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CREDIT AGREEMENT
dated as of July 14, 1997
among
G&K SERVICES, INC.,
WORK WEAR CORPORATION OF CANADA LTD.,
as Borrowers,
VARIOUS BANKS,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
and
NBD BANK
and
FIRST CHICAGO NBD BANK, CANADA
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II US FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.1 Commitment as to US Revolving Facility. . . . . . . . . . . 23
Section 2.2 Commitment as to Term Facility. . . . . . . . . . . . . . . 23
Section 2.3 Procedures for Borrowing Under the US Facilities. . . . . . 23
Section 2.4 Converting US Floating Rate Fundings to Eurodollar
Fundings; Procedures. . . . . . . . . . . . . . . . . 24
Section 2.5 Procedures at End of a US Interest Period . . . . . . . . . 24
Section 2.6 Setting and Notice of Rates . . . . . . . . . . . . . . . . 25
Section 2.7 Commitment to Issue Letters of Credit . . . . . . . . . . . 25
Section 3.5 Pro Rata Treatment - Canadian Banks . . . . . . . . . . . . 30
Section 2.9 US Revolving Advances and Term Advances Denominated
in US Dollars . . . . . . . . . . . . . . . . . . . . 30
Section 2.10 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.11 Exculpation of Canadian G&K Enterprises. . . . . . . . . . 31
ARTICLE III CANADIAN FACILITY. . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.1 Commitment as to Canadian Revolving Facility. . . . . . . . 31
Section 3.2 Procedures for Borrowing Under the Canadian
Revolving Facility. . . . . . . . . . . . . . . . . . 31
Section 3.3 Converting Canadian Floating Rate Fundings to
Acceptances; Procedures . . . . . . . . . . . . . . . 32
Section 3.4 Procedures at End of a Canadian Interest Period . . . . . . 32
Section 3.5 Pro Rata Treatment - Canadian Banks . . . . . . . . . . . . 33
Section 3.6 Bankers' Acceptances. . . . . . . . . . . . . . . . . . . . 33
Section 3.7 Setting and Notice of BA Purchase Price . . . . . . . . . . 35
Section 3.8 Canadian Revolving Advances and Drafts Denominated
in Canadian Dollars . . . . . . . . . . . . . . . . . 35
Section 3.9 Restrictions on Conversion From Acceptances to
Canadian Revolving Advances . . . . . . . . . . . . . 35
Section 3.10 Guaranty by G&K Enterprises. . . . . . . . . . . . . . . . 35
ARTICLE IV NOTES; INTEREST RATES; LOAN PERIODS; COMPUTATION OF
INTEREST AND FEES . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.1 Notes; Amortization . . . . . . . . . . . . . . . . . . . . 36
Section 4.2 Interest on Notes; Default Rate . . . . . . . . . . . . . . 38
Section 4.3 Adjustment of Margins . . . . . . . . . . . . . . . . . . . 39
Section 4.4 Canadian Interest Act . . . . . . . . . . . . . . . . . . . 40
Section 4.5 Obligation to Repay Advances; Representations . . . . . . . 40
Section 4.6 Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.7 Interest Due Dates. . . . . . . . . . . . . . . . . . . . . 41
Section 4.8 Computation of Interest and Fees. . . . . . . . . . . . . . 41
Section 4.9 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.10 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . 42
Section 4.11 Voluntary Reduction or Termination of the
Commitments; Prepayments. . . . . . . . . . . . . . . 42
Section 4.12 Payments . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 4.13 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 4.14 Increased Costs; Capital Adequacy; Funding Exceptions. . . 47
Section 4.15 Funding Losses . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.16 Right of Banks to Fund through Other Offices . . . . . . . 50
Section 4.17 Discretion of Banks as to Manner of Funding. . . . . . . . 51
Section 4.20 Limitation on Availability of Fixed Rate Fundings . . . . 52
ARTICLE V CONDITIONS OF LENDING. . . . . . . . . . . . . . . . . . . . . . 52
Section 5.1 Conditions Precedent to the Initial Advances. . . . . . . . 52
Section 5.2 Conditions Precedent to All Advances. . . . . . . . . . . . 55
ARTICLE VI REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . 55
Section 6.1 Corporate Existence and Power; Names; Chief
Executive Offices . . . . . . . . . . . . . . . . . . 55
Section 6.2 Authorization for Borrowings and Letters of Credit;
No Conflict as to Law or Agreements . . . . . . . . . 55
Section 6.3 Legal Agreements. . . . . . . . . . . . . . . . . . . . . . 56
Section 6.4 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.5 Financial Condition; No Adverse Change. . . . . . . . . . . 56
Section 6.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.7 Regulation U. . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.9 Titles and Liens. . . . . . . . . . . . . . . . . . . . . . 57
Section 6.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 57
Section 6.11 Default. . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.12 Environmental Compliance . . . . . . . . . . . . . . . . . 59
Section 6.13 Submissions to Banks . . . . . . . . . . . . . . . . . . . 59
Section 6.14 Public Utility Holding Company Act; Investment
Company Act . . . . . . . . . . . . . . . . . . . . . 60
Section 6.15 Asset Purchase Documents. . . . . . . . . . . . . . . . . 60
ARTICLE VII AFFIRMATIVE COVENANTS OF THEBORROWERS. . . . . . . . . . . . . 61
Section 7.1 Reporting Requirements. . . . . . . . . . . . . . . . . . . 61
Section 7.2 Books and Records; Inspection and Examination . . . . . . . 64
Section 7.3 Compliance with Laws. . . . . . . . . . . . . . . . . . . . 64
Section 7.4 Payment of Taxes and Other Claims . . . . . . . . . . . . . 64
Section 7.5 Maintenance of Properties . . . . . . . . . . . . . . . . . 65
Section 7.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.7 Preservation of Corporate Existence . . . . . . . . . . . . 65
Section 7.8 Minimum EBITDA. . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.9 Minimum Debt Service Coverage Ratio . . . . . . . . . . . . 66
Section 7.10 Minimum Stockholders' Equity . . . . . . . . . . . . . . . 66
Section 7.11 Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . 67
Section 7.12 Interest Rate Protection . . . . . . . . . . . . . . . . . 67
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ARTICLE VIII NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 67
Section 8.1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 8.2 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . 68
Section 8.3 Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 8.4 Investments . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.6 Sale or Transfer of Assets; Suspension of
Business Operations . . . . . . . . . . . . . . . . . 71
Section 8.7 Merger and Consolidation; Change of Control . . . . . . . . 71
Section 8.8 Sale and Leaseback. . . . . . . . . . . . . . . . . . . . . 72
Section 8.9 Restrictions on Nature of Business. . . . . . . . . . . . . 72
Section 8.10 Accounting . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 8.11 Hazardous Substances . . . . . . . . . . . . . . . . . . . 72
Section 8.12 Capital Expenditures . . . . . . . . . . . . . . . . . . . 73
Section 8.13 Rental Payments. . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE IX EVENTS OF DEFAULT; RIGHTS AND REMEDIES. . . . . . . . . . . . . 73
Section 9.1 Events of Default . . . . . . . . . . . . . . . . . . . . . 73
Section 9.2 Rights and Remedies . . . . . . . . . . . . . . . . . . . . 75
ARTICLE X AGREEMENT AMONG BANKS AND AGENTS . . . . . . . . . . . . . . . . 76
Section 10.1 Authorization; Powers; Agent for Collateral Purposes . . . 76
Section 10.2 Actions on Default; Application of Proceeds. . . . . . . . 77
Section 10.3 Exculpation. . . . . . . . . . . . . . . . . . . . . . . . 78
Section 10.4 Use of the Term "Agent". . . . . . . . . . . . . . . . . . 79
Section 10.5 Reimbursement for Costs and Expenses . . . . . . . . . . . 79
Section 10.6 Payments Received Directly by Banks. . . . . . . . . . . . 79
Section 10.7 Indemnification. . . . . . . . . . . . . . . . . . . . . . 80
Section 10.8 Agent and Affiliates . . . . . . . . . . . . . . . . . . . 80
Section 10.9 Credit Investigation . . . . . . . . . . . . . . . . . . . 80
Section 10.10 Defaults. . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 10.11 Obligations Several . . . . . . . . . . . . . . . . . . . 81
Section 10.12 Sale or Assignment; Addition of Banks . . . . . . . . . . 81
Section 10.13 Participation . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.14 Borrower not a Beneficiary or Party . . . . . . . . . . . 83
Section 10.15 Withholding Tax Exemption . . . . . . . . . . . . . . . . 83
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.1 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . 84
Section 11.2 Amendments, Requested Waivers, Etc.. . . . . . . . . . . . 84
Section 11.3 Addresses for Notices, Etc . . . . . . . . . . . . . . . . 84
Section 11.4 Costs and Expenses . . . . . . . . . . . . . . . . . . . . 85
Section 11.5 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.6 Execution in Counterparts. . . . . . . . . . . . . . . . . 86
Section 11.7 Integration; Inconsistency . . . . . . . . . . . . . . . . 86
Section 11.8 Agreement Effectiveness. . . . . . . . . . . . . . . . . . 86
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Section 11.9 Advice from Independent Counsel. . . . . . . . . . . . . . 86
Section 11.10 Judicial Interpretation . . . . . . . . . . . . . . . . . 86
Section 11.11 Binding Effect; No Assignment by Borrower . . . . . . . . 87
Section 11.12 Severability of Provisions. . . . . . . . . . . . . . . . 87
Section 11.13 Headings. . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 11.14 Governing Law; Jurisdiction; Waiver of Jury Trial . . . . 87
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CREDIT AGREEMENT
This Agreement, dated July 14, 1997, is by and among G&K SERVICES,
INC., a Minnesota corporation ("G&K INC."), WORK WEAR CORPORATION OF CANADA
LTD., an Ontario corporation ("Work Wear"; G&K Inc. and Work Wear, sometimes
individually referred to as a "Borrower" and collectively referred to as the
"Borrowers"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association ("Norwest"; in its separate capacity as administrative agent for
certain Banks, the "US Agent"), NBD BANK, a bank chartered under the laws of the
State of Michigan ("NBD"), FIRST CHICAGO NBD BANK, CANADA, a bank chartered
under the laws of Canada ("FCNBD"; in its separate capacity as administrative
agent for certain Banks, the "Canadian Agent") and each of the banks appearing
on the signature pages hereof, together with such other banks as may from time
to time become a party to this Agreement pursuant to the terms and conditions of
ARTICLE X hereof (collectively the "Banks" and individually each called a
"Bank").
RECITALS
The Borrowers have requested that the Banks extend certain revolving
and term credit facilities to the Borrowers in the aggregate principal amount of
Four Hundred Twenty-Five Million Dollars ($425,000,000) to refinance the
existing credit facilities of the Borrowers and to provide financing for the
acquisition of certain assets pursuant to the asset purchase agreement described
below.
The Borrowers have offered to secure all such credit facilities by
granting to the Banks security interests in certain personal property assets
owned by the Borrowers and by causing certain affiliated companies to grant
security interests and guaranties to the Banks.
The Banks are willing to extend the requested credit facilities to the
Borrowers pursuant to the terms and subject to the conditions set forth in this
Agreement.
ACCORDINGLY, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrowers, the Agents and the Banks hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in the PREAMBLE have the meanings therein
assigned to them;
(b) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular; and
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP.
"Acceptance" means a Draft duly stamped and accepted by a Canadian
Bank in accordance with SECTIONS 3.1 and 3.6.
"Acceptance Amount" means the sum of (a) the aggregate face amount of
all issued and outstanding Acceptances and (b) amounts paid under an
Acceptance for which the Canadian Banks have neither been reimbursed nor
made an Advance.
"Acceptance Fee" has the meaning specified in SECTION 3.6(d).
"Adjustment Date" has the meaning specified in SECTION 10.12.
"Advance" or "Advances" means a US Revolving Advance or a Canadian
Revolving Advance, individually, or US Revolving Advances and Canadian
Revolving Advances, collectively.
"Agent" or "Agents" means individually, the US Agent or the Canadian
Agent and, collectively, the US Agent and the Canadian Agent.
"Aggregate Revolving Commitment Amount" means the sum of the US
Revolving Commitment Amount and the Canadian Revolving Commitment Amount.
"Agreement" means this Credit Agreement and all exhibits, amendments
and supplements hereto.
"Applicant" has the meaning specified in SECTION 10.12.
"Asset Purchase" means the purchase of certain assets by G&K Inc., G&K
Co. and G&K Linen from the Sellers pursuant to the Asset Purchase
Agreement.
"Asset Purchase Agreement" means the Asset Purchase Agreement dated as
of May 30, 1997, by and among G&K Inc. and the Sellers.
"Asset Purchase Documents" means the Asset Purchase Agreement and all
other documents executed in connection with the Asset Purchase.
"Assets Held for Sale" means the assets identified on SCHEDULE 4.1.
"Assignment Certificate" has the meaning specified in
SECTION 10.12(a).
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"BA Purchase Price" shall mean the product of (i) the face amount of
Drafts to be sold in connection with a Borrowing and (ii) the applicable
Discount, as determined by the Canadian Agent in accordance with
SECTION 3.2, less the Acceptance Fee retained by each Canadian Bank in
consideration for the acceptance of such Drafts.
"Bank" or "Banks" has the meaning specified in the PREAMBLE.
"Borrower" and "Borrowers" have the meanings specified in the
PREAMBLE.
"Borrowing" means the funding of Advances or the discounting of
Acceptances under a particular Facility concurrently by the Banks of that
Facility.
"Borrowing Date" means the date on which a Borrowing is funded to a
Borrower by the applicable Banks.
"Business Day" means a Canadian Business Day or a US Business Day, as
the context requires.
"Canadian Administrative Fee" has the meaning specified in
SECTION 4.9 (b).
"Canadian Agent" means FCNBD in its separate capacity as
administrative agent to facilitate the funding and repayment of Canadian
Revolving Advances and Acceptances.
"Canadian Bank Rate" means at any time an interest rate per annum
equal to the minimum rate at which the Bank of Canada makes short-term
advances to chartered banks.
"Canadian Banks" means those Banks which, from time to time, shall
have Commitments to make Canadian Revolving Advances to Work Wear.
"Canadian Business Day" means any day other than a Saturday or Sunday
on which Canadian banks are open for business in Xxxxxxx, Xxxxxxx.
"Canadian Commitment Fee" has the meaning specified in
SECTION 4.9(a)(ii).
"Canadian Dollar" and the sign "C$" means the lawful currency of
Canada.
"Canadian Dollar Equivalent" means for an amount of US Dollars, the
amount in freely-transferable Canadian Dollars that the Canadian Agent may
purchase for the given amount of such US Dollars on the spot market on the
day of determination. Where possible, such spot rate shall be determined by
reference to the Bank of Canada noon exchange rate on the dealing screen as
of 12:00 Noon, Toronto, Ontario time on the day of determination.
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"Canadian Floating Rate" means an annual rate at all times equal to
the sum of (a) the Canadian Reference Rate and (b) the applicable Margin,
which annual rate shall change when and as the Canadian Reference Rate
changes.
"Canadian Floating Rate Advance" means any Canadian Revolving Advance
which bears interest at a rate determined by reference to the Canadian
Reference Rate.
"Canadian Floating Rate Funding" means any Funding which bears
interest at a rate determined by reference to the Canadian Reference Rate,
including Canadian Floating Rate Advances.
"Canadian G&K Enterprises" means Work Wear, Work Wear-Quebec and NRO
and any other wholly-owned Subsidiary of either Borrower formed after the
Closing Date (i) which has its primary place of business in Canada, (ii)
which executes a Guaranty and, if prior to the Collateral Release Date, a
Guarantor Security Agreement, for the benefit of the Canadian Banks
guarantying the due and prompt payment by Work Wear of all Canadian
Obligations, and (iii) if prior to the Collateral Release Date, whose stock
is pledged to the Canadian Banks pursuant to a Collateral Pledge Agreement.
"Canadian Interest Period" means, relative to any Acceptance, a period
of 30, 60, 90 or 180 days after the date of issuance, rollover or
conversion, as the case may be, as Work Wear may select in its relevant
notice pursuant to SECTIONS 3.2, 3.3 or 3.4; PROVIDED, HOWEVER, that:
(a) no more than five (5) different Canadian Interest Periods
may be outstanding at any one time with respect to a Facility;
(b) if a Canadian Interest Period would otherwise end on a day
which is not a Canadian Business Day, such Canadian Interest Period
shall end on the next following Canadian Business Day (unless such
next following Canadian Business Day is the first Canadian Business
Day of a month, in which case such Canadian Interest Period shall end
on the next preceding Canadian Business Day); and
(c) no Canadian Interest Period may end later than the
applicable Maturity Date for the Canadian Revolving Facility.
"Canadian Obligations" means each and every debt, liability and
obligation of every type and description arising under or in connection
with any of the Loan Documents, or under any interest rate swap or
protection agreement entered into by Work Wear with a Bank in order to
hedge its interest rate risk under the Canadian Revolving Facility, which
Work Wear may now or at any time hereafter owe to a Bank, whether such
debt, liability or obligation now exists or is hereafter created or
incurred, whether it is direct or indirect, due or to become due, absolute
or contingent,
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primary or secondary, liquidated or unliquidated, or sole, joint, several
or joint and several, and including specifically, but not limited to all
indebtedness, liabilities and obligations of Work Wear arising under or
evidenced by Canadian Revolving Notes and the Acceptances; EXCLUDING
HOWEVER, all US Obligations.
"Canadian Reference Rate" means the rate of interest publicly
announced from time to time by the Canadian Agent as its "base rate" or
"prime rate", or, if the Canadian Agent ceases to announce a rate so
designated, any similar successor rate designated by the Canadian Agent.
The Canadian Reference Rate is not necessarily the most favored rate of the
Canadian Agent and the Canadian Agent may lend to its customers at rates
that are at, above or below the Canadian Reference Rate.
"Canadian Revolving Advance" means a loan of funds by a Canadian Bank
to Work Wear under the Canadian Revolving Facility, including Canadian
Floating Rate Advances made thereunder.
"Canadian Revolving Commitment" means, with respect to each Canadian
Bank, the amount of the Canadian Revolving Commitment set forth opposite
such Canadian Bank's name on the execution pages hereof, or below such
Canadian Bank's signature on an Assignment Certificate executed by such
Canadian Bank, unless such amount is reduced pursuant to SECTION 4.11, in
which event it means the amount to which said amount is reduced pursuant
thereto, or as the context may require, the obligation of such Canadian
Bank to make Canadian Revolving Advances and to create Acceptances, as
contemplated in SECTION 3.1.
"Canadian Revolving Commitment Amount" means the Canadian Dollar
Equivalent on the Closing Date of Twenty-Five Million US Dollars
($25,000,000), being the maximum amount of the Canadian Revolving
Commitments of all Canadian Banks, in the aggregate, to make Canadian
Revolving Advances to Work Wear pursuant to SECTION 3.1, subject to
reduction in accordance with SECTION 4.11; such amount to be adjusted to
the Canadian Dollar Equivalent of Twenty-Five Million US Dollars
($25,000,000) on each anniversary of the Closing Date.
"Canadian Revolving Facility" means the revolving credit facility made
available to Work Wear pursuant to SECTION 3.1.
"Canadian Revolving Facility Outstanding Amount" means, as of the date
of determination, the sum of (a) the aggregate principal amount of all
outstanding Canadian Revolving Advances and (b) the Acceptance Amount.
"Canadian Revolving Note" means a promissory note of Work Wear payable
to a Canadian Bank in the amount of such Canadian Bank's Canadian Revolving
Commitment, in substantially the form of EXHIBIT B (as such promissory note
may be amended, extended or otherwise modified from time to time),
evidencing Work
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Wear's obligation to pay all indebtedness to such Canadian Bank resulting
from such Canadian Bank's Percentage of each Borrowing under the Canadian
Revolving Facility, and also means each promissory note accepted by such
Canadian Bank from time to time in substitution therefor or in renewal
thereof.
"Capital Adequacy Rule" has the meaning specified in \
SECTION 4.14(b)(ii).
"Capital Adequacy Rule Change" has the meaning specified in
SECTION 4.14(b)(iii).
"Capital Expenditures" of the G&K Group means, with respect to the
applicable Covenant Computation Period, the sum of:
(a) the aggregate amount of all expenditures of the G&K Group for
fixed or capital assets made during such period which, in accordance
with GAAP, would be classified as capital expenditures; and (without
duplication)
(b) the aggregate amount of all Capitalized Lease Liabilities of
the G&K Group incurred during such Covenant Computation Period.
"Capitalized Lease Expenditures" of the G&K Group means, with respect
to the applicable Covenant Computation Period, the total expenditures made
by the G&K Group on account of its Capitalized Lease Liabilities,
determined in accordance with GAAP.
"Capitalized Lease Liabilities" of the G&K Group means, with respect
to the applicable Covenant Computation Period, all monetary obligations of
the G&K Group under any leasing or similar arrangement which, in accordance
with GAAP, would be classified as capitalized leases, and, for purposes of
this Agreement, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP.
"Cash Flow Available for Debt Service" of the G&K Group means, with
respect to the applicable Covenant Computation Period, the G&K Group's
EBITDA MINUS Cash Tax Expense, Dividends and Capital Expenditures.
"Cash Tax Expense" of the G&K Group means Tax Expense less any
provision for deferred taxes and PLUS any prepaid Tax Expense.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all personal property of a G&K Enterprise in which
any Bank has been granted a security interest pursuant to any Security
Document, together
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with all substitutions and replacements for, products of and proceeds from
any of the foregoing.
"Collateral Pledge Agreements" means (a) the Collateral Pledge
Agreement of even date herewith by G&K Inc., granting the Banks a security
interest in (i) all stock of G&K Inc.'s presently existing Subsidiaries
(other than Work Wear, Work Wear-Quebec and NRO) and of any US G&K
Enterprise formed after the Closing Date and owned directly by G&K Inc.,
together with all options to purchase such stock, and (ii) 65% of the
shares of NRO and any Canadian G&K Enterprise formed after the Closing Date
and owned directly by G&K Inc., to secure payment of all Obligations, (b)
the Collateral Pledge Agreement of even date herewith by G&K Co. granting
the Banks a security interest in 65% of the shares of Work Wear to secure
payment of all Obligations and (c) the Collateral Pledge Agreement of even
date herewith by Work Wear, granting the Canadian Banks a security interest
in all stock of Work Wear-Quebec and of any Canadian G&K Enterprise formed
after the Closing Date and owned directly by Work Wear, together with all
options to purchase such stock, to secure the Canadian Obligations.
"Collateral Release Date" means the date on which all Collateral is
released by the Banks in accordance with SECTION 4.19.
"Commitment" means, with respect to a Bank, such Bank's Revolving
Commitment or Term Commitment, as the context requires.
"Commitment Fee" means the Canadian Commitment Fee or the US
Commitment Fee.
"Covenant Computation Date" means the last day of each Fiscal Quarter
of G&K Inc., commencing on September 30, 1997.
"Covenant Computation Period" means the four (4) consecutive Fiscal
Quarters of the G&K Group immediately preceding and ending on a Covenant
Computation Date; PROVIDED, HOWEVER, that with respect to the Covenant
Computation Dates September 27, 1997, December 27, 1997 and March 28, 1998,
(a) for purposes of computing the Leverage Ratio used in determining Level
I Status, Level II Status, Level III Status, Level IV Status and Level V
Status, the procedures set forth in SECTION 4.3(b) shall apply, (b) for
purposes of computing the Debt Service Coverage Ratio (SECTION 7.9) and
minimum EBITDA (SECTION 7.8), the applicable Covenant Computation Period
shall commence on June 28, 1997 and shall end on such Covenant Computation
Date, without annualization, and (c) for purposes of computing the maximum
Leverage Ratio under SECTION 7.11, the applicable Covenant Computation
Period shall commence on June 28,1997 and shall end on such Covenant
Computation Date, and shall be annualized based on such period.
-7-
"Current Assets" shall mean the aggregate amount of assets of the G&K
Group which in accordance with GAAP may be properly classified as current
assets, after deducting adequate reserves where proper, but in no event
including any Assets Held for Sale, cash, marketable securities or real
estate.
"Current Liabilities" shall mean (i) all Debt of the G&K Group due on
demand or within one year from the date of determination and (ii) all other
liabilities of the G&K Group (including taxes accrued as estimated) which
in accordance with generally accepted accounting principles, may be
properly classified as current liabilities; EXCLUDING, HOWEVER, (a) the
Revolving Facility Outstanding Amount and (b) all scheduled installments of
principal due on Funded Debt of the G&K Group payable during the period of
determination.
"Debt" of the G&K Group means, without duplication (a) all obligations
of the G&K Group for borrowed money, (b) all obligations of a member of the
G&K Group evidenced by bonds, debentures, notes or other similar
instruments, (c) all obligations of a member of the G&K Group to pay the
deferred purchase price of property or services, except trade accounts
payable arising in the ordinary course of business, (d) all Capitalized
Lease Liabilities of a member of the G&K Group, (e) all debt of others
secured by a lien on any asset of a member of the G&K Group, whether or not
such debt is assumed by a member of the G&K Group, (f) all debt of others
guaranteed by such other Person, (g) all obligations of a member of the G&K
Group to pay a specified purchase price for goods or services, whether or
not delivered or accepted (i.e., take-or-pay and similar obligations), (h)
all obligations of a member of the G&K Group under any interest rate swap
program or any similar agreement, arrangement or undertaking relating to
fluctuations in interest rates and (i) all obligations of a member of the
G&K Group to advance funds to, or purchase assets, property or services
from, any other Person in order to maintain the financial condition of a
member of the G&K Group.
"Debt Service Coverage Ratio" of the G&K Group means, with respect to
the applicable Covenant Computation Period, the ratio of (a) the G&K
Group's Cash Flow Available for Debt Service to (b) the G&K Group's Debt
Service Requirements.
"Debt Service Requirements" of the G&K Group means, with respect
to the applicable Covenant Computation Period, the aggregate, without
duplication, of (a) Interest Expense of the G&K Group (b) all scheduled
installments of principal on Funded Debt of the G&K Group (including
scheduled principal payments made, or to be made, under the Term Notes and
excluding (i) Excess Cash Flow Payments, (ii) voluntary prepayments of
principal made, or to be made, under the Term Notes and (iii) any principal
payments made under a Revolving Facility), which are due on demand or during
such Covenant Computation Period, and (c) all Capitalized Lease Expenditures
(less Interest Expense included therein) of the G&K Group which are due on
demand or during such Covenant Computation Period.
-8-
"Default" means an event that, with nothing more than the giving of
notice or passage of time or both, would constitute an Event of Default.
"Default Percentage" means, as to any Bank, a fraction determined as
of the date of any distribution or contribution occurring after an Event of
Default, the numerator of which equals the principal amount of all
Obligations then owed to such Bank (expressed in its U.S. Dollar
Equivalent) on such date and the denominator of which equals the principal
amount of all Outstanding Obligations owed to all Banks (expressed in its
U.S. Dollar Equivalent) on such date.
"Default Rate" shall have the meaning specified in SECTION 4.2(d).
"Default Share" means, as to any Bank, that Bank's appropriate share
of any payments, collections and proceeds received by an Agent after the
occurrence of an Event of Default, as provided in SECTION 10.2.
"Discount" means the bid rate established by the Canadian Agent as the
average of the bid rates quoted by each Canadian Bank for the sale of its
banker's acceptances in an amount and bearing a maturity approximately
equal to such Canadian Bank's Percentage of a proposed Borrowing, rollover
or conversion of Acceptances at approximately 10:00 a.m., Toronto, Ontario
time, on the date of such proposed Borrowing, rollover or conversion of
Acceptances, which bid rate shall be conclusive and binding on Work Wear
absent manifest error.
