EXHIBIT 4.2
SECOND AMENDED AND RESTATED
CREDIT AND SECURITY AGREEMENT
DATED AS OF DECEMBER 9, 2004
AMONG
DELTA GALIL USA INC., AS BORROWER,
BANK LEUMI USA, AS AGENT
AND
EACH OF THE PERSONS WHICH IS A PARTY HERETO AS A BANK
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS................................................2
Section 1.1 General Definitions........................................2
Section 1.2 Accounting Terms..........................................14
Section 1.3 Terms Defined in Uniform Commercial Code..................14
ARTICLE 2 CREDIT FACILITY...........................................15
Section 2.1 Revolving Loan Facility...................................15
Section 2.2 Making the Revolving Loans................................15
Section 2.3 Revolving Loan Payments...................................16
2.3.1 Payments..................................................16
2.3.2 Mandatory Payments of Revolving Loans.....................16
Section 2.4 The Term Loan.............................................17
2.4.1 Outstanding Term Loans....................................17
2.4.2 New Term Loan and Consolidation...........................17
2.4.4 Payments..................................................17
Section 2.5 Interest..................................................18
2.5.1 Revolving Loan Rates......................................18
2.5.2 Term Loan Rate............................................18
2.5.3 Unavailability of LIBOR Rate Based Loans..................18
2.5.4 LIBOR Rate Costs..........................................19
2.5.5 Default Rate of Interest..................................20
2.5.6 Computation of Interest...................................20
2.5.7 Interest Payments.........................................20
2.5.8 Usury.....................................................21
Section 2.6 Increased Costs...........................................21
2.6.1 Costs.....................................................21
2.6.2 Taxes.....................................................21
Section 2.7 Fees......................................................22
2.7.1 Unused Fee................................................22
2.7.2 Commitment Fee............................................22
2.7.3 Agent Fee.................................................22
Section 2.8 Prepayment of Prime Rate Loans............................22
Section 2.9 Prepayment of LIBOR Rate Loans............................22
Section 2.10 LIBOR Rate Indemnity......................................22
Section 2.11 Letters of Credit.........................................23
2.11.1 Letters of Credit.........................................23
2.11.2 Issuance of Letters of Credit.............................23
2.11.3 Requirements For Issuance of Letters of Credit............23
2.11.4 Letter of Credit Fees.....................................25
Section 2.12 Acceptances...............................................25
2.12.1 Acceptance Availability...................................26
2.12.2 Creation of Acceptances...................................26
2.12.3 Payment of Acceptance Liabilities.........................26
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2.12.4 Participation.............................................26
2.12.5 Indemnification; Conversion of Acceptance Liabilities.....26
ARTICLE 3 EFFECTIVENESS OF AGREEMENT................................27
Section 3.1 Conditions Precedent......................................27
3.1.1 Transactions Lawful and Permitted.........................27
3.1.2 Representations and Warranties............................27
3.1.3 Notes.....................................................27
3.1.4 Burlen....................................................27
3.1.5 Pledge....................................................28
3.1.6 Opinions of Counsel.......................................28
3.1.7 Proof of Insurance........................................28
3.1.8 Fees......................................................28
3.1.9 Delta Galil Guarantees....................................28
3.1.10 Auburn Confirmations......................................28
3.1.15 Other Documents...........................................28
3.1.12 Payoff Letter.............................................29
Section 3.2 Georgia Properties Conditions Subsequent..................29
3.2.1 Georgia Real Estate Documentation.........................29
3.2.2 Title Insurance...........................................29
3.2.3 Surveys...................................................29
3.2.4 Certificates of Occupancy.................................29
3.2.5 Insurance.................................................30
3.2.6 Appraisals and Environmental Reports......................30
3.2.7 Leases....................................................30
3.2.8 Further Assurances........................................30
Section 3.3 Pennsylvania and North Carolina Properties
Conditions Subsquent....................................30
3.3.1 Real Estate Collateralization Documents...................30
3.3.2 Title Insurance...........................................30
3.3.3 Lessor Estoppel and Waiver................................30
3.3.4 Opinions of Counsel.......................................30
Section 3.4 Conditions Subsequent.....................................31
3.4.1 Burlen Stock Certificates and Stock Powers................31
3.4.2 Termination of Bank of America Liens on
Personal Property.......................................31
3.4.3 Opinion of Georgia Counsel................................31
3.4.4 Termination of Bank of America N.A. Mortgages.............31
3.4.5 Opinion With Respect to Guaranties........................31
ARTICLE 4 CONDITIONS TO ADVANCES, ETC...............................31
Section 4.1 Representations and Warranties............................31
Section 4.2 No Default................................................32
Section 4.3 Material Adverse Change...................................32
Section 4.4 Liens.....................................................32
Section 4.5 No Obstacle...............................................32
Section 4.6 Borrowing Base............................................32
Section 4.7 Other Requirements........................................32
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ARTICLE 5 COLLATERAL................................................32
Section 5.1 Security Interest.........................................32
Section 5.2 The Agent as Borrower's Attorney-in-Fact..................33
5.2.1 Appointment...............................................33
5.2.2 Ratification of Acts......................................34
5.2.3 Limitation on Liability...................................34
5.2.4 Additional Powers.........................................34
Section 5.3 Trademark Security Agreement..............................35
Section 5.4 Real Estate Assets........................................35
Section 5.5 Additional Collateral.....................................35
ARTICLE 6 REPRESENTATIONS AND WARRANTIES............................35
Section 6.1 Corporate Matters.........................................35
6.1.1 Existence and Ownership...................................35
6.1.2 Bi-Annual Reports.........................................35
Section 6.2 Corporate Authority; Non-Contravention....................36
Section 6.3 Binding Effect............................................36
Section 6.4 Collateral................................................36
Section 6.5 Place of Business.........................................37
Section 6.6 Corporate Names...........................................37
Section 6.7 Tax Liabilities...........................................37
Section 6.8 Other Agreements..........................................37
Section 6.9 Employee Controversies....................................37
Section 6.10 Compliance with Laws and Regulations......................37
Section 6.11 Intellectual Property.....................................37
Section 6.12 Pension Matters...........................................38
Section 6.13 Financial Statements......................................38
Section 6.14 Disclosure................................................38
Section 6.15 Loans.....................................................38
Section 6.16 Margin and Investment Company Act.........................38
Section 6.17 Parent, Subsidiaries and Other Interests..................39
Section 6.18 Litigation and Proceedings................................39
Section 6.19 Environmental Matters.....................................39
Section 6.20 The Real Estate Assets....................................40
6.20.1 Improvements..............................................40
6.20.2 Certificates of Occupancy.................................40
6.20.3 Condition.................................................40
6.20.4 Leases....................................................40
6.20.5 No Defaults...............................................40
6.20.6 Judgments.................................................40
6.20.7 Real Estate Assets........................................40
Section 6.21 Dissolution of Affiliates.................................40
Section 6.22 Release of Liens of Record................................40
ARTICLE 7 AFFIRMATIVE COVENANTS.....................................41
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Section 7.1 Financial Statements......................................41
Section 7.2 Inspection................................................43
Section 7.3 Conduct of Business.......................................44
Section 7.4 Taxes.....................................................44
Section 7.5 Insurance.................................................45
Section 7.6 Notice of Suit etc........................................45
Section 7.7 Preservation of Collateral and Perfection of Liens
Therein.................................................45
7.7.1 Preservation of Collateral and Perfection of Liens........45
7.7.2 Maintain Equipment........................................46
7.7.3 Intellectual Property.....................................46
Section 7.8 Reports...................................................46
7.8.1 Monthly Reports...........................................46
7.8.2 Additional Reports........................................47
Section 7.9 Comply with Laws..........................................47
Section 7.10 Pay all Indebtedness......................................47
Section 7.11 Collateral Audit, etc.....................................47
Section 7.12 Proceeds of Loans.........................................47
Section 7.13 Environmental Laws........................................47
Section 7.14 Notice of Release or Environmental Complaint..............48
Section 7.15 Additional Collateral.....................................48
Section 7.16 Execution of Supplemental Instruments.....................48
Section 7.17 Operating Accounts........................................48
Section 7.18 Executives................................................49
Section 7.19 Wundies, Inc..............................................49
ARTICLE 8 NEGATIVE COVENANTS........................................49
Section 8.1 Liens.....................................................49
Section 8.2 Indebtedness..............................................49
Section 8.3 Consolidations, Mergers or Acquisitions...................50
Section 8.4 Guaranties................................................50
Section 8.5 Disposal of Property......................................50
Section 8.6 Investments...............................................50
Section 8.7 Loans.....................................................51
Section 8.8 Capital Expenditures......................................51
Section 8.9 Dividends.................................................51
Section 8.10 Nature of Business........................................51
Section 8.11 Transactions with Affiliates..............................51
Section 8.12 Leases....................................................51
Section 8.13 Subsidiaries and Guarantors...............................51
Section 8.14 Compliance with ERISA.....................................52
Section 8.15 Amendment of Certificate of Incorporation or By-Laws......52
Section 8.16 Change Fiscal Year........................................52
Section 8.17 Prepayment of Indebtedness................................52
Section 8.18 Fixed Charge Coverage.....................................52
Section 8.19 Net Worth Ratio...........................................54
Section 8.20 Leverage Ratio............................................55
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Section 8.21 Delta Galil Debt..........................................56
ARTICLE 9 EVENTS OF DEFAULT.........................................56
Section 9.1 Events of Default.........................................56
9.1.1 Failure to Make Payments When Due.........................56
9.1.2 Breach of Covenants.......................................56
9.1.3 Breach of Warranty........................................56
9.1.4 Judgments, Liens..........................................56
9.1.5 Attachment................................................56
9.1.6 Bankruptcy; Appointment of Receiver.......................57
9.1.7 Other Loan Documents......................................57
9.1.8 Injunction................................................57
9.1.9 Default Under Other Agreements............................57
9.1.10 Default as to Other Indebtedness..........................57
9.1.11 Material Adverse Change...................................58
9.1.12 Ownership of the Borrower.................................58
9.1.13 Loss of Collateral........................................58
9.1.14 Environmental Lien........................................58
9.1.15 Unenforceability of Any Loan Document.....................58
9.1.16 Delta Galil Material Adverse Effect.......................58
9.1.17 Delta Galil Guarantees....................................58
9.1.18 Walmart Sales.............................................58
9.1.19 Conditions Subsequent.....................................59
ARTICLE 10 RIGHTS AND REMEDIES.......................................59
Section 10.1 Acceleration; Termination.................................59
Section 10.2 Rights and Remedies Generally.............................59
Section 10.3 Entry Upon Premises and Access to Information.............59
Section 10.4 Disposition of Collateral by Agent........................60
10.4.1 Manner of Disposition.....................................60
10.4.2 Proceeds of Disposition...................................61
Section 10.5 Marshalling; Payments Set Aside...........................61
Section 10.6 Set-Off...................................................61
Section 10.7 Notification of Accounts..................................61
Section 10.8 Settlement of Accounts....................................61
Section 10.9 Collateral Custodian......................................62
Section 10.10 Waiver of Demand..........................................62
Section 10.11 Reinstatement.............................................62
Section 10.12 Waiver of Notice..........................................62
Section 10.13 Cross-Collateralization...................................63
Section 10.14 Auburn and Burlen Authorization...........................63
ARTICLE 11 THE AGENT.................................................63
Section 11.1 Appointment of Agent......................................63
Section 11.2 Nature of Duties of Agent.................................64
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Section 11.3 Lack of Reliance on Agent.................................64
Section 11.4 Instructions to Agent.....................................65
11.4.1 Required Consents.........................................65
11.4.2 Right to Request Instructions from the Banks..............65
Section 11.5 Reliance by Agent.........................................65
Section 11.6 Indemnification of Agent..................................65
Section 11.7 The Agent in its Individual Capacity......................66
Section 11.8 Successor Agent...........................................66
Section 11.9 Collateral Matters........................................67
Section 11.10 Actions with Respect to Defaults..........................68
Section 11.11 Delivery of Information...................................68
ARTICLE 12 MISCELLANEOUS.............................................69
Section 12.1 Expenses..................................................69
Section 12.2 Indemnity.................................................69
Section 12.3 No Agency.................................................69
Section 12.4 Expenditures..............................................70
Section 12.5 Limitation of Liability...................................70
Section 12.6 Reliance by Banks.........................................70
Section 12.7 Applicable Law............................................70
Section 12.8 Submission to Jurisdiction; Waiver of Bond................71
Section 12.9 Titles....................................................71
Section 12.10 Binding Effect............................................71
Section 12.11 Notices...................................................71
Section 12.12 Severability..............................................72
Section 12.13 Successors and Assigns; Participations....................72
Section 12.14 Waivers and Amendments....................................75
Section 12.15 Survival of Representations and Warranties................76
Section 12.16 Complete Agreement........................................76
Section 12.17 Counterparts, Facsimile Signatures........................76
Section 12.18 No Presumption...........................................76
Section 12.19 No Third Party Beneficiaries..............................76
Section 12.20 Waiver of Jury Trial......................................76
Exhibits and Schedules
----------------------
Schedule 1.1
Schedule 3.3.1
Schedule 6.1
Schedule 6.5
Schedule 6.6
Schedule 6.11
Schedule 6.17
Schedule 6.18
Schedule 6.19
Schedule 8.1
Schedule 8.2
Schedule 8.14
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Exhibit A Form of Revolving Note
Exhibit B Form of Notice of Advance
Exhibit C Form of Term Note
Exhibit D Form of Unlimited Guaranty
Exhibit E Form of Security Agreement
Exhibit F Form of Burlen Trademark Security Agreement
Exhibit G Form of Amendment to Pledge Agreement
Exhibit H Form of Confirmation of Guaranty and Security Agreement
Exhibit I Form of Officer's Certificate
Exhibit J Form of Borrowing Base Certificate
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THIS SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT (this
"Agreement") dated as of December 9, 2004 is among DELTA GALIL USA INC., a
Delaware corporation having an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), BANK LEUMI USA, a New York banking corporation as
agent for the Banks (the "Agent"), having an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and each of the Persons named in Schedule 1.1 annexed
hereto (each a "Bank" and collectively, the "Banks").
As of September 11, 2000 Wundies Enterprises, Inc., Wundies Industries,
Inc. (together, the "Original Borrowers"), Bank Leumi USA, Bank Hapoalim B.M.
(together the "Original Lenders") and the Agent, entered into a Credit and
Security Agreement (the "Original Agreement').
Pursuant to the Original Agreement, the Original Lenders (i) made a
revolving loan commitment to make revolving loans to the Original Borrowers, in
an aggregate principal amount, at any one time outstanding, not to exceed
$70,000,000, minus the principal amount of all outstanding letters of credit,
(ii) made term loans and second term loans to the Original Borrowers in the
aggregate initial principal amount of $30,000,000, and (iii) made a facility
available to the Original Borrowers for letters of credit, in an aggregate face
amount, at any one time outstanding, not to exceed $4,000,000.
Effective as of January 1, 2002, Wundies Enterprises, Inc. and its
affiliate, Inner Secrets, Inc., merged with and into Wundies Industries, Inc.
the surviving corporation (the "Merger"), which effective with the Merger,
changed its name to Delta Galil USA Inc. Subsequently, the Original Agreement
was amended, by agreements dated as June 14, 2002, September 25, 2002, May 1,
2003 and June 3, 2003 which amendments, among other things, provided that the
Original Lenders would make third term loans to the Borrower and provide an
acceptance facility to the Borrower.
As of June 30, 2004, the Original Agreement, as theretofor amended, was
further amended and restated in an Amended and Restated Credit and Security
Agreement (the "Restated Agreement") to provide, among other things, for (i) the
Borrower's acquisition of Auburn, (ii) the inclusion of Auburn's eligible
accounts and eligible inventory in the Borrowing Base, (iii) the guaranty by
Auburn of the obligations, and (iv) security for Auburn's said guaranty.
The Agent, the Banks and the Borrower have agreed to further amend and
restate the Restated Agreement, among other things, to (i) change the Maturity
Date and (ii) make provision for (a) the Borrower's acquisition of Burlen, (b)
the inclusion of Burlen's Eligible Accounts and Eligible Inventory in the
Borrowing Base, (c) the Guaranty by Burlen of the Obligations, and (d) security
for Burlen's said guaranty.
NOW, THEREFORE, it is agreed:
ARTICLE 1
DEFINITIONS
SECTION 1.1 GENERAL DEFINITIONS . The terms defined herein include
the plural as well as the singular, as the context may require. Except as
otherwise indicated, all agreements defined herein refer to the same as they may
from time to time be amended or supplemented or the terms thereof waived or
modified in accordance herewith or therewith. When used herein, the following
terms shall have the following meanings:
"ACCEPTANCE" and "ACCEPTANCES" shall have the meaning assigned to such
terms in Section 2.12 of this Agreement.
"ACCEPTANCE AVAILABILITY" shall have the meaning assigned to such term
in Section 2.12.1 of this Agreement.
"ACCEPTANCE DOCUMENTS" shall mean, with respect to any Acceptance, the
Acceptance and the request therefore as provided in Section 2.12.2 hereof, and
any other agreements, instruments, guarantees or other documents (whether
general in application or applicable only to such Acceptance) governing or
providing for (i) the rights and obligations of the parties concerned or at risk
with respect to such Acceptance, or (ii) any collateral security for any such
obligations, each as the same may be modified and supplemented and in effect
from time to time.
"ACCOUNT DEBTOR" shall mean the party who is obligated to any Loan Party
under an Account.
"ACCOUNTS" shall have the meaning assigned to such term in the Uniform
Commercial Code and in any event shall mean and include, all present and future
rights of each of the Loan Parties, as is applicable, to payment for goods sold
or leased or for services rendered, whether now existing or hereafter arising
and wherever located, and whether or not they have been earned by performance
including, without limitation, all Eligible Accounts (as herein defined), all
obligations owing to any Loan Party arising out of or in connection with all
guarantees and other security therefore, whether secured or unsecured, and all
Indebtedness owed to the Borrower by its Affiliates.
"ADVANCE" shall mean a Revolving Loan which the Borrower has requested
that the Banks make pursuant to a Notice of Advance.
"ADVANCE DATE" shall have the meaning assigned to such term in Section
2.1 of this Agreement.
"AFFILIATE" shall mean, as to any Person, any Person that directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, such Person. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (i) to vote thirty
(30%) percent or more of the securities having ordinary voting power for the
election of directors of such Person, or (ii) to direct or cause the direction
of the
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management and policies of such Person whether by contract or otherwise.
"AGENT" shall have the meaning set forth in the introduction to this
Agreement, or any successor agent as is provided for in Section 11.8 of this
Agreement.
"AGREEMENT" shall mean this Second Amended and Restated Credit and
Security Agreement, as same may be amended or restated from time to time.
"AUBURN" shall mean Auburn Hosiery ▇▇▇▇▇, Inc., a Kentucky Corporation.
"AUBURN COLLATERAL" shall mean all property and interests in property
now owned or hereafter acquired by Auburn in or upon which a Lien is granted to
or created in favor of the Banks by Auburn to secure payment of the Obligations,
pursuant to the Auburn Security Agreement.
