SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 10 - Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended April 1, 1995, Commission file number 0-4063
G&K SERVICES, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-0449530
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
505 WATERFORD PARK, STE. 455
MINNEAPOLIS, MINNESOTA 55441
(Address of principal executive offices and zip code)
(612) 546-7440
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES _X_ NO ___
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
CLASS A Outstanding April 28, 1995
Common Stock, par value $.50 per share 18,543,360
CLASS B Outstanding April 28, 1995
Common Stock, par value $.50 per share 1,865,089
PART I
FINANCIAL INFORMATION
ITEM 1. Financial Statements
G&K SERVICES, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
April 1, 1995
(Unaudited)
<TABLE>
<CAPTION>
April 1, July 2, April 2,
1995 1994 1994
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 223 $ 5,131 $ 2,684
Accounts receivable, net 30,229 26,326 25,181
Inventories-
New goods 16,223 6,904 7,080
Goods in service 27,515 22,774 21,657
Prepaid expenses 3,413 2,395 3,105
Total current assets 77,603 63,530 59,707
PROPERTY, PLANT AND EQUIPMENT
Land 16,134 14,495 12,333
Buildings and improvements 48,990 40,984 40,806
Machinery and equipment 107,505 93,440 90,881
Automobiles and trucks 18,835 15,812 14,874
Less accumulated depreciation (85,485) (75,147) (73,452)
105,979 89,584 85,442
OTHER ASSETS
Goodwill 36,086 35,188 35,436
Restrictive covenants, customer lists
and other assets arising from acquisitions 8,788 9,408 10,037
Other assets 8,372 7,354 6,786
Total other assets 53,246 51,950 52,259
$ 236,828 $ 205,064 $ 197,408
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 8,314 $ 8,879 $ 7,566
Accrued expenses -
Salaries and employee benefits 6,703 6,257 5,199
Other 5,457 4,744 4,378
Reserve for income taxes 10,495 8,747 7,795
Current maturities of debt 7,356 5,552 10,828
Total current liabilities 38,325 34,179 35,766
LONG TERM DEBT, NET OF CURRENT MATURITIES 69,941 54,676 49,511
DEFERRED INCOME TAXES 10,685 11,014 11,426
OTHER NONCURRENT LIABILITIES 5,102 4,338 3,730
STOCKHOLDERS' EQUITY
Common stock, $.50 par
Class A, 50,000,000 shares authorized, 18,543,360,
18,498,504 and 18,498,504 shares issued and outstanding 9,272 9,249 9,227
Class B, 10,000,000 shares authorized, 1,865,089
shares issued and outstanding 933 933 933
Additional paid-in capital 18,879 18,853 18,630
Retained earnings 90,592 78,237 74,610
Cumulative translation adjustment (6,901) (6,415) (6,425)
Total stockholders' equity 112,775 100,857 96,975
$ 236,828 $ 205,064 $ 197,408
</TABLE>
The accompanying notes are an integral part of these statements.
G&K SERVICES, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
APRIL 1, 1995
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
Apr. 1, Apr. 2, Apr. 1, Apr. 2,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
REVENUES $ 66,719 $ 57,132 $ 192,806 $ 166,011
EXPENSES
Operating 36,895 31,572 105,328 91,055
Cost of merchandise sold 2,561 1,770 7,202 4,922
Selling and administrative 13,825 12,247 41,346 36,337
Depreciation 3,790 3,156 10,653 9,376
Amortization of intangibles 638 744 1,969 2,255
57,709 49,489 166,498 143,945
INCOME FROM OPERATIONS 9,010 7,643 26,308 22,066
Interest expense 2,035 1,475 4,768 4,349
Interest income (26) (112) (120) (314)
Other (income) expense, net (438) 45 (881) (270)
INCOME BEFORE INCOME TAXES 7,439 6,235 22,541 18,301
Provision for income taxes 3,020 2,574 9,116 7,565
NET INCOME 4,419 3,661 13,425 10,736
Weighted average number of
shares outstanding 20,368 20,345 20,368 20,330
NET INCOME PER SHARE $ 0.22 $ 0.18 $ 0.66 $ 0.53
Dividends per share 0.0175 0.0175 0.0525 0.0517
</TABLE>
The accompanying notes are an integral part of these statements.
G&K SERVICES, INC. and SUBSIDARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
April 1, 1995
(Unaudited)
<TABLE>
<CAPTION>
For The Three Months For The Nine Months
Ended Ended
April 1, April 2, April 1, April 2,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 4,419 $ 3,661 $ 13,425 $ 10,736
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation and amortization 4,428 3,901 12,622 11,631
Noncurrent deferred income taxes (107) (601) (326) (1,127)
Changes in current operating items -
Inventories (3,389) 123 (10,772) (2,050)
Accounts receivable and prepaid expenses (425) (456) (3,595) (1,681)
Accounts payable and other current liabilities (768) (544) 2,185 (667)
Other, net (114) 807 (235) 918
Net cash provided by operating activities 4,044 6,891 13,304 17,760
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions, net (9,746) (4,570) (24,376) (10,119)
Acquisition of operating assets 0 0 (9,480) 0
Net cash used for investment activities (9,746) (4,570) (33,856) (10,119)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt financing 0 0 15,000 0
Borrowings (Repayments) on line-of-credit
and existing debt 4,994 (2,866) 2,296 (8,487)
Acquisition payments refundable from escrow (278) 0 (630) 0
Sale of Common Stock 48 0 48 0
Cash dividends paid (357) (362) (1,070) (1,055)
Net cash provided from (used for) financing activities 4,407 (3,228) 15,644 (9,542)
INCREASE (DECREASE) IN CASH (1,295) (907) (4,908) (1,901)
Cash:
Beginning of the period 1,518 3,591 5,131 4,585
End of the period $ 223 $ 2,684 $ 223 $ 2,684
</TABLE>
The accompanying notes are an integral part of these statements.
ITEM 2. Management's Discussion and Analysis of Operations
RESULTS OF OPERATIONS
Revenues from rentals and services totaled $192,806,000 and
$166,011,000 in the first nine months of fiscal 1995 and 1994, respectively.
Revenues for G&K's U.S. operations grew at a 18.5% rate for the first nine
months of fiscal 1995 when compared with the same period last year. Removing the
effect of the B.C.P. acquisition in September, revenues increased 16.6%.
Reaching previously untapped markets, record sales to new accounts, and customer
retention rates at record levels helped us achieve this result. This 16.6%
revenue growth rate is higher than the 13.5% gain reported in the first nine
months last year. Revenues for Work Wear Canada operations increased at a 6.6%
rate for the first nine months of fiscal 1995. Revenues in Canadian dollars
increased 11.3% as compared to the same period last year. There were no
significant changes in product mix or selling prices during the first nine
months of fiscal 1995.
EXPENSES
Operating expenses were $105,327,000 and $91,055,000 representing 54.6%
and 54.8% of revenues from rentals and services for the first nine months of
fiscal 1995 and 1994, respectively.
Selling and administrative expenses were $41,055,000 and $36,337,000 in
the first nine months of fiscal 1995 and 1994, an increase of 14.0%. As a
percentage of revenues, these expenses were 21.4% and 21.9% in the first nine
months of fiscal 1995 and 1994.
Interest expense of $4,768,000 increased 9.6% in the first nine months
of fiscal 1995 because of higher average borrowing levels and higher interest
rates.
NET INCOME
Net income for the first nine months of fiscal 1995 totaled $13,425,000
representing a 25.0% increase compared with the same period in 1994.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities were $13,312,000 in the first nine
months of fiscal 1995 compared with $17,881,000 in the same period last year.
The decrease is the result of higher inventory levels from business growth and
restocking by B.C.P. to handle G&K's rental business requirements. In November,
the Company borrowed $15,000,000 in fixed rate debt and the U.S. revolver was
increased to $50,000,000.
Management believes that funds generated from operations and existing
lines of credit should provide adequate funding for current business operations
and should enable G&K to service its debt related to the Work Wear Corporation
of Canada acquisition in a timely manner.
G&K SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements included herein, except for the
July 2, 1994, balance sheet which was extracted from the audited
financial statements of July 2, 1994, have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the
financial statements and the notes thereto included in the Company's
latest annual report.
2. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position
as of April 1, 1995, July 2, 1994, and April 2, 1994, and the results
of operations for the nine months ended April 1, 1995, and April 2,
1994, and the changes in financial position for the periods then ended.
The accounting policies followed by the Company are set forth in Note 1
to the Company's Annual Consolidated Financial Statements. In addition,
the Company's policy regarding foreign currency translation is to
translate balance sheet accounts at the current period-end exchange
rate and income statement items at the average exchange rate for the
period for its foreign operations. Resulting translation adjustments
are made directly to a separate component of stockholders' equity.
The results of operations for the nine month period ended April 1,
1995, and April 2, 1994, are not necessarily indicative of the results
to be expected for the full year.
3. Net income per share is based on the weighted average number of shares
of common stock outstanding.
PART II
OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits
10.1 - Second Amendment dated as of June 21, 1994, to Loan
Agreement between Registrant and Metropolitan Life
Insurance Company, dated as of September 28, 1990.
10.2 - Third Amendment dated as of November 23, 1994, to
Loan Agreement between Registrant and Metropolitan
Life Insurance Company, dated as of September 28,
1990.
10.3 - Credit Agreement dated as of June 21, 1994, by and
among G&K Services, Inc., Work Wear Corporation of
Canada, LTD, various banks, and Norwest Bank
Minnesota, N.A., as agent.
10.4 - First Amendment to Credit Agreement dated as of
November 28, 1994, by and among G&K Services, Inc.,
Work Wear Corporation of Canada, LTD, various banks,
and Norwest Bank Minnesota, N.A., as agent.
27 - Financial Data Schedule (for SEC use only)
b. Reports on Form 8-K. No reports on Form 8-K were filed during
the quarter-ended April 1, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
G&K SERVICES, INC.
(Registrant)
Date: May 12, 1995 /s/Stephen F. LaBelle
Stephen F. LaBelle
Secretary and Treasurer
(Chief Financial Officer)
June 21, 1994
G&K Services, Inc.
G&K Services, Co.
Waterford Park
505 Highway 169N
Suite 455
Minneapolis, Minnesota 55441-6446
Attention: Stephen LaBelle
Secretary and Treasurer
Re: Loan Agreement dated as of September 28, 1990
Dear Sirs:
We are the holder of the 10.62% Senior Notes (the "Notes") issued by G&K
Services, Inc. (the "Company") in the original aggregate principal amount of
$40,000,000 pursuant to the Loan Agreement dated as of September 28, 1990,
between the Company and us (the "Agreement"). The Notes were amended pursuant to
an amendment agreement dated January 28, 1993 (the "First Amendment") and are
entitled to the benefit of a Guaranty dated as of September 28, 1990 issued by
G&K Services, Co. (the "G&K Co. Guaranty").
As the holder of the Notes and as a party to the Agreement, we hereby
agree that the Agreement and the Notes shall be amended by this amendment (the
"Second Amendment") as follows:
1. The first paragraph of the Notes shall be amended by deleting all
references therein to "Overdue Interest Rate" and substituting in lieu thereof
"Default Rate".
2. Section 2.03 of the Notes shall be deleted in its entirety and the
following substituted therefor:
"2.03. Default Rate.
From and after the occurrence of an Event of Default
and continuing thereafter until such Event of Default shall be
remedied to the written satisfaction of the Holders of the
Notes, the outstanding principal balance of this Note and, so
far as may be lawful, any overdue installment of interest,
shall bear interest, until paid in full, at the Default Rate."
3. Section 4.01 of the Notes shall be deleted in its entirety and the
following substituted therefor:
"4.01. Limitation on Indebtedness.
The Company will not, and will not permit any
Restricted Subsidiary to create, assume, incur or otherwise
become liable, in each case contingently or otherwise, in
respect of any Indebtedness, whether secured or unsecured,
other than:
A. Indebtedness evidenced by the Notes;
B. Indebtedness of the Company incurred pursuant to
the Credit Agreement not exceeding at any time
U.S.$25,000,000;
C. Indebtedness of Work Wear incurred pursuant to the
Credit Agreement not exceeding at any time the lesser of (i)
Canadian $30,000,000 and (ii) twenty-five percent (25%) of
Consolidated Stockholders' Equity as set forth in the most
recently available financial statements of the Company,
(quarterly or annual, as the case may be), with conversion to
Canadian dollars to be made as of the date of delivery of such
financial statements in accordance with Section 1.2 of the
Credit Agreement;
D. Indebtedness of the Company or any Restricted
Subsidiary in existence on September 28, 1990 and listed in
Exhibit B to the Note, but not including any extensions or
renewals thereof;
E. Indebtedness of a Restricted Subsidiary to the
Company or another Restricted Subsidiary on account of
borrowings, or Indebtedness of the Company to a Restricted
Subsidiary on account of borrowings from that Restricted
Subsidiary;
F. Subordinated Debt of the Company, or renewals
thereof, provided it is subordinated to the prior payment of
principal of and interest on the Notes on terms and conditions
approved in writing by the Holders of the Notes; and
G. Indebtedness of the Company secured by Liens
permitted by Section 4.03."
4. Section 4.02 of the Notes shall be deleted in its entirety and the
following substituted therefor:
"4.02. Guaranties.
The Company will not, and will not permit any
Restricted Subsidiary to, assume, guarantee, endorse or
otherwise become directly or contingently liable in connection
with any obligations of any other Person, except:
A. the G&K Co. Guaranty;
B. the Company Guaranty;
C. the endorsement of negotiable instruments by the
Company or any Restricted Subsidiary for deposit or collection
or similar transactions in the ordinary course of business;
and
D. guaranties, endorsements and other direct or
contingent liabilities in connection with the obligations of
other Persons in existence on September 28, 1990 and listed in
Exhibit B to the Note."
5. Section 4.03 of the Notes shall be deleted in its entirety and the
following substituted therefor:
"4.03. Limitation on Liens.
The Company will not, and will not permit any
Restricted Subsidiary to, (i) create, assume, incur or suffer
to exist any Lien upon any property or assets (real or
personal, tangible or intangible) of the Company or any
Restricted Subsidiary, whether now owned or hereafter
acquired, or any income or profits therefrom, (ii) own or
acquire or agree to acquire any property or assets (real or
personal, tangible or intangible) subject to any Lien, (iii)
suffer to exist any Indebtedness of the Company or any
Restricted Subsidiary or claims or demands against the Company
or any Restricted Subsidiary, which Indebtedness, claims or
demands, if unpaid, might (in the hands of the holder or
anyone who shall have guaranteed the same or who has any right
or obligation to purchase the same), by law or upon bankruptcy
or insolvency or otherwise, be given any priority whatsoever
over its general creditors or (iv) give its consent to the
subordination of any right or claim of the Company or any
Restricted Subsidiary to any right or claim of any other
Person, excluding, however, from the operation of the
foregoing:
A. Liens for taxes or assessments or other
governmental charges to the extent not required to be paid by
Section 3.03A;
B. Materialmen's, merchants', carriers', workers',
repairers' or other like liens arising in the ordinary course
of business to the extent not required to be paid by Section
3.03A;
C. 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;
D. Zoning restrictions, easements, licenses,
restrictions on the use of real property or minor
irregularities in title thereto, which do not in the aggregate
have a material adverse effect on the business of the Company
or any Restricted Subsidiary;
E. Purchase money Liens upon or in property acquired
by the Company or any Restricted Subsidiary after the date
hereof, or mortgages, liens or security interests existing
upon or in such property at the time of acquisition thereof by
the Company or any Restricted Subsidiary, provided that:
(1) no such Lien extends or shall extend to or cover
any property of the Company or any Restricted
Subsidiary, as the case may be, other than the
property then being acquired and fixed improvements
then or thereafter erected thereon;
(2) the aggregate principal amount of all
Indebtedness of the Company and each Restricted
Subsidiary secured by all Liens described in this
subsection shall not exceed $1,000,000 at any one
time outstanding; and
(3) the aggregate principal amount of Indebtedness
secured by Liens described in this Subsection E at
the time of acquisition of the property subject
thereto shall not exceed 100% of the cost of such
property or of the then fair market value of such
property as determine by the Board of Directors of
the Company, whichever shall be less, and the
aggregate amount of payments made thereunder in any
period of 12 consecutive months will not result in a
violation of any other restriction contained in this
Agreement;
F. Liens on any property of the Company or any
Restricted Subsidiary (other than those described in
Subsection E) securing any Indebtedness for borrowed money in
existence on September 28, 1990 and listed in Exhibit B to the
Notes; and
G. Liens arising out of a judgment against the
Company or any Restricted Subsidiary for the payment of money
not exceeding $500,000 with respect to which an appeal is
being prosecuted and a stay of execution pending such appeal
has been secured and for which adequate reserves have been
established.
Without limiting the foregoing, the Company agrees that the Company
will not, and will not permit any Restricted Subsidiary to, agree with any other
Person not to grant any Lien in its or such Restricted Subsidiary's assets
except with the Banks who are parties to the Credit Agreement."
6. Section 4.04 of the Notes shall be deleted in its entirety and the
following substituted therefor:
"4.04. Intentionally Omitted."
7. Section 4.05 of the Notes shall be deleted in its entirety and the
following substituted therefor:
"4.05. Capitalization Ratio.
The Company will maintain as at the end of each of
the Company's fiscal quarters, on a consolidated basis, the
ratio of (i) all Indebtedness of the Company and its
Restricted Subsidiaries arising from borrowed money (including
all such Indebtedness created, assumed or guaranteed either
directly or indirectly and all obligations secured by Liens
upon property on which the Company or a Restricted Subsidiary
customarily pays interest), including Consolidated Current
Indebtedness, Consolidated Funded Indebtedness and the Current
Portion of Consolidated Funded Indebtedness to (ii) the sum of
(A) all Indebtedness of the Company and its Restricted
Subsidiaries arising from borrowed money (including all such
Indebtedness created, assumed or guaranteed either directly or
indirectly and all obligations secured by Liens upon property
on which the Company or a Restricted Subsidiary customarily
pays interest), including Consolidated Current Indebtedness,
Consolidated Funded Indebtedness and the Current Portion of
Consolidated Funded Indebtedness and (B) the total
stockholders' equity of the Company and its Restricted
Subsidiaries, determined in accordance with GAAP (as shown and
described on its most recently delivered balance sheet), at
not more than 0.5 to 1.00."
8. Section 4.07 of the Notes shall be deleted in its entirety and the
following substituted therefor:
"4.07. Minimum Total Stockholders Equity.
The Company will maintain on a consolidated basis, in
each period designated below, its Consolidated Stockholders'
Equity, determined in accordance with GAAP (as shown and
described on the Company's balance sheet) at an amount not
less than the amount set forth opposite such period:
Period Amount
Date hereof through March 31, 1995 $ 95,000,000
April 1, 1995 through March 31, 1996 $105,000,000
April 1, 1996 through March 31, 1997 $120,000,000
April 1, 1997 through September 28, 1997" $135,000,000
9. Section 4.08 of the Notes shall be deleted in its entirety and the
following substituted therefor:
"4.08. Interest Coverage Ratio.
The Company will maintain as at the end of each of
the Company's fiscal quarters, on a consolidated basis, the
ratio of (i) Consolidated Earnings Before Interest Expense and
Taxes for such quarter and each of the immediately preceding
three fiscal quarters to (ii) Consolidated Interest Expense
(without deduction of any interest income) for such quarter
and each of the immediately preceding three fiscal quarters,
at not less than 3.00 to 1.00."
10. Section 4.09 of the Notes shall be deleted in its entirety and the
following substituted therefor:
"4.09. Funds Flow Coverage Ratio.
The Company will maintain as at the end of each of
the Company's fiscal quarters (based upon such quarter and
each of the immediately preceding three fiscal quarters), on a
consolidated basis, the ratio of (i) the net income of the
Company and its Restricted Subsidiaries, plus depreciation,
amortization, non-current deferred income taxes and other
non-cash charges for the immediately preceding four fiscal
quarters (determined in accordance with GAAP) to (ii) all
Indebtedness of the Company and its Restricted Subsidiaries
arising from borrowed money (including all such Indebtedness
created, assumed or guaranteed either directly or indirectly
and obligations secured by Liens upon property upon which the
Company or a Restricted Subsidiary customarily pays interest),
including Consolidated Current Indebtedness, Consolidated
Funded Indebtedness and the Current Portion of Consolidated
Funded Indebtedness, for such quarter and each of the
immediately preceding three fiscal quarters, at not less than
0.28 to 1.00."
11. Subsection E of Section 4.10 of the Notes shall be amended by
deleting the word "Guarantor" in the first line thereof and inserting "G&K Co."
in lieu thereof.
12. Section 4.11 of the Notes shall be deleted in its entirety and the
following substituted therefor:
"4.11. Dividends.
The Company will not declare or pay any dividends
(other than dividends payable solely in its own stock) on any
class of its stock or make any payment on account of its
purchase, redemption, or other retirement of any shares of
such stock, or make any distribution in respect thereof,
either directly or indirectly during any fiscal year if, after
giving effect to such payment, distribution or application,
the aggregate amount of such dividends, distributions and
application of assets paid or made during such fiscal year
would exceed twenty-five percent (25%) of the Net Income of
the Company and its Restricted Subsidiaries for the fiscal
year immediately preceding the year in which such dividend is
paid, or any such distribution or application of assets is
made, and the right to make any such payments, distributions
and application of assets as herein described shall be non-
cumulative from fiscal year to fiscal year."
13. Section 4.16 of the Notes shall be deleted in its entirety and the
following substituted therefor:
"4.16. Expenditures for Fixed Assets.
The Company will not, and will not permit any
Restricted Subsidiary to, make any Capital Expenditure if,
after giving effect to such Capital Expenditure, the aggregate
amount of Consolidated Capital Expenditures made by the
Company and its Restricted Subsidiaries for any fiscal year
will exceed the amount set forth below:
Fiscal Year Limitation
1994 U.S. $33,000,000
1995 U.S. $40,000,000
1996 U.S. $33,000,000
1997 U.S. $35,000,000
provided, however, that the restrictions contained in this
Section are subject to the further limitations imposed by
Section 4.03E if any fixed asset is acquired under a purchase
money Lien referred to in that Section."
14. Section 4.23 of the Notes shall be deleted in its entirety and the
following substituted therefor:
"4.23. Account Payable.
The Company will not permit G&K Co. to order goods or
services in the name of G&K Co., or pay any trade accounts
payable."
15. (A) The following Definitions set forth in Section 6 of the Notes
shall be deleted in their entirety and the following substituted therefor:
"Agreement" means the Loan Agreement dated September
28, 1990 between the Company and Metropolitan Life Insurance
Company entered into in connection with the issuance of the
Notes, as amended by the First Amendment and the Second
Amendment, and as the same may be further amended from time to
time.
"Credit Agreement" means the Credit Agreement dated
as of June 21, 1994 between the Company, Work Wear, the U.S.
Banks and the Canadian Banks specified therein and Norwest
Bank Minnesota National Association, as Agent for the Banks,
as the same may be amended from time to time with the consent
of Metropolitan.
"Guarantor" means G&K Co.
"Guaranty" means the G&K Co. Guaranty.
"Overdue Interest Rate" Intentionally omitted.
"Restricted Subsidiary" means each and every
Subsidiary of the Company and its Subsidiaries.
"Unrestricted Subsidiary" Intentionally omitted.
(B) The following definitions shall be added to Section 6 of the Notes:
"Banks" means the U.S. Banks and the Canadian Banks
specified in the Credit Agreement.
"Canadian Banks" means the Banks, organized under the
laws of Canada or any province or territory thereof, specified
in the Credit Agreement as committed to make loans to Work
Wear.
"Company Guaranty" means the Guaranty, dated as of
the dated hereof, issued by the Company to the Canadian Banks
guaranteeing the Indebtedness of Work Wear to the Canadian
Banks under the Credit Agreement.
"Consolidated Stockholders' Equity" means the
Company's consolidated stockholders' equity as shown and
described as such on the Company's consolidated financial
statements delivered to you in accordance with Section 5.1 of
the Agreement.
"Default Rate" means a per annum rate equal to the
sum of (i) the interest rate otherwise in effect with respect
to this Note and (ii) two percent (2%)."
"First Amendment" means the amendment to the Notes
dated January 28, 1993.
"G&K Co. Guaranty" has the meaning specified in the
first paragraph of this Second Amendment.
"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 the Company or any Restricted Subsidiary or any of
their respective businesses or operations.
"Second Amendment" means this amendment to the
Agreement, as defined in the second paragraph hereof.
"U.S. Banks" means the Banks, organized under the
laws of the United States of America or any state thereof,
specified in the Credit Agreement as committed to make loans
to the Company.
16. Section 8.01 shall be amended by adding the following sentence at
the end of such Section:
"In addition, the Company hereby agrees to indemnify
each Holder and each officer, director, employee and agent
thereof (herein individually each called an "Indemnitee" and
collectively called the "Indemnitees") from and against any
and all losses, claims, damages, reasonable expenses
(including, without limitation, reasonable attorneys' fees)
and liabilities (all of the foregoing being herein called the
"Indemnified Liabilities") incurred by an Indemnitee in
connection with any Litigation arising out of, or relating to,
the financing provided herein or any Litigation in which it is
alleged that any Environmental Law has been breached, except
for any portion of such losses, claims, damages, expenses or
liabilities incurred solely as a result of the gross
negligence or willful misconduct of the applicable Indemnitee
or as a result of a breach of the Agreement by the applicable
Indemnitee. If and to the extent that the foregoing indemnity
may be unenforceable for any reason, the Company hereby agrees
to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. All obligations provided for
in this Section 8.01 shall survive any termination of the
Agreement and payment in full of this Note.