"Dividends" means dividends, distributions and other payments, however
described, payable by a member of the G&K Group on any shares of any class
of its stock, and the amount of any other redemption, retirement, purchase
or acquisition by a member of the G&K Group of any shares of any class of
its stock; excluding, however, any (i) distributions to the extent
consisting exclusively of shares of stock of G&K Inc. and (ii)
distributions paid by any wholly-owned Subsidiary of a Borrower.
"Dollar" shall mean lawful currency of the United States of America or
Canada, as the context requires.
"Draft" shall mean a draft of Work Wear denominated in Canadian
Dollars, duly executed and delivered to a Canadian Bank in accordance with
SECTION 3.6(a).
"EBITDA" of the G&K Group means, with respect to the applicable
Covenant Computation Period, the G&K Group's Pre-Tax Earnings, PLUS
Interest Expense and Non-Cash Charges.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
-9-
"ERISA Affiliate" means any corporation, trade or business that, along
with a US G&K Enterprise, is a member of a controlled group of
corporations, controlled group of trades or businesses or affiliated
service group, as described in Sections 414(b), 414(c) and 414(m),
respectively, of the Code.
"ERISA Plan" means any of the following employee benefit plans (each
of which shall also be defined terms for purposes of this Agreement), but
only to the extent any of them is subject to regulation under ERISA:
(i) Pension Plan as defined in ERISA Section 3(2);
(ii) Defined Benefit Plan means a Pension Plan of the type defined
in ERISA Section 3(35);
(iii) Multi-Employer Plan means a Pension Plan of the type defined in
ERISA Section 3(37); and
(iv) Welfare Plan as defined in ERISA Section 3(1).
"Environmental Laws" has the meaning specified in SECTION 6.12.
"Eurocurrency Reserve Percentage" means the then applicable percentage
relating to the US Agent (expressed as a decimal) prescribed by the Board
of Governors of the Federal Reserve System (or any successor) for
determining reserve requirements applicable to "Eurocurrency Liabilities"
pursuant to Regulation D or any other then applicable regulation of the
Board of Governors which prescribes reserve requirements applicable to
"Eurocurrency Liabilities" as presently defined in Regulation D.
"Eurodollar Advance" means any Advance which bears interest at a rate
determined by reference to a Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a US Interest Period,
the rate per annum equal to the rate (rounded up to the nearest
one-sixteenth of one percent (1/16%)) determined by the US Agent in
accordance with SECTION 2.6 to be a rate at which US Dollar deposits are
offered to major banks in the London interbank eurodollar market for funds
to be made available on the first day of such US Interest Period and
maturing at the end of such US Interest Period.
"Eurodollar Funding" means any Funding which bears interest at a rate
determined by reference to the Eurodollar Rate, including Eurodollar
Advances.
"Eurodollar Rate" means, with respect to a US Interest Period, the
rate obtained by adding (a) the applicable Margin to (b) the rate obtained
by dividing (i) the applicable Eurodollar Base Rate by (ii) a percentage
equal to one (1.00) MINUS the
-10-
applicable percentage (expressed as a decimal) prescribed by the Board of
Governors of the Federal Reserve System (or any successor thereto) for
determining the maximum reserve requirements applicable to eurodollar
fundings (currently referred to as "Eurocurrency Liabilities" in Regulation
D) or any other maximum reserve requirements applicable to a member bank of
the Federal Reserve System with respect to such eurodollar fundings.
"Event of Default" has the meaning specified in SECTION 9.1.
"Excess Cash Flow" means, with respect to the G&K Group, Net Income,
PLUS Non-Cash Charges and deferred taxes, MINUS scheduled maturities of
long term Debt, MINUS Capital Expenditures and PLUS or MINUS, as the case
may be, changes in Working Capital, but in no event to include any gain
from the sale of Assets Held for Sale.
"Excess Cash Flow Payments" has the meaning specified in
SECTION 4.1(e)(i).
"FCNBD" has the meaning specified in the PREAMBLE.
"Facility" means the Canadian Revolving Facility, US Revolving
Facility or the Term Facility, as the context requires.
"Federal Funds Rate" means at any time an interest rate per annum
equal to the weighted average of the rates for overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business
Day, the average of the quotations for such day for such transactions
received by the US Agent from three Federal funds brokers of recognized
standing selected by it; it being understood that the Federal Funds Rate
for any day which is not a Business Day shall be the Federal Funds Rate for
the next preceding Business Day.
"Fiscal Quarter" means a 13-week accounting period, each ending on a
Saturday, with one such 13-week period ending on June 28, 1997 and with
each prior 13-week period, and each subsequent 13-week period, constituting
additional Fiscal Quarters hereunder.
"Floating Rate" means the Canadian Floating Rate or the US Floating
Rate, as the context requires.
"Funded Debt" of the G&K Group means, without duplication, all
interest-bearing Debt of the G&K Group, and shall include all
interest-bearing Debt created, assumed or guaranteed by the G&K Group
either directly or indirectly, including obligations secured by liens upon
property of any member of the G&K Group and upon which any member of the
G&K Group customarily pays the interest, and all Capitalized Lease
Liabilities.
-11-
"Funding" means a designated portion of outstanding principal of a
Facility which bears interest at a rate determined by reference to a
particular Eurodollar Rate or Floating Rate, as the case may be.
"GAAP" means generally accepted accounting principles, as amended from
time to time, applied to the extent possible on a basis consistent with the
accounting practices reflected in the annual financial statements referred
to in SECTION 6.5.
"G&K Co." means G&K Services Co., a Minnesota corporation and a
wholly-owned Subsidiary of G&K Inc.
"G&K Enterprise" means G&K Inc., G&K Co., G&K Linen, Work Wear,
TeamWear, Work Wear-Quebec, NRO, and each other wholly-owned Subsidiary of
any such companies formed after the Closing Date, individually, or all of
them collectively.
"G&K Group" means G&K Inc. and (i) all direct or indirect Subsidiaries
of G&K Inc. that are reported under GAAP on a consolidated basis and (ii)
each G&K Enterprise (including specifically G&K Linen), whether or not
reported on a consolidated basis.
"G&K Inc." has the meaning specified in the PREAMBLE.
"G&K Inc. Security Agreement" means the security agreement of G&K Inc.
of even date herewith pursuant to which G&K Inc. grants the Banks a
security interest in all personal property assets of G&K Inc. to secure
payment of all Obligations.
"G&K Linen" means G&K Services Linen Company, a Minnesota corporation
and a wholly-owned subsidiary of G&K Inc.
"Guaranties" means (i) those certain guaranty agreements of even date
herewith executed and delivered to all Banks by those US G&K Enterprises
existing before the Closing Date guarantying the due and prompt payment by
the Borrowers of all Obligations, (ii) those certain guaranty agreements of
even date herewith executed and delivered to the Canadian Banks by those
Canadian G&K Enterprises (except Work Wear) existing before the Closing
Date guarantying the due and prompt payment by Work Wear of all Canadian
Obligations, and (iii) such other guaranties as may be executed from time
to time by a G&K Enterprise formed after the Closing Date.
"Guarantors" means (i) the US G&K Enterprises with respect to all
Obligations and (ii) the Canadian G&K Enterprises (except Work Wear) with
respect to all Canadian Obligations.
"Guarantor Security Agreement" means the separate security agreement
of a Guarantor pursuant to which that Guarantor grants a security interest
in all its personal
-12-
property assets to secure payment of either (i) all Obligations or (ii) the
Canadian Obligations, as the case may be.
"Hazardous Substance" means any substance listed or identified in, or
regulated by, any Environmental Laws.
"Indemnities" has the meaning specified in SECTION 11.5.
"Interest Expense" of the G&K Group means, with respect to the
applicable Covenant Computation Period, the total gross interest expense on
all Debt of the G&K Group during such period, and shall in any event
include, without limitation and without duplication, (a) accrued interest
(whether or not paid) on all Debt of the G&K Group and (b) the interest
portion of any Capitalized Lease Expenditure of the G&K Group (determined
in accordance with GAAP).
"Interest Period" means a US Interest Period or a Canadian Interest
Period, as the context requires.
"Letter of Credit" means a Participated Letter of Credit or a
Swingline Letter of Credit, or both, as the context may require.
"Letter of Credit Amount" means the sum of (a) the aggregate face
amount of all issued and outstanding Letters of Credit and (b) amounts
drawn under Letters of Credit for which the US Banks have neither been
reimbursed nor made Advances, including (without limitation) the Swingline
Letter of Credit Amount.
"Letter of Credit Bank" means Norwest, in its separate capacity as
issuer of Letters of Credit pursuant to SECTION 2.7.
"Letter of Credit Fees" has the meaning specified in SECTION 2.7(c).
"Level I Status" means that period (or periods) of time during which
the Leverage Ratio is less than 2.00 to 1.00.
"Level II Status" means that period (or periods) of time during which
the Leverage Ratio is greater than or equal to 2.00 to 1.00 but less than
2.50 to 1.00.
"Level III Status" means that period (or periods) of time during which
the Leverage Ratio is greater than or equal to 2.50 to 1.00 but less than
3.00 to 1.00.
"Level IV Status" means that period (or periods) of time during which
the Leverage Ratio is greater than or equal to 3.00 to 1.00 but less than
3.50 to 1.00.
"Level V Status" means that period (or periods) of time during which
the Leverage Ratio is greater than or equal to 3.50 to 1.00.
-13-
"Leverage Ratio" of the G&K Group means, with respect to the
applicable Covenant Computation Date, the ratio of (a) the G&K Group's
Funded Debt to (b) the G&K Group's EBITDA.
"Litigation" means any litigation, proceeding (including without
limitation any governmental, administrative or arbitration proceeding)
claim, lawsuit, and/or investigation or inquiry pending or threatened
against or involving a member of the G&K Group or any of their respective
businesses or operations.
"Loan Documents" means this Agreement, Acceptances (as and when
created), the Notes, the Guaranties, each and every application or other
agreement pursuant to which a Letter of Credit is issued and the Security
Documents.
"Margin" means, with respect to computation of (a) an interest rate on
Fundings under a Facility, (b) an Acceptance Fee, (c) a Commitment Fee or
(d) a Letter of Credit Fee, the applicable increment (expressed in basis
points) set forth and described in the table below, established as of the
last day of each Fiscal Quarter according to the then applicable Status
determined in accordance with SECTION 4.3:
Xxxxx X Xxxxx XX Xxxxx XXX Xxxxx XX Level V
Status Status Status Status Status
Leverage Ratio less than greater than greater than greater than greater than
2.00 or equal to or equal to or equal to or equal to
2.00 2.50 3.00 3.50
less than 2.50 less than 3.00 less than 3.50
Commitment Fee on 15.0 bp 20.0 bp 25.0 bp 30.0 bp 35.0 bp
Unused Daily
Balance of Revolving
Facilities
Eurodollar Margin, 50.0 bp 62.5 bp 75.0 bp 95.0 bp 112.5 bp
Acceptance Fee and
Letter of Credit Fee
US Reference Rate 0 bp 0 xx 0 xx 0 xx 0 xx
Xxxxxx and Canadian
Reference Rate
Margin
"Material Adverse Effect" means, with respect to any event or
circumstance, a material adverse effect on:
(a) the business, financial condition, operations or prospects of the
G&K Group, taken as a whole;
(b) the ability of a Borrower or Guarantor to perform its obligations
under any Loan Document to which it is a party;
-14-
(c) the validity, enforceability or collectibility of any Loan
Document; or
(d) the status, existence, perfection, priority (subject to Permitted
Liens) or enforceability of any lien or security interest granted to the
Banks pursuant to the Security Documents .
"Material Litigation" or "Material Litigation Development" means any
Litigation or any development in any Litigation (i) which involves this
Agreement or any of the transactions contemplated hereby or thereby
(including, without limitation, any judgment, order, injunction or other
restraint prohibiting or imposing materially adverse conditions upon the
performance by a member of the G&K Group or any Subsidiary of its
obligations under or in connection with this Agreement or any Loan Document
to which it is a party), (ii) involving uninsured liabilities which could
individually or in the aggregate exceed $10,000,000, (iii) which could
individually or in the aggregate otherwise impair the validity or
enforceability of or the ability of a member of the G&K Group to perform
any of its obligations under this Agreement or any Loan Document,
(iv) which could individually or in the aggregate materially impair the
ability of a member of the G&K Group to conduct business substantially as
now conducted, or (v) which could individually or in the aggregate
materially and adversely affect the consolidated business, operations,
prospects or financial condition of a member of the G&K Group taken as a
whole.
"Maturity Date" means (a) June 30, 2002 with respect to the Revolving
Facilities and (b) June 30, 2004 with respect to the Term Facility.
"Net Income" of the G&K Group means, with respect to the applicable
Covenant Computation Period, the after-tax net income of the G&K Group as
determined in accordance with GAAP.
"Non-Cash Charges" of the G&K Group means, with respect to the
applicable Covenant Computation Period, the G&K Group's depreciation,
amortization (excluding merchandise amortization) and other non-cash
charges which have the effect of reducing Pre-Tax Earnings or Net Income,
as the case may be, all as determined in accordance with GAAP.
"Norwest" has the meaning specified in the PREAMBLE.
"Note" or "Notes" means a US Note or a Canadian Revolving Note, or all
such Notes collectively, as the context requires.
"NRO" means 912489 Ontario Limited, an Ontario corporation and a
wholly-owned Subsidiary of G&K Inc.
"Obligations" means each and every debt, liability and obligation of
every type and description arising under or in connection with any of the
Loan Documents, or
-15-
under any interest rate swap or protection agreement entered into by a
Borrower with a Bank in order to hedge its interest rate risk under the
Facilities, which either Borrower may now or at any time hereafter owe to a
Bank, whether such debt, liability or obligation now exists or is hereafter
created or incurred, whether it is direct or indirect, due or to become
due, absolute or contingent, primary or secondary, liquidated or
unliquidated, or sole, joint, several or joint and several, and including
specifically, but not limited to, the Letter of Credit Amount, Acceptance
Amount and all indebtedness, liabilities and obligations of the Borrowers
arising under or evidenced by the Notes and the Drafts.
"Outstanding Canadian Obligations" means that portion of the
Outstanding Obligations arising from or relating to the Canadian Revolving
Facility.
"Outstanding Obligations" means, as of the date of determination, the
outstanding principal amount (including the Letter of Credit Amount) of all
Obligations.
"Outstanding US Obligations" means that portion of the Outstanding
Obligations arising from or relating to the US Facilities.
"Payee" has the meaning specified in SECTION 4.13.
"Payment Date" means the last day of each Fiscal Quarter of the G&K
Group, commencing on September 27, 1997.
"PBGC" means the Pension Benefit Guaranty Corporation, organized under
Title IV of ERISA.
"Percentage" means, with respect to a Facility and as to any Bank, the
percentage set forth opposite such Bank's signature on the execution pages
hereof, or below such Bank's signature on any Assignment Certificate
executed by such Bank, in relation to such Facility, representing the ratio
of such Bank's Revolving Commitment or Term Commitment, as the case may be,
to the applicable Revolving Commitment Amount or Term Commitment Amount.
"Permitted Liens" has the meaning specified in SECTION 8.1.
"Person" means any individual, corporation, partnership, limited
liability Borrower, joint venture, association, joint-stock Borrower,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Plan" means a Defined Benefit Plan as defined in and as covered by
Title IV of ERISA that is maintained by or contributed to by any US G&K
Enterprise for its employees.
-16-
"PPSA" means the Personal Property Security Act , as amended from time
to time, as in effect in any particular province of Canada, or with respect
to any province where the Personal Property Security Act has not been
adopted, any other such statute or act governing, in such province,
creation and perfection of security interests in tangible personal
property, as amended from time to time, including the Civil Code in effect
from time to time in the Province of Quebec.
"Pre-Tax Earnings" of the G&K Group means, with respect to the
applicable Covenant Computation Period, the G&K Group's Net Income, PLUS
any provision for Tax Expense, LESS any extraordinary, non-operating or
non-cash income claimed or earned by the G&K Group, all as determined in
accordance with GAAP.
"Pricing Differential" has the meaning specified in SECTION 3.9.
"Purchased Assets" has the meaning specified in SECTION 4.10(a).
"Registered Pension Plan" means a pension plan with defined benefit
provisions that is registered under the Canada Income Tax Act and is
maintained or contributed to by any Canadian G&K Enterprise for its
employees.
"Reportable Event" has the meaning assigned to that term in Title IV
of ERISA.
"Required Banks" means, at any time, one or more of the Banks holding
at least fifty-one percent (51%) of the Commitments (expressed in their US
Dollar Equivalent) or, if the Commitments have terminated one or more of
the Banks holding at least fifty-one percent (51%) of the Outstanding
Obligations (expressed in their US Dollar Equivalent).
"Required Payment" has the meaning specified in SECTION 4.12(c).
"Return" has the meaning specified in SECTION 4.14(b)(i).
"Revolving Advance" means a loan of funds by a Bank to a Borrower
under a Revolving Facility.
"Revolving Commitment" means the US Revolving Commitment of a US Bank
or the Canadian Revolving Commitment of a Canadian Bank, or both, as the
context requires.
"Revolving Commitment Amount" means the US Revolving Commitment Amount
or the Canadian Revolving Commitment Amount, as the context requires.
"Revolving Commitment Termination Date" means the earlier of (a) the
Maturity Date with respect to a Revolving Facility or (b) the date on which
a
-17-
Revolving Commitment is terminated pursuant to SECTION 9.2 or reduced to
zero pursuant to SECTION 4.11(a).
"Revolving Facility" means the US Revolving Facility or the Canadian
Revolving Facility and "Revolving Facilities" means the US Revolving
Facility and the Canadian Revolving Facility, as the context requires.
"Revolving Facility Outstanding Amount" means the US Revolving
Facility Outstanding Amount and the Canadian Revolving Facility Outstanding
Amount, or either of them, as the context requires.
"Security Documents" means the G&K Inc. Security Agreement, the Work
Wear Security Agreement, the Collateral Pledge Agreements, the Guarantor
Security Agreements and each and every additional agreement entered into by
a Borrower or Guarantor for the benefit of an Agent or Bank to secure
payment of any of the Obligations, as such agreements may hereafter be
amended, supplemented or restated from time to time.
"Sellers" means National Service Industries, Inc., a Delaware
corporation, National Service Industries, Inc., a Georgia corporation and
NSI Enterprises, Inc., a California corporation.
"Status" means the financial condition of the G&K Group determined in
accordance with the definitions of "Level I Status", "Level II Status",
"Level III Status", "Level IV Status" and "Level V Status."
"Stockholders' Equity" of the G&K Group means, with respect to the
applicable Covenant Computation Period, the aggregate capital and retained
earnings of the G&K Group, as determined in accordance with GAAP, as set
forth and described in the G&K Group's financial statements of the G&K
Group, prepared on a consistent basis; adjusted, however, for any gain or
loss on the ultimate disposition of the Assets Held for Sale that has been
treated as an adjustment of the original purchase price allocation of such
Assets Held for Sale.
"Subsidiary" means any corporation of which more than fifty percent
(50%) of the outstanding shares of capital stock having general voting
power under ordinary circumstances to elect a majority of the board of
directors of such corporation, (irrespective of whether or not at the time
stock of any other class or classes shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned by a Person, by such Person and one or more Subsidiaries
of such Person, or by one or more other Subsidiaries of such Person.
"Swingline Letter of Credit" has the meaning specified in SECTION
2.7(b).
-18-
"Swingline Letter of Credit Amount" means the sum of (a) the aggregate
face amount of all issued and outstanding Swingline Letters of Credit and
(b) amounts drawn under Swingline Letters of Credit for which the Letter of
Credit Bank has neither been reimbursed nor made advances.
"Tax Expense" means the amount of any current and deferred income,
excise and other taxes incurred by any member of the G&K Group to any
governmental or other authority as a result of income earned by that Person
during the applicable period of determination.
"Taxes" has the meaning specified in SECTION 4.13.
"TeamWear" means G&K TeamWear, Inc., a Minnesota corporation and a
wholly-owned Subsidiary of G&K, Inc.
"Term Advance" means a loan of funds by a US Bank to G&K Inc. under
the Term Facility.
"Term Commitment" means, with respect to each US Bank, the amount of
the Term Commitment set forth opposite such US Bank's name on the execution
pages hereof, or below such US Bank's signature on an Assignment
Certificate, or as the context may require, the obligation of such US Bank
to make Term Advances to G&K Inc. under SECTION 2.2 hereof.
"Term Commitment Amount" shall mean Three Hundred Million Dollars
($300,000,000), being the maximum amount of the Term Commitments of all US
Banks.
"Term Facility" means the term loan facility being made available to
G&K Inc. by the US Banks pursuant to SECTION 2.2.
"Term Note" means a promissory note of G&K Inc. payable to a US Bank
in the amount of such US Bank's Term Commitment, in substantially the form
of EXHIBIT C (as such promissory note may be amended, extended or otherwise
modified from time to time), evidencing the obligation of G&K Inc. to pay
all indebtedness to such US Bank resulting from such US Bank's Percentage
of the Term Facility, and also means each other promissory note accepted
from time to time in substitution therefor or in renewal thereof.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the state designated in SECTION 11.14(a) as the state whose laws shall
govern this Agreement, or in any other state whose laws are held to govern
this Agreement or any portion hereof.
"US Administrative Fee" has the meaning specified in SECTION 4.9(b).
-19-
"US Agent" means Norwest in its separate capacity as administrative
agent hereunder.
"US Banks" means those Banks which, from time to time, shall have
Commitments to make US Revolving Advances and Term Advances to G&K Inc.
"US Business Day" shall mean any day other than a Saturday or Sunday
on which national banks are open for business in Minnesota, Michigan and
New York and, if such day relates to a Eurodollar Advance, a day on which
dealings are carried on in the London interbank Eurodollar market.
"US Commitment Fee" has the meaning specified in SECTION 4.9(a)(i).
"US Dollar" and the sign "$" and "US$" shall mean lawful currency of
the United States of America.
"US Dollar Equivalent" means for an amount of Canadian Dollars, the
amount in freely-transferable US Dollars that the Canadian Agent may
purchase for the given amount of such Canadian Dollars on the spot market
on the day of determination. Where possible, such spot rate shall be
determined by reference to the Bank of Canada noon exchange rate on the
dealing screen as of 12:00 Noon, Toronto, Ontario time, on the date of
determination.
"US Facilities" means the US Revolving Facility and the Term Facility
collectively, and "US Facility" means the US Revolving Facility or the Term
Facility, as the context requires.
"US Floating Rate" means an annual rate at all times equal to the sum
of (a) the US Reference Rate and (b) the applicable Margin, which annual
rate shall change when and as the US Reference Rate changes.
"US Floating Rate Advance" means any US Advance which bears interest
at a rate determined by reference to the US Reference Rate.
"US G&K Enterprises" means G&K Inc., G&K Co., G&K Linen, TeamWear and
any other wholly-owned Subsidiary of either Borrower formed after the
Closing Date (i) which has its primary place of business in the United
States of America, (ii) which executes a Guaranty and, if prior to the
Collateral Release Date, a Guarantor Security Agreement, for the benefit of
all Banks guarantying the due and prompt payment of all Obligations and
(iii) if prior to the Collateral Release Date, whose stock is pledged to
the Banks pursuant to a Collateral Pledge Agreement.
"US Interest Period" means, relative to any Eurodollar Funding, the
period beginning on (and including) the date on which such Eurodollar
Funding is made, or continued as, or converted into, a Eurodollar Funding
pursuant to SECTIONS 2.3, 2.4 or
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2.5 and shall end on (but exclude) the day which numerically corresponds to
such date one (1), two (2), three (3) or six (6) months thereafter (or, if
such month has no numerically corresponding day, on the last US Business
Day of such month), as G&K Inc. may select in its relevant notice pursuant
to SECTIONS 2.3, 2.4, or 2.5; PROVIDED, HOWEVER, that:
(a) no more than five (5) different US Interest Periods may be
outstanding at any one time with respect to a US Facility;
(b) if a US Interest Period would otherwise end on a day which
is not a US Business Day, such US Interest Period shall end on the
next following US Business Day (unless such next following US Business
Day is the first US Business Day of a month, in which case such US
Interest Period shall end on the next preceding US Business Day);
(c) no US Interest Period applicable to a Funding for a US
Facility may end later than the applicable Maturity Date for such US
Facility; and
(d) in no event shall G&K Inc. select US Interest Periods with
respect to Fundings under the Term Facility which, in the aggregate,
would require payment of funding losses under SECTION 4.15 in order to
make payments of principal as required under SECTION 4.1.
"US Note" means a US Revolving Note or a Term Note, and "US Notes"
means the US Revolving Notes and the Term Notes, collectively.
"US Obligations" means each and every debt, liability and obligation
of every type and description arising under or in connection with any of
the Loan Documents, or under any interest rate swap or protection agreement
entered by G&K Inc. with a Bank in order to hedge its interest rate risk
under the Facilities, into which G&K Inc. may now or at any time hereafter
owe to a Bank, whether such debt, liability or obligation now exists or is
hereafter created or incurred, whether it is direct or indirect, due or to
become due, absolute or contingent, primary or secondary, liquidated or
unliquidated, or sole, joint, several or joint and several, and including
specifically, but not limited to, the Letter of Credit Amount and all
indebtedness, liabilities and obligations of G&K Inc. arising under or
evidenced by the Notes executed by G&K Inc.
"US Reference Rate" means the rate of interest publicly announced from
time to time by the US Agent as its "base rate" or "prime rate", or, if the
US Agent ceases to announce a rate so designated, any similar successor
rate designated by the US Agent; such rate is not necessarily the most
favored rate of the US Agent and the US Agent may lend to its customers at
rates that are at, above or below such rate.
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"US Revolving Advance" means a loan of funds by a US Bank to G&K Inc.
under the US Revolving Facility, including both US Floating Rate Advances
and Eurodollar Advances made thereunder.
"US Revolving Commitment" means, with respect to each US Bank, the
amount of the US Revolving Commitment set forth opposite such US Bank's
name on the execution pages hereof, or below such US Bank's signature on an
Assignment Certificate executed by such US Bank, unless such amount is
reduced pursuant to SECTION 4.11(a) hereof, in which event it means the
amount to which said amount is reduced pursuant thereto, or as the context
may require, the obligation of such US Bank to make US Revolving Advances,
as contemplated in SECTION 2.1.
"US Revolving Commitment Amount" means One Hundred Million Dollars
($100,000,000), being the maximum amount of the US Revolving Commitments of
all US Banks, in the aggregate, to make US Revolving Advances to G&K Inc.
pursuant to SECTION 2.1, subject to reduction in accordance with
SECTION 4.11(a).
"US Revolving Facility" means the revolving credit facility being made
available to G&K Inc. by the US Banks pursuant to SECTION 2.1.
"US Revolving Facility Outstanding Amount" means, as of the date of
determination, the sum of (a) the aggregate principal amount of all
outstanding US Revolving Advances and (b) the Letter of Credit Amount.
"US Revolving Note" means a promissory note of G&K Inc. payable to a
US Bank in amount of such US Bank's US Revolving Commitment, in
substantially the form of EXHIBIT A (as such promissory note may be
amended, extended or otherwise modified from time to time), evidencing the
obligation of G&K Inc. to pay its indebtedness to such US Bank resulting
from such US Bank's Percentage of each Borrowing under the US Revolving
Facility, and also means each promissory note accepted by such US Bank from
time to time in substitution therefor or in renewal thereof.
"US Revolving Facility" means the revolving credit facility described
in SECTION 2.1.
"Working Capital" of the G&K Group means the G&K Group's Current
Assets minus its Current Liabilities.
"Work Wear" has the meaning specified in the PREAMBLE, which is a
wholly-owned Subsidiary of G&K Co.