"AUBURN SECURITY AGREEMENT" shall mean the Security Agreement dated as
of June 30, 2004 executed and delivered by Auburn pursuant to the Restated
Agreement.
"AUBURN SHARES" shall mean all of the issued and outstanding shares of
capital stock of Auburn.
"BANK" and "BANKS" shall mean respectively each Person identified on
Schedule 1.1 annexed, as same may be amended from time to time.
"BANK COMMITMENT" shall mean the Commitment of each Bank and its Pro
Rata Share of the Term Loan.
"BORROWER" shall have the meaning set forth in the Introduction to this
Agreement.
"BORROWING BASE" shall mean, as of any date of determination, an amount
equal to the sum of (i) eighty-five (85%) percent of the Eligible Accounts; plus
(ii) during the period (a) October 1 through February 28, the lesser of (1)
$36,000,000 or (2) fifty-five (55%) percent of the value of Eligible Inventory,
and (b) during the period March 1 through September 30 of each year, the lesser
of (1) $42,000,000 or (2) sixty-five (65%) percent of the Eligible Inventory;
which sum (the total of (i) and (ii)) shall be reduced by the amount, if any, by
which the sum of the Eligible Accounts of Auburn plus the Eligible Inventory of
Auburn exceeds the lesser of (a) $10,000,000, or (b) the amount of all
outstanding debt owing by Auburn to the Borrower. For the purposes of
determining the Borrowing Base, Eligible Inventory shall (I) be valued at the
lower of cost or market, (II) include only the lesser of (a) fifty-five (55%)
percent or sixty-five (65%) percent, as is applicable, of the Eligible Inventory
of Auburn consisting of "▇▇▇▇▇▇ Sports Socks" or (b) Inventory of "▇▇▇▇▇▇ Sports
Socks" valued at $4,000,000, and (III) fifty-five (55%) percent or sixty-five
(65%) percent, as applicable, of the Eligible Inventory of Auburn consisting of
Converse, Inc. licensed products may be limited as is provided in Section 7.7.3
of this Agreement.
"BURLEN" shall mean Burlen Corp., a Georgia corporation.
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"BURLEN COLLATERAL" shall mean all property and interests in property
now owned or hereafter acquired by Burlen in or upon which a Lien is granted to
or created in favor of the Banks by Burlen to secure payment of the Obligations,
pursuant to the Security Agreement provided for in Section 3.1.4 of this
Agreement.
"BURLEN JUDGMENT LIEN" shall mean the judgment lien against Burlen
arising out of a preference claim in the approximate amount of $20,000.
"BURLEN SECURITY AGREEMENT" shall have the meaning defined in Section
3.1.4 of this Agreement.
"BURLEN SHARES" shall mean all of the issued and outstanding shares of
capital stock of Burlen.
"BUSINESS DAY" shall mean, any day on which commercial banks in both New
York, New York and Israel are required by law to be open for business.
"CAPITALIZED LEASE OBLIGATIONS" shall mean all obligations of a lessee
which, in accordance with GAAP, should be capitalized on the books of such
lessee.
"CLOSING DATE" shall mean the date on which all conditions to be met, as
provided in Section 3.1, shall have been satisfied.
"COLLATERAL" shall mean, all property and interests in property now
owned or hereafter acquired by the Borrower in or upon which a Lien is granted
to or created in favor of the Banks by the Borrower to secure payment of the
Obligations, whether under Article 5 or any other provision of this Agreement,
under any of the other Loan Documents, or under any other documents, instruments
or writings executed by or on behalf of the Borrower and delivered to the Agent
or any of the Banks.
"COMMITMENT" shall mean each Bank's obligation to make Revolving Loans,
and its obligations with respect to Letters of Credit and Acceptances.
"DEFAULT" shall mean the occurrence of any event or circumstance which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default.
"DELTA GALIL" shall mean, Delta Galil Industries Ltd., an Israeli
corporation.
"DELTA GALIL GUARANTEES" shall have the meaning assigned to such term in
Section 3.1.9 of this Agreement.
"EBITDA" shall mean, with respect to any period, the net income of the
Loan Parties, on a consolidated basis, after taxes for such period (excluding
any after-tax gains or losses on the sale of assets (other than the sale of
Inventory in the ordinary course of business) and excluding other after-tax
extraordinary gains or losses) PLUS interest expense,
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income tax expense, depreciation and amortization for such period, PLUS or MINUS
any other non-cash charges or gains which have been subtracted or added in
calculating net income after taxes for such period, for all of the Loan Parties,
on a consolidated basis. For the purposes of the calculation of EBITDA
hereunder, as of June 30, 2005, the EBITDA generated by Burlen for the period
from June 30, 2004 through December 31, 2004 will be added. In addition, for the
purposes of calculating EBITDA hereunder as of September 30, 2004, the EBITDA of
Burlen for the period from September 30, 2004 through December 31, 2004 will be
added.
"ELIGIBLE ACCOUNTS" shall mean Accounts which consist of ordinary trade
accounts receivable owned by any of the Loan Parties payable in cash in United
States dollars and arising out of the final sale of Eligible Inventory in the
ordinary course of a Loan Party's business as presently conducted other than:
(i) any Account with respect to which the goods covered thereby have not been
delivered or with respect to which such Loan Party failed to issue an original
invoice within two (2) days after delivery of such goods; (ii) any Account with
respect to which the Banks do not have a valid perfected Lien (iii) any Account
which is subject to Liens or other claims of another Person (other than the
Permitted Encumbrances) (iv) any Account which is not due and payable,
absolutely and unconditionally, within one hundred twenty (120) days from the
date of the original invoice; (v) any Account which is not paid within sixty
(60) days from its due date; (vi) unless otherwise provided in the next
subsection or as agreed by the Agent, so much of the Accounts of an Account
Debtor as exceed ten (10%) percent of the Eligible Accounts; (vii) so much of
the Accounts of (A) each of Walmart, Inc. and Sam's Club division of Walmart,
Inc. as exceed forty-five (45%) percent of the Eligible Accounts; provided that
all such Eligible Accounts do not exceed seventy (70%) percent of the Eligible
Accounts, (B) Target Stores, Inc. as exceed forty-five (45%) percent of the
Eligible Accounts, (C) ▇.▇. ▇▇▇▇▇, Inc. as exceed thirty-five (35%) percent of
the Eligible Accounts, and (D) K-Mart, Inc. and/or Sears ▇▇▇▇▇▇▇ & Co., Inc.
and/or Lands End, Inc. as exceed the lesser of $10,000,000, or thirty-five (35%)
percent of the Eligible Accounts, (viii) any Account resulting from goods which
are shipped or delivered to the Account Debtor on an absolute sale basis or
goods shipped on a ▇▇▇▇ and hold sale basis, a consignment sale basis, a
guaranteed sale basis, a sale or return basis, or on the basis of any other
similar understanding; (ix) any Account with respect to which the Account Debtor
is an Affiliate of the Borrower; (x) any Account with respect to which the
Account Debtor is the United States of America or any department, agency or
instrumentality thereof; (xi) any Account with respect to which the Account
Debtor is not a United States Person or is not located in the United States,
unless the sale is on letter of credit or acceptance terms; (xii) any Account
with respect to which the Account Debtor is the subject of bankruptcy or a
similar insolvency proceeding, or has made an assignment for the benefit of
creditors, or whose assets have been conveyed to a receiver or trustee, or who
has failed or suspended or gone out of business; (xiii) any Account which is
evidenced by chattel paper, a promissory note or other instrument; (xiv) any
Account with respect to which the terms or conditions prohibit or restrict
assignment or collection rights; (xv) any Account which does not conform at the
time to the Borrower's representations and warranties; and (xvi) any Account for
which the prospect of payment is or will be impaired, in the reasonable
determination of the Agent.
"ELIGIBLE INVENTORY" shall mean all Inventory, other than
work-in-progress, which is part of a Loan Party's current line of goods and not
seconds or returns, and in which the Agent, as agent for the Banks a valid Lien
perfected within the United States (subject to the next sentence),
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and which is free of all Liens or claims of other Persons (other than Permitted
Encumbrances) and which is not, in the Agent's opinion, unmerchantable, and
which the Agent in its sole judgment, shall deem Eligible Inventory based on
such considerations as the Banks may from time to time give the Agent by notice.
Eligible Inventory shall include finished goods in-transit for which title has
passed to a Loan Party, provided same are insured to the full value thereof, or
(i) in the case of an Issuer, having issued a Letter of Credit, for which the
Agent shall have in its possession all negotiable bills of lading properly
endorsed and all non-negotiable bills of lading issued in the Agent's or any
Bank's name; and (ii) in the case of payment being made by sight draft, such
bills of lading shall be held by the Agent or any Bank; PROVIDED, HOWEVER, that
in each case such bills of lading shall be delivered to the applicable Loan
Party, in the ordinary course of business, in connection with the clearance of
such Inventory through the United States customs.
"ENVIRONMENT" means any surface or subsurface water, water vapor,
surface or subsurface land, soil, sand, gravel, stone, rock, air, fish,
wildlife, animal life, vegetation, micro-organisms and all other natural
resources.
"ENVIRONMENTAL COMPLAINT" shall have the meaning set forth in Section
6.19 of this Agreement.
"ENVIRONMENTAL LAW" shall mean any law, ordinance, rule, regulation or
requirement, issued by any federal, foreign, state or local governmental or
quasi-governmental authority, whether now existing or hereinafter enacted, and
any judicial or administrative interpretations thereof, regulating the disposal,
distribution generation, handling, manufacture, possession, processing,
production, sale, storage, transport, treatment or use of any Hazardous
Substance or relating to the protection of the Environment, including, without
limitation, any health or safety laws directly related to the protection of the
Environment.
"ENVIRONMENTAL PERMITS" shall mean all permits, licenses, certificates,
approvals, authorizations, consents or registrations required by any applicable
Environmental Law in connection with the ownership, use and/or operation of the
Premises, including without limitation those required for the disposal,
distribution, generation, handling, manufacture, possession, processing,
production, sale, storage, treatment, transport or use of any Hazardous
Substance.
"EQUIPMENT" shall have the meaning set forth in the Uniform Commercial
Code and in any event shall mean and include all machinery, all manufacturing,
distribution, selling, data processing, office and other equipment, all
furniture, fixtures, trade fixtures, tools, tooling, molds, dies and vehicles,
and all other goods other than Inventory, and in each case whether now owned or
hereafter acquired by a Loan Party wherever located, and accessions and
additions thereto, parts and appurtenances thereof, substitutions therefor and
replacements thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EUROCURRENCY LIABILITIES" shall have the meaning specified in
Regulation D of the Board
6
of Governors of the Federal Reserve System, as in effect from time to time.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 9.1 of
this Agreement.
"FEDERAL RESERVE BOARD" shall mean the Board of Governors of the Federal
Reserve System or its successor.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section 6.13
of this Agreement.
"FIXED CHARGES" shall mean for any period, without duplication,
scheduled payments of principal during the applicable period with respect to all
Indebtedness of the Borrower, on a consolidated basis with the other Loan
Parties, for borrowed money, plus scheduled payments of the principal during the
applicable period with respect to all Capitalized Lease Obligations of the
Borrower, on a consolidated basis with the other Loan Parties, plus scheduled
payments of interest during the applicable period with respect to all
Indebtedness of the Borrower, on a consolidated basis with the other Loan
Parties, for borrowed money including Capitalized Lease Obligations, plus
unfinanced capital expenditures of the Borrower, on a consolidated basis with
the other Loan Parties, during the applicable period, plus payments during the
applicable period in respect of income or franchise taxes of the Borrower, on a
consolidated basis with the other Loan Parties.
"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession which are applicable to the circumstances as of the
date of determination.
"GENERAL INTANGIBLES" shall have the meaning set forth in the Uniform
Commercial Code, and in any event shall mean and include all rights, interests,
choses in action, causes of action and all other intangible personal property of
the Loan Parties of every kind and nature (other than Accounts), now owned or
hereafter acquired by any Loan Party, including, without limitation, corporate
or other business records, loans and other obligations receivable, inventions,
designs, patents, patent applications, provisional patent applications,
manufacturing processes and procedures, proprietary technical information,
quality control procedures, confidential business information, know-how,
copyright applications, computer programs and software, service marks,
trademarks, trade names, trade secrets, goodwill, registrations, copyrights,
license rights, franchises, customer lists, customer and supplier contracts,
firm sale orders, partnerships and joint ventures, other contracts and contract
rights, tax refunds and tax refund claims, deposit accounts (general or special)
with, and all credits and claims against, any financial institution, rights and
claims against carriers and shippers, rights to indemnification, rights to
proceeds of insurance of which a Loan Party is beneficiary, and any letter of
credit, guaranty or Liens held by or granted to any Loan Party to secure payment
of any obligation owing by any Person to any Loan Party, and the like, however
and wherever arising.
7
"GEORGIA PROPERTIES" means the premises located at (i) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, and (ii) ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
"GEORGIA REAL ESTATE DOCUMENTATION" shall have the meaning set forth in
Section 3.2.1 of this Agreement.
"GUARANTOR" and "GUARANTORS" mean respectively (i) each of Auburn,
Burlen, and Delta Galil, and (ii) all of Auburn, Burlen, Delta Galil, and any
new subsidiary of the Borrower, Auburn or Burlen (as permitted in Section 8.13
of this Agreement) that does not become a Borrower as is provided therein.
"HAZARDOUS SUBSTANCE" shall mean any material whatsoever, which is or
may potentially be harmful to the Environment, or to the health or safety of
human or animal life or vegetation, regardless of whether such material be found
on or below the surface of the ground, in any surface or underground water,
airborne in ambient air or in the air inside of any structure built or located
upon or below the surface of the ground, or in any machinery, equipment or
inventory located or used in any such structure, including but not limited to
all hazardous substances, hazardous materials, hazardous wastes, toxic
substances, infectious wastes, medical wastes, imminently hazardous substances,
pollutants and contaminants from time to time defined, listed, identified,
designated, or classified as such under any Environmental Law regardless of the
quantity of any such material.
"HONDURAS SHARES" means the shares of capital stock of Wundies de
Honduras.
"IMPROVEMENTS" shall have the meaning set forth in Section 6.20.1 of
this Agreement.
"INDEBTEDNESS" shall mean with respect to any specified Person, (i) all
indebtedness of such Person for borrowed money (including, without limitation,
reimbursement and all other obligations with respect to surety bonds, letters of
credit and bankers' acceptances, whether or not matured) or for the deferred
purchase price of property or services, (ii) all obligations of such Person
evidenced by notes, bonds, debentures or similar instruments, (iii) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies under such agreement in the event of
default are limited to repossession on sale of any such property), (iv) all
Capitalized Lease Obligations of such Person, (v) all contingent obligations,
(vi) all indebtedness referred to in clause (i), (ii), (iii), (iv) or (v) above
secured by (or for which the holder of such indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and contracts rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such indebtedness, and (vii) the Obligations.
"INTEREST CHARGES" shall mean, for any period, the total interest
expense of the Borrower during such period with respect to all Indebtedness
determined in accordance with GAAP (including the interest component of lease
payments), PROVIDED, HOWEVER, that such term shall not include any amortization
of deferred financing charges that might be included in interest expense in
accordance with GAAP.
8
"INTEREST PERIOD" shall mean with respect to (i) any LIBOR Rate Loan (A)
initially, the period commencing on the Advance Date with respect to such LIBOR
Rate Loan and ending one (1), two (2) or three (3) months thereafter (or such
other period as shall be agreed to by the Agent, but in no event shall such
period be greater than eleven (11) months), as selected by the Borrower in its
Notice of Advance, given with respect thereto; and (B) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such LIBOR Rate Loan, and ending one (1), two (2) or three (3) months thereafter
(or such other period as shall be agreed to by the Agent, but in no event shall
such period be greater than eleven (11) months), as selected by the Borrower by
a notice of continuation with respect thereto (or if no notice of continuation
is given, the Interest Period shall be the same as the prior Interest Period);
and (ii) the Term Loan, each period commencing on the last day of the next
preceding Interest Period applicable to the Term Loan and ending three (3)
months thereafter. All of the foregoing provisions relating to Interest Periods
are subject to the following: (i) if any Interest Period would otherwise end on
a day that is not a LIBOR Business Day, such Interest Period shall be extended
to the next succeeding LIBOR Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding LIBOR Business
Day; (ii) if any Interest Period would otherwise extend beyond (x) the Maturity
Date in the case of a LIBOR Rate Loan, it shall end on the Maturity Date or (y)
December 1, 2009 in the case of the Term Loan, it shall end on December 1, 2009;
(iii) any Interest Period that begins on the last LIBOR Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month; and (iv) the Borrower shall select Interest
Periods so as not to require a payment or prepayment of any LIBOR Rate Loan as
the case may be, during an Interest Period applicable thereto.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"INVENTORY" shall have the meaning set forth in the Uniform Commercial
Code and in any event shall mean and include all goods, merchandise and other
personal property now owned or hereafter acquired by any Loan Party (wherever
located, whether in the possession of a Loan Party or of a bailee or other
Person) which are held to be furnished under any contract of service or for sale
or other disposition, all raw materials, work in process, supplies, whole goods,
spare parts and components, materials and supplies of any kind which are or
might be used or consumed in a Loan Party's business or used in connection with
the manufacture, packing, shipping, advertising, selling or finishing of any
such goods, all documents of title representing the same, and all records, files
and writings with respect thereto, and shall include such property the sale or
other disposition of which has given rise to Accounts and which has been
returned to or repossessed or stopped in transit by a Loan Party.
"ISSUER" shall mean any Bank which issues a Letter of Credit and/or
accepts a draft pursuant to the terms hereof.
"LEASES" shall mean the leases pursuant to which the premises located at
(i) ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, and (ii) ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ have been demised to the Borrower.
9
"LETTER OF CREDIT" shall have the meaning set forth in Section 2.11.1 of
this Agreement.
"LIBOR BUSINESS DAY" shall mean any day on which the Banks are open for
business in New York City and on which commercial banks in the City of London,
England are open for dealings in U.S. dollar deposits in the London Interbank
Market.
"LIBOR RATE" shall mean relative to any Interest Period, the rate
(rounded to the next higher 1/16th of 1%) for U.S. dollar deposits of the
maturity corresponding to the Interest Period, as quoted by the British Bankers
Association in London as its "LIBOR" rate for U.S. dollar deposits as of 11:00
a.m. London time, on the second LIBOR Business Day before the relevant Interest
Period begins; PROVIDED, HOWEVER, that if the Agent adopts generally in its
business a different rate quoting system or service for obtaining the rate of
interest commonly know as "LIBOR" for U.S. dollar deposits, then upon giving
prompt notice to the Borrower such alternative rate quoting system or service
shall be utilized for determining "LIBOR" in lieu of the rate quoted by the
British Bankers Association.
"LIBOR RATE LOAN" shall mean a Revolving Loan on which interest shall be
charged at the Revolving LIBOR Loan Rate.
"LIEN" shall mean a security interest, collateral assignment, deed of
trust or mortgage or assignment or any other encumbrance upon or charge against
or interest in property to secure payment of a debt or performance of an
obligation, including, but not limited to, the retained or security title of a
conditional vendor or of a lessor under a Capitalized Lease Obligation, on
assignment of a right to receive income or a sale or other transfer of an
Account, chattel paper or General Intangible.