17. Section 8.04 of the Notes shall be deleted in its entirety and the
following substituted therefor:
"8.04. Governing Law.
This Note shall be construed in accordance with and
governed by the substantive and procedural laws of the State
of Minnesota."
18. The first sentence of Section 6.7 of the Agreement shall be deleted
in its entirety and the following substituted therefor:
"This Agreement shall be construed in accordance with and
governed by the substantive and procedural laws of the State
of Minnesota."
19. The effectiveness of this Second Amendment shall be subject to the
satisfaction of the following conditions:
19.1 Opinion of Company Counsel. You shall have received from
Maslon Edelman Borman & Brand, counsel to the Company and G&K Co., a
favorable opinion, dated the date hereof in the form set forth in
Exhibit A hereto.
19.2 Fee. You shall have received a fee of $75,985.
19.3 Bank Documents. You shall have received final executed
copies of each of the Credit Agreement and the Company Guaranty, in
form and substance satisfactory to you and your counsel.
20. Except as so amended by this Second Amendment and the First
Amendment, the Notes and the Agreement are in all respects ratified and
confirmed and all provisions thereof shall be given full force and effect as if
they were set forth herein in their entirety; and all references in the
Agreement to the Notes shall mean the Notes as so amended by this Second
Amendment and the First Amendment.
[Remainder of page intentionally left blank]
This Second Amendment shall be of no force or effect unless and until
you have satisfied all of the conditions precedent specified herein and return
to the undersigned a counterpart hereof executed by you at the foot hereof.
Very truly yours,
METROPOLITAN LIFE INSURANCE COMPANY
By:________________________________
Name:
Title:
AGREED TO AND ACCEPTED:
G&K SERVICES, INC.
By:________________________________
Name:
Title:
G&K SERVICES, CO.
By:________________________________
Name:
Title:
November 23, 1994
G&K Services, Inc.
G&K Services, Co.
Waterford Park
505 Highway 169N
Suite 455
Minneapolis, Minnesota 55441-6446
Attention: Stephen LaBelle
Secretary and Treasurer
Re: Loan Agreement dated as of September 28, 1990
Dear Sirs:
We are the holder of the 10.62% Senior Notes (the "Notes") issued by
G&K Services, Inc. (the "Company") in the original aggregate principal amount of
$40,000,000 pursuant to the Loan Agreement dated as of September 28, 1990,
between the Company and us (the "Agreement"). The Notes were amended pursuant to
an amendment agreement dated January 28, 1993 (the "First Amendment") and an
amendment agreement dated June 21, 1994 (the "Second Amendment") and are
entitled to the benefit of a Guaranty dated as of September 28, 1990 issued by
G&K Services, Co. (the "G&K Co. Guaranty").
As the holder of the Notes and as a party to the Agreement, we hereby
agree that the Agreement and the Notes shall be amended by this amendment (the
"Third Amendment") as follows:
1. Subsections A and B of Section 4.01 of the Notes shall be deleted in
their entirety and the following substituted therefor:
"A. Indebtedness evidenced by the Notes and the 8.46%
Notes;
B. Indebtedness of the Company incurred pursuant to
the Credit Agreement not exceeding at any time U.S.
$25,000,000; provided, however, that upon execution and
delivery by the parties to the Credit Agreement of a First
Amendment to Credit Agreement in form and substance
satisfactory to the Holders of the Notes, such amount may be
increased to U.S. $50,000,000;"
2. Subsection A of Section 4.02 of the Notes shall be deleted in its
entirety and the following substituted therefor:
"A. the 8.46% Guaranty and the G&K Co. Guaranty;"
3. The last paragraph of Section 4.03 of the Notes shall be deleted in
its entirety and the following substituted therefor:
"Without limiting the foregoing, the Company agrees that the
Company will not, and will not permit any Restricted Subsidiary to,
agree with any other Person not to grant any Lien in its or such
Restricted Subsidiary's assets except with the Holders of the 8.46%
Notes and the Banks who are parties to the Credit Agreement."
4. Subsections C, D, E, F, and G of Section 4.10 of the Notes shall be
deleted in their entirety and the following substituted therefor:
"C. loans and advances by a Restricted Subsidiary to
the Company or another Restricted Subsidiary, except as
provided in the proviso to Subsection E below;
D. loans and advances by the Company to any
restricted Subsidiary, except as provided in the proviso to
Subsection E below;
E. any existing loans or investments by the Guarantor
or the Company in or to Work Wear; provided, however, that
no further loans or advances and no further investments in
Work Wear shall be permitted, except for those currently in
existence on the date hereof;
F. except as provided in the proviso to Subsection E
above, investments not otherwise permitted by the foregoing
Subsections A through E of this Section 4.10 not at any time
exceeding 5% of Consolidated Tangible Net Worth; and
G. except as provided in the proviso to Subsection E above,
investments not otherwise permitted by the foregoing Subsections A
through F of this Section 4.10 to the extent that the amount of such
investments is deducted in determining Consolidated Tangible Net Worth
for all purposes of the Notes.:
5. (A) The following Definitions set forth in Section 6 of the Notes
shall be deleted in their entirety and the following substituted therefor:
"Agreement" means the Loan Agreement dated September
28, 1990 between the Company and Metropolitan Life Insurance
Company entered into in connection with the issuance of the
Notes, as amended by the First Amendment, the Second Amendment
and the Third Amendment, and as the same may be further
amended from time to time.
"Guarantor" means G&K Services, Co.
"Restricted Subsidiary" means each and every
Subsidiary of the Company and its Subsidiaries, whether now
existing or hereafter created or acquired.
(B) The following definitions shall be added to Section 6 of
the Notes:
"8.46% Guaranty" means the guaranty of the Guarantor,
dated as of November 23, 1994, guaranteeing to the holders of
the 8.46% Notes the obligations of the Company under the 8.46%
Notes and the 8.46% Loan Agreement.
"8.46% Loan Agreement" means the Loan Agreement dated
as of November 23, 1994 by and between the Company,
Metropolitan Life Insurance Company and certain affiliates, as
the same may be amended from time to time with the consent of
the Holders of the Notes.
"8.46% Notes" means the 8.46% Senior Notes due
November 23, 1997 of the Company issued pursuant to the 8.46%
Loan Agreement, as the same may be amended from time to time
with the consent of the Holders of the Notes.
6. (A) Subsection K of Section 7.01 of the Notes shall be amended by
adding the phrase "or the 8.46% Guaranty" after the word "Guaranty" in the
second line thereof.
(B) Subsection L of Section 7.01 of the Notes shall be amended by
adding the phrase "or the 8.46% Guaranty" after the word "Guaranty" in the
second line thereof.
(C) Section 7.01 of the Notes shall be amended by adding a new
Subsection N to read as follows:
"N. The occurrence of an "Event of Default" as
defined under the 8.46% Notes or the 8.46% Loan
Agreement;"
Except as so amended by this Third Amendment, the Second Amendment and
the First Amendment, the Notes and the Agreement are in all respects ratified
and confirmed and all provisions thereof shall be given full force and effect as
if they were set forth herein in their entirety; and all references in the
Agreement to the Notes shall mean the Notes as so amended by this Third
Amendment, the Second Amendment and the First Amendment.
[Remainder of Page Intentionally Left Blank]
This Third Amendment shall be of no force or effect unless and until
you have returned to the undersigned a counterpart hereof executed by you at the
foot hereof.
Very truly yours,
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ Michael J. Kroeger
Name: Michael J. Kroeger
Title: Vice-President
AGREED TO AND ACCEPTED:
G&K SERVICES, INC.
By: /s/ Stephen F. LaBelle
Name: Stephen F. LaBelle
Tile: Treasurer
G&K SERVICES, CO.
By: /s/ Stephen F. LaBelle
Name: Stephen F. LaBelle
Tile: Treasurer
CREDIT AGREEMENT
dated as of June 21, 1994
among
G&K SERVICES, INC.,
WORK WEAR CORPORATION OF CANADA LTD.,
VARIOUS BANKS,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Agent
TABLE OF CONTENTS
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PREAMBLE ....................................................................................................... 1
SECTION 1 CERTAIN DEFINITIONS; OTHER MATTERS................................................................... 2
1.1 Definitions................................................................................... 2
SECTION 2 TRANCHE A COMMITMENTS; TYPES OF TRANCHE A LOANS;
PROCEDURES FOR BORROWING OR CONVERTING; PRO RATA
TREATMENT; LETTERS OF CREDIT.................................................................. 12
2.1 Tranche A Revolving Commitments............................................................... 12
2.2 Various Types of Loans........................................................................ 12
2.3 Procedures for Borrowing...................................................................... 12
2.4 Converting Tranche A Floating Rate Loans to
Eurodollar Loans; Procedures.................................................................. 13
2.5 Procedures at End of a Loan Period............................................................ 13
2.6 Pro Rata Treatment............................................................................ 14
2.7 Issuing Letters of Credit..................................................................... 14
2.8 Participation in Letters of Credit............................................................ 16
2.9 Tranche A Revolving Loans Denominated in U.S.
Dollars....................................................................................... 17
SECTION 3 TRANCHE B COMMITMENTS; TRANCHE B REVOLVING LOANS;
CREATION OF BANKERS' ACCEPTANCES; PROCEDURES FOR
BORROWING OR CONVERTING; PRO RATA TREATMENT................................................... 18
3.1 Tranche B Revolving Commitments............................................................... 18
3.2 Various Types of Fundings..................................................................... 18
3.3 Procedures for Borrowing...................................................................... 18
3.4 Converting Tranche B Floating Rate Loans to
Acceptances; Procedures....................................................................... 19
3.5 Procedures at End of a Loan Period............................................................ 20
3.6 Pro Rata Treatment............................................................................ 20
3.8 Tranche B Revolving Loans and Drafts Denominated
in Canadian Dollars........................................................................... 22
3.9 Restrictions on Conversion From Acceptances to
Loans......................................................................................... 22
SECTION 4 NOTES EVIDENCING LOANS; INTEREST RATES; LOAN
PERIODS; COMPUTATION OF INTEREST AND FEES..................................................... 24
4.1 Revolving Notes............................................................................... 24
4.2 Several Liability; Waivers.................................................................... 24
4.3 Recordkeeping................................................................................. 24
4.4 Interest on Loans............................................................................. 25
4.4.1 Tranche A Floating Rate Loans.......................................................... 25
4.4.2 Eurodollar Loans....................................................................... 25
4.4.3 Tranche B Floating Rate Loans.......................................................... 25
4.4.4 Default Rate........................................................................... 25
4.5 Loan Periods.................................................................................. 25
4.5.1 Tranche A Loan Periods................................................................. 25
4.5.2 Tranche B Loan Periods................................................................. 26
4.6 Interest Due Dates............................................................................ 26
4.7 Setting and Notice of Rates................................................................... 27
4.8 Computation of Interest and Acceptance Fees................................................... 27
4.9 Payment of Interest........................................................................... 27
SECTION 5 FEES.......................................................................................... 28
5.1 Facility Fees................................................................................. 28
5.1.1 Tranche A Facility Fee................................................................. 28
5.1.2 Tranche B Facility Fee................................................................. 28
5.2 Administration Fees........................................................................... 28
5.3 Unused Commitment Fees........................................................................ 28
5.3.1 Tranche A Unused Commitment Fee........................................................ 28
5.3.2 Tranche B Unused Commitment Fee........................................................ 29
5.3.3 Payment Dates.......................................................................... 29
5.4 Payment of Fees............................................................................... 29
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENT.................................................................................... 30
6.1 Voluntary Reduction or Termination of the
Revolving Commitments......................................................................... 30
6.2 Mandatory Reduction of Tranche B Commitment
Amount........................................................................................ 30
6.3 Voluntary Prepayments......................................................................... 30
6.4 Mandatory Prepayment of Tranche B Revolving Loans............................................. 31
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF...................................................... 32
7.1 Making of Payments............................................................................ 32
7.1.1 Tranche A Payments..................................................................... 32
7.1.2 Tranche B Payments..................................................................... 32
7.2 Effect of Payments............................................................................ 33
7.3 Distributions by Administrative Agents........................................................ 33
7.4 Due Date Extension............................................................................ 34
7.5 Proration of Payments......................................................................... 34
7.6 Setoff........................................................................................ 34
7.7 Application of Certain Payments............................................................... 35
7.8 Taxes......................................................................................... 35
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR FIXED RATE
LOANS......................................................................................... 37
8.1 Increased Costs............................................................................... 37
8.2 Capital Adequacy.............................................................................. 38
8.3 Basis for Determining Interest Rate Inadequate or
Unfair........................................................................................ 39
8.4 Illegality.................................................................................... 40
8.5 Funding Losses................................................................................ 40
8.6 Right of U.S. Banks to Fund through Other Offices............................................. 41
8.7 Discretion of Banks as to Manner of Funding................................................... 41
8.8 Conclusiveness of Statements; Survival of
Provisions.................................................................................... 41
SECTION 9 WARRANTIES.................................................................................... 42
9.1 Organization, Etc............................................................................. 42
9.2 Authorization; No Conflict.................................................................... 42
9.3 Validity and Binding Nature................................................................... 42
9.4 Financial Information, etc.................................................................... 42
9.5 Litigation and Contingent Liabilities......................................................... 43
9.6 Liens......................................................................................... 43
9.7 Subsidiaries.................................................................................. 43
9.8 Employee Benefit Plans........................................................................ 43
9.9 Investment Company Act........................................................................ 44
9.10 Public Utility Holding Company Act............................................................ 44
9.11 Information................................................................................... 44
9.12 Use of Proceeds............................................................................... 44
9.13 Ownership of Properties....................................................................... 44
9.14 Hazardous Substances.......................................................................... 44
9.15 Insurance..................................................................................... 45
SECTION 10 AFFIRMATIVE COVENANTS............................................................................... 46
10.1 Reports, Certificates and Other Information...................................................... 46
10.1.1 Audit Report.......................................................................... 46
10.1.2 Interim Reports....................................................................... 46
10.1.3 Certificate........................................................................... 46
10.1.4 Reports to SEC and Shareholders....................................................... 47
10.1.5 Notice of Default, Litigation and ERISA
Matters........................................................................... 47
10.1.6 Projections........................................................................... 47
10.1.7 Waivers and Amendments to Met Life Loan
Agreement......................................................................... 48
10.1.9 Other Information..................................................................... 48
10.2 Books, Records, and Inspections.................................................................. 48
10.3 Insurance........................................................................................ 48
10.4 Compliance with Laws............................................................................. 48
10.5 Payment of Taxes and Other Claims................................................................ 49
10.6 Maintenance of Properties........................................................................ 49
10.7 Preservation of Corporate Existence.............................................................. 49
10.8 Capitalization Ratio............................................................................. 49
10.9 Current Ratio.................................................................................... 50
10.10 Minimum Total Stockholders Equity................................................................ 50
10.11 Interest Coverage Ratio.......................................................................... 50
10.12 Funds Flow Coverage Ratio........................................................................ 50
SECTION 11 NEGATIVE COVENANTS.................................................................................. 51
11.1 Liens............................................................................................ 51
11.2 Indebtedness..................................................................................... 52
11.3 Guaranties....................................................................................... 53
11.4 Investments...................................................................................... 53
11.6 Merger and Consolidation; Change of Control...................................................... 55
11.7 Sale and Leaseback............................................................................... 55
11.8 Subordinated Debt................................................................................ 55
11.9 Expenditures for Fixed Assets.................................................................... 55
11.10 Restrictions on Nature of Business............................................................... 56
11.11 Hazardous Substances............................................................................. 56
11.12 Indebtedness to Met Life......................................................................... 56
11.13 Unfunded Vested Liabilities for Defined Benefit
Plans........................................................................................ 56
SECTION 12 CONDITIONS TO MAKING OF LOANS AND ISSUANCE OF
LETTERS OF CREDIT................................................................................... 57
12.1 Initial Loans, Acceptances and Letters of Credit................................................. 57
12.1.1 Notes................................................................................. 57
12.1.3 Certificate of Incorporation and By-Laws.............................................. 57
12.1.4 Resolutions........................................................................... 57
12.1.5 Consents, etc......................................................................... 57
12.1.6 Incumbency and Signatures............................................................. 57
12.1.7 Opinions of Counsel................................................................... 58
12.1.8 Amendments of Reimbursement Agreements................................................ 58
12.1.9 Other................................................................................. 58
12.2 Further Conditions to Initial Loans, Acceptances
and Letter of Credit......................................................................... 58
12.2.1 Debt to be Retired.................................................................... 58
12.2.2 Litigation............................................................................ 58
12.2.3 No Material Adverse Change............................................................ 58
12.2.4 Payment of Costs, Fees and Expenses................................................... 59
12.2.5 Other Banks........................................................................... 59
12.3 Conditions to all Borrowings..................................................................... 59
SECTION 13 EVENTS OF DEFAULT AND THEIR EFFECT.................................................................. 60
13.1 Events of Default................................................................................ 60
13.1.1 Non-Payment of Principal.............................................................. 60
13.1.2 Non-Payment of Interest, etc.......................................................... 60
13.1.3 Default under the Met Life Loan Agreement
and related Notes................................................................. 60
13.1.4 Non-Payment of Other Indebtedness for
Borrowed Money.................................................................... 60
13.1.5 Other Material Obligations............................................................ 60
13.1.6 Bankruptcy, Insolvency, etc........................................................... 60
13.1.7 Non-Compliance with Financial Covenants............................................... 61
13.1.8 Non-Compliance with Other Provisions.................................................. 61
13.1.9 Warranties............................................................................ 61
13.1.10 Defined Benefit Plans................................................................. 62
13.1.11 Judgments............................................................................. 62
13.2 Effect of Event of Default....................................................................... 62
13.3 Additional Remedy if Letters of Credit or
Acceptances are Outstanding.................................................................. 63
13.4 Banks Rights to Set-Off.......................................................................... 65
SECTION 14 THE AGENTS.......................................................................................... 67
14.1 Authorization.................................................................................... 67
14.2 Indemnification.................................................................................. 67
14.3 Exculpation...................................................................................... 67
14.4 Agent and Affiliates............................................................................. 68
14.5 Credit Investigation............................................................................. 68
14.6 Resignation...................................................................................... 68
14.7 Expenses......................................................................................... 69
SECTION 15 ADDITIONAL BANKS; SUCCESSORS AND ASSIGNS............................................................ 70
15.1 Successors and Assigns........................................................................... 70
15.2 Addition of Banks................................................................................ 70
15.3 Status........................................................................................... 70
15.4 Company Assistance............................................................................... 71
15.5 Other Transfers.................................................................................. 71
15.6 Participations................................................................................... 72
15.7 Disclosure of Information........................................................................ 72
SECTION 16 GENERAL............................................................................................. 74
16.1 Waiver; Amendments............................................................................... 74
16.2 Confirmations.................................................................................... 74
16.3 Notices.......................................................................................... 74
16.4 Computations..................................................................................... 75
16.5 Obligations of Banks and Agents Several.......................................................... 75
16.6 Costs, Expenses and Taxes........................................................................ 75
16.7 Indemnification by Companies..................................................................... 76
16.8 Captions......................................................................................... 76
16.9 Governing Law.................................................................................... 76
16.10 Counterparts..................................................................................... 77
16.11 Submission to Jurisdiction; Jury Trial........................................................... 77
16.12 Entire Agreement................................................................................. 78
</TABLE>
EXHIBITS AND SCHEDULES
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Exhibit A Tranche A Request for Borrowing
Exhibit B Tranche B Request For Conversion to
Eurodollar Loan
Exhibit C Tranche A Request for Renewal of Eurodollar
Loan
Exhibit D Schedule of Issued and Outstanding Letters of
Credit
Exhibit E Tranche B Request For Borrowing
Exhibit F Tranche B Request for Conversion to
Acceptances
Exhibit G Tranche B Request for Extension of
Acceptances
Exhibit H-1 Tranche A Note
Exhibit H-2 Tranche B Note
Exhibit I Certificate as to No Default
Exhibit J Assignment Certificate
Exhibit K Tranche B Notice of Payment
SCHEDULES
Schedule 9.4 Exceptions from Generally Accepted Accounting
Principles and Consistency
Schedule 9.5 Material Litigation and Material Litigation
Developments
Schedule 9.6 Outstanding Liens as of the Closing Date
Schedule 9.7 Schedule of Subsidiaries
Schedule 9.8 Contingent Liabilities under ERISA Plans
Schedule 9.12 Debt to be Retired
Schedule 9.14 Hazardous Substances and Other Environmental
Issues
Schedule 11.2 Outstanding Indebtedness of G&K and its
Subsidiaries
</TABLE>
CREDIT AGREEMENT
Dated as of June 21, 1994
This Agreement is among G&K SERVICES, INC., a Minnesota corporation
(herein called the "G&K"), WORK WEAR CORPORATION OF CANADA LTD., an Ontario
corporation (herein called "Work Wear"; G&K and Work Wear sometimes individually
referred to as a "Company" and collectively referred to as the "Companies") the
undersigned banks (herein collectively called the "Banks" and individually each
called a "Bank") and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national
banking association having its principal office at Norwest Center, Sixth Street
and Marquette Avenue, Minneapolis, Minnesota, 55479, as agent for the Banks
(herein, in such capacity, called the "Agent").
PREAMBLE
a. G&K, the Agent, in its capacity as agent and as Bank, and other
banks have entered into a Credit Agreement dated as of September 28, 1990, as
amended by First Amendment to Credit Agreement dated March 12, 1991, a Second
Amendment to Credit Agreement dated July 31, 1991, a Third Amendment to Credit
Agreement dated February 25, 1992 and a Fourth Amendment to Credit Agreement
dated October 6, 1992 (as so amended, the "Prior Credit Agreement"), pursuant to
which such banks agree to make loans on a revolving credit basis to, and issue
one or more standby letters of credit for the account of, G&K for use by G&K in
its United States operations.
b. Work Wear has entered into a Loan Agreement with Canadian Imperial
Bank of Commerce ("CIBC") dated as of September 28, 1990 (the "CIBC Loan
Agreement"), pursuant to which CIBC agreed to make certain loans and other
extensions of credit to Work Wear for use by Work Wear in its Canadian
operations (the "CIBC Loans")
c. The Companies wish to consolidate their financing for both the U.S.
operations and the Canadian operations in a single credit arrangement with the
Banks, thereby refinancing all indebtedness previously issued pursuant to the
Prior Credit Agreement and CIBC Loan Agreement, respectively, and the Banks have
agreed to accommodate such desires pursuant to the terms and subject to the
conditions set forth in this Agreement.
ACCORDINGLY, in consideration of the mutual agreements herein contained
and subject to the terms and conditions hereof, the parties hereto hereby agree
as follows:
SECTION 1 CERTAIN DEFINITIONS; OTHER MATTERS.
1.1 Definitions. When used herein the following terms shall have the
following meanings (such meanings to be applicable to both the singular and
plural forms of the terms defined):
Acceptance shall mean a Draft duly stamped and accepted by a Canadian
Bank in accordance with Section 3.1, as further described and defined in
Section 3.7.
Acceptance Fee See Section 3.7(c).
Additional Bank shall mean a financial institution that becomes a Bank
pursuant to the procedures set forth in Sections 15.2 through 15.4.
Administrative Agent or Administrative Agents shall mean, individually,
a Tranche A Agent or a Tranche B Agent and, collectively, the Tranche A Agent
and the Tranche B Agent.
Agent shall mean Norwest, in its separate capacity as agent for and on
behalf of all Banks.
Agents shall mean the Agent, the Tranche A Agent and the Tranche B
Agent, collectively.
Assignment Certificate see Section 15.3.
BA Purchase Price shall mean the product of (i) the face amount of
Drafts to be sold in connection with a Drawing and (ii) the applicable Discount,
as determined by the Tranche B Agent in accordance with Section 3.7, less the
Acceptance Fee retained by each Canadian Bank in consideration for the
acceptance of such Drafts.
Bank see Preamble.
Borrowing shall mean Loans and Drawings of a particular Tranche funded
concurrently by the Banks of that Tranche.
Canadian Banks shall mean those Banks which, from time to time, shall
have Commitments to make Tranche B Loans to Work Wear.
Canadian Bank Rate shall mean 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 Business Day shall mean any day other than a Saturday or
Sunday on which Canadian banks are open for business in Toronto, Ontario,
Canada.
Canadian Dollar and the sign "C.$" shall mean lawful currency of
Canada.
Capitalized Lease shall mean, as to any Person, any lease of (or other
agreement conveying the right to use) real or personal property that, in
accordance with generally accepted accounting principles, is required to be
accounted for as a capital lease on the balance sheet of such Person.
CIBC see Preamble.
CIBC Loans see Preamble.
CIBC Loan Agreement see Preamble.
Commitments shall mean the Revolving Commitments of all Banks and
Commitment as to any Bank shall mean the Revolving Commitment of such Bank,
including (with respect to U.S. Banks) such Bank's participation in the risk and
liability of LC's and (with respect to Canadian Banks) such Bank's agreement to
accept Drafts in accordance with Section 3.
Companies see Preamble.
Current Assets shall mean the aggregate amount of assets of G&K and its
Subsidiaries which in accordance with generally accepted accounting principles
may be properly classified as current assets, after deducting adequate reserves
where proper, but in no event including any cash, marketable securities or real
estate.
Current Liabilities shall mean (i) all Debt of G&K and its Subsidiaries
due on demand or within one year from the date of determination thereof, and
(ii) all other items of G&K and its Subsidiaries (including taxes accrued as
estimated) which in accordance with generally accepted accounting principles,
may be properly classified as current liabilities.
