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Exhibit 10.11
THIS NOTE WAS ORIGINALLY ISSUED ON DECEMBER 29, 1997, AND HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
PURSUANT TO SECTION 4 OF THIS NOTE, THIS INSTRUMENT IS SUBORDINATED
TO THE SENIOR INDEBTEDNESS (AS DEFINED HEREIN) AND NOTWITHSTANDING
ANY STATEMENT TO THE CONTRARY CONTAINED IN THIS INSTRUMENT, NO
PAYMENT OF ANY NATURE ON ACCOUNT OF THE OBLIGATIONS HEREUNDER,
WHETHER OF PRINCIPAL OR INTEREST, SHALL BE MADE, PAID, RECEIVED OR
ACCEPTED EXCEPT IN ACCORDANCE WITH THE TERMS OF SUCH SECTION 4.
12% JUNIOR SUBORDINATED NOTE
December 29, 1997 $11,000,000
GCIH, Inc., a Delaware corporation (the "Company"), hereby promises
upon the terms and subject to the provisions hereof to pay to the order of
Gerber Products Company, a Michigan corporation (the "Subordinated Seller") (the
Subordinated Seller and each of its permitted assigns is a "Holder"), the
principal amount of Eleven Million Dollars ($11,000,000), as such amount may be
increased from time to time pursuant to Section 2 below. This Junior
Subordinated Note (this "Note") is being issued pursuant to that Note Issuance
and Settlement Agreement by and between the Subordinated Seller and the Company,
dated as of the date hereof.
1. Definitions. Except as otherwise provided in this Section 1,
capitalized terms used in this Note and not defined herein shall have the
meanings assigned to such terms in the Credit Agreement (as defined below).
"Bankruptcy Event" shall occur:
(i) if the Company or Gerber shall (1) be generally not paying its
debts as they become due, (2) file, or consent by answer or otherwise to the
filing against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, (3) make an assignment for the
benefit of its creditors, (4) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, (5) be adjudicated
insolvent or be liquidated under any bankruptcy or insolvency law, or (6) take
corporate action for the purpose of any of the foregoing; or
(ii) If a court or governmental authority of competent jurisdiction
shall enter an order appointing, without consent by the Company or Gerber, as
applicable, a custodian, receiver, trustee or other officer with similar powers
with respect to it or with respect to any substantial part of its property, or
if an order for relief shall be entered in any case or proceeding for
liquidation or
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reorganization or otherwise to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up or liquidation
of the Company or Gerber, or if any petition for any such relief shall be filed
against the Company or Gerber and such petition shall not be dismissed within 60
days.
"CMP" means Citicorp Mezzanine Partners, L.P., a Delaware limited
partnership, or any successor thereof.
"Change of Control" shall have the meaning set forth in the Credit
Agreement.
"Company Event of Default" has the meaning set forth in Section 6.
"Credit Agreement" means, collectively, the Credit Agreement dated
as of December 17, 1997, by and among Gerber and Auburn Hosiery Mills, Inc., a
Kentucky corporation as Borrowers, the Company and the Domestic Subsidiaries of
the Company and the Borrowers as Guarantors, NationsBank, N.A., as
Administrative Agent, and certain other parties, as the same may be amended,
restated, extended, refunded, refinanced, replaced, supplemented, restructured
or otherwise modified from time to time (in whole or in part and without
limitation as to terms, conditions or covenants and without regard to the
principal amount thereof), including all related notes, collateral documents,
guarantees, instruments and agreements entered into in connection therewith, as
the same may be amended, modified, supplemented, restated, extended, renewed,
refunded, refinanced, restructured or replaced from time to time.
"Default" unless otherwise specified, means any Default as such term
is used in either the Credit Agreement or the Senior Subordinated Credit
Agreement.
"Event of Default" unless otherwise specified, means any Event of
Default as such term is used in either the Credit Agreement or the Senior
Subordinated Credit Agreement.
"Excess Cash Flow" shall have the meaning assigned thereto in the
Credit Agreement.
"Fiscal Year" means each twelve month period ending on the last day
of December in each year.
"Gerber" means Gerber Childrenswear, Inc., a Delaware corporation
and wholly-owned Subsidiary of the Company.
"Junior Interest Notes" means, collectively, (i) any Junior
Subordinated Notes of the Company (substantially in the form attached as Exhibit
I hereto) issued pursuant to Section 2 hereof, (ii) any Junior Subordinated
Notes of the Company issued in payment of any interest accrued on any other
Junior Interest Note, or (iii) any notes which may be issued in exchange or
substitution for the notes described in clause (i) or (ii) above, in whole or in
part. Each Junior Interest Note shall provide that the entire principal amount
of such note is due on the Maturity Date.
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"Junior Subordinated Notes" means, collectively, (i) this Note, (ii)
any Junior Interest Notes, or (iii) any notes which may be issued in exchange or
substitution of the notes described in clauses (i) or (ii) above, in whole or in
part.
"Initial Interest Payment Date" means the first Interest Payment
Date occurring after January 1, 1998 as determined in accordance with Section
4(e)(iii).
"Majority Holders" means, at any time, the holders of a majority in
aggregate principal amount of the Junior Subordinated Notes then outstanding.
"Maturity Date" has the meaning set forth in Section 3.
"no longer in effect" means, with respect to the Credit Agreement,
(i) all Senior Indebtedness thereunder has been paid in cash, and (ii) all
commitments and obligations thereunder have been terminated.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Senior Debt Documents" shall mean the Credit Agreement, the Senior
Subordinated Credit Agreement and all other documents and instruments delivered
or filed in connection with the creation, incurrence, guaranteeing or securing
of any Senior Indebtedness (including, without limitation, all security
agreements and mortgages).
"Senior Indebtedness" means, collectively, (i) all Indebtedness now
or hereafter incurred by the Company or any of its Subsidiaries pursuant to the
terms of the Credit Agreement, (ii) all Indebtedness or Obligations (each as
defined in the Senior Subordinated Credit Agreement) now or hereafter incurred
by the Company or any of its Subsidiaries pursuant to the Senior Subordinated
Credit Agreement, (iii) all other Indebtedness of the Company's Subsidiaries,
(iv) guarantees by the Company of indebtedness referred to in clauses (i) and
(ii) above and any Refinancings (as defined below) thereof, and (v) all
obligations of the Company or any of its Subsidiaries in respect of any
indebtedness incurred by the Company or any of its Subsidiaries for the purpose
of refinancing, restructuring, extending or renewing (collectively,
"Refinancings") the obligation of the Company or any of its Subsidiaries under
clauses (i), (ii) or (iii) above. Senior Indebtedness shall include, in all
instances, interest (at the rate set forth in such Senior Indebtedness) accruing
after the filing of a petition initiating any proceedings under any Bankruptcy
Law (as defined below), whether or not allowed as a claim in such proceeding.