"LOAN" AND "LOANS" shall mean, respectively, (i) any Revolving Loan and
the Term Loan, and (ii) all of the foregoing.
"LOAN DOCUMENTS" shall mean, this Agreement, the Revolving Note, the
Term Note, the Pledge Agreement, the Real Estate Collateralization Documents,
the Security Agreements, the Trademark Security Agreements, the guarantees and
any other agreements executed and delivered by each Guarantor, and all other
agreements, instruments and documents, including, without limitation, security
agreements, loan agreements, notes, mortgages, deeds of trust, intercreditor
agreements, assignment of leases, pledges, powers of attorney, consents,
assignments, collateral assignments, letter agreements, contracts, notices,
financing statements, account opening documents, and all other writings, all of
which must be in form and substance satisfactory to the Agent, heretofore, now,
or hereafter executed by or on behalf of the Borrower or any Guarantor and
delivered to the Agent or any Bank pursuant to or in furtherance of this
Agreement, together with all agreements, instruments and documents referred to
therein or contemplated thereby and as now in effect or as at any time amended,
modified or changed.
"LOAN PARTY" and "LOAN PARTIES" shall mean respectively (i) each of the
Borrower, Auburn and Burlen, and (ii) all of the Borrower, Auburn and Burlen.
10
"MATERIAL ADVERSE EFFECT" shall mean the results of one or more
circumstances or events, financial or otherwise, which individually or in the
aggregate would have a material adverse effect on the financial condition,
results of operations or business of any Loan Party or Guarantor in the sole
discretion of the Banks and with respect to which the Banks have given the
Borrower notice.
"MATURITY DATE" shall mean the earliest of (i) January 15, 2006, and
(ii) the date of an acceleration pursuant to Section 10.1 of this Agreement.
"MERGER" shall have the meaning set forth in the Introduction to this
Agreement.
"MULTIEMPLOYER PLAN" shall mean a Plan described in Section 4001(a)(3)
of ERISA.
"NET WORTH" shall mean with respect to any specified Person, as at any
date of determination, the Total Assets of such Person including, without
limitation, goodwill, franchises, licenses, patents, trademarks, trade names,
copyrights, service marks and brand names, after subtracting therefrom all
amounts due from Affiliates and employees of such Person, MINUS Total
Liabilities of such Person (excluding any debt fully subordinated to the
Obligations on written terms satisfactory to the Banks), in each case determined
in accordance with GAAP.
"NOTES" shall mean the Revolving Note and the Term Note.
"NOTICE OF ADVANCE" shall have the meaning set forth in Section 2.2 of
this Agreement.
"OBLIGATIONS" shall mean, all present and future Indebtedness and other
liabilities and obligations of any Loan Party, to the Agent, any Bank or an
Affiliate of any Bank of every type and description, at any time arising under
or with respect to this Agreement or any of the other Loan Documents or the
transactions contemplated hereby or thereby or any other extension of credit or
transaction of any type or nature, whether or not presently contemplated, that
is made or entered into by a Bank or any Affiliate of a Bank in connection with
this Agreement, including all overdrafts of the Borrower.
"OUTSTANDING REVOLVING LOAN BALANCE" shall mean the amount of all
Obligations in connection with the Revolving Loans outstanding at any given time
and pursuant to this Agreement, but excluding any interest, fees or charges not
yet due.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED ENCUMBRANCES" shall mean as to any property and assets of any
Loan Party (i) liens incurred or deposits made in the ordinary course of
business in connection with governmental requirements respecting workmen's
compensation, unemployment insurance, social security and other like laws, (ii)
Liens for taxes, assessments or other governmental charges not delinquent, or
being contested in good faith and by appropriate proceedings and with respect to
which proper reserves have been taken by the applicable Loan Party; PROVIDED,
11
HOWEVER, that no enforcement of such Lien shall be occurring or a stay of
enforcement of any such Lien shall be in effect; (iii) Liens disclosed in the
consolidated financial statements of the Borrower, the existence of which the
Required Lenders have specifically consented to in writing; (iv) easements,
rights of way and other encumbrances on title to real property; (v) deposits or
pledges to secure bids, tenders, contracts (other than contracts for the payment
of money), leases, statutory obligations, surety and appeal bonds and other
obligations of like nature arising in the ordinary course of a Loan Party's
business not to exceed $250,000 in the aggregate; (vi) judgment Liens that have
been stayed or bonded, the Burlen Judgment Lien and mechanics', workers',
materialmen's or other like Liens arising in the ordinary course of a Loan
Party's business with respect to obligations that are not over-due for a period
of more than thirty (30) days or that are being contested in good faith by a
Loan Party, with appropriate reserves set aside, such amount of reserves to be
established by the Agent in its commercially reasonable discretion and with
respect to Liens in excess of $250,000 if in effect for more than thirty (30)
days, fully bonded; (vii) Liens placed upon fixed assets hereafter acquired to
secure a portion of the purchase price thereof, PROVIDED, HOWEVER, that any such
Lien shall not encumber any other property of a Loan Party and (viii) Liens
securing the Obligations as provided in this Agreement and the other Loan
Documents. In addition, Permitted Encumbrances shall also mean as to the Leases
(i) the interest or title of a lessor or sublessor under any Lease, (ii) a
restriction or encumbrance that the interest of title of such lessor or
sublessor may be subject to (including without limitation, a ground lease or
other prior lease of the demised premises, mortgages, mechanics liens, tax liens
and easements), or (iii) subordination of the interest of the lessee or
sublessee under such Lease to any restrictions or encumbrance referred to in the
preceding sub-clause (ii).
"PERSON" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, entity, party or government, including,
without limitation, any instrumentality, division, agency, body or department
thereof.
"PLAN" shall mean any "employee pension benefit plan" as defined in
Section 3(2) of ERISA maintained by the Borrower or any Affiliate of the
Borrower or to which the Borrower or an Affiliate of the Borrower is required to
contribute.
"PLEDGE AGREEMENT" shall mean that certain Pledge Agreement dated as of
September 11, 2000 between the Agent and Wundies Enterprises, Inc., as amended.
"PREMISES" shall mean the land surface and the entire subsurface, all
surface water and subsurface water, whether flowing or stagnant, the ambient
air, all structures, fixtures and buildings located, situated or erected on the
land, and all machinery and equipment located at or in connection with any such
structure, now or subsequently used, occupied, possessed, owned, operated or
managed by any Loan Party or its Affiliates, including the Real Estate Assets.
"PRIME RATE" shall mean a fluctuating interest rate per annum which
shall at all times be equal to the rate of interest announced in New York, New
York, from time to time, as the prime rate of the Agent acting as a Bank (which
such Bank may refer to as its "reference rate", "base rate", or by some other
reference) which is not necessarily the lowest or best rate charged to
12
creditworthy customers.
"PRIME RATE LOAN" shall mean a Revolving Loan on which interest shall be
charged at the Prime Rate.
"PRO RATA SHARE" shall mean with respect to each Bank, as at any date
same is to be determined, the percent shown on Schedule 1.1 annexed hereto;
unless there is an assignment by a Bank of a portion of its Commitment in which
event each Bank's Pro Rata Share shall be as set forth in the Register provided
for in Section 12.14.5 of this Agreement.
"REAL ESTATE ASSETS" shall mean (i) the Borrower's fee title estate in
and to premises (a) ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, (b) ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, and (c) ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, (ii) the Borrower's leasehold estate in and to the
premises demised under the Leases, (iii) Auburn's fee title estate in and to
premises ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, and in and to premises
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, and (iv) Burlen's fee title estate in
and to the Georgia Properties.
"REAL ESTATE COLLATERALIZATION DOCUMENTATION" shall mean the mortgages
and deeds of trust, assignments and/or UCC-1 Financing Statements and other
documents relating to the Real Estate Assets executed and delivered pursuant to
the Original Agreement, the June 14, 2002 Amendment thereto, and pursuant to
this Agreement.
"RELEASE" shall mean any discharging, disposing, emitting, leaking,
pumping, pouring, emptying, injecting, escaping, leaching, dumping or spilling
of any Hazardous Substance into the Environment (including without limitation
the abandonment or discarding of barrels, containers, and other closed
receptacles).
"REQUIRED LENDERS" shall mean, as at any date at which the same is to be
determined, Banks having, in the aggregate, a Pro Rata Share which is more than
sixty seven (67%) percent.
"REVOLVING FACILITY AMOUNT" shall mean at any time at which same is to
be determined, the lesser of (i) the Borrowing Base, or (ii) $60,000,000; in
either case minus the face amount of all Letters of Credit and Acceptances then
outstanding.
"REVOLVING LIBOR LOAN RATE" shall mean the LIBOR Rate plus one and
fifteen one hundredth (1.15%) percent.
"REVOLVING LOAN" shall have the meaning set forth in Section 2.1 of this
Agreement.
"REVOLVING LOAN COMMITMENT" shall mean the sum of $60,000,000.
"REVOLVING NOTE" shall have the meaning set forth in Section 2.1 of this
Agreement.
"ROLL OVER DATE" applicable to a particular Interest Period shall mean
the last day of such Interest Period.
13
"SECURITY AGREEMENT" and "SECURITY AGREEMENTS" shall mean respectively
(i) each of the Auburn Security Agreement and the Burlen Security Agreement, and
(ii) both the Auburn Security Agreement and Burlen Security Agreement.
"TERM LOAN" shall have the meaning set forth in Section 2.4.2 of this
Agreement.
"TERM LOAN RATE" shall mean the LIBOR Rate plus one and four tenths
(1.40%) percent.
"TERM NOTE" shall have the meaning set forth in Section 2.4.2 of this
Agreement.
"TOTAL ASSETS" shall mean all assets, including intangible assets (if
owned on the date hereof, valued as provided in the Borrower's most recent
Financial Statement, and if acquired after the date hereof, valued at cost)
appearing on the assets side of the balance sheet, in accordance with GAAP.
"TOTAL LIABILITIES" shall mean all liabilities, including capitalized
leases and all reserves for deferred taxes and other deferred sums appearing on
the liabilities side of the balance sheet, in accordance with GAAP.
"TRADEMARK SECURITY AGREEMENTS" shall mean the Amended and Restated
Trademark Security Agreement made by the Borrower and the Trademark Security
Agreement made by Auburn, each dated as of June 30, 2004, and the Trademark
Security Agreement made by Burlen, as provided in Section 3.1.4 of this
Agreement.
"UNIFORM COMMERCIAL CODE" shall have the meaning set forth in Section
1.3 of this Agreement.
"WUNDIES DE HONDURAS " shall mean Wundies de Honduras S.A. de C.V., a
Honduras corporation.
SECTION 1.2 ACCOUNTING TERMS. Any accounting terms used in this
Agreement which are not specifically defined herein shall have the meanings
customarily given them in accordance with GAAP.
SECTION 1.3 TERMS DEFINED IN UNIFORM COMMERCIAL CODE. All other
terms contained in this Agreement (and which are not otherwise specifically
defined herein) shall have the meanings provided by the Uniform Commercial Code
of the State of New York (the "Uniform Commercial Code") in effect as of the
Closing Date to the extent the same are used or defined therein, and all
references to the Uniform Commercial Code shall mean the Uniform Commercial Code
as in effect on the Closing Date.
14
ARTICLE 2
CREDIT FACILITY
SECTION 2.1 REVOLVING LOAN FACILITY. Subject to the terms and
conditions of this Agreement, each of the Banks, severally and not jointly,
shall make revolving loans available to the Borrower in the following manner.
During the period from the date hereof to and including such date as is thirty
(30) days prior to the Maturity Date, each Bank will make revolving loans (each
a "Revolving Loan" and collectively the "Revolving Loans ") to the Borrower in
amounts not to exceed such Banks' Pro Rata Share which, when added to the then
Outstanding Revolving Loan Balance, do not exceed the then effective Revolving
Facility Amount. The date a Revolving Loan is made is referred to as the
"Advance Date". The Borrower may borrow, repay and reborrow the Revolving Loans
subject to the terms of this Agreement. The Borrower's Obligations with respect
to each Advance shall be outstanding, due and enforceable in accordance with the
terms of the third amended and restated revolving note, duly executed by the
Borrower, dated as of the Closing Date, substantially in the form annexed hereto
as EXHIBIT "A" (the "Revolving Note") delivered and payable to the Agent as
agent for the Banks in the principal amount of $60,000,000. The Revolving Note
amends, restates and replaces the two (2) outstanding second amended and
restated revolving notes made by the Borrower, one to the order of each Original
Lender each of which is hereby cancelled, but the Revolving Note does not
extinguish or negate the debt evidenced thereby. Each Bank shall fund each
Revolving Loan through the Agent as provided herein. The Agent on behalf of each
Bank, shall, and is hereby authorized by the Borrower to, endorse on the
schedule attached to the Revolving Note (or on a continuation of such schedule
attached to the Revolving Note and made a part thereof) or in the Agent's books
and records evidencing such Revolving Loan, an appropriate notation evidencing
the date and amount of each Revolving Loan to the Borrower (including all
Revolving Loans outstanding as of the Closing Date) as well as the date and
amount of each payment and prepayment with respect thereto; PROVIDED, HOWEVER,
that the failure of the Agent to make such a notation on a Revolving Note shall
not affect any Obligations of the Borrower under the Revolving Note. Any such
notation shall be presumptively correct as to the date and amount of the
Revolving Loan or portion thereof, or payment or prepayment of principal or
interest thereon, absent manifest error.
SECTION 2.2 MAKING THE REVOLVING LOANS. Each Revolving Loan shall be
made on notice (a "Notice of Advance"), given by the Borrower to the Agent and
the Banks not later than 11:00 A.M. (New York City time) on the third Business
Day prior to the date of the proposed Revolving Loan, if it is to be a LIBOR
Rate Loan, or one (1) Business Day prior to the date of the proposed Revolving
Loan if it is to be a Prime Rate Loan. Each Notice of Advance shall be in the
form of "Exhibit B" annexed hereto. Each Notice of Advance shall specify therein
(i) the date of such proposed Advance, (ii) the aggregate amount of such
proposed Advance, (iii) whether the Advance is to be a Prime Rate Loan or LIBOR
Rate Loan, and (iv) if the Revolving Loan is to be a LIBOR Rate Loan, the
initial Interest Period for such Advance. Each Notice of Advance shall be
irrevocable and binding on the Borrower. The Agent on the same day it receives a
Notice of Advance shall advise each Bank of such Bank's Pro Rata Share of the
requested Advance (such Bank's Revolving Loan). The Borrower shall indemnify the
Agent and each Bank against any loss, cost or expense incurred by any of them as
a result of any failure of
15
the Borrower to fulfill, on or before the date specified in such Notice of
Advance for such proposed Advance, the applicable conditions set forth in
Article III, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Bank to fund any
Revolving Loan to be made by such Bank as part of such proposed Advance. Each
Revolving Loan shall be in a minimum aggregate principal amount of $1,000,000 or
in integral multiples of $100,000 in excess thereof. The Borrower may not give
more than five (5) Notices of Advance in any one month. All Revolving Loans
comprising the same borrowing shall be made by each Bank simultaneously and
proportionately to their respective Pro Rata Shares, it being understood that no
Bank shall be responsible for any failure by any other Bank to perform its
obligation to make a Revolving Loan hereunder, nor shall the commitment of any
Bank be increased or decreased as a result of any such failure. If any Bank
fails to perform its obligation to make a Revolving Loan, the Borrower shall be
given notice thereof. Each Bank shall make its Revolving Loan on the proposed
date thereof by paying the amount required to the Agent in New York, New York in
immediately available funds not later than noon, New York City time, and the
Agent shall as soon as practicable, but in no event later than noon, New York
City time on the proposed date thereof, credit the amounts so received to the
general deposit account of the Borrower with the Agent in immediately available
funds or, if the Revolving Loans are not to be made on such date because any
condition precedent to a borrowing herein specified is not met, promptly return
the amounts so received to the respective Banks.
SECTION 2.3 REVOLVING LOAN PAYMENTS.
2.3.1 PAYMENTS. The aggregate unpaid principal amount of the Revolving
Loans shall be due and payable in full, without notice or demand to the Borrower
on the Maturity Date and shall be payable to the Agent in immediately available
funds without offset or counterclaim. The Borrower hereby authorizes the Agent
to charge any of its accounts with the Agent for any amount due and payable.
Absent the occurrence of an Event of Default all payments shall be applied first
to fees and expenses, than to interest on the Obligations, and the balance to
principal in accordance with this Agreement. Whenever any payment due hereunder,
or under any other Loan Document, shall be stated to be due on a day other than
a Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest. Upon receipt of payment from the Borrower, of principal or
interest, the Agent shall pay each Bank its Pro Rata Share on the same day as
the Borrower's said payment if such payment is received by the Agent before 2:00
p.m, and otherwise on the next Business Day (which for the purposes of this
Section shall mean any day on which COMMERCIAL banks are open for business in
New York, New York). If any payment from the Borrower is received after 2 p.m.,
the Borrower shall be responsible for interest until the next Business Day.
2.3.2 MANDATORY PAYMENTS OF REVOLVING LOANS. If at any time the
Outstanding Revolving Loan Balance shall exceed the Revolving Facility Amount,
the Borrower, without demand or notice, shall immediately pay to the Agent such
amount as may be necessary to eliminate such excess, and the Agent shall pay
each Bank its Pro Rata Share thereof, as is provided in Section 2.3.1 of this
Agreement.
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SECTION 2.4 THE TERM LOAN.
2.4.1 OUTSTANDING TERM LOANS. On September 11, 2000, each Original
Lender made a term loan to the Original Borrowers in the principal amount of
$5,000,000. The Original Borrowers evidenced their obligation to pay the
interest and principal on each term loan by executing and delivering two (2)
term notes, one (1) payable to each Original Lender, each dated as of September
11, 2000, and in the principal amount of $5,000,000 which notes were amended and
restated as of June 14, 2002. On January 5, 2001 each Original Lender made a
second term loan to the Original Borrowers in the principal amount of
$10,000,000. The Original Borrowers evidenced their obligation to pay the
principal of and interest on each second term loan by executing and delivering
two (2) term notes, one (1) payable to each Original Lender, each dated as of
January 5, 2001 and in the principal amount of $10,000,000, which notes were
amended and restated as of June 14, 2002. On June 14, 2002 each Original Lender
made a third term loan to the Borrower in the principal amount of $2,500,000.
The Borrower evidenced its obligation to pay the principal of and interest on
each third term loan by executing and delivering two (2) term notes, one (1)
payable to each Original Lender, each dated as of the June 14, 2002, and in the
principal amount of $2,500,000. The Borrower hereby confirms that (i) the
aggregate principal balance of the term loans made to the Original Borrowers and
to it by the Original Lenders, as of the Closing Date is $7,428,600, (ii) each
note evidencing the said term loans is its valid and binding agreement, and
(iii) it has no defense, claim, or offset to payment of any of the said term
loans.