"Work Wear Security Agreement" means the Security Agreement of Work
Wear of even date herewith pursuant to which Work Wear grants the Canadian
Banks
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a security interest in all personal property assets of Work Wear to secure
payment of the Canadian Obligations.
"Work Wear-Quebec" means LA CORPORATION WORK WEAR (DU) QUEBEC, also
known as Work Wear Corporation of Quebec, a Quebec corporation and a
wholly-owned Subsidiary of Work Wear.
ARTICLE II
US FACILITY
Section 2.1 COMMITMENT AS TO US REVOLVING FACILITY. Each US Bank, severally
and for itself alone, agrees, on the terms and subject to the conditions herein
set forth, to make US Revolving Advances to G&K Inc. from time to time during
the period from the date hereof to and including the Revolving Commitment
Termination Date in an aggregate amount at any time outstanding not to exceed
such US Bank's Percentage of such US Revolving Advances; PROVIDED, HOWEVER, that
(a) the US Revolving Facility Outstanding Amount shall not at any time exceed
the US Revolving Commitment Amount, (b) on the Closing Date the sum of the US
Revolving Facility Outstanding Amount and the US Dollar Equivalent of the
Canadian Revolving Facility Outstanding Amount shall not exceed $85,000,000 and
(c) no US Bank's Percentage of the US Revolving Facility Outstanding Amount
shall at any time exceed its US Revolving Commitment. Within the above limits,
G&K Inc. may obtain US Revolving Advances, repay US Revolving Advances in
accordance with the terms hereof and reborrow US Revolving Advances in
accordance with the applicable terms and conditions of this ARTICLE II.
Section 2.2 COMMITMENT AS TO TERM FACILITY. Each US Bank hereby
agrees, on the terms and subject to the conditions herein set forth, to make a
single Term Advance to G&K Inc. on the Closing Date in an amount equal to such
US Bank's Term Commitment. The Term Facility is not a revolving facility and,
once the initial Term Advance is made by a US Bank, such US Bank shall have no
further obligation to make any additional Term Advances to G&K Inc. under the
Term Facility, whether or not any amounts are repaid thereunder.
Section 2.3 PROCEDURES FOR BORROWING UNDER THE US FACILITIES. G&K Inc.
may request not more than one Borrowing each week except as allowed in the US
Agent's discretion. Each Borrowing under the US Facilities shall be funded by
the US Banks as either US Floating Rate Advances or Eurodollar Advances, as G&K
Inc. shall specify in the related notice of Borrowing or notice of conversion
pursuant to this SECTION 2.3 or SECTION 2.4. Except as set forth in the
preceding sentence, US Floating Rate Advances and Eurodollar Advances may be
outstanding at the same time. It is understood, however, that (a) in the case of
a Borrowing which is to bear interest at a US Floating Rate, the principal
amount of the Borrowing shall be in an amount equal to or greater than
$5,000,000 and (b) in the case of a Borrowing which is to bear interest at a
Eurodollar Rate, the principal amount of the
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Borrowing shall be in an amount equal to $5,000,000 or a higher integral
multiple of $1,000,000. G&K Inc. shall give notice to the US Agent of each
proposed Borrowing not later than 10:30 a.m., Minneapolis, Minnesota time, on a
US Business Day which, in the case of a Borrowing that is to bear interest
initially at a US Floating Rate, is the Borrowing Date, or, in the case of a
Borrowing that is to bear interest initially at a Eurodollar Rate, is at least
three (3) US Business Days prior to the Borrowing Date. Each such notice shall
be effective upon receipt by the US Agent, shall be in writing or by telephone
or telecopy transmission, to be confirmed in writing by G&K Inc. if so requested
by the US Agent (in the form of EXHIBIT D), and shall specify whether the
Borrowing is to bear interest initially at a US Floating Rate or a Eurodollar
Rate, and in the case of a Borrowing that is to bear interest initially at a
Eurodollar Rate, shall specify the US Interest Period to be applicable thereto.
Promptly upon receipt of such notice (but in no event later than 12:00 Noon,
Minneapolis, Minnesota time, with respect to a US Floating Rate Advance, and the
close of business, with respect to a Eurodollar Advance, in each case on the US
Business Day of receipt of such notice), the US Agent shall advise each US Bank
of the proposed Borrowing. At or before 2:00 p.m., Minneapolis, Minnesota time,
on the requested Borrowing Date, each US Bank shall provide the US Agent at the
principal office of the US Agent in Minneapolis, Minnesota with immediately
available funds covering such US Bank's Percentage of such Borrowing. Subject to
satisfaction of the conditions precedent set forth in ARTICLE V with respect to
such Borrowing, the US Agent shall pay over such funds to G&K Inc. prior to the
close of business on the Borrowing Date.
Section 2.4 CONVERTING US FLOATING RATE FUNDINGS TO EURODOLLAR
FUNDINGS; PROCEDURES. So long as no Default or Event of Default shall exist, G&K
Inc. may convert all or any part of any outstanding US Floating Rate Funding
into a Eurodollar Funding by giving notice to the US Agent of such conversion
not later than 10:30 a.m., Minneapolis, Minnesota time, on a US Business Day
which is at least three (3) US Business Days prior to the date of the requested
conversion. Each such notice shall be effective upon receipt by the US Agent,
shall be in writing or by telephone or telecopy transmission, to be confirmed in
writing by G&K Inc. if so requested by the US Agent (in the form of EXHIBIT E),
shall specify the date and amount of such conversion, the total amount of the
Funding to be so converted and the US Interest Period therefor. Each conversion
of a Funding shall be on a US Business Day, and the aggregate amount of each
such conversion of a US Floating Rate Funding to a Eurodollar Funding shall be
in an amount equal to $5,000,000 or a higher integral multiple of $1,000,000.
Section 2.5 PROCEDURES AT END OF A US INTEREST PERIOD. Unless G&K Inc.
requests a new Eurodollar Funding in accordance with the procedures set forth
below, or prepays the principal of an outstanding Eurodollar Funding at the
expiration of a US Interest Period, each US Bank shall automatically and without
request of G&K Inc. convert each Eurodollar Funding to a Floating Rate Funding
on the last day of the relevant US Interest Period. So long as no Default or
Event of Default shall exist, G&K Inc. may cause all or any part of any
outstanding Eurodollar Funding to continue to bear interest at a Eurodollar Rate
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after the end of the then applicable US Interest Period by notifying the US
Agent not later than 10:30 a.m., Minneapolis, Minnesota time, on a US Business
Day which is at least three (3) US Business Days prior to the first day of the
new US Interest Period. Each such notice shall be in writing or by telephone or
telecopy transmission, to be confirmed in writing by G&K Inc. if so requested by
the US Agent (in the form of EXHIBIT F), shall be effective when received by the
US Agent, and shall specify the first day of the applicable US Interest Period,
the amount of the expiring Eurodollar Funding to be continued and the US
Interest Period therefor. Promptly upon receipt of such notice, the US Agent
shall advise each US Bank thereof. Each new US Interest Period shall begin on a
US Business Day and the amount of each Funding bearing a new Eurodollar Rate
shall be in an amount equal to $5,000,000 or a higher integral multiple of
$1,000,000.
Section 2.6 SETTING AND NOTICE OF RATES. The applicable Eurodollar
Rate for each US Interest Period shall be determined by the US Agent between the
opening of business and 12:00 Noon, Minneapolis, Minnesota time, on the second
US Business Day prior to the beginning of such US Interest Period, whereupon
notice thereof (which may be by telephone) shall be given by the US Agent to G&K
Inc. and each US Bank. Each such determination of the applicable Eurodollar Rate
shall be conclusive and binding upon the parties hereto, in the absence of
demonstrable error. The US Agent, upon written request of G&K Inc. or any US
Bank, shall deliver to G&K Inc. or such requesting US Bank a statement showing
the computations used by the US Agent in determining the applicable Eurodollar
Rate hereunder.
Section 2.7 COMMITMENT TO ISSUE LETTERS OF CREDIT. The Letter of
Credit Bank agrees, from the date hereof to and including the Commitment
Termination Date, to issue one or more letters of credit for the account of a
G&K Enterprise (if such account party is not G&K Inc., to be guaranteed by G&K
Inc.); some of which the US Banks will participate in the risk (herein each a
"Participated Letter of Credit") some of which the Letter of Credit Bank shall
retain all risk (herein each a "Swingline Letter of Credit"), on the terms and
subject to the conditions set forth below:
(a) GENERAL TERMS. The Letter of Credit Amount shall at no time
exceed $10,000,000 and no Letter of Credit shall be issued by the Letter of
Credit Bank if, after giving effect to the issuance of such Letter of
Credit, the US Revolving Facility Outstanding Amount would exceed the US
Revolving Commitment Amount. The expiration date of any Letter of Credit
shall not be later than fifteen (15) days prior to the Maturity Date for
the US Revolving Facility. Each Letter of Credit will be issued upon no
less than three (3) US Business Days' prior written application from G&K
Inc. to the Letter of Credit Bank. The application requesting issuance of a
Letter of Credit shall be on the Letter of Credit Bank's standard form or
such other form as may be agreed to by the Letter of Credit Bank and G&K
Inc. If any of the terms of such application are inconsistent with the
terms and provisions of this Agreement, the terms and provisions of this
Agreement shall govern. The Letter of Credit Bank shall not be obligated to
issue a Letter of Credit unless on the date of issuance all of the
conditions precedent specified in SECTION 5.2 shall have been satisfied as
fully as if the issuance of
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such Letter of Credit were an Advance. Promptly after issuance of a Letter
of Credit that is a Participated Letter of Credit, the US Agent shall so
advise each US Bank of all relevant information with respect thereto.
(b) SWINGLINE LETTER OF CREDIT FACILITY. The Letter of Credit Bank,
in its discretion, may from time to time issue Swingline Letters of Credit
pursuant to the general terms set forth in SUBSECTION (a) above, and within
the limitations set forth therein and herein; PROVIDED that no Swingline
Letter of Credit may be made after the occurrence and during the
continuance of an Event of Default. With respect to each Swingline Letter
of Credit so issued by the Letter of Credit Bank, no other US Bank shall
participate in the risk and obligation under such Letter of Credit pursuant
to SUBSECTION (d) hereof, nor shall any such US Bank be entitled to a
commission with respect thereto, until any such Swingline Letter of Credit
is converted to a Participated Letter of Credit as hereinafter provided.
The Swingline Letter of Credit Amount shall at no time exceed $500,000 and
no Swingline Letter of Credit shall be issued by the Letter of Credit Bank
if, after giving effect to the issuance of such Swingline Letter of Credit,
(i) the US Revolving Facility Outstanding Amount would exceed the US
Revolving Commitment Amount, (ii) the sum of the requested Swingline Letter
of Credit and the Letter of Credit Bank's Percentage of the US Revolving
Facility Outstanding Amount would exceed the Letter of Credit Bank's US
Revolving Commitment. The Swingline Letter of Credit Amount shall
constitute a part of, and shall not be in addition to, the Letter of Credit
Bank's US Revolving Commitment. The Letter of Credit Bank, at any time and
from time to time in its sole and absolute discretion, may notify each US
Bank that a Swingline Letter of Credit shall thereafter constitute a
Participated Letter of Credit, whereupon each US Bank shall be deemed to,
and hereby irrevocably and unconditionally agrees to, purchase from the
Letter of Credit Bank an undivided participating interest in the Letter of
Credit Bank's risk and obligation under such Swingline Letter of Credit.
Upon receipt of such notice of conversion of a Swingline Letter of Credit
to a Participated Letter of Credit, the specified Swingline Letter of
Credit shall for all purposes of this SECTION 2.7 constitute a Participated
Letter of Credit and each US Bank shall be entitled to payment of its pro
rata share of the Letter of Credit Fee paid and to be paid by G&K Inc.
upon issuance of such Swingline Letter of Credit. The obligation of the US
Banks to purchase their undivided participating interest in any such
Swingline Letter of Credit shall exist whether or not any Default or Event
of Default shall have occurred or shall then be existing.
(c) LETTER OF CREDIT FEES. G&K Inc. shall pay to the US Banks a
commission with respect to each Participated Letter of Credit at an annual
rate equal to the applicable Margin in effect from time to time, payable
annually in advance and upon such others terms as may be agreed upon by G&K
Inc. and the Required Banks at the time of issuance of any such
Participated Letter of Credit. Such fees arising with respect to a
Participated Letter of Credit, which shall not include fees payable to the
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Letter of Credit Bank pursuant to SECTION 2.7(j), shall be shared among the
US Banks pro rata in accordance with their respective Percentages. G&K
Inc. shall pay to the Letter of Credit Bank a commission with respect to
each Swingline Letter of Credit at an annual rate equal to the applicable
Margin in effect from time to time, payable annually in advance and upon
such other terms as may be agreed upon by G&K Inc. and the Letter of Credit
Bank at the time of issuance of such Swingline Letter of Credit. Each such
annual commission payable by G & K, Inc. on account of the issuance of a
Letter of Credit shall hereafter be referred to as a "Letter of Credit
Fee."
(d) PARTICIPATIONS IN LETTER OF CREDIT RISK. Upon issuance of a
Participated Letter of Credit hereunder or upon conversion of a Swingline
Letter of Credit to a Letter of Credit as contemplated in SUBSECTION (b)
above, and without any further notice to any US Bank, each US Bank shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase
from the Letter of Credit Bank an undivided participating interest in the
Letter of Credit Bank's risk and obligation under such Letter of Credit and
in the obligation of the Letter of Credit Bank to honor drafts thereunder,
and in the amount of any drawing thereunder, and in all rights of the
Letter of Credit Bank to obtain reimbursement from G&K Inc. in the amount
of such drawing, and all other rights of the Letter of Credit Bank with
respect thereto, in an amount equal to the product of (i) the maximum
amount available to be drawn under such Letter of Credit and the amount of
any drawing thereunder, respectively and (ii) the Percentage of such US
Bank. Whenever a draft submitted under a Letter of Credit is paid by the
Letter of Credit Bank (whether a Swingline Letter of Credit or a
Participated Letter of Credit), the Letter of Credit Bank shall so notify
the US Agent, the US Agent shall so notify each US Bank and shall request
immediate reimbursement from G&K Inc. for the amount of the draft. If
sufficient funds are not immediately paid to the US Agent by G&K Inc., G&K
Inc. shall be deemed to have requested a Borrowing pursuant to SECTION 2.3
and the US Banks shall be notified of such request in accordance with
SECTION 2.3 and shall fund such request for a Borrowing as US Floating Rate
Advances (in accordance with their respective Percentages) for purposes of
reimbursing the Letter of Credit Bank for the amount of such draft so paid
by the Letter of Credit Bank (less any amounts realized by the Letter of
Credit Bank pursuant to the second sentence of this SECTION 2.7(d)). If for
any reason or under any circumstance (including, without limitation, the
occurrence of a Default or Event of Default or the failure to satisfy any
of the conditions presently set forth in SECTION 5.2) the US Banks do not
make such US Floating Rate Advances as contemplated above and G&K Inc. does
not otherwise reimburse the Letter of Credit Bank for the amount of the
draft so paid by the Letter of Credit Bank, G&K Inc. shall nonetheless be
obligated to reimburse the amount of the draft to the Letter of Credit
Bank, with interest upon such amount at the US Floating Rate from and after
the date such draft is paid by the Letter of Credit Bank until the amount
thereof is repaid to the Letter of Credit Bank in full. If the Letter of
Credit Bank shall not have obtained reimbursement for any drawing under a
Letter of Credit (whether from G&K Inc. or as
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proceeds of a Borrowing), upon demand of the US Agent each US Bank shall
immediately advance the amount of its participation in such drawing to the
Letter of Credit Bank and shall be entitled to interest on such
participating interest at the Default Rate until reimbursed in full by G&K
Inc.
(e) EXCULPATION OF LETTER OF CREDIT BANK. Each US Bank and G&K Inc.
agree that, in paying any drawing under a Letter of Credit, the Letter of
Credit Bank shall not have any responsibility to obtain any document (other
than any sight draft and certificates expressly required by the Letter of
Credit) or to ascertain or inquire as to the validity or accuracy of any
such document or the authority of the Person executing or delivering any
such document. The Letter of Credit Bank shall not be liable to any
Borrower or US Bank for: (i) any action taken or omitted in connection
herewith at the request or with the approval of the US Banks (including the
Required Banks, as applicable); (ii) any action taken or omitted in the
absence of gross negligence or willful misconduct; or (iii) the due
execution, effectiveness, validity or enforceability of any document
executed in connection with a Letter of Credit.
(f) ASSUMPTION OF RISK. G&K Inc. hereby assumes all risks of the acts
or omissions of any beneficiary or transferee with respect to its use of
any Letter of Credit; PROVIDED that this assumption is not intended to, and
shall not, preclude G&K Inc.'s pursuing such rights and remedies as it may
have against the beneficiary or transferee at law or under any other
agreement. The Letter of Credit Bank shall not be liable or responsible for
any of the matters described in clauses (i) through (vii) of SUBSECTION (g)
below. In furtherance and not in limitation of the foregoing: (i) the
Letter of Credit Bank may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of
any notice or information to the contrary; and (ii) the Letter of Credit
Bank shall not be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason.
(g) UNCONDITIONAL OBLIGATION OF REIMBURSEMENT. The obligation of G&K
Inc. under this Agreement to reimburse the Letter of Credit Bank for a
drawing under a Letter of Credit shall be unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement
under all circumstances, including the following:
(i) any lack of validity or enforceability of this Agreement
or any letter of credit application;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of G&K Inc. in
respect of any Letter of Credit or any other amendment or waiver of or
any consent to departure from any letter of credit application;
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(iii) the existence of any claim, set-off, defense or other
right that G&K Inc. may have at any time against any beneficiary or
any transferee of any Letter of Credit (or any Person for whom any
such beneficiary or any such transferee may be acting), the Letter of
Credit Bank or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby any unrelated
transaction;
(iv) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue
or inaccurate in any respect; or any loss or delay in the transmission
or otherwise of any document required in order to make a drawing under
any Letter of Credit;
(v) any payment by the Letter of Credit Bank under any Letter
of Credit against presentation of a draft or certificate that does not
strictly comply with the terms of any Letter of Credit; or any payment
made by the Letter of Credit Bank under any Letter of Credit to any
Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of
any Letter of Credit, including any arising in connection with any
insolvency proceeding;
(vi) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from
any other guarantee, for all or any of the obligations of G&K Inc. in
respect of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance
that might otherwise constitute a defense available to, or a discharge
of, G&K Inc. or a guarantor.
(h) LIABILITY OF LETTER OF CREDIT BANK. Notwithstanding anything in
this SECTION 2.7 to the contrary, including particularly
SUBSECTION (f) and (g) above, G&K Inc. may have a claim against the Letter
of Credit Bank and the Letter of Credit Bank may be liable to G&K Inc., to
the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by G&K Inc. which G&K Inc.
proves were caused by the Letter of Credit Bank's willful misconduct or
gross negligence or the willful failure to pay under any Letter of Credit
after the presentation to the Letter of Credit Bank by the beneficiary of a
sight draft and certificate strictly complying with the terms and
conditions of a Letter of Credit.
(i) INDEMNIFICATION BY G&K INC. G&K Inc. shall indemnify, protect,
defend and hold harmless each Indemnitee from and against all losses,
liabilities, claims, damages, judgments, costs and expenses, including but
not limited to all reasonable attorneys' fees and legal expenses, incurred
by the Indemnitees or imposed
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upon the Indemnitees at any time by reason of the issuance, demand for
honor or honor of any Letter of Credit or the enforcement, protection or
collection of the US Bank's claims against G&K Inc. under this SECTION 2.7
or by reason of any act or omission of any Indemnitee in connection with
any of the foregoing; PROVIDED, HOWEVER, that such indemnification shall
not extend to losses, liabilities, claims, damages, judgments, costs and
expenses to the extent arising from any act or omission of an Indemnitee
which constitutes gross negligence or willful misconduct.
(j) ADMINISTRATIVE FEES. G&K Inc. hereby agrees to pay to the Letter
of Credit Bank (A) a fronting fee equal to one quarter of one percent
(0.25%) of the face amount of each Participated Letter of Credit, payable
upon issuance of such Participated Letter of Credit and (B) all
administrative fees charged by the Letter of Credit Bank in the ordinary
course of business in connection with the issuance of Letters of Credit,
honoring of drafts under Letters of Credit, amendments thereto, transfers
thereof and all other activity with respect to Letters of Credit, at the
then current rates established by the Letter of Credit Bank from time to
time for such services rendered on behalf of customers of the Letter of
Credit Bank generally, payable on demand of the Letter of Credit Bank.
Section 2.8 PRO RATA TREATMENT - US BANKS. All US Revolving Advances
and Term Advances, conversions and repayments shall be effected so that after
giving effect thereto all US Revolving Advances and Term Advances shall be pro
rata among the US Banks according to their respective Percentages.
Section 2.9 US REVOLVING ADVANCES AND TERM ADVANCES DENOMINATED IN US
DOLLARS. All US Revolving Advances and Term Advances shall be made to G&K Inc.
in US Dollars and shall be repaid by G&K Inc. in US Dollars. All interest
accruing on outstanding US Revolving Advances and Term Advances, all commissions
payable with respect to Letters of Credit and all fees payable in connection
with or determined in relation to a US Facility shall be computed, and paid, in
US Dollars.
Section 2.10 GUARANTIES. Pursuant to the terms and conditions of the
Guaranties executed by each US G&K Enterprise, such US G&K Enterprise shall
guarantee to each Bank the due and prompt payment of all Obligations.
Section 2.11 EXCULPATION OF CANADIAN G&K ENTERPRISES .
Notwithstanding anything in this Agreement to the contrary, no Canadian G&K
Enterprise shall be liable for any US Obligations, whether arising under or
evidenced by any Loan Documents, including the US Notes.
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ARTICLE III
CANADIAN FACILITY
Section 3.1 COMMITMENT AS TO CANADIAN REVOLVING FACILITY. Each
Canadian Bank, severally and for itself alone, agrees, on the terms and subject
to the conditions herein set forth, to (a) make Canadian Revolving Advances to
Work Wear and (b) to create and discount Acceptances on behalf of Work Wear from
time to time during the period from the date hereof to and including the
Revolving Commitment Termination Date in an aggregate amount at any time
outstanding not to exceed such Canadian Bank's Percentage of the Canadian
Revolving Advances or Acceptances from time to time requested by Work Wear;
PROVIDED, HOWEVER, that (i) the Canadian Revolving Facility Outstanding Amount
shall not at any time exceed the lesser of (A) the Canadian Revolving Commitment
Amount or (B) the Canadian Dollar Equivalent of US$25,000,000, (ii) on the
Closing Date the sum of the US Revolving Facility Outstanding Amount and the US
Dollar Equivalent of the Canadian Revolving Facility Outstanding Amount shall
not exceed US $85,000,000 and (iii) no Canadian Bank's Percentage of the
Canadian Revolving Facility Outstanding Amount shall at any time exceed its
Canadian Revolving Commitment. Within the above limits, Work Wear may obtain
Canadian Revolving Advances and cause the Canadian Banks to create and discount
Acceptances, repay Canadian Revolving Advances and Acceptances in accordance
with the terms hereof and reborrow Canadian Revolving Advances and cause the
Canadian Banks to create and discount new Acceptances in accordance with the
applicable terms and conditions of this ARTICLE III.
Section 3.2 PROCEDURES FOR BORROWING UNDER THE CANADIAN REVOLVING
FACILITY. Work Wear may request Borrowings daily. Each Borrowing under the
Canadian Revolving Facility shall be funded by the Canadian Banks as either
Canadian Floating Rate Advances or the creation and discounting of Acceptances,
as Work Wear shall specify in the related notice of Borrowing or notice of
conversion pursuant to this SECTION 3.2 or SECTION 3.3. Canadian Floating Rate
Advances and Acceptances may be outstanding at the same time. It is understood,
however, that (a) in the case of a Borrowing which is to bear interest at the
Canadian Floating Rate, the principal amount of the Borrowing shall be in an
amount equal to or greater than C$500,000, and (b) in the case of the creation
and discounting of Acceptances, the principal amount of the Borrowing shall be
in an amount equal to C$1,500,000 or a higher integral multiple of C$500,000.
Work Wear shall give notice to the Canadian Agent of each proposed Borrowing not
later than 12:00 Noon, Toronto, Ontario time, at least one (1) Canadian Business
Day prior to a Borrowing which will be funded as a Canadian Floating Rate
Advance and at least three (3) Canadian Business Days prior to a Borrowing which
will be funded through the discounting of Acceptances. Each such notice shall be
effective upon receipt by the Canadian Agent, shall be in writing or by
telephone or telecopy transmission, to be confirmed in writing by Work Wear if
so requested by the Canadian Agent (in the form of EXHIBIT G), shall specify
whether the Borrowing is to bear interest initially at a Canadian Floating Rate
or is to be funded as a discounting of Acceptances and, in the case of a
Borrowing that is to be funded as a discounting of Acceptances, shall specify
the date and
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amount of the Acceptances and the Canadian Interest Period to be applicable
thereto. Promptly upon receipt of such notice (but in no event later than the
end of the Canadian Business Day of receipt of such notice), the Canadian Agent
shall advise each Canadian Bank of the proposed Borrowing. At or before 12:00
Noon, Toronto, Ontario time, on the requested Borrowing Date, each Canadian Bank
shall provide the Canadian Agent at the principal office of the Canadian Agent
in Toronto, Ontario (unless any such Bank and the Canadian Agent shall otherwise
agree) with immediately available funds covering such Canadian Bank's Percentage
of such Borrowing (constituting either proceeds of a Canadian Floating Rate
Advance or the BA Purchase Price with respect to the discounting of
Acceptances). Subject to satisfaction of the conditions precedent set forth in
ARTICLE V with respect to such Borrowing, the Canadian Agent shall pay over such
funds to Work Wear prior to the close of business on the Borrowing Date.
Section 3.3 CONVERTING CANADIAN FLOATING RATE FUNDINGS TO ACCEPTANCES;
PROCEDURES. So long as no Default or Event of Default shall exist, Work Wear may
convert all or any part of any outstanding Canadian Floating Rate Advances into
Acceptances by giving notice to the Canadian Agent of such conversion not later
than 12:00 Noon, Toronto, Ontario time, on a Canadian Business Day which is at
least three (3) Canadian Business Days prior to the date of the requested
conversion. Each such notice shall be effective upon receipt by the Canadian
Agent, shall be in writing or by telephone or telecopy transmission, to be
confirmed in writing by Work Wear if so requested by the Canadian Agent (in the
form of EXHIBIT H), shall specify the date and amount of such conversion, the
total amount of Canadian Revolving Advances to be so converted and the Canadian
Interest Period therefor. Promptly upon receipt of such notice, the Canadian
Agent shall advise each Canadian Bank thereof. Each conversion of Canadian
Floating Rate Advances to Acceptances shall be on a Canadian Business Day, and
the aggregate amount of each such conversion shall be at least C$1,500,000 or a
higher integral multiple of C$500,000.
Section 3.4 PROCEDURES AT END OF A CANADIAN INTEREST PERIOD. Unless
Work Wear requests creation and discounting of new Acceptances in accordance
with the procedures set forth below, each Canadian Bank shall automatically and
without request by Work Wear, make a Canadian Floating Rate Advance on the last
day of the relevant Canadian Interest Period in an amount sufficient to pay in
full all Acceptances maturing on such day. So long as no Default or Event of
Default shall exist, Work Wear may cause the creation and discounting of new
Acceptances at the end of the then applicable Canadian Interest Period by
notifying the Canadian Agent not later than 12:00 Noon, Toronto, Ontario time,
on a Canadian Business Day which is at least three (3) Canadian Business Days
prior to the first day of the new Canadian Interest Period. Each such notice
shall be in writing or by telephone or telecopy transmission, to be confirmed in
writing by Work Wear if so requested by the Canadian Agent (in the form of
EXHIBIT I), shall be effective when received by the Canadian Agent, and shall
specify the first day of the applicable Canadian Interest Period, the amount of
the new Acceptances to be created and the Canadian Interest Period therefor.