Senior Indebtedness outstanding under the Senior Debt Documents shall continue
to constitute Senior Indebtedness, notwithstanding that such Senior Indebtedness
or any claim in respect thereof may be disallowed, avoided or subordinated
pursuant to any insolvency law, Title 11 of the United States Code or any
similar federal or state law for the relief of debtors or other applicable
insolvency law (each, a "Bankruptcy Law") or equitable principles (A) as a claim
for unmatured interest, or (B) as a fraudulent transfer or conveyance arising in
connection with the Purchase; provided that,
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notwithstanding any provision in this Note to the contrary, the aggregate
principal amount of Senior Indebtedness outstanding at any time shall not exceed
$122,500,000 and any principal indebtedness or principal obligation in excess of
$122,500,000 shall not be Senior Indebtedness for any purposes hereunder.
"Senior Lenders" shall mean the Lenders from time to time party to
the Credit Agreement, CMP for so long as it shall hold all or any portion of the
Senior Indebtedness under the Senior Subordinated Credit Agreement and all other
holders of Senior Indebtedness.
"Senior Notes" shall mean the Notes as defined in the Credit
Agreement.
"Senior Subordinated Credit Agreement" means the Senior Subordinated
Credit Agreement, dated as of January 22, 1996, by and among the Company, Gerber
and CMP, and as amended as of December 17, 1997, as the same may be amended,
restated, extended, refunded, refinanced, replaced, supplemented, restructured
or otherwise modified from time to time (in whole or in part and without
limitation as to terms, conditions or covenants and without regard to the
principal amount thereof), including all related notes, collateral documents,
guarantees, instruments and agreements entered into in connection therewith, as
the same may be amended, modified, supplemented, restated, extended, renewed,
refunded, refinanced, restructured or replaced from time to time.
"Subordinated Debt Documents" shall mean this Note and each Junior
Interest Note, in each case, as amended, modified, replaced or substituted from
time to time.
"Subordinated Indebtedness" shall mean all indebtedness, contingent
obligations and other obligations, whether for principal, prepayment charges,
interest, indemnities or reimbursement of fees, expenses or other amounts, of
the Company under the Subordinated Debt Documents.
"Subordinated Seller" shall have the meaning set forth in the
preamble.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, association or other business entity if
such Person or Persons shall be allocated a majority of partnership, association
or other business entity gains or losses or shall be or control the managing
director or general partner of such partnership, association or other business
entity.
"Termination Date" shall mean January 22, 2001.
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2. Payment of Interest.
(a) Interest Rate. Interest shall accrue on the unpaid principal
amount of this Note from the date hereof until this Note is paid in full, at the
rate of the lesser of twelve percent (12%) per annum or the maximum rate
permitted by applicable law (the "Interest Rate").
(b) Interest Payment Date. The Company shall pay interest annually
in arrears (i) on or prior to the Termination Date, on the date determined in
accordance with Section 4(e)(iii), and (ii) after the Termination Date, the
first day of each February (each such date referred to in clause (i) or clause
(ii) above, an "Interest Payment Date"). The first Interest Payment Date shall
be the Initial Interest Payment Date.
(c) Interest Payment. On each Interest Payment Date or, if such day
is not a business day, the next succeeding business day,
(i) on or prior to the Termination Date, except as otherwise
provided in Section 4(e) hereof, the Company shall pay interest on
this Note in cash or other immediately available funds, in an
aggregate amount equal to the sum of (without duplication) (A)
interest which has accrued on this Note during the immediately
preceding Fiscal Year, plus, (B) interest ("Compound Interest")
accrued during the period beginning on January 1 of each calendar
year (the "Compound Interest Accrual Commencement Date") and ending
on the Interest Payment Date in such calendar year, on the amount of
interest which shall have accrued during the period beginning on
January 1 of the calendar year immediately preceding such Compound
Interest Accrual Commencement Date (for each year thereafter) and
ending on December 31 of the calendar year immediately preceding
such Compound Interest Accrual Commencement Date (and such Compound
Interest shall be deemed to have accrued in the Fiscal Year ending
immediately prior to the applicable Compound Interest Accrual
Commencement Date); and (without duplication)
(ii) after the Termination Date, the Company shall pay
interest which has accrued since the immediately preceding Interest
Payment Date on this Note in cash or other immediately available
funds.
To the extent interest due on this Note is not payable in cash pursuant to
Section 4(e), on each Interest Payment Date, or if such day is not a business
day, the next succeeding business day, the Company shall pay in cash such
portion of the unpaid accrued interest on this Note as is permitted to be paid
in cash pursuant to Section 4(e) and such portion of the unpaid accrued interest
on this Note that is not payable in cash pursuant to Section 4(e) by issuing to
the Holder one or more Junior Interest Notes in aggregate principal amount equal
to the amount of the unpaid accrued interest to be so paid.
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3. Payment of Principal.
(a) Scheduled Payment. On January 22, 2006 (the "Maturity Date"),
the Company shall pay to the Holder of this Note the entire principal amount,
plus all accrued and unpaid interest, of this Note which is then unpaid.
(b) Optional Prepayments. Subject to the provisions of Section 4
hereof, the Company may, at any time and from time to time, without premium or
penalty, prepay all or a portion of the unpaid principal amount of the Junior
Subordinated Notes, together with unpaid interest accrued on such portion of the
principal amount which it is prepaying since the immediately preceding Interest
Payment Date.
(c) Mandatory Prepayments. Subject to the provisions of Section 4
hereof, within 15 days of the consummation of a sale of any capital stock of the
Company in connection with the initial underwritten public offering thereof and
the receipt by the Company of cash proceeds in respect of any such sale (the
"net cash proceeds"), the Company shall apply an amount equal to the lesser of
(A) 50% of the difference of (i) the net cash proceeds that the Company so
receives and (ii) any payments required by the Senior Debt Documents to prepay
the Senior Indebtedness described in clauses (i), (ii) or (iv) of the definition
of Senior Indebtedness and any Refinancing thereof, and (B) the remaining unpaid
principal amount of all Junior Subordinated Notes, to the prepayment of all
Junior Subordinated Notes without any premium or penalty.
(d) Application of Prepayments. All prepayments (whether voluntary
or mandatory) shall include payment of accrued and unpaid interest on the
principal amount of the Junior Subordinated Notes so prepaid and shall be
applied to payment of interest before application to principal. A prepayment of
less than all of the unpaid principal amount of any Junior Subordinated Note
shall not relieve the Company of its obligation to make the scheduled payment on
such Junior Subordinated Note on the Maturity Date. A prepayment of less than
all of the aggregate unpaid principal amount of the Junior Subordinated Notes
shall be made pro rata among all holders of Junior Subordinated Notes based on
the outstanding principal amount of all Junior Subordinated Notes held by each
such holder.