2.4.2 NEW TERM LOAN AND CONSOLIDATION. Concurrently with the execution
and delivery of this Agreement, the Banks through the Agent, are making an
additional term loan to the Borrower in the principal amount of $62,571,400, to
which amount is being added the aggregate principal balance of the term loans
made by the Original Lenders to the Original Borrowers and to the Borrower, as
described in Section 2.4.1 hereof. Accordingly, the principal amount of the term
loan as of the Closing Date is $70,000,000 (the "Term Loan"). The principal
amount of the Term Loan shall be repaid by the Borrower to the Agent, as agent
for the Banks, in twenty (20) consecutive quarterly installments due and payable
on the first day of each March, June, September and December commencing March
2005. Each such installment shall be in the principal amount of $3,500,000.
Concurrently the Borrower is evidencing its obligation to pay the principal or
interest on the Term Loan by executing and delivering a term note dated as of
even date herewith in the principal amount of $70,000,000 substantially in the
form of the term note annexed hereto as Exhibit C (the "Term Note"). The Term
Note incorporates and amends, restates and replaces each of the term notes
referred to in Section 2.4.1 of this Agreement, each of which is hereby
cancelled, but the Term Note which in no way extinguishes or negates the
Obligations evidenced thereby. If any payment from the Borrower is received
after 2 p.m., the Borrower shall be responsible for interest until the next
Business Day.
2.4.3 PAYMENTS. Absent the occurrence of an Event of Default, all
payments shall be applied first to fees and expenses, then to interest on the
Obligations, and the balance to principal in accordance with this Agreement. The
Borrower shall make all payments of principal and interest on the Term Loan in
immediately available funds to the Agent without offset or counterclaim.
Whenever any payment due on the Term Loan or under any other Loan Document,
shall be stated to be due on a day other than a Business Day, such payment shall
be
17
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest. Upon receipt of
payment from the Borrower, of principal and/or interest, the Agent shall pay
each Bank its Pro Rata Share on the same day as the Borrower's said payment, if
received by the Agent before noon and otherwise on the next Business Day (which
for purposes of this Section 2.4.3 shall mean any day on which commercial banks
are open for business in New York, New York). If any payment from the Borrower
is received after 2 p.m., the Borrower shall be responsible for interest until
the next Business Day.
SECTION 2.5 INTEREST.
2.5.1 REVOLVING LOAN RATES. The Borrower shall pay interest on the
unpaid principal amount of each Revolving Loan from the date hereof until the
principal amount thereof shall be paid in full at the following rates. Each
Prime Rate Loan shall bear interest on the unpaid principal amount thereof at a
rate per annum equal to the Prime Rate as in effect from day to day as interest
accrues. Each LIBOR Rate Loan shall bear interest during each Interest Period
applicable thereto at the Revolving LIBOR Loan Rate applicable to such Interest
Period. The Agent shall, as soon as practicable after 11:00 a.m., New York City
time, two (2) LIBOR Business Days prior to the commencement of a particular
Interest Period, determine the LIBOR Rate which will be in effect during such
Interest Period and, inform the Borrower and each Bank of the Revolving LIBOR
Loan Rate so determined (which determination shall be conclusive and binding
upon the Borrower and each Bank absent manifest error). Except as otherwise
specifically provided to the contrary, each LIBOR Rate Loan shall bear interest
at the Revolving LIBOR Loan Rate so determined from and including the first day
of such particular Interest Period to, but not including, the last day of such
particular Interest Period.
2.5.2 TERM LOAN RATE. The Borrower shall pay interest on the unpaid
principal amount of the Term Loan from the date thereof until the principal
amount thereof shall be paid in full. The Term Loan shall bear interest during
each Interest Period applicable thereto at the Term Loan Rate applicable to such
Interest Period. The Agent shall, as soon as practical after 9 a.m. New York
City time, two (2) LIBOR Business Days prior to the commencement of a particular
Interest Period determine the LIBOR Rate which shall in effect during such
Interest Period and inform the Borrower and each Bank of the Term Loan Rate so
determined (which determination shall be conclusive and binding upon the
Borrower absent manifest error). Except as otherwise specifically provided the
contrary, the Term Loan shall bear interest at the Term Loan Rate so determined
from and including the first day of such particular Interest Period to, but not
including, the last day of such particular Interest Period.
2.5.3 UNAVAILABILITY OF LIBOR RATE BASED LOANS.
(a) In the event, and on each occasion that prior to the
commencement of a particular Interest Period, the Agent shall have determined in
good faith (which determination shall be conclusive and binding upon the
Borrower) that U.S. dollar deposits in an amount approximately equal to the
principal balance of such LIBOR Rate Loan, or the Term Loan, as is applicable,
and for the relevant maturity, are not available at such time in the London
Interbank Market, or reasonable means do not exist for ascertaining a LIBOR Rate
for such particular Interest Period, the Agent shall so notify the Borrower and
each Bank and the interest for the
18
LIBOR Rate Loans or Term Loan, as is applicable, shall automatically convert to
the Prime Rate as of the Advance Date or next occurring Roll Over Date with
respect to such Loan, unless the Borrower notifies the Agent no later than two
(2) Business Days prior to the date of such proposed borrowing that its request
for such borrowing be canceled or made as an unaffected type of LIBOR Rate Loan,
it otherwise being agreed that the Prime Rate shall remain in effect thereafter
unless and until the Agent shall have determined in good faith (which
determination shall be conclusive and binding upon the Borrower) that the
aforesaid circumstances no longer exist, whereupon interest shall again be
charged at the Revolving LIBOR Loan Rate or Term Loan Rate, as is applicable, in
the manner set forth in this Agreement.
(b) If any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Bank to
make or maintain a Loan based upon the LIBOR Rate, or any portion thereof, such
Bank shall, within one (1) business day so notify the Agent and the Borrower,
whereupon such Bank's obligations hereunder to make or maintain Loans based upon
the LIBOR Rate shall be suspended and each affected Loan shall automatically
convert to a Prime Rate Loan, unless the Borrower notifies the Agent and each
Bank within two (2) Business Days that its request for such proposed borrowing
be canceled, or such borrowing be made as an unaffected type of LIBOR Rate Loan,
or if such Loan is outstanding that it is concurrently being repaid. Notice
given to the Borrower pursuant to this Section 2.5.3 shall be effective on the
last day of the then existing Interest Period, unless it shall be unlawful to
maintain such LIBOR Rate Loan in which event it shall be effective immediately.
Interest at the Prime Rate shall remain in effect unless and until the Agent
shall have determined in good faith (which determination shall be conclusive and
binding upon the Borrower) that the aforesaid circumstances no longer exist,
whereupon interest shall be charged at the Revolving LIBOR Loan Rate or Term
Loan Rate, as is applicable, in the manner set forth in this Agreement.
(c) If interest on any Loan is charged at the Prime Rate on
and from a date other than a Roll Over Date, the Borrower shall pay to the Agent
for the benefit of the Banks, on demand, an amount determined in accordance with
Section 2.10 of this Agreement.
2.5.4 LIBOR RATE COSTS. The Borrower agrees to pay the Agent, on
demand by the Agent, such additional amount or amounts as the Agent shall
reasonably determine will compensate the Agent and each Bank for (i) additional
costs incurred by any of them, in making or maintaining a LIBOR Rate on a Loan,
and (ii) any amount not received, or receivable, by the Agent or any Bank under
this Agreement (whether principal, interest or otherwise) as a result of:
2.5.4.1 the imposition after the date of this Agreement of, or
changes after the date of this Agreement in the reserve requirements promulgated
by the Board of Governors of the Federal Reserve system of the United States,
including, but not limited to, any reserve on Eurocurrency Liabilities as
defined in Regulation D of the Board of Governors of the Federal Reserve System
of the United States at the ratios provided in such Regulation from time to time
(it being agreed that the portion of the Loans bearing interest based upon a
LIBOR Rate from time to time in accordance with the provisions of this Agreement
shall be deemed to constitute Eurocurrency Liabilities, as defined by such
Regulation);
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2.5.4.2 any change, after the date of this Agreement, in
applicable law, rule or regulation or in the interpretation or administration
thereof by any domestic or foreign governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) or by any domestic or foreign court changing the basis of taxation or
payments to any Bank, as the case may be, of a Loan on which interest is charged
based upon the LIBOR Rate or interest based upon the LIBOR Rate Loan or any
other fees or amounts payable under this Agreement (other than taxes imposed on
all or any portion of the overall net income of such Bank, by the State of New
York or the Federal government and other than franchise taxes imposed in lieu of
net income taxes), or imposing, modifying or applying any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, credit extended by, or any other acquisition of funds for Loans by
the Agent or any Bank or on the London Interbank Market any other condition
affecting this Agreement, or the Loan or Loans bearing interest based upon a
LIBOR Rate; or
2.5.4.3 any amount or amounts payable by the Borrower to the
Agent pursuant to this Section 2.5, or Sections 2.6 or 2.10 of this Agreement
shall be paid by the Borrower to the Agent within ten (10) days of receipt by
the Borrower from the Agent of a statement setting forth the amount or amounts
due and the basis for the determination from time to time of such amount or
amounts, which statement shall be conclusive and binding upon the Borrower
absent manifest error. Failure on the part of the Agent or a Bank to demand
compensation for any increased costs in any Interest Period shall not constitute
a waiver of the Agent's or such Bank's right to demand compensation for any
increased costs incurred during any such Interest Period or in any other
subsequent or prior Interest Period. For the purposes of this Section 2.5.4.3,
the Agent shall follow the instructions of the affected Bank. If a Bank cannot
make a LIBOR Rate Loan and is therefore obliged to make a Prime Rate Loan, as
herein provided, the other Bank or Banks shall have the option to also make a
Prime Rate Loan in response to the applicable Notice of Advance.
2.5.5 DEFAULT RATE OF INTEREST. Effective immediately upon the
occurrence of any Event of Default, and effective retroactively to the date of
the Default underlying the Event of Default, without further notice or demand,
the principal balance of all Obligations then outstanding and, to the extent
permitted by applicable law, any interest payments on the Obligations not paid
when due, shall bear interest payable at a rate per annum equal to the Prime
Rate plus three (3%) percent.
2.5.6 COMPUTATION OF INTEREST. Interest shall be computed on the basis
of a year of 360 days and the actual number of days elapsed in the period during
which interest accrues. Interest on each Advance shall accrue at the rate
specified in Section 2.5.1 of this Agreement from the Advance Date until the
Revolving Loan is repaid in full by federal wire transfer or other immediately
available funds. Interest on the principal balance of the Term Loan shall accrue
at the rate specified in Section 2.5.2 of this Agreement until the Term Loan is
repaid in full by federal wire transfer or other immediately available funds.
2.5.7 INTEREST PAYMENTS. Interest accrued on a Prime Rate Loan in any
calendar month shall be payable in arrears on the first day of the following
month, and on any LIBOR Rate Loan at the end of the Interest Period; and in any
event on the Maturity Date. Interest may be charged
20
to any account maintained by the Borrower with the Agent on the date such
payment is due and payable.
2.5.8 USURY. Notwithstanding anything elsewhere contained in the Loan
Documents (i) no provision of the Loan Documents shall be deemed to require the
payment or to permit the collection of any interest in excess of the maximum
rate now or hereafter permitted to be paid or collected under the applicable
usury law and (ii) if it should be determined that any amount paid or collected
is in excess of such maximum lawful rate, such excess shall, at the election of
the Agent, either (a) be credited as a repayment of principal or (b) be deemed
to have been paid and collected by mutual mistake of the parties and shall be
refunded to the Borrower. Any credit pursuant to this Section 2.5.8 shall reduce
the Revolving Loans, and take effect and be applied on the first day after the
expiration of the next Roll Over Date.
SECTION 2.6 INCREASED COSTS.
2.6.1 COSTS. If either (i) the introduction of or any change in the
interpretation of any domestic or foreign law or regulation, or (ii) compliance
by the Agent or any Bank with any domestic or foreign guideline, or request from
any central bank or other governmental authority (whether or not having the
force of law) affects or would affect the amount of capital required or expected
to be maintained by the Agent or any Bank or any corporation controlling any
Bank, and any Bank reasonably determines that the amount of such capital is
increased by or based upon the existence of any Loan made hereunder, then, upon
demand by the Agent, the Borrower shall pay to the Agent for such Bank from time
to time such additional amounts as may be specified by the Agent as sufficient
to compensate it, or as applicable the affected Bank, in light of such
circumstances, to the extent that such Bank reasonably determines such increase
in capital to be allocable to the maintenance of the Loan. A certificate as to
such amounts submitted to the Borrower by the Agent shall, in the absence of
manifest error, be conclusive and binding for all purposes. For the purposes of
this Section 2.6.1, the Agent shall follow the instructions of the affected
Bank.
2.6.2 TAXES. All payments made pursuant to this Agreement or any other
Loan Document shall be made free and clear of, and without deduction for, any
taxes (as herein defined). If the Borrower shall be required to deduct any taxes
in respect of any sum payable under the Notes, or its reimbursement obligations
with respect to Letters of Credit or by reason of the Acceptances then the sum
payable shall be increased so that the Banks shall receive an amount equal to
the sum the Banks would have received had no deductions been made. In the event
that the Banks shall pay any taxes required to be deducted by the Borrower, and
not deducted, the Borrower shall pay to the Banks on demand, and shall indemnify
and hold the Banks harmless from any and all taxes paid by the Banks, and any
and all liabilities (including, without limitation, penalties, interest and
expenses) with respect thereto, whether or not such taxes were correctly or
legally asserted. For the purpose of this Section 2.6.2 only, "taxes" shall mean
any and all present and future taxes, levies, imposts, deductions, charges and
withholdings in any jurisdiction worldwide, and all liabilities with respect
thereto, which are imposed with respect to the Notes, Letters of Credit or
Acceptances, or to any amount payable under this Agreement, excluding taxes
determined on the basis of the net income of a Person or of any of its offices.
21
SECTION 2.7 FEES.
2.7.1 UNUSED FEE. The Borrower shall pay the Agent for the benefit of
each Bank, a fee of one quarter of one percent (0.25%) per annum on the daily
average of the unused portion of the Revolving Loan Commitment which shall be
calculated and be due and payable quarterly in arrears on the first day of
October, January, April and July; which fees shall be non-refundable and fully
earned on the date due and may be charged to the Borrower accounts at the Agent.
The Agent shall remit to each Bank its Pro Rata Share of such fees as provided
in Section 2.3.1 of this Agreement.
2.7.2 COMMITMENT FEE. The Borrower shall pay the Agent for the benefit
of each Bank a Commitment Fee of $275,000. The Agent shall remit to each Bank
its Pro Rata Share of such fee as provided in Section 2.3.1 of this Agreement.
2.7.3 AGENT FEE. The Borrower shall pay the Agent an agent fee of
$50,000 as a condition of this Agreement becoming effective and shall pay the
Agent an additional agent fee of $81,000 on June 30, 2005, for the period to the
Maturity Date, and if the Banks in their discretion should extend the Maturity
Date, as a condition of each twelve (12) month extension, the Borrower shall
concurrently pay the Agent an amount equal to one eighth of one (1/8%) percent
of the then outstanding principal balance of the Term Loan and one eighth and
one (1/8%) percent of the Commitment of all of the Banks.
SECTION 2.8 PREPAYMENT OF PRIME RATE LOANS. The Borrower shall have
the right to prepay any Prime Rate Loan in whole or in part (but only integral
multiples of $100,000) upon not less than one (1) Business Days prior written
notice to the Agent and the Banks, specifying the intended date of prepayment
and the amount to be prepaid upon payment of all interest and other sums then
due and payable pursuant to the provisions of this Agreement.
SECTION 2.9 PREPAYMENT OF LIBOR RATE LOANS. The Borrower shall have
the right to prepay any LIBOR Rate Loan in whole upon not less than three (3)
LIBOR Business Days' prior written IRREVOCABLE notice to the Agent prior to the
date of said prepayment specifying the intended date of prepayment and the
amount to be prepaid and upon payment of all related interest and other sums
then due and payable pursuant to the provisions of this Agreement. The LIBOR
Rate Loan specified in any such IRREVOCABLE notice of prepayment shall,
notwithstanding anything to the contrary contained in this Agreement, be
absolutely and unconditionally due and payable on the date specified in such
notice. No prepayment premium shall be payable if such prepayment occurs on a
Roll Over Date. If such prepayment does not occur on a Roll Over Date, the
Borrower shall pay to the Agent for the benefit of the Banks contemporaneously
with such prepayment an amount equal to any loss or expense by reason thereof,
as provided for in Section 2.10.
SECTION 2.10 LIBOR RATE INDEMNITY. The Borrower shall indemnify the
Agent and the Banks against any loss or expense that the Agent or any Bank, as
the case may be, may sustain or incur as a consequence of any default by the
Borrower in the payment of principal or interest on a LIBOR Rate Loan as and
when due and payable, or prepayment of any LIBOR Rate
22
Loan or conversion thereof occur on a date which is not a Rollover Date thereof,
or the occurrence of any Event of Default specified in this Agreement,
including, but not limited to, any loss or expense sustained or incurred by the
Agent or any Bank in liquidating or re-employing deposits from third parties
acquired to effect or maintain a LIBOR Rate with respect to all or any portion
of the LIBOR Rate Loan. The Agent shall provide the Borrower with a statement
explaining the amount of any such loss or expense, which statement shall be
conclusive and binding upon the Borrower absent manifest error.
SECTION 2.11 LETTERS OF CREDIT.
2.11.1 LETTERS OF CREDIT. Subject to the terms and conditions hereof,
the Agent, as a Bank, shall issue, or cause one or more of the other Banks to
issue, letters of credit ("Letters of Credit") on behalf of the Borrower;
PROVIDED, HOWEVER, that the Agent will not issue or cause to be issued any
Letters of Credit: (i) to the extent that the face amount of such Letters of
Credit would then cause the Outstanding Revolving Loan Balance PLUS the
outstanding Letters of Credit and Acceptances to exceed the lesser of (a) the
Revolving Loan Commitment or (b) the Borrowing Base, (ii) after the Maturity
Date or (iii) which have an expiration date which is later than January 15,
2006. In the event there is a draw against a Letter of Credit, which is not
reimbursed as provided in the applicable reimbursement agreement or otherwise,
the amount of the draw shall be deemed a Revolving Loan for the purposes of the
Revolving Facility Amount. All disbursements or payments related to Letters of
Credit shall bear interest at the applicable Prime Loan Rate; Letters of Credit
that have not been drawn upon shall not bear interest.
2.11.2 ISSUANCE OF LETTERS OF CREDIT. The Borrower may request the
Agent, as a Bank, to issue, or request one or more of the other Banks to issue a
Letter of Credit by delivering to the Agent its form, or upon the Agent's
request, the Issuer's form of Letter of Credit application (the "Application")
completed to the satisfaction of the Agent and the Issuer, and such other
certificates, documents and other papers and information as the Agent may
reasonably request. The Borrower shall provide each Bank with a copy of each
such request, including any request to increase an issued Letter of Credit. Each
Letter of Credit shall, among other things, provide for the payment of sight
drafts or acceptances of drafts when presented for honor thereunder in
accordance with the terms thereof, and when accompanied by the documents
described therein. Each Documentary Letter of Credit shall be subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, and any amendments or
revision thereof adhered to by the Issuer, and each standby letter of credit
shall be subject to the International Standards and Practices for Standby
Letters of Credit of the International Chamber of Commerce, effective January 1,
1999 ("ISP98") and any amendments or revisions thereof adhered to by the Issuer,
in each case, to the extent not inconsistent therewith, the laws of the State of
New York. The Agent shall use its best efforts to notify each Bank of the
request by the Borrower for a Letter of Credit.