Promptly upon receipt of such notice, the Canadian Agent shall advise each
Canadian Bank thereof. Each
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new Canadian Interest Period shall begin on a Canadian Business Day and the
aggregate amount of the new Acceptances being created shall be in an amount
equal to C$1,500,000 or a higher integral multiple of C$500,000.
Section 3.5 PRO RATA TREATMENT - CANADIAN BANKS. All Canadian
Revolving Advances, Acceptances, conversions and repayments shall be effected so
that after giving effect thereto all Canadian Revolving Advances and Acceptances
shall be pro rata among the Canadian Banks according to their respective
Percentages.
Section 3.6 BANKERS' ACCEPTANCES. Acceptances shall be created,
purchased and repaid in accordance with the following:
(a) WORK WEAR DRAFTS. To enable the Canadian Banks to create
Acceptances in the manner specified in this SECTION 3.6, Work Wear shall
supply the Canadian Banks with such number of Drafts as they may reasonably
request, duly endorsed and executed on behalf of Work Wear by any one or
more of its officers. Each Canadian Bank shall exercise such care in the
custody and safekeeping of Drafts as it would exercise in the custody and
safekeeping of similar property owned by it. Each Canadian Bank, upon
request of Work Wear, will promptly advise Work Wear of the number and
designations, if any, of the uncompleted Drafts then held by it. The
signatures of such officers may be mechanically reproduced in facsimile and
Drafts and Acceptances bearing such facsimile signatures shall be binding
upon Work Wear as if they had been manually signed by such officers.
Notwithstanding that any of the individuals whose manual or facsimile
signatures appear on any draft as one of such officers may no longer hold
office as of the date thereof or as of the date of acceptance of a Draft by
a Canadian Bank or at any time hereafter, any Draft so signed shall be
valid and binding on Work Wear.
(b) FORM OF DRAFTS. Drafts tendered by Work Wear for acceptance by a
Canadian Bank shall be in the form provided by such Canadian Bank to Work
Wear and shall (i) be in the amount of C$100,000, C$500,000 or C$1,000,000,
individually and shall total such Canadian Bank's Percentage of a
Borrowing, (ii) be dated the date of the Borrowing, (iii) mature and be
payable by Work Wear on the last day of the Canadian Interest Period
designated by Work Wear with respect to such Drafts. Work Wear hereby
renounces, and shall not claim, any days of grace for payment of any
Acceptances.
(c) PROCEDURES ON BORROWING DATE. Not later than 12:00 Noon, Toronto,
Ontario time, on any Borrowing Date, each Canadian Bank shall (i) complete
one or more Drafts dated the date of such Borrowing, in an aggregate amount
designated by the Canadian Agent as being such Canadian Bank's proportion
of a requested Borrowing, (ii) stamp such Drafts as accepted by such
Canadian Bank and (iii) provide for the discounting of such Acceptances in
accordance with this SECTION 3.6.
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(d) ACCEPTANCE FEE. On the proposed Borrowing Date, Work Wear shall
pay to the Canadian Agent for the account of each Canadian Bank accepting a
Draft or Drafts, a stamping fee computed at an annual rate on the basis of
(i) the applicable Margin, (ii) the face amount of the Draft being accepted
and (iii) the term thereof (the "Acceptance Fee"); provided, however, that
if an Event of Default shall exist, (i) with respect to currently
outstanding Acceptances, Work Wear shall pay to the Canadian Agent for the
account of each Canadian Bank, an additional stamping fee for the unexpired
term of such Acceptances computed at a rate of two percent (2%) per annum
of the face amount of such Acceptances and (ii) with respect to new
Acceptances created thereafter, the applicable Margin shall be increased by
two percent (2%).
(e) BA PURCHASE PRICE. On the Borrowing Date, each Canadian Bank
shall deliver to the Canadian Agent the applicable BA Purchase Price for
the Acceptances created in accordance with notices received from the
Canadian Agent under SECTIONS 3.2, 3.3 or 3.4. Acceptances purchased by a
Canadian Bank may be held by it for its own account until maturity or sold
by it at any time prior thereto in any relevant market, in such Canadian
Bank's sole discretion.
(f) MATURITY DATE FOR ACCEPTANCES. Work Wear shall pay to the
Canadian Agent, and there shall become due and payable, at 12:00 Noon
Toronto, Ontario time, on the maturity date of each Acceptance, an amount
in Canadian Dollars in immediately available funds equal to the face amount
of such Acceptance so maturing. Work Wear shall make each payment of a
maturing Acceptance by deposit of the required funds to the Canadian Agent
or by requesting the Canadian Agent to debit Work Wear's demand deposit
account for the amount of such funds. If Work Wear fails to pay the face
amount of any Acceptance when and as the same shall become due, or cause
the creation and discounting of new Acceptances pursuant to SECTION 3.4,
the unpaid amount thereof shall automatically be converted to Canadian
Floating Rate Advances in accordance with SECTION 3.4, with the proceeds of
such Canadian Revolving Advances being used to pay in full each maturing
Acceptance.
Section 3.7 SETTING AND NOTICE OF BA PURCHASE PRICE. The applicable BA
Purchase Price for each Canadian Interest Period shall be determined by the
Canadian Agent between the opening of business and 12:00 Noon, Toronto, Ontario
time, on the first Canadian Business Day of such Canadian Interest Period,
whereupon notice thereof (which may be by telephone) shall be given by the
Canadian Agent to Work Wear and each Canadian Bank. Each such determination of
the applicable BA Purchase Price shall be conclusive and binding upon the
parties hereto, in the absence of demonstrable error. The Canadian Agent, upon
written request of Work Wear or any Canadian Bank, shall deliver to Work Wear or
such requesting Canadian Bank a statement showing the computations used by the
Canadian Agent in determining the applicable BA Purchase Price hereunder.
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Section 3.8 CANADIAN REVOLVING ADVANCES AND DRAFTS DENOMINATED IN
CANADIAN DOLLARS. All Canadian Revolving Advances shall be made to Work Wear and
all Drafts shall be payable in Canadian Dollars and shall be repaid by Work Wear
in Canadian Dollars. All interest accruing on outstanding Canadian Revolving
Advances and all Acceptance Fees and other fees payable in connection with or
determined in relation to the Canadian Revolving Facility shall be computed, and
paid, in Canadian Dollars.
Section 3.9 RESTRICTIONS ON CONVERSION FROM ACCEPTANCES TO CANADIAN
REVOLVING ADVANCES. If at any time the annual interest rate which would be
applicable to a Borrowing funded with Canadian Floating Rate Advances is less
than the annual effective interest rate on Acceptances (determined by applying
the applicable Discount and Acceptance Fees to a Borrowing funded by the
creation of Acceptances) (herein the "Pricing Differential"), the Canadian
Agent, in its discretion, by notice in writing to Work Wear, may require, and if
the Pricing Differential equals or exceeds one percent (1%), the Canadian Agent
shall require, that Work Wear cause all or a portion of maturing Acceptances to
be replaced with new Acceptances created and discounted in accordance with
SECTION 3.4.
Section 3.10 GUARANTY BY G&K ENTERPRISES. Pursuant to the terms and
conditions of the Guaranties executed by each G&K Enterprise, such G&K
Enterprise (other than Work Wear) shall guaranty to each Canadian Bank the due
and prompt payment of all Canadian Obligations.
ARTICLE IV
NOTES; INTEREST RATES; LOAN PERIODS; COMPUTATION OF INTEREST AND FEES
Section 4.1 NOTES; AMORTIZATION.
(a) US REVOLVING FACILITY. G&K Inc.'s obligation to pay all US
Revolving Advances made by a US Bank hereunder shall be evidenced by and
repayable in accordance with a US Revolving Note issued by G&K Inc. to such
US Bank. The aggregate unpaid principal amount of each US Revolving Note
shall bear interest at the applicable US Floating Rate unless a Eurodollar
Rate shall become applicable thereto pursuant to SECTIONS 2.3, 2.4 or 2.5,
and shall be payable on the applicable Maturity Date with respect thereto
or earlier in accordance with SECTION 9.2.
(b) CANADIAN REVOLVING FACILITY. Work Wear's obligation to pay all
Canadian Revolving Advances made by a Canadian Bank hereunder shall be
evidenced by and repayable in accordance with a Canadian Revolving Note
issued by Work Wear to such Canadian Bank. The aggregate unpaid principal
amount of each Canadian Revolving Note shall bear interest at the
applicable Canadian Floating Rate unless converted to an Acceptance
pursuant to SECTIONS 3.2, 3.3 or 3.4, and shall be
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payable on the applicable Maturity Date with respect thereto or earlier in
accordance with SECTION 9.2.
(c) TERM FACILITY. G&K Inc.'s obligation to pay all Term Advances
made by a US Bank hereunder shall be evidenced by and repayable with
interest in accordance with a Term Note issued by G&K Inc. to such US Bank.
The aggregate unpaid principal amount of each Term Note shall bear interest
at the applicable US Floating Rate unless a Eurodollar Rate shall become
applicable thereto pursuant to SECTIONS 2.3, 2.4 or 2.5.
(d) REGULAR AMORTIZATION OF TERM FACILITY. The Term Facility shall be
payable in quarterly installments, commencing on December 27, 1997, and
continuing on each Payment Date thereafter until the Maturity Date, when
all unpaid principal thereof shall be finally due and payable. Principal
due with respect to the Term Facility on each such Payment Date is set
forth below:
INSTALLMENT DUE DATES AMOUNT OF INSTALLMENT
December 27, 1997 through June 27, 1998 $3,333,333
September 26, 1998 through June 26, 1999 $3,750,000
September 25, 1999 through June 24, 2000 $8,750,000
September 30, 2000 through June 30, 2001 $13,750,000
September 29, 2001 through June 29, 2002 $15,000,000
September 28, 2002 through June 28, 2003 $15,000,000
September 27, 2003 through March 27, 2004 $16,250,000
June 30, 2004 entire unpaid balance
(e) ADDITIONAL AMORTIZATION OF TERM FACILITY. In addition to the
installments payable on the Term Facility pursuant to SUBSECTION(d), G&K
Inc. shall make the following additional payments, in each case to be
applied pro rata against each installment described under SUBSECTION(d) as
being scheduled for payment in the period September 25, 1999 through June
30, 2004, with such pro rata application being computed as a fraction, the
numerator of which is the amount of such installment and the denominator is
the aggregate amount of all such remaining unpaid installments (commencing
not earlier than September 25, 1999) as of the date of determination:
(i) EXCESS CASH FLOW PAYMENTS. For the fiscal year ending
June 27, 1998, an amount equal to seventy-five percent (75%) of the
Excess Cash Flow. For each subsequent fiscal year, an amount equal to
the product of the applicable percentage set forth below and the
Excess Cash Flow of the G&K Group as determined from its audited
financial statements for the immediately preceding fiscal year (herein
the "Excess Cash Flow Payments"), due and payable on the Fiscal
Quarter ending in September of each year:
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PERCENTAGE OF
FINANCIAL CONDITION EXCESS CASH FLOW
Level I Status 0%
Level II Status 50%
Level III Status 50%
Level IV Status 75%
Level V Status 75%
(ii) ASSETS HELD FOR SALE. An amount equal to the entire
consideration payable to a G&K Enterprise in connection with the sale
(or collection as to related assets not included in such sale) of any
Assets Held for Sale, including any portion of such consideration
which is deferred or payable over time, LESS all "Permitted
Deductions," shall be due and payable on the first Payment Date
occurring ten (10) days after closing of the sale of any such Assets
Held for Sale; provided, that collection of accounts receivable
relating to any Assets Held for Sale prior to closing of the sale of
such Assets Held for Sale shall not constitute a portion of the
consideration received by a G&K Enterprise for purposes of computing
the required prepayment due under this SUBSECTION (e)(ii). "Permitted
Deductions" as used in this SUBSECTION (e)(ii) shall mean (A) G&K
Inc.'s good faith estimate of the amount due and payable to the
Sellers under the Asset Purchase Agreement on account of any such
sale, (B) reasonable out-of-pocket costs and expenses actually
incurred by a G&K Enterprise in connection with the preparation or
sale of such Assets Held for Sale including (without limitation)
legal, accounting, environmental, appraisal, real estate brokerage,
investment banking and finders fees, costs and expenses actually
incurred on account of such preparation or sale of such Assets Held
for Sale, (C) the amount of any Withdrawal Liability (as defined in
SECTION 7.2 of the Asset Purchase Agreement) for which any G&K
Enterprise becomes liable in respect of any such sale, not exceeding,
however, $5,000,000 in the aggregate with respect to all Assets Held
for Sale and (D) the amount of any lease liabilities and purchase
money indebtedness incurred after the Closing Date with respect to new
assets being conveyed with such Assets Held for Sale, trade accounts
payable and other similar liabilities which have the effect of
reducing the amount of the purchase price received upon sale of such
Assets Held for Sale.
(iii) ASSETS SOLD IN THE ORDINARY COURSE. An amount equal to
that portion of the net proceeds received by any G&K Enterprise from
sales of assets (other than sales of inventory in the ordinary course
of business and Assets Held for Sale) which in any fiscal year exceeds
$10,000,000, due and payable on the first Payment Date after receipt
of more than $10,000,000 in any fiscal year; excluding, however,
intercompany sales of assets by and among the Canadian G&K
Enterprises, as to assets originally held by a Canadian G&K
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Enterprise, and sales of assets by and among the US G&K Enterprises,
as to assets originally held by a US G&K Enterprise.
(iv) PROCEEDS OF ADDITIONAL DEBT. An amount equal to 100% of
the proceeds of additional Debt incurred by a G&K Enterprise, due and
payable on the first Payment Date after receipt; PROVIDED, HOWEVER,
that if (A) any such Debt (other than subordinated debt) is permitted
pursuant to SECTION 8.2 or (B) the G&K Group shall have achieved Level
III Status, Level II Status or Level I Status for the two preceding
Fiscal Quarters, then no proceeds of any such additional Debt (other
than subordinated debt) need be applied to payment of the Term
Facility.
Section 4.2 INTEREST ON NOTES; DEFAULT RATE. The Borrowers shall pay
interest on the unpaid principal amount of each Funding for the period
commencing on the date of this Agreement until the unpaid principal amount of
each Funding is paid in full, in accordance with the following:
(a) US FLOATING RATE FUNDINGS. Subject to SUBSECTION(d) below, while
any outstanding principal of a US Note constitutes a US Floating Rate
Funding, the outstanding principal balance thereof shall bear interest at
an annual rate at all times equal to the US Floating Rate.
(b) CANADIAN FLOATING RATE FUNDINGS. Subject to SUBSECTION(d) below,
while any outstanding principal of a Canadian Note constitutes a Canadian
Floating Rate Funding, the outstanding principal balance thereof shall bear
interest at an annual rate at all times equal to the Canadian Floating
Rate.
(c) EURODOLLAR FUNDINGS. Subject to SUBSECTION(d) below, while any
outstanding principal of a US Note constitutes a Eurodollar Funding, the
outstanding principal balance thereof shall bear interest for the
applicable US Interest Period at an annual rate equal to the Eurodollar
Rate established with respect to such Eurodollar Funding in accordance with
SECTIONS 2.3, 2.4 or 2.5.
(d) DEFAULT RATE. From and after the occurrence of an Event of
Default and continuing thereafter until such Event of Default shall be
remedied or waived in writing by the Required Banks, the outstanding
principal balance of each Funding shall bear interest, until paid in full,
at a rate equal to the sum of (i) the interest rate otherwise in effect
with respect to such outstanding principal and (ii) two percent (2.0%) (the
"Default Rate").
(e) PAYMENT OF INTEREST. Interest accrued on all US Revolving
Advances shall be payable by G&K Inc. in US Dollars, in immediately
available funds, to the US Agent for the pro rata account of all US Banks,
based on their respective Percentages. Interest accrued on all Canadian
Revolving Advances shall be payable by Work Wear
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in Canadian Dollars, in immediately available funds, to the Canadian Agent
for the pro rata account of all Canadian Banks, based on their respective
Percentages.
Section 4.3 ADJUSTMENT OF MARGINS. Reductions and increases in the
Margins shall be made in accordance with the following:
(a) until the one hundred and eightieth (180th) day after the Closing
Date, all Margins shall be determined as if Level V Status were in effect
(regardless of actual financial performance);
(b) the immediately preceding four (4) Fiscal Quarters shall be used
in determining the Leverage Ratio to establish the Margin hereunder, except
that prior to the first anniversary of the Closing Date, (i) financial
results shall be annualized based upon only those Fiscal Quarters which
occurred after the Closing Date and (ii) the first Fiscal Quarter ending
after the Closing Date shall be deemed to be that period of time commencing
on June 28, 1997 and ending on September 27, 1997;
(c) adjustments will be made quarterly effective as of the fifth
(5th) US Business Day following receipt of the financial statements of the
G&K Group and quarterly certificates delivered under SECTION 7.1(b);
provided, however, that any adjustment to be made during the Fiscal Quarter
in which the 180-day period described in SUBSECTION(a) ends shall become
effective on the later to occur of (i) the fifth (5th) U.S. Business day
following receipt of the financial statements of the G&K Group as described
above or (ii) the first day immediately following the expiration of such
180-day period;
(d) if G&K Inc. fails to deliver any financial statements or
certificates when required under SECTION 7.1(b), the applicable Margin
shall be determined as if a Level V Status were in effect and such Level V
Status shall remain in effect until such time as the required financial
statements and certificates are received showing a different status to
exist subject however to SUBSECTION(c) above; and
(e) no reduction in the Margins will be made so long as there
continues to exist a Default or an Event of Default.
Section 4.4 CANADIAN INTEREST ACT. Work Wear and the Canadian Banks
agree that for purposes of the Interest Act (Canada) (a) the principle of
"deemed reinvestment of interest" shall not apply to any calculation of interest
under this Agreement and (b) the rates of interest applicable to outstanding
Canadian Floating Rate Advances or otherwise specified in this Agreement are
intended to be nominal rates and not effective rates or yields.
Section 4.5 OBLIGATION TO REPAY ADVANCES; REPRESENTATIONS. Each
Borrower shall be obligated to repay all Advances and Acceptances
notwithstanding the failure of an Agent to receive any written request therefor
or written confirmation thereof and notwithstanding the fact that the person
requesting the same was not in fact authorized to do
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so. Any request for a Borrowing under SECTION 2.3 or SECTION 3.2 or the issuance
of a Letter of Credit under SECTION 2.7, whether written, telephonic, telecopy
or otherwise, shall be deemed to be a representation by the Borrowers that
(a) the amount of the requested Borrowing (or the face amount of the Letter of
Credit), when added to the applicable Revolving Facility Outstanding Amount
would not exceed the applicable Revolving Commitment Amount and (b) the
statements set forth in SECTION 5.2 are correct as of the time of the request.
Section 4.6 RECORDKEEPING. Each Bank shall record in its records or,
at its option, on schedules retained with its Notes, the date and amount of each
Advance made by such Bank, and each repayment thereof. The Letter of Credit Bank
shall record in its records all pertinent information concerning each Letter of
Credit. Each Canadian Bank shall record in its records all pertinent information
concerning each Acceptance. The failure so to record any such amount or any
error in so recording any such amount shall not, however, limit or otherwise
affect the obligations of the Borrowers hereunder or under any Note to repay the
principal amount of the Advances, the Acceptance Amount or the Letter of Credit
Amount, together with all interest accrued thereon.
Section 4.7 INTEREST DUE DATES.
(a) US INTEREST DUE DATES. Accrued interest on each Eurodollar
Funding shall be due and payable on the last day of the US Interest Period
relating to such Eurodollar Funding; PROVIDED, HOWEVER, that if any US
Interest Period is longer than three (3) months, interest shall be due and
payable monthly in arrears on the last day of the third month occurring
after commencement of such US Interest Period, on the last day of each
three month period thereafter (if any) and on the last day of such US
Interest Period. Accrued interest on each US Floating Rate Funding shall be
due and payable in arrears on the each Payment Date and at maturity.
(b) CANADIAN INTEREST DUE DATES. Accrued interest on each Canadian
Floating Rate Advance shall be due and payable in arrears on each Payment
Date and at maturity.
Section 4.8 COMPUTATION OF INTEREST AND FEES. Interest accruing on the
US Notes and on the unreimbursed portion of any Letter of Credit Amount, all
Letter of Credit Fees and all other fees described in SECTION 4.9 shall be
computed on the basis of actual number of days elapsed in a year of three
hundred sixty (360) days. Interest on all Canadian Revolving Advances and all
Acceptance Fees shall be computed on the basis of the actual number of days
elapsed in a year of 365 or 366 days, as the case may be.
Section 4.9 FEES. The Borrowers shall pay fees to the Agents and the
Banks, commencing on the date hereof and continuing until all Obligations are
paid in full, in accordance with the following:
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(a) COMMITMENT FEES.
(i) G&K Inc. shall pay to the US Agent for the pro rata
account of the US Banks a commitment fee (the "US Commitment Fee")
equal to the applicable Margin in effect from time to time on the
daily average amount by which the US Revolving Commitment Amount
exceeds the US Revolving Facility Outstanding Amount, from the Closing
Date to and including the Revolving Commitment Termination Date,
payable quarterly in arrears on each Payment Date. Any such US
Commitment Fee remaining unpaid on the Revolving Commitment
Termination Date shall be due and payable on such date. The US
Commitment Fee shall be shared by the US Banks on the basis of their
respective Percentages of the US Revolving Facility.
(ii) Work Wear shall pay to the Canadian Agent for the pro rata
account of the Canadian Banks a commitment fee (the "Canadian
Commitment Fee") equal to the applicable Margin in effect from time to
time on the daily average amount by which the Canadian Revolving
Commitment Amount exceeds the Canadian Revolving Facility Outstanding
Amount, from the Closing Date to and including the Revolving
Commitment Termination Date, payable quarterly in arrears each Payment
Date. Any such Canadian Commitment Fee remaining unpaid on the
Revolving Commitment Termination Date shall be due and payable on such
date. The Canadian Commitment Fee shall be shared by the Canadian
Banks on the basis of their respective Percentages of the Canadian
Revolving Facility.
(b) ADMINISTRATIVE FEES. G&K Inc. shall pay to the US Agent and Work
Wear shall pay to the Canadian Agent the administrative fees described in
the commitment letter dated as of May 14, 1997.
(c) PAYMENT OF FEES. Fees accrued on account of the US Facilities
shall be payable by G&K Inc. in US Dollars, in immediately available funds,
to the US Agent for itself and for the account of those US Banks entitled
thereto. Fees accrued on account of the Canadian Revolving Facility shall
be payable by Work Wear in Canadian Dollars, in immediately available
funds, to the Canadian Agent for itself and for the account of the Canadian
Banks entitled thereto.
Section 4.10 USE OF PROCEEDS.
(a) TERM FACILITY. G&K Inc. shall use the proceeds of the Term
Facility (i) to fund the purchase of those assets from the Sellers as
specified in the Asset Purchase Agreement (the "Purchased Assets"), (ii) to
fund closing costs and (iii) to refinance existing Borrower indebtedness.
(b) REVOLVING FACILITIES. The Borrowers shall use the proceeds of the
initial Borrowings under the Revolving Facilities (i) to fund the purchase
of the Purchased
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Assets, (ii) to fund closing costs, (iii) to refinance existing
indebtedness of the Borrowers and (iv) for working capital purposes. The
proceeds of each subsequent Borrowing shall be used by the Borrowers for
their working capital purposes.
Section 4.11 VOLUNTARY REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS.
(a) REDUCTION OR TERMINATION OF REVOLVING COMMITMENTS.
(i) Each Borrower, from time to time upon not less than three
(3) Business Days' prior written notice to the appropriate Agent, may
permanently reduce its applicable Revolving Commitment Amount;
PROVIDED, HOWEVER, that no such reduction shall reduce its Revolving
Commitment Amount to an amount less than the corresponding Revolving
Facility Outstanding Amount. Any such voluntary reduction shall be pro
rata as to such Revolving Commitments according to a Bank's Percentage
of the applicable Revolving Facility and shall be in an amount equal
to $5,000,000 or C$1,000,000, as the case may be, or a higher integral
multiple of $1,000,000 or C$500,000, as the case may be.
(ii) Each Borrower at any time prior to the Revolving
Commitment Termination Date may terminate its applicable Commitment by
(A) providing to the appropriate Agent not less than three (3)
Business Days' prior written notice of its intention to so terminate
the such Revolving Commitment and (B) satisfying all related Revolving
Notes, Acceptances and all other monetary Obligations and returning,
or making a cash deposit with respect to, all outstanding Letters of
Credit.
(b) PREPAYMENTS. Each Borrower from time to time, but not more
frequently than once per week, with respect to the US Facilities, and
daily, with respect to the Canadian Facilities, except as permitted by the
appropriate Agent, may voluntarily prepay any Note or Acceptance in whole
or in part. In the event of either mandatory prepayment or voluntary
prepayment hereunder:
(i) any prepayment of a Facility shall be applied against
outstanding Fundings of each Bank under that Facility pro rata
according to each Bank's Percentage of that Facility;
(ii) each prepayment of the US Notes shall be made to the US
Agent not later than 12:00 Noon, Minneapolis, Minnesota time, on a US
Business Day, and funds received after that hour shall be deemed to
have been received by the US Agent on the next following US Business
Day;
(iii) each prepayment of the Canadian Notes shall be made to the
Canadian Agent not later than 12:00 Noon, Toronto, Ontario time, on a
Canadian Business Day, and funds received after that hour shall be
deemed to
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have been received by the Canadian Agent on the next following
Canadian Business Day;
(iv) each partial prepayment of Fundings which, at the time of
such prepayment, bear interest at a Eurodollar Rate (A) shall be
accompanied by accrued interest on such partial prepayment through the
date of prepayment and additional compensation calculated in
accordance with SECTION 4.15 and (B) shall be in an aggregate amount
equal to the applicable minimum Funding amount specified in
SECTION 2.5 for the applicable Facility and, after application of any
such prepayment, shall not result in a Eurodollar Funding remaining
outstanding in an amount less than such minimum Funding amount;
(v) each partial prepayment of Fundings with respect to a US
Facility which, at the time of such prepayment, bear interest at a US
Floating Rate, shall be in an aggregate amount equal to $5,000,000 or
a higher integral multiple of $1,000,000, unless (in either case) the
aggregate outstanding balance of all US Notes under the US Facility
being prepaid is less than such minimum Funding amount, in which event
any such prepayment may be in such lesser amount;
(vi) each partial prepayment of Acceptances (A) shall be
accompanied by accrued interest on such partial prepayment through the
date of prepayment and additional compensation calculated in
accordance with SECTION 4.15 and (B) shall be in an aggregate amount
equal to the applicable minimum amount specified in SECTION 3.4 and,
after application of any such prepayment, shall not result in an
Acceptance remaining outstanding in an amount less than such minimum
amount;
(vii) each partial prepayment of Fundings with respect to the
Canadian Revolving Facility which, at the time of such prepayment,
bear interest at a Canadian Floating Rate, shall be in an aggregate
amount equal to C$100,000 or a higher integral multiple of C$100,000
unless (in either case) the aggregate outstanding balance of all
Canadian Revolving Notes under the Canadian Revolving Facility is less
than such minimum Funding amount, in which event any such prepayment
may be in such lesser amount;
(viii) unless notified by G&K Inc. in writing to the contrary,
the US Agent shall apply all partial prepayments received on account
of the US Facilities to outstanding US Revolving Advances and, if no
US Revolving Advances are then outstanding, to outstanding Term
Advances; and
(ix) except as otherwise provided in SECTION 4.1, each partial
prepayment of the Term Facility shall be applied to principal
installments becoming due under the Term Facility in accordance with
SECTION 4.1(e).