Debt shall mean, as to any Person, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under Capitalized
Leases, (v) all Debt of others secured by a lien on any asset of such Person,
whether or not such Debt is assumed by such Person, (vi) all Debt of others
guaranteed by such Person, (vii) all obligations of such Persons to pay a
specified purchase price for goods or services, whether or not delivered or
accepted (i.e., take-or-pay and similar obligations), (viii) all obligations of
such Person under any interest rate swap programs or any similar agreement or
arrangement relating to fluctuations in interest rates, and (ix) all obligations
of such Person to advance funds to, or purchase assets, property or services
from, any other Person in order to maintain the financial condition of such
other Person.
Debt to be Retired see Section 9.12.
Default Rate see Section 4.4.4.
Discount shall mean the bid rate established by the Tranche B 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 Drawing, rollover or conversion of
Acceptances at approximately 10:00 a.m., Toronto, Ontario time, on the date of
such proposed Drawing, rollover or conversion of Acceptances. Such Discount so
established by the Tranche B Agent shall be conclusive and binding on Work Wear
absent manifest error.
Dollar or U.S. Dollar and the sign "$" and "U.S.$" shall mean lawful
currency of the United States of America.
Draft shall mean a draft of Work Wear denominated in Canadian Dollars,
duly executed and delivered to a Canadian Bank in accordance with Section 3.7.
Drawing shall mean the creation of Acceptances and the resulting
funding thereof by a Canadian Bank.
Drawing Date shall mean the date on which Acceptances are created and a
funding occurs with respect thereto in accordance with Section 3.
Environmental Law shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. ss. 1802 et seq., the Toxic Substances
Control Act, 15 U.S.C. ss. 2601 et seq., the Federal Water Pollution Control
Act, 33 U.S.C. ss. 1252 et seq., the Clean Water Act, 33 U.S.C. ss. 1321 et
seq., the Clean Air Act, 42 U.S.C. ss. 7401 et seq., and any other federal,
state, county, municipal, local or other statute, law, ordinance or regulation
which may relate to or deal with human health or the environment, all as may be
from time to time amended.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
as amended.
ERISA Affiliate shall mean any corporation, trade or business that is,
along with G&K, a member of a controlled group of corporations or a controlled
group of trades or businesses, as described in sections 414(b) and 414(c),
respectively, of the Internal Revenue Code of 1986, as amended.
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:
Pension Plan as defined in ERISA Section 3(2);
Defined Benefit Plan means a Pension Plan of the type
defined in ERISA Section 3(35);
Multi-Employer Plan means a Pension Plan of the type
defined in ERISA Section 3(37); and
Welfare Plan as defined in ERISA Section 3(1).
Eurocurrency Reserve Percentage shall mean the then applicable
percentage relating to the Tranche A 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 Loan shall mean any Loan which bears interest at a rate
determined by reference to the Eurodollar Rate (Reserve Adjusted).
Eurodollar Rate shall mean, with respect to any Tranche A Loan Period,
the rate per annum at which U.S. Dollar deposits in immediately available funds
are offered to the Tranche A Agent as of 11:00 a.m. (London Time) two U.S.
Business Days prior to the beginning of such Loan Period as determined by the
Tranche A Agent on the basis of the Reuters Screen LIBO page; provided, however,
that if the Reuters Screen LIBO page is no longer available, the Eurodollar Rate
shall be determined by the Tranche A Agent on the basis of a substantially
comparable source of the Tranche A Agent's selection and acceptable to the U.S.
Banks, for the number of days comprised therein and in an amount equal or
comparable to the amount of the Eurodollar Loan of a Bank to be outstanding
during such Loan Period.
Eurodollar Rate (Reserve Adjusted) shall mean, with respect to any Loan
Period, a rate per annum (rounded upwards, if necessary to the nearest 1/100 of
1%) determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) 1-Eurocurrency Reserve Percentage
Event of Default shall mean any of the events described in Section
13.1.
Facility Percentage shall mean as to any Bank a percentage representing
the ratio as of the date of determination of such Bank's Commitment (expressed
in U.S. Dollars) to the aggregate of the Commitments for both Tranches
(expressed in U.S. Dollars), adjusted (as required) upon the addition of any
Additional Bank or Banks.
Federal Funds Rate shall mean 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 U.S. Business
Day, the average of the quotations for such day for such transactions received
by the 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
U.S. Business Day shall be the Federal Funds Rate for the next preceding U.S.
Business Day.
Fixed Rate shall mean a Eurodollar Rate (Reserve Adjusted).
Fixed Rate Loan or Fixed Rate Loans shall mean a Eurodollar Loan,
individually, or Eurodollar Loans, collectively.
Floating Rate Loans shall mean Tranche A Floating Rate Loans and
Tranche B Floating Rate Loans, collectively.
G&K see Preamble.
Group shall mean Fixed Rate Loans or Acceptances having the same Loan
Period.
Guaranties shall mean those certain Agreements of even date herewith
executed and delivered by G&K to each Canadian Bank guarantying the due and
prompt payment by Work Wear of all Tranche B Revolving Loans, Acceptances and
other obligations of Work Wear hereunder or under the Tranche B Revolving Notes.
Hazardous Materials shall mean any noxious or hazardous substance or
any radioactive, toxic or dangerous waste, substance or materials recognized as
such under Canadian federal or provincial legislation, and existing in
quantities sufficient to be of danger to the environment as contemplated by such
legislation, including without limitation, asbestos, polychlorinated biphenyls
and any contaminant as defined in the Environmental Protection Act (Ontario).
Hazardous Substance shall mean any asbestos, ureaformaldehyde,
polychlorinated biphenyls ("PCBs"), nuclear fuel or material, chemical waste,
radioactive material, explosives, known carcinogens, petroleum products and
by-products and other dangerous, toxic or hazardous pollutants, contaminants,
chemicals, materials or substances listed or identified in, or regulated by, any
Environmental Law.
LC Amount shall mean the sum of (i) the aggregate face amount of all
issued and outstanding Letters of Credit and (ii) amounts drawn under Letters of
Credit for which the U.S. Banks have neither been reimbursed nor made Tranche A
Loans.
Letter of Credit see Section 2.7.
Litigation shall mean 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 either Company or any Subsidiary or any of their respective businesses
or operations.
Loan Documents shall mean the Notes, Acceptances (as and when created),
this Agreement and the other documents whose delivery and execution are
conditions to the Banks' obligations hereunder.
Loan or Loans shall mean a Tranche A Revolving Loan or a Tranche B
Revolving Loan, individually, or Tranche A Revolving Loans and Tranche B
Revolving Loans, collectively.
Loan Period shall mean a Tranche A Loan Period or a Tranche B Loan
Period, as the context may require.
Material Litigation or Material Litigation Development shall mean 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
any Company 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
liabilities which could individually or in the aggregate exceed $500,000, (iii)
which could individually or in the aggregate otherwise impair the validity or
enforceability of or the ability of a Company or any Subsidiary 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 Company or
any Subsidiary 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 G&K and
its Subsidiaries taken as a whole.
Met Life means Metropolitan Life Insurance Company.
Met Life Loan Agreement means the Loan Agreement dated as of September
28, 1990, between Met Life and G&K, as amended pursuant to an Amendment
Agreement dated as of January 28, 1993 and a Second Amendment dated June 21,
1994.
NBDC shall mean NBD Bank, Canada.
Norwest means Norwest Bank Minnesota, National Association.
Notes shall mean the Revolving Notes.
Percentage shall mean as to any Bank the percentage set forth as such
opposite such Bank's signature hereto or below such Bank's signature on any
Assignment Certificate executed by such Bank, representing the ratio of such
Bank's Commitment to the aggregate Tranche Commitment Amount for the applicable
Tranche.
Person shall mean any natural person, corporation, joint venture
partnership, trust, association, governmental authority or unit, or any other
entity, whether acting in an individual, fiduciary, or other capacity.
Pro Rata Default Share shall mean as to any Bank a fraction determined
as of the date on which an Event of Default is declared or acknowledged, as the
case may be, by the Required Banks, the numerator of which is the sum of (i) the
outstanding principal balance of such Bank's Loans (expressed in U.S. Dollars)
as of such date, (ii) the face amount of all outstanding Acceptances created by
such Bank as of such date (expressed in U.S. Dollars) and (iii) such Bank's
Percentage of the LC Amount as of such date (expressed in U.S. Dollars) and the
denominator of which is the aggregate outstanding principal balance of all
Loans, Acceptances and the LC Amount outstanding as of such date (expressed in
U.S. Dollars).
Reportable Event shall have the meaning given to such term in ERISA
Section 4043.
Required Banks shall mean (i) prior to the date on which occurs an
Event of Default, Banks (including, where relevant, Additional Banks) having
aggregate Facility Percentages of 60% or more and (ii) after the date on which
occurs an Event of Default, Banks (including, where relevant, Additional Banks)
having Pro Rata Default Shares of 60% or more.
Revolving Commitment shall mean the Tranche A Revolving Commitment of a
U.S. Bank and the Tranche B Revolving Commitment of a Canadian Bank, as the
context may require.
Revolving Loan Termination Date shall mean the earlier to occur of (i)
June 30, 1997 or (ii) such other date on which the Revolving Commitments shall
terminate pursuant to Section or Section .
Revolving Note see Section 4.1.
Subordinated Debt see Section 11.8.
Subsidiary shall mean any corporation of which more than 50% of the
outstanding shares of capital stock having general voting power under ordinary
circumstances to elect a majority party 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 G&K or G&K and
one or more other Subsidiaries or by one or more Subsidiaries. Work Wear is a
Subsidiary.
Total Stockholders' Equity shall mean G&K's consolidated total
stockholders' equity as shown and described as such on G&K's consolidated
financial statements delivered to the Banks in accordance with Section 10.1.
Tranche shall mean a group or category of Banks, Loans or procedures of
or relating to Loans made in accordance with either Section 2 or Section 3, as
the context may require.
Tranche A Agent shall mean Norwest in its separate capacity as
administrative agent to facilitate the funding and repayment of Tranche A Loans.
Tranche A Commitment Amount shall mean Twenty-Five Million U.S. Dollars
(U.S.$25,000,000), being the maximum aggregate amount of the Revolving
Commitments of all U.S. Banks to make Tranche A Loans and issue Letters of
Credit to or for the account of G&K, subject to reduction in accordance with
Section 6.1.
Tranche A Exposure shall mean, as of the date of determination, the sum
of (i) the aggregate principal amount of all Tranche A Revolving Loans
outstanding and (ii) the LC Amount.
Tranche A Floating Rate Loan shall mean any Tranche A Loan which bears
interest at a rate determined by reference to the Tranche A Reference Rate.
Tranche A Loans shall mean Loans made by the U.S. Banks to G&K as
contemplated in Section 2 hereof.
Tranche A Loan Period see Section 4.5.
Tranche A Reference Rate shall mean at any time the variable rate of
interest per annum then most recently announced by Norwest as its "base" rate or
"prime" rate, as the case may be, however designated or described. Norwest's
base rate is not necessarily the lowest rate offered by Norwest to its
commercial customers.
Tranche A Revolving Commitment see Section 2.1.
Tranche A Revolving Loan see Section 2.1.
Tranche B Agent shall mean NBDC in its separate capacity as
administrative agent to facilitate the funding and repayment of Tranche B Loans
and Acceptances.
Tranche B Commitment Amount shall mean the maximum aggregate amount of
the Revolving Commitments of all Canadian Banks to make Tranche B Loans to and
to create Acceptances for the benefit of Work Wear, which shall be the lesser of
(i) Thirty Million Canadian Dollars (C.$30,000,000), or such lesser amount as
may become effective in accordance with Section 6.1 or 6.1, 6.2 or (ii) the
Canadian Dollar equivalent of twenty-five percent (25%) of G&K's Total
Stockholders' Equity as set forth in the most recently available quarterly
financial statements of G&K delivered pursuant to Section 10.1.2 hereof with
respect to the first three fiscal quarters of G&K and as set forth in the annual
audit report of G&K delivered pursuant to Section 10.1.1 hereof with respect to
the last fiscal quarter of G&K, with conversion to Canadian Dollars to be made
as of the date of delivery of such financial statements.
Tranche B Exposure shall mean, as of the date of determination, the sum
of (i) the aggregate principal amount of all Tranche B Revolving Loans
outstanding and (ii) the aggregate face amount of all outstanding Acceptances.
Tranche B Floating Rate Loan shall mean any Tranche B Loan which bears
interest at a rate determined by reference to the Tranche B Reference Rate.
Tranche B Loans shall mean Loans made by the Canadian Banks to Work
Wear as contemplated in Section 3 hereof.
Tranche B Loan Period see Section 4.5.2.
Tranche B Reference Rate shall mean at any time the variable rate of
interest per annum then most recently announced by NBDC as its "prime" rate,
however designated or described. NBDC's prime rate is not necessarily the lowest
rate offered by NBDC to its commercial customers.
Tranche B Revolving Commitment see Section 3.1.
Tranche B Revolving Loan see Section 3.1.
Type of Loan or Borrowing means (i) a Tranche A Floating Rate Loan or
Borrowing or a Eurodollar Loan or Borrowing, with respect to Tranche A Loans and
(ii) a Tranche B Floating Rate Loan or Borrowing or the creation of an
Acceptance or a Drawing, with respect to Tranche B.
U.S. 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 Loan, a day on which dealings are
carried on in the London interbank Eurodollar market.
Unmatured Event of Default shall mean any event which if it continues
uncured will, with lapse of time or notice or lapse of time and notice,
constitute an Event of Default.
Work Wear see Preamble.
1.2 Conversion From Canadian Dollars to U.S. Dollars. Each
time Canadian Dollars are to be expressed in their U.S. Dollar
equivalent, or U.S. Dollars are to be expressed in their Canadian
Dollar equivalent as contemplated in this Agreement, such
converted amount shall be computed by the Tranche B Agent at the
spot rate on the date 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.
SECTION 2 TRANCHE A COMMITMENTS; TYPES OF TRANCHE A LOANS;
PROCEDURES FOR BORROWING OR CONVERTING; PRO RATA
TREATMENT; LETTERS OF CREDIT.
2.1 Tranche A Revolving Commitments. Subject to the terms and
conditions of this Agreement, each of the U.S. Banks, severally and for itself
alone, agrees to make loans (herein collectively called the "Tranche A Revolving
Loans" and individually each called a "Tranche A Revolving Loan") to G&K on a
revolving basis from time to time before the Revolving Loan Termination Date in
an amount not to exceed such Bank's Percentage of the Tranche A Revolving Loans
from time to time requested by G&K; provided, however, that the aggregate
principal amount of all Tranche A Exposure which the U.S. Banks shall be
committed to have outstanding hereunder shall not at any time exceed the Tranche
A Commitment Amount; and the aggregate principal amount of all Tranche A
Exposure which any U.S. Bank shall be committed to have outstanding hereunder
shall not at any time exceed such Bank's Percentage of the aggregate principal
amount of the Tranche A Exposure which all U.S. Banks are then committed to have
outstanding to G&K. The commitments of the U.S. Banks to make Tranche A
Revolving Loans and participate in the risk and liability of outstanding letters
of credit are herein collectively called the "Tranche A Revolving Commitments,"
and the commitment of each U.S. Bank is called its "Tranche A Revolving
Commitment."
2.2 Various Types of Loans. Each Borrowing under Tranche A may be
funded by the U.S. Banks as Tranche A Floating Rate Loans or Eurodollar Loans
(each being herein called a "Type of Loan"), as G&K shall specify in the related
notice of Borrowing or conversion pursuant to Section 2.3 or 2.4. Tranche A
Floating Rate Loans and Eurodollar Loans may be outstanding at the same time. It
is understood, however, that (i) in the case of Tranche A Revolving Loans which
are Eurodollar Loans, not more than four different Tranche A Loan Periods shall
be outstanding at any one time, and (ii) the aggregate principal amount of each
Group of Eurodollar Loans shall be at least U.S.$500,000 or a higher integral
multiple of U.S.$100,000.
2.3 Procedures for Borrowing. G&K shall give notice to the Tranche A
Agent of each proposed Borrowing not later than 10:30 a.m., Minneapolis time, on
a U.S. Business Day which, in the case of a Borrowing that is to bear interest
initially at a Tranche A Floating Rate, is the proposed date of such Borrowing
or, in the case of a Borrowing that is to bear interest initially at a
Eurodollar Rate (Reserve Adjusted), is at least three U.S. Business Days prior
to the proposed date of such Borrowing. Each such notice shall be effective upon
receipt by the Tranche A Agent, shall be in writing, by telephone or by telecopy
transmission, to be confirmed in writing by G&K if so requested by the Tranche A
Agent (to be in the form of Exhibit A), shall specify whether the Borrowing is
to bear interest initially at a Tranche A Floating Rate or a Eurodollar Rate
(Reserve Adjusted), and (in the case of a Borrowing that is to bear interest
initially at a Eurodollar Rate (Reserve Adjusted)) shall specify the date and
amount of the Borrowing that is to bear interest initially at a Eurodollar Rate
(Reserve Adjusted) and the Tranche A Loan Period therefor. Promptly upon receipt
of such notice (but in no event later than 12:00 Noon of the U.S. Business Day
of receipt of such notice), the Tranche A Agent shall advise each U.S. Bank of
the proposed Borrowing. At or before 2:00 p.m., Minneapolis time, on the
requested Borrowing date, each Bank shall provide the Tranche A Agent at the
principal office of the Tranche A Agent in Minneapolis with immediately
available funds covering such Bank's Percentage of such Borrowing, and subject
to the satisfaction of the conditions precedent set forth in Section 12 with
respect to such Borrowing, the Tranche A Agent shall pay over such funds to G&K
prior to the close of business on the requested Borrowing date. Each Borrowing
with respect to a Tranche A Floating Rate Loan shall be in an amount equal to
U.S.$500,000 or a higher integral multiple of U.S.$100,000.
2.4 Converting Tranche A Floating Rate Loans to Eurodollar Loans;
Procedures. So long as no Event of Default or Unmatured Event of Default shall
exist, G&K may convert all or any part of any outstanding Tranche A Floating
Rate Loans into Eurodollar Loans by giving notice to the Tranche A Agent of such
conversion not later than 10:30 a.m., Minneapolis time, on a U.S. Business Day
which is at least three U.S. Business Days prior to the date of the requested
conversion. Each such notice shall be effective upon receipt by the Tranche A
Agent, shall be in writing, by telephone or by telecopy transmission, to be
confirmed in writing by G&K if so requested by the Tranche A Agent (in the form
of Exhibit B), shall specify the date and amount of such conversion, the total
amount of Tranche A Revolving Loans to be so converted and the Tranche A Loan
Period therefor. Promptly upon receipt of such notice, the Tranche A Agent shall
advise each U.S. Bank thereof. Each conversion of Tranche A Revolving Loans
shall be on a U.S. Business Day, and the aggregate amount of each such
conversion of Tranche A Floating Rate Loans to Eurodollar Loans shall be at
least U.S.$500,000 or a higher integral multiple of U.S.$100,000.
2.5 Procedures at End of a Loan Period. Unless G&K requests a new
Eurodollar Loan in accordance with the procedures set forth below, each U.S.
Bank shall automatically and without request by G&K, convert each Eurodollar
Loan to a Tranche A Floating Rate Loan on the last day of the relevant Tranche A
Loan Period. So long as no Event of Default or Unmatured Event of Default shall
exist, G&K may cause all or any part of any outstanding Eurodollar Loans to
continue to bear interest at a Eurodollar Rate (Reserve Adjusted) after the end
of the then-applicable Tranche A Loan Period by notifying the Tranche A Agent
not later than 10:30 a.m., Minneapolis time, on a U.S. Business Day which is at
least three U.S. Business Days prior to the first day of the new Tranche A Loan
Period. Each such notice shall be in writing, by telephone or by telecopy
transmission, to be confirmed in writing by G&K if so requested by the Tranche A
Agent (in the form of Exhibit C), shall be effective when received by the
Tranche A Agent, and shall specify the first day of the applicable Tranche A
Loan Period, the amount of the new Eurodollar Loans and the Tranche A Loan
Period therefor. Promptly upon receipt of such notice, the Tranche A Agent shall
advise each U.S. Bank thereof. Each new Tranche A Loan Period shall begin on a
U.S. Business Day and the aggregate amount of the Tranche A Revolving Loans
bearing the new Eurodollar Rate (Reserve Adjusted) shall be at least
U.S.$500,000 or a higher multiple of U.S.$100,000.
2.6 Pro Rata Treatment. All Borrowings, conversions and repayments
shall be effected so that after giving effect thereto all Types of Tranche A
Revolving Loans shall be pro rata among the U.S. Banks according to their
respective Percentages.
2.7 Issuing Letters of Credit. The Tranche A Agent agrees, on the terms
and subject to the conditions set forth below, to issue one or more standby
letters of credit for the account of G&K from time to time before the Revolving
Loan Termination Date on the terms and subject to the conditions set forth
below:
(a) Each new letter of credit issued pursuant to this Section
2.7 and each letter of credit issued and outstanding on the date of
this Agreement as set forth and described in Exhibit D is referred to
herein as a "Letter of Credit". Notwithstanding anything in the
foregoing to the contrary, the LC Amount outstanding at any one time
may not exceed the lesser of (i) U.S.$10,000,000 or (ii) the Tranche A
Commitment Amount less the aggregate outstanding principal balance of
all outstanding Tranche A Revolving Loans. The expiration dates of the
Letters of Credit shall not be later than the Revolving Commitment
Termination Date. Each Letter of Credit will be issued upon no less
than five U.S. Business Days' prior written application and agreement
from G&K. The application requesting issuance of a Letter of Credit
shall be on the standard form of the Tranche A Agent or such other form
as may be agreed to by the Tranche A Agent and G&K. In the event that
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. No Letter of Credit shall be issued unless on
the date of issuance all of the conditions precedent specified in
Section shall have been satisfied as fully as if the issuance of such
Letter of Credit were a Tranche A Revolving Loan.
(b) As soon as practicable after issuing or amending any
Letter of Credit, the Tranche A Agent will send a copy of the Letter of
Credit or amendment and of the related reimbursement agreement to each
U.S. Bank.
(c) G&K agrees to pay to the Tranche A Agent for the pro rata
account of the U.S. Banks, a commission upon the undrawn face amount
outstanding from time to time at the rate of 1.50% per annum (based on
actual days elapsed and a 360-day year), payable quarterly in advance
(pro rated, as appropriate) on the last U.S. Business Day of each
March, June, September and December.
(d) Whenever a draft submitted under a Letter of Credit is
paid by the Tranche A Agent, the Tranche A Agent is authorized to
charge G&K's demand deposit account maintained with the Tranche A Agent
for the amount of the draft. If sufficient funds are not available in
such account, G&K agrees to pay the amount of the draft upon demand,
with interest (based on actual days elapsed and a 360-day year) upon
such amount at the Tranche A Reference Rate from and after the date
such draft is paid by the Tranche A Agent to and including the date the
amount of the draft is paid in full.
(e) The obligation of G&K to reimburse the Tranche A Agent for
the amount of any payment made by the Tranche A Agent under any Letter
of Credit shall be absolute, unconditional, and irrevocable, and G&K
shall make all such payments without offset or counterclaim of any
kind.
(f) G&K shall indemnify, protect, defend and hold harmless the
Tranche A Agent and each U.S. Bank and their respective directors,
officers, employees, attorneys and agents (collectively the
"Indemnitees") 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 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 Tranche A Agent's claims
against G&K 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, such indemnification shall not extend to losses, liabilities,
claims, damages, judgments, costs and expenses arising solely from any
act or omission of an Indemnitee which constitutes gross negligence or
wilful misconduct.
2.8 Participation in Letters of Credit. Each U.S. Bank hereby assumes
its Percentage of the risk and liability of repayment with respect to each
Letter of Credit and shall be entitled to its Percentage of each commission paid
by G&K with respect thereto as provided in Section 2.7 (c), subject to the
following:
(a) In the event the Tranche A Agent makes any payment
pursuant to the terms of any Letter of Credit and is not promptly
reimbursed by G&K, the Tranche A Agent shall be entitled to request
that each other U.S. Bank pay to the Tranche A Agent such Bank's
Percentage of the unreimbursed amount. The Tranche A Agent shall make
such request in writing addressed to each U.S. Bank, specifying the
Letter of Credit number, the date of the drawing, the total
unreimbursed amount and the U.S. Bank's Percentage of the unreimbursed
amount. Upon receipt of any such notice prior to 10:00 a.m. Minneapolis
time on a U.S. Business Day, the recipient shall be unconditionally and
irrevocably obligated to pay its Percentage of the unreimbursed amount
to the Tranche A Agent prior to the close of business on such date.
Notices received after 10:00 a.m. Minneapolis time shall be deemed to
have been received on the next following a U.S. Business Day. If
payment is not made when due, interest on the unpaid amount shall
accrue from and including the day of notice to, but not including, the
day of payment at the Federal Funds Rate.
(b) After making any payment to the Tranche A Agent under
subsection (a) in connection with a particular Letter of Credit, a U.S.
Bank shall be entitled to participate to the extent of its Percentage
in the related reimbursements received by the Tranche A Agent, whether
in the form of payments by G&K, payments from third parties or
otherwise. Upon receiving any such reimbursement, the Tranche A Agent
will distribute to each U.S. Bank its Percentage of such reimbursement.
Such distribution shall be made on the U.S. Business Day that the
Tranche A Agent receives such reimbursement, if such reimbursement is
received before 10:00 a.m. Minneapolis time on such U.S. Business Day,
or on the U.S. Business Day following receipt of such reimbursement if
such payment is received after 10:00 a.m. Minneapolis time.