2.11.3 REQUIREMENTS FOR ISSUANCE OF LETTERS OF CREDIT.
2.11.3.1 In connection with the issuance of any Letter of
Credit, the Borrower shall indemnify, save and hold the Agent and each Bank
harmless from any loss, reasonable cost, expense or liability, including,
without limitation, payments made by the Agent or any Bank and
23
reasonable expenses and reasonable attorneys fees incurred by the Agent or any
Bank arising out of, or in connection with, any Letter of Credit to be issued or
created for the Borrower. The Borrower shall be bound by the Agent or any
Issuer's regulations and reasonable good faith interpretations of any Letter of
Credit issued or created for the Borrower's account, although this
interpretation may be different from its own; and neither the Agent nor any Bank
shall be liable for any error, negligence, or mistakes, whether of omission or
commission, in following the Borrower's instructions or those contained in any
Letter of Credit, or of any modifications, amendments or supplements thereto or
in issuing or paying any Letter of Credit, except for the Agent's, any Bank's,
or the Issuer's willful misconduct or gross negligence.
2.11.3.2 If the Agent is not the Issuer of any Letter of Credit,
the Borrower shall authorize and direct the Issuer to deliver to Agent all
instruments, documents, and other writings and property received by the Issuer
pursuant to the Letter of Credit and to accept and rely upon Agent's
instructions and agreements with respect to all matters arising in connection
with the Letter of Credit, the application therefor or any acceptance therefor.
2.11.3.3 In connection with all Letters of Credit issued or
caused to be issued by the Agent under this Agreement, the Borrower hereby
appoints the Agent, or its designee, as its attorney-in-fact, with full power
and authority, following the occurrence and during the continuance of an Event
of Default (i) to sign and/or endorse the Borrower's name upon any warehouse or
other receipts, Applications and acceptances; (ii) to sign the Borrower's name
on bills of lading; (iii) to clear Inventory through the United States of
America Customs Department ("Customs") in the name of the Agent or its
designees, and to sign and deliver to Customs officials powers of attorney in
the name of the Borrower for such purpose; and (iv) to complete in the
Borrower's name or name of the Agent, any order, sale or transaction, obtain the
necessary documents in connection therewith, and collect the proceeds thereof.
Neither the Agent nor its attorneys will be liable for any acts or omissions nor
for any error of judgment or mistakes of fact or law, except for the Agent or
its attorney's gross negligence or willful misconduct. This power, being coupled
with an interest, is irrevocable as long as there is an Event of Default which
has not been (i) cured or (ii) waived in accordance with the terms of this
Agreement.
2.11.3.4 Each Bank shall, to the extent of its Pro Rata Share,
be deemed to have irrevocably purchased an undivided participation in each
unreimbursed reimbursement obligation. In the event that at the time a
disbursement is made the Outstanding Revolving Loan Balance exceeds or would
exceed, with the making of such disbursement, the Revolving Facility Amount, and
such disbursement is not reimbursed by the Borrower within two (2) Business
Days, the Agent shall promptly notify the Borrower and each Bank, which notice
shall be deemed a Notice of Advance (notwithstanding that the Outstanding Loan
Balance exceeds the Revolving Facility Amount) of a Prime Rate Loan in the
amount of the disbursement plus interest thereon from the date thereof, plus any
unreimbursed costs and expenses relating to such unreimbursed disbursement, all
of which shall be set forth in such notice. Each Bank's participation commitment
shall continue until the last to occur of any of the following events: (A) the
Agent ceases to be obligated to issue or cause to be issued Letters of Credit
hereunder, (B) no Letter of Credit issued hereunder remains outstanding and
uncanceled or (C) all Persons (other than the Borrower) have been fully
reimbursed for all payments made under or relating to Letters of Credit. Any
sums expended, in a commercially reasonable manner, by the Agent or
24
any Bank due to the Borrower's failure to perform or comply with its obligations
under this Agreement or any other Loan Document, shall be charged to the
Borrower as a Prime Rate Loan and added to the Obligations.
2.11.4 LETTER OF CREDIT FEES. The Borrower shall pay to the Agent for
the account of the Banks, fees for each Letter of Credit for the period from and
excluding the date of issuance of same to and including the date of expiration
or termination, (i) in the case of commercial Letters of Credit, a fixed fee
equal to one quarter (0.25%) percent of the face amount of each outstanding
Letter of Credit, such fee to be payable on the date of issue thereof and
quarterly thereafter; and a fixed fee equal to the greater of (a) $200 or (b)
one eighth of one percent (1/8%) such fee to be payable on the negotiation of
the Letter of Credit and retained by the Issuer; and (ii) in the case of standby
Letters of Credit, a fee equal to the maximum face amount of each outstanding
Letter of Credit multiplied by one and fifteen one hundredths (1.15%) percent,
such fees to be calculated on the basis of a 360-day year for the actual number
of days elapsed and to be payable at the issuance of such Letter of Credit, and
(iii) in the case of standby Letters of Credit or commercial Letters of Credit,
a fronting fee equal to the greater of (a) $200, or (b) one-eighth (1/8%)
percent and retained by the Issuer, and any and all reasonable fees and expenses
as required by the Issuer in connection with any such Letter of Credit,
including, without limitation, in connection with the opening, amendment or
renewal of any such Letter of Credit and any acceptances created thereunder, and
shall reimburse the Agent for any and all reasonable fees and expenses, if any,
paid by the Agent or any Issuer. All such fees and expenses shall be deemed
earned in full on the date when the same are due and payable hereunder and shall
not be subject to rebate or proration upon the termination of this Agreement for
any reason. Any such fee or expense in effect at the time of a particular
transaction shall be the charge for that transaction, notwithstanding any
subsequent change in the Issuer's prevailing fee or expense for that type of
transaction. Following the occurrence and during the continuance of an Event of
Default, upon demand the Borrower will cause cash to be deposited and maintained
in an account with each Bank, as cash collateral pursuant to this Agreement, in
an amount equal to each Bank's Pro Rata Share of the outstanding Letters of
Credit plus two (2%) percent, and the Borrower hereby irrevocably authorizes
each Bank, in its discretion, on the Borrower's behalf and in the Borrower's
name, to open such an account and to make and maintain deposits therein, and
authorize the Agent to utilize the proceeds of Accounts or other Collateral or
any other funds of the Borrower coming into the Agent's possession at any time
to fund such accounts.
SECTION 2.12 ACCEPTANCES. Subject to the terms and conditions of this
Agreement, upon the request of the Borrower, the Issuer will accept drafts
presented by the beneficiary of a commercial Letter of Credit, which drafts (i)
are being presented to the Agent in accordance with the terms of a commercial
Letter of Credit, and (ii) name the Issuer as drawee and the beneficiary as
payee and otherwise are in a form acceptable to the Issuer in its sole
discretion (each an "Acceptance" and collectively, "Acceptances"). No Acceptance
shall have a maturity date which is later than ninety (90) days after its
creation date or occurring after January 15, 2006. The Borrower shall pay the
Agent for the benefit of the Banks a fee on each Acceptance at a rate equal to
one and fifteen one hundredths (1.15%) percent of the full amount of such
Acceptance from the date the Acceptance is created to the date of its maturity,
such fee to be calculated on the basis of a 360-day year for the actual number
of days elapsed, and to be payable on the date the Acceptance is created. In
addition, the Borrower shall pay a $200 administration fee and any
25
other reasonable costs or expenses of the Issuer.
2.12.1 ACCEPTANCE AVAILABILITY. The aggregate amount available to the
Borrower for Acceptances ("Acceptance Availability") shall be the lesser of: (i)
the Borrowing Base, or (ii) $60,000,000, in either case minus the outstanding
(a) Revolving Loans, (b) Letters of Credit, and (c) Acceptances.
2.12.2 CREATION OF ACCEPTANCES. The Agent as a Bank, or any other Bank
as an Issuer shall create an Acceptance upon the presentation of a draft by the
beneficiary of a commercial Letter of Credit, which draft (i) is being presented
to the Issuer in accordance with the terms of a commercial Letter of Credit, and
(ii) names the Issuer as drawee and the beneficiary as payee and otherwise is in
a form acceptable to the Issuer in its sole discretion. The Borrower hereby
constitutes and appoints the Agent, acting by any authorized signatory thereof,
the true and lawful attorney-in-fact of the Borrower to sign for and in the name
of the Borrower any such draft presented to the Issuer for acceptance and to
complete any such draft as appropriate.
2.12.3 PAYMENT OF ACCEPTANCE LIABILITIES. Neither the Agent nor any
Bank shall have an obligation to discount any Acceptance created hereunder. The
sole obligation of the Agent shall be to honor its obligation on the drafts
accepted by it in accordance with the provisions of this Section 2.12. With
respect to each Acceptance created hereunder, the Borrower unconditionally
agrees to pay the Agent for such Acceptance, on the maturity date of such
Acceptance, or on such earlier date as may be required pursuant to the terms of
this Agreement, the face amount of the Acceptance.
2.12.4 PARTICIPATION. Each Bank shall, to the extent of its Pro Rata
Share, be deemed to have irrevocably purchased an undivided participation in
each unreimbursed Acceptance. In the event that at the time a disbursement is
made the Outstanding Revolving Loan Balance plus the face amount of any
outstanding Letters of Credit and outstanding Acceptance exceed or would exceed,
with the making of such disbursement, the Revolving Facility Amount, and such
disbursement is not reimbursed by the Borrower within two (2) Business Days, the
Agent shall promptly notify the Borrower and each Bank, which notice shall be
deemed a Notice of Advance (notwithstanding that the Outstanding Loan Balance
exceeds the Revolving Facility Amount) of a Prime Rate Loan in the amount of the
disbursement plus interest thereon from the date thereof, plus any unreimbursed
costs and expenses relating to such unreimbursed disbursement; all of which
shall be set forth in such notice. Each Bank's participation commitment shall
continue until the last to occur of any of the following events: (A) the Agent
ceases to be obligated to issue or cause to be issued Acceptances hereunder, (B)
no Acceptance issued hereunder remains outstanding and uncanceled or (C) the
Banks have been fully reimbursed for all payments made under or relating to
Acceptances. Any sums expended, in a commercially reasonable manner, by the
Agent or any Bank due to the Borrower's failure to perform or comply with its
obligations with respect to Acceptances under this Agreement or any other Loan
Document, may be charged to the Borrower as a Prime Rate Loan and added to the
Obligations.
2.12.5 INDEMNIFICATION; CONVERSION OF ACCEPTANCE LIABILITIES. The
Borrower shall indemnify, save and hold the Agent and each Bank harmless from
any loss, cost, reasonable expense or liability, including, without limitation,
payments made by the Agent or any Bank and
26
reasonable expenses and reasonable attorneys' fees incurred by any of them
arising out of or in connection with any Acceptance to be issued or created for
the Borrower, including but not limited to any loss, cost, expense or liability
due to the fact that any of the certifications made pursuant to Section 2.12 of
this Agreement proves to have been incorrect in any respect. The foregoing
agreement shall be in addition to any rights that the Agent or any Bank may have
by reason of any other provision of this Agreement, at common law or otherwise.
In addition, in the event that any Acceptance created hereunder is or becomes
ineligible for purchase or discount by the Federal Reserve Bank (assuming such
Acceptance was accepted and endorsed by a member bank of the Federal Reserve
System), the related outstanding liability shall automatically be converted to a
Prime Rate Loan, subject to all applicable provisions of this Agreement.
ARTICLE 3
EFFECTIVENESS OF AGREEMENT
SECTION 3.1 CONDITIONS PRECEDENT. The effectiveness of this
Agreement, and each Bank's Commitment, shall be expressly subject to the Banks'
satisfaction, or waiver, of the following conditions precedent, such
satisfaction, or waiver, to be evidenced by each Bank's execution of a
counterpart of this Agreement:
3.1.1 TRANSACTIONS LAWFUL AND PERMITTED. The Agent and each Bank shall
have received such assurances, as it may request to confirm that the execution
and delivery of, and performance under, the Agreement and other Loan Documents
(i) have been duly authorized by all necessary corporate action and have
received all necessary consents and approvals (including shareholder approval)
and have been done with all necessary notifications, registrations and filings,
(ii) are permitted by and comply in all respects with the certificate of
incorporation and by-laws of each of the Loan Parties and any and all applicable
contracts, statutes, and regulations, and rules of common law and equity, and
(iii) are not and will not be subject to rescission, avoidance or legal
liability.
3.1.2 REPRESENTATIONS AND WARRANTIES. No Default or Event of Default
shall have occurred and be continuing and all of the representations and
warranties contained in this Agreement or otherwise made to the Agent and/or the
Banks pursuant to or in connection with any of the other Loan Documents shall be
correct and complete in all material respects.
3.1.3 NOTES. The Borrower shall have executed and delivered the
Revolving Note and Term Note to the Agent.
3.1.4 BURLEN. Burlen shall have executed and delivered (i) an
unlimited guarantee of payment to the Banks of the Obligations in the form of
"Exhibit D" annexed hereto, (ii) a security agreement in the form of "Exhibit E"
annexed hereto (the "Burlen Security Agreement") granting to the Agent for the
benefit of the Banks a first priority perfected security interest in all of its
personal property, both tangible and intangible, (iii) a Trademark Security
Agreement in the form of "Exhibit F" annexed hereto, and (iv) such other
documents as the Agent or the Banks shall reasonably require, including, but not
limited to an executed copy of the Agreement pursuant to which the Borrower is
purchasing the Burlen Shares.
27
3.1.5 PLEDGE. The Borrower shall have executed and delivered a second
amendment to the Pledge Agreement, substantially in the form of "Exhibit G"
annexed hereto, to the Agent, for the benefit of each Bank, pursuant to which it
shall have pledged all of the issued and outstanding Burlen Shares to the Agent
for the benefit of the Banks.
3.1.6 OPINIONS OF COUNSEL. The Banks shall have received a favorable
written opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, special counsel to the
Loan Parties in form and substance satisfactory to the Agent, the Banks and
their counsel, as to due authorization, due execution, enforceability and such
other matters required by the Banks and their counsel and containing such
qualifications, limitations and exceptions as are reasonably acceptable to the
Agent, the Banks and their counsel.
3.1.7 PROOF OF INSURANCE. The Agent shall have received evidence
satisfactory to the Banks that the insurance required (i) pursuant to SECTION
7.5 has been obtained, and (ii) with respect to the Real Estate Assets required
pursuant to the terms and provisions of the Real Estate Collateralization
Documents.
3.1.8 FEES. The Banks shall have received payment in full of the
Agent's and each Bank's fees, including, without limitation, reasonable legal
fees incurred in connection with the preparation, negotiation and execution of
this Agreement and all other documents delivered pursuant hereto.
3.1.9 DELTA GALIL GUARANTEES. The Banks shall have received (i) an
executed counterpart of a letter agreement, dated as of the date hereof, between
Delta Galil and the Bank amending Delta Galil's Springing Guaranty, dated June
13, 2002, and (ii) a Guaranty from Delta Galil in favor of the Banks, dated as
of even date hereof, which is governed by Israeli law.
3.1.10 AUBURN CONFIRMATIONS. The Agent shall have received a
confirmation by Auburn of its Guaranty and the Auburn Security Agreement; in the
form of EXHIBIT H annexed hereto.
3.1.11 OTHER DOCUMENTS. The Borrower also shall have delivered to the
Agent:
3.1.11.1 a copy of the certificate of incorporation of each of
the Loan Parties, as amended to the Closing Date, certified to be a true,
correct and complete copy thereof by the Secretary of State of the State of its
incorporation, or with respect to the Borrower and Auburn, a Certificate
executed by its Secretary or Assistant Secretary, certifying that its
Certificate of Incorporation has not been amended, restated or otherwise changed
since the date of the Restated Agreement, together with a certificate from the
Secretary of State in the States in which each of the Loan Parties is
incorporated confirming its legal existence and good standing under the laws of
such State, and a certificate of the Secretary of State of each State in which
any Loan Party is qualified to do business as a foreign corporation to the
effect that such Loan Party is in good standing under the laws of such State,
each dated a recent date prior to the Closing Date;
3.1.11.2 a copy of the by-laws of each Loan Party certified by
its Secretary or Assistant Secretary, to be a true, correct and complete copy of
such by-laws as of the Closing
28
Date; or with respect to the Borrower and Auburn, a certificate signed by its
Secretary or Assistant Secretary, certifying that its by-laws have not been
amended, restated, repealed or otherwise changed since the date of the Restated
Agreement.
3.1.11.3 resolutions of each Loan Party's Board of Directors and
an authorized Committee of Delta Galil's Board of Directors approving and
authorizing the execution, delivery and performance of each of the Loan
Documents to which it is a party, together with a certificate of the Secretary
or Assistant Secretary of each Loan Party and Delta Galil dated the Closing Date
to the effect that such resolutions have been duly adopted by its Board of
Directors, have not been modified or rescinded and remain in full force and
effect, and that such resolutions are the only resolutions adopted by its Board
of Directors relating to the subject matter thereof;
3.1.11.4 a certificate of the Secretary or Assistant Secretary
of each Loan Party and Delta Galil, dated the Closing Date, as to the incumbency
and signatures of the officers executing this Agreement or any of the other Loan
Documents, on its behalf;
3.1.11.5 original copies of such other Loan Documents executed
by the Borrower and Guarantors, acknowledged as appropriate, as may be requested
by the Banks in their sole discretion; and
3.1.11.6 filed copies of UCC-l financing statements identifying
Burlen as debtor, listing the Agent as agent for the Banks and the Banks as
secured parties, and recorded in all places as are necessary to protect the Lien
of the Agent and the Banks in the Burlen Collateral.
3.1.12 PAYOFF LETTER. A "Pay-off letter" from Bank of America N.A. and
indemnification letter from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, both in form and substance
satisfactory to the Banks and their counsel.
SECTION 3.2 GEORGIA PROPERTIES CONDITIONS SUBSEQUENT. The Borrower
as soon as is practical, but in any event no later than February 15, 2005, shall
deliver, or cause Burlen to deliver, the following to the Agent for the benefit
of the Banks:
3.2.1 GEORGIA REAL ESTATE DOCUMENTATION. Such mortgages, deeds of
trust, assignments and/or UCC-1 financing statements, each in recordable form,
as the Agent may require, in form and substance satisfactory to the Agent, in
order to grant to the Banks a first lien and perfected security interest in the
Georgia Properties as security for the Obligations (collectively, the "Georgia
Real Estate Documentation").
3.2.2 TITLE INSURANCE. Policies of title insurance insuring the
Georgia Real Estate Documentation as first liens on the Georgia Properties
encumbered thereby, free and clear of any other liens or exceptions to title
except as may be approved by the Agent.