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Section 4.12 PAYMENTS.
(a) MAKING OF PAYMENTS.
(i) All payments of principal and interest due with respect to
a Facility shall be made to that Facility's Agent for the account of
that Facility's Banks pro rata according to their Percentages;
PROVIDED, that any such payments so received by an Agent while an
Event of Default shall exist shall be allocated to the Banks in
accordance with SECTION 10.2.
(ii) All payments of Commitment Fees pursuant to
SECTION 4.9 (a) shall be made to the appropriate Agent for the account
of that Facility's Banks pro rata according to their Percentages of
that Facility. All payments of administrative fees pursuant to
SECTION 4.9(b) shall be made to the appropriate Agent for the
exclusive account of that Agent.
(iii) All such payments shall be made to the appropriate Agent
at its office, not later than 12:00 Noon, Minneapolis, Minnesota time
or Toronto Ontario time, as the case may be, on the date due, in
immediately available funds, and funds received after that hour shall
be deemed to have been received on the next following Business Day.
(iv) Each Borrower hereby authorizes the Agents to charge such
Borrower's demand deposit account(s) maintained with an Agent for the
amount of any such payment on its due date, but an Agent's failure to
so charge such account shall in no way affect the obligation of that
Borrower to make any such payment.
(v) Each Agent shall remit to each Bank in immediately
available funds on the same Business Day as received by the Agent its
share of all such payments received by the Agent for the account of
such Bank. If an Agent fails to remit any payment to any Bank when
required hereby, that Agent shall pay interest on demand to that Bank
for each day during the period commencing on the date such remittance
was due until the date such remittance is made at an annual rate equal
to the Federal Funds Rate or the Canadian Bank Rate, as the case may
be, for such day.
(vi) All payments under SECTIONS 4.13, 4.14 or 4.15 shall be
made by the Borrowers directly to the Bank entitled thereto.
(b) EFFECT OF PAYMENTS. Each payment by a Borrower to an Agent for
the account of any Bank pursuant to SECTION 4.12(a) shall be deemed to
constitute payment by that Borrower directly to such Bank, PROVIDED,
HOWEVER, that if any such payment by that Borrower to that Agent is
required to be returned to that Borrower for any reason whatsoever, then
that Borrower's obligation to such Bank with respect to such payment shall
be deemed to be automatically reinstated.
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(c) DISTRIBUTIONS BY AGENT. Unless an Agent shall have been notified
by a Bank or a Borrower prior to the date on which such Bank or such
Borrower is scheduled to make payment to such Agent of (in the case of a
Bank) the proceeds of an Advance or an Acceptance to be made by it
hereunder or (in the case of a Borrower) a payment to such Agent for the
account of one or more of the Banks hereunder (such payment by a Bank or a
Borrower (as the case may be) being herein called a "Required Payment"),
which notice shall be effective upon receipt, that it does not intend to
make the Required Payment to such Agent, such Agent may assume that the
Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient(s) on such date and, if such Bank or such Borrower (as
the case may be) has not in fact made the Required Payment to the Agent,
the recipient(s) of such payment shall, on demand, repay to the Agent the
amount so made available together with interest thereon for each day during
the period commencing on the date such amount was so made available by the
Agent until the date the Agent recovers such amount at a rate (i) equal to
the Federal Funds Rate or Canadian Bank Rate (as the case may be) for such
day, in the case of a Required Payment owing by a Bank, or (ii) equal to
the applicable rate of interest as provided in this Agreement, in the case
of a Required Payment owing by a Borrower.
(d) SETOFF. Each Borrower agrees that each Bank, subject to such
Bank's sharing obligations set forth in SECTION 10.6, shall have all rights
of setoff and bankers' lien provided by applicable law, and in addition
thereto, each Borrower agrees that if at any time any amount is due and
owing by a Borrower under this Agreement to any Bank at a time when an
Event of Default shall exist, any Bank may apply any and all balances,
credits, and deposits, accounts or moneys of the Borrowers then or
thereafter in the possession of such Bank (excluding, however, any trust or
escrow accounts held by a Borrower for the benefit of any third party) to
the payment thereof.
(e) DUE DATE NOT ON BUSINESS DAY. If any payment of principal of or
interest on any Floating Rate Funding or any fees payable hereunder falls
due on a day which is not a Business Day, then such due date shall be
deemed to be the immediately preceding Business Day.
(f) APPLICATION OF PAYMENTS. Except as otherwise provided herein, so
long as no Default or Event of Default shall exist, each payment received
from a Borrower shall be applied to such Facility or other Obligations as
that Borrower shall specify by notice to be received by the appropriate
Agent on or before the date of such payment, or in the absence of such
notice, as such Agent shall determine in its discretion. Concurrently with
each remittance to any Bank of its appropriate share of any such payment
(based upon such Bank's Percentage of the Facility to which such payment
relates), such Agent shall advise such Bank as to the application of such
payment. Except as otherwise provided herein, while any Default or Event of
Default shall exist,
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each Bank shall have the right to apply all payments received by it from a
Borrower as such Bank may determine in its discretion.
Section 4.13 TAXES. Subject to SECTION 4.16 hereof, all payments made
by a Borrower to an Agent or a Bank (herein a "Payee") under or in connection
with this Agreement, the Notes or the Acceptances shall be made without any
setoff or other counterclaim, and shall be free and clear of and without
deduction for or on account of any present or future taxes now or hereafter
imposed by any governmental or other authority, except to the extent that any
such deduction or withholding is compelled by law. As used herein, the term
"Taxes" shall include all income, excise and other taxes of whatever nature
(other than taxes generally assessed on the overall net income of a Payee by the
government or other authority of the country, state, province or political
subdivision in which such Payee is incorporated or in which the office through
which such Payee is acting is located) as well as all levies, imposts, duties,
charges, or fees of whatever nature. "Taxes" shall not include, however, any
foreign withholding taxes or similar deductions imposed solely as a result of a
Bank's election to make a Funding through a foreign office of such Bank. If a
Borrower is compelled by law to make any deductions or withholdings on account
of any Taxes (including any foreign withholding) it will:
(a) pay to the relevant authorities the full amount required to be so
withheld or deducted;
(b) pay such additional amounts (including, without limitation, any
penalties, interest or expenses) as may be necessary in order that the net
amount received by the Payee after such deductions or withholdings
(including any required deduction or withholding on such additional
amounts) shall equal the amount the Payee would have received had no such
deductions or withholdings been made; and
(c) promptly forward to the Agent (for delivery to the appropriate
Payee) an official receipt or other documentation satisfactory to the Agent
evidencing such payment to such authorities.
The amount that a Borrower shall be required to pay to a Payee pursuant to the
foregoing clause (b) shall be reduced, to the extent permitted by applicable
law, by the amount of any offsetting tax benefit which such Payee receives as
the result of such Borrower's payment to the relevant authorities as reasonably
determined by such Payee; PROVIDED, HOWEVER, that if such Payee shall
subsequently determine that it has lost the benefit of all or a portion of such
tax benefit, such Borrower shall promptly remit to such Payee the amount
certified by such Payee to be the amount necessary to restore such Payee to the
position it would have been in if no payment had been made pursuant to this
sentence. If any Taxes otherwise payable by a Borrower pursuant to the foregoing
are directly asserted against a Payee, such Payee may pay such taxes and such
Borrower promptly shall reimburse such Payee to the full extent otherwise
required under this SECTION 4.13. The obligations of the Borrowers under this
SECTION 4.13 shall survive any termination of this Agreement.
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Section 4.14 INCREASED COSTS; CAPITAL ADEQUACY; FUNDING EXCEPTIONS.
(a) INCREASED COSTS ON EURODOLLAR ADVANCES. If Regulation D of the
Board of Governors of the Federal Reserve System or after the date of this
Agreement the adoption of any applicable law, rule or regulation, or any
change in any existing law, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by a US Bank with any request or directive (whether
or not having the force of law) of any such authority, central bank or
comparable agency, shall:
(i) subject a US Bank to or cause the withdrawal or
termination of any exemption previously granted to a US Bank with
respect to, any tax, duty or other charge with respect to its
Eurodollar Fundings or its obligation to make Eurodollar Fundings, or
shall change the basis of taxation of payments to a US Bank of the
principal of or interest under this Agreement in respect of its
Eurodollar Fundings or its obligation to make Eurodollar Fundings
(except for changes in the rate of tax on the overall net income of a
US Bank imposed by the jurisdictions in which a US Bank's principal
executive office is located); or
(ii) impose, modify or deem applicable any reserve (including,
without limitation, any reserve imposed by the Board of Governors of
the Federal Reserve System, but excluding any reserve included in the
determination of interest rates pursuant to SECTION 4.2), special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, a US Bank; or
(iii) impose on a US Bank any other condition affecting its
making, maintaining or funding of its Eurodollar Fundings or its
obligation to make Eurodollar Fundings;
and the result of any of the foregoing is to increase the cost to an
affected US Bank of making or maintaining any Eurodollar Funding, or to
reduce the amount of any sum received or receivable by such US Bank under
this Agreement or under its Notes with respect to a Eurodollar Funding,
then the affected US Bank will notify G&K Inc. and the US Agent of such
increased cost and within fifteen (15) days after demand by such US Bank
(which demand shall be accompanied by a statement setting forth the basis
of such demand) G&K Inc. shall pay to such US Bank such additional amount
or amounts as will compensate such US Bank for such increased cost or such
reduction; provided, however, that no such increased cost or such reduction
shall be payable by G&K Inc. for any period longer than ninety (90) days
prior to the date on which notice thereof is delivered to G&K Inc. Each US
Bank will promptly notify G&K Inc. of any event of which it has knowledge,
occurring after the date hereof, which will entitle such US Bank to
compensation pursuant to this SECTION 4.14. If G&K Inc. receives notice
from a US Bank of any event which will entitle such US Bank to compensation
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pursuant to this SECTION 4.14, G&K Inc. may prepay any then outstanding
Eurodollar Fundings or notify the affected US Bank that any pending request
for a Eurodollar Funding shall be deemed to be a request for a Floating
Rate Funding, in each case subject to the provisions of SECTION 4.15.
(b) CAPITAL ADEQUACY. If a Bank determines at any time that such
Bank's Return has been reduced as a result of any Capital Adequacy Rule
Change, such Bank may require the appropriate Borrower to pay to such Bank
the amount necessary to restore such Bank's Return to what it would have
been had there been no Capital Adequacy Rule Change. For purposes of this
SECTION 4.14(b), the following definitions shall apply:
(i) "Return", for any calendar quarter or shorter period,
means the percentage determined by dividing (A) the sum of interest
and ongoing fees earned by a Bank under this Agreement during such
period by (B) the average capital such Bank is required to maintain
during such period as a result of its being a party to this Agreement,
as determined by such Bank based upon its total capital requirements
and a reasonable attribution formula that takes account of the Capital
Adequacy Rules then in effect. Return may be calculated for a Bank for
each calendar quarter and for the shorter period between the end of a
calendar quarter and the date of termination in whole of this
Agreement.
(ii) "Capital Adequacy Rule" means any law, rule, regulation or
guideline regarding capital adequacy that applies to a Bank, or the
interpretation thereof by any governmental or regulatory authority.
Capital Adequacy Rules include rules requiring financial institutions
to maintain total capital in amounts based upon percentages of
outstanding loans, binding loan commitments and letters of credit.
(iii) "Capital Adequacy Rule Change" means any change in any
Capital Adequacy Rule occurring after the date of this Agreement, but
does not include any changes in applicable requirements that at the
date hereof are scheduled to take place under the existing Capital
Adequacy Rules or any increases in the capital that a Bank is required
to maintain to the extent that the increases are required due to a
regulatory authority's assessment of such Bank's financial condition.
The initial notice sent by a Bank shall be sent as promptly as practicable
after such Bank learns that its Return has been reduced, shall include a
demand for payment of the amount necessary to restore such Bank's Return
for the quarter in which the notice is sent, and shall state in reasonable
detail the cause for the reduction in such Bank's Return and such Bank's
calculation of the amount of such reduction. Thereafter, a Bank may send a
new notice during each calendar quarter setting forth the calculation of
the reduced Return for that quarter and including a demand for payment of
the
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amount necessary to restore such Bank's Return for that quarter. A Bank's
calculation in any such notice shall be conclusive and binding absent
demonstrable error.
(c) BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR. If with
respect to any Interest Period:
(i) the US Agent determines that, or the Required US Banks
determine and advise the US Agent that, deposits in US dollars (in the
applicable amounts) are not being offered in the London interbank
eurodollar market for such US Interest Period; or
(ii) the US Agent otherwise determines, or the Required US
Banks determine and advise the US Agent (which determination shall be
binding and conclusive on all parties), that by reason of
circumstances affecting the London interbank eurodollar market
adequate and reasonable means do not exist for ascertaining the
applicable Eurodollar Rate; or
(iii) the Canadian Agent determines, or the Required Canadian
Banks determine and advise the Canadian Agent (which determination
shall be binding and conclusive on all parties), that by reason of
circumstances affecting the market for bankers' acceptances
denominated in Canadian Dollars there is no market in Canada for such
bankers' acceptances or that the demand therefor is insufficient to
justify the Canadian Banks continuing to create and sell (or purchase)
bankers' acceptances in such market; or
(iv) the Required US Banks or the Required Canadian Banks, as
the case may be, advise the appropriate Agent that the Eurodollar Rate
(Reserve Adjusted), the BA Purchase Price or the Acceptance Fee, as
determined by such Agent, will not adequately and fairly reflect the
cost to such Banks of funding or maintaining (as the case may be) any
Funding or Borrowing for such Interest Period, or that the funding or
making (as the case may be) of Eurodollar Advances or Acceptances has
become impracticable as a result of an event occurring after the date
of this Agreement which in the opinion of such Banks materially
affects such Eurodollar Advances or Acceptances;
THEN the appropriate Agent shall promptly notify the affected parties and
(A) in the event of any occurrence described in the foregoing clauses (i)
and (ii), G&K Inc. shall enter into good faith negotiations with each
affected Bank in order to determine an alternate method to determine the
Eurodollar Rate for such Bank, and during the pendency of such negotiations
with any Bank, such Bank shall be under no obligation to make any new
Eurodollar Fundings and (B) in the event of any occurrence described in the
foregoing clauses (iii) or (iv), for so long as such circumstances shall
continue, no Bank shall be under any obligation to make any new Eurodollar
Fundings or create any Acceptances.
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(d) ILLEGALITY. If any change in (including the adoption of any new)
applicable laws or regulations, or any change in the interpretation of
applicable laws or regulations by any governmental authority, central bank,
comparable agency or any other regulatory body charged with the
interpretation, implementation or administration thereof, or compliance by
a Bank with any request or directive (whether or not having the force of
law) of any such authority, central bank, comparable agency or other
regulatory body, should make it or, in the good faith judgment of the
affected Bank, shall raise a substantial question as to whether it is
unlawful for such Bank to make, create, maintain or fund Eurodollar
Fundings or Acceptances, then (i) the affected Bank shall promptly notify
the affected Borrower and the appropriate Agent, (ii) the obligation of the
affected Bank to make, maintain or convert into Eurodollar Fundings or
Acceptances shall, upon the effectiveness of such event, be suspended for
the duration of such unlawfulness, and (iii) for the duration of such
unlawfulness, any notice by a Borrower pursuant to
SECTIONS 2.3, 2.4 or 2.5 or 3.2, 3.3 or 3.4 requesting the affected Bank
to make, continue making or convert into Eurodollar Fundings or Acceptances
shall be construed as a request to make or to continue making Floating Rate
Fundings.
Section 4.15 FUNDING LOSSES. Each Borrower hereby agrees that upon
demand by a Bank (which demand shall be accompanied by a statement setting forth
the basis for the calculations of the amount being claimed) such Borrower will
indemnify such Bank against any loss or expense which such Bank may have
sustained or incurred (including, without limitation, any net loss or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Bank to fund or maintain Eurodollar Fundings or Acceptances) or
which such Bank may be deemed to have sustained or incurred, as reasonably
determined by such Bank, (i) as a consequence of any failure by such Borrower to
make any payment when due of any amount due hereunder in connection with any
Eurodollar Fundings or Acceptances, (ii) due to any failure of a Borrower to
borrow or convert any Eurodollar Fundings or Acceptances on a date specified
therefor in a notice thereof or (iii) due to any payment or prepayment of any
Eurodollar Funding or Acceptance on a date other than the last day of the
applicable Interest Period for such Eurodollar Funding or Acceptance. For this
purpose, all notices under SECTIONS 2.3, 2.4 and 2.5 shall be deemed to be
irrevocable.
Section 4.16 RIGHT OF BANKS TO FUND THROUGH OTHER OFFICES. Each Bank,
if it so elects, may fulfill its agreements hereunder with respect to any
Funding or the creation and discounting of any Acceptance by causing a foreign
branch or affiliate of such Bank to make such Funding or create and discount any
Acceptance; PROVIDED, that the obligation of a Borrower to repay such Funding or
Acceptance shall nevertheless be to such Bank, and such Funding or Acceptance
shall be deemed held by such Bank for the account of such branch or affiliate.
If either Borrower is required to pay additional amounts to or for the account
of any Bank as a result of an election by such Bank pursuant to this
SECTION 4.16 to fund through an office which is not located in the United
States, with respect to US Banks, or which is not
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located in Canada, with respect to Canadian Banks, then (i) such Bank will
change the jurisdiction of such funding office if, in the reasonable judgment of
such Bank, such change (x) will eliminate or reduce any such additional payment
which may hereafter accrue and (y) it is not otherwise disadvantageous to such
Bank or (ii) if such Bank does not change the jurisdiction of its funding office
established pursuant to this SECTION 4.16, the Borrower shall have the right to
require that such Bank assign its Commitments and Notes to a substitute Bank
pursuant to the terms and conditions, and subject to the approvals required, in
SECTION 10.2.
Section 4.17 DISCRETION OF BANKS AS TO MANNER OF FUNDING.
Notwithstanding any provision of this Agreement to the contrary, each Bank shall
be entitled to fund and maintain all or any part of its Eurodollar Fundings in
any manner it deems fit, it being understood, however, that for the purposes of
this Agreement (specifically including, without limitation, SECTION 4.15 hereof)
all determinations hereunder shall be made as if each Bank had actually funded
and maintained each Eurodollar Funding during each US Interest Period for such
Eurodollar Funding through the purchase of deposits having a maturity
corresponding to such US Interest Period and bearing an interest rate equal to
the appropriate Eurodollar Rate for such US Interest Period.
Section 4.18 AVERAGING AND ATTRIBUTION; SURVIVAL OF PROVISIONS. Each
Bank may use reasonable averaging and attribution methods in determining
compensation pursuant to such SECTIONS 4.13, 4.14 or 4.15 and the provisions of
SECTIONS 4.13, 4.14 and 4.15 shall survive termination of this Agreement.
Section 4.19 RELEASE OF COLLATERAL. The Banks hereby agree to release
Collateral, and the Agents are hereby authorized and directed to execute and
deliver to the Borrowers and Guarantors such UCC and PPSA termination statements
and other instruments of termination, satisfaction and release as the Borrowers
may request, at the sole cost and expense of the Borrowers, as may be
appropriate in accordance with the following:
(a) Upon the later of (i) the date of delivery of the annual audit
report of the G&K Group for the fiscal year ended June 27, 1998 or (ii) the
date on which the G&K Group shall have achieved Level III Status for two
consecutive Fiscal Quarters, the Agents shall release any and all
Collateral and all Obligations shall thereafter constitute unsecured
Obligations; subject, however, to confirmation by the Agents that, upon
release of such Collateral (i) no Default or Event of Default will then
exist and (ii) no liens (except Permitted Liens) will remain outstanding
against any Collateral.
(b) Upon request of a Borrower, and provided that no Default or Event
of Default shall then exist hereunder, the appropriate Agent shall release
a specified item of Collateral upon receiving from G & K, Inc. a written
certification that (i) such item of Collateral constitutes an Asset Held
for Sale and has been sold by a G&K Enterprise and that the proceeds
thereof will be paid to the US Agent for application to outstanding
Obligations in accordance with SECTION 4.1(e)(ii) or (ii) such item of
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Collateral has been sold by a G&K Enterprise in accordance with the
restrictions set forth in SECTION 8.6 and that, when added to the book
value of all other assets sold by any G&K Enterprise during that fiscal
year, the aggregate book value of all such sales does not exceed
$15,000,000 as provided therein.
Section 4.20 LIMITATION ON AVAILABILITY OF FIXED RATE FUNDINGS.
Notwithstanding anything in ARTICLES II or III to the contrary, neither
Eurodollar Fundings nor Acceptances will be available to either Borrower until
the earlier to occur of (i) thirty (30) US Business Days after the Closing Date
or (ii) the date on which the Borrowers receive written notice from the Agents
advising that the restriction set forth in this SECTION 4.20 is terminated.
ARTICLE V
CONDITIONS OF LENDING
Section 5.1 CONDITIONS PRECEDENT TO THE INITIAL ADVANCES. The
obligation of the Banks to fund the initial Advances or issue any Letter of
Credit is subject to the condition precedent that the US Agent shall have
received the following, each in form and substance satisfactory to the Required
Banks:
(a) The Notes, properly executed on behalf of the Borrowers.
(b) Drafts, in blank, in sufficient numbers as may be required by the
Canadian Banks, properly executed on behalf of Work Wear.
(c) The Guaranties, properly executed on behalf of the appropriate
Guarantors.
(d) The Security Documents, properly executed on behalf of the
appropriate G&K Enterprise.
(e) The Collateral Pledge Agreements, duly executed by G&K Inc., G&K
Co. and Work Wear, together with the original certificates evidencing the
stock covered thereby and blank assignments of that stock duly executed by
G&K Inc., G&K Co. and Work Wear.
(f) Current searches of appropriate filing offices (including,
without limitation, patent and trademark offices, secretaries of state and
county recorders) showing (i) that no state or federal tax liens have been
filed and remain in effect against any Borrower, any Guarantor or any of
the Purchased Assets, (ii) that no financing statements or other
notifications or filings have been filed and remain in effect against any
Borrower, any Guarantor or any of the Purchased Assets, other than those
constituting Permitted Liens or for which the US Agent has received an
appropriate release, termination or satisfaction, and (iii) that the Agents
have duly filed all financing statements necessary to perfect the security
interests granted to the Agents
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and the Banks, to the extent such security interests are capable of being
perfected by filing.
(g) A certified copy of the resolutions of the board of directors of
the Borrowers and Guarantors evidencing approval of all Loan Documents and
the other matters contemplated hereby.
(h) Copies of the Articles of Incorporation and Bylaws of the
Borrowers and Guarantors, certified by the Secretary or Assistant Secretary
of the Borrowers and Guarantors as being true and correct copies thereof.
(i) Certificates of good standing of the Borrowers and Guarantors,
dated not more than sixty (60) days prior to the date hereof, and evidence
satisfactory to the US Agent that each of the Borrowers and Guarantors is
qualified to conduct its business in each state where it presently conducts
such business if failure to obtain any such qualification or licensing
would have a Material Adverse Effect.
(j) A signed copy of a certificate of the Secretary or an Assistant
Secretary of the Borrowers and Guarantors which shall certify the names of
the officers of the Borrowers and Guarantors authorized to sign the Loan
Documents and the other documents or certificates to be delivered pursuant
to this Agreement, including requests for Advances, Eurodollar Fundings and
Acceptances, together with the true signatures of such officers. The Agents
and each Bank may conclusively rely on such certificates until they shall
receive a further certificate of the Secretary or an Assistant Secretary of
the Borrowers or Guarantors, as the case may be, canceling or amending the
prior certificate and submitting the signatures of the officers named in
such further certificate.
(k) Certificates of the insurance required under the Security
Agreements, naming the appropriate Agent, as collateral agent for all
appropriate Banks, as lender's loss payee thereunder, together with an
acceptable lender's loss payable endorsement.
(l) Collateral examination reports for such Collateral as may be
required by the Agents.
(m) Audited financial statements for the period ended June 29, 1996,
together with (i) forecasted financial statements for the G&K Group giving
effect to acquisition of the Purchased Assets in the form attached hereto
as SCHEDULE 6.5 and (ii) such information as the Agents may reasonably
request to confirm the tax, legal and business assumptions relied upon in
such pro forma financial statements.
(n) A signed copy of an opinion of counsel for each of the Borrowers
and Guarantors, addressed to the Banks.
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(o) Copies of the Asset Purchase Documents, properly executed on
behalf of the parties thereto, certified by the Secretary or Assistant
Secretary of G&K Inc. as being true and correct copies thereof.
(p) A certificate of G&K Inc.'s chief financial officer setting forth
the calculation of the purchase price for the Purchased Assets showing all
pre-closing and post-closing adjustments (as estimated by G&K Inc. on the
Closing Date), and stating that such fully adjusted purchase price shall
not exceed $300,000,000, together with such supporting evidence as the
Agents may reasonably require.
(q) Evidence that simultaneously with the initial Advance, all
conditions precedent to effectiveness of the Asset Purchase Documents shall
have been satisfied or waived and that the Asset Purchase shall have been
consummated substantially in accordance with the Asset Purchase Agreement.
(r) A financial analysis of the Purchased Assets and such other
audits completed by Xxxxxx Xxxxxxxx and all other due diligence items with
respect thereto that the Agents have reasonably requested.
(s) A copy of a fairness opinion from G&K Inc.'s investment banker
addressed to G&K Inc.'s board of directors as to the terms of the purchase
of the Purchased Assets.
(t) Environmental audits and other information regarding the
condition of real estate owned and to be owned by any G&K Enterprise,
whether constituting Purchased Assets or otherwise, together with copies of
all real estate appraisals obtained by any G&K Enterprise as to any such
real estate and, if requested by the Required Banks, appropriate estimates
of any remediation exposure, clean up costs or other potential liability
known by any officer of a G&K Enterprise for the past or present violation
of any Environmental Law.
(u) Evidence satisfactory to the Agents of the satisfaction and
payment in full of all outstanding credit facilities of any G&K Enterprise.
(v) Evidence of satisfactory compliance with all requirements of the
Xxxx Xxxxx Xxxxxx Act.
(w) Payment of all fees and expenses then due and payable pursuant to
the commitment letter dated as of May 14, 1997 or otherwise pursuant to
SECTIONS 4.9 and 11.4.
(x) Such other documents as any Bank may reasonably request.
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Section 5.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of
the Banks to fund any Borrowing or issue a Letter of Credit shall be subject to
the further conditions precedent that on such date:
(a) the representations and warranties contained in ARTICLE VI hereof
are correct in all material respects on and as of the date of such
Borrowing or Letter of Credit as though made on and as of such date, except
to the extent that such representations and warranties relate solely to an
earlier date; and
(b) no event has occurred and is continuing, or would result from
such Borrowing or Letter of Credit, which constitutes a Default or an Event
of Default.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to the Banks as follows:
Section 6.1 CORPORATE EXISTENCE AND POWER; NAMES; CHIEF EXECUTIVE
OFFICES. Each G&K Enterprise is a corporation duly incorporated, validly
existing and in good standing under the laws of its respective state of
incorporation, and is duly licensed or qualified to transact business in all
jurisdictions where the character of the property owned or leased or the nature
of the business transacted by it makes such licensing or qualification necessary
and where failure to obtain such licensing or qualification would have a
Material Adverse Effect on that G&K Enterprise. Each G&K Enterprise has all
requisite power and authority, corporate or otherwise, to conduct its business,
to own its properties and to execute and deliver, and to perform all of its
obligations under, the Loan Documents. Within the last twelve (12) months, the
G&K Group has done business solely under the names set forth in SCHEDULE 6.1
hereto. The chief executive offices and principal places of business of each G&K
Enterprise are located at the addresses set forth in SCHEDULE 6.1, and all
material records relating to each G&K Enterprise's business are kept at that
location.