(c) The Tranche A Agent will exercise the same care in the
administration, payment and enforcement of the Letters of Credit and
reimbursement obligations as it exercises with respect to letters of
credit and reimbursement obligations which are for its account solely.
In no event will the Tranche A Agent be liable to the other U.S. Banks
for any error in judgment or for any action taken or omitted to be
taken by it in connection with any Letter of Credit, except for willful
misconduct or gross negligence.
2.9 Tranche A Revolving Loans Denominated in U.S. Dollars. All Tranche
A Revolving Loans shall be made to G&K in U.S. Dollars and shall be repaid by
G&K in U.S. Dollars. All interest accruing on outstanding Tranche A Revolving
Loans, all interest on and commissions payable with respect to Letters of Credit
and all fees payable in connection therewith shall be computed, and paid, in
U.S. Dollars.
SECTION 3 TRANCHE B COMMITMENTS; TRANCHE B REVOLVING LOANS;
CREATION OF BANKERS' ACCEPTANCES; PROCEDURES FOR
BORROWING OR CONVERTING; PRO RATA TREATMENT.
3.1 Tranche B Revolving Commitments. Subject to the terms and
conditions of this Agreement, each of the Canadian Banks, severally and for
itself alone, agrees to (i) make loans (herein collectively called the "Tranche
B Revolving Loans" and individually each called a "Tranche B Revolving Loan") to
Work Wear on a revolving basis and (ii) to create bankers' acceptances (herein
collectively called the "Acceptances" and individually called an "Acceptance")
from time to time before the Revolving Loan Termination Date in an amount not to
exceed such Bank's Percentage of the Tranche B Revolving Loans or Acceptances
from time to time requested by Work Wear; provided, however, that the aggregate
principal amount of all Tranche B Exposure which the Canadian Banks shall be
committed to have outstanding hereunder shall not at any time exceed the Tranche
B Commitment Amount; and the aggregate principal amount of all Tranche B
Exposure which any Canadian Bank shall be committed to have outstanding
hereunder shall not at any time exceed such Bank's Percentage of the aggregate
principal amount of Tranche B Exposure which all Canadian Banks are then
committed to have outstanding to Work Wear. The commitments of the Canadian
Banks to make Tranche B Revolving Loans and to create Acceptances are herein
collectively called the "Tranche B Revolving Commitments," and the commitment of
each Canadian Bank is called its "Tranche B Revolving Commitment."
3.2 Various Types of Fundings. Each Borrowing under Tranche B may be
funded by the Canadian Banks as either Tranche B Floating Rate Loans or the
creation and acceptance of Acceptances (each being herein called a "Type of
Loan"), as Work Wear shall specify in the related notice of Borrowing or
conversion pursuant to Section 3.3 or 3.4. Tranche B Floating Rate Loans and
Acceptances may be outstanding at the same time. It is understood, however, that
(i) in the case of Acceptances, not more than five different Tranche B Loan
Periods shall be outstanding at any one time, and (ii) the aggregate principal
amount of each Group of Acceptances shall be at least C.$3,000,000 or a higher
integral multiple of C.$1,500,000.
3.3 Procedures for Borrowing. Work Wear shall give notice to the
Tranche B Agent of each proposed Borrowing not later than 12:00 Noon, Toronto,
Ontario time, at least one Canadian Business Day prior to a Borrowing which will
be funded as a Tranche B Floating Rate Loan and at least three 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 Tranche B
Agent, shall be in writing, by telephone or by telecopy transmission, to be
confirmed in writing by Work Wear if so requested by the Tranche B Agent (in the
form of Exhibit E), shall specify whether the Borrowing is to bear interest
initially at a Tranche B 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 amount of the Acceptances
and the Tranche B Loan Period therefor. 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 Tranche B Agent shall advise each Canadian Bank of the
proposed Borrowing and all other relevant information with respect thereto. At
or before 12:00 Noon, Toronto, Ontario time, on the requested Borrowing date,
each Canadian Bank shall provide the Tranche B Agent at the principal office of
the Tranche B Agent in Toronto, Ontario (unless any such Bank and the Tranche B
Agent shall otherwise agree) with immediately available funds covering such
Canadian Bank's Percentage of such Borrowing (constituting either proceeds of a
Tranche B Floating Rate Loan or the BA Purchase Price with respect to the
discounting of Acceptances), and subject to the satisfaction of the conditions
precedent set forth in Section 12 with respect to such Borrowing, the Tranche B
Agent shall pay over such funds to Work Wear prior to the close of business on
the requested Borrowing date. Each Tranche B Borrowing constituting Tranche B
Floating Rate Loans shall be in an amount not less than C.$500,000 and each
Borrowing constituting the discounting of Acceptances shall be in an amount
equal to C.$3,000,000 or a higher integral multiple of C.$1,500,000.
3.4 Converting Tranche B Floating Rate Loans to Acceptances;
Procedures. So long as no Event of Default or Unmatured Event of Default shall
exist, Work Wear may convert all or any part of any outstanding Tranche B
Floating Rate Loans into Acceptances by giving notice to the Tranche B Agent of
such conversion not later than 12:00 Noon, Toronto, Ontario time, on a Canadian
Business Day which is at least three Canadian Business Days prior to the date of
the requested conversion. Each such notice shall be effective upon receipt by
the Tranche B Agent, shall be in writing, by telephone or by telecopy
transmission, to be confirmed in writing by Work Wear if so requested by the
Tranche B Agent (in the form of Exhibit F), shall specify the date and amount of
such conversion, the total amount of Tranche B Revolving Loans to be so
converted and the Tranche B Loan Period therefor. Promptly upon receipt of such
notice, the Tranche B Agent shall advise each Canadian Bank thereof. Each
conversion of Tranche B Revolving Loans shall be on a Canadian Business Day, and
the aggregate amount of each such conversion of Tranche B Floating Rate Loans to
Acceptances shall be at least C.$3,000,000 or a higher integral multiple of
C.$1,500,000.
3.5 Procedures at End of a Loan Period. Unless Work Wear requests
creation of new Acceptances in accordance with the procedures set forth below,
each Canadian Bank shall automatically and without request by Work Wear, make a
Tranche B Floating Rate Loan on the last day of the relevant Tranche B Loan
Period in an amount sufficient to pay in full all Acceptances maturing on such
day. So long as no Event of Default or Unmatured Event of Default shall exist,
Work Wear may cause all or any part of any outstanding Acceptances to be renewed
and reissued after the end of the then-applicable Tranche B Loan Period by
notifying the Tranche B Agent not later than 12:00 Noon, Toronto, Ontario time,
on a Canadian Business Day which is at least three Canadian Business Days prior
to the first day of the new Tranche B Loan Period. Each such notice shall be in
writing, by telephone or by telecopy transmission, to be confirmed in writing by
Work Wear if so requested by the Tranche B Agent (in the form of Exhibit G),
shall be effective when received by the Tranche B Agent, and shall specify the
first day of the applicable Tranche B Loan Period, the amount of the new
Acceptances to be created, and the Tranche B Loan Period therefor. Promptly upon
receipt of such notice, the Tranche B Agent shall advise each Canadian Bank
thereof. Each new Tranche B Loan Period shall begin on a Canadian Business Day
and the aggregate amount of the new Acceptances being created shall be at least
C.$3,000,000 or a higher integral multiple of C.$1,500,000.
3.6 Pro Rata Treatment. All Borrowings, conversions and repayments
shall be effected so that after giving effect thereto all Types of Loans
(including both Floating Rate Loans and Acceptances) shall be pro rata among the
Canadian Banks according to their respective Percentages.
3.7 Bankers Acceptances. Acceptances shall be created,
purchased and repaid in accordance with the following:
(a) 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 Tranche
B Loan 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.
(b) Not later than 12:00 Noon, Toronto, Ontario time, on any
Drawing Date, each Canadian Bank shall (i) complete one or more Drafts
dated the date of such Drawing, in an aggregate amount designated by
the Tranche B Agent as being such Canadian Bank's proportion of a
requested Drawing, (ii)stamp such Drafts as accepted by such Canadian
Bank and (iii) provide for the discounting of such Acceptances in
accordance with this Section 3.7.
(c) On the proposed Drawing Date, Work Wear shall pay to the
Tranche B Agent for the account of each Canadian Bank accepting a Draft
or Drafts, a stamping fee of one and one-half percent (1.50%) per annum
computed on the basis of the face amount of the Draft being accepted
and the term thereof (the "Acceptance Fee"); provided, however, that
from and after the occurrence of an Event of Default and continuing
thereafter until such Event of Default shall be remedied to the written
satisfaction of the Canadian Banks, Work Wear shall pay to the Tranche
B Agent for the account of each Canadian Bank (i) with respect to
currently outstanding Acceptances, an additional annual fee for the
unexpired term of such Acceptances equal to two percent (2%) per annum
and (ii) with respect to new Acceptances created thereafter, the
Acceptance Fee shall be equal to three and one-half (3.50%) per annum.
(d) On the Drawing Date, each Canadian Bank shall deliver to
the Tranche B Agent the applicable BA Purchase Price for the
Acceptances created in accordance with notices received from the
Tranche B Agent under Sections 3.3, 3.4 or 3.5, in accordance with
Section 3.3. 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.
(e) To enable the Canadian Banks to create Acceptances in the
manner specified in this Section 3.7, Work Wear shall supply the
Canadian Banks with such number of Drafts as such Canadian Banks 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 will, upon request of Work Wear, 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.
(f) Work Wear shall pay to the Tranche B 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. Work Wear shall make each payment of a maturing Acceptance
by deposit of the required funds to the Tranche B Agent or by
requesting the Tranche B 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
renew the amount thereof pursuant to Section 3.5, the unpaid amount
thereof shall automatically be converted to a Tranche B Floating Rate
Loan in accordance with Section 3.5, with the proceeds of such Tranche
B Revolving Loan being used to pay in full each maturing Acceptance.
3.8 Tranche B Revolving Loans and Drafts Denominated in Canadian
Dollars. All Tranche B Revolving Loans 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 Tranche B Revolving Loans
and fees payable in connection therewith and all Acceptance Fees shall be
computed, and paid, in Canadian Dollars.
3.9 Restrictions on Conversion From Acceptances to Loans. If at any
time the annual interest rate which would be applicable to a Borrowing funded
with Tranche B Floating Rate Loans 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 Tranche B 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 Tranche B Agent shall require, that Work Wear
cause all or a portion of maturing Acceptances to be renewed and reissued in
accordance with Section 3.5 hereof. Upon receipt of any such written notice from
the Tranche B Agent, Work Wear shall cause such maturing Acceptances to be
renewed and reissued in accordance with the applicable provisions of Section 3.5
hereof.
3.10 Guaranty by G&K. Pursuant to the terms and conditions of the
Guaranties, G&K shall guaranty to each Canadian Bank the due and prompt payment
of each and every debt, liability and obligation arising hereunder or issued
pursuant to the terms hereof which Work Wear may now or in any time hereafter
owe to any Canadian Bank, including both principal and interest thereon, whether
such debt, liability or obligation now exists or is hereafter created or
incurred and whether it is direct or indirect, due or to become due, absolute or
contingent, primary or secondary, liquidated or unliquidated, and including
specifically, but not limited to, all indebtedness of Work Wear evidenced by the
Revolving Notes executed and delivered to the Canadian Banks and all Acceptances
issued on behalf of Work Wear as contemplated hereby.
SECTION 4 NOTES EVIDENCING LOANS; INTEREST RATES; LOAN
PERIODS; COMPUTATION OF INTEREST AND FEES.
4.1 Revolving Notes. The Revolving Loans of each Bank shall be
evidenced by a promissory note (herein individually called a "Revolving Note"
and collectively for all Banks called the "Revolving Notes") substantially in
the form set forth in Exhibit H-1 (with respect to Tranche A Revolving Loans)
and Exhibit H-2 (with respect to Tranche B Revolving Loans), with appropriate
insertions, dated the Closing Date (or a date prior thereto satisfactory to the
Agent), payable to the order of such Bank in the principal amount of the
original Revolving Commitment of such Bank.
4.2 Several Liability; Waivers. Subject in all events to G&K's
liability as guarantor of Work Wear's obligations hereunder pursuant to the
Guaranties, each of the Companies shall be severally (and not jointly) liable
for payment of all indebtedness from time to time evidenced by each Revolving
Note and each Acceptance executed and delivered by such Company and for all
other obligations under this Agreement specified as the obligation of such
Company. Each of the Companies shall be jointly and severally liable for all
liabilities and obligations arising under this Agreement which are not expressly
stated as the obligations of a particular Company (herein the "Joint and Several
Obligations"). Each Company acknowledges and agrees that, with respect to
Tranche A Revolving Loans and Letters of Credit, the Tranche A Agent will deal
solely and exclusively with G&K and, with respect to Tranche B Revolving Loans
and Acceptances, the Tranche B Agent will deal solely and exclusively with Work
Wear. Each of the Companies hereby waives any and all defenses, claims, set-offs
and discharges available to a surety, guarantor or accommodation co-obligor,
dependent on its character as such and acknowledges that its liability for
payment of all Joint and Several Obligations hereunder shall be joint, several,
direct and non-contingent and shall not be affected or impaired by any voluntary
or involuntary liquidation, dissolution, sale or other disposition of all or
substantially all of the assets, marshalling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of, or other similar
event or proceeding affecting, the other Company with respect to any such
indebtedness.
4.3 Recordkeeping. Each Bank shall record in its records or, at its
option, on schedules retained with its Note, the date and amount of each Loan
made by such Bank, and each repayment thereof. The aggregate unpaid principal
amount so recorded shall be rebuttable presumptive evidence of the principal
amount of the Loans owing and unpaid by a Company. 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 respective obligations of the Companies hereunder
or under any Note to repay the principal amount of the Loans, together with all
interest accrued thereon.
4.4 Interest on Loans. Each Company hereby agrees to pay interest on
the unpaid principal amount of each Loan made to it for the period commencing on
the date such Loan is made by a Bank until such Loan is paid in full, in
accordance with the following:
4.4.1 Tranche A Floating Rate Loans. At all times while a Loan
is a Tranche A Floating Rate Loan, the outstanding principal balance
thereof shall bear interest at an annual rate at all times equal to the
Tranche A Reference Rate.
4.4.2 Eurodollar Loans. At all times while a Loan is a
Eurodollar Loan, the outstanding principal balance thereof shall bear
interest for the applicable Tranche A Loan Period at an annual rate
equal to (i) the Eurodollar Rate (Reserve Adjusted) established with
respect such Loan in accordance with Section hereof and (ii) one and
one-half percent (1- 1/2%).
4.4.3 Tranche B Floating Rate Loans. At all times while a Loan
is a Tranche B Floating Rate Loan, the outstanding principal balance
thereof shall bear interest at an annual rate at all times equal to the
Tranche B Reference Rate.
4.4.4 Default Rate. From and after the occurrence of an Event
of Default and continuing thereafter until such Event of Default shall
be remedied to the written satisfaction of the Banks, the outstanding
principal balance of each Loan shall bear interest, until paid in full,
at a rate equal to (i) the interest rate otherwise in effect with
respect thereto and (ii) two percent (2%) (the "Default Rate").
4.5 Loan Periods. Each Eurodollar Loan and Acceptance shall commence on
the date such Loan is made or converted, or the date on which a Drawing occurs,
as the case may be, and shall continue for a Loan Period determined in
accordance with the following:
4.5.1 Tranche A Loan Periods. Each Eurodollar Loan shall
mature on the date which is one, two, three or six months after the
date of funding or conversion, as the case may be, as G&K may specify
in the related notice pursuant to Section 2.3, 2.4 or 2.5 (each such
period, herein a "Tranche A Loan Period"); provided, however, that each
Tranche A Loan Period which would otherwise end on a day which is not a
U.S. Business Day shall end on the next succeeding U.S. Business Day
(unless such next succeeding U.S. Business Day is the first U.S.
Business Day of the calendar month, in which case such Tranche A Loan
Period shall end on the immediately preceding U.S. Business Day).
4.5.2 Tranche B Loan Periods. Each Acceptance shall mature on
the date which is approximately 30, 60, 90 or 180 days after the date
of issuance, rollover or conversion, as the case may be, as Work Wear
may specify in the related notice pursuant to Section 3.3, 3.4, 3.5 or
(each such period herein a "Tranche B Loan Period"); provided, however,
that:
(a) Each Tranche B Loan Period which would otherwise end on a
day which is not a Canadian Business Day shall end on the next
succeeding Canadian Business Day (unless such next succeeding Canadian
Business Day is the first Canadian Business day of a calendar month, in
which case such Tranche B Loan Period shall end on the immediately
preceding Canadian Business Day); and
(b) Tranche B Loan Periods shall be designated so that the sum
of:
(i) Tranche B Floating Rate Loans;
(ii) Acceptances having a Tranche B Loan Period ending on or
prior to the next scheduled mandatory reduction of the Tranche
B Commitment Amount under Section 6.1, 6.2; and
(iii) the unadvanced portions of the Tranche B Commitment
Amount,
shall not be less than the amount of the next scheduled mandatory reduction of
the Tranche B Commitment Amount under Section 6.1, 6.2.
4.6 Interest Due Dates. Accrued interest on each Eurodollar Loan shall
be payable on the last day of any Loan Period relating to such Loan; provided,
however, that if any Loan Period is longer than three months, interest shall be
payable monthly on the last day of each monthly period after commencement of
such Loan Period and on the last day of such Loan Period. Accrued interest on
each Tranche A Floating Rate Loan shall be payable in arrears on the last U.S.
Business Day of each month and at a maturity or conversion of such Tranche A
Floating Rate Loan to a Eurodollar Loan. Accrued interest on each Tranche B
Floating Rate Loan shall be payable in arrears on the last Canadian Business Day
of each month and at maturity or conversion of such Tranche B Floating Rate Loan
to Acceptances. After maturity, accrued interest on each Loan shall be payable
on demand.
4.7 Setting and Notice of Rates. The applicable Eurodollar Rate for
each Tranche A Loan Period shall be determined by the Tranche A Agent and the
applicable BA Purchase Price for each Acceptance shall be determined by the
Tranche B Agent, and notice thereof (which may be by telephone) shall be given
by each such Agent promptly to the Company requesting such Loan or Acceptance
and to each affected Bank. Each such determination shall be conclusive and
binding upon the parties hereto, in the absence of demonstrable error. The
Tranche A Agent, with respect to Eurodollar Loans, and the Tranche B Agent, with
respect to Acceptances, upon written request of the appropriate Company or any
Bank, shall deliver to the requesting Company or such Bank a statement showing
the computations used by such Agent in making the determinations hereunder.
4.8 Computation of Interest and Acceptance Fees. Interest on all
Tranche A Revolving Loans and on all unreimbursed draws occurring under a Letter
of Credit shall be computed on the basis of the actual number of days elapsed in
a year of 360 days. Interest on all Tranche B Revolving Loans 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. The applicable interest rate for
all Floating Rate Loans shall change simultaneously with each change in the
Tranche A Reference Rate or the Tranche B Reference Rate, as the case may be.
4.9 Payment of Interest. Interest accrued on all Tranche A Revolving
Loans shall be payable by G&K in U.S. Dollars, in immediately available funds,
to the Tranche A Agent for the pro rata account of all U.S. Banks, based on
their respective Percentages. Interest accrued on all Tranche B Revolving Loans
shall be payable by Work Wear in Canadian Dollars, in immediately available
funds, to the Tranche B Agent for the pro rata account of all Canadian Banks,
based on their respective Percentages.
4.10 Canadian Interest Act. Work Wear and the Canadian Banks agree that
for purposes of the Interest Act (Canada) (i) the principle of "deemed
reinvestment of interest" shall not apply to any calculation of interest under
this Agreement and (ii) the rates of interest applicable to outstanding Tranche
B Floating Rate Loans or otherwise specified in this Agreement are intended to
be nominal rates and not effective rates or yields.
SECTION 5 FEES.
5.1 Facility Fees. Facility fees with respect to each Tranche will be
paid as follows:
5.1.1 Tranche A Facility Fee. G&K hereby agrees to pay a
facility fee equal to thirty thousand three hundred fifty-six U.S.
Dollars (U.S.$30,356) on the Closing Date to the Tranche A Agent for
the pro rata account of the U.S. Banks, to be shared among the U.S.
Banks based upon their respective Percentages.
5.1.2 Tranche B Facility Fee. Work Wear hereby agrees to pay a
facility fee equal to forty-six thousand seven hundred twenty-six
Canadian Dollars (C.$46,726) on the Closing Date to the Tranche B Agent
for the pro rata account of the Canadian Banks, to be shared among the
Canadian Banks based upon their respective Percentages.
5.2 Administration Fees. Work Wear agrees to pay the Tranche B Agent,
solely for the account of the Tranche B Agent, an administration fee of fifteen
thousand Canadian Dollars (C.$15,000) for the first year this Agreement is in
effect, payable in immediately available funds on the Closing Date. Work Wear
agrees to pay the Tranche B Agent an administration fee solely for the account
of the Tranche B Agent for the next succeeding year this Agreement is in effect,
in the amount of fifteen thousand Canadian Dollars (C.$15,000), unless Work Wear
and the Tranche B Agent agree to a lesser fee mutually acceptable to both Work
Wear and the Tranche B Agent. There shall be no administration fees payable to
Norwest in its capacity as Agent or Tranche A Agent hereunder.
5.3 Unused Commitment Fees. Commitment fees with respect to each
Tranche will be paid as follows:
5.3.1 Tranche A Unused Commitment Fee. G&K hereby agrees to
pay an unused commitment fee computed at the rate of three-eighths of
one percent (.375%) per annum on the daily average amount by which the
Tranche A Commitment Amount exceeds the Tranche A Exposure (the "Unused
Tranche A Portion"), payable in U.S. Dollars to the Tranche A Agent for
the account of the U.S. Banks, for the period commencing on the date
hereof to and including the Revolving Loan Termination Date. With
respect to such fee, one quarter percent (.25%) per annum on the Unused
Tranche A Portion shall be shared by the U.S. Banks (including the
Tranche A Agent) pro rata based upon their respective Percentages and
one eighth percent (.125%) per annum on the Unused Tranche A Portion
shall be retained by the Tranche A Agent solely for its own account.
5.3.2 Tranche B Unused Commitment Fee. Work Wear hereby agrees
to pay an unused commitment fee computed at the rate of three-eighths
of one percent (.375%) per annum on the daily average amount by which
the Tranche B Commitment Amount then in effect exceeds the Tranche B
Exposure (the "Unused Tranche B Portion"), payable in Canadian Dollars
to the Tranche B Agent for the account of the Canadian Banks,
commencing on the date hereof and continuing to and including the
Revolving Loan Termination Date. With respect to such fee, one quarter
percent (.25%) per annum on the Unused Tranche B Portion shall be
shared by the Canadian Banks (including the Tranche B Agent) pro rata
based upon their respective Percentages and one eighth percent (.125%)
per annum on the Unused Tranche B Portion shall be retained by the
Tranche B Agent solely for its own account.
5.3.3 Payment Dates. All unused commitment fees payable under
this Section 5.3 shall be payable in arrears on the last day of each
June, September, December and March, and on the Revolving Loan
Termination Date, with the first such payment becoming due and payable
on June 30, 1994.
5.4 Payment of Fees. All fees payable to the Tranche A Agent or to any
U.S. Bank under this Section 5 shall be payable by G&K in U.S. Dollars in
immediately available funds, and shall be computed on the basis of the actual
number of days elapsed in a year of 360 days. All fees payable to the Tranche B
Agent or to any Canadian Bank under this Section 5 shall be payable by Work Wear
in Canadian Dollars, in immediately available funds, and 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 6 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENT.
6.1 Voluntary Reduction or Termination of the Revolving Commitments.
G&K or Work Wear, as the case may be, may from time to time on at least three
U.S. or Canadian Business Days', as the case may be, prior written notice
received by the appropriate Agent (which shall promptly advise each Bank of the
affected Tranche), permanently reduce the amount of the Tranche A Commitment
Amount, with respect to G&K, or the Tranche B Commitment Amount, with respect to
Work Wear. Each such voluntary reduction shall be pro rata as to the Revolving
Commitments of the Banks in the Tranche being reduced, according to each such
Bank's respective Percentage. Any such voluntary reduction shall be in an
aggregate amount of $500,000 or a higher integral multiple of $100,000
denominated in the appropriate currency. Any voluntary reduction of the Tranche
B Commitment Amount under this Section 6.1 shall reduce pro rata the quarterly
mandatory reductions of the Tranche B Revolving Commitments required by Section
6.1, 6.2. Each Company may at any time on like notice prior to the Revolving
Loan Termination Date terminate its respective Revolving Commitment (but one
Tranche may not be terminated without the concurrent termination of the other
Tranche) upon payment in full of the Revolving Notes and the other obligations
of such Company hereunder and termination of each outstanding Letter of Credit.
6.2 Mandatory Reduction of Tranche B Commitment Amount. The Tranche B
Commitment Amount shall be automatically and permanently reduced by consecutive
quarterly reductions of three hundred seventy-five thousand Canadian Dollars
(C.$375,000) each, with the first such reduction occurring on the last day of
September, 1994, and with each subsequent reduction occurring on the last day of
each December, March, June and September thereafter until the Revolving Loan
Termination Date. Each mandatory reduction of the Tranche B Commitment Amount
shall be pro rata as to each Canadian Bank's Revolving Commitment, according to
such Canadian Bank's respective Percentage.