3.2.3 SURVEYS. Surveys of the Georgia Properties in form and substance
satisfactory to the Agent and certified to the Agent for the benefit of the
Banks.
3.2.4 CERTIFICATES OF OCCUPANCY. If requested and available,
certificates of occupancy
29
for the Georgia Properties issued by the applicable municipal authorities for
the locations in which the Real Estate Assets are located and authorizing the
current use of the Georgia Properties.
3.2.5 INSURANCE. Insurance with respect to the Georgia Properties
required pursuant to the terms and provisions of the Georgia Real Estate
Documentation.
3.2.6 APPRAISALS AND ENVIRONMENTAL REPORTS. Such appraisals and
environmental reports as the Banks shall reasonably require.
3.2.7 LEASES. Certification by Borrower as to all tenancies or rights
of possession or other agreements pertaining to or affecting the Georgia
Properties.
3.2.8 FURTHER ASSURANCES. Such additional documentation and
information as the Banks or their counsel shall reasonably require following
review of the documents provided pursuant to Sections 3.2.1, 3.2.2, 3.2.3, 3.2.4
,3.2.5, 3.2.6 and 3.2.7.
SECTION 3.3 PENNSYLVANIA AND NORTH CAROLINA PROPERTIES CONDITIONS
SUBSEQUENT. The Borrower as soon as is practical, but in any event no later than
January 31, 2005, shall deliver, or cause Auburn to deliver, the following to
the Agent for the benefit of the Banks.
3.3.1 REAL ESTATE COLLATERALIZATION DOCUMENTS. The Agent shall have
received for the benefit of the Banks the Real Estate Collateralization
Documents and related documents listed on Schedule 3.3.1 annexed hereto.
3.3.2 TITLE INSURANCE. Policies of title insurance insuring the Real
Estate Collateralization Documentation as first liens on the respective portions
of the Real Estate Assets encumbered thereby, free and clear of any other Liens
or exceptions to title except as may be approved by the Agent.
3.3.3 LESSOR ESTOPPEL AND WAIVER. Delivery to the Agent of an estoppel
and waiver agreement, in form and substance satisfactory to the Agent, from the
lessor under the lease for ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
certifying, among other things, that no defaults exist thereunder, waiving any
landlord's lien with respect to the Borrower's personal property located at the
said premises and consenting to the assignment of the said leases to the Agent
for the benefit of the Banks, or its designee, upon the occurrence of an Event
of Default.
3.3.4 OPINIONS OF COUNSEL. The Banks shall have received a favorable
written opinion of (i) special Pennsylvania Counsel to the Borrower, and (ii)
special North Carolina counsel to the Borrower, each such counsel to be
acceptable to the Agent, with respect to the Real Estate Collateralization
Documents applicable to the Real Estate Assets in such counsel's State, each in
form and substance satisfactory to the Agent, the Banks and their counsel, as to
due authorization, due execution, enforceability and such other matters required
by the Banks and their counsel and containing such qualifications, limitations
and exceptions as are reasonably acceptable to the Agent, the Banks and their
counsel.
30
SECTION 3.4 CONDITIONS SUBSEQUENT. The Borrower as soon as
practical, but in any event within the time periods specified below, shall
deliver or cause to be delivered to the Agent.
3.4.1 BURLEN STOCK CERTIFICATES AND STOCK POWERS. Within three (3)
business days, the stock certificate or stock certificates evidencing the Burlen
Shares, and such stock powers, or documents, as would permit the Agent to
transfer legal and beneficial ownership of the Burlen Shares.
3.4.2 TERMINATION OF BANK OF AMERICA LIENS ON PERSONAL PROPERTY.
Within three (3) business days, evidence that all UCC-1 Financing Statements in
favor of Bank of America N.A., as secured party naming Burlen, as debtor, have
been terminated.
3.4.3 OPINION OF GEORGIA COUNSEL. Within six (6) business days a
favorable written opinion of special counsel to Burlen, similar in form and
substance to the opinion delivered pursuant by ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
pursuant to Section 3.1.6 of this Agreement, and which shall include a favorable
opinion as the form of UCC-1 Financing Statement filed, or to be filed by the
Agent with respect to the Burlen Collateral and as to the proper place of filing
of the UCC-1 Financing Statement.
3.4.4 TERMINATION OF BANK OF AMERICA N.A. MORTGAGES. Not later than
February 15, 2005, evidence that the mortgages held by Bank of America on the
Georgia Properties have been terminated of record.
3.4.5 OPINION WITH RESPECT TO GUARANTIES. Within ten (10) Business
Days from the Closing Date, the Banks shall have received (x) a written opinion
of ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, special counsel to Delta Galil, in form
and substance satisfactory to the Banks and their counsel, to the effect that
the Springing Guaranty dated June 13, 2002, as amended, is a valid and binding
obligation of Delta Galil, enforceable in accordance with its terms under the
laws of the State of New York, and (y) an opinion from Israeli counsel
substantially similar to the opinion received by the Agent from I ▇▇▇▇▇▇
▇▇▇-▇▇▇▇▇▇, Hamou & Co. dated June 13, 2002, with respect to said Springing
Guaranty. Within ten (10) Business Days from the Closing Date, the Banks shall
also receive a written opinion from Israeli counsel, in form and substance
satisfactory to the Banks and their counsel, and covering such matters as they
shall reasonably request, with respect to a guaranty dated as of the Closing
Date by Delta Galil of all of the Obligations of the Borrower in favor of the
Banks (which guaranty shall be in Hebrew and governed by the laws of the State
of Israel).
ARTICLE 4
CONDITIONS TO ADVANCES, ETC.
The obligation to make an Advance, make the Term Loan, issue a Letter of
Credit or create an Acceptance shall be expressly subject to the satisfaction of
the following conditions precedent:
SECTION 4.1 REPRESENTATIONS AND WARRANTIES. All of the
representations and
31
warranties of the Borrower and the Guarantors contained herein shall be true and
correct in all material respects to the same extent as though made on and as of
any Advance Date, the date of the issuance of the Letter of Credit, or the date
of the creation of an Acceptance, as is applicable.
SECTION 4.2 NO DEFAULT. No Default or Event of Default shall have
occurred or shall result from the making of the requested Advance, issuing the
Letter of Credit or creating the Acceptance.
SECTION 4.3 MATERIAL ADVERSE CHANGE. No adverse change deemed
material by the Required Lenders in their sole and absolute discretion
(provided, however, that the Required Lenders give the Agent and the other Banks
notice thereof), in the financial condition, operations, properties, business,
management or ownership of any of the Loan Parties or Delta Galil, or of any of
the Loan Parties', or Delta Galil's business or financial prospects, or the
risks associated with the transaction contemplated by this Agreement, shall have
occurred.
SECTION 4.4 LIENS. The Agent for the benefit of the Banks shall hold
valid, enforceable and perfected first priority Liens, in and to all of the
Collateral, the Auburn Collateral, and the Burlen Collateral. included in the
Borrowing Base, subject only to the Permitted Encumbrances and Liens permitted
pursuant to Section 8.1 of this Agreement.
SECTION 4.5 NO OBSTACLE. No law or regulation shall prohibit, and no
order, judgment or decree of any court, arbitrator or governmental authority
shall enjoin or restrain, any Bank from making the requested Advance, Term Loan,
Letter of Credit or Acceptance.
SECTION 4.6 BORROWING BASE. After giving effect to the amount of the
requested Advance, Letter of Credit or Acceptance, the aggregate amount of the
Outstanding Revolving Loan Balance, outstanding Letters of Credit, and
Acceptances, do not exceed the Revolving Facility Amount.
SECTION 4.7 OTHER REQUIREMENTS. The Agent shall have received such
other documents and evidence with respect to the transactions contemplated by
this Agreement, in form and substance satisfactory to the Banks, as they may
reasonably request.
ARTICLE 5
COLLATERAL
SECTION 5.1 SECURITY INTEREST. To secure payment of the Obligations,
the Original Borrowers pursuant to the Original Agreement granted to the Agent,
as agent for the Banks, a continuing security interest in and to all of the
property and assets of the Original Borrowers to secure the Obligations. The
Borrower, as successor in interest to the Original Borrowers, does hereby
ratify, confirm and continue such grant. Accordingly, the Borrower hereby grants
to the Agent, for the ratable benefit of each Bank, a continuing security
interest in and to all of the assets and properties of the Borrower, whether now
owned or hereafter acquired and wherever located, including without limitation,
all (i) Accounts; (ii) Inventory; (iii) Equipment; (iv) General Intangibles; (v)
notes, drafts, letters of credit, debt and equity securities (including but
32
not limited to certain of the Honduras Shares, and the Auburn Shares and the
Burlen Shares), whether or not certificated, warrants, options, puts and calls
and other rights to acquire or otherwise relating to equity securities and other
instruments of any nature whatsoever; (vi) chattel paper and all bills of
lading, warehouse receipts and other documents of title; (vii) property or
interests in property now or hereafter coming into the possession, custody or
control of the Agent or any of the Banks in any way or for any purpose (whether
for safekeeping, deposit, custody, pledge, transmission, collection or
otherwise); (viii) proceeds of any loans made to the Borrower; (ix) deposit
accounts, monies, securities or other property or bank balances held by the
Agent or any of the Banks or any affiliate thereof; (x) insurance proceeds of or
relating to any of the foregoing; (xi) books and records relating to any of the
foregoing and to the business of the Borrower including without limitation, any
computer programming data relating to the foregoing; and (xii) accessions and
additions to, substitutions for and replacements, products and proceeds of any
of the foregoing.
SECTION 5.2 THE AGENT AS BORROWER'S ATTORNEY-IN-FACT.
5.2.1 APPOINTMENT. Pursuant to the Original Agreement the Original
Borrowers appointed the Agent, or any other person whom the Agent may designate,
as their attorney-in-fact, coupled with an interest, which power of attorney is
hereby confirmed and ratified by the Borrower, with full power of substitution
and with full power from time to time in the Borrower's stead: (i) to file any
and all financing statements, modifications and continuations in respect of the
Collateral and the transactions contemplated by this Agreement and the other
Loan Documents in any jurisdiction which the Agent deems appropriate with
respect to any Collateral, and the Borrower agrees to reimburse the Agent for
the reasonable expense of any such filing including reasonable attorneys fees;
(ii) to file a carbon, photographic or other reproduction of this Agreement or
of a financing statement if the Agent deems such filing necessary or desirable
under applicable law; (iii) to send requests for verification of Accounts to
customers or Account Debtors as long as such requests do not identify the Agent
or any Bank; (iv) after the occurrence and during the continuation of an Event
of Default (A) to endorse the Borrower's name on any checks, notes, acceptances,
money orders, drafts or other forms of payment or security that may come into
the Agent or any Bank's possession; (B) to sign the Borrower's name on any
invoice or ▇▇▇▇ of lading relating to any Account, on drafts against customers,
on schedules and assignments of Accounts, on notices of assignment, on
verifications of Accounts and on notices to customers; (C) to notify the post
office authorities to change the address for delivery of the Borrower's mail to
an address designated by the Agent; (D) to receive, open and dispose of all mail
addressed to the Borrower; (E) to file any claims or take any action or
institute any proceeding which the Agent deems necessary or desirable for the
collection of any Collateral or otherwise to enforce or protect its rights with
respect to the Collateral, including but not limited to any notification to any
account debtors of the Borrower; (F) to pay or discharge taxes, liens, security
interests or other encumbrances levied or placed on or threatened against the
Collateral, to effect any repairs with the proceeds of any insurance called for
by the terms of this Agreement and to pay all or any part of the premiums
therefor and the costs thereof; (G) to direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys due, and to
become due thereunder, directly to the Agent or as the Agent shall direct; (H)
to receive payment of and receipt for any and all moneys, claims and other
amounts due, and to become due at any time, in respect of or arising out of any
Collateral; (I) to sign and indorse any invoices, assignments,
33
verifications and notices in connection with accounts and other documents
constituting or relating to the Collateral; (J) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part hereof and to enforce any
other right in respect of any Collateral; (K) to defend any suit, action or
proceeding brought against the Borrower with respect to any Collateral; (L) to
settle, compromise or adjust any suit, action or proceeding described above and,
in connection therewith, to give such discharges or releases as the Banks may
deem appropriate; (M) to license or, to the extent permitted by an applicable
license, sublicense, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any patent or trademark, throughout the world
for such term or terms, on such conditions, and in such manner, as the Required
Lenders shall in their sole discretion determine; (N) generally to sell,
transfer, pledge, make any agreement with respect to or otherwise deal with any
of the Collateral as fully and completely as though the Agent were the absolute
owner thereof for all purposes, and to do, at the Agent's option and the
Borrower's expense, at any time, or from time to time, all acts and things which
the Agent reasonably deems necessary to protect, preserve or realize upon the
Collateral and the Liens of the Agent and the Banks therein, in order to effect
the intent of this Agreement, all as fully and effectively as the Borrower might
do; (O) to ask, demand, collect, ▇▇▇ for, recover and receive moneys due and to
become due under or in respect of any of the Collateral; or (P) to obtain and
adjust insurance required to be maintained pursuant to the within Agreement; and
(v) to do all things necessary to perfect the Agent's and each Bank's Lien in
the Collateral, to preserve and protect the Collateral and to otherwise carry
out this Agreement. This power being coupled with an interest is irrevocable
until the Obligations have been fully satisfied or the financing arrangements
between the Banks and Borrower are terminated, whichever shall later occur.
5.2.2 RATIFICATION OF ACTS. The Borrower hereby ratifies, to the
extent permitted by law, all that the attorneys acting pursuant to this
subsection shall lawfully, and in good faith do or cause to be done by virtue
hereof.
5.2.3 LIMITATION ON LIABILITY. The powers conferred on the Agent
hereunder are solely to protect the Banks' interest in the Collateral and shall
not impose any duty upon the Agent to exercise any such powers. The Agent and
each of the Banks shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers and neither the Agent, any
of the Banks nor any of the officers, directors, employees or agents shall be
responsible to the Borrower for any act or failure to act, except for their own
gross negligence or willful misconduct.
5.2.4 ADDITIONAL POWERS. The Borrower also authorizes the Agent, in
addition to its rights and remedies under the Uniform Commercial Code, at any
time and from time to time upon the occurrence and during the continuance of any
Event of Default or upon the nonpayment of any or all of the Obligations, after
demand for payment, (i) to communicate in the Agent's or any Bank's own name
with any party to any contract with regard to the assignment of the right, title
and interest of the Borrower in and under the contracts hereunder and other
matters relating thereto, and (ii) to execute, in connection with the sale
provided for herein, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
34
SECTION 5.3 TRADEMARK SECURITY AGREEMENT. To secure payment of the
Obligations the Original Borrowers, pursuant to the Original Agreement, entered
into a Trademark Security Agreement with the Agent wherein and whereby the
Agent, as agent for the Banks, was granted a security interest in certain
Trademarks (as therein defined), which Trademark Security Agreement was Amended
and Restated concurrently with the execution and delivery of the Restated
Agreement. The Borrower hereby ratifies and confirms the Amended and Restated
Trademark Security Agreement, and represents and warrants to the Agent and the
Banks, that the Amended and Restated Trademark Security Agreement is complete
and correct and continues to secure the Loans and other Obligations.
SECTION 5.4 REAL ESTATE ASSETS. To secure payment of the
Obligations, the Original Borrowers, pursuant to the Original Agreement, and the
Borrower pursuant to the June 14, 2002 Amendment thereto, granted to the Agent
as agent for the Banks, mortgages, assignments, pledges and/or other Liens on
the Real Estate Assets, other than the Borrower's lease for its Premises in
Secaucus, New Jersey. The Borrower hereby ratifies and confirms the Real Estate
Collateralization Documents as amended or restated concurrently herewith or
hereafter pursuant to this Agreement, and represents and warrants to the Agent
and the Banks that the Liens and other interests granted to the Agent, as agent
for the Banks in the Real Estate Assets remain in full force and effect as of
the date hereof and continue to secure the Loans and other Obligations.
SECTION 5.5 ADDITIONAL COLLATERAL. Concurrently with the execution
and delivery of this Agreement, (i) Burlen is granting to the Bank a security
interest and Lien on the Burlen Collateral pursuant to the Burlen Security
Agreement, and (ii) the Borrower, pursuant to an amendment to the Pledge
Agreement, as provided for in Section 3.1.5 hereof, is pledging the Burlen
Shares to the Banks.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and each of the Banks
as follows (each such representation and warranty deemed to be repeated on each
Advance Date):
SECTION 6.1 CORPORATE MATTERS.
6.1.1 EXISTENCE AND OWNERSHIP. The Borrower and each Guarantor is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its formation and is duly qualified as a foreign corporation and
in good standing in all states where the nature and extent of the business
transacted by it or the ownership of its assets makes such qualification
necessary, except for those states in which the failure to qualify would not
have a Material Adverse Effect. Schedule 6.1 annexed hereto, lists the legal and
beneficial owners of all of the issued and outstanding shares of capital stock
of the Borrower. The Borrower is the legal and beneficial owner of the Auburn
Shares and the Burlen Shares.
6.1.2 BI-ANNUAL REPORTS. Each of the Loan Parties has filed all annual
or bi-annual reports required to be filed by each of them in its state of
incorporation and each state in which it
35
has qualified to do business.
SECTION 6.2 CORPORATE AUTHORITY; NON-CONTRAVENTION. The execution,
delivery and performance by the Borrower of this Agreement and by the Borrower
and the Guarantors of all other Loan Documents as to which they are parties are
within the Borrower's and each Guarantor's corporate powers, have been duly
authorized by all necessary corporate action, and require no action by or in
respect of, or filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or bylaws of the Borrower or
any Guarantor of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Borrower or any Guarantor or result in the creation
or imposition of any Lien (other than any Lien created pursuant to the terms of
the Loan Documents) on any asset of the Borrower or any Affiliate, except for
any such contravention, default or Lien as would not have a Material Adverse
Effect.
SECTION 6.3 BINDING EFFECT. This Agreement and all other Loan
Documents and the Obligations are the legal, valid and binding obligations of
such of the Borrower and the Guarantors as are party thereto and are enforceable
against the Borrower and such Guarantor as are parties thereof in accordance
with their respective terms, except as limited by applicable bankruptcy,
reorganization, insolvency, moratorium, receivership or similar laws affecting
or relating to the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether enforcement is sought in a
proceeding in equity or at law).
SECTION 6.4 COLLATERAL. The Borrower has good, indefeasible, and
merchantable title to and ownership of the Collateral, free and clear of all
Liens except for the Liens permitted by Section 8.1 of this Agreement. All of
the Collateral, Auburn Collateral and Burlen Collateral and other assets and
properties of each Loan Party are currently maintained and insured as required
by this Agreement and the Security Agreements. Each Account (including all
Eligible Accounts) listed or referred to on any trial balance, balance sheet or
the books or records of any Loan Party, or referred to in any report to the
Agent or any Bank (other than Accounts which are proceeds of letters of credit,
insurance proceeds, contract rights, chattel paper, instruments and documents
not arising directly out of a sale or lease of goods or services) is and will be
free and clear of Liens in favor of any Person other than the Agent and the
Banks as provided in this Agreement, will cover a bona fide sale and delivery of
goods usually dealt in by such Loan Party in the ordinary course of its
business, and will be for a liquidated amount from a customer competent to
contract therefor and maturing as stated in the applicable Loan Party's
assignment thereof to the Agent. The Equipment is in good working order and
condition, ordinary wear and tear excepted, and is used or usable in the current
conduct of the Loan Parties' businesses, and each of the Loan Parties has all of
the machinery and equipment necessary to the current conduct of its businesses.