Section 6.2 AUTHORIZATION FOR BORROWINGS AND LETTERS OF CREDIT; NO
CONFLICT AS TO LAW OR AGREEMENTS. The execution, delivery and performance by the
Borrowers and Guarantors of the Loan Documents, and the Letters of Credit and
Borrowings from time to time obtained hereunder, have been duly authorized by
all necessary corporate action and do not and will not (i) require any consent
or approval which has not been obtained prior to the date hereof, (ii) require
any authorization, consent or approval by, or registration, declaration or
filing (other than filing of financing statements as contemplated hereunder)
with, or notice to, any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or any third party, except such
authorization, consent, approval, registration, declaration, filing or notice as
has been obtained, accomplished or given prior to the date hereof, (iii) violate
any provision of any law, rule or regulation (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve System) or of any
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order, writ, injunction or decree presently in effect having applicability to
any G&K Enterprise or of the Articles of Incorporation or Bylaws of any G&K
Enterprise, (iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other material agreement, lease or
instrument to which any G&K Enterprise is a party or by which it or its
properties may be bound or affected, or (v) result in, or require, the creation
or imposition of any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by any G&K Enterprise (other than as
required hereunder in favor of the Agents).
Section 6.3 LEGAL AGREEMENTS. Each of the Loan Documents constitutes
the legal, valid and binding obligations and agreements of the applicable
Borrower or Guarantor, enforceable against them in accordance with its terms,
except to the extent that enforcement thereof may be limited by applicable
bankruptcy, insolvency or similar laws now or hereafter in effect affecting
creditors' rights generally and by general principles of equity.
Section 6.4 SUBSIDIARIES. Each member of the G&K Group and all
Subsidiaries thereof are set forth and described in the organizational chart
attached hereto as SCHEDULE 6.4, as amended from time to time as any new
Subsidiaries are created. As to each entity shown in such organizational chart
which does not constitute a Borrower or a Guarantor hereunder, the book value of
all assets of such entity is less than US$100,000.
Section 6.5 FINANCIAL CONDITION; NO ADVERSE CHANGE.
(a) G&K Inc. has furnished to the Agents audited consolidated
financial statements of the G&K Group for its fiscal year ended June 29,
1996, and unaudited financial statements of the G&K Group for the third
Fiscal Quarter ended March 29, 1997, and those statements fairly present
the financial condition of the G&K Group on the dates thereof and the
results of operations and cash flows for the periods then ended (subject to
year-end audit adjustments) and were prepared in accordance with GAAP.
(b) G&K Inc. has furnished to the Agents the projected opening
balance sheet reflecting the Asset Purchase and projections for the fiscal
years of the G&K Group through June of 2002, in the form attached hereto as
SCHEDULE 6.5. These documents were prepared in accordance with GAAP, are
the most accurate projected opening balance sheet and projections available
and are identical to those used by the Borrowers for internal planning
purposes.
(c) Since the date of the most recent financial statements, there has
not occurred any event or circumstance that would have a Material Adverse
Effect.
Section 6.6 LITIGATION. There is no Material Litigation pending or, to
the knowledge of any officer of a G&K Enterprise, threatened against or
affecting any officer of a
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G&K Enterprise or the properties of any G&K Enterprise before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, except as set forth and described in SCHEDULE 6.6.
Section 6.7 REGULATION U. No G&K Enterprise has engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any Borrowing will be
used to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.
Section 6.8 TAXES. Except as disclosed in SECTION 8.1, each G&K
Enterprise has paid or caused to be paid to the proper authorities when due all
federal, state and local taxes required to be withheld by it, except for any
such taxes subject to state withholding liability which do not constitute a
material liability and are not known by any officer of a G&K Enterprise, or, if
known, such G&K Enterprise is diligently proceeding in good faith to resolve
and, if required, pay all such amounts and, with respect to which, such G&K
Enterprise shall have set aside adequate reserves. Except as disclosed in
SCHEDULE 8.1, each G&K Enterprise has filed all federal, national, state,
provincial and local tax returns which to the knowledge of the officers of the
G&K Group, are required to be filed, and each G&K Enterprise has paid or caused
to be paid to the respective taxing authorities all taxes as shown on said
returns or on any assessment received by it to the extent such taxes have become
due, except for any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested by that G&K Enterprise in good
faith and by proper proceedings and for which that G&K Enterprise shall have set
aside adequate reserves.
Section 6.9 TITLES AND LIENS. Each G&K Enterprise has good title to
all properties and assets reflected in the latest balance sheet referred to in
SECTION 6.5 (including without limitation all Collateral), free and clear of all
mortgages, security interests, liens and encumbrances, except for Permitted
Liens. In addition, no financing statement naming any G&K Enterprise as debtor
is on file in any jurisdiction except to perfect only security interests
permitted by SECTION 8.1.
Section 6.10 EMPLOYEE BENEFIT PLANS.
(a) Except as set forth and described in SCHEDULE 6.10, no US G&K
Enterprise maintains and none has in the past maintained any Plan. No fact
or circumstance that is reasonably expected to have a material adverse
effect on a Plan's qualification under Code Section 401(a) exists in
connection with any Plan sponsored by a US G&K Enterprise. No US G&K
Enterprise:
(i) sponsors any Defined Benefit Plan other than any
Multi-Employer Plan that has any accumulated funding deficiency within
the meaning of ERISA Section 302(a)(2); or
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(ii) has any material liability, or knows of any fact or
circumstance that could reasonably be expected to result in any
material liability to the PBGC, the Internal Revenue Service, the US
Department of Labor or any participant, or class of participants, in
connection with any Plan (other than the funding or payment of
benefits that are or may become payable to participants or
beneficiaries of any such Plan).
No US G&K Enterprise has received any notice that it is not in full
compliance, or has any knowledge to the effect that it is not in compliance
in all material respects with the requirements of ERISA in connection with
an ERISA Plan that it sponsors or to which it contributes. Each ERISA Plan
(other than any Multi-Employer Plan) as to which any US G&K Enterprise or
any ERISA Affiliate may reasonably be expected to have any material
liability complies in all material respects with ERISA and the Code and the
regulations issued thereunder and (A) no Reportable Event has occurred with
respect to any Plan sponsored by any US G&K Enterprise or any ERISA
Affiliate which will have the effect of creating a liability of any US G&K
Enterprise or any ERISA Affiliate which will have a Material Adverse
Effect; (B) no US G&K Enterprise nor any ERISA Affiliate has withdrawn from
any Multi-Employer Plan or initiated steps to do so, except in accordance
with all applicable requirements of ERISA and in a manner which will not
create a material liability of any US G&K Enterprise or any ERISA Affiliate
which will have a Material Adverse Effect; (C) no steps have been taken to
terminate any Pension Plan except in accordance with all applicable
requirements of ERISA and the Code in a manner which will not create a
material liability of a US G&K Enterprise or any ERISA Affiliate which will
have a Material Adverse Effect; and (D) during the twelve consecutive
months prior to any date on which this representation may be made or
re-made, no contribution failure has occurred with respect to any Plan
sufficient to give rise to a lien under SECTION 302(f)(1) of ERISA. No US
G&K Enterprise has a contingent liability with respect to any
post-retirement benefit under a Welfare Plan, other than (x) liability for
continuation coverage described in Part 6 of Title I of ERISA or any
similar state law or (z) as set forth on SCHEDULE 6.10.
(b) Except as set forth and described in SCHEDULE 6.10, no Canadian
G&K Enterprise maintains and none has maintained any Registered Pension
Plan. No fact or circumstance that is reasonably expected to have a
material adverse effect on a registration under the Canada Income Tax Act
exists in connection with any Registered Pension Plan. No Canadian G&K
Enterprise has any material liability, or knows of any fact or circumstance
that could reasonably be expected to result in any material liability, to
Revenue Canada, the Office of the Superintendent of Financial Institutions
or the pension authority of any Province, or any member or class of members
in connection with any Registered Pension Plan or other employee benefit
plan (other than the funding or payment of benefits that are or may become
payable to participants or beneficiaries of any such plan). No Canadian
G&K Enterprise has received any notice that it is not in full compliance,
or has any knowledge to the effect
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that it is not in compliance in all material respects, with the
requirements of the Income Tax Act, the Pension Benefits Standards Act or
the pension laws of any Province, to the extent applicable, in connection
with any Registered Pension Plan that it sponsors or to which it
contributes. Each Registered Pension Plan and other employee benefit plan
as to which a Canadian G&K Enterprise may reasonably be expected to have
any material liability complies in all material respects with the Income
Tax Act, the Pension Benefits Standards Act and the pension or employee
benefit laws of the Provinces, to the extent applicable. No Canadian G&K
Enterprise has taken any steps to wind-up any Registered Pension Plan,
except in accordance with the applicable requirements of the Income Tax Act
and the Pension Benefit Standards Act or applicable pension law of the
Province or registration, and in a manner that will not create a material
liability of any Canadian G&K Company.
Section 6.11 DEFAULT. Each G&K Enterprise is in compliance with all
provisions of all agreements, instruments, decrees and orders to which it is a
party or by which it or its property is bound or affected, the breach or default
of which could have a Material Adverse Effect on the G&K Group.
Section 6.12 ENVIRONMENTAL COMPLIANCE. Except as disclosed in
SCHEDULE 6.12, each G&K Enterprise has obtained all permits, licenses and other
authorizations which are required under United States federal, state and local
laws and regulations and Canadian national and provincial laws and regulations
relating to emissions, discharges, releases of pollutants, contaminants,
hazardous or toxic materials, or wastes into ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or hazardous or toxic materials or wastes
("Environmental Laws") at its facilities or in connection with the operation of
its facilities. Except as disclosed in SCHEDULE 6.12, each G&K Enterprise and
all its activities at its facilities comply in all material respects with all
Environmental Laws and with all applicable terms and conditions of all permits,
licenses and authorizations required by any Environmental Law. Except as
disclosed in SCHEDULE 6.12, each G&K Enterprise is in compliance in all material
respects with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
Environmental Laws or contained in any plan, order, decree, judgment or notice
of which it is aware and with respect to which noncompliance would have a
Material Adverse Effect on the G&K Group. Except as disclosed in SCHEDULE 6.12,
no officer of a G&K Enterprise is aware of, or has received notice of, any
events, conditions, circumstances, activities, practices, incidents, actions or
plans which may interfere with or prevent continued compliance with, or which
may give rise to any liability under, any Environmental Laws.
Section 6.13 SUBMISSIONS TO BANKS. All financial and other information
provided to an Agent or a Bank by or on behalf of the Borrowers in connection
with the Borrowers' request for the credit facilities contemplated hereby is
true and correct in all material respects and, as to projections, valuations or
pro forma financial statements, present a
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good faith opinion as of the date made as to such projections, valuations and
pro forma condition and results.
Section 6.14 PUBLIC UTILITY HOLDING COMPANY ACT; INVESTMENT COMPANY
ACT. No G&K Enterprise is a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended. No G&K Enterprise 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 6.15 ASSET PURCHASE DOCUMENTS. The Asset Purchase Documents
provide, among other things, for the purchase by the US G&K Enterprises of the
Purchased Assets. G&K Inc. has furnished to the Agents true, complete and
correct copies of all Asset Purchase Documents. The Asset Purchase Documents
have not subsequently been amended, supplemented or modified, and constitute the
complete understanding among the parties thereto in respect of the matters and
transactions covered thereby. The Asset Purchase Documents have been duly
executed and delivered by the parties thereto and are in full force and effect.
All representations and warranties made by the Borrowers in the Asset Purchase
Documents, and, to the best knowledge of the Borrowers after reasonable inquiry,
all representations and warranties made by the Sellers and other parties to the
Asset Purchase Documents, are true and correct in all material respects.
Section 6.16. FINANCIAL SOLVENCY. Both before and after giving effect
to the Asset Purchase and all of the transactions contemplated in the Loan
Documents, the Borrowers and Guarantors:
(a) were and will not be insolvent, as that term is used and defined
in Section 101(32) of the United States Bankruptcy Code, Section 2 of the
Uniform Fraudulent Transfer Act, and Section 2 of the Bankruptcy and
Insolvency Act of Canada;
(b) do not have unreasonably small capital and are not engaged or
about to engage in a business or a transaction for which any remaining
assets of the Borrowers or Guarantors are unreasonably small;
(c) do not, by executing, delivering or performing their obligations
under the Loan Documents or by taking any action with respect thereto,
intend to, nor believe that it will, incur debts beyond their ability to
pay them as they mature;
(d) do not, by executing, delivering or performing their obligations
under the Loan Documents or by taking any action with respect thereto,
intend to hinder, delay or defraud either their present or future
creditors; and
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(e) do not contemplate filing a petition in bankruptcy or for an
arrangement or reorganization or similar proceeding under any law any
jurisdiction or country, and, to the best knowledge of the Borrowers, is
not the subject of any bankruptcy or insolvency proceedings or similar
proceedings under any law of any jurisdiction or country threatened or
pending against any Borrower or Guarantor.
ARTICLE VII
AFFIRMATIVE COVENANTS OF THE BORROWERS
So long as any Note, Acceptance or Letter of Credit shall remain
unpaid or outstanding or any Commitment shall be outstanding, the Borrowers
shall comply with the following requirements, unless the Required Banks shall
otherwise consent in writing:
Section 7.1 REPORTING REQUIREMENTS. The Borrowers will deliver, or
cause to be delivered, to each Bank each of the following, which shall be in
form and detail reasonably acceptable to the Required Banks:
(a) as soon as available, and in any event within ninety (90) days
after the end of each fiscal year of the G&K Group, audited annual
financial statements of the G&K Group with the unqualified opinion of
independent certified public accountants selected by G&K Inc. and
acceptable to the Required Banks, which annual financial statements shall
include the balance sheets of the G&K Group as at the end of such fiscal
year and the related statements of income, retained earnings and cash flows
of the G&K Group for the fiscal year then ended, prepared on a consolidated
basis, all in reasonable detail and prepared in accordance with GAAP,
together with (i) copies of all management letters prepared by such
accountants; (ii) a report signed by such accountants stating that in
making the investigations necessary for said opinion they obtained no
knowledge, except as specifically stated, of any Default or Event of
Default and all relevant facts in reasonable detail to evidence, and the
computations as to, whether or not G&K Inc. is in compliance with the
requirements set forth in SECTIONS 7.8 - 7.11 and 8.12; and (iii) a
certificate of the chief financial officer of G&K Inc., substantially in
the form of EXHIBIT J, stating (A) that such financial statements have been
prepared in accordance with GAAP and fairly represent the financial
condition and results of operations of the G&K Group and (B) whether or not
such officer has knowledge of the occurrence of any Default or Event of
Default and, if so, stating in reasonable detail the facts with respect
thereto and the steps, if any, being taken to cure it;
(b) as soon as available and in any event within forty-five (45) days
after the end of each Fiscal Quarter, an unaudited/internal balance sheet
and statement of income, cash flow and retained earnings of the G&K Group
as at the end of and for such Fiscal Quarter and for the year-to-date
period then ended, prepared on a consolidating and consolidated basis, in
reasonable detail and stating in comparative
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form the budget of the G&K Group for such month and for the year-to-date
period then ended (as described in SECTION 7.1(d) and the figures for the
corresponding date and periods in the previous year, all prepared in
accordance with GAAP subject to year-end audit adjustments; and accompanied
by a certificate of the chief financial officer of G&K Inc., substantially
in the form of EXHIBIT K, stating (i) that such financial statements have
been prepared in accordance with GAAP (subject to the foregoing exceptions)
and fairly represent the financial condition and results of operations of
the G&K Group, (ii) whether or not such officer has knowledge of the
occurrence of any Default or Event of Default not theretofore reported and
remedied and, if so, stating in reasonable detail the facts with respect
thereto and the steps, if any, being taken to cure it, and (iii) all
relevant facts in reasonable detail to evidence, and the computations as to
(A) the Status of the G&K Group for purposes of establishing the
appropriate Margins, (B) whether or not the G&K Group is in compliance with
the requirements set forth in SECTIONS 7.8 - 7.11 and 8.12, (C) all sales
of Assets Held for Sale and sales of all other assets during such Fiscal
Quarter and the net proceeds received therefrom and (D) the Canadian Dollar
Equivalent of US$25,000,000 and the US Dollar Equivalent of the Canadian
Revolving Facility Outstanding Amount as at the end of such Fiscal Quarter;
(c) as soon as possible and in any event within forty-five (45) days
after the last day of each Fiscal Quarter, an unaudited/internal balance
sheet and statement of income, cash flow and retained earnings of Work Wear
as at the end of such Fiscal Quarter and for the year-to-date period then
ended and the figures for the corresponding date and periods in the
previous year, prepared in accordance with GAAP, subject to year-end
adjustments, and accompanied by a certificate of the chief financial
officer of Work Wear substantially in the form of EXHIBIT K, stating that
such financial statements have been prepared in accordance with GAAP
(subject to the foregoing exceptions) and fairly represent the financial
condition and results of operation of Work Wear;
(d) at least thirty (30) days before the beginning of each fiscal
year of the G&K Group, the projected balance sheets, income statements,
Capital Expenditures budget, and cash flow statements for the G&K Group for
each month of such year, each in reasonable detail, representing the good
faith projections of G&K Inc. for each such month, and certified by G&K
Inc.'s chief financial officer as being the most accurate projections
available and identical to the projections used by G&K Inc. for internal
planning purposes, together with such supporting schedules and information
as any Bank from time to time may reasonably request;
(e) immediately after the commencement thereof, notice in writing of
all Material Litigation and of all proceedings before any governmental or
regulatory agency affecting any G&K Enterprise of the type described in
SECTION 6.6;
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(f) as promptly as practicable (but in any event not later than five
(5) business days) after an officer of a Borrower obtains knowledge of the
occurrence of a Default or Event of Default hereunder, notice of such
occurrence, together with a detailed statement by a responsible officer of
that Borrower setting forth the steps being taken by that Borrower to cure
the effect of such Default or Event of Default;
(g) as soon as possible and in any event within thirty (30) days
after any US G&K Enterprise knows or has reason to know that any Reportable
Event with respect to any Plan has occurred that is reasonably expected to
have a Material Adverse Effect, the statement of the chief financial
officer of G&K Inc. setting forth details as to such Reportable Event and
the action which the affected US G&K Enterprise proposes to take with
respect thereto; and a copy of any notice of such Reportable Event that is
required to be given to the PBGC on or prior to the date such notice must
be delivered to the PBGC;
(h) as soon as possible, and in any event within ten (10) days after
any US G&K Enterprise fails to make any quarterly contribution it is
required to make under Code Section 4.12(m) with respect to any Plan (other
than a Multi-Employer Plan) the statement of the chief financial officer of
G&K Inc. setting forth details as to such failure and the action which the
affected US G&K Enterprise proposes to take with respect thereto; and a
copy of any notice of such failure that is required to be given to the PBGC
on or prior to the date such notice must be delivered to the PBGC;
(i) as soon as possible and in any event within ten (10) days after
any Canadian G&K Enterprise files any notice of wind-up with Revenue
Canada, the Office of the Superintendent of Financial Institutions or the
pension authority of the Province in which a Registered Pension Plan is
registered that is reasonably expected to have a Material Adverse Effect,
the statement of the chief financial officer of G&K Inc. setting forth the
details as to such wind-up and the action that the Canadian G&K Enterprise
proposes to take with respect thereto; and a copy of the notice of wind-up
filed with any government authority on or prior to the date such notice
must be delivered to the appropriate government authority;
(i) promptly upon obtaining knowledge thereof, notice of the
violation by any G&K Enterprise of any law, rule or regulation, the
non-compliance with which could have a Material Adverse Effect;
(j) promptly upon their distribution, copies of all financial
statements, reports, proxy statements and other communications which G&K
Inc. shall have sent to its stockholders;
(k) promptly after the sending or filing thereof, copies of all
regular and periodic financial reports which G&K Inc. shall file with the
Securities and Exchange Commission or any national securities exchange; and
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(l) from time to time, with reasonable promptness, such other
material, reports, records or information as an Agent may reasonably
request.
(m) sixty (60) days after expiration of the "Review Period" described
in SECTION 3.6 of the Asset Purchase Agreement, a certification of the
final purchase price (subject to such adjustments as may then be pending)
for the assets acquired pursuant to the Asset Purchase Agreement setting
forth all adjustments to such purchase price in comparative form against
the estimates thereof provided to the Agents pursuant to SECTION 5.1(p).
Section 7.2 BOOKS AND RECORDS; INSPECTION AND EXAMINATION. Each
Borrower will, and will cause each G&K Enterprise to, keep accurate books of
record and account for itself pertaining its business and financial condition
and such other matters as the Agents may from time to time request in which true
and complete entries will be made in accordance with GAAP and, upon request of
and reasonable notice by an Agent, will permit any officer, employee, attorney
or accountant for any Bank to audit, review, make extracts from or copy any and
all corporate and financial books and records of any G&K Enterprise at all
reasonable times during ordinary business hours, to send and discuss with
account debtors and other obligors requests for verification of amounts owed to
a G&K Enterprise, and to discuss the affairs of such G&K Enterprise with any of
its directors, officers, employees or agents. Each Borrower will, and will cause
each G&K Enterprise to, permit any Bank or its employees, accountants, attorneys
or agents, to examine and inspect any of its property at any time during
ordinary business hours; provided, that each Bank will use reasonable efforts to
conduct (or have conducted) any such examination or inspection so as to minimize
disruptions to operations.
Section 7.3 COMPLIANCE WITH LAWS. Each Borrower will, and will cause
each G&K Enterprise to, (a) comply with the requirements of applicable laws and
regulations, the noncompliance with which would have a Material Adverse Effect,
(b) comply with all applicable Environmental Laws and obtain any permits,
licenses or similar approvals required by any such Environmental Laws, the
noncompliance with which would have a Material Adverse Effect, and (c) use and
keep its assets, and will require that others use and keep its assets, only for
lawful purposes, without violation of any federal, national, state, provincial
or local law, statute or ordinance, the noncompliance with which would have a
Material Adverse Effect.
Section 7.4 PAYMENT OF TAXES AND OTHER CLAIMS. Each Borrower will, and
will cause each G&K Enterprise to, pay or discharge, when due, (a) all taxes,
assessments and governmental charges levied or imposed upon it or upon its
income or profits, upon any properties belonging to it prior to the date on
which penalties attach thereto, (b) all federal, national, state, provincial and
local taxes required to be withheld by it, and (c) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien or charge
upon any properties of any G&K Enterprise; PROVIDED, that no G&K Enterprise
shall be required to pay or withhold any such tax, assessment, charge or claim
(i) whose amount,
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applicability or validity is being contested in good faith by appropriate
proceedings and for which proper reserves have been made or (ii) which is a
state (and not federal) obligation not known to the officers of any G&K
Enterprise, which is not material and, when a G&K Enterprise becomes aware
thereof, such tax, assessment, charge or claim is properly paid.
Section 7.5 MAINTENANCE OF PROPERTIES. Each Borrower will, and will
cause each G&K Enterprise to, keep and maintain all of its properties necessary
or useful in its business in good condition, repair and working order (normal
wear and tear excepted); PROVIDED, HOWEVER, that nothing in this SECTION 7.5
shall prevent a G&K Enterprise from discontinuing the operation or maintenance
of any of its properties if such discontinuance of operation or maintenance, in
the judgment of the officers of such G&K Enterprise, constitutes a reasonable
and prudent business decision as to such properties and is not disadvantageous
in any material respect to the Banks.
Section 7.6 INSURANCE. Each Borrower will, and will cause each G&K
Enterprise to, obtain and at all times maintain insurance with insurers believed
by it to be responsible and reputable in such amounts and against such risks as
is usually carried by companies engaged in similar business and owning similar
properties in the same general areas in which it operates. Without limiting the
foregoing, at all times each Borrower will, and will cause each G&K Enterprise
to maintain business interruption insurance including coverage for force majeure
and, keep all tangible Collateral insured against risks of fire (including
so-called extended coverage), theft, collision (in case of Collateral consisting
of motor vehicles) and such other risks and in such amounts as the Required
Banks may reasonably request, with lender's loss payable clauses or endorsements
in favor of the appropriate Agent as collateral agent on behalf of the Banks, in
form reasonably acceptable to such Agent (including, without limitation a
provision requiring at least thirty (30) days prior written notice to such Agent
of any cancellation or modification of such insurance) and, upon request of an
Agent, deliver policies or certificates of such insurance to such Agent.
Section 7.7 PRESERVATION OF CORPORATE EXISTENCE. Each Borrower will,
and will cause each G&K Enterprise to, preserve and maintain its legal existence
and all of its rights, privileges and franchises necessary or desirable in the
normal conduct of its business and shall conduct its business in an orderly,
efficient and regular manner; provided, however, that any Canadian G&K
Enterprise may merge into any other Canadian G&K Enterprise and any US G&K
Enterprise may merge into any other US G&K Enterprise, provided that G&K Inc. or
Work Wear, as the case may be, shall remain a continuing and surviving
corporation.
Section 7.8 MINIMUM EBITDA. As of each Covenant Computation Date, the
G&K Group (on a consolidated basis) will maintain its EBITDA for the applicable
Covenant Computation Period at not less than the amount set forth opposite the
applicable period below:
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XXXXXXXX XXXXXXXXXXX DATE MINIMUM EBITDA
September 27, 1997 $ 22,000,000
December 27, 1997 $ 47,000,000
March 28, 1998 $ 75,000,000
June 27, 1998 $104,000,000
September 26, 1998 $109,000,000
December 26, 1998 $113,000,000
March 27, 1999 $118,000,000
June 26, 1999 $121,000,000
September 25, 1999
and thereafter $125,000,000
Section 7.9 MINIMUM DEBT SERVICE COVERAGE RATIO. As of each Covenant
Computation Date, the G&K Group (on a consolidated basis) will maintain its Debt
Service Coverage Ratio for the applicable Covenant Computation Period at not
less than the ratio set forth opposite the applicable period below:
COVENANT COMPUTATION DATE MINIMUM DEBT SERVICE COVERAGE
RATIO
September 27, 1997 No Requirement
December 27, 1997 1.10 to 1.00
March 28, 1998 1.10 to 1.00
June 27, 1998 1.15 to 1.00
September 26, 1998 1.20 to 1.00
December 26, 1998 and thereafter 1.25 to 1.00
Section 7.10 MINIMUM STOCKHOLDERS' EQUITY. G&K Inc. (on a
consolidated basis) will maintain its Stockholders' Equity at not less than
$145,000,000 on September 27, 1997 and, on each Covenant Computation Date
thereafter, at not less than the sum of (a) the minimum required Stockholders'
Equity for G&K Inc., on a consolidated basis, for the immediately preceding
Covenant Computation Date (determined in accordance herewith) and (b) fifty
percent (50%) of the Net Income (positive only) for G&K Inc., on a consolidated
basis, for the immediately preceding Covenant Computation Period.