6.3 Voluntary Prepayments. Subject to Section 8, each Company may from
time to time prepay its respective Loans in whole or in part without premium or
penalty, provided that (i) each prepayment of Tranche A Revolving Loans shall be
made to the Tranche A Agent at its office in Minneapolis, not later than 12:00
Noon, Minneapolis time on a U.S. Business Day, and funds received after that
hour shall be deemed to have been received by the Tranche A Agent on the next
following U.S. Business Day, (ii) each prepayment of Tranche B Revolving Loans
shall be made upon not less than one Canadian Business Day's prior written
notice to the Tranche B Agent (in the form of Exhibit K), with payment made to
the Tranche B Agent at its office in Toronto, Ontario, not later than 12:00
Noon, Toronto, Ontario time on a Canadian Business Day, and funds received after
that hour shall be deemed to have been received by the Tranche B Agent on the
next following Canadian Business Day and (iii) each partial prepayment of
Tranche A Revolving Loans shall be in a principal amount of at least
U.S.$100,000, (iv) each partial payment of Tranche B Revolving Loans shall be in
a principal amount of at least C.$500,000 and (v) each partial prepayment
received from a Company shall be applied against its respective Loans in the
appropriate Tranche pro rata according to each Bank's respective Percentage of
the Loans being prepaid.
6.4 Mandatory Prepayment of Tranche B Revolving Loans. Work Wear shall
make a mandatory prepayment of the Tranche B Revolving Loans if, and to the
extent that, the outstanding principal balance of the Tranche B Revolving Loans
exceeds the applicable Tranche B Commitment Amount, as the same is reduced in
accordance with Section 6.1, 6.2 hereof. Any such partial prepayment shall be
applied against Tranche B Revolving Loans pro rata according to each Canadian
Bank's respective Percentage as follows: first to the Tranche B Floating Rate
Loans; second to Acceptances having a Tranche B Loan Period ending on the date
of the mandatory prepayment; and third to any remaining Acceptances, together
with such additional amounts as may be payable pursuant to Section 8.5.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF.
7.1 Making of Payments.
7.1.1 Tranche A Payments. All payments of principal of and
interest on the Notes held by U.S. Banks shall be made to the Tranche A
Agent for the account of the U.S. Banks pro rata according to the
respective unpaid principal amounts of the Notes held by them. All
payments of fees pursuant to Sections 5.1.1 and 5.3.1 shall be made to
the Tranche A Agent for the account of the U.S. Banks pro rata
according to their Percentages. All payments of commissions payable in
accordance with Section 2.7 (c) shall be made to the Tranche A Agent
for the account of the U.S. Banks according to their Percentages. All
such payments shall be made to the Tranche A Agent at its office in
Minneapolis, not later than 12:00 Noon, Minneapolis time, on the date
due, in immediately available funds, and funds received after that hour
shall be deemed to have been received by the Tranche A Agent on the
next following U.S. Business Day. G&K hereby authorizes the Tranche A
Agent to charge G&K's general deposit account maintained with the
Tranche A Agent for the amount of any such payment on the due date
therefor, but the Tranche A Agent's failure to so charge such account
shall in no way affect the obligation of G&K to make any such payment.
The Tranche A Agent shall remit to each U.S. Bank in immediately
available funds on the same U.S. Business Day as received by the Agent
its share of all such payments received in collected funds by the
Tranche A Agent for the account of such U.S. Bank. If the Tranche A
Agent fails to remit any payment to any U.S. Bank when required hereby,
the Tranche A Agent shall pay interest on demand to that U.S. Bank for
each day during the period commencing on the date such remittance was
due until the date such remittance is made at a rate equal to the
Federal Funds Rate for such day. All payments under Section 8.1 or 8.5
shall be made by G&K directly to the U.S. Bank or U.S. Banks entitled
thereto.
7.1.2 Tranche B Payments. All payments on account of
Acceptances and all principal of and interest on the Notes held by
Canadian Banks shall be made to the Tranche B Agent for the account of
the Canadian Banks pro rata according to the respective Acceptances
created by them and the unpaid principal amounts of the Notes held by
them. All payments of fees pursuant to Section 5.2 shall be made to the
Tranche B Agent for its own account, and all payments of fees pursuant
to Section 5.1.2 and 5.3.2 shall be made to the Tranche B Agent for the
account of the Canadian Banks pro rata according to their Percentages.
All such payments shall be made to the Tranche B Agent at its office in
Toronto, Ontario, not later than 12:00 Noon, Toronto, Ontario time, on
the date due, in immediately available funds, and funds received after
that hour shall be deemed to have been received by the Tranche B Agent
on the next following Canadian Business Day. Work Wear hereby
authorizes the Tranche B Agent to charge Work Wear's general deposit
account maintained with the Tranche B Agent for the amount of any such
payment on the due date therefor, but the Tranche B Agent's failure to
so charge such account shall in no way affect the obligation of Work
Wear to make any such payment. The Tranche B Agent shall remit to each
Canadian Bank in immediately available funds on the same Canadian
Business Day as received by the Tranche B Agent its share of all such
payments received in collected funds by the Tranche B Agent for the
account of such Canadian Bank. If the Tranche B Agent fails to remit
any payment to any Canadian Bank when required hereby, the Tranche B
Agent shall pay interest on demand to that Tranche B Bank for each day
during the period commencing on the date such remittance was due until
such date as the remittance was made at a rate equal to the Canadian
Bank Rate for such date. All payments under Section 8.1 or 8.5 shall be
made by Work Wear directly to the Canadian Bank or Canadian Banks
entitled thereto.
7.2 Effect of Payments. Each payment by a Company to an Administrative
Agent for the account of any Bank pursuant to Section 7.1 shall be deemed to
constitute payment by such Company directly to such Bank, provided, however,
that in the event any such payment by a Company to an Administrative Agent is
required to be returned to such Company for any reason whatsoever, then such
Company's obligation to such Bank with respect to such payment shall be deemed
to be automatically reinstated.
7.3 Distributions by Administrative Agents. Unless an Administrative
Agent shall have been notified by a Bank or a Company prior to the date on which
such Bank or a Company is scheduled to make payment to such Administrative Agent
of (in the case of a Bank) the proceeds of a Loan to be made by it hereunder or
(in the case of a Company) a payment to an Administrative Agent for the account
of one or more of the Banks hereunder (such payment by a Bank or a Company (as
the case may be) being herein called the "Required Payment"), which notice shall
be effective upon receipt, that it does not intend to make the Required Payment
to the appropriate Administrative Agent, such Administrative 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 the Company (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 such Administrative
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 Administrative Agent until the date the Administrative Agent recovers such
amount at a rate (i) equal to the Federal Funds Rate for such day, in the case
of a Required Payment owing by a U.S. Bank, (ii) equal to the Canadian Bank Rate
for such day in the case of a Required Payment owing by a Canadian Bank, or
(iii) equal to the applicable rate of interest as provided in this Agreement, in
the case of a Required Payment owing by such Company.
7.4 Due Date Extension. If any payment of principal of any of the Loans
or Acceptances or any fees or commissions payable hereunder falls due on a
Saturday, Sunday or other day which is not a U.S. Business Day, in the case of
Tranche A payments, or a Canadian Business Day, in the case of Tranche B
payments, then such due date shall be extended to the next following U.S.
Business Day or Canadian Business Day, as the case may be, and (in the case of
principal) additional interest shall accrue and be payable for the period of
such extension.
7.5 Proration of Payments. Subject to any contrary provisions set forth
in Section 13.4 (with respect to sharing after the occurrence of an Event of
Default), if any Bank shall obtain any payment or other recovery (whether
voluntary, involuntary, by application of offset or otherwise) on account of
principal of or interest on any Note or any Acceptance in excess of its pro rata
share of payments and other recoveries obtained by the other Banks of its
Tranche, such Bank shall promptly give notice of such fact to the appropriate
Administrative Agent and shall purchase from such other Banks in its Tranche a
participation in the Notes held by them as shall be necessary to cause such
purchasing Bank to share the excess payment or other recovery ratably with each
of them; provided, however, that if all or any portion of the excess payment or
other recovery is thereafter recovered from such purchasing Bank, the purchase
shall be rescinded and the purchaser restored to the extent of such recovery
(but without interest thereon).
7.6 Setoff. The Companies agree that each Bank shall have all rights of
setoff and bankers' lien provided by applicable law, and in addition thereto,
the Companies (and each of them) agree that at any time (i) any amount owing by
a Company (or both of them) under this Agreement is due to any Bank or (ii) any
Event of Default exists, each Bank may apply to the payment of any amount owing
by a Company under this Agreement any and all balances, credits, and deposits,
accounts or moneys of the Company then or thereafter in the possession of such
Bank.
7.7 Application of Certain Payments. Except as otherwise provided
herein, each payment of principal shall be applied to such type of obligations
within a Tranche as a Company shall direct by notice to be received by the
appropriate Administrative Agent on or before the date of such payment, or in
the absence of such notice, as the appropriate Administrative Agent shall
determine in its discretion. Concurrently with each remittance to any Bank of
its pro rata share of any such payment, the appropriate Administrative Agent
shall advise such Bank as to the application of such payment.
7.8 Taxes. All payments made by either Company to either Administrative
Agent or any Bank (herein any "Payee") under or in connection with this
Agreement or the Notes or Acceptances shall be made without any setoff or other
counterclaim, and 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 the Payee by the government or other authority of
the country, state or political subdivision in which such Payee is incorporated
or in which the office through which the Payee is acting is located) as well as
all levies, imposts, duties, charges, or fees of whatever nature. If a Company
is compelled by law to make any deductions or withholdings on account of any
Taxes (including any foreign withholding) it will:
(i) pay to the relevant authorities the full amount required
to be so withheld or deducted;
(ii) pay such additional amounts (including, without
limitation, any penalties, interest or expenses) as may be necessary in
order that the net amount received by each Payee after such deductions
or withholdings (including any required deduction or withholding on
such additional amounts) shall equal the amount such Payee would have
received had no such deductions or withholdings been made; and
(iii) promptly forward to the appropriate Administrative Agent
(for delivery to such Payee) an official receipt or other documentation
satisfactory to such Agent evidencing such payment to such authorities.
If any Taxes otherwise payable by a Company pursuant to the foregoing
paragraph are directly asserted against any Payee, such Payee may pay such taxes
and the affected Company promptly shall reimburse such Payee to the full extent
otherwise required by such paragraph. The obligations of each Company under this
Section 7.8 shall survive any termination of this Agreement.
The amount that any Company shall be required to pay to any Bank
pursuant to the foregoing clause (ii) shall be reduced, to the extent permitted
by applicable law, by the amount of any offsetting tax benefit which such Bank
receives as the result of such Company's payment to the relevant authorities as
reasonably determined by such Bank; provided, however, that if such Bank shall
subsequently determine that it has lost the benefit of all or a portion of such
tax benefit, the affected Company shall promptly remit to such Bank the amount
certified by such Bank to be the amount necessary to restore such Bank to the
position it would have been in if no payment had been made pursuant to this
sentence.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR FIXED RATE
LOANS.
8.1 Increased Costs.
(a) If (i) Regulation D of the Board of Governors of the
Federal Reserve System or (ii) 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 any Bank with any request or directive (whether or not
having the force of law) of any such authority, central bank or
comparable agency,
(A) shall subject any Bank to or cause the withdrawal or
termination of any exemption previously granted any Bank with
respect to, any tax, duty or other charge with respect to its
Fixed Rate Loans or its obligation to make Fixed Rate Loans,
or shall change the basis of taxation of payments to any Bank
of the principal of or interest under this Agreement in
respect of its Fixed Rate Loans or its obligation to make
Fixed Rate Loans (except for changes in the rate of tax on the
overall net income of such Bank imposed by the jurisdictions
in which such Bank's principal executive office is located);
or
(B) shall 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 ), special deposit or
similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Bank; or
(C) shall impose on any Bank any other condition affecting its
making, maintaining or funding of its Fixed Rate Loans or its
obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to such Bank of
making or maintaining any Fixed Rate Loan, or to reduce the amount of any sum
received or receivable by such Bank under this Agreement or under its Note with
respect to Fixed Rate Loans, then the affected Bank will notify the appropriate
Company and the Agent within 90 days after discovering such increased cost and
within 15 days after demand by such Bank (which demand shall be accompanied by a
statement setting forth the basis of such demand), the notified Company shall
pay directly to such Bank such additional amount or amounts as will compensate
such Bank for such increased cost or such reduction.
(b) Each Bank will promptly notify the appropriate Company and
the Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Bank to compensation pursuant to
this Section 8.1. If any Company receives notice from any Bank of any
event which will entitle such Bank to compensation pursuant to this
Section 8.1, such Company may prepay any then-outstanding Fixed Rate
Loan or notify the appropriate Administrative Agent (which shall
promptly notify each Bank) that any pending request for a Fixed Rate
Loan shall be deemed to be a request for a Floating Rate Loan, in each
case subject to the provisions of Section 8.2.
8.2 Capital Adequacy. If any 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 Company to pay to such Bank the amount
necessary to restore the Bank's Return to what it would have been had there been
no Capital Adequacy Rule Change. For purposes of this Section 8.2:
(a) "Return", for any calendar quarter or shorter period,
means the percentage determined by dividing (i) the sum of interest and
ongoing fees earned by a Bank under this Agreement during such period
by (ii) 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.
(b) "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, letters of credit and
bankers' acceptances.
(c) "Capital Adequacy Rule Change" means any change in any
Capital Adequacy Rule occurring after the date of this Agreement, but
the term does not include any changes in applicable requirements that
at the Closing Date 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 that Bank's financial
condition.
(d) 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 the Bank's Return for the quarter in which the notice is sent,
and shall state in reasonable detail the cause for the reduction in the
Bank's Return and the Bank's calculation of the amount of such
reduction. Thereafter, the 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 amount
necessary to restore the Bank's Return for that quarter. A Bank's
calculation in any such notice shall be conclusive and binding absent
demonstrable error.
8.3 Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Loan Period:
(a) the Tranche A Agent determines that deposits in U.S.
Dollars (in the applicable amounts), as the case may be, are not being
offered to such Administrative Agent in the relevant market for the
relevant Loan Period; or
(b) the Tranche A Agent determines (which determination shall
be binding and conclusive on all parties) that by reason of
circumstances affecting the interbank Eurodollar market adequate and
reasonable means do not exist for ascertaining the applicable
Eurodollar Rate; or
(c) the Tranche B Agent determines (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
(d) Banks having an aggregate Percentage of 60% or more of a
Tranche advise the appropriate Administrative Agent that the Eurodollar
Rate (Reserve Adjusted), the BA Purchase Price or the Acceptance Fee,
as determined by such Administrative Agent, will not adequately and
fairly reflect the cost to such Banks of maintaining, funding or
creating (as the case may be) Loans or Acceptances for such Loan
Period, or that the making, funding or creating (as the case may be) of
Fixed Rate Loans 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 Fixed Rate Loans or
Acceptances,
then the appropriate Administrative Agent shall promptly notify the affected
parties and (i) in the event of any occurrence described in the foregoing clause
(b) and (c), the affected Company shall enter into good faith negotiations with
each affected Bank in order to determine an alternate method to determine
appropriate alternative pricing and funding for such Bank, and during the
pendency of such negotiations with any Bank, such Bank shall be under no
obligation to make Fixed Rate Loans or create Acceptances, as the case may be,
and (ii) in the event of any occurrence described in the foregoing clause (a) or
(d), for so long as such circumstances shall continue no Bank of the affected
Tranche shall be under any obligation to make Fixed Rate Loans or create
Acceptances as the case may be.
8.4 Illegality. In the event that 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 any 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 applicable Bank, shall raise a
substantial question as to whether it is) unlawful for a Bank (any such Bank
herein called an "Affected Bank") to make, maintain or fund Fixed Rate Loans or
create, sell or purchase Acceptances, then (a) the Affected Bank shall promptly
notify each of the other parties hereto, and (b) the obligation of the Affected
Bank to make, maintain or convert into Fixed Rate Loans or create, sell or
purchase Acceptances shall, upon the effectiveness of such event, be suspended
for the duration of such unlawfulness, and (c) for the duration of such
unlawfulness, any notice by a Company pursuant to Section 2.3, 2.4, 2.5, 3.3,
3.4, 3.5 or 3.7 requesting Banks to make Fixed Rate Loans or create, sell or
purchase Acceptances shall, as to the Affected Bank, be construed as a request
to make or to continue making Floating Rate Loans in the amount of such Affected
Bank's Percentage of the total amount of the Borrowing requested.
8.5 Funding Losses. Each Company hereby agrees that upon demand by any
Bank (which demand shall be accompanied by a statement setting forth the basis
for the calculations of the amount being claimed) such Company will indemnify
such Bank against any loss or expense which such Bank may sustain or incur
(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 Fixed Rate Loans or in connection with the creation, sale,
purchase or payment of Acceptances), as reasonably determined by such Bank, (i)
as a consequence of any failure by such Company to make any payment when due of
any amount due hereunder in connection with any Fixed Rate Loan or Acceptance,
or (ii) due to any failure of such Company to borrow or convert any Fixed Rate
Loans or to accept proceeds of any Acceptance or provide Drafts or complete any
Borrowing by way of the discount of Acceptances on a date specified therefor in
a notice thereof or (iii) due to any payment or prepayment (including any
prepayment pursuant to Section 6 or Section 8.1(b)) of any Fixed Rate Loan or
Acceptance on a date other than the last day of the applicable Loan Period. For
this purpose, all notices of Borrowing, conversion or renewal pursuant to this
Agreement shall be deemed to be irrevocable.
8.6 Right of U.S. Banks to Fund through Other Offices. Each U.S. Bank
may, if it so elects, fulfill its commitment as to any Fixed Rate Loan by
causing a foreign branch or affiliate of such U.S. Bank to make such Fixed Rate
Loan, provided that in such event the obligation of G&K to repay such Fixed Rate
Loan shall nevertheless be to such U.S. Bank and shall be deemed held by such
U.S. Bank, to the extent of such Fixed Rate Loan, for the account of such branch
or affiliate.
8.7 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 its funding of all or any part of its Loans in any manner it deems
fit, it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if such Bank had actually funded and
maintained each Fixed Rate Loan during each Loan Period for such Fixed Rate Loan
through the purchase of deposits having a maturity corresponding to such Loan
Period and bearing an interest rate equal to the appropriate Fixed Rate for such
Loan Period.
8.8 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of any Bank pursuant to Section 8.1, 8.2, 8.3, 8.4
or 8.5 shall be conclusive absent demonstrable error. Each Bank may use
reasonable averaging and attribution methods in determining compensation
pursuant to Sections 8.1 and 8.5, and the provisions of such Sections shall
survive termination of this Agreement.
SECTION 9 WARRANTIES.
To induce the Agents and Banks to enter into this Agreement, to make
Loans, issue Acceptances and issue Letters of Credit, each Company hereby
warrants to the Agents and each Bank that:
9.1 Organization, Etc. G&K is a corporation duly existing and in good
standing under the laws of the State of Minnesota; Work Wear is a corporation
duly existing and in good standing under the laws of the Province of Ontario;
each Subsidiary is a corporation duly existing and in good standing under the
laws of the jurisdiction of its respective incorporation; and G&K and each
Subsidiary is duly qualified and in good standing as a foreign corporation
authorized to do business in each jurisdiction where, because of the nature of
its activities or properties, such qualification is required and where the
failure to so qualify would have a material adverse effect on the business,
property, assets, condition (financial or otherwise) or prospects of G&K and its
Subsidiaries on a consolidated basis.
9.2 Authorization; No Conflict. The execution, delivery and performance
by the Companies of this Agreement and the execution by the Companies of the
Loan Documents to which they are parties are within their respective corporate
powers, have been duly authorized by all necessary corporate action, have
received all necessary governmental approval (if any shall be required), and do
not and will not contravene or conflict or result in a default under, or the
creation or imposition of any lien, mortgage, security interest or encumbrance
of any kind on any of the properties of either Company or any Subsidiary
pursuant to, any provision of any law, regulation (including, without
limitation, applicable regulations of the Board of Governors of the Federal
Reserve System), order or decree or of the charter or by-laws of either Company
or (assuming the repayment of the Debt to be Retired on or before the Closing
Date) of any material agreement, indenture, instrument, order or decree which is
binding upon the Company or any Subsidiary.
9.3 Validity and Binding Nature. This Agreement is, and each Loan
Document when duly executed and delivered will be, the legal, valid, and binding
obligations of the Company executing such Loan Document, enforceable against
such Company in accordance with their respective terms.
9.4 Financial Information, etc. (a) G&K's audited consolidated
financial statements as at July 3, 1993, copies of which have been furnished to
the Agent, have been prepared in conformity with generally accepted accounting
principles applied on a basis consistent with those of the preceding fiscal
year, except as disclosed in Schedule 9.4 and fairly present the financial
condition of G&K and its Subsidiaries as at such date and the results of their
operations for the period then ended, and since such date there has been no
material adverse change in their financial condition, operations or prospects;
and (b) the so-called "Seven Year Cash Flow Projection Through 2000" dated
October 28, 1993, copies of which have been furnished to the Agent, represent
G&K's best estimate of the anticipated financial condition and operations of G&K
and its Subsidiaries for each such period therein described based on assumptions
which G&K believes are reasonable and which are disclosed therein.
9.5 Litigation and Contingent Liabilities. No Material Litigation is
pending or, to the best of the Companies' knowledge, threatened, and no Material
Litigation Development has occurred, except as set forth in Schedule 9.5. Other
than (i) any liability incident to such Material Litigation or Material
Litigation Development or (ii) as disclosed in the financial statements referred
to in Section 9.4(a), neither Company nor any Subsidiary has any contingent
liabilities which might be material to G&K and its Subsidiaries on a
consolidated basis.
9.6 Liens. None of the assets of either Company or any Subsidiary is
subject to any material lien, encumbrance, security interest or mortgage of any
kind except (i) current taxes not delinquent or taxes being contested in good
faith and by appropriate proceedings and for which adequate reserves have been
established, (ii) liens arising in the ordinary course of business for sums not
due or sums being contested in good faith and by appropriate proceedings and for
which adequate reserves have been established, but not involving any deposits or
advances or borrowed money or the deferred purchase price of property or
services, and (iii) to the extent shown in Schedule 9.6.
9.7 Subsidiaries. All Subsidiaries are listed in Schedule 9.7.
9.8 Employee Benefit Plans. Each ERISA Plan as to which either Company
or any ERISA Affiliate may have any liability complies in all material respects
with all applicable requirements of law and regulations, and (i) no Reportable
Event has occurred with respect to any ERISA Plan that is a Defined Benefit Plan
sponsored by either Company or any ERISA Affiliate which will have the effect of
creating a liability of either Company or any ERISA Affiliate which will be
material to either Company and its Subsidiaries on a consolidated basis; (ii)
neither G&K nor any ERISA Affiliate has withdrawn from any ERISA Plan that is a
Multi-Employer Plan or initiated steps to do so, except in accordance with all
applicable requirements of law and regulations and in a manner which will not
create a liability of either Company or any ERISA Affiliate which will be
material to G&K and its Subsidiaries on a consolidated basis; (iii) no steps
have been taken to terminate any Pension Plan except in accordance with all
applicable requirements of law and regulations and in a manner which will not
create a liability of the Company or any ERISA Affiliate which will be material
to G&K and its Subsidiaries on a consolidated basis; and (iv) 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 Pension Plan
sufficient to give rise to a lien under Section 302(f)(1) of ERISA. Neither
Company has a contingent liability with respect to any post-retirement benefit
under a Welfare Plan, other than (i) liability for continuation coverage
described in Part 6 of Title I of ERISA and (ii) as set forth on Schedule 9.8.
9.9 Investment Company Act. Neither Company nor any Subsidiary is an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
9.10 Public Utility Holding Company Act. Neither Company nor any
Subsidiary 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.
9.11 Information. No information furnished or to be furnished by or on
behalf of either Company or any Subsidiary to the Agent or any Bank for the
purposes of or in connection with this Agreement or any transaction contemplated
hereby contains or will contain any untrue statement of a material fact or omits
or will omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not materially misleading.
9.12 Use of Proceeds. The proceeds of the Loans shall be used
exclusively (i) to repay all outstanding indebtedness issued pursuant to the
Prior Credit Agreement and pursuant to the CIBC Loan Agreement, as listed on
Schedule 9.12 hereto (collectively the "Debt to be Retired") and (ii) for
ordinary working capital purposes of the Companies.
9.13 Ownership of Properties. The Companies and each Subsidiary have
good and marketable title to or valid leasehold interests in all of the
properties and assets necessary to such entity in the conduct of the business
presently conducted by it.
9.14 Hazardous Substances. Except as disclosed in Schedule 9.14,
hereto, to the best of each Company's knowledge after reasonable inquiry,
neither G&K or any Person, nor Work Wear or any Person, has ever caused or
permitted any Hazardous Substance in the case of G&K, or Hazardous Materials in
the case of Work Wear, to be disposed of in any manner which might result in any
material liability to either Company or any of the Subsidiary on, under or at
any real property which is operated by either Company or any Subsidiary or in
which either Company or any Subsidiary has any interest; and, to the best of
each Company's knowledge after reasonable inquiry, no such real property has
ever been used (either by a Company or by any other Person) as a dump site or
permanent or temporary storage site for any Hazardous Substance in the case of
G&K or Hazardous Materials in the case of Work Wear, except to the extent any
such real property has been used by a Company or any Subsidiary as a temporary
storage site for Hazardous Substances in the case of G&K or Hazardous Materials
in the case of Work Wear incidental to the business of a Company or a Subsidiary
and stored in accordance with all applicable Environmental Laws in the case of
G&K or the Environmental Protection Act (Ontario) or other applicable Canadian
federal, provincial or municipal law in the case of Work Wear.