4. Subordination.
(a) Subordination to Senior Indebtedness. Each of the Company and
Subordinated Seller for itself and its respective successors and assigns,
covenants and agrees, and each other holder of Subordinated Indebtedness, by its
acceptance of this Note or such Subordinated Indebtedness, shall be deemed to
have covenanted and agreed, that the payment of the Subordinated Indebtedness
shall be subordinate and subject in right of payment, to the extent and in the
manner hereinafter set forth, to the prior payment in full in cash or cash
equivalents of all Senior Indebtedness, and that each holder of Senior
Indebtedness, whether now outstanding or hereafter created, incurred, assumed or
guaranteed shall be deemed to have acquired Senior Indebtedness in reliance upon
the provisions contained in this Section 4. The provisions of this Section 4
shall be reinstated if at any time any payment of any of the Senior Indebtedness
is rescinded or must
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otherwise be returned by any holder of Senior Indebtedness or any representative
of such holder upon the insolvency, bankruptcy or reorganization of any Credit
Party. Any provision of this Section 4 or the Subordinated Debt Documents to the
contrary notwithstanding, no Credit Party shall make, and no holder of
Subordinated Indebtedness shall accept, any payment or prepayment of principal,
or prepayment of other amounts due thereunder, of any kind whatsoever with
respect to the Subordinated Indebtedness at any time when any of the Senior
Indebtedness remains outstanding except that, subject to the other provisions of
this Section 4, a Credit Party may make and the Subordinated Seller may accept
the scheduled payment of principal due on the Maturity Date and any mandatory
payment of principal under Section 3(c) above which has become due and payable
as provided in and in accordance with the Subordinated Debt Documents as in
effect on the date hereof. Unless barred by the provisions of Sections 4(b) or
4(c), the holders of the Subordinated Indebtedness shall be entitled to receive
regularly scheduled payments of interest and payment or reimbursement of all
fees, expenses, indemnities and like amounts under the Subordinated Debt
Documents as in effect on the date hereof. In no event shall any holder of
Subordinated Indebtedness commence any action or proceeding to contest the
provisions of this Agreement or the priority of the Liens granted to the holders
of the Senior Indebtedness by Gerber or any other Credit Party. No holder of
Subordinated Indebtedness shall take, accept or receive any collateral security
from the Company or any other Credit Party for the payment of the Subordinated
Indebtedness until the Senior Credit Agreement is no longer in effect and all
Senior Indebtedness has been paid in full.
(b) Subordinated Indebtedness Subordinated to Prior Payment of All
Senior Indebtedness in Dissolution, Liquidation, Reorganization, etc.
(i) Upon any payment or distribution of the assets of any
Credit Party of any kind or character, whether in cash, property or securities
(including (i) any collateral, whether the proceeds thereof or in kind, at any
time securing the Subordinated Indebtedness and (ii) any payments or
distributions in respect of indebtedness which is subordinated to the
Subordinated Indebtedness (the payments under this clause (ii), "Junior
Payments")), to creditors upon any dissolution, winding-up, or liquidation, or
reorganization, arrangement, adjustment, composition, or readjustment of any
Credit Party or their respective securities or debt (whether voluntary or
involuntary, or in bankruptcy, insolvency, reorganization, liquidation,
receivership proceedings, or upon an assignment for the benefit of creditors, or
any other marshaling of the assets and liabilities of any Credit Party or
otherwise), then in such event:
(A) the holders of Senior Indebtedness shall be entitled
to receive payment in full in cash or cash equivalents of all amounts due
or to become due on or in respect of all Senior Indebtedness before any
payments of any nature (other than payments of interest due on the Junior
Subordinated Notes by the delivery of a Junior Interest Note pursuant to
Section 4(e)(i)) are made on account of or applied on or made with respect
to the Subordinated Indebtedness; and
(B) any payment or distribution of assets of any Credit
Party (other than payments of interest due on the Junior Subordinated
Notes by the delivery of a Junior Interest Note pursuant to Section
4(e)(i)) of any kind or character, whether in cash, property
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or securities, by set-off or otherwise, to which the holders of
Subordinated Indebtedness would be entitled except for the provisions of
this Section 4, including, without limitation, Junior Payments, shall be
paid or delivered by any debtor, custodian, liquidating trustee or agent
or other Person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to
the holders of Senior Indebtedness as their respective interests may
appear, for application to the payment of all such Senior Indebtedness
remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full in cash or cash equivalents after giving effect to
any concurrent payment or distribution, to the holders of such Senior
Indebtedness; provided, however, that if pursuant to an order or decree
issued by a court of competent jurisdiction, all or any portion of such
assets so distributed and paid over to or for the benefit of the holders
of Senior Indebtedness is required to be returned to a Credit Party, or
its bankruptcy estate, such holders of Senior Indebtedness shall pay over
such assets (or the cash equivalent thereof) to the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee, agent or other Person
specified in such order or decree, in which event the provisions of this
Section 4 shall be reinstated to the same extent as if such amounts had
not been paid over to or for the benefit of the holders of Senior
Indebtedness as contemplated by Section 4(a) hereof.
(ii) The Company and Gerber shall give prompt notice to each
holder of outstanding Senior Indebtedness and Subordinated Indebtedness of any
dissolution, winding-up, total or partial liquidation, reorganization,
arrangement, adjustment, composition, recapitalization or readjustment of the
Company or Gerber, or their respective securities or debt.
(iii) Each holder of Subordinated Indebtedness shall duly and
promptly take such action as the Administrative Agent (or CMP if the Credit
Agreement is no longer in effect) may reasonably request to collect the
Subordinated Indebtedness for the account of the Senior Lenders and to file
appropriate claims or proofs of debt in respect to the Subordinated
Indebtedness.
(iv) If any holder of Subordinated Indebtedness does not file
a proper claim or proof of debt in the form required in any dissolution, winding
up, liquidation or bankruptcy reorganization of a Credit Party prior to 10
business days before the expiration of the time to file such claim or proof (the
"Appointment Trigger Date"), then the Administrative Agent (or CMP if the Credit
Agreement is no longer in effect) shall have the right to file and is hereby
authorized to file such a claim or proof for and on behalf of such holder.
Neither the Administrative Agent nor any Senior Lender shall have any liability
to any such holder in connection with any such filing except to the extent of
any loss or damage suffered by such holder as a result of the gross negligence
or willful misconduct of the Administrative Agent. Subordinated Seller hereby
appoints, and each other holder of the Subordinated Indebtedness, by its
acceptance thereof, appoints, as of the Appointment Trigger Date, the
Administrative Agent (or if the Credit Agreement is no longer in effect as of
such Appointment Trigger Date, CMP), as attorney-in-fact for such Person, solely
for the purpose of filing any such claim, proof of claim or other instrument of
similar character. Subordinated Seller and each other holder of Subordinated
Indebtedness, by its acceptance thereof, agrees that it will execute and deliver
such other and further powers of attorney or other instruments
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as the Administrative Agent or any Senior Lender may reasonably request in order
to accomplish the foregoing.