The Honduras Shares pledged to the Agent represent 65.6% of the issued and
outstanding shares of capital stock of Wundies de Honduras (the "Pledged
Honduras Shares"). The Auburn Shares and Burlen Shares pledged by the Borrower
represent all of the issued and outstanding capital stock of Auburn and Burlen.
The Borrower has all voting rights with respect to the Pledged Honduras Shares,
the Auburn Shares and the Burlen Shares and there are no warrants, options or
rights in any Person to acquire the Pledge Honduras Shares, the Auburn Shares,
the Burlen Shares or any other equity interest in Wundies de Honduras, Auburn or
36
Burlen, except that one (1) Honduras Share is owned by each of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. The Banks have
a first priority perfected lien on the Pledged Honduras Shares and Auburn Shares
and upon compliance by the Borrower with Section 3.1.5 of this Agreement, the
Banks will have a first priority perfected lien on all of the Burlen Shares.
SECTION 6.5 PLACE OF BUSINESS. The principal place of business and
chief executive office of the Borrower is set forth in the first paragraph of
this Agreement. The books and records of the Borrower and records concerning the
Eligible Accounts are located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇.
All Inventory and Equipment of each of the Loan Parties is located at the places
set forth on Schedule 6.5 annexed hereto.
SECTION 6.6 CORPORATE NAMES. Within the past five (5) years, no Loan
Party has been known by any corporate or fictitious name, except (i) that the
Borrower, prior to the Merger, was known by the names of the Original Borrowers,
and (ii) as provided in Schedule 6.6 annexed hereto.
SECTION 6.7 TAX LIABILITIES. The Borrower and the Guarantors have
filed all tax returns for and paid in full all federal, state and local taxes
(including all applicable payroll taxes) to the extent such filings and payments
required to be made prior to the date of this Agreement. All of such returns are
true, correct and complete. The Borrower does not have any knowledge of any
deficiency or additional assessment in connection with any of the foregoing tax
returns, not provided for on its or the applicable Guarantor's books, or
reserved against its or the applicable Guarantor books.
SECTION 6.8 OTHER AGREEMENTS. Neither the Borrower nor any Guarantor
is in default under any contract, lease or commitment to which it is a party or
by which it or any of its property is bound in any respect which would result in
a Material Adverse Effect nor knows of any dispute regarding any contract,
lease, or commitment which would result in a Material Adverse Effect.
SECTION 6.9 EMPLOYEE CONTROVERSIES. There are no controversies
pending or, to the best of the Borrower's knowledge after diligent inquiry,
threatened between any of the Loan Parties and any of their employees, other
than employee grievances arising in the ordinary course of business and those
which are not, in the aggregate, expected to have a Material Adverse Effect.
SECTION 6.10 COMPLIANCE WITH LAWS AND REGULATIONS. Each of the Loan
Parties is in compliance in all respects with all laws, orders, rules,
regulations, requirements, and ordinances of all federal, foreign, state and
local governmental or quasi-governmental authorities, and any judicial or
administrative interpretations thereof, applicable to its business, operations
and assets and all permits, licenses, certificates, approvals, authorization,
consents, or registrations required or obtained thereunder, for which the
failure to comply therewith would have a Material Adverse Effect.
SECTION 6.11 INTELLECTUAL PROPERTY. Each of the Loan Parties owns or
possesses all of
37
the material licenses, patents, patent applications, copyrights, service marks,
trademarks and trade names necessary for it to continue to conduct its business
as heretofore conducted by it, all of which are listed on Schedule 6.11 annexed
hereto.
SECTION 6.12 PENSION MATTERS. Except as set forth on Schedule 8.14
annexed hereto, no Loan Party has any Plan except for a plan established under
Internal Revenue Code 401(k) which plan is conducted, maintained and
administered in accordance with all applicable laws in all material respects.
SECTION 6.13 FINANCIAL STATEMENTS. The Borrower has delivered to the
Agent its financial statements for its fiscal years ending December 31, 2003 and
the nine (9) month period ending September 30, 2004 which are complete, correct
and represent in all material respects the financial position of the Borrower
and Auburn on a consolidated and consolidating basis as of the respective dates
thereof, and the result of the operations of the Borrower and Auburn for the
periods covered by such financial statements subject to normal and customary
adjustments for those statements that are not audited. The Borrower has
delivered to the Agent a Financial Statement for Burlen for the Fiscal year
ending January 2, 2004 which is complete, correct and represents in all material
respects the financial position of Burlen as of such date and the results of
operations of Burlen for such period, subject to normal customary year end
adjustments. Since the date of such financial statements of the Loan Parties
(the "Financial Statements"), there has not been any material adverse change in
the financial condition, assets, liabilities, business or operations of the
Borrower or Auburn.
SECTION 6.14 DISCLOSURE. No representation or warranty by the
Borrower or any Guarantor made to the Agent or any Bank contained in this
Agreement or any other document, certificate or written statement furnished by
or on behalf of the Borrower or any Guarantor for use in connection with the
transactions contemplated by this Agreement (including, without limitation, the
Financial Statements) contains any untrue statement of material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein, in the light of the circumstances under which they were made, not
misleading. The Borrower has not withheld any fact known to it which materially
adversely affects its or any Guarantor's business, operation, assets or
conditions (financial or otherwise) which has not been disclosed herein or in
such other documents, certificates and statements furnished to the Banks and the
Agent on or before the date hereof for use in connection with transactions
contemplated hereby.
SECTION 6.15 LOANS. After giving effect to this Agreement, except for
the Obligations, unsecured obligations to suppliers of goods and services
incurred and currently payable by the Loan Parties in the ordinary course of
business subsequent to the date of the Financial Statements and as disclosed on
the Financial Statements, as of the Closing Date, the Loan Parties have no other
Indebtedness.
SECTION 6.16 MARGIN AND INVESTMENT COMPANY ACT. No Loan Party owns
any margin security, and the proceeds of the Loans will not be used for the
purpose of purchasing or carrying any margin securities or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry any margin securities or for any other purpose not permitted by
Regulation U or X of the Federal Reserve Board. No Loan Party is an "investment
38
company" or a company "controlled" by an investment company within the meaning
of the Investment Company Act of 1940, as amended.
SECTION 6.17 PARENT, SUBSIDIARIES AND OTHER INTERESTS. The Borrower
has no subsidiaries and owns no interest in any corporation, partnership or
joint venture except (i) Wundies de Honduras, (ii) Auburn, (iii) Burlen, and
(iv) as set forth on Schedule 6.17 annexed hereto.
SECTION 6.18 LITIGATION AND PROCEEDINGS. Except as set forth in
Schedule 6.18 annexed hereto, no judgments are outstanding against any of the
Loan Parties and, to the best of the Borrower's knowledge after diligent
inquiry, there is not now pending or threatened any litigation, contested claim
or government proceeding, claim, assertion or investigation by or against any of
the Loan Parties, except pending or threatened litigation fully covered by
insurance and contested claims which arose in the ordinary course of business
and, in the aggregate, seek recovery of less than $50,000.
SECTION 6.19 ENVIRONMENTAL MATTERS. Except as set forth on Schedule
6.19 annexed hereto, (i) the business and operations of the Loan Parties and the
condition of their assets, property and the Premises comply in all material
respects with all applicable Environmental Law and Environmental Permits; (ii)
there has been no Release, or threat of Release in either case in violation of
any Environmental Law, from, at or about the Premises or any property now or
previously used by any of the Loan Parties or their businesses or operations or
for the transport, storage or disposal of any of their assets or wastes; (iii)
to the knowledge of the Borrower there has not been any injury to the
Environment, in violation of any Environmental Law, including any person,
property, animal life or vegetation, caused by any Release or threatened Release
on the Premises or as a result of the transport, storage or disposal of any of
its assets or wastes; (iv) to the knowledge of the Borrower there is and has
been no investigation, proceeding, complaint, order, directive, claim, citation
or notice alleging violation of any Environmental Law by any Person past,
pending or threatened, affecting the Premises, any of the Loan Parties, or any
present or prior tenant, user, owner, operator, or any other person in any way
related to any of the foregoing, or their businesses, operations, assets,
equipment, property, leaseholds, or other facilities, or any properties at which
any of the Loan Parties transported, stored or disposed of any Hazardous
Substances, or any property near any of the foregoing, with respect to (a)
Releases or threats of Release (b) air emissions, (c) spills, releases or
discharges to sewer, septic system or waste treatment, storage or disposal
systems, (d) noise emissions, (e) solid or liquid waste disposal, (f) the use,
generation, storage, transportation or disposal of Hazardous Substances, (g)
alleged violations of any Environmental Law, (h) any other environmental, health
or safety matters, (any of which (iv)(a) through (h) is hereafter referred to as
an "Environmental Complaint"); (v) each of the Loan Parties have filed all
notices required to be filed under any Environmental Law indicating past or
present treatment, storage, use or disposal of Hazardous Substances or reporting
Release(s); (vi) to the knowledge of the Borrower, no Loan Party has any
material contingent liability in connection with any past or present Release or
threatened Release in violation of any Environmental Law; (vii) the Borrower has
no knowledge of any condition concerning the Environment or affecting any of the
Premises; and (viii) the Premises are not currently used, nor to the knowledge
of the Borrower have they been used in the past, by any Person in a manner which
violates any Environmental Law or which could give rise
39
to liability for Hazardous Substances, nor do conditions exist on or affect the
Premises which could violate any such law or give rise to such liability.
SECTION 6.20 THE REAL ESTATE ASSETS.
6.20.1 IMPROVEMENTS. Except as set forth on Schedule 6.19 annexed
hereto, the improvements on the respective parcels of real property constituting
the Real Estate Assets (the "Improvements") and the present use thereof do not
violate in any material respect (i) any restrictive covenants or other
agreements applicable thereto, or (ii) any federal, state or municipal laws,
regulations or requirements (including, without limitation, any zoning,
building, subdivision or Environmental law, regulations or requirements), and
neither the Borrower nor Auburn has received nor is the Borrower aware of any
notice of the violation of the same.
6.20.2 CERTIFICATES OF OCCUPANCY. All required certificates of
occupancy for the use, occupancy and operation of the Improvements have been
issued and are in full force and effect and the Borrower is not aware of any
pending or threatened action or proceeding to revoke or modify the same.
6.20.3 CONDITION. No material part of the Improvements has been damaged
(by fire or otherwise) in any material respect and not repaired, or in the
process of being repaired, nor taken in condemnation or in any other like
proceeding, nor is any condemnation or like proceeding pending with respect to
any of the Real Estate Assets.
6.20.4 LEASES. As of the Closing Date, other than the Leases, there are
no leases, tenancies or occupancies, or agreements, written or oral, or Person
other than the Loan Parties in, or entitled to, possession of any portion of the
Real Estate Assets.
6.20.5 NO DEFAULTS. Neither the Borrower nor Auburn is in any respect
in default in the performance of any of the terms or provisions of any of the
Leases, nor is there are any fact or condition which, with notice or lapse of
time or both, would become such a default. There are no understandings,
contracts, agreements or commitments of any kind whatsoever with respect to any
of the Leases or the premises covered thereby except as expressly provided for
in the Leases.
6.20.6 JUDGMENTS. Except as set forth in Schedule 6.19, there are no
Liens, judgments, actions or proceedings filed or pending against any of the
Real Estate Assets, other than first mortgages held by Bank of America N.A. on
the Georgia Properties, and Liens in favor of the Agent for the benefit of the
Banks.
6.20.7 REAL ESTATE ASSETS. As of the Closing Date, the Real Estate
Assets constitute all of the Borrower's real estate and direct, or indirect
interests in real estate, and there has been no material decrease in the value
of the Real Estate Assets since September 11, 2000.
SECTION 6.21 DISSOLUTION OF AFFILIATES. The Borrower has caused
In-Touch Communications, Inc., a Delaware corporation, to be liquidated and
dissolved.
SECTION 6.22 RELEASE OF LIENS OF RECORD. The Borrower has terminated,
or cause to be
40
terminated, all UCC financing statements naming the CIT Group/Commercial
Services, Inc. and/or Capital Factors, Inc., as secured party, and the Borrower,
as debtor.
ARTICLE 7
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that so long as this Agreement remains
in effect (whether or not there are any outstanding Obligations):
SECTION 7.1 FINANCIAL STATEMENTS. Each of the Loan Parties shall
keep proper books and records in accordance with a consistent application
(except as otherwise consented to by the Agent) of GAAP in which full and true
entries will be made of all dealings or transactions of or in relation to its
business and affairs. Each of the Loan Parties shall at all times hereunder (i)
keep correct and accurate records itemizing and describing the kind, type,
location, quality and quantity of Inventory, its cost therefor, daily
withdrawals therefrom and accessions thereto, and (ii) keep correct and accurate
records itemizing and describing the kind, type, age and condition of the
Equipment, together with records of its cost therefor and all accumulated
depreciation thereof. The Borrower shall deliver to the Agent for the benefit of
the Banks:
7.1.1 as soon as practicable but in any event within sixty (60) days
after the end of each of first and third fiscal quarters (a) consolidated and
consolidating statements of income, profits and losses, and retained earnings of
the Loan Parties for such quarter, setting forth, in comparative form, budgeted
figures for such quarter and actual figures for the corresponding quarter in the
preceding fiscal year, and consolidated and consolidating balance sheet of the
Loan Parties as of the end such quarter, setting forth, in comparative form,
actual figures as at the end of the corresponding quarter in the preceding
fiscal year, all in reasonable detail and certified as accurate by the Chief
Executive Officer, Chief Financial Officer or Chief Operating Officer of the
Borrower, subject to changes resulting from normal year-end adjustments, and (b)
consolidated and consolidating operating statements for the Loan Parties for
such quarter including, without limitation, statements of cash flow and analysis
of working capital and other data as the Agent may reasonably request, and a
comparison of actual cash flow and working capital with budgeted amounts for
such quarter;
7.1.2 as soon as practicable but in any event within sixty (60) days
after the end of the Borrower's fiscal six (6) month period (a) consolidated and
consolidating statements of income, profits and losses, and retained earnings of
the Loan Parties for such period, setting forth in comparative form, budgeted
figures for such six (6) month period and actual figures for the corresponding
six (6) month period in the preceding fiscal year, and consolidated and
consolidating balance sheets of the Loan Parties as of the end such six (6)
month period, setting forth, in comparative form, actual figures as at the end
of the corresponding six (6) month period in the preceding fiscal year, all in
reasonable detail, reviewed by independent public accounts selected by the
Borrower and satisfactory to the Agent, subject to changes resulting from normal
year-end adjustments, and (b) consolidated and consolidating operating
statements for the Loan Parties for such six (6) month period including, without
limitation, statements of cash flow and analysis of working capital and other
data as the Agent or the Banks may reasonably request, and
41
a comparison of actual cash flow and working capital with budgeted amounts for
such period;
7.1.3 as soon as practicable but in any event within ninety (90) days
after the end of each fiscal year, consolidated and consolidating statements of
income, retained earnings and changes in financial condition for the Loan
Parties for such year, and a consolidated and consolidating balance sheet of the
Loan Parties as of the end of such year, all with supporting schedules setting
forth in each case, in comparative form, corresponding figures for the period
covered by the preceding annual audit and as of the end of the preceding fiscal
year, certified by PricewaterhouseCoopers LLP independent public accountants, or
such other nationally recognized firm of certified public accountants as has
been selected by the Borrower and is satisfactory to the Agent, whose opinion
shall be unqualified and otherwise in scope and substance reasonably
satisfactory to the Agent;
7.1.4 as soon as practicable but in any event not more than three (3)
Business Days after the Chief Executive Officer, Chief Financial Officer or
Chief Operating Officer of the Borrower obtains knowledge of the occurrence or
the existence of a Default or Event of Default hereunder, notice of any and all
such Defaults or Events of Default;
7.1.5 as soon as practicable, such other business or financial data,
reports, or evaluations (whether or not prepared by the Borrower) as the Agent
or the Banks may reasonably request.
7.1.6 as soon as practicable but in any event within sixty (60) days
after the end of the fiscal quarter of Delta Galil (a) a statement of income and
retained earnings of Delta Galil for such quarter, setting forth, in comparative
form, budgeted figures for such quarter and actual figures for the corresponding
quarter in the preceding fiscal year, and a balance sheet of Delta Galil as of
the end of such quarter, setting forth, in comparative form, actual figures as
at the end of the corresponding quarter in the preceding fiscal year, all in
reasonable detail and certified as accurate by the Chief Executive Officer,
Chief Financial Officer or Chief Operating Officer of Delta Galil, subject to
changes resulting from normal year-end adjustments, and (b) an operating
statement for Delta Galil for such quarter including, without limitation,
statements of cash flow and analysis of working capital and other data as the
Agent or the Banks may reasonably request, and a comparison of actual cash flow
and working capital with budgeted amounts for such quarter;
7.1.7 as soon as practicable but in any event within sixty (60) days
after the end of the Delta Galil's fiscal six (6) month period (a) statements of
income and retained earnings of Delta Galil for such period, setting forth in
comparative form, budgeted figures for such quarter and actual figures for the
corresponding six (6) month period in the preceding fiscal year, and a balance
sheet of Delta Galil as of end of such six (6) month period, setting forth, in
comparative form, actual figures as at the end of the corresponding six (6)
month period in the preceding fiscal year, all in reasonable detail, reviewed by
independent public accounts selected by Delta Galil and satisfactory to the
Agent, subject to changes resulting from normal year-end adjustments, and (b) an
operating statement for Delta Galil for such six (6) month period including,
without limitation, statements of cash flow and analysis of working capital and
such other data as the Agent or the Banks may reasonably request, and a
comparison of actual cash
42
flow and working capital with budgeted amounts for such period;
7.1.8 as soon as practicable but in any event within ninety (90) days
after the end of each fiscal year, a statement of income, statement of profits
and losses, retained earnings and changes in financial condition for Delta Galil
for such year, and a balance sheet of Delta Galil as of the end of such year,
all with supporting schedules setting forth in each case, in comparative form,
corresponding figures for the period covered by the preceding annual audit and
as of the end of the preceding fiscal year, certified by such nationally
recognized firm of certified public accountants as has been selected by Delta
Galil and is satisfactory to the Agent, whose opinion shall be unqualified and
otherwise in scope and substance reasonably satisfactory to the Agent;
7.1.9 as soon as practicable, all periodic filings by Delta Galil with
the United States Security and Exchange Commission and such other business or
financial data, reports, evaluations or certificates of Delta Galil as the Agent
may reasonably request.