9.15 Insurance. Each of the Companies and each Subsidiary carries all
insurance required by law and such other insurance, to such extent and against
such hazards and liabilities, as is customarily maintained by companies
similarly situated.
SECTION 10 AFFIRMATIVE COVENANTS.
Until the expiration or termination of the Revolving Commitments,
expiration of each outstanding Letter of Credit and payment of each outstanding
Acceptance and thereafter until payment in full of all liabilities hereunder and
under the Loan Documents, the Companies agree that, unless at any time the
Required Banks shall otherwise expressly consent in writing:
10.1 Reports, Certificates and Other Information. The Companies will
furnish to each Bank or, with respect to Section 10.1.8, 10.1.9 to each Canadian
Bank, the following:
10.1.1 Audit Report. Within 120 days after the last day of
each fiscal year of G & K, copies of an annual audit report of G&K and
its Subsidiaries prepared on a consolidated basis and in conformity
with generally accepted accounting principles, including consolidated
balance sheets, income statements and statements of cash flows for G&K
and its Subsidiaries, duly certified without qualification by
independent certified public accountants of recognized standing
selected by G&K and acceptable to the Required Banks, together with a
certificate from such accountants stating that, in making the
examination necessary for the signing of such annual audit report, they
have not become aware of any Event of Default or Unmatured Event of
Default that has occurred and is continuing, or if they have become
aware of any such event, describing it and the steps, if any, being
taken to cure it, and certified as to fair presentation by G&K's chief
financial officer.
10.1.2 Interim Reports. Within 45 days after the last day of
each quarter of each fiscal year of G&K, a copy of the unaudited
financial statements of G&K and its Subsidiaries prepared on a
consolidated basis and in conformity with generally accepted accounting
principles (subject to normal year-end adjustments), including
consolidated balance sheets as at the close of such quarter, income
statements and statements of cash flows for such quarter and for the
period from the beginning of such fiscal year to the close of such
quarter and showing corresponding figures for such quarter and period
of the immediately preceding fiscal year, for G&K and its Subsidiaries
signed by the chief financial officer of G&K and certified as to fair
presentation by such chief financial officer.
10.1.3 Certificate. Contemporaneously with the furnishing of a
copy of each annual audit report and of each quarterly statement
provided for in this Section 10.1, a certificate substantially in the
form of Exhibit I, dated the date of such annual report or such
quarterly statement and signed by the chief financial officer of G&K to
the effect that no Event of Default or Unmatured Event of Default has
occurred and is continuing, or, if there is any such event, describing
it and the steps, if any, being taken to cure it and containing a
computation of, and showing the computations as to and compliance with
each of the financial covenants and ratios contained in Section 10.8,
10.9, 10.10, 10.11 and 10.11, 10.12.
10.1.4 Reports to SEC and Shareholders. Copies of each filing
and report made by G&K or any Subsidiary with or to any securities
exchange or the Securities and Exchange Commission, and of each
communication from G&K to shareholders generally, promptly upon the
filing or making thereof.
10.1.5 Notice of Default, Litigation and ERISA Matters.
Forthwith upon learning of the occurrence of any of the following,
written notice thereof, describing the same and the steps being taken
by the appropriate Company or Subsidiary affected with respect thereto:
(i) the occurrence of an Event of Default or an Unmatured Event of
Default, including, without limitation, the occurrence of an "Event of
Default" as defined under the Met Life Loan Agreement or under any note
issued pursuant thereto or an event which, with the passage of time or
the giving of notice, or both, would be such an "Event of Default"
under the Met Life Loan Agreement or any note issued pursuant thereto,
(ii) the institution of any Material Litigation or the occurrence of
any Material Litigation Development, (iii) without limiting the
foregoing provisions, the occurrence of a Reportable Event under, or
the institution of steps by the appropriate Company or any ERISA
Affiliate to withdraw from, or the institution of any steps to
terminate, or the failure to make a timely contribution to any Pension
Plan as to which the appropriate Company or any ERISA Affiliate may
have any liability if the liability resulting from the occurrence of
such Reportable Event, or from such withdrawal, termination or
contribution failure, would be material to G&K and its Subsidiaries on
a consolidated basis, or (iv) any other occurrence deemed by G&K to be
a materially adverse event.
10.1.6 Projections. Prior to the end of each fiscal year of
G&K, projections which present in reasonable detail G&K's best estimate
of the anticipated financial condition and operations of G&K and its
Subsidiaries for the succeeding fiscal year, including projected
balance sheets, income statements and statements of cash flow and
material assumptions.
10.1.7 Waivers and Amendments to Met Life Loan Agreement.
Within ten (10) U.S. Business Days after the execution of any
amendment, waiver or other modification or extension of any kind to the
Met Life Loan Agreement and related documents, a copy of such
amendment, waiver or other modification or extension. Nothing in this
Section 10.1.7 shall be deemed to amend the obligations of G&K under
Section 11.12.
10.1.8 Work Wear Financial Reports. Within forty-five (45)
days after the last day of each quarter of each fiscal year of Work
Wear, a copy of the unaudited financial statements of Work Wear,
prepared in conformity with generally accepted accounting principles
(subject to normal year-end adjustments), including the balance sheets
as at the close of such quarter or year, as the case may be, income
statements and statements of cash flows for such quarter or year, as
the case may be, and for the period from the beginning of such fiscal
year to the close of such quarter or year, as the case may be, and
showing corresponding figures for such period of the immediately
preceding fiscal year, signed by the chief financial officer of Work
Wear and certified as to fair presentation by such chief financial
officer.
10.1.9 Other Information. From time to time such other
information concerning either Company or any Subsidiary as any Agent or
any Bank may reasonably request, including without limitation a list of
intercompany loans and advances.
10.2 Books, Records, and Inspections. Each Company will maintain, and
cause each Subsidiary to maintain, complete and accurate books and records;
permit, and cause each Subsidiary to permit, at reasonable times and on
reasonable notice, access by the Agent or any Bank to the books and records of
such Company and of each Subsidiary; and permit, and cause each Subsidiary to
permit, at reasonable times and on reasonable notice, the Agent or any Bank to
inspect the properties and operations of the Companies and each Subsidiary.
10.3 Insurance. Each Company will maintain, and cause each Subsidiary
to maintain, such insurance as may be required by law and such other insurance,
to such extent and against such hazards and liabilities, as is customarily
maintained by companies similarly situated.
10.4 Compliance with Laws. Each Company will, and will cause each
Subsidiary to, comply with the requirements of applicable laws and regulations,
the non-compliance with which would materially and adversely affect its business
or the consolidated financial condition of G&K and its Subsidiaries.
10.5 Payment of Taxes and Other Claims. Each Company will pay or
discharge, and will cause each Subsidiary to pay or discharge, when due, (a) all
taxes, assessments and governmental charges levied or imposed upon it or upon
its income or profits, or upon any properties belonging to it, prior to the date
on which penalties attach thereto, (b) all federal, state 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 such Company or any Subsidiary; provided, that neither Company nor
any Subsidiary shall be required to pay any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which adequate reserves have been
established.
10.6 Maintenance of Properties. Each Company will keep and maintain,
and will cause each Subsidiary to keep and maintain, all of its properties
necessary or useful in its business in good condition, repair and working order;
provided, however, that nothing in this Section 10.6 shall prevent either
Company or any Subsidiary from discontinuing the operation and maintenance of
any of its properties if such discontinuance is, in the judgment of such Company
or the appropriate Subsidiary, desirable in the conduct of its business and not
disadvantageous in any material respect to the Banks.
10.7 Preservation of Corporate Existence. Except as permitted by
Section 11.16, each Company will, and will cause each Subsidiary to, preserve
and maintain its corporate existence and all of its rights, privileges and
franchise; provided, however, that neither Company nor any Subsidiary shall be
required to preserve any of its rights, privileges, and franchises (other than
its own corporate existence) if its Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
such Company or the appropriate Subsidiary and that the loss thereof is not
disadvantageous in any material respect to the Banks.
10.8 Capitalization Ratio. G&K will maintain as at the end of each of
G&K's fiscal quarters, on a consolidated basis, the ratio of (i) all Debt of G&K
and its Subsidiaries arising from borrowed money (including all such Debt
created, assumed or guaranteed either directly or indirectly and all obligations
secured by liens upon property on which G&K or a Subsidiary customarily pays
interest), including both long-term and short-term Debt and all Capitalized
Lease obligations to (ii) the sum of (A) all Debt of G&K and its Subsidiaries
arising from borrowed money (including all such Debt created, assumed or
guaranteed either directly or indirectly and obligations secured by liens upon
property upon which G&K or a Subsidiary customarily pays interest), including
both long-term and short-term Debt and all Capitalized Lease obligations and (B)
the total stockholders' equity of G&K and its Subsidiaries (as shown and
described on the most recently delivered balance sheet), at not more than .50 to
1.00.
10.9 Current Ratio. G&K will maintain as at the end of each of G&K's
fiscal quarters, on a consolidated basis, the ratio of its Current Assets to
Current Liabilities at not less than 1.20 to 1.00.
10.10 Minimum Total Stockholders Equity. G&K will maintain on a
consolidated basis, in each period designated below, its Total Stockholders'
Equity at an amount not less than the amount set forth below opposite such
period:
Period Amount
Closing Date through March 31, 1995 $ 95,000,000
April 1, 1995 through March 31, 1996 $ 105,000,000
April 1, 1996 through March 31, 1997 $ 120,000,000
April 1, 1997 through June 30, 1997 $ 135,000,000
10.11 Interest Coverage Ratio. G&K will maintain as at the end of each
of G&K's fiscal quarters, on a consolidated basis, the ratio of (i) the net
income before interest and taxes of G&K and its Subsidiaries for such quarter
and each of the immediately preceding three fiscal quarters to (ii) the total
cash interest expense of G&K and its Subsidiaries for such quarter and each of
the immediately preceding three fiscal quarters, at not less than 3.00 to 1.00.
10.12 Funds Flow Coverage Ratio. G&K will maintain as at the end of
each of G&K's fiscal quarters (based upon such quarter and each of the
immediately preceding three fiscal quarters), on a consolidated basis, the ratio
of (i) the net income of G&K and its Subsidiaries, plus depreciation,
amortization, non-current deferred income taxes and other non-cash charges for
such quarter and each of the immediately preceding three fiscal quarters to (ii)
all Debt of G&K and its Subsidiaries arising from borrowed money (including all
such Debt created, assumed or guaranteed either directly or indirectly and
obligations secured by liens upon property upon which G&K or a Subsidiary
customarily pays interest), including both long-term and short-term Debt and all
Capitalized Lease obligations as at the end of such fiscal quarter, at not less
than .28 to 1.00.
SECTION 11 NEGATIVE COVENANTS.
Until the expiration or termination of the Revolving Commitments
expiration of each outstanding Letter of Credit and payment of each outstanding
Acceptance and thereafter until payment in full of all liabilities hereunder and
under the Loan Documents, the Companies agree that, unless at any time the
Required Banks shall otherwise expressly agree in writing:
11.1 Liens. The Companies will not, and will not permit any Subsidiary
to, create, incur, assume or suffer to exist any mortgage, deed of trust,
pledge, lien, security interest, or other charge or encumbrance of any nature on
any of its assets, now owned or hereafter acquired, or assign or otherwise
convey any right to receive income or give its consent to the subordination of
any right or claim of either Company or any Subsidiary to any right or claim of
any other Person; excluding, however, from the operation of the foregoing:
(a) Liens for taxes or assessments or other governmental
charges to the extent not required to be paid by Section 10.5;
(b) 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 10.5;
(c) 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;
(d) Zoning restrictions, easements, licenses, restrictions on
the use of real property or minor irregularities in title thereto,
which do not in the aggregate have a material adverse effect on the
business of either Company or any Subsidiary;
(e) Purchase money mortgages, liens, or security interests
(which term for purposes of this subsection shall include conditional
sale agreements or other title retention agreements and leases in the
nature of title retention agreements, including Capitalized Leases)
upon or in property acquired by either Company or any Subsidiary after
the date hereof, or mortgages, liens or security interests existing
upon or in such property at the time of acquisition thereof by either
Company or Subsidiary, provided that:
(1) no such mortgage, lien or security interest extends or
shall extend to or cover any property of either Company or
Subsidiary, as the case may be, other than the property then
being acquired and fixed improvements then or thereafter
erected thereon;
(2) the aggregate principal amount of all Debt of the
Companies and each Subsidiary secured by all mortgages, liens
or security interests described in this subsection shall not
exceed U.S.$1,000,000 at any one time outstanding; and
(3) the aggregate principal amount of Debt secured by
mortgages, liens and security interests described in this
subsection (e) at the time of acquisition of the property
subject thereto shall not exceed 100% of the cost of such
property or of the then fair market value of such property as
determined by the Board of Directors of G & K, whichever shall
be less, and the aggregate amount of payments made thereunder
in any period of 12 consecutive months will not result in a
violation of any other restriction contained in this
Agreement;
(f) Mortgages, liens, pledges, and security interests on any
property of either Company or any Subsidiary (other than those
described in subsection (e)) securing any indebtedness for borrowed
money in existence on the date hereof and listed in Schedule 11.1
hereto; and
(g) Liens arising out of a judgment against either Company or
any Subsidiary for the payment of money not exceeding U.S.$500,000 with
respect to which an appeal is being prosecuted and a stay of execution
pending such appeal has been secured and for which adequate reserves
have been established.
Without limiting the foregoing, the Companies agree that the Companies
will not, and will not permit any Subsidiary to, agree with any other Person not
to grant any security interest or other lien in its or such Subsidiary's assets,
except for such agreement with Met Life pursuant to the Met Life Loan Agreement.
11.2 Indebtedness. The Companies will not, and will not permit any
Subsidiary to, incur, create, assume or permit to exist any indebtedness or
liability on account of deposits or advances or any indebtedness for borrowed
money, or any other Debt, except:
(a) indebtedness evidenced by the Notes or any Acceptance
issued hereunder;
(b) indebtedness of the Companies or any Subsidiary in
existence on the date hereof and listed in Schedule 11.2 hereto, but
not including any extensions or renewals thereof;
(c) indebtedness of Subsidiaries to G&K in the form of loans
and advances;
(d) Subordinated Debt, or renewals thereof, provided it is
subordinated to the prior payment of principal of and interest on the
Notes on terms and conditions approved in writing by the Banks;
(e) purchase money indebtedness of either Company or any
Subsidiary secured by liens permitted by subsection (e) of Section
11.1; and
(f) indebtedness of G&K to Met Life not to exceed
U.S.$31,000,000, plus accrued interest, pursuant to the Met Life Loan
Agreement.
11.3 Guaranties. The Companies will not, and will not permit any
Subsidiary to, assume, guarantee, endorse or otherwise become directly or
contingently liable in connection with any obligations of any other Person,
except:
(a) a guaranty by G&K Services, Co., dated September 28, 1990,
and a guaranty of Work Wear, dated on or about the date of this
Agreement, in each case guarantying payment of the indebtedness owed by
G&K to Met Life pursuant to the Met Life Loan Agreement;
(b) the endorsement of negotiable instruments by either
Company or any Subsidiary for deposit or collection or similar
transactions in the ordinary course of business; and
(c) 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 11.3 hereto.
11.4 Investments. The Companies will not, and will not permit any
Subsidiary to, make an investment (in one installment or in a series of related
installments) if the aggregate amount (or value) thereof is or will exceed
U.S.$10,000,000 to purchase any stock or other securities or evidences of
indebtedness of, make any loans or advances to, or make any investment or
acquire any interest whatsoever in, any other Person, after the date hereof
unless:
(a) G&K shall have provided the Agent with reasonably detailed
information describing the proposed investment or acquisition and
projections which represent in reasonable detail the best estimate of
the anticipated operations of G&K and its Subsidiaries after
consolidating the contemplated investment or acquisition into the
projected operations for G&K and its Subsidiaries over a period of not
less than 3 years;
(b) G&K shall have provided a certificate signed by the chief
financial officer of G&K setting forth all relevant facts in reasonable
detail to evidence, and the computations as to, whether or not G&K and
its Subsidiaries would be in compliance with the requirements set forth
in Sections 10.8 through 10.11, 10.12 hereof based upon the projections
described in subparagraph (a) above over the period therein described;
(c) the Agent shall have approved the assumptions and
computations as set forth in the certificate provided pursuant to
subparagraph (b) above and shall have determined in their reasonable
discretion that such contemplated investment or acquisition would not
result in the occurrence of an Event of Default or an Unmatured Event
of Default, and, in particular, would not result in a violation of the
covenants set forth in Sections 10.8 through 10.11, 10.12; and
(d) the Banks shall have determined that the contemplated
investment or acquisition does not constitute a hostile or unfriendly
takeover action or investment by the Companies toward or against a
Person with which a Bank has a depository, trust, lending or other
financial relationship.
11.5 Dividends. G&K will not declare or pay any dividends (other than
dividends payable solely in its own stock) on any class of its stock or make any
payment on account of the purchase, redemption or other retirement of any shares
of such stock or make any distribution in respect thereof, either directly or
indirectly during any fiscal year if, after giving effect to such payment,
distribution or application, the aggregate amount of such dividends,
distributions and application of assets paid or made during such fiscal year
would exceed twenty-five percent (25%) of the net income of G&K and its
Subsidiaries for the fiscal year immediately preceding the year in which any
such dividend is paid, or any such distribution or application of assets is
made, and the right to make such payments, distributions and application of
assets as herein described shall be non-cumulative from fiscal year to fiscal
year.
11.6 Merger and Consolidation; Change of Control. G&K 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 shall not be the continuing or surviving
corporation. In addition, whether or not occurring as the result of any such
merger or consolidation, the Companies shall not suffer to occur or exist a
material change in the ownership or control of G&K and its Subsidiaries. For
purposes hereof, a "material change" shall mean, with respect to G&K's board of
directors, a change in the majority of such directors occurring during any six
month period.
11.7 Sale and Leaseback. The Companies will not, and will not permit
any Subsidiary to, enter into any arrangement, directly or indirectly, with any
other Person whereby either Company or such Subsidiary shall sell or transfer
any real or personal property, 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 such Company or such Subsidiary, as the case may be,
intends to use for substantially the same purpose or purposes as the property
being sold or transferred.
11.8 Subordinated Debt. The Companies will not, and will not permit any
Subsidiary to, (i) make any payment of, or acquire, Subordinated Debt except as
expressly permitted by the subordination provision thereof, (ii) give security
for all or any part of Subordinated Debt; (iii) amend or cancel the
subordination provisions of such Subordinated Debt; (iv) take or omit to take
any action whereby the subordination of such Subordinated Debt or any part
thereof to the Notes might be terminated, impaired or adversely affected; or (v)
omit to give the Banks prompt written notice of any default under any agreement
or instrument relating to such Subordinated Debt by reason whereof such
Subordinated Debt might become or be declared to be immediately due and payable.
"Subordinated Debt" means Debt which is subordinated to the Notes and to the
Companies' obligations hereunder on terms approved in writing by the Banks.
11.9 Expenditures for Fixed Assets. The Companies will not, and will
not permit any Subsidiary to, make any expenditure of money for the purchase or
construction of fixed assets, including any expenditure under a Capitalized
Lease, if, after giving effect to such expenditure, the aggregate amount of such
expenditures made by the Companies and the Subsidiaries combined for any fiscal
year will exceed the amounts set forth below:
Fiscal Year Limitation
1994 U.S. $33,000,000
1995 U.S. $40,000,000
1996 U.S. $33,000,000
1997 U.S. $35,000,000
provided, however, that the restrictions contained in this Section are subject
to the further limitations imposed by Section 11.1 (e) if any fixed asset is
acquired under a purchase money mortgage, lien or security interest referred to
in that Section.
11.10 Restrictions on Nature of Business. The Companies will not, and
will not permit any Subsidiary to, engage in any business materially different
from the business in which a Company or such Subsidiary is now engaged.
11.11 Hazardous Substances. The Companies will not, and will not permit
any Subsidiary to, cause or permit any Hazardous Substance in the case of G&K or
Hazardous Materials in the case of Work Wear to be disposed of in any manner
which, as determined at the time of such disposal, might result in any material
liability to G&K and its Subsidiaries, on, under, or at any real property which
is operated by either Company or any Subsidiary or in which either Company or
any Subsidiary has an interest.
11.12 Indebtedness to Met Life. Without the prior written consent of
the Required Banks, G&K will not, and will not permit any Subsidiary to, (i)
make any optional prepayment of any indebtedness to Met Life under the Met Life
Loan Agreement or any note issued pursuant thereto, (ii) take or omit to take
any action which would result in a "Change of Control" (as defined under the Met
Life Loan Agreement or any note issued pursuant thereto), (iii) give security
for all or any part of any indebtedness to Met Life under the Met Life Loan
Agreement, (iv) amend, cancel or change in any way any of the material
provisions of the Met Life Loan Agreement or any note issued pursuant thereto,
or (v) omit to give the Agent prompt written notice of the occurrence of an
"Event of Default" (as defined under the Met Life Loan Agreement or any note
issued pursuant thereto) or of an event which, with the passage of time or the
giving of notice, or both, would constitute such an "Event of Default" under the
Met Life Loan Agreement or any note issued pursuant thereto.
11.13 Unfunded Vested Liabilities for Defined Benefit Plans. The
Companies will not, and will not permit any Subsidiary to, create, incur, assume
or suffer to exist any unfunded vested liability under any Defined Benefit Plan
if, after giving effect to such liability, the aggregate amount of such
liabilities for G& K and its Subsidiaries combined would exceed U.S. $2,000,000.
SECTION 12 CONDITIONS TO MAKING OF LOANS AND ISSUANCE OF
LETTERS OF CREDIT.
The obligation of each Bank to make any Loan, or create any Acceptance
or issue any Letter of Credit (in the case of the Tranche A Agent) is subject to
the following conditions precedent:
12.1 Initial Loans, Acceptances and Letters of Credit. The obligation
of each Bank to make its initial Loans or create Acceptances and of the Tranche
A Agent to issue its initial Letter of Credit pursuant to Section 2.7 is, in
addition to the conditions precedent specified in Sections 12.2 and 12.3,
subject to the condition precedent that the Agent shall have received all of the
following, each duly executed and dated the Closing Date (or such earlier date
as shall be satisfactory to the Agent), in form and substance satisfactory to
the Banks, and each (except for the Notes, of which only the originals shall be
signed) in sufficient number of signed counterparts to provide one for each
Bank:
12.1.1 Notes. The Revolving Notes.
12.1.2 Drafts. Drafts in blank, in sufficient numbers
as may be required by the Canadian Banks.
12.1.3 Certificate of Incorporation and By-Laws. Certified
copies of the certificate of incorporation and by-laws of each
Company.
12.1.4 Resolutions. Certified copies of resolutions of the
Board of Directors of each Company authorizing or ratifying the
execution, delivery and performance of this Agreement and the Loan
Documents provided for by this Agreement to be executed by such
Company.
12.1.5 Consents, etc. Certified copies of all documents
evidencing any necessary corporate action, consents and approvals (if
any) with respect to this Agreement and the Loan Documents, including
any such consents, waivers and approvals as may be required under the
Met Life Loan Agreement.
12.1.6 Incumbency and Signatures. A certificate of the
Secretary or an Assistant Secretary of each Company certifying the
names of the officer or officers of such Company authorized to sign
this Agreement and the Loan Documents provided for in this Agreement
and to request Borrowings and Letters of Credit hereunder, together
with a sample of the true signature of each such officer. The
Administrative Agents and each Bank may conclusively rely on each such
certificate furnished until formally advised by a like certificate of
any changes, therein.
12.1.7 Opinions of Counsel. A separate opinion of counsel for
each Company, in form and content acceptable to the Banks.
12.1.8 Amendments of Reimbursement Agreements. Amendments to
any existing Letter of Credit Reimbursement Agreements that are
outstanding on the date of this Agreement, with respect to any Letter
of Credit, whereby G&K shall have agreed to pay to the Tranche A Agent
a commission at the rate set forth in Section 2.7(c).
12.1.9 Other. Such other documents as any Bank may
reasonably request.
12.2 Further Conditions to Initial Loans, Acceptances and Letter of
Credit. The obligation of each Bank to make its initial Loan and to create its
initial Acceptances, and of the Tranche A Agent to issue its initial Letter of
Credit pursuant to Section 2.7, is subject to the further conditions precedent
that:
12.2.1 Debt to be Retired. The Debt to be Retired, together
with all interest accrued thereon and all prepayment premiums and other
amounts payable in connection therewith, shall simultaneously be paid
in full from the proceeds of such Loans and the Agent shall receive
evidence satisfactory to the Agent of such payment and of the
cancellation of all instruments evidencing, and (where applicable)
termination of all security interests and liens securing, any of the
Debt to be Retired.
12.2.2 Litigation. No Material Litigation, except as disclosed
on Schedule 9.5 shall exist, and no Material Litigation Development
shall have occurred except as disclosed on Schedule 9.5.
12.2.3 No Material Adverse Change. No event shall have
occurred or condition shall have arisen prior to the Closing Date
which, in the sole judgment of the Required Banks, (i) has or may have
a materially adverse effect on the rights or remedies of the Banks
hereunder or under any Note or on the ability of the Companies to
perform its obligations hereunder or under any Note, or (ii) has, or
may have, a materially adverse effect on the business, property, assets
or condition (financial or otherwise) of G&K and its Subsidiaries on a
consolidated basis.