(c) No Payments with Respect to Subordinated Indebtedness in Certain
Circumstances. (i) Subject in each case to Section 4(e):
(A) In circumstances in which Section 4(b) is not
applicable, no payment of any nature in respect of the Subordinated
Indebtedness (including, without limitation, pursuant to any
judgment with respect thereto, but excluding all payments of
interest due on the Junior Subordinated Notes by delivery of a
Junior Interest Note pursuant to Section 4(e) which shall not be
restricted by this subsection 4(c)(i)(A)) shall be made by or on
behalf of the Company or any Credit Party if, at the time of such
payment:
(1) a default in the payment when due (whether at
the maturity thereof, or upon acceleration of maturity or otherwise
and without giving effect to any applicable grace periods) of all or
any portion of the Senior Indebtedness (whether of principal,
interest or any other amount with respect thereto) shall have
occurred, and such default shall not have been cured or waived in
accordance with the terms of the Senior Debt Documents (a "Payment
Default"); or
(2) subject to clause (iii) of this Section 4(c),
(x) the Company and the Subordinated Seller shall have received
notice (a "Blockage Notice") from the Administrative Agent (or CMP
if the Credit Agreement is no longer in effect) of the occurrence of
one or more Events of Default in respect of the Senior Indebtedness
(other than Payment Defaults) (a "Covenant Default") and the
determination of the Administrative Agent or CMP, as applicable, to
invoke this Section 4(c)(A)(2), (y) each such Event of Default shall
not have been cured or waived in accordance with the terms of the
applicable Senior Debt Documents, and (z) 180 days shall not have
elapsed since the date such Blockage Notice was received (any period
during which no payment in respect of the Subordinated Indebtedness
may be made by reason of the application of this clause (2) being
hereinafter called a "Payment Bar Period").
(ii) the Company may resume payments in respect of the
Subordinated Indebtedness:
(A) in the case of a Payment Default, upon a cure or
waiver thereof in accordance with the terms of the Senior Debt
Documents; or
(B) in the case of an Event of Default or Events of
Default referred to in clause (2) of Section 4(c)(i)(A), upon the
earlier to occur of the cure or waiver of all such Events of Default
in accordance with the terms of the Senior Debt Documents, or the
expiration of such period of 180 days.
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(iii) Notwithstanding any provision of Section 4(c)(i) to the
contrary:
(A) no Payment Bar Period shall be in effect during more
than an aggregate of 180 days within any period of 360 consecutive
days; and
(B) no Event of Default existing on the date any
Blockage Notice is given shall, unless the same shall have ceased to
exist for a period of at least 30 consecutive days, be used as a
basis for any subsequent such notice.
(iv) the Company shall give prompt written notice to the
Subordinated Seller of (i) any Payment Default in respect of Senior Indebtedness
and (ii) its receipt of any notice of a Covenant Default.
(v) The Subordinated Seller shall provide the Administrative
Agent and CMP with copies of all default and other notices given to the Company
or Gerber under the terms of the Subordinated Debt Documents and all notices to
the Company under this Section 4.
(d) Subordination on Acceleration of Senior Indebtedness. In
circumstances in which Section 4(b) is not applicable, following any
acceleration of the maturity of any Senior Indebtedness and as long as such
acceleration shall continue unrescinded and unannulled, such Senior Indebtedness
shall first be paid in full in cash, or provision for such payment shall be made
in a manner satisfactory to the holders of the Senior Indebtedness, before any
payment is made on account of or applied on the Subordinated Indebtedness.
(e) Interest Payments.
(i) Prior to the date that is one (1) day after the
Termination Date, notwithstanding anything contained in this Note or the
Subordinated Debt Documents to the contrary, in circumstances when Section 4(b)
is not applicable, any payment of interest otherwise due and payable under this
Note shall not be payable in cash, and the Company, in lieu of paying interest
in cash on this Note shall make payment of interest hereunder by the delivery of
one or more Junior Interest Notes in aggregate principal amount equal to the
amount of interest then due and payable under this Note and dated the date of
issuance of such Junior Interest Note, if on the Interest Payment Date any one
or more of the following shall apply:
(A) an Event of Default shall be continuing on such
Interest Payment Date under the Credit Agreement; or
(B) the Lenders under the Credit Agreement shall not
have received a prepayment of $500,000 under subsection 3.3(b)(ii)
of the Credit Agreement in respect of the Fiscal Year most recently
ended prior to the Fiscal Year in which such Interest Payment Date
occurs (unless such payment was waived in writing by the requisite
percentage of Lenders under the Credit Agreement); provided, that,
in any event interest on such Interest Payment Date shall be payable
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(x) in cash only to the extent of that portion of Excess Cash Flow
for the Fiscal Year most recently ended prior to such Interest
Payment Date remaining after application of $500,000 to such
prepayment under subsection 3.3(b)(ii) of the Credit Agreement in
respect of such Fiscal Year and (y) only in respect of interest
accrued since the immediately preceding Interest Payment Date (or
with respect to the payment of interest on the Initial Interest
Payment Date, since the date hereof); or
(C) as of such Interest Payment Date, and after giving
effect to the payment of all interest payable on such Interest
Payment Date in cash, the amount, if any, by which (1) the Revolving
Committed Amount exceeds (2) the sum of the outstanding principal
balance of the Revolving Loan plus $20,000,000, shall be less than
$12,500,000.
(ii) In the event that any Junior Interest Note is delivered
in lieu of cash as required by this Section 4(e) in respect of any
Interest Payment Date, then no Company Event of Default shall be deemed to
be continuing by virtue of such delivery and the delivery of such Junior
Interest Note shall satisfy in full the requirement of the Company to make
payment of interest due and payable on such Interest Payment Date.
(iii) On or prior to the Termination Date, Interest on this
Note accrued, or pursuant to Section 2(c)(i), deemed to have accrued,
during any Fiscal Year shall be payable on the date that is thirty (30)
days following the date that a prepayment from Excess Cash Flow in respect
of such Fiscal Year is due and payable under Subsection 3.3(b)(ii) of the
Credit Agreement; provided, however, that for purposes of calculating the
interest payable on the Initial Interest Payment Date, this Amended Note
will be deemed to have been issued and outstanding as of January 1, 1997.
(iv) No holder of this Note may offset any amounts owing by
such holder to the Company or any other Credit Party against any amounts
owning to the Company hereunder.
