upon the satisfaction of the foregoing condition precedent, this Amendment shall
become effective on the date of the closing of the Offering and the issuance of
the New Holdings Subordinated Notes and the Series D Preferred Stock in
connection therewith (the "Effective Date").
4. Representations and Warranties of the Borrower. The Borrower
hereby represents and warrants as follows:
(a) This Amendment and the Credit Agreement as previously executed
and as amended hereby, constitute legal, valid and binding obligations of the
Borrower and are enforceable against the Borrower in accordance with their
terms.
(b) Upon the effectiveness of this Amendment, 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 deemed to have been remade as of the
Effective Date of this Amendment.
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.
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(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.
6. Governing Law. This Amendment shall be governed by and construed
in accordance with the internal laws (as opposed 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 the 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
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Title:
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THE FIRST NATIONAL BANK OF
CHICAGO, as Agent
By
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Title:
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LENDERS:
THE FIRST NATIONAL BANK OF
CHICAGO, as a Lender
By
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Title:
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THE BANK OF NOVA SCOTIA,
as a Lender
By
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Title:
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BANQUE PARIBAS,
as a Lender
By
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Title:
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CAISSE NATIONALE DE CREDIT AGRICOLE,
as a Lender
By
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Title:
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DLJ CAPITAL FUNDING, INC.,
as a Lender
By
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Title:
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MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY, as a Lender
By
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Title:
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MERCANTILE BANK NATIONAL ASSOCIATION,
as a Lender
By
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Title:
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SENIOR DEBT PORTFOLIO, as a Lender
By: Boston Management and Research as
Investment Advisor
By
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Title:
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XXX XXXXXX AMERICAN CAPITAL PRIME
RATE INCOME TRUST, as a Lender
By
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Title:
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IMPERIAL BANK, as a Lender
By
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Title:
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SCHEDULE 5.8 AMENDMENT
Subsidiaries
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Preferred Stock
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- Series A Preferred Stock, par value $0.01 per share
- 13,500 shares authorized, 1,773.92120 of which are issued and outstanding
- Series B Preferred Stock, par value $0.01 per share
- 11,000 shares authorized, 1,445.41727 of which are issued and outstanding
- Series C Preferred Stock, par value $0.01 per share
- 2,500 shares authorized, 328.50393 of which are issued and outstanding
- Series D Preferred Stock, par value $0.01 per share
- 25,000 shares authorized, all of which are issued and outstanding
Ownership
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See attached.
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SCHEDULE 6.3(H) SUPPLEMENT
Transactions with Shareholders and Affiliates
---------------------------------------------
12. Exchange Solicitation Statement dated September 12, 1997, made by
Holdings with respect to the exchange of 12% Subordinated Notes due 2008 for
11.375% Subordinated Discount Notes due 2009, and related Tender executed by
MCIT.
13. Exchange and Consent Solicitation dated September 12, 1997, made
by Holdings with respect to the Preferred Stock, and related Tender and Consent
executed by the holders thereof.
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CONSENT
The undersigned, as Guarantor under the Guaranty dated as of February
27, 1997 (the "Guaranty") in favor of the Lenders and the Agent parties to the
Credit Agreement referred to in the foregoing Amendment, hereby consents to said
Amendment and hereby confirms and agrees that, notwithstanding the effectiveness
of said Amendment, the Guaranty is, and shall continue to be, in full force and
effect and is hereby confirmed and ratified in all respects.
Dated: September 17, 1997 GFSI HOLDINGS, INC.
By __________________________
Title:________________________
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