All financial statements delivered to the Agent pursuant to Section
7.1.1 through 7.1.5 of this Agreement (except where otherwise expressly
indicated) shall be prepared in accordance with GAAP, applied on a consistent
basis (except as otherwise consented to by the Agent). Together with each
delivery of statements of income, retained earnings, changes in financial
condition and balance sheets required hereunder, the Borrower shall deliver to
the Agent (i) an Officer's Certificate in substantially the form of "Exhibit I"
annexed hereto, stating that (a) there exists no Default or Event of Default or,
if any Default or Event of Default exists, specifying the nature thereof and the
action the Borrower expect to take with respect thereto, and (b) no Material
Adverse Effect has occurred with respect to any of the Loan Parties, (ii) a
certificate that it is in compliance with the covenants set forth in Sections
8.18, 8.19 and 8.20 of this Agreement, together with a statement setting forth
its calculations in making such determination, and (iii) with respect to such
financial statements described in this Section 7.1, a certificate of the
independent public accountant performing the audit that, in conducting the audit
necessary to permit them to issue a report with respect to such financial
statements, they have obtained no knowledge of the existence of a Default or
Event of Default, or, if such accountants did obtain such knowledge, specifying
the nature of the Default or Event of Default.
All financial statements delivered to the Agent pursuant to Section
7.1.6 through 7.1.9 of this Agreement shall be prepared in accordance with
generally accepted accounting principals in Israel, applied on a consistent
basis (except as otherwise consented to by the Agent).
SECTION 7.2 INSPECTION. The Agent, or any Person designated by the
Agent, shall have the right, from time to time hereafter, to call at each Loan
Party's place or places of business (or any other place where the Collateral or
any information relating thereto is kept or located) during reasonable business
hours, without hindrance or delay, (i) to inspect, audit, check and make copies
of and extracts from the applicable Loan Party's books, records, journals,
orders, receipts, correspondence and other data relating to the Loan Party's
business or to any transactions between the parties hereto and whether such item
or data are maintained in accordance with such Loan Party's standard operating
procedures or pursuant to this Agreement, (ii) to verify such matters concerning
the Collateral as the Agent (in the Agent's sole and absolute discretion) may
consider appropriate and (iii) to discuss the affairs, finances and business of
the Loan Parties
43
with their officers and directors. Upon request, the Borrower shall provide the
Agent with copies of such documents as the Agent may request. The Borrower shall
deliver to the Agent, within three (3) Business Days of its request, any
instruments necessary to obtain records from any Person maintaining the same.
The Agent shall have the right, at any time or times after an Event of Default
has occurred and is continuing, to verify by mail, telephone, telegraph or other
communication with any Account Debtor, under any name and in any form, the
validity, amount or any other matter relating to any or all of the Accounts. The
Borrower shall pay on demand all expenses reasonably incurred by the Agent in
acquiring information pursuant to this Section 7.2 including, but not limited
to, appraisers and asset based lender review auditors.
SECTION 7.3 CONDUCT OF BUSINESS. If any change in the principal
place of business and chief executive office or location of books and records of
the Borrower from that shown in the preamble to this Agreement, or any change in
the places where any Loan Party's Inventory or Equipment is located as permitted
in Section 6.5 of this Agreement is to occur, the Borrower shall notify the
Agent and the Banks thirty (30) days in advance thereof. Each Loan Party shall
maintain in full force and effect its corporate existence, licenses, bonds,
franchises, leases, patents, trademarks, contracts and other rights necessary to
the profitable conduct of its business. Each Loan Party shall comply with any
and all labor or employment related laws, statutes, rules and regulations of any
governmental or quasi-government authority asserting jurisdiction for such
transfer of business location. Each Loan Party shall continue in and limit its
operations to the same general line or type of business as that presently
conducted by it and shall comply in all material respects with all applicable
laws and regulations of all federal, state or local governmental authorities.
The Collateral shall remain, at all times, at the locations set forth in
Schedule 6.5 of this Agreement and the Borrower shall not transfer the
Collateral, books or records from such Premises to any other location without
the prior written consent of the Agent, except in the ordinary course of
business.
SECTION 7.4 TAXES. Each Loan Party shall prepare and timely file all
federal, state and local tax returns required to be filed by them and shall pay
to the appropriate governmental authorities when due, all present and future
Federal, state, local and other income and other taxes, including but not
limited to sales taxes, payroll taxes and property taxes, together with interest
thereon and penalties with respect thereto, if any, and any payment of
principal, interest charges, fees or other amounts made on or in respect thereof
to be paid or deposited by the applicable Loan Party ("Tax Liabilities"), except
that such Loan Party may defer any such payment if it is diligently contesting
such Tax Liabilities in good faith by appropriate proceedings, provided the
taxpayer has maintained an adequate reserve according to GAAP, but any such
deferment shall not extend beyond the time when such unpaid Tax Liabilities
become a Lien upon any of such Loan Party's assets. Each Loan Party will furnish
the Agent promptly after its request with evidence satisfactory to the Agent
establishing payment of such Taxes. In the Required Lender's discretion, the
Agent shall have the right (but shall not be obligated) to pay any Tax
Liabilities in the event any Loan Party shall fail timely to do so, provided
that the Agent provides the Borrower with not less than seven (7) days prior
written notice of any such payment; any such payment shall be deemed an Advance
hereunder bearing interest at the Prime Rate. After the provision by the Agent
to the Borrower of official receipts evidencing such payments, the Borrower
shall, promptly on demand, reimburse the Agent for any such payment and any
costs and expenses (including reasonable attorneys' fees) which it or the Banks
may
44
incur in connection therewith.
SECTION 7.5 INSURANCE. Each Loan Party shall at all times and at its
expense maintain business interruption coverage, public liability, product
liability and third party property insurance, and shall keep such of their
tangible assets as constitute Collateral, Auburn Collateral, or Burlen
Collateral, as is applicable, insured against loss or damage by fire, theft,
explosion and all other hazards and risks insured against by other owners or
users of similar businesses in amounts at least equal to the lesser of (i) the
outstanding principal balance of the Obligations, or (ii) the full replacement
value of all such assets. All such policies of insurance shall (i) be in a form,
in amounts and with insurers reasonably acceptable to the Agent, (ii) require at
least thirty (30) days prior written notice to the Agent of termination or
material alteration, (iii) name the Agent on behalf of each Bank as a lender,
loss payee or additional insured, as the case may be, or be validly assigned to
the Agent as agent for the Banks, in form and substance satisfactory to the
Agent, and (iv) allow the Agent to pay any premiums therefor or deductibles
thereunder for or on account of the applicable Loan Party. The Borrower shall
deliver to the Agent certificates of such insurance and evidence of payment of
all premiums therefor, quarterly statements which describe any and all claims in
excess of $100,000 made thereunder and, at least ten (10) days prior to the
expiration of such policies, certificates of renewal. If any Loan Party, at any
time or times hereafter, shall fail to obtain or maintain policies of insurance
required hereunder, or to pay any premium in whole or in part relating thereto,
the Agent may, without waiving or releasing any obligation of the applicable
Loan or any Default or Event of Default hereunder, at any time or times
thereafter (but shall be under no obligation to do so), obtain and maintain such
policies of insurance and pay such premiums therefore and take any other action
with respect thereto which the Agent deems advisable. The Borrower shall,
promptly on demand, reimburse the Agent for any such payment and any costs or
expenses (including reasonable attorneys fees) which it may incur in connection
therewith.
SECTION 7.6 NOTICE OF SUIT ETC. The Borrower shall, as soon as
practicable but in any event within two (2) Business Days after the Borrower
learns of any of the following, give written notice to the Agent of (i) any
material proceeding instituted or threatened to be instituted, by or against any
Loan Party in any federal, state, local or foreign court or before any
commission or other regulatory body (federal, state, local or foreign), (ii) any
violation of law, statute, regulation or ordinance which could reasonably be
expected to have a Material Adverse Effect on any Loan Party and (iii) any
material adverse change in business, assets or condition, financial or
otherwise, of any Loan Party.
SECTION 7.7 PRESERVATION OF COLLATERAL AND PERFECTION OF LIENS
THEREIN.
7.7.1 PRESERVATION OF COLLATERAL AND PERFECTION OF LIENS. The Borrower
shall take such steps as are necessary to preserve the value of all Accounts,
Inventory, Equipment, and other material properties owned by any of the Loan
Parties or used by them in their businesses, ordinary wear and tear excepted.
The Borrower shall execute and deliver to the Agent for the benefit of the
Banks, concurrently with the execution of this Agreement and at any time or
times hereafter, any and all instruments, documents, conveyances, assignments,
mortgages, security agreements, financing statements or other Loan Documents
(and shall pay the cost of filing or recording the same in all offices deemed
necessary by the Agent) as the Agent in its sole and
45
absolute discretion may request and in form and substance satisfactory to it, to
perfect and keep perfected the Liens in the Collateral granted by the Borrower,
and the Auburn Collateral and Burlen Collateral granted respectively by Auburn
and Burlen to the Banks, to otherwise protect or preserve such collateral and
Banks' Lien therein, or to enforce such Lien in such collateral or to create or
perfect a Lien in the Banks' favor in any other assets or property now owned or
hereafter acquired by any Loan Party.
7.7.2 MAINTAIN EQUIPMENT. The Borrower shall, and shall cause Auburn
and Burlen to, keep and maintain the Equipment useful and reasonably necessary
to such Loan Party's business in good operating condition and repair, ordinary
wear and tear excepted, and shall make all necessary replacements thereof so
that the value and operating efficiency thereof shall at all times be maintained
and preserved in accordance with industry standards, shall promptly inform Agent
of any additions to or deletions from the Equipment; and shall not permit any
such Equipment to become a fixture to real estate or an accession to other
personal property. The Borrower shall, immediately upon demand, deliver to the
Agent any and all evidences and indices of ownership of any of the Equipment
(including, but not limited to, certificates of title and applications for
title).
7.7.3 INTELLECTUAL PROPERTY. The Borrower, within ten (10) days
thereafter, shall notify the Agent of any property which any Loan Party has
acquired which should be listed on Schedule 6.11 hereto, and will do and perform
such acts as the Agent shall reasonably require to grant the Banks a security
interest therein. The Borrower may cause Auburn to obtain and deliver to the
Agent a written consent from Converse, Inc. authorizing the Agent upon the
occurrence of an Event of Default, to exercise its right of sale of Inventory
bearing the trademarks licensed by Converse, Inc. to Auburn. If such consent is
not received by the Agent, not more than $1,000,000 of such licensed Inventory
shall be included in the Borrowing Base.
SECTION 7.8 REPORTS.
7.8.1 MONTHLY REPORTS. The Borrower shall deliver to the Agent, no
later than the fifteenth (15th) calendar day of each month, a written report,
which shall include, as of the last Business Day of the preceding month, the
following, in form reasonably satisfactory to the Agent:
7.8.1.1 a detailed aged trial balance of Accounts;
7.8.1.2 an accounts payable aging; and
7.8.1.3 a Borrowing Base Certificate in the form annexed hereto
as EXHIBIT J certified by the President or Chief Financial Officer of the
Borrower.
The monthly reports shall also include such additional information as
the Agent shall from time to time require. Upon request therefor by the Agent,
the Borrower shall furnish copies of any reports or information, in form
satisfactory to the Agent, concerning assets, liabilities and collateral as the
Agent may reasonably require.
46
7.8.2 ADDITIONAL REPORTS. Upon the reasonable request of any Bank, the
Borrower shall deliver to the Banks within the time periods reasonably requested
by such Bank such further schedules, information and/or documents as each Bank
may reasonably require. The items to be provided under this subsection are to be
in form and scope satisfactory to the requesting Bank, and provided to all of
the Banks.
SECTION 7.9 COMPLY WITH LAWS. Each Loan Party shall comply in all
material respects with all applicable laws and regulations with respect to its
properties and business, including such laws and regulations as are hereafter
enacted or promulgated by any governmental authority having jurisdiction over it
or any of its properties.
SECTION 7.10 PAY ALL INDEBTEDNESS. Each Loan Party shall pay all
Indebtedness and obligations, secured and unsecured, promptly in accordance with
their terms and promptly pay and discharge or cause to be paid and discharged
all license fees, assessments and governmental charges or levies imposed upon it
or upon its income and profits or upon its properties, or upon any part thereof,
respectively, before the same shall become in default, as well as all lawful
claims for labor, materials and supplies or otherwise which, if unpaid, might
become a lien or charge upon its properties, or any part thereof, provided that
they shall not be required to pay and discharge or cause to be paid and
discharged any such assessment, charge, levy or claim so long as the validity
thereof shall be contested in good faith by appropriate proceedings and they
shall have set aside on their books adequate reserves with respect to any such
assessment, levy or claim so contested in accordance with GAAP.
SECTION 7.11 COLLATERAL AUDIT, ETC. Upon any Bank's request and at
the Borrower's expense, (i) not more than two (2) times per calendar year
(unless an Event of Default has occurred whereupon there shall be no limit,
PROVIDED, HOWEVER, that if the Event of Default has been cured or waived, an
additional audit may be conducted at the Borrower's expense within three (3)
months thereafter) the Agent shall retain an auditor, to examine, prepare and
complete an audit and/or valuation of all or any of the Collateral, Auburn
Collateral or Burlen Collateral, which the Agent may use in determining the
Borrowing Base or for any other purpose, and which shall otherwise be in form
and substance satisfactory to the Agent, and (ii) not more often than one (1)
time per annum the Agent may retain an appraiser to prepare an appraisal and
valuation of all or any of the Real Estate Assets, and at the Agent's option, an
environmental assessment and report with respect thereto.
SECTION 7.12 PROCEEDS OF LOANS. The proceeds of the Loans will be (i)
used by the Borrower for (a) its working capital, and (b) up to $65,000,000 used
to fund the Borrower's purchase of the Burlen Shares, (ii) loaned to Burlen to
satisfy its Indebtedness to Bank of America and (iii) loaned to or invested in
Auburn or Burlen for use as working capital, and for no other purpose.
SECTION 7.13 ENVIRONMENTAL LAWS. Each Loan Party shall conduct its
business and control its use of any of the Premises so as to comply in all
material respects with Environmental Law and all Environmental Permits obtained
thereunder, including without limitation, the Federal Resource Conservation and
Recovery Act, the Federal Comprehensive Environmental Response, Compensation and
Liability Act, the Federal Clean Water Act, the Federal Clean Air
47
Act and the Federal Occupational Safety and Health Act and all state
counterparts thereof and to avoid the occurrence of any Release or threatened
Release, in amounts in violation of any Environmental Law, any Environmental
Complaint and the creation of any liability under Environmental Law concerning
the Loan Parties, their Affiliates, their business or any of the Premises;
PROVIDED, HOWEVER, that nothing contained in this Section 7.13 shall prevent any
Loan Party from contesting, in good faith and by appropriate legal proceedings,
any such law, regulation or interpretation or application thereof. If a Loan
Party shall receive notice that any violation of any Environmental Law may or is
alleged to have been committed or is about to be committed by it, or in the case
of the Borrower by Auburn or Burlen or any past or then present tenant, user,
owner, operator or any other Person, on, at or about the Premises, or that any
Loan Party or Bank has or may have any liability or obligations under any
Environmental Law or by reason of any Release or threatened Release in amounts
in violation of any Environmental Law, the Borrower agrees that it shall, at its
own expense and subject to the contract rights set forth above, immediately
cure, or if appropriate cause Auburn or Burlen, as is appropriate to cure, the
same and indemnify, protect, defend and hold the Banks and their officers,
directors, employees, attorneys, and agents harmless from any and every
liability, loss, damage, responsibility, obligation action, judgment, suit,
claim, and expense (including reasonable attorney's fees and all reasonable
expenses incurred by reason of such or by reason of any action to enforce this
Section 7.13 as well as fines, penalties, cleanup costs, disbursements,
investigation costs and consultants fees) in respect thereof.
SECTION 7.14 NOTICE OF RELEASE OR ENVIRONMENTAL COMPLAINT. The
Borrower shall promptly give to the Agent oral AND written notice of the
occurrence of any Release in amounts in violation of any Environmental Law or
Environmental Complaint. Such notices shall include, among other information,
the name of the Person who filed or made the claim, the nature of the claim, the
actual or potential amount of the claim, a detailed description of the events,
Release or Environmental Complaint and the Loan Party's plan for dealing with
same. The Borrower shall promptly comply, or cause Auburn or Burlen, as may be
applicable, to comply with its obligations under all laws and regulations with
regard to such Release or Environmental Complaint.
SECTION 7.15 ADDITIONAL COLLATERAL. Promptly advise the Banks as to
(i) the acquisition by any Loan Party of any interest in any real estate, and
all the particulars thereof, and if requested by the Agent (which shall make
such a request, if so directed by the Required Lenders) assist the Agent for the
benefit of the Banks in obtaining a first priority Lien thereon, and (ii) any
new address where any of the Collateral, Auburn Collateral or Burlen Collateral
may be located.
SECTION 7.16 EXECUTION OF SUPPLEMENTAL INSTRUMENTS. Execute and
deliver to the Agent from time to time, upon demand, such supplemental
agreements, statements, assignments and transfers, or instructions or documents
relating to the Collateral, the Auburn Collateral or the Burlen Collateral and
such other instruments as the Agent may reasonably request, in order that the
full intent of this Agreement may be carried into effect.
SECTION 7.17 OPERATING ACCOUNTS. The Borrower shall maintain all of
its operating accounts and cash management arrangements with any of the Banks
and, as soon as is practical,
48
but in any event prior to February 1, 2005, cause each of Auburn and Burlen to
(i) take such action as is necessary to cause all of its operating and cash
management accounts to be maintained at any of the Banks, and to provide the
Agent with such evidence as the Agent may reasonably require to establish
Auburn's and Burlen's compliance with this covenant, or (ii) execute, and have
each bank where such accounts are maintained execute, such blocked account, and
other agreements, with respect to such account as the Agent shall reasonably
require.
SECTION 7.18 EXECUTIVES. Each of the Loan Parties shall continue to
employ its Chief Executive Officer in the same capacity, and with substantially
the same duties, as such Person holds on the Closing Date; PROVIDED, HOWEVER,
that if any such Person leaves the employ of the applicable Loan Party for any
reason, the Borrower (i) within ten (10) Business Days thereafter shall give the
Agent notice thereof, and (ii) within ninety (90) Business Days shall have
filled the vacated position with a Person reasonably satisfactory to the Agent.
SECTION 7.19 WUNDIES, INC. Within forty-five (45) days of the Closing
Date, the Borrower shall cause Wundies, Inc, a New York corporation, to be
dissolved, and shall provide the Agent with evidence thereof.
ARTICLE 8
NEGATIVE COVENANTS
The Borrower agrees that without the prior written consent of the
Required Lenders, except with respect to Sections 8.3, 8.5, 8.10, 8.15 where the
consent of all of the Banks shall be required.
SECTION 8.1 LIENS. No Loan Party shall create, incur, assume or
suffer to exist any Lien on any of their assets, including, without limitation,
the Collateral except (i) Permitted Encumbrances (ii) Liens on Equipment
hereafter leased or acquired by a Loan Party, provided that (a) such Liens
secure Capitalized Lease Obligations or other Indebtedness permitted by clause
(vii) of Section 8.2 of this Agreement and (