(f) Acceleration of Subordinated Indebtedness; Remedies. If a
Company Event of Default (which shall mean that all necessary notices have been
given and any prerequisite for the passage of time has been satisfied) under the
Subordinated Debt Documents shall exist at any time that any Senior Indebtedness
shall be outstanding, neither the Subordinated Seller, nor any other holder of
Subordinated Indebtedness shall take any action (i) to accelerate or to collect
payment of any Subordinated Indebtedness, (ii) to foreclose or otherwise realize
on any security given to secure or guarantee such Subordinated Indebtedness,
(iii) to commence or join with any other creditor (other than holders of a
majority in principal amount of the Senior Notes or any representative thereof)
in commencing any proceeding in connection with or premised on the occurrence of
a Bankruptcy Event, or (iv) to pursue any other remedy with respect to the
Subordinated Indebtedness prior to the earlier of:
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(A) the payment in full in cash or cash equivalents of all
Senior Indebtedness;
(B) the initiation of a proceeding (other than a proceeding
prohibited by clause (iii) of this Section 4(f)) in connection with or
premised upon the occurrence of a Bankruptcy Event;
(C) the expiration of 180 days immediately following the
receipt by the Administrative Agent of notice of the occurrence of such
Company Event of Default from the holder or holders entitled to accelerate
payments on the Subordinated Indebtedness; and
(D) the acceleration of the maturity of any Senior
Indebtedness by the Administrative Agent or CMP;
provided, however, that if, with respect to (B) and (D) above, such proceeding
or acceleration, respectively, is rescinded, or with respect to (C) above,
during such 180-day period such Company Event of Default has been cured or
waived, the prohibition against taking the action described in clauses (i),
(ii), (iii) and (iv) of this Section 4(f) shall automatically be reinstated as
of the date of the rescission, cure or waiver, as applicable. In the event of
the occurrence of any event described in clause (C) or clause (D) above, the
Subordinated Seller shall give ten (10) days prior written notice to the
Administrative Agent and CMP before taking any action described in clauses (i)
(except as to acceleration as to which five (5) days prior written notice shall
be required), (ii), (iii) or (iv) of this Section 4(f), which notice shall
describe with specificity the action that the holder or holders of Subordinated
Indebtedness entitled to accelerate payments on the Subordinated Indebtedness in
good faith intend to take. Such 10 (or 5, as applicable) day notice may be given
during the 180-day period described in clause (iii) above.
(g) Holders of Subordinated Indebtedness to be Subrogated to Rights
of Holders of Senior Indebtedness. Subject to the payment in full in cash or
cash equivalents of all Senior Indebtedness, the holders of Subordinated
Indebtedness shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of assets of the Company
applicable to the Senior Indebtedness until the principal of, and interest and
premium (if any) on, and all other amounts payable in respect of, Subordinated
Indebtedness shall be paid in full in cash or cash equivalents, and for purposes
of such subrogation, no payment or distribution to the holders of the Senior
Indebtedness of assets, whether in cash, property or securities, distributable
to the holders of Senior Indebtedness under the provisions hereof to which the
holders of Subordinated Indebtedness would be entitled except for the provisions
of this Section 4(g), and no payment pursuant to the provisions of this Article
4 to the holders of the Senior Indebtedness by the holders of Subordinated
Indebtedness, shall, as between any Credit Party, its creditors other than the
holders of the Senior Indebtedness, and the holders of the Subordinated
Indebtedness, be deemed to be a payment by such Credit Party to or on account of
such Senior Indebtedness, it being understood that the provisions of this
Section 4(g) are, and are intended, solely for the purpose of defining the
relative rights of the holders of Subordinated Indebtedness, on the one hand,
and the holders of Senior Indebtedness, on the other hand.
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(h) No Reliance. Each of the Company, each other Credit Party and
the Subordinated Seller has examined with its counsel all documentation in
connection with the Subordinated Indebtedness, including this Note. No holder of
Senior Indebtedness makes any representation or warranty in connection with this
Note, and neither the Administrative Agent, any Senior Lender nor any one or
more officers, directors, employees or agents of the Administrative Agent or any
Senior Lender shall be liable for any action lawfully taken or omitted to be
taken by them under or in connection with this Section 4, except for their own
gross negligence, bad faith or willful misconduct. Neither the Administrative
Agent nor any Senior Lender shall be responsible in any manner to the Company,
any other Credit Party or the Subordinated Seller for any recitals, statements,
representations or warranties herein or for the effectiveness, enforceability,
genuineness, validity or the due execution of this Note or any other agreement
made in connection herewith (other than any such agreement on the part of a
Senior Lender) or be under an obligation to the Company, any other Credit Party
or the Subordinated Seller to ascertain or to inquire about the performance or
observance of any of the terms, covenants or conditions hereof on the part of
the parties hereto. Neither the Administrative Agent nor any Senior Lender shall
be deemed to have knowledge of the occurrence of a default or an event of
default under the Subordinated Debt Documents unless the Administrative Agent or
such Senior Lender has received written notice from the Subordinated Seller
specifying such default or event of default. The Subordinated Seller shall not
be deemed to have knowledge of the occurrence of a default or event of default
under the Senior Debt Documents unless the Subordinated Seller has received
written notice from the Administrative Agent or any Senior Lender specifying
such default or event of default. Each holder of Senior Indebtedness and the
Subordinated Seller shall be deemed to have knowledge of such matters as are the
subject of notices delivered to the Administrative Agent or CMP (with respect to
the Senior Indebtedness) and the Subordinated Seller, respectively.
(i) Obligations of the Company Unconditional. Nothing contained in
this Section 4 is intended to or shall impair, as between each Credit Party and
their respective creditors other than the holders of Senior Indebtedness, the
obligations of such Credit Party to the holders of Subordinated Indebtedness to
pay any Subordinated Indebtedness as and when such Subordinated Indebtedness
shall become due and payable in accordance with its terms, which obligations the
Company acknowledges are absolute and unconditional, or to affect the relative
rights of the holders of Subordinated Indebtedness and creditors of the Loan
Parties other than the holders of Senior Indebtedness, nor, except as set forth
in this Section 4, shall any holder of Subordinated Indebtedness be prevented
from accelerating the Subordinated Indebtedness or exercising all remedies
otherwise permitted by applicable law upon the happening of an event of default
under the applicable Subordinated Debt Documents subject to the rights, if any,
of the holders of Senior Indebtedness set forth in this Section 4, in respect of
assets, whether in cash, property or securities, of any Credit Party received
upon the exercise of any such remedy.
(j) Payments Received in Contravention of This Indebtedness. Should
any payment or distribution of any kind of character, whether in cash, property
or securities, or any collateral security, or the proceeds of any thereof, be
collected or received by a holder or holders of the Subordinated Indebtedness
and such collection or receipt is prohibited hereunder, such holder or holders
will promptly turn over the same to any Person designated by the Administrative
Agent
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(or CMP if the Credit Agreement is no longer in effect) in each case in the form
received (except for the endorsement or the assignment of such holder or holders
when necessary) for the application to (in the case of cash) or as collateral
for (in the case of non-cash property or securities) the payment or prepayment
of all Senior Indebtedness remaining not paid in full in cash or cash
equivalents and, until so turned over, the same shall be held in trust by such
holder or holders as the property of the holders of Senior Indebtedness.
(k) Modifications to Senior and Subordinated Indebtedness.
(i) A holder of any Senior Indebtedness may at any time and
from time to time without the consent of or notice to the holders of
Subordinated Indebtedness, without incurring liability to the holders of
Subordinated Indebtedness, and without impairing or releasing the obligations of
the holders of Subordinated Indebtedness under this Agreement: (A) change the
manner or place of payment or change the time of payment of or renew or alter
any Senior Indebtedness, or amend in any other manner any agreement, note,
guaranty or other instrument evidencing or securing or otherwise relating to any
Senior Indebtedness; (B) exercise or refrain from exercising any rights against
the Company or any other Credit Party and other Persons (including the holders
of Subordinated Indebtedness); and (C) apply any sums by whomsoever paid or
howsoever realized to any Senior Indebtedness, in such manner as the holders of
Senior Indebtedness determine.