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Section 7.11 MAXIMUM LEVERAGE RATIO. As of each Covenant Computation
Date, the G&K Group (on a consolidated basis) will maintain its Leverage Ratio
at not more than the ratio set forth opposite the applicable period below:
COVENANT COMPUTATION DATE MAXIMUM LEVERAGE RATIO
September 27, 1997 4.25 to 1.00
December 27, 1997 4.00 to 1.00
March 28, 1998 3.50 to 1.00
June 27, 1998 3.00 to 1.00
September 26, 1998 3.00 to 1.00
December 26, 1998 3.00 to 1.00
March 27, 1999 2.75 to 1.00
June 26, 1999 2.75 to 1.00
September 25, 1999 and thereafter 2.50 to 1.00
Section 7.12 INTEREST RATE PROTECTION. Within sixty (60) days after
the Closing Date, G&K Inc. shall enter into interest rate protection agreements
acceptable to the Agents with respect to not less than $110,000,000 of the Term
Facility, for a minimum term of not less than two (2) years and under which the
Borrowers are protected against the risk of LIBOR rates increasing by more than
three (3) percent over the 90-day LIBOR rate as of the Closing Date.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Note, Acceptance or Letter of Credit shall remain
unpaid or outstanding or any Commitment shall be outstanding, the Borrowers will
comply with the following requirements, unless the Required Banks shall
otherwise consent in writing:
Section 8.1 LIENS. No Borrower will, nor will it permit any other G&K
Enterprise to, create, incur or suffer to exist any mortgage, deed of trust,
pledge, lien, security interest, assignment or transfer upon or of any its
assets, now owned or hereafter acquired, to secure any indebtedness; EXCLUDING,
HOWEVER, the following (collectively "Permitted Liens"):
(a) mortgages, deeds of trust, pledges, liens, security interests and
assignments in existence on the date hereof and listed in SCHEDULE 8.1;
(b) liens for taxes or assessments or other governmental charges to
the extent not required to be paid by SECTION 7.4;
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(c) materialmen's, merchants', carriers', worker's, repairer's, or
other like liens arising in the ordinary course of business to the extent
not required to be paid by SECTION 7.4;
(d) pledges or deposits to secure obligations under worker's
compensation laws, unemployment insurance and social security laws, or to
secure the performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases or to secure statutory obligations
or surety or appeal bonds, or to secure indemnity, performance or other
similar bonds in the ordinary course of business;
(e) zoning restrictions, easements, licenses, restrictions on the use
of real property or minor irregularities in title thereto, which do not
materially impair the use of such property in the operation of the business
of a G&K Enterprise or the value of such property for the purpose of such
business;
(f) liens and security interests granted to the Banks pursuant to any
of the Security Documents;
(g) purchase money mortgages, liens or security interests, including
conditional sale agreements or other title retention agreements and leases
which are in the nature of title retention agreements, upon or in property
acquired after the Closing Date, or mortgages, liens or security interests
existing in such property at the time of the acquisition thereof, PROVIDED
THAT:
(i) no such mortgage, lien or security interest extends or
shall extend to or cover any property of a G&K Enterprise other than
the property then being acquired; and
(ii) the aggregate principal amount of the indebtedness secured
by any such mortgage, lien or security interest shall not exceed the
cost of such property so acquired in connection therewith; and
(h) covenants, restrictions, rights, easements, encumbrances (which
do not secure the payment of money) and minor irregularities in title which
do not materially interfere with the business or operations of a G&K
Enterprise as presently conducted; and
(i) other liens securing indebtedness permitted under SECTION 8.2 in
the aggregate principal amount not exceeding $5,000,000 before the
Collateral Release Date or $10,000,000 thereafter, provided that in no
event shall any such lien cover any accounts receivable or inventory of any
G&K Enterprise.
Section 8.2 INDEBTEDNESS. No Borrower will, nor will it permit any
other G&K Enterprise to, incur, create, assume, permit or suffer to exist, any
indebtedness or liability on account of deposits or advances or any indebtedness
for borrowed money, or any other indebtedness or liability evidenced by notes,
bonds, debentures or similar obligations, except:
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(a) Obligations arising hereunder;
(b) indebtedness in existence on the date hereof and listed in
SCHEDULE 8.2;
(c) Capitalized Lease Liabilities and indebtedness of a G&K
Enterprise secured by security interests permitted by SECTION 8.1(g) and
other indebtedness of a G&K Enterprise incurred to finance the purchase of
property after the Closing Date, not to exceed $15,000,000 in the aggregate
for the entire G&K Group at any time outstanding;
(d) other indebtedness not otherwise permitted in this SECTION 8.2
not to exceed $10,000,000 in the aggregate at any time outstanding for the
entire G&K Group before the Collateral Release Date or $15,000,000
thereafter;
(e) subordinated indebtedness, which has been subordinated to all
Obligations under terms and conditions satisfactory to the Required Banks,
in their sole discretion, provided that 100% of the proceeds of any such
subordinated indebtedness is applied to the mandatory prepayment of the
Term Facility pursuant to SECTION 4.1(e)(iv) notwithstanding clause (A) or
(B) thereof; and
(f) indebtedness for borrowed money or any other indebtedness or
liability incurred by a US G&K Enterprise from another US G&K Enterprise or
by a Canadian G&K Enterprise from another Canadian G&K Enterprise.
Section 8.3 GUARANTIES. No Borrower will, nor will it permit any other
G&K Enterprise to, assume, guarantee, endorse or otherwise become directly or
contingently liable in connection with any obligations of any other Person,
except:
(a) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(b) guaranties, endorsements and other direct or contingent
liabilities in connection with the obligations of other Persons in
existence on the date hereof and listed in SCHEDULE 8.2;
(c) guaranties, endorsements and other liabilities incurred in the
ordinary course of business with respect to obligations that are not Funded
Debt obligations, not to exceed $10,000,000 in the aggregate at any time
outstanding;
(d) guaranties, endorsements and other liabilities incurred by a US
G&K Enterprise for the benefit of another US G&K Enterprise or by a
Canadian G&K Enterprise for the benefit of another Canadian G&K Enterprise,
provided that the indebtedness so guaranteed is otherwise permitted under
SECTION 8.2; and
(e) the Guaranties.
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Section 8.4 INVESTMENTS. No Borrower will, nor will it permit any
other G&K Enterprise to, purchase or hold beneficially any stock or other
securities or evidences of indebtedness of, make or permit to exist any loans or
advances to, or create or acquire any Subsidiary or make any investment or
acquire any interest whatsoever in, any other Person, except:
(a) investments in direct obligations of the United States of America
or any agency or instrumentality thereof whose obligations constitute the
full faith and credit obligations of the United States of America having a
maturity of one (1) year or less, commercial paper issued by a US
corporation rated "A-1" or "A-2" by Standard & Poors Corporation or "P-1"
or "P-2" by Xxxxx'x Investors Service, investments in money market mutual
funds whose underlying assets are exclusively investments which would
otherwise be permitted investments under this SECTION 8.4(a), or repurchase
agreements, certificates of deposit or bankers' acceptances having a
maturity of one (1) year or less issued by members of the Federal Reserve
System having deposits in excess of $500,000,000 (which certificates of
deposit or bankers' acceptances are fully insured by the Federal Deposit
Insurance Corporation);
(b) travel advances or loans to officers and employees of the G&K
Companies;
(c) advances in the form of progress payments, prepaid rent or
security deposits;
(d) purchases of a G&K Enterprise's stock in accordance with an
employee benefit plan not exceeding $2,500,000 in the aggregate for all G&K
Enterprises per fiscal year before the Collateral Release Date or
$5,000,000 thereafter;
(e) investments by a G&K Enterprise in another G&K Enterprise
including intercompany transfers, advances, loans, guarantees or other
financial accommodations, not permitted under SUBSECTION (f) below, as set
forth and described in SCHEDULE 8.4, together with readvances of any such
loans and other financial accommodations extended by G&K Inc. to Work Wear,
so long as the aggregate amount of any such loans and other financial
accommodations extended by G&K Inc. to Work Wear shall not exceed
$20,000,000 at any time outstanding;
(f) investments, including intercompany transfers, advances, loans,
guarantees or other financial accommodations by a US G&K Enterprise in
another US G&K Enterprise or by a Canadian G&K Enterprise in another
Canadian G & K Enterprise;
(g) investments constituting loans, advances or other financial
accommodations to, or the acceptance of promissory notes or other evidences
of indebtedness or agreements as to the deferred payment of any amount owed
to a G&K
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Enterprise from, any Person not to exceed a principal amount of $10,000,000
in the aggregate for the entire G&K Group at any time outstanding; and
(h) investments to purchase assets, stock or other securities of, or
to make any investment or acquire any interest whatsoever in, any other
Person, whether in connection with acquisition of a business or otherwise,
not to exceed $10,000,000 prior to the Collateral Release Date and
$25,000,000 after the Collateral Release Date, in the aggregate for the
entire G&K Group invested during any fiscal year of the G&K Group; and
(i) purchases by G&K Inc. of its own issued and outstanding capital
stock, provided that prior to the Collateral Release Date such purchases
shall not exceed $5,000,000 in the aggregate.
Section 8.5 RESTRICTED PAYMENTS. Unless otherwise permitted under
SECTION 8.4(d) or (i), G&K Inc. will not declare or pay, or make expenditures on
account of any Dividends if, after giving effect to such payment, distribution
or application, the aggregate amount of such Dividends paid or made during such
fiscal year would exceed $3,000,000 for the fiscal year immediately preceding
the year in which any such Dividends are paid, and the right to make such
Dividends as herein described shall be non-cumulative from fiscal year to fiscal
year.
Section 8.6 SALE OR TRANSFER OF ASSETS; SUSPENSION OF BUSINESS
OPERATIONS. No Borrower will, nor will it permit any other G&K Enterprise to,
sell, lease, assign, transfer or otherwise dispose of all or a substantial part
of its assets (whether in one transaction or in a series of transactions) to any
other Person (except another G&K Enterprise), other than the sale of the Assets
Held For Sale and inventory in the ordinary course of business, and will not
liquidate, dissolve or suspend its business operations; provided, however, that
any proceeds of any such sale of assets shall be applied to the Term Facility to
the extent required under SECTION 4.1(e). For purposes of the foregoing, a
"substantial part" of a G&K Enterprise assets shall mean assets with a book
value in excess of $15,000,000 during any fiscal year.
Section 8.7 MERGER AND CONSOLIDATION; CHANGE OF CONTROL. G&K Inc. will
not consolidate with or merge into any Person, or permit any Person to merge
into it, or transfer or sell, (in any transaction analogous in purpose or effect
to a consolidation or merger) all or substantially all of its assets to any
other Person if, as a result thereof G&K Inc. shall not be the continuing or
surviving corporation. In addition, whether or not occurring as the result of
any such merger or consolidation, the Borrowers shall not suffer to occur or
exist a material change in the ownership or control of any G&K Enterprise except
as otherwise permitted in SECTION 7.7 . For purposes hereof, a "material change"
shall mean (a) the acquisition after the Closing Date by any individual or
control group of more than a 20% voting interest in the capital stock of G&K
Inc., (b) the disposition by Xxxxxxx X. Xxxx (together with any control group of
which he is a member) of more than 50% of the number of shares of capital stock
of G&K Inc., owned or controlled as of the Closing Date or (c) with respect to
G&K Inc.'s
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Board of Directors, a change in the majority of such directors occurring during
any six month period; provided however, that, nothing hereunder shall limit or
restrict Xxxxxxx X. Xxxx (together with any control group of which he is a
member) from disposing of any capital stock of G&K Inc. (y) at any time that G&K
Inc., shall be in Level I Status or Level II Status so long as (i) the purchaser
of such capital stock shall not thereafter constitute a control group holding
20% voting interest in the capital stock by G&K Inc. and (ii) any redemption of
such stock by G&K would not cause the Status to change and (z) at any time after
the date which is two (2) years from the Closing Date. For purposes of this
SECTION 8.7, a control group of which Xxxxxxx X. Xxxx is a member shall include
his spouse, direct or indirect lineal descendants and any trusts created for the
benefit of any such persons.
Section 8.8 SALE AND LEASEBACK. No Borrower will, nor will it permit
any other G&K Enterprise to, enter into any arrangement, directly or indirectly,
with any other Person whereby a G&K Enterprise shall sell or transfer a
substantial part of any real or personal property of the G&K Group, whether now
owned or hereafter acquired, and then or thereafter rent or lease as lessee such
property or any part thereof or any other property which a G&K Enterprise
intends to use for substantially the same purpose or purposes as the property
being sold or transferred. For purposes of the foregoing, a "substantial part"
of the G&K Group's assets shall mean assets with a book value in excess of
$10,000,000.
Section 8.9 RESTRICTIONS ON NATURE OF BUSINESS. No Borrower will, nor
will it permit any other G&K Enterprise to, engage in business in any industry
materially different from that presently engaged in by it and will not purchase,
lease or otherwise acquire assets not related to its businesses, provided that
nothing in the foregoing shall limit or restrict the ability of any G&K
Enterprise to sell any related products to customers of a G&K Enterprise.
Section 8.10 ACCOUNTING. No Borrower will, nor will it permit any
other G&K Enterprise to, adopt any material change in accounting principles,
other than as required by GAAP, or adopt, permit or consent to any change in its
fiscal year. If GAAP shall change in a manner that materially affects the
computation of any financial covenants set forth in SECTIONS 7.8- 7.12, the
Required Banks may, with the Borrowers' consent (which will not be unreasonably
withheld), adjust such financial covenants as may be necessary to account for
such change.
Section 8.11 HAZARDOUS SUBSTANCES. No Borrower will, nor will it
permit any other G&K Enterprise to, cause or permit any Hazardous Substances to
be disposed of in any manner which reasonably may be expected to result in any
Material Adverse Effect, on, under or at any real property which is operated by
a G&K Enterprise or in which a G&K Enterprise has any interest.
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Section 8.12 CAPITAL EXPENDITURES. No Borrower will, nor will it
permit any other G&K Enterprise to, make Capital Expenditures during any fiscal
year, in an aggregate amount in excess of the amount for the entire G&K Group
set forth opposite the applicable period below:
FISCAL YEAR-END AMOUNT
June 27, 1998 $60,000,000
June 26, 1999 60,000,000
June 24, 2000 70,000,000
June 30, 2001 65,000,000
and thereafter;
PROVIDED, HOWEVER, that to the extent the aggregate amount of Capital
Expenditures for the G&K Group for any fiscal year is less than the maximum
permitted Capital Expenditures for such fiscal year as provided above, the
amount of any such excess may be carried over to the next fiscal year, but if
not utilized during such immediately succeeding fiscal year, any such excess may
not be carried over to a subsequent fiscal year; PROVIDED FURTHER, HOWEVER, that
the limitations set forth in this SECTION 8.12 shall not limit the Borrowers'
ability to make investments permitted under SECTION 8.4(h).
Section 8.13 RENTAL PAYMENTS. No Borrower will, nor will it permit any
other G&K Enterprise to, become or be a party as lessee to any lease with
respect to real or personal property if, after giving effect to such lease, the
aggregate amount of rent for any such leases with a remaining term of longer
than one year from the applicable Covenant Computation Date for any period of
twelve consecutive months payable by the G&K Group with respect to all such
leases (after deducting the aggregate amount of rent receivable by the G&K Group
under any sublease of any such lease to any Person) will exceed $7,000,000. For
purposes of this SECTION 8.13, "rent", with respect to any lease or sublease and
for any period, means the aggregate minimum amount payable by the lessee or
sublessee to the lessor or sublessor for such period.
ARTICLE IX
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
Section 9.1 EVENTS OF DEFAULT. "Event of Default", wherever used
herein, means any one of the following events:
(a) default in the payment of any principal of any Note or Acceptance
when it becomes due and payable; or
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(b) default in the payment of any interest on any Note or Acceptance
or any fees, costs or expenses required to be paid by a Borrower under this
Agreement or any other Loan Document and the continuation of such default
for more than three (3) Business Days; or
(c) default in the performance, or breach, of any covenant or
agreement on the part of a Borrower contained in SECTIONS 7.8 - 7.11
or 8.12; or
(d) default in the performance, or breach, of any covenant or
agreement of a Borrower in this Agreement (other than a covenant or
agreement a default in whose performance or whose breach is elsewhere in
this SECTION 9.1 specifically dealt with) or in any other Loan Document and
the continuance of such default or breach for a period of thirty (30)
calendar days after there has been given a written notice from an Agent
specifying such default or breach and requiring it to be remedied; or
(e) a Borrower or Guarantor shall be or become insolvent, or admit in
writing its inability to pay its debts as they mature, or make an
assignment for the benefit of creditors; or a Borrower or Guarantor shall
apply for or consent to the appointment of any receiver, trustee, or
similar officer for it or for all or any substantial part of its property;
or such receiver, trustee or similar officer shall be appointed without the
application or consent of that Borrower or Guarantor; or a Borrower or
Guarantor shall institute (by petition, application, answer, consent or
otherwise) any insolvency, reorganization, arrangement, readjustment of
debt, dissolution, liquidation or similar proceeding relating to it under
the laws of any jurisdiction; or any such proceeding shall be instituted
(by petition, application or otherwise) against a Borrower or Guarantor; or
any judgment, writ, warrant of attachment or execution or similar process
shall be issued or levied against a substantial part of the property of a
Borrower or Guarantor and such judgment, writ, or similar process shall not
be released, vacated or fully bonded within sixty (60) calendar days after
its issue or levy; or
(f) any Guarantor shall repudiate or purport to revoke its Guaranty;
or
(g) a petition naming a Borrower or Guarantor as debtor shall be
filed under the United States Bankruptcy Code, the Bankruptcy and
Insolvency Act of Canada or the Companies Creditors' Arrangement Act of
Canada; or
(h) any representation or warranty made by a Borrower or Guarantor in
any Loan Document or by a Borrower (or any of its officers) in any request
for a Borrowing, or in any other certificate, instrument, or statement
contemplated by or made or delivered pursuant to or in connection with any
Loan Document, shall prove to have been incorrect in any material respect
when made; or
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(i) the rendering against a Borrower of a final judgment, decree or
order for the payment of money in excess of $5,000,000 (unless the payment
of such judgment is fully insured) and the continuance of such judgment,
decree or order unsatisfied and in effect for any period of thirty (30)
consecutive calendar days without a stay of execution; or
(j) a default under any bond, debenture, note, securitization
agreement or other evidence of indebtedness or similar obligation of a
Borrower relating to Funded Debt with an outstanding principal balance of
$250,000 or more or under any indenture or other instrument under which any
such evidence of indebtedness or similar obligation has been issued or by
which it is governed and the expiration of the later of (i) five (5)
Business Days after such default has occurred or (ii) the applicable period
of grace, if any, specified in such evidence of indebtedness, indenture or
other instrument; or
(k) any Reportable Event, which the US Agent determines in good faith
constitutes grounds for the termination by the PBGC of any Plan that is
material to any G&K Enterprise (other than a Multi-Employer Plan) sponsored
by a US G&K Enterprise or for the appointment by the appropriate United
States District Court of a trustee to administer any such Plan, shall have
occurred and be continuing thirty (30) days after written notice to such
effect shall have been given to the Borrowers by the US Agent; or any such
Plan shall have been terminated, or a trustee shall have been appointed by
an appropriate United States District Court to administer any such Plan, or
the PBGC shall have instituted proceedings to terminate any such Plan or to
appoint a trustee to administer any such Plan; or
(l) a Borrower or Guarantor shall liquidate, dissolve, terminate or
suspend its business operations or otherwise fail to operate its business
in the ordinary course, or shall sell all or substantially all of its
assets other than in accordance with SECTION 8.6.
Section 9.2 RIGHTS AND REMEDIES. Upon the occurrence of an Event of
Default or at any time thereafter until such Event of Default is cured or waived
to the written satisfaction of the Required Banks, the Agents or the Required
Banks may (and, upon written request of the Required Banks the appropriate Agent
shall) exercise any or all of the following rights and remedies:
(a) by notice to the Borrowers, declare the Commitments to be
terminated, whereupon the same shall forthwith terminate;
(b) by notice to the Borrowers, declare all Obligations to be
forthwith due and payable, whereupon all Obligations shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the
Borrowers;
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(c) by notice to the Borrowers, demand payment by the Borrowers of
funds with respect to each outstanding Letter of Credit and Acceptance in
an amount sufficient to fund a cash escrow equal to the sum of the Letter
of Credit Amount and Acceptance Amount, which cash escrow will be held by
the Agents, without interest, in special cash collateral accounts and
applied to payment of maturing Acceptances and to reimbursement of all
drafts submitted under outstanding Letters of Credit;
(d) without notice to the Borrowers and without further action, apply
any and all monies owing by any Bank to the Borrowers to the payment of the
Obligations;
(e) exercise and enforce the rights and remedies available to the
Banks under any Loan Document; and
(f) exercise any other rights and remedies available to any Bank by
law or agreement.
Notwithstanding the foregoing, upon the occurrence of an Event of Default
described in SECTION 9.1(g), all Obligations shall be immediately due and
payable without presentment, demand, protest or notice of any kind.
ARTICLE X
AGREEMENT AMONG BANKS AND AGENTS
Section 10.1 AUTHORIZATION; POWERS; AGENT FOR COLLATERAL PURPOSES.
Each Bank irrevocably appoints and authorizes each Agent to act as
administrative agent for and on behalf of such Bank to the extent provided
herein, in any Loan Documents or in any other document or instrument delivered
hereunder or in connection herewith, and to take such other actions as may be
reasonably incidental thereto. Each Agent agrees to act as administrative agent
for each Bank upon the express conditions contained in this ARTICLE X, but in no
event shall an Agent constitute a fiduciary of any Bank, nor shall an Agent have
any fiduciary responsibilities in respect of any Bank. In furtherance of the
foregoing, and not in limitation thereof, each Bank irrevocably (a) authorizes
each Agent to execute and deliver and perform those obligations under this
Agreement and each of the Loan Documents to which the Agent is a party as are
specifically delegated to the Agent, and to exercise all rights, powers and
remedies as may be specifically delegated hereunder or thereunder, together with
such additional powers as may be reasonably incidental thereto, (b) appoints
each Agent as nominal beneficiary or nominal secured party, as the case may be,
under the Loan Documents and all related UCC and PPSA financing statements, and
(c) authorizes each Agent to act as agent of and for such Bank for purposes of
holding, perfecting and disposing of Collateral under the Loan Documents. As to
any matters not expressly provided for by this Agreement or the Loan Documents,
neither Agent shall be required to exercise any discretion or take any action,
but shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Required Banks or, if so required
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pursuant to SECTION 11.2, upon the instructions of all Banks; PROVIDED, HOWEVER,
that except for action expressly required of an Agent hereunder, each Agent
shall in all cases be fully justified in failing or refusing to act hereunder
unless it shall be indemnified to its satisfaction by all Banks against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action, and neither Agent shall in any event be
required to take any action which is contrary to this Agreement, the Loan
Documents or applicable law.
Section 10.2 ACTIONS ON DEFAULT; APPLICATION OF PROCEEDS. Prior to the
occurrence of an Event of Default, each Agent, after deduction of any costs of
collection, as provided in SECTION 10.5, shall remit to each Bank (to the
extent a Bank is to share therein) that Bank's pro rata share of all payments
of principal, interest and fees payable hereunder in accordance with such Bank's
Percentage with respect to the Facility under which such payments are received.
After the occurrence of an Event of Default, the Agents shall coordinate all
administration and collection activities against the G&K Enterprises and all
Collateral and shall advise all Banks, on a periodic basis, with respect to the
contemplated actions to be taken with respect thereto, subject, in any event, to
the direction of the Required Banks. In addition, the Canadian Agent, for and
on behalf of the Canadian Banks, shall make every effort to satisfy and pay in
full all Outstanding Canadian Obligations from payments made by a Canadian G&K
Enterprise and from all proceeds and collections obtained on account of actions
against a Canadian G&K Enterprise or any Collateral owned or pledged by a
Canadian G&K Enterprise before seeking to apply to any such Outstanding Canadian
Obligations any payments, proceeds or collections from or relating to a US G&K
Enterprise. After the occurrence of an Event of Default, each Agent, after
deduction of any costs of collection, as provided in SECTION 10.5, shall remit
to each Bank (to the extent a Bank is to share therein), such Bank's appropriate
share of all principal, interest and fees and all other collections and
recoveries on account of any G&K Enterprise or any Collateral in accordance with
the following (as to each Bank its "Default Share"):
(a) Payments made by a Canadian G&K Enterprise and all proceeds and
collections obtained on account of any collection activity against, or any
Collateral owned or pledged by, a Canadian G&K Enterprise shall be remitted
by the Canadian Agent to each Canadian Bank in an amount equal to such
Canadian Bank's Percentage of such payments, proceeds and collections;
(b) Prior to payment in full of all Outstanding Canadian Obligations,
payments made by a US G&K Enterprise and all proceeds and collections
obtained on account of any collection activity against, or any Collateral
owned or pledged by, a US G&K Enterprise shall be remitted by the US Agent
(i) to each US Bank, in an amount equal to such US Bank's Default
Percentage of such payments, proceeds and collections and (ii) to a special
escrow account established by the US Agent for the benefit of the Canadian
Banks, in an amount equal to such Canadian Banks' Default Percentage of
such payments, proceeds and collections. After the Canadian Agent shall
have confirmed to the US Agent that, to the extent practicable, the
Canadian
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Agent has exhausted its remedies against the Canadian G&K Enterprises and
the Collateral owned or pledged by a Canadian G&K Enterprise, the US Agent
shall release to the Canadian Agent that portion of the proceeds in such
escrow account as may be necessary to satisfy all remaining Outstanding
Canadian Obligations, the Canadian Agent shall distribute such amounts in
accordance with SUBSECTION (a) above and the US Agent shall distribute any
remaining funds in such escrow account to the US Banks in accordance with
SUBSECTION (c) below;
(c) After payment in full of all Outstanding Canadian Obligations,
payments made by a US G&K Enterprise and all proceeds and collections
obtained on account of any collection activity against, or any Collateral
owned or pledged by, a US G&K Enterprise shall be remitted by the US Agent
to each US Bank in an amount equal to such US Bank's Default Percentage of
such payments, proceeds and collections.
Each Bank's interest under the Loan Documents shall be payable solely from
payments, collections and proceeds actually received by the appropriate Agent
under the Loan Documents; and each Agent's only liability to a Bank with respect
to any such payments, collections and proceeds shall be to account for such
Bank's Percentage (or Default Share, as the case may be) of such payments,
collections and proceeds in accordance with this Agreement. If the Agent is
required for any reason to refund any such payments, collections or proceeds,
each Bank will refund to the Agent, upon demand, its Percentage (or Default
Share, as the case may be) of such payments, collections or proceeds, together
with its Percentage (or Default Share, as the case may be) of interest or
penalties, if any, payable by the Agent in connection with such refund. If any
Bank has wrongfully refused to fund its Percentage of any Borrowing, or if the
outstanding principal balance of the Advances and Acceptances made by any Bank
under a Facility is for any other reason less than its Percentage of the
aggregate principal balance of all Advances and Acceptances under that Facility,
the appropriate Agent may remit payments received by it to the other Banks
sharing in that Facility until such payments have reduced the aggregate amounts
owed by the applicable Borrower to the extent that the aggregate amount of the
Advances and Acceptances owing to such Bank hereunder are equal to its
Percentage of the aggregate amounts of the Advances and Acceptances owing under
the applicable Facility to all of the Banks hereunder. The foregoing provision
is intended only to set forth certain rules for the application of payments,
proceeds and collections in the event that a Bank has breached its obligations
hereunder and shall not be deemed to excuse any Bank from such obligations.
Section 10.3 EXCULPATION. No Agent shall be liable for any action
taken or omitted to be taken by the Agent in connection with this Agreement or
the Loan Documents, except for its own gross negligence or willful misconduct.