12.2.4 Payment of Costs, Fees and Expenses. Prior to or
concurrently with the making of the initial Loans, the Companies shall
have paid to the Agent all costs, fees, and expenses (including,
without limitation, reasonable legal fees and expenses) payable by the
Companies hereunder to the extent then due.
12.2.5 Other Banks. Each other Bank shall be prepared
to honor its Commitment under this Agreement.
12.3 Conditions to all Borrowings. The obligation of each Bank to make
any Loan or create, sell or purchase any Acceptance, and of the Agent to issue
any letter of credit pursuant to Section 2.7, is subject to the conditions
precedent that (a) no Event of Default or Unmatured Event of Default has
occurred and is continuing or will result from the making of such Loan,
creation, sale or purchase of such Acceptance or issuance of such Letter of
Credit, and (b) the warranties of the Company contained in Section 9, are true
and correct as of the date of the requested funding or issuance with the same
effect as though made on such date. With each notice of proposed Borrowing given
by a Company pursuant to Section 2.3 or Section 3.3, such Company shall be
automatically deemed to have warranted that the conditions precedent set forth
in this Section 12.3 are and will continue to be fully satisfied as of the date
of such notice and of each Borrowing and re-Borrowing (if any) requested
thereby.
SECTION 13 EVENTS OF DEFAULT AND THEIR EFFECT.
13.1 Events of Default. Each of the following shall constitute an Event
of Default under this Agreement:
13.1.1 Non-Payment of Principal. Default in the payment when
due of any principal of any Note or Acceptance.
13.1.2 Non-Payment of Interest, etc. Default in the payment
when due of any interest on any Note or any other amount payable by
either Company hereunder or under any agreement relating to one or more
Letters of Credit and continuance of such default for two (2) U.S.
Business Days, with respect to Tranche A obligations, and two (2)
Canadian Business Days, with respect to Tranche B obligations, after
the appropriate Administration Agent notifies the affected Company of
such default.
13.1.3 Default under the Met Life Loan Agreement and related
Notes. The occurrence of an "Event of Default" as defined under the Met
Life Loan Agreement or any note issued pursuant thereto.
13.1.4 Non-Payment of Other Indebtedness for Borrowed Money.
Default in the payment when due (subject to any applicable grace
period), whether by acceleration or otherwise, of any other Debt of
either Company or any Subsidiary having a principal amount in excess of
U.S.$250,000 (except any such Debt of any Subsidiary owing to G&K) or
default in the performance or observance of any obligation or condition
with respect to any such other Debt if the effect of such default is to
permit the holder or holders thereof to accelerate the maturity of any
such Debt.
13.1.5 Other Material Obligations. Default in the payment of
any amount when due (subject to any applicable grace period), or in the
performance or observance (subject to any applicable grace period) of
any material obligation of or condition agreed to by a Company or any
Subsidiary, with respect to any material purchase or lease of goods or
services the loss of which would be material to G&K and its
Subsidiaries on a consolidated basis (except only to the extent that
(i) the existence of any such default is being contested by a Company
or such Subsidiary in good faith and by appropriate proceedings and
(ii) a Company or such Subsidiary has set aside adequate reserves
therefor).
13.1.6 Bankruptcy, Insolvency, etc. Either Company or any
Subsidiary becomes insolvent or generally fails to pay, or admits in
writing its inability or refusal to pay, debts as they become due; or
either Company or any Subsidiary applies for, consents to, or
acquiesces in the appointment of, a trustee, receiver or other
custodian for such Company or Subsidiary or any substantial part of the
property thereof, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed for
either Company or any Subsidiary or for a substantial part of the
property of any thereof and is not discharged within 60 days; or any
bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution
or liquidation proceeding (except the voluntary dissolution, not under
any bankruptcy or insolvency law, of a Subsidiary), is commenced in
respect of either Company or any Subsidiary, and if such case or
proceeding is not commenced by a Company or such Subsidiary, it is
consented to or acquiesced in by such Company or Subsidiary or remains
for 30 days undismissed; or either Company or any Subsidiary takes any
corporate action to authorize, or in furtherance of, any of the
foregoing.
13.1.7 Non-Compliance with Financial Covenants. Failure by G&K
to comply with Sections 10.8 through 10.12 of this Agreement,
inclusive.
13.1.8 Non-Compliance with Other Provisions. Failure by either
Company or any Subsidiary to comply with or to perform any provision of
this Agreement or any Loan Document, and (except where a shorter period
is specified in this Section 13.1) continuance of such failure for 30
days after notice thereof to the Companies from the Agent, any Bank or
the holder of any Note (the term "notice" has the meaning ascribed to
such term in Section 1-201 (25) and (27) of the Uniform Commercial
Code); provided, however, that in the event any such failure could be
remedied through diligent efforts of the Companies over a period of
longer than 30 days and the Companies have been proceeding diligently
to effect a cure within the first 30 days after receipt of notice of
such failure as provided above, the grace period described in this
Section 13.1.8 shall be extended from 30 days to 60 days upon delivery
by the Companies to the Agent of such information with respect to the
proposed remedy as the Agent shall reasonably request.
13.1.9 Warranties. Any warranty made by the Companies (or
either of them) herein is breached or is false or misleading in any
material respect, or any schedule, certificate, financial statement,
report, notice or other writing furnished by either Company to the
Agent or any Bank is false or misleading in any material respect on the
date as of which the facts therein set forth are stated or certified.
13.1.10 Defined Benefit Plans. With respect to any ERISA Plan
that is a Defined Benefit Plan, as to which either Company or any ERISA
Affiliate may have any liability, (a) a contribution failure with
respect to such plan shall occur sufficient to give rise to a lien
under Section 302(f)(1) of ERISA or (b) steps are undertaken to
terminate such plan or such plan is terminated or such Company or such
ERISA affiliate withdraws from or institutes steps to withdraw from
such plan or any Reportable Event with respect to such plan shall occur
which, in any such case, will have the effect of creating a liability
of a Company or any ERISA Affiliate which is material to G&K and its
Subsidiaries on a consolidated basis.
13.1.11 Judgments. Final judgments for the payment of money,
which judgments in the aggregate exceed U.S.$250,000 (excluding any
portion thereof paid or covered by insurance), shall be rendered
against either Company or any Subsidiary by a court of competent
jurisdiction and shall remain undischarged or not fully bonded for a
period (during which execution shall not be effectively stayed) of 60
days after the date on which any period for appeal has expired.
13.2 Effect of Event of Default. If any Event of Default described in
Section 13.1.6 shall occur, the Commitments (if they have not theretofore
terminated) shall automatically terminate and the Loans shall become immediately
due and payable, all without notice of any kind; and, in the case of any other
Event of Default, the Agent acting with the concurrence of the Required Banks
may (and upon written request of the Required Banks shall) declare the
Commitments (if they have not theretofore terminated) to be terminated and all
Notes to be due and payable, whereupon the Commitments (if they have not
theretofore terminated) shall immediately terminate and all Notes shall become
immediately due and payable without presentment, demand, protest or notice of
any kind, and the Agent acting with the concurrence of the Required Banks and/or
the Banks may (and upon written request of the Required Banks shall) exercise
any and all of rights and remedies contained in any of the Loan Documents. The
Agent shall promptly advise the Companies and each Bank of any such declaration,
but failure to do so shall not impair the effect of such declaration.
Notwithstanding the foregoing, the effect as an Event of Default of any event
described in Section 13.1.1, 13.1.2, 13.1.6 or may be waived by the written
concurrence of all Banks and the effect as an Event of Default of any other
event described in Section 13.1 may be waived by the written concurrence of the
Required Banks; provided, however, that the effect as an Event of Default of any
event described in Section 13.1.7, 13.3 may be waived once during any twelve
month period upon the written concurrence of the Required Banks and may be
waived on any future occurrence during such twelve month period only upon the
written concurrence of all Banks.
13.3 Additional Remedy if Letters of Credit or Acceptances are
Outstanding. If any Event of Default shall occur and be continuing while one or
more Letters of Credit or Acceptances are outstanding, or at any time on or
after the Revolving Loan Termination Date while one or more Letters of Credit or
Acceptances are outstanding, the Agent may (and shall upon written request of
the Required Banks) make demand upon the affected Company and forthwith upon
such demand such Company will pay to the appropriate Administrative Agent in
immediately available funds for deposit in a special cash collateral account
maintained by such Administrative Agent (a "Cash Collateral Account") an amount
equal to the sum of (i) the maximum amount then available to be drawn under all
outstanding Letters of Credit (assuming compliance with all conditions for
drawing thereunder) or (ii) the face amount of all issued and outstanding
Acceptances (the "Required Amount"), as the case may be. The appropriate
Administrative Agent shall have sole discretion in administering such funds,
including the right to return funds to the Company submitting the same if an
Agent so elects, until all outstanding Letters of Credit and Acceptances shall
have expired or been paid in full and all of the Companies' obligations to the
Banks shall have been paid in full. Any such Cash Collateral Account shall be
held and administered in accordance with the following:
(a) If requested by a Company and subject to the right of the
appropriate Administrative Agent to withdraw funds from the Cash
Collateral Account as provided below, such Agent will from time to time
invest funds on deposit in a Cash Collateral Account, reinvest proceeds
and invest interest or other income received from any such investments,
in such Eligible Securities (as hereinafter defined) as a Company may
select. Such proceeds, interest or income which are not so invested or
reinvested in Eligible Securities shall, except as otherwise provided
in this subsection, be deposited and held by the Agent in the Cash
Collateral Account. "Eligible Securities" means (i) United States
treasury bills or Canadian treasury bills (as the case may be) with a
remaining maturity not in excess of 90 days, (ii) negotiable
certificates of deposit of the Agent or of any other Bank, with a
remaining maturity not in excess of 90 days, and (iii) such other
instruments as the Companies may request and such Agent may approve in
writing, provided, however, that funds deposited on account of Tranche
A obligations shall be invested in instruments denominated in U.S.
Dollars and funds deposited on account of Tranche B obligations shall
be invested in instruments denominated in Canadian Dollars. Eligible
Securities from time to time purchased and held pursuant to this
Section 13.1.7, 13.3 shall be referred to as "Collateral Securities"
and shall, for purposes of this Agreement, constitute part of the funds
held in the Cash Collateral Account established by an Administrative
Agent in amounts equal to their respective outstanding principal
amounts.
(b) If at any time an Agent determines that any funds held in
a Cash Collateral Account are subject to any right or claim of any
person or entity other than such Agent which is senior to or of equal
priority with the Agent's interest therein or that the total amount of
such funds is less than the Required Amount, the affected Company will,
forthwith upon demand by an Agent, pay to such Agent, as additional
funds to be deposited and held in such Cash Collateral Account, an
amount equal to the excess of (i) the Required Amount over (ii) the
total amount of funds, if any, then held in the Cash Collateral Account
which such Agent determines to be free and clear of any such right and
claim.
(c) Each Company hereby pledges, assigns, and grants to its
respective Administrative Agent, for itself and for the benefit of each
Bank, a security interest in all funds from time to time held in the
Cash Collateral Account (including Collateral Securities) established
by such Administrative Agent, and all proceeds thereof, as security for
the payment of all amounts due and to become due from such Company to
the Banks of its Tranche under this Agreement.
(d) The Agents, at any time or from time to time after funds
are either deposited in a Cash Collateral Account or invested in
Collateral Securities, after selling (upon five days' notice to the
Company), if necessary, any Collateral Securities, may apply funds then
held in the Cash Collateral Account to the payment of any amounts, in
such order as an Agent may elect, as shall have become or shall become
due and payable by a Company to the Banks of its Tranche under this
Agreement. To that end, the Agents may sell Collateral Securities and
apply the proceeds of such sale in the manner set forth in the
preceding sentence. The Companies agree that, to the extent notice of
sale of any Collateral Securities shall be required by law, at least
five days' notice to a Company of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. An Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
(e) Neither the Companies nor any Person claiming on behalf of
or through the Companies shall have any right to withdraw any of the
funds held in any Cash Collateral Account, except that after the
payment of all amounts payable by the Companies to the Banks under this
Agreement and the expiration of an outstanding Letter of Credit in
accordance with its terms, funds in an amount equal to the amount which
no longer is available for drawing as the result of the expiration of
such Letter of Credit in the Cash Collateral Account shall be returned
by the Tranche A Agent to G&K or paid to whomever may be legally
entitled thereto.
(f) The Companies agree that they will not (i) sell or
otherwise dispose of any interest in a Cash Collateral Account or any
funds held therein, or (ii) create or permit to exist any lien,
security interest or other charge or encumbrance (except such as is
subordinated, on terms and conditions reasonably satisfactory to the
appropriate Agent, to the security interest of such Agent) upon or with
respect to the Cash Collateral Account or any funds held therein,
except as provided in or contemplated by this Agreement.
(g) The Agents shall exercise reasonable care in the custody
and preservation of any funds held in a Cash Collateral Account and
shall be deemed to have exercised such care if such funds are accorded
treatment substantially equivalent to that which an Agent accords its
own property, it being understood that the Agents shall not have any
responsibility for taking any necessary steps to preserve rights
against any parties with respect to such funds.
13.4 Banks Rights to Set-Off. If any Event of Default shall occur and
be continuing, each Bank is hereby authorized at any time and from time to time
thereafter, without notice to or consent of either Company, any notice being
expressly waived by each Company, to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by a Bank to the Company or either of them
against any and all amounts which have become due and payable to any of the
Banks by such Company, under a Note, this Agreement or otherwise under a Loan
Document. If any Bank shall obtain any payment or other recovery (whether
voluntary, involuntary, by application of its rights to set-off or otherwise) on
account of principal of, or interest on any Loan made by such Bank or any
Acceptance created by such Bank, or on account of any fees payable under this
Agreement to such Bank, in excess of such Bank's Pro Rata Default Share, such
Bank shall promptly give notice of such fact to the Agent and shall promptly
remit to the Agent such amount as shall be necessary to cause the remitting Bank
to share such excess payment or other recovery ratably with each of the Banks in
accordance with their respective Pro Rata Default Shares, together with interest
for each day on such amount until so remitted at a rate equal to the Federal
Funds Rate or the Canadian Bank Rate (as appropriate) 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, the remittance shall
be restored to the extent of such recovery. To the extent deemed necessary by
the Agent and/or the remitting Bank, distribution of such excess amounts to the
other Banks may be effected through the purchase by such remitting Bank from the
non-remitting Banks of an undivided participating interest in the Loans held by
such nonremitting Banks ratably in accordance with their respective Pro Rata
Default Shares.
SECTION 14 THE AGENTS.
14.1 Authorization. Each Bank and the holder of each Note irrevocably
appoints and authorizes the Agent to act on behalf of such Bank or holder to the
extent provided herein or in any document or instrument delivered hereunder or
in connection herewith, and to take such other action as may be reasonably
incidental thereto. Each U.S. Bank and the holder of each Tranche A Revolving
Note irrevocably appoints and authorizes the Tranche A Agent to act on behalf of
such U.S. Bank or holder as Administrative Agent with respect to Tranche A
Revolving Loans and Letters of Credit to the extent provided herein or in any
document or instrument delivered hereunder or in connection herewith, and to
take such other action as may be reasonably incidental hereto. Each Canadian
Bank and the holder of each Tranche B Revolving Note irrevocably appoints and
authorizes the Tranche B Agent to act on behalf of such Canadian Bank or holder
in connection with Tranche B Revolving Loans and Acceptances to the extent
provided herein or in any document or instrument delivered hereunder or in
connection herewith, and to take such other action as may be reasonably
incidental thereto.
14.2 Indemnification. No Agent shall be required to do any act
hereunder or under any other document or instrument delivered hereunder or in
connection herewith or take any action toward the execution or enforcement of
the agency hereby created, or to prosecute or defend any suit in respect of this
Agreement or the Notes or any documents or instrument delivered hereunder or in
connection herewith unless indemnified to its satisfaction by the holders of the
related Notes (with respect to Tranche A, Tranche B or both, as the case may be)
against loss, cost, liability and expense. If any indemnity furnished to an
Agent for any purpose shall, in the opinion of such Agent, be insufficient or
become impaired, the Agent may call for additional indemnity and not commence or
cease to do the acts indemnified against until such additional indemnity is
furnished.
14.3 Exculpation. Each Agent shall be entitled to rely upon advice of
counsel concerning legal matters and upon this Agreement, any Loan Document and
any schedule, certificate, statement, report, notice or other writing which it
believes to be genuine or to have been presented by a proper person. No Agent
nor any of its directors, officers, employees or agents shall (a) be responsible
for 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) be responsible for the validity,
genuineness, perfection, effectiveness, enforceability, existence, value or
enforcement of any collateral security, (c) be under any duty to inquire into or
pass upon any of the foregoing matters, or to make any inquiry concerning the
performance by the Companies or any other obligor of its obligations, or (d) in
any event, be liable as such for any action taken or omitted by it or them,
except for its or their own gross negligence or willful misconduct. The agency
relationships hereby created shall in no way impair or affect any of the rights
and powers of, or impose any duties or obligations upon, any Agent in its
individual capacity as holder of a Note hereunder.
14.4 Agent and Affiliates. Each Agent shall have the same rights and
powers hereunder in its individual capacity as any other Bank, and may exercise
or refrain from exercising the same as though it were not an Agent, and each
Agent and its affiliates may accept deposits from and generally engage in any
kind of business with either Company or any Subsidiary as if it were not an
Agent hereunder.
14.5 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 Commitment been granted and the Loans made directly by such Bank to the
Company to which that Bank is lending without the intervention of any Agent or
any other Bank. Each Bank agrees and acknowledges that no Agent makes any
representation or warranty about the creditworthiness of either Company or any
Subsidiary or any other party to this Agreement or with respect to the legality,
validity, sufficiency or enforceability of this Agreement, any Loan Document, or
any other instrument or document delivered hereunder or in connection herewith.
14.6 Resignation. An Agent may resign as such at any time upon at least
30 days' prior notice to the Companies and the Banks. In the event of any
resignation of an Agent, the Required Banks shall as promptly as practicable
appoint a successor agent. If no such successor agent shall have been so
appointed by the Required Banks, and shall have accepted such appointment,
within 30 days after the resigning Agent's giving of notice of resignation, then
the resigning Agent may, on behalf of the Banks, appoint a successor agent,
which shall be a commercial bank organized under the laws of the United States
of America or of any State thereof if the resigning Agent is a U.S. Bank and
which shall be a commercial bank organized under the laws of Canada or any
Province thereof if the resigning Agent is a Canadian Bank. Upon the acceptance
of any appointment as Agent hereunder by a successor agent, such successor agent
shall thereupon be entitled to receive from the prior agent such documents of
transfer and assignment as such successor agent may reasonably request and the
resigning agent shall be discharged from its duties and obligations under this
Agreement. After any resignation pursuant to this Section 14, the provisions of
this Section 14.6 shall inure to the benefit of the retiring Agent as to any
actions taken or omitted to be taken by it while it was an agent hereunder.
14.7 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 reasonable attorneys fees and legal expenses). If an Agent
does not receive such 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, remit to the Agent its Pro Rata
Default Share of the difference between (i) such costs and expenses and (ii)
such payments, collections and proceeds, together with interest for each day on
such amount until so remitted at an annual rate equal to the Canadian Bank Rate
for amounts owed by a Canadian Bank and the Federal Funds Rate for amounts owed
by a U.S. Bank.
SECTION 15 ADDITIONAL BANKS; SUCCESSORS AND ASSIGNS.
15.1 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that (a) the Companies may not assign or
transfer their rights or obligations hereunder without the prior written consent
of all Banks; and (b) the rights of sale, assignment, and transfer of the Banks
are subject to this Section 15.
15.2 Addition of Banks. Any Bank may, at any time, upon at least ten
(10) U.S. Business Days' prior written notice to the Agent (unless the Agent
consents to a shorter period of time) request consent of the Agent to assign a
portion or all of its Loans and its Commitment to a financial institution (an
"Applicant") on any date (the "Adjustment Date") selected by such Bank. Such
request shall specify the identity of such Applicant and the Percentage which it
proposes that such Applicant acquire (which Percentage shall be the same for all
Loans). Any such addition of an Additional Bank shall be subject to the prior
written consent of the Agent and the Companies, which consent shall not be
unreasonably withheld. If the Agent so consents, the Agent shall inform the
Companies of the identity of each Applicant and of its proposed Percentage and,
if the Companies so consent, such Bank may make the contemplated assignments and
transfers to the Applicant. Any addition of an Applicant pursuant hereto shall
be at the cost and expense of the Bank requesting approval of the Applicant.
15.3 Status. To confirm the status of each Additional Bank as a party
to this Agreement and to evidence the assignment of the applicable portion of
the assigning Bank's Commitment and Loans in accordance herewith:
(a) the Companies, such Bank, such Applicant, and the Agents
shall, on or before the Adjustment Date, execute and deliver to the
Agent an Assignment Certificate, in substantially the form of Exhibit J
(an "Assignment Certificate"); and
(b) the Companies shall execute and deliver a new Note to such
Additional Bank evidencing such Additional Bank's assigned Commitment
and Loans and a replacement Note to such assigning Bank in the amount
of such Bank's adjusted Commitment in exchange for (but not in payment
of) such assigning Bank's old Note.
Upon the execution and delivery of such Assignment Certificate and such
Notes, (a) 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 Percentages arising therefrom, (b) the assigning Bank
shall be relieved of all obligations hereunder to the extent of the reduction of
all obligations hereunder and to the extent of the reduction of such Bank's
Percentage, and (c) the Additional Bank shall become a party hereto and shall be
entitled to all rights, benefits and privileges accorded to a Bank herein and in
each other document or instrument executed pursuant hereto and subject to all
obligations of a Bank hereunder, including the right to approve or disapprove
actions which, in accordance with the terms hereof, require the approval of the
Required Banks or all Banks, and the obligations to make Loans hereunder.
Promptly after the execution of any Assignment Certificate, a copy thereof shall
be delivered by the Agent to each Bank.
15.4 Company Assistance. In order to facilitate the addition of
Additional Banks hereto, the Companies agree to cooperate fully with each Bank
and the Agent in connection therewith and to provide all reasonable assistance
requested by each Bank and the Agent relating thereto, including, without
limitation, the furnishing of such written materials and financial information
regarding the Companies and the Subsidiaries as any Bank or the Agent may
reasonably request, the execution of such documents as any Bank or the Agent may
reasonably request (provided that such request will not be made if the assigning
Bank has previously received copies of such written materials and financial
information) with respect thereto, and the participation by officers of the
Companies and the Subsidiaries in a meeting or teleconference call with any
Applicant upon the request of any Bank or the Agent.
15.5 Other Transfers. Without limiting any other provision hereof:
(a) each Bank shall have the right at any time upon written
notice to the Companies and the Agent to sell, assign, transfer, or
negotiate all or any part of its Commitment, Loans, Note, and other
rights and obligations under this Agreement and the Loan Documents to
one or more affiliates of such Bank; provided that, unless consented to
by the Companies and the Agent (which consent shall not be unreasonably
withheld), no such sale, assignment, transfer or negotiation of a
Commitment shall relieve the transferring Bank from its obligations (to
the extent such affiliate does not fulfill its obligations) hereunder;
and
(b) each Bank shall have the right at any time to sell,
assign, transfer, or negotiate all or any part of its Commitment,
Loans, Note, and other rights and obligations under this Agreement and
the Loan Documents to one or more other Banks, and any such sale,
assignment, transfer or negotiation shall relieve the transferring Bank
from its obligations hereunder to the extent of the obligations so
transferred (except, in any event, to the extent that the Company, any
other Bank or the Agent has rights against such transferring Bank as a
result of any default by such transferring Bank under this Agreement);
provided, however, that any partial sale, assignment, transfer or negotiation
pursuant to this Section 15.5 shall be pro rata as to all of the Commitment and
Loans transferred.
15.6 Participations. In addition to the rights granted in Sections 15.2
and 15.5, each Bank may grant participations in all or any part of its Loans,
Note and Commitment to any institutional investor, without the consent of the
Companies or the Agent, but only so long as:
(a) no holder of any such participation, other than an
affiliate of such Bank, shall be entitled to require such Bank to take
or omit to take any action hereunder, except that such Bank may agree
with such participant that such Bank will not, without such
participant's consent, take any action which would increase any
Commitment, extend any termination or maturity of any Loans or extend
the due date for or reduce the amount of any payment of principal of or
rate of interest on any Loan or any fees accruing hereunder;
(b) such Bank retains at all times at least twenty percent
(20%) of its original Commitment for its own account; and
(c) no Bank, as between the Companies and such Bank, shall be
relieved of any of its obligations hereunder as a result of any such
granting of a participation.
The Companies hereby acknowledge and agree that for purposes of Section
8 any participant described in this Section 15.6, will be considered to be a
Bank hereunder (provided that such participant shall not be entitled to receive
any more than the Bank selling such participation would have received had such
sale not taken place) and may rely on, and possess all rights under, any
opinions, certificates, or other instruments or documents delivered under or in
connection with this Agreement or any Loan Document.
15.7 Disclosure of Information. The Companies authorize each Bank to
disclose to any participant, assignee or Additional Bank (each, a "Transferee")
and any prospective Transferee any and all financial and other information in
such Bank's possession concerning the Companies which has been delivered to such
Bank by the Companies pursuant to this Agreement or which has been delivered to
such Bank by the Companies in connection with such Bank's credit evaluation of
the Companies prior to entering into this Agreement. Each Bank agrees to, and
will require each Transferee and prospective Transferee to keep confidential all
financial and other confidential information concerning the Companies.
SECTION 16 GENERAL.
16.1 Waiver; Amendments. No delay on the part of an Agent, any Bank, or
the holder of any Note in the exercise of any right, power or remedy shall
operate as a waiver thereof, nor shall any single or partial exercise by any of
them of any right, power or remedy preclude other or further exercise thereof,
or the exercise of any other right, power or remedy. Any provision of this
Agreement or the Notes may be amended, modified or waived, and any consent with
respect thereto shall be effective, if and only if the same shall be in writing
and executed and delivered by the Agent and the Required Banks, and then any
such amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No amendment,
modification, waiver or consent (a) shall change any condition precedent
specified in Section 12, forgive the payment of any amount payable hereunder,
amend this Section 16.1, extend or increase the amount of the Commitments or any
Commitment, subject any Bank to any additional obligations to the Companies,
extend the due date of any payment called for hereunder, reduce the fees
hereunder, release any Company from its obligations under the Loan Documents, or
reduce the aggregate Percentage required to effect an amendment, modification,
waiver or consent, in each case without the consent of all of the Banks or (b)
shall extend the maturity or reduce the principal amount of, or rate of interest
on, any Note without the consent of the holder of such Note. No provisions of
Section 14 shall be amended, modified or waived without the consent of each
affected Agent.
16.2 Confirmations. Each Company and each holder of a Note of such
Company agree from time to time, upon written request received by it from the
other, to confirm to the other in writing (with a copy of each such confirmation
to the Agent) the aggregate unpaid principal amount of the Loans then
outstanding under such Note.
16.3 Notices. Except as otherwise expressly provided herein, all
notices, requests, demands and other communications otherwise provided for under
the Loan Documents shall be in writing and mailed or delivered to the applicable
party at its address indicated on the execution pages hereto or, as to each
party, at such other address 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 16.3. All such notices, requests, demands and other communications, when
delivered, shall be effective upon actual delivery, when mailed, shall be
effective when sent by a nationally recognized overnight mail courier or
delivery service, addressed as aforesaid, except that any notices or requests to
an Agent pursuant to Section 2 or Section 3 shall not be effective until
actually received by such Agent. Any notice, request, demand or other
communication to the Companies shall be deemed given to both Companies upon the
giving thereof to either such Company.
Each Agent and each Bank shall be entitled to rely upon all telephonic
notices given by the Companies as permitted herein, (including facsimile
transmission) and the Companies shall hold the Agents and each Bank harmless
from any loss, cost or expense ensuing from any such reliance, which
indemnification shall survive any termination of this Agreement. All default
notices, waivers, or consents given to, and all written requests made upon, the
Companies by an Agent, any Bank or the holder of any Note shall be promptly
notified to all other Banks.
16.4 Computations. Where the character or amount of any asset or
liability is required to be determined, or any consolidation or other accounting
computation is required to be made, for the purpose of this Agreement, such
determination or calculation shall, to the extent applicable and except as
otherwise specified in this Agreement, be made in accordance with generally
accepted accounting principles as in effect at the date of this agreement
applied on a basis consistent with those applied in preparing the audited
financial statements delivered by the Company pursuant to Section 9.4.
16.5 Obligations of Banks and Agents Several. The obligations of each
Bank and each Agent hereunder are the several obligations of such Bank or Agent,
as the case may be, and no Bank or Agent shall be responsible for the
obligations of any other Bank or Agent hereunder, nor will the failure by an
Agent or Bank to perform any of its obligations hereunder relieve any other
Agent or Bank from the performance of its respective obligations hereunder.
Nothing contained in this Agreement and no action taken by any Bank or 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, a partnership, a association, joint venture or other entity.
16.6 Costs, Expenses and Taxes. The Companies hereby agree to pay on
demand all reasonable out-of-pocket costs and expenses of each Agent (including
the reasonable fees and out-of-pocket expenses of counsel for each Agent and of
local counsel, if any, who may be retained by said counsel) in connection with
the preparation, execution, delivery, amendment and administration of this
Agreement, the Loan Documents and all other instruments or documents provided
for herein or delivered or to be delivered hereunder or in connection herewith;
provided, however, that so long as no Event of Default or Unmatured Event of
Default shall exist, an Agent shall notify the Companies prior to incurring
legal fees associated with the routine administration of such documents or
instruments. The Companies further jointly and severally agree to pay on demand
all reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees and legal expenses) incurred by an Agent or any Bank in connection with the
enforcement of this Agreement, the Loan Documents or any such other instruments
or documents during the continuance of any Event of Default. Each Bank agrees to
reimburse the Agents for such Bank's Pro Rata Default Share of any such costs or
expenses of such Agent which are not paid by the Companies. In addition, the
Companies jointly and severally agree to pay, and to save the Agents and the
Banks harmless from all liability for, any stamp or similar taxes which may be
payable in connection with the execution or delivery of this Agreement, the
borrowings hereunder, the issuance of the Notes, the recording or filing of any
Loan Documents and any instruments or documents provided for herein or delivered
or to be delivered hereunder or in connection herewith. All obligations provided
for in this Section 16.6 shall survive any termination of this Agreement.
16.7 Indemnification by Companies. The Companies hereby jointly and
severally agree to indemnify the Agents and each Bank and each officer,
director, employee and agent thereof (herein individually each called an
"Indemnitee" and collectively called the "Indemnitees") from and against any and
all losses, claims, damages, reasonable expenses (including, without limitation,
reasonable attorneys' fees) and liabilities (all of the foregoing being herein
called the "Indemnified Liabilities") incurred by an Indemnitee in connection
with any Litigation arising out of, or relating to, the financing provided
herein or any Litigation in which it is alleged that any Environmental Law has
been breached, except for any portion of such losses, claims, damages, expenses
or liabilities incurred solely as a result of the gross negligence or willful
misconduct of the applicable Indemnitee or as a result of a breach of this
Agreement by the applicable Indemnitee. If and to the extent that the foregoing
indemnity may be unenforceable for any reason, the Companies hereby agree to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. All
obligations provided for in this Section 16.7 shall survive any termination of
this Agreement.
16.8 Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
16.9 Governing Law. This Agreement and each Tranche A Note shall be a
contract made under and governed by the internal laws of the State of Minnesota.
Each Tranche B Note and Acceptance shall be a contract made under and governed
by the internal laws of the Province of Ontario, Canada. Whenever possible each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Companies and rights of the Agents, each Bank
and any other holder of a Note expressed herein or in any Note shall be in
addition to and not in limitation of those provided by applicable law.
16.10 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, and each such
counterpart shall be deemed to be an original but all such counterparts shall
together constitute but one and the same Agreement. When counterparts executed
by all the parties shall have been lodged with the Agent (or, in the case of any
Bank as to which an executed counterpart shall not have been so lodged, the
Agent shall have received telegraphic, telex or other written confirmation from
such Bank of execution of a counterpart hereof by such Bank), this Agreement
shall become effective as of the date hereof without further notice to any
party.
16.11 Submission to Jurisdiction; Jury Trial. The Companies hereby
irrevocably agree that any legal action or proceeding pertaining to this
Agreement may be brought in the courts of the State of Minnesota, County of
Hennepin, or of the United States of America for the District of Minnesota, or
in the courts of Ontario, Canada, and by its execution and delivery of a
counterpart hereof, each Company irrevocably submits to the jurisdiction of such
courts. Each Company hereby irrevocably agrees that service of process in any
such action or proceeding may be made either by mailing, by registered or
certified mail, postage prepaid, a copy of the summons and complaint, or other
legal process, in such action or proceeding to the Companies at its address
shown on the signature page hereof (or any other address of a Company to which
notices may be sent pursuant to Section 16.3) or by delivering a copy of such
process to such address. Service of process in any such action or proceeding,
effected as aforesaid, shall be effective upon receipt by a Company or such
agent and shall be deemed personal service upon such Company or such agent and
shall be legal and binding upon such Company for all purposes, notwithstanding
any failure on the part of a Company's agent to forward copies of such process
to the Company. Each Company hereby waives, to the fullest extent permitted by
law, any objection it may now or hereafter have to the laying of venue in any
such action or proceeding in any such court as well as any right it may now or
hereafter have to remove any such action or proceeding, once commenced, to
another court on the grounds of forum non convenience or otherwise. EACH COMPANY
HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT, ANY LOAN DOCUMENT, OR
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY
SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
16.12 Entire Agreement. This Agreement and the Notes, together embody
the entire agreement among the parties relating to the Loans to be made
hereunder and supersede all prior agreements and understandings, if any,
relating to the subject matter hereof and thereof. This Agreement supersedes and
replaces the Prior Credit Agreement and the CIBC Loan Agreement and all
commitments and other obligations of any bank thereunder are hereby terminated
and canceled.
[SIGNATURE PAGES FOLLOW]
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be
executed and delivered at Minneapolis, Minnesota, as of the date first above
written.
G&K SERVICES, INC.
By /s/ Stephen F. LaBelle
Its Secretary and Treasurer
505 North Highway 169
Suite 455
Minneapolis, Minnesota 55441
Phone: (612) 546-7440
Fax: (612) 546-7872
WORK WEAR CORPORATION OF CANADA LTD.
By /s/ Stephen F. LaBelle
Its Secretary and Treasurer
6299 Airport Road
Suite 101
Mississauga, Ontario
CANADA L4V 1N3
Phone: (905) 677-6161
Fax: (905) 677-6289
Dollar Amount
of
Tranche Commitment Percentage NORWEST BANK MINNESOTA,
A U.S.$18,750,000 75.00% NATIONAL ASSOCIATION
in its capacities as
Bank, Agent and
Administrative Agent
By /s/ John K. Lukaska
Its Vice President
Norwest Center, 7th Floor
Sixth and Marquette
Minneapolis, MN 55479-0089
Phone: (612) 667-0870
Fax: (612) 667-7266
Dollar Amount
of
Tranche Commitment Percentage NBD BANK, N.A.
A U.S.$6,250,000 25.00%
By /s/ Patrick P. Skiles
Patrick P. Skiles
Its VICE PRESIDENT
611 Woodward Avenue
Detroit, Michigan 48226
Phone: (313) 225-2843
Fax: (313) 225-1671
Dollar Amount
of
Tranche Commitment Percentage NBD BANK, CANADA
B C.$16,000,000 53.3333% in its capacities as Bank
and Administrative Agent
By Jeremiah I. Hynes III
Its Vice President
Suite 4240
BCE Place
162 Bay Street
Toronto, Ontario
CANADA M5J 2S1
Phone: (416) 865-0466
Fax: (416) 363-7574
Dollar Amount
of
Tranche Commitment Percentage CANADIAN IMPERIAL BANK
B C.$14,000,000 46.6667% OF COMMERCE
By David A. Smith
Its General Manager
Corporate Finance Group
Commerce Court West
Third Floor
Toronto, Ontario
CANADA M5L 1A2
Phone:(416) 980-2441
Fax: (416) 359-0408
FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment is made as of the 28th day of November,
1994, by and among G&K SERVICES, INC. ("G&K"), WORK WEAR CORPORATION OF CANADA
LTD. ("Work Wear"; G&K and Work Wear, as the context requires, may be
hereinafter referred to collectively as the "COMPANIES" and individually as a
"COMPANY"), NBD BANK, N.A. ("NBD USA"), NBD BANK, CANADA ("NBD Canada"),
CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC") and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION ("NORWEST"; NBD USA, NBD CANADA, CIBC and NORWEST, as the context
requires, may be hereinafter referred to collectively as the "Banks" and
individually as a "Bank") and HARRIS TRUST AND SAVINGS BANK ("Harris").
RECITALS
The Companies and the Banks have entered into a Credit
Agreement dated as of June 21, 1994 (the "Credit Agreement") under which NBD USA
and Norwest have agreed to make certain revolving credit loans to and issue
letters of credit for the account of G&K (the "Tranche A Facility") and NBD
Canada and CIBC have agreed to make certain revolving credit loans to and issue
banker's acceptances for the account of Work Wear (the "Tranche B Facility").
G&K wishes to increase the size of the Tranche A Facility and
NBD USA and Norwest have agreed to increase their respective Tranche A
Commitments and Harris has agreed to become an additional lender under Tranche A
of the Credit Agreement, all pursuant to the terms and subject to the conditions
set forth in this First Amendment.
ACCORDINGLY, in consideration of the premises, the Companies,
the Banks and Harris hereby agree as follows:
1. Definitions. Except as otherwise expressly set forth
herein, all capitalized terms in this First Amendment which are defined in the
Credit Agreement shall have the same meanings assigned to them in the Credit
Agreement.
2. Representations and Warranties. To induce the Banks and
Harris to enter into this First Amendment, the Companies hereby represent and
warrant as follows:
(a) The Loan Documents constitute the legal, valid
and binding agreements of each Company (to the extent a Company is a
party thereto), are subject to no defenses, counterclaims, rights of
offset or recoupment and are enforceable in accordance with their
respective terms.
(b) The Guaranties of G&K to NBD Canada and CIBC
constitute the legal, valid and binding obligations of G&K, are subject
to no defenses, counterclaims, rights of offset or recoupment and are
enforceable in accordance with their respective terms.
(c) The representations and warranties contained in
Section 9 of the Credit Agreement are true and correct as of the date
hereof as though made on and as of this date, except to the extent that
such representations and warranties relate solely to an earlier date.
(d) No event has occurred and is continuing or would
result from the execution and delivery of this First Amendment and the
ancillary documents contemplated hereby which constitutes or would
constitute a default or an event of default under the Credit Agreement,
the Met Life Loan Agreement (assuming delivery by Met Life of its
consent to this First Amendment, as contemplated hereby) or any other
agreement, indenture, evidence of indebtedness or other obligation of
either of the Companies.
3. Addition of Harris as Bank. The Companies and each Bank
hereby consent to Harris becoming an additional "Bank" under Tranche A of the
Credit Agreement and, from and after the date hereof, Harris shall be accorded
all rights, privileges and benefits of a "Bank" under and pursuant to the Credit
Agreement. Each and every reference in the Credit Agreement to "Bank" or "Banks"
shall hereinafter be deemed a reference to each Bank and to Harris,
collectively.
4. Harris' Tranche A Commitment; Assignment of Tranche A
Advances. Harris' commitments, obligations, rights, benefits and privileges as a
"Bank" under the Credit Agreement are as follows:
(a) Harris' respective Tranche and Commitment are set
forth opposite Harris' name on the signature page hereof under the
captions "Tranche" and "Dollar Amount of Commitment", respectively.
(b) Harris' Percentage of all Tranche A Exposure, all
Tranche A Loans and the Tranche A Commitment Amount shall be equal to
the applicable percentage set forth opposite Harris' name on the
signature page hereof under the caption "Percentage".
(c) Concurrent with the execution and delivery of
this First Amendment, Harris shall be deemed to have assumed its
Percentage of the risk and liability of each Letter of Credit currently
outstanding and Norwest and NBD USA shall each assign and transfer to
Harris an appropriate share of such bank's outstanding Tranche A Loans
so that Norwest, NBD USA and Harris shall have Tranche A Loans
outstanding in an amount equal to each such Bank's and Harris'
respective Percentage of the aggregate of all such Tranche A Loans. All
Tranche A Loans assigned by Norwest and NBD USA to Harris shall be
assigned pro rata so that Harris, Norwest and NBD USA shall have their
respective pro rata shares of each tenor of Tranche A Eurodollar Loans
and of Tranche A Floating Rate Loans.
(d) Norwest shall collect and apply accrued interest,
letter of credit commissions and fees payable under the Credit
Agreement with respect to Tranche A obligations for all periods prior
to the date hereof for the sole benefit of and for the sole account of
Norwest and NBD USA. Harris shall be entitled to receive interest and
fees with respect to Tranche A obligations from and after the date
hereof.
(e) Harris shall hereinafter be deemed a party to the
Credit Agreement and a "Bank" thereunder and (i) shall be entitled to
all rights, benefits and privileges accorded to a Bank under the Credit
Agreement, (ii) shall be subject to all obligations of a Bank
thereunder (including without limitation the obligation to fund its
Percentage of Tranche A Loans to the extent of its Commitment) and
(iii) shall be deemed to have specifically ratified and confirmed, and
by executing this First Amendment, Harris specifically ratifies and
confirms, all of the provisions of the Credit Agreement and each other
Loan Document.
5. Increase in Existing Tranche A Commitments. Norwest and NBD
USA hereby agree that their respective Commitments shall be increased to the
amounts set forth opposite their respective names on the signature hereof under
the caption "Dollar Amount of Commitment". Additionally, the respective
Percentage of Norwest and NBD USA of all Tranche A Exposure, all Tranche A Loans
and the Tranche A Commitment Amount shall be equal to the applicable percentage
set forth opposite each such Banks' name on the signature page hereof under the
caption "Percentage".
6. Issuance of the Replacement Promissory Notes. To evidence
the obligation of G&K to repay all Tranche A Loans to the Tranche A Banks, and
in replacement for (but not in payment of) the Revolving Notes currently held by
Norwest and NBD USA, respectively, and to evidence G&K's obligation to repay all
Tranche A Loans made by Harris, G&K hereby agrees to issue and deliver to the
Tranche A Banks the following Promissory Notes (the "New Notes"):
(a) A Revolving Note of G&K payable to the order of
Norwest in the stated principal amount of $21,250,000, in substantially
the form of Exhibit A attached hereto.
(b) A Revolving Note of G&K payable to the order of
NBD USA in the stated principal amount of $8,750,000, in substantially
the form of Exhibit B attached hereto.
(c) A Revolving Note of G&K payable to the order of
Harris in the stated principal amount of $20,000,000, in substantially
the form of Exhibit C attached hereto.
The New Notes shall be issued to Norwest and NBD USA in replacement for the
Revolving Notes previously held by Norwest and NBD, respectively, and all
references in the Credit Agreement and in each other Loan Document to the
Tranche A Notes, Notes, Revolving Notes or other terms of like import shall be
deemed to include, as appropriate, references to the New Notes issued in
accordance with this First Amendment.
7. Consent to Additional Term Debt from Met Life. Section 11.2
of the Credit Agreement prohibits G&K from incurring additional indebtedness
except as expressly therein permitted. G&K has requested that the Banks and
Harris consent to the incurrence by G&K of an additional $15,000,000 in term
debt from Met Life pursuant to the terms and conditions of a Loan Agreement
(relating to 8.46% Senior Notes due November 23, 1997) dated November 23, 1994.
The Banks and Harris hereby consent to the incurrence of such additional
indebtedness by G & K pursuant to the terms and conditions of the aforesaid Loan
Agreement. In connection therewith, the Credit Agreement is amended as follows:
(a) The definition of "Met Life Loan Agreement"
appearing in Section 1.1 of the Credit Agreement is hereby amended to
read as follows:
"Met Life Loan Agreement" means, collectively (i) the
Loan Agreement dated as of September 28, 1990,
between Met Life and G & K, as amended pursuant to an
Amendment Agreement dated as of January 28, 1993, a
Second Amendment dated June 21, 1994 and a Third
Amendment dated November 23, 1994 and (ii) the Loan
Agreement dated as of November 23, 1994, between Met
Life, certain subsidiaries of Met Life and G & K.
(b) Section 11.2(f) of the Credit Agreement is hereby
amended to read as follows:
(f) Indebtedness of G & K to Met Life not to exceed
U.S. $46,000,000, plus accrued interest, pursuant
to Met Life Loan Agreement.
(c) Section 11.3(a) of the Credit Agreement is hereby
amended to read as follows:
(a) Guaranties by G & K Services, Co. with respect
to the indebtedness owed by G & K to Met Life
pursuant to the Met Life Loan Agreement;
8. Payment of Fees. G&K hereby irrevocably commits and agrees
to pay the following fees and reimburse Norwest for the following outstanding
expenses:
(a) Facility fees will be due and payable to Norwest in the
amount of $3,125, to NBD USA in the amount of $3,125 and to Harris in
the amount of $25,000. An arrangement fee will be due and payable to
Norwest, in addition to the foregoing facility fee, in the amount of
$31,250. Each such fee shall be deemed fully earned upon execution of
this First Amendment.
(b) G&K will pay or reimburse Norwest for all outstanding fees
and disbursements of counsel to Norwest incurred in connection with the
execution and delivery of the Credit Agreement, all additional fees and
disbursements incurred since the date thereof and all fees and
disbursements incurred in connection with the preparation, execution
and delivery of this First Amendment.
9. Conditions Precedent. As a condition to the effectiveness
of this First Amendment, Norwest shall have received each of the following, in
form and substance satisfactory to it:
(a) This First Amendment, duly executed on behalf of
the Companies, each Bank and Harris.
(b) The New Notes, duly executed on behalf of G&K.
(c) Certificates of the secretary or assistant
secretary of each of the Companies setting forth the specimen
signatures of officers of such Companies which have been authorized to
execute and deliver this First Amendment, the New Notes and such other
documents as are contemplated hereby, together with a copy of the
resolutions adopted by the respective boards of directors of the
Companies approving such execution and delivery.
(d) A Third Amendment to the Met Life Loan Agreement,
duly executed on behalf of G & K and Met Life, pursuant to which Met
Life evidences its consent to the increases in the Commitments as
contemplated herein.
(e) An opinion of counsel to the Companies in form
and content acceptable to Norwest.
(f) Payment of all fees and expenses described in
paragraph 8 hereof.
10. Exculpation. Harris hereby acknowledges and confirms that
it has received a copy of the Credit Agreement and all other Loan Documents,
instruments and agreements referred to in the Credit Agreement. Harris further
confirms and agrees that (i) in becoming an additional Bank under the Credit
Agreement and in making its Commitment to make Tranche A Revolving Loans under
the Credit Agreement, such actions have and will be made without recourse to, or
representation or warranty by, any Bank in any capacity, (ii) it has reviewed
the entire Credit Agreement, and in particular, Section 14.3 thereof and agrees
to be bound thereby, and (iii) the address shown below its signature on this
First Amendment shall be its notice address for all purposes of the Credit
Agreement, unless and until it shall designate another address for such purpose.
Harris acknowledges that it has made such inquiries and taken such care on its
own behalf as would have been the case had its Commitment been granted and its
Loans made directly to G&K without the intervention of any other Bank. Harris
acknowledges that neither Norwest nor any other Bank has made any representation
or warranty about the credit worthiness of either Company or any other party to
the Credit Agreement or with respect to the legality, validity, sufficiency or
enforceability of the Credit Agreement, any Loan Document or any other
instrument or document delivered thereunder or in connection therewith.
11. Miscellaneous.
(a) The Companies hereby release and forever
discharge the Banks and each of their respective former and present
directors, officers, employees, agents and representatives of and from
every and all claims, demands, causes of action (at law or in equity)
and liabilities of any kind or nature, whether known or unknown,
liquidated or unliquidated, absolute or contingent, which the Companies
ever had, presently have or claim to have against a Bank or any of its
respective directors, officers, employees, agents or representatives of
or relating to events, occurrences, actions, inactions or other matters
of or relating to the Credit Agreement or any Loan Document or any
actions or inactions hereunder or thereunder which occurred prior to
the date of this First Amendment.
(b) The Companies hereby reaffirm their agreement
under Section 16.6 of the Credit Agreement to pay or reimburse Norwest,
among other costs and expenses, for all expenses incurred by Norwest in
connection with the amendment, performance or enforcement of the Loan
Documents, including without limitation, all reasonable fees and
disbursements of legal counsel to Norwest in connection with the
preparation of this First Amendment.
(c) Except as expressly amended hereby, all
provisions of the Loan Documents shall remain in full force and effect.
After the effective date hereof, each reference in any Loan Document or
any other document executed in connection with the Credit Agreement to
"this Agreement", "hereunder" or "hereof" or words of like import
referring to the Credit Agreement shall be deemed and refer to the
Credit Agreement as amended hereby. In addition, from and after the
effective date hereof, each reference in any Loan Document to the Notes
or the Revolving Notes of Norwest, NBD USA or Harris shall be deemed
references to the New Notes.
(d) This First Amendment 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 in the same one and the same
instrument.
(e) The execution of this First Amendment and
acceptance of any documents related hereto shall not be deemed a waiver
of any Default or Event of Default under any Loan Document, whether or
not existing on the date of this First Amendment.
(f) This First Amendment shall be governed by, and
construed in accordance with, the internal laws of the State of
Minnesota.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the undersigned have executed this First
Amendment as of the day and year first above mentioned.
G&K SERVICES, INC.
By /s/ Stephen F. LaBelle
Its Secretary and Treasurer
WORK WEAR CORPORATION
OF CANADA LTD
By /s/ Stephen F. LaBelle
Its Secretary and Treasurer
Dollar Amount
Tranche of Commitment Percentage NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
A US $21,250,000 42.50%
By /s/ John K. Lukaska
Its Vice President
Dollar Amount
Tranche of Commitment Percentage NBD BANK, N.A.
A US $8,750,000 17.50%
By /s/ Patrick P. Skiles
Its Vice President
Dollar Amount
Tranche of Commitment Percentage HARRIS TRUST AND SAVINGS BANK
A US $20,000,000 40.00%
By /s/ Catherine C. Ciolek
Its Vice President
111 West Monroe
P.O. Box 755
Chicago, Illinois 60690
Attn: Vice President,
Midwest Group
Phone: (312) 461-7009
Fax: (312) 461-2591
Dollar Amount
Tranche of Commitment Percentage NBD BANK, CANADA
B C$16,000,000 53.3333%
By /s/ Jeremiah I. Hynes, III
Its Vice President
Dollar Amount
Tranche of Commitment Percentage CANADIAN IMPERIAL BANK
OF COMMERCE
B C$14,000,000 46.6667%
By /s/ David A. Smith
Its General Manager
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<EPS-DILUTED> .66
</TABLE>