(ii) the Company, each other Credit Party, the Subordinated
Seller and each holder of Subordinated Indebtedness shall not amend or modify in
any manner this Note and the provisions of the Junior Interest Note without the
express written consent of the Administrative Agent and CMP, in each instance.
(iii) The Administrative Agent will provide notice to the
Subordinated Seller of any change in the identity of the Administrative Agent,
if other than NationsBank, N.A. The Subordinated Seller will provide notice to
the Administrative Agent and CMP of any change in the identity of the
Subordinated Seller, if other than Gerber Products Company.
(l) "Paid in Full". For purposes of this Section 4, "payment in
full", "paid in full" or "satisfied", as used with respect to the Senior
Indebtedness, means the receipt of cash or cash equivalents equal to the full
amount of Senior Indebtedness, including, without limitation, the principal
amount of the Senior Indebtedness and interest thereon to the date of such
payment; provided, however, that any such cash or cash equivalents that the
holders of Senior Indebtedness have been required to return or disgorge shall
not be deemed to have been paid to the holders of Senior Indebtedness for the
purposes of determining whether the Senior Indebtedness has been "paid in full"
or "satisfied".
(m) Effect of Failure to Pay Subordinated Indebtedness. The failure
to make any payment on account of Subordinated Indebtedness by reason of the
operation of any provision of this Agreement shall not be construed as
preventing the occurrence of an event of default under the applicable
Subordinated Debt Documents; provided, however, that the delivery of a Junior
Interest
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Note in compliance with Section 4(e) hereof shall constitute payment in full of
interest due and payable on the applicable Interest Payment Date and no Company
Event of Default shall arise thereby.
(n) No Disposition of Subordinated Indebtedness. No holder of
Subordinated Indebtedness will sell, assign, pledge, encumber or otherwise
dispose of any of the Subordinated Indebtedness unless such sale, assignment,
pledge, encumbrance or disposition is made expressly subject to this Section 4
and unless, after giving effect thereto, there would not be more than three (3)
holders of Subordinated Indebtedness. The Subordinated Seller and each other
Holder of this Note or any Subordinated Indebtedness shall promptly notify the
Company, Administrative Agent and CMP of the occurrence of any sale, assignment,
transfer or other disposition of this Note or any Subordinated Indebtedness and
the name and address for notices hereunder of the transferee thereof.
(o) Legends. The Company and the Subordinated Seller shall cause
this Note and each other instrument or document which now or thereafter
evidences all or any portion of the Subordinated Indebtedness to be
conspicuously marked with the following legend:
"PURSUANT TO SECTION 4 OF THIS NOTE, THIS INSTRUMENT IS SUBORDINATED
TO THE SENIOR INDEBTEDNESS (AS DEFINED HEREIN) AND NOTWITHSTANDING
ANY STATEMENT TO THE CONTRARY CONTAINED IN THIS INSTRUMENT, NO
PAYMENT OF ANY NATURE ON ACCOUNT OF THE OBLIGATIONS HEREUNDER,
WHETHER OF PRINCIPAL OR INTEREST, SHALL BE MADE, PAID, RECEIVED OR
ACCEPTED EXCEPT IN ACCORDANCE WITH THE TERMS OF SUCH SECTION 4."
(p) Remedies Enforcement.
(i) Upon any breach of this Section 4 by the Company, any
other Credit Party or the Subordinated Seller, the Administrative Agent (or CMP
with respect to any Senior Indebtedness under the Senior Subordinated Credit
Agreement) may, by written notice to the Company and Gerber, declare the Senior
Indebtedness immediately due and payable, and may sue and receive from the
Subordinated Seller any payment received in violation of this Section 4. The
rights and remedies of the Administrative Agent and the Senior Lenders under
this Section 4 are cumulative and in addition to any other rights and remedies
of the Administrative Agent and the Senior Lenders under the Senior Debt
Documents or any other agreement which may now or hereafter exist in law or at
equity. No postponement or delay by the Administrative Agent or any Senior
Lender in the enforcement of any right under this Section 4 shall constitute a
waiver thereof, nor shall any single or partial exercise of any right under this
Section 4 preclude any other or further exercise thereof or the exercise of any
other right. Without limiting the foregoing, the Administrative Agent and each
Senior Lender (in accordance with the Senior Debt Documents) is hereby
authorized to demand specific performance of the provisions of this Section 4,
whether or not any Credit Party shall have complied with any of the provisions
hereof applicable to it, at any time when any Credit Party, the Subordinated
Seller or any other holder of the Subordinated
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Indebtedness shall have failed to comply with any of the provisions of this
Section 4 applicable to it. The holders of the Subordinated Indebtedness hereby
irrevocably waive any defense based on the adequacy of a remedy at law that
might be asserted as a bar to such remedy of specific performance.
(ii) The Subordinated Seller hereby acknowledges that the
provisions of this Section 4 are intended to be enforceable at all times until
the Credit Agreement is no longer in effect and the Senior Indebtedness has been
paid in full, whether before or after the commencement of a proceeding in
connection with or premised on the occurrence of a Bankruptcy Event.
(q) Waiver of Consolidation. Each holder of Subordinated
Indebtedness acknowledges and agrees that (i) the Company, each other Credit
Party and their respective Affiliates are each separate and distinct entities,
(ii) each such holder and each Senior Lender has relied upon the separate
existence and credit worthiness of the Company and Gerber, (iii) notwithstanding
any facts, circumstances, conditions or events, Gerber Childrenswear, Inc. shall
not have any liability, obligation or indebtedness to any holder of Subordinated
Indebtedness with respect to this Note or any Junior Interest Note; provided,
that nothing in this clause (iii) shall relieve the Company or any successor of
the Company from any of its obligations hereunder (including as a result of any
merger of the Company with any Person, including those Persons referred to above
in this Section 4(q)), and (iv) it will not at any time when any Senior
Indebtedness has not been paid in full, or when the Revolving Committed Amount
under the Credit Agreement is still in force or any Letter of Credit is
outstanding, insist upon, plead, or in any manner whatsoever, seek the entry of
any order or judgment, or take the benefit or advantage of, any substantive
consolidation, piercing of the corporate veil or any other order or judgment
that causes an effective combination of the assets and liabilities of the
Company, any other Credit Party and any other individual, corporation,
partnership or joint venture in any case or proceeding under Title 11 of the
United States Code or other similar proceeding.
(r) Duration and Modification of Agreement; Enforceability of Senior
Indebtedness Documents. This Agreement is of a continuing nature, and it shall
continue in force so long as any portion of the Senior Indebtedness remains
unpaid or any Letter of Credit is outstanding or the Revolving Committed Amount
under the Credit Agreement has not terminated. As between the Senior Lenders and
the Subordinated Seller, the Senior Lenders may, without notice to the
Subordinated Seller and without prejudice hereunder, extend, renew or alter the
terms of the Senior Debt Documents and the Senior Indebtedness, forbear
collection, release, compromise or settle, take or release collateral security
therefor and in connection with the Senior Indebtedness and deal with any and
all parties.