Each Agent shall be entitled to rely upon advice of counsel concerning legal
matters, the advice of independent public accountants with respect to accounting
matters and advice of other experts as to any other matters and upon this
Agreement, any Loan Documents and any schedule, certificate, statement, report,
notice or other writing which it reasonably believes to be genuine or to have
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been presented by a proper Person. Neither of the Agents nor any of its
directors, officers, employees or agents shall be responsible or in any way
liable for (a) any recitals, representations or warranties contained in, or for
the execution, validity, genuineness, effectiveness or enforceability of this
Agreement, any Loan Document, or any other instrument or document delivered
hereunder or in connection herewith, (b) the validity, genuineness, perfection,
effectiveness, enforceability, existence or value of any Collateral or (c) any
action taken or omitted by a Borrower or the other Agent. The designation of
Norwest and FCNBD as Agents hereunder shall in no way impair or affect any of
the rights and powers of, or impose any duties or obligations upon, Norwest or
FCNBD in its individual capacity as Bank hereunder.
Section 10.4 USE OF THE TERM "AGENT". The term "Agent" is used herein
in reference to an Agent merely as a matter of custom. It is intended to reflect
only an administrative relationship between each Agent and the Banks, in each
case as independent contracting parties. However, the obligations of an Agent
shall be limited to those expressly set forth herein and in no event shall the
use of such term create or imply any fiduciary relationship or any other
obligation arising under the general law of agency.
Section 10.5 REIMBURSEMENT FOR COSTS AND EXPENSES. All payments,
collections and proceeds received or effected by an Agent may be applied first
to pay or reimburse the Agent for all reasonable costs and expenses at any time
incurred by or imposed upon the Agent in connection with this Agreement or any
other Loan Document (including but not limited to all reasonable attorney's
fees, foreclosure expenses and advances made to protect the security of any
Collateral, but excluding any costs, expenses, damages or liabilities arising
from the gross negligence or willful misconduct of the Agent). If an Agent does
not receive payments, collections or proceeds sufficient to cover any such costs
and expenses within five (5) days after their incurrence or imposition, each
Bank shall, upon demand of the US Agent, with respect to collection activities
against US G&K Enterprises and Collateral owned by US G&K Enterprise, each
Canadian Bank shall remit to the US Agent such Bank's Default Percentage, and,
upon demand of the Canadian Agent with respect to collection activities against
the Canadian G&K Enterprises and Collateral owned by any Canadian G&K
Enterprise, each Canadian Bank shall remit to the Canadian Agent such Canadian
Bank's Percentage of the difference between (i) such costs and expenses and (ii)
such payments, collections and proceeds, together with interest on such amount
for each day following the thirtieth day after demand therefor until so remitted
at a rate equal to the Federal Funds Rate or the Canadian Bank Rate (as the case
may be) for each such day.
Section 10.6 PAYMENTS RECEIVED DIRECTLY BY BANKS. If any Bank shall
obtain any payment or other recovery (whether voluntary, involuntary, by
application of offset or otherwise) on account of any Facility or on account of
any fees under this Agreement (other than through distributions made in
accordance with SECTION 10.2 hereof) in excess of such Bank's applicable
Percentage with respect to such Facility (or such Bank's Default Percentage, if
applicable), such Bank shall promptly give notice of such fact to the
appropriate Agent and shall promptly remit to such Agent such amount as shall be
necessary to cause the
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remitting Bank to share such excess payment or other recovery ratably with each
of the Banks in the affected Facility in accordance with their respective
Percentages or Default Percentages, if applicable, together with interest for
each day on such amount until so remitted at a rate equal to the Federal Funds
Rate or Canadian Bank Rate (as the case may be) for each such day; PROVIDED,
HOWEVER, that if all or any portion of the excess payment or other recovery is
thereafter recovered from such remitting Bank or holder, the remittance shall be
restored to the extent of such recovery.
Section 10.7 INDEMNIFICATION. Each Bank severally (but not jointly)
hereby agrees to indemnify and hold harmless each Agent, as well as such Agent's
agents, employees, officers and directors, ratably according to their respective
Default Percentages from and against any and all losses, liabilities (including
liabilities for penalties), actions, suits, judgment, demands, damages, costs,
disbursements, or expenses (including attorneys' fees and expenses) of any kind
or nature whatsoever, which are imposed on, incurred by, or asserted against the
Agent or its agents, employees, officers or directors in any way relating to or
arising out of this Agreement or the Loan Documents, or as a result of any
action taken or omitted to be taken by the Agent; PROVIDED, HOWEVER, that no
Bank shall be liable for any portion of any such losses, liabilities (including
liabilities for penalties), actions, suits, judgments, demands, damages, costs
disbursements, or expenses resulting from the gross negligence or willful
misconduct of an Agent. Notwithstanding any other provision of the Loan
Documents, each Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall be indemnified to its satisfaction by
the Banks against any and all liability and expense that may be incurred by it
by reason of taking or continuing to take any such action.
Section 10.8 AGENT AND AFFILIATES. Norwest and FCNBD shall have the
same rights and powers in its capacity as a Bank hereunder as any other Bank,
and may exercise or refrain from exercising the same as though it were not an
Agent, and Norwest and FCNBD and their affiliates may accept deposits from and
generally engage in any kind of business with each G&K Enterprise as fully as if
Norwest and FCNBD were not the Agents hereunder.
Section 10.9 CREDIT INVESTIGATION. Each Bank acknowledges that it has
made such inquiries and taken such care on its own behalf as would have been the
case had its Commitments been granted and its Advances or Acceptances made
directly by such Bank to a Borrower without the intervention of an Agent or any
other Bank. Each Bank agrees and acknowledges that no Agent makes any
representations or warranties about the creditworthiness of the Borrowers or any
other party to this Agreement (including the other Agent) or with respect to the
legality, validity, sufficiency or enforceability of this Agreement, any Loan
Document, any Collateral or any other instrument or document delivered hereunder
or in connection herewith.
Section 10.10 DEFAULTS. No Agent shall have a duty to inquire into any
performance or failure to perform by a Borrower and shall not be deemed to have
knowledge of the occurrence of a Default or an Event of Default (other than
under SECTIONS 9.1(a) or
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9.1(b)) hereof unless the Agent has received notice from a Bank or a Borrower
specifying the occurrence of such Default or Event of Default. In the event that
an Agent receives such a notice of the occurrence of a Default or an Event of
Default, such Agent shall give prompt notice thereof to the Banks. In the event
of any Default, the appropriate Agent shall (subject to SECTION 10.7 hereof)
(a) in the case of a Default that constitutes an Event of Default, not take any
the actions referred to in SECTION 9.2(b) hereof unless so directed by the
Required Banks, and (b) in the case of any Default, take such actions with
respect to such Default as shall be directed by the Required Banks; PROVIDED
that, unless and until an Agent shall have received such directions, an Agent
may take any action, or refrain from taking any action, with respect to such
Default as it shall deem advisable in the best interest of the Banks.
Section 10.11 OBLIGATIONS SEVERAL. The obligations of each Bank
hereunder are the several obligations of such Bank, and neither any Bank nor an
Agent shall be responsible for the obligations of any other Bank hereunder, nor
will the failure by an Agent or any Bank to perform any of its obligations
hereunder relieve an Agent or any other Bank from the performance of its
respective obligations hereunder. Notwithstanding the forgoing, each Bank
acknowledges and agrees that the failure of any Bank to honor any of its
obligations hereunder shall not relieve any other Bank of its own several
obligations hereunder. Nothing contained in this Agreement, and no action taken
by any Bank or an Agent pursuant hereto or in connection herewith or pursuant to
or in connection with the Loan Documents shall be deemed to constitute the
Banks, together or with or without the Agents, as a partnership, association,
joint venture, or other entity.
Section 10.12 SALE OR ASSIGNMENT; ADDITION OF BANKS. Except as
permitted under the terms and conditions of this SECTION 10.12 or, with respect
to participations, under SECTION 10.13, no Bank may sell, assign or transfer its
rights or obligations under this Agreement or its interest in any Note. Any
Bank, at any time upon at least ten (10) Business Days' prior written notice to
the US Agent (and the Canadian Agent if the sale relates to the Canadian
Revolving Facility) and the Borrowers (unless the affected Agents and the
Borrowers consent to a shorter period of time), may assign all of such Bank's
Notes, Advances, Acceptances and Commitments, or a portion thereof (so long as
any such portion is not less then $10,000,000 and is in equal percentages of
such assigning Bank's Commitments), to a domestic or foreign bank (having a
branch office in the United States), an insurance company or other financial
institution (an "Applicant") on any date (the "Adjustment Date") selected by
such Bank, but only so long as the Borrowers and the US Agent (and the Canadian
Agent if the sale relates to the Canadian Revolving Facility) shall have
provided their prior written approval of such proposed Applicant, which prior
written approval will not be unreasonably withheld. Notwithstanding the
foregoing, (x) assignments may be made by a Bank to The First National Bank of
Chicago or to another Bank already a party to this Agreement in an amount not
less than $1,000,000 and (y) no such consent of the Borrowers shall be required
to sale of an interest to an affiliate of a Bank or, in any event, if an Event
of Default shall exist. Upon receipt of such approval and to confirm the status
of
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each additional Bank as a party to this Agreement and to evidence the assignment
in accordance herewith:
(a) the Agents, the Borrowers, the assigning Bank and such Applicant
shall, on or before the Adjustment Date, execute and deliver to the Agent
an Assignment Certificate in substantially the form of EXHIBIT L (an
"Assignment Certificate");
(b) the affected Borrower will execute and deliver to the Agent, for
delivery by the Agent in accordance with the terms of the Assignment
Certificate, (i) new Notes payable to the order of the Applicant in amounts
corresponding to the applicable Commitments acquired by such Applicant and
(ii) new Notes payable to the order of the assigning Bank in amounts
corresponding to the retained Commitments. Such new Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of the
Notes to be replaced by such new Notes, shall be dated the effective date
of such assignment and shall otherwise be in the form of the Notes to be
replaced thereby. Such new Notes shall be issued in substitution for, but
not in satisfaction or payment of, the Notes being replaced thereby and
such new Notes shall be treated as Notes for purposes of this Agreement;
and
(c) the assigning Bank shall pay to the applicable Agent an
administrative fee of $3,000.
Upon the execution and delivery of such Assignment Certificate and such new
Notes, and effective as of the effective date thereof (i) this Agreement shall
be deemed to be amended to the extent, and only to the extent, necessary to
reflect the addition of such additional Bank and the resulting adjustment of the
Percentages arising therefrom, (ii) the assigning Bank shall be relieved of all
obligations hereunder to the extent of the reduction of the assigning Bank's
Percentage, and (iii) the Applicant shall become a party hereto and shall be
entitled to all rights, benefits and privileges accorded to a Bank herein and in
each other Loan Document or other document or instrument executed pursuant
hereto and subject to all obligations of a Bank hereunder, including, without
limitation, the right to approve or disapprove actions which, in accordance with
the terms hereof, require the approval of the Required Banks or all Banks.
Promptly after the execution of any Assignment Certificate, a copy thereof shall
be delivered by the US Agent to each Bank and to the Borrowers. In order to
facilitate the addition of additional Banks hereto, the Borrowers and the Banks
shall cooperate fully with the Agents in connection therewith and shall provide
all reasonable assistance requested by the Agents relating thereto, including,
without limitation, the furnishing of such written materials and financial
information regarding the Borrowers as either Agent may reasonably request, the
execution of such documents as either Agent may reasonably request with respect
thereto, and the participation by officers of the Borrowers, and the Banks in a
meeting or teleconference call with any Applicant upon the request of either
Agent.
Section 10.13 PARTICIPATION. In addition to the rights granted in
SECTION 10.12, each Bank may grant participations in all or a portion of its
Notes, Advances, Acceptances
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and Commitments to any domestic or foreign commercial bank (having a branch
office in the United States), insurance company, financial institution or an
affiliate of such Bank. No holder of any such participation, however, shall be
entitled to require any Bank to take or omit to take any action hereunder except
those actions described in Section 11.2 requiring consent of all Banks. The
Banks shall not, as among the Borrowers, the Agents and the Banks, be relieved
of any of their respective obligations hereunder as a result of any such
granting of a participation. The Borrowers hereby acknowledge and agree that any
participation described in this SECTION 10.13 may rely upon, and possess all
rights under, any opinions, certificates, or other instruments or documents
delivered under or in connection with any Loan Document. Except as set forth in
this SECTION 10.13, no Bank may grant any participation in the Notes, Advances,
Acceptances or Commitments.
Section 10.14 BORROWER NOT A BENEFICIARY OR PARTY. Except with respect
to the limitation of liability applicable to the Banks under SECTION 10.11 and
the Borrowers' right to approve additional Banks in accordance with
SECTION 10.12, the provisions and agreements in this ARTICLE X are solely among
the Banks and the Agents and the Borrowers shall not be considered a party
thereto or a beneficiary thereof.
Section 10.15 WITHHOLDING TAX EXEMPTION. At least five (5) US Business
Days prior to the first date on which interest or fees are payable hereunder for
the account of any Bank, each Bank that is not incorporated under the laws of
the United States of America, or a state thereof, agrees that it will deliver to
each of the Borrowers and the US Agent two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224, certifying in either case
that such Bank is entitled to receive payments under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes. Each Bank which so delivers a Form 1001 or 4224 further undertakes to
deliver to each of the Borrowers and the US Agent two additional copies of such
form (or a successor form) on or before the date that such form expires
(currently, three successive calendar years for Form 1001 and one calendar year
for Form 4224) or becomes obsolete or after the occurrence of any event
requiring a change in the most recent forms so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrowers or the US Agent, in each case certifying that such
Bank is entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes, unless an
event (including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Bank from duly completing and delivering any such form with respect to it and
such Bank advises the Borrowers and the US Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax.
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ARTICLE XI
MISCELLANEOUS
Section 11.1 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on
the part of an Agent or any Bank in exercising any right, power or remedy under
the Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
under the Loan Documents. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law.
Section 11.2 AMENDMENTS, REQUESTED WAIVERS, ETC. No amendment,
modification, termination or waiver of any provision of any Loan Document or
consent to any departure by a Borrower therefrom shall be effective unless the
same shall be in writing and signed by the Required Banks and, if the rights or
duties of an Agent are affected thereby, by such Agent; provided that no
amendment, modification, termination, waiver or consent shall do any of the
following unless the same shall be in writing and signed by all Banks:
(a) change the amount of any Commitment (except as permitted in accordance with
SECTION 10.12), (b) increase the Term Commitment Amount or any Revolving
Commitment Amount, (c) modify any Margin or reduce the amount of any principal
of or interest due on any Advance, (d) change the amount or calculation of the
Acceptance Fee, any Commitment Fee or any other fee payable hereunder (except
those payable solely to an Agent), (e) change the amount of, or payment date
with respect to, any principal of, interest on or fees payable in connection
with any Outstanding Obligations, (f) change the definition of "Required Banks,"
(g) amend SECTION 10.2 as to the application of payments and collections,
(h) amend this SECTION 11.2 or any other provision of this Agreement requiring
the consent or other action of the Required Banks or all Banks, (i) release any
Guaranty or (i) except for releases of Collateral contemplated in SECTION 4.19,
release, subordinate or terminate any security interest in any Collateral. Any
waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given. No notice to or demand on
the Borrowers in any case shall entitle the Borrowers to any other or further
notice or demand in similar or other circumstances.
Section 11.3 ADDRESSES FOR NOTICES, ETC. Except as otherwise expressly
provided herein, all notices, requests, demands and other communications
provided for under the Loan Documents shall be in writing and mailed, telecopied
or delivered to the applicable parties at their respective addresses or telecopy
numbers set forth on the execution pages hereto, or, as to each party, at such
other address or telecopy number as shall be designated by such party in a
written notice to the other party complying as to delivery with the terms of
this SECTION 11.3. All such notices, requests, demands and other communications
(a) when delivered, shall be effective upon actual delivery, (b) when
telecopied, shall be effective upon receipt, (c) and when mailed, shall be
effective when sent by nationally recognized overnight mail courier or delivery
service, addressed as aforesaid, except that notices or requests to an
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Agent or any Bank pursuant to any of the provisions of ARTICLES II or III shall
not be effective until received by the Agents or such Bank.
Section 11.4 COSTS AND EXPENSES. The Borrowers will reimburse the
Agents for (a) any and all reasonable out-of-pocket costs and reasonable
expenses, including without limitation reasonable attorneys' fees and expenses,
lien and UCC and PPSA searches, title and recording expenses and other similar
expenses, paid or incurred by an Agent in connection with the preparation,
filing or recording of the Loan Documents and any other document or agreement
related hereto or thereto, and the transactions contemplated hereby (which
amount shall be paid on the Closing Date or as soon thereafter as demand is made
therefor) and the negotiation of any amendments, modifications or extensions to
or of any of the foregoing documents, instruments or agreements and the
preparation of any and all documents necessary or desirable to effect such
amendments, modifications or extensions, (b) customary transaction fees of an
Agent incurred in connection with the loans contemplated hereby, (c) fees in
connection with any audits or inspections by an Agent of any Collateral or the
operations or business of a Borrower or Guarantor, whether conducted at the
premises of a Borrower or Guarantor or at an Agent's premises, provided that the
cost thereof shall not exceed $10,000 during any period of twelve consecutive
months, unless an Event of Default shall have occurred and is continuing during
the period, in which event the foregoing limit shall no longer apply, and (d)
any and all other reasonable out-of-pocket costs and expenses incurred by an
Agent in connection with any of the transactions contemplated hereby. The
Borrowers will reimburse each Agent and each Bank for any and all reasonable
costs and expenses incurred by an Agent or any Bank in connection with the
enforcement of any of the rights or remedies of the Agents or the Banks under
any of the Loan Documents or under applicable law, whether or not suit is filed
with respect thereto.
Section 11.5 INDEMNITY. In addition to the payment of expenses
pursuant to SECTION 11.4, the Borrowers agree to indemnify, defend and hold
harmless each Agent, the Letter of Credit Bank and each Bank and each of their
respective participants, parent corporations, subsidiary corporations,
affiliated corporations, successor corporations, and all present and future
officers, directors, employees and agents (the "Indemnitees"), from and against
(i) any claim, loss or damage to which any Indemnitee may be subjected as a
result of any past, present or future existence, use, handling, storage,
transportation or disposal of any Hazardous Substance by any G&K Enterprise or
with respect to any property owned, leased or controlled by any G&K Enterprise,
(ii) any and all transfer taxes, documentary taxes, assessments or charges made
by any governmental authority (excluding income taxes) by reason of the
execution and delivery of this Agreement and the other Loan Documents or the
making of any Advances and (iii) any and all liabilities, losses, damages,
penalties, judgments, suits, claims, costs and expenses of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel) in connection with any investigative, administrative or judicial
proceedings, whether or not such Indemnitee shall be designated a party thereto,
which may be imposed on, incurred by or asserted against such Indemnitee, in any
manner relating to or arising out of or in connection with, the making of
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any Advances, discounting of any Acceptances or issuing any Letters of Credit or
entering into this Agreement or any other Loan Documents or the use or intended
use of the proceeds of the proceeds of the Facilities, excepting, however, from
the foregoing any such liabilities, losses, damages, penalties, judgments,
suits, claims, costs and expenses resulting from the willful misconduct or gross
negligence of any Indemnitee. If any investigative, judicial or administrative
proceeding arising from any of the foregoing is brought against any Indemnitee,
upon request of such Indemnitee, the Borrowers, or counsel designated by the
Borrowers and satisfactory to the Indemnitee, will resist and defend such
action, suit or proceeding to the extent and in the manner directed by the
Indemnitee, at the Borrowers' sole cost and expense. Each Indemnitee will use
its best efforts to cooperate in the defense of any such action, suit or
proceeding. If the foregoing undertaking to indemnify, defend and hold harmless
may be held to be unenforceable because it violates any law or public policy,
the Borrowers shall nevertheless make the maximum contribution to the payment
and satisfaction of each of the indemnified liabilities contemplated hereby
which is permissible under applicable law. The obligations of the Borrowers
under this SECTION 11.5 shall survive termination of this Agreement and the
discharge of the Obligations.
Section 11.6 EXECUTION IN COUNTERPARTS. This Agreement and other Loan
Documents may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same instrument.
Section 11.7 INTEGRATION; INCONSISTENCY. This Agreement, together with
the Loan Documents, comprise the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement among the parties hereto with respect to
such subject matter, superseding all prior oral or written understandings. If
any provision of a Loan Document is inconsistent with or conflicts with a
comparable or similar provision appearing in this Agreement, the comparable or
similar provision in this Agreement shall govern.
Section 11.8 AGREEMENT EFFECTIVENESS. This Agreement shall become
effective upon delivery of fully executed counterparts hereof to each of the
parties hereto.
Section 11.9 ADVICE FROM INDEPENDENT COUNSEL. The parties hereto
understand that this Agreement is a legally binding agreement that may affect
such party's rights. Each party hereto represents to the other that it has
received legal advice from counsel of its choice regarding the meaning and legal
significance of this Agreement and that it is satisfied with its legal counsel
and the advice received from it.
Section 11.10 JUDICIAL INTERPRETATION. Should any provision of this
Agreement require judicial interpretation, it is agreed that a court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against any person by reason of the rule
of construction that a document is to be construed more strictly
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against the person who itself through its agent prepared the same, it being
agreed that all parties hereto have participated in the preparation of this
Agreement.
Section 11.11 BINDING EFFECT; NO ASSIGNMENT BY BORROWER. This
Agreement shall be binding upon and inure to the benefit of the Borrowers, the
Banks, the Agents and their respective successors and assigns; PROVIDED, except
that no Borrower may assign any or all of its rights or obligations hereunder or
any of its interest herein without the prior written consent of all Banks.
Section 11.12 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
Section 11.13 HEADINGS. Article and SECTION 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.
Section 11.14 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.
(a) GOVERNING LAW. The Loan Documents shall be governed by, and
construed in accordance with, the laws of the State of Minnesota, except to
the extent expressly provided to the contrary in any such Loan Document.
(b) JURISDICTION. Each Borrower hereby irrevocably submits to the
jurisdiction of any state or federal court sitting in St. Xxxx or
Minneapolis, Minnesota, in any action or proceeding arising out of or
relating to this Agreement or any of the other Loan Documents, and each
Borrower hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such Minnesota state or
federal court. Each Borrower hereby irrevocably waives, to the fullest
extent they may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding. Each Borrower irrevocably
consents to the service of copies of the summons and complaint and any
other process which may be served in any such action or proceeding by the
mailing of copies of such process to each Borrower at its addresses
specified in SECTION 11.3. Each Borrower agrees that a final judgment in
any such action or proceeding may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in
this SECTION 11.14(b) shall affect the right of an Agent or any Bank to
serve legal process in any other manner permitted by law or affect the
right of an Agent or any Bank to bring any action or proceeding against a
Borrower or its property in the courts of other jurisdictions.
(C) WAIVER OF JURY TRIAL. EACH BORROWER AND THE BANKS HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING
-87-
OUT OF OR RELATING TO ANY LOAN DOCUMENT OR ANY INSTRUMENT OR DOCUMENT
DELIVERED THEREUNDER.
[SIGNATURE PAGES FOLLOW]
-88-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
BORROWERS
000 Xxxxx Xxxxxxx 000, Xxxxx 000 G&K SERVICES, INC.
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx
Phone: (000) 000-0000 By /s/ Xxxxxxx X. Xxxx
Fax: (000) 000-0000 --------------------------------
Xxxxxxx X. Xxxx
Its Chief Financial Officer
0000 Xxxxxxx Xxxx, Xxxxx 000 WORK WEAR CORPORATION OF
Mississauga, Ontario CANADA LTD.
Attn: Xxxxxx Xxxx
Phone: (000) 000-0000 By /s/ Xxxxxxx X. Xxxx
Fax: (000) 000-0000 --------------------------------
Xxxxxxx X. Xxxx
Its Chief Financial Officer
BANKS AND AGENTS
Norwest Center, 5th Floor NORWEST BANK MINNESOTA,
Sixth and Marquette NATIONAL ASSOCIATION
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000 as US Bank, Letter of Credit Bank
Attn: Xxxxxx X. Xxxxxx and US Agent
Phone: (000) 000-0000
Fax: (000) 000-0000
By
--------------------------------
Xxxxxx X. Xxxxxx
Its Vice President
Dollar Amount
Facility of Commitment Percentage
-------- ------------- ----------
US Revolving $25,000,000 25%
Term $75,000,000 25%
[Signature Page to Credit Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
BORROWERS
000 Xxxxx Xxxxxxx 000, Xxxxx 000 G&K SERVICES, INC.
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx
Phone: (000) 000-0000 By
Fax: (000) 000-0000 --------------------------------
Xxxxxxx X. Xxxx
Its Chief Financial Officer
0000 Xxxxxxx Xxxx, Xxxxx 000 WORK WEAR CORPORATION OF
Mississauga, Ontario CANADA LTD.
Attn: Xxxxxx Xxxx
Phone: (000) 000-0000 By
Fax: (000) 000-0000 --------------------------------
Xxxxxxx X. Xxxx
Its Chief Financial Officer
BANKS AND AGENTS
Norwest Center, 5th Floor NORWEST BANK MINNESOTA,
Sixth and Marquette NATIONAL ASSOCIATION
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000 as US Bank, Letter of Credit Bank
Attn: Xxxxxx X. Xxxxxx and US Agent
Phone: (000) 000-0000
Fax: (000) 000-0000
By /s/ Xxxxxx X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx
Its Vice President
Dollar Amount
Facility of Commitment Percentage
-------- ------------- ----------
US Revolving $25,000,000 25%
Term $75,000,000 25%
[Signature Page to Credit Agreement]
000 Xxxxxxxx Xxxxxx XXX XXXX
Xxxxxxx, Xxxxxxxx 00000 as US Bank
Attn: Xxxxxxxxxx X. Xxxxxxx
Phone: (000) 000-0000 By /s/ Xxxxxxxxxx X. Xxxxxxx
Fax: (000) 000-0000 --------------------------------
Xxxxxxxxxx X. Xxxxxxx
Its Vice President
Dollar Amount
Facility of Commitment Percentage
-------- ------------- ----------
US Revolving $ 75,000,000 75%
Term $225,000,000 75%
FIRST CHICAGO NBD BANK, CANADA
Suite 4240 as Canadian Bank and Canadian Agent
BCE Place
000 Xxx Xxxxxx By /s/ Xxxxx Xxxxxx
Toronto, Ontario CANADA M5J 2S1 ---------------------------
Attn: Xxxxx Xxxxxx Xxxxx Xxxxxx
Phone: (000) 000-0000 Its First Vice President
Fax: (000) 000-0000
Canadian
Dollar Amount
Facility of Commitment Percentage
-------- ------------- ----------
Canadian
Revolving C$34,325,875 100%
[Signature Page to Credit Agreement]
TABLE OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Form of US Revolving Note
Exhibit B Form of Canadian Revolving Note
Exhibit C Form of Term Note
Exhibit D Form of Notice of Borrowing-US Facility
Exhibit E Form of Notice of Conversion-US Facility
Exhibit F Form of Notice to Continue Eurodollar Funding
Exhibit G Form of Notice of Borrowing-Canadian Facility
Exhibit H Form of Notice of Conversion-Canadian Facility
Exhibit I Form Of Notice to Renew Acceptance
Exhibit J Form of Year-End Compliance Certificate
Exhibit K Form of Quarterly Compliance Certificate
Exhibit L Form of Assignment Certificate
SCHEDULES
Schedule 4.1 Assets Held for Sale
Schedule 6.1 Names; Chief Executive Offices
Schedule 6.4 Subsidiaries; Organizational Chart
Schedule 6.5 Projected Opening Balance Sheet and Related
Projections
Schedule 6.6 Litigation
Schedule 6.10 Plans
Schedule 6.12 Environmental Disclosures
Schedule 8.1 Existing Liens
Schedule 8.2 Permitted Indebtedness and Guaranties
Schedule 8.4 Existing Investments
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