(s) Waiver. Except as expressly provided herein, the Company, and
each other Credit Party and the Subordinated Seller hereby waive to the extent
permitted by applicable law: (i) promptness, diligence, notice of acceptance or
any other notice with respect to any of the Senior Indebtedness and this Section
4, any requirement that any holder of Senior Indebtedness or the Administrative
Agent, protest, secure, perfect or insure any security interest or lien on any
property subject thereto or exhaust any right to take action against the
Company, any other Credit Party or
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any other Person or any collateral, presentment for payment, notice of
non-payment or nonperformance, demand, protest, notice of protest and notice of
dishonor or default with respect to the Senior Indebtedness, (ii) defenses to
pay or perform based upon any of the Senior Indebtedness not being a valid and
binding obligation of the Company, or any other Credit Party, enforceable in
accordance with its terms (notwithstanding bankruptcy laws, insolvency laws and
other laws affecting generally the protection of debtors or rights of
creditors); (iii) any disability of the Company or any other Credit Party or
defense available to the Company or any other Credit Party (other than payment
in full in cash or cash equivalents) with respect to the Senior Indebtedness,
including absence or cessation of liability for any reason whatsoever; and (iv)
until all the Senior Indebtedness is paid (in cash or cash equivalents) and
performed in full, any right to subrogation or realization on any of the
Company's or any other Credit Party's property, including participation in any
marshalling of the Company's or any other Credit Party's assets.
(t) Successors and Assigns. The provisions of this Section 4 shall
be binding upon the Company, the Administrative Agent, the Senior Lenders, the
Subordinated Seller and their respective successors and assigns, and shall inure
to the benefit of the Administrative Agent and the Senior Lenders and their
respective successors and assigns. The benefits of this Section 4 shall be
freely assignable at any time by the Senior Lenders provided any such assignment
is in conjunction with the assignment of the related Senior Indebtedness.
(u) Amendment and Waivers. Notwithstanding any other provisions of
this Note, this Section 4 may be changed, modified or waived only by a writing
signed by the Company, the Subordinated Seller, CMP and the Administrative
Agent.
(v) Further Assurances. The Company each other Credit Party and the
holders of the Subordinated Indebtedness each will, at the expense of the
Company and at any time and from time to time, promptly execute and deliver all
further instruments and documents, and take all further action, that may be
reasonably necessary or appropriate, or that the Administrative Agent may
reasonably request, in order to protect any right or interest granted or
purported to be granted to this Section 4 or to enable the holders of the Senior
Indebtedness or the Administrative Agent to the exercise and enforce their
rights and remedies hereunder.
5. Notices. Any notice or other communication required or permitted
to be given under this Note shall be in writing addressed to the respective
party as set forth below and may be personally served, telecopied or sent by
nationally recognized overnight courier service or United States certified mail,
postage prepaid, and shall be deemed to have been given: (a) if delivered in
person, when delivered; (b) if delivered by telecopy, on the date of
transmission if transmitted on a Business Day before 4:00 p.m. (CST) or, if not,
on the next succeeding Business Day; or (c) if delivered by overnight courier,
two days after delivery to such courier, properly addressed.
Notices shall be addressed as follows:
If to the Company:
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GCIH, Inc.
1333 Broadway, 7th Floor
New York, New York 10018
Telecopy No.: (212) 268-5122
Attention: Edward Kittredge
With copies to:
CITICORP VENTURE CAPITAL, LTD.
399 Park Avenue
14th Floor, Zone 4
New York, New York 10043
Telecopy No.: (212) 888-2940
Attention: Mr. John Weber
and
KIRKLAND & ELLIS
153 East 53rd Street
New York, New York 10022
Attn: Kirk A. Radke, Esq.
Telecopy No.: (212) 446-4900
If to the Administrative Agent:
NATIONSBANK, N.A.
NationsBank Corporate Center
100 North Tryon Street, 7th Floor
NC 1-007-08-11
Charlotte, NC 28255
Telecopy No.: (704) 388-0209
Attn: David Dinkens
with a copy to:
CITICORP MEZZANINE PARTNERS, L.P.
399 Park Avenue,
14th Floor, Zone 4
New York, New York 10043
Attention: Ms. Byron Knief
Telecopy No.: (212) 888-2940
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and to:
MOORE & VAN ALLEN
NationsBank Corporate Center
100 North Tryon Street, 47th Floor
Charlotte, NC 28202
Attn: Thomas C. O'Bannon, Esq.
If to the Subordinated Seller:
GERBER PRODUCTS COMPANY
445 State Street
Fremont, Michigan 49412
Attention: General Counsel
Telecopy: (616) 928-2331
With a copy to:
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
333 West Wacker Drive
Chicago, Illinois 60606
Attention: William R. Kunkel, Esq.
Telecopy: (312) 407-0411
or to such other address as the party addressed shall have previously designated
by written notice to the serving party, given in accordance with this Section 5.
Notice not given as provided above shall, if it is in writing, be deemed given
if and when actually received by the party to whom given.
6. Events of Default.
(a) Definition. For purposes of this Note, a "Company Event of
Default" shall be deemed to have occurred upon:
(i) (A) the Company's failure to pay when due (whether
pursuant to Section 3(a) above or upon acceleration or otherwise) any portion of
the unpaid principal amount of any Junior Subordinated Note; or (B) the
Company's failure to pay any interest thereon or issue any Junior Interest Note
due or to pay any other amount due thereunder or under any other Subordinated
Debt Documents and such default continues for a period of ten (10) days.
(ii) (A) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the Company or Gerber in
an involuntary case under any Bankruptcy Law, which decree or order is not
stayed; or any other similar relief shall be granted and remain unstayed
under any applicable federal or state law; or (B) an involuntary case is
commenced against the Company or Gerber under any applicable Bankruptcy
Law;
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or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over the Company or
Gerber or over all or a substantial part of any of their respective
properties, shall have been entered; or an interim receiver, trustee or
other custodian of the Company or Gerber for all or a substantial part of
its properties is involuntarily appointed; or a warrant of attachment,
execution or similar process is issued against any substantial part of the
properties of the Company or Gerber, and the continuance of any such
events in this clause (B) for sixty (60) days unless dismissed, bonded,
stayed, vacated or discharged;
(iii) the Company or Gerber shall have an order for relief
entered with respect to it or commence a voluntary case under any
Bankruptcy Law, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of
or taking possession by a receiver, trustee or other custodian for all or
a substantial part of their respective properties; the making by the
Company or Gerber of any assignment for the benefit of creditors the
admission by the Company in writing of its inability to pay its debts as
such debts become due;
(iv) the acceleration of the maturity of any Senior
Indebtedness by the Administrative Agent or CMP; provided, that if such
acceleration is rescinded no Company Event of Default shall be deemed to
have occurred hereunder;
(v) a Change of Control shall occur; or
(vi) the Company shall fail to perform or observe its
obligations under Sections 7 and 8 hereof, and such failure shall continue
for a period of ten (10) days after the Majority Holders have given the
Company notice thereof.
(b) Consequences of Events of Default.
(i) Upon the occurrence and during the continuance of a
Company Event of Default described in clauses (i), (iv), (v) or (vi) of
Section 6(a) above, the Majority Holders may by notice to the Company and
the Administrative Agent declare all or any portion of the unpaid
principal amount of the Junior Subordinated Notes due and payable and
demand immediate payment of all or any portion of the unpaid principal
amount of the Junior Subordinated Notes, subject to the limitations
described in Section 4 above. Upon the occurrence of a Company Event of
Default described in clauses (ii) or (iii) of Section 6(a) above, the
unpaid principal amount of the Junior Subordinated Notes shall
automatically become due and payable without any notice by the holders
thereof.
(ii) Subject to Section 4 above, each holder of the Junior
Subordinated Notes shall also have all other rights which such holder may
have pursuant to applicable law or in equity.
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7. Financial Statements and Other Reports. The Company will
maintain, and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of consolidated financial statements in conformity with GAAP.
The Company will deliver to the Subordinated Seller:
(a) as soon as practicable and in any event within ninety (90)
days after the end of each fiscal year of the Company, consolidated and
consolidating (showing intercompany eliminations) balance sheets of the
Company and its Subsidiaries as of the end of such year and the related
consolidated and consolidating (showing intercompany eliminations)
statements of income, stockholders' equity and cash flow of the Company
and its Subsidiaries for such fiscal year, setting forth in each case in
comparative form the consolidated figures for the previous fiscal year,
all in reasonable detail accompanied by an unqualified report thereon of a
firm of independent certified public accountants of recognized national
standing selected by the Company and reasonably satisfactory to the
Administrative Agent, which report shall state that such consolidated
financial statements fairly present the consolidated financial position of
the Company and its Subsidiaries as at the date indicated and the results
of their operations and cash flow for the periods indicated in conformity
with GAAP applied on a consistent basis with prior years and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards; and
(b) as soon as practicable and in any event within forty-five
(45) days after the end of each fiscal quarter of the Company, other than
quarters which are the last fiscal quarter in a fiscal year of the
Company, copies of the consolidated and consolidating balance sheets of
the Company and its Subsidiaries as of the end of such fiscal quarter, and
related consolidated and consolidating statements of income, stockholder's
equity and cash flow of the Company and its Subsidiaries for such fiscal
quarter and for the portion of the fiscal year ending with such fiscal
quarter, in each case setting forth in comparative form the figures for
the corresponding periods of the preceding fiscal year, all in reasonable
detail.
8. Restricted Junior Payments. The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly, declare, order, pay,
make or set apart any sum of any Restricted Junior Payment, except that the
Company and its Subsidiaries may make Restricted Junior Payments permitted under
the Senior Debt Documents.
9. Amendment and Waiver. Except as otherwise expressly provided
herein, the Company may take any action herein prohibited, or omit to perform
any act herein required to be performed by it, only if the Company has obtained
the prior written consent of the Majority Holders.
10. Cancellation. After all unpaid principal and interest owed on
this Note has been paid in full, this Note shall be surrendered to the Company
for cancellation and shall not be reissued.
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11. Governing Law; Severability. The construction, validity and
interpretation of this Note shall be governed by and construed in accordance
with the domestic laws of the State of New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York. Whenever possible each
provision of this Note shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Note shall be
prohibited by or invalid under such 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 Note and shall be
interpreted so as to be effective and valid.
12. Descriptive Headings. The descriptive headings of this Note are
inserted for convenience only, and do not constitute a part of this Note.
13. Expenses. The Company shall pay all reasonable out-of-pocket
costs and expenses of the Subordinated Seller actually incurred in connection
with the preservation of rights under, and enforcement of, and any renegotiation
or restructuring of this Note or the other Subordinated Debt Documents requested
by the Company and any amendment, waiver or consent requested by the Company
relating hereto or thereto (including, without limitation, the fees and
disbursements of counsel for the Subordinated Seller).
14. Waivers, etc. The Company hereby waives presentment for payment,
demand, protest and notice of dishonor. No delay on the part of the Subordinated
Seller in the exercise of any right or remedy shall operate as a waiver thereof,
and no single or partial exercise by the Subordinated Seller of any right or
remedy shall preclude any other or further exercise thereof or the exercise of
any other right or remedy.
15. Successors and Assigns Regarding Notes. The provisions of this
Note and each of the other Junior Subordinated Notes shall be binding upon the
Company and its respective successors and assigns and shall inure to the benefit
of the Subordinated Seller and its successors and assigns; provided that the
Company may not assign or transfer any of its obligations under any Junior
Subordinated Note without the prior written consent of Subordinated Seller.
* * * * *
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IN WITNESS WHEREOF, the Company has executed and delivered this
Junior Subordinated Note on the date first written above.
GCIH, INC.
By: /s/ Richard Solar
-----------------------
Name: RICHARD SOLAR
Title:Senior Vice President
Attest:
/s/ Katherine A. Courpas
- ------------------------
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EXHIBIT I TO 12% JUNIOR SUBORDINATED NOTE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
_________ __, 199_ AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN A JUNIOR
SUBORDINATED NOTE DATED AS OF JANUARY 22, 1996 FROM THE ISSUER (THE
"COMPANY") TO THE HOLDER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY
THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
PURSUANT TO SECTION 4 OF THIS NOTE, THIS INSTRUMENT IS SUBORDINATED TO THE
SENIOR INDEBTEDNESS (AS DEFINED HEREIN) AND NOTWITHSTANDING ANY STATEMENT
TO THE CONTRARY CONTAINED IN THIS INSTRUMENT, NO PAYMENT OF ANY NATURE ON
ACCOUNT OF THE OBLIGATIONS HEREUNDER, WHETHER OF PRINCIPAL OR INTEREST,
SHALL BE MADE, PAID, RECEIVED OR ACCEPTED EXCEPT IN ACCORDANCE WITH THE
TERMS OF SUCH SECTION 4.
JUNIOR SUBORDINATED INTEREST NOTE
[Date] $________
GCIH, INC., a Delaware corporation (the "Company"), hereby promises
to pay to the order of __________________ (the "Holder") the principal amount of
_______ Dollars ($________), together with interest thereon at the rate of
twelve percent (12%) per annum calculated from the date hereof, on January 22,
2006 (the "Maturity Date") in accordance with the provisions of this Junior
Subordinated Interest Note (this "Junior Interest Note").
This Junior Interest Note was issued pursuant to Section 2 of the
12% Junior Subordinated Note issued by the Company on January 22, 1996, or any
note which may be issued in substitution thereof or as a replacement therefor,
in whole or in part (the "Junior Subordinated Note").
The provisions of sections 1 through 15 of the Junior Subordinated
Note are hereby incorporated by reference, with all references to Junior
Subordinated Notes hereby deemed to be, for purposes of this Junior Interest
Note, references to the Junior Interest Note.
* * * * *
25
IN WITNESS WHEREOF, the Company has executed and delivered this
Junior Interest Note on the date first written above.
GCIH, INC.
By: ____________________________
Name:
Title:
Attest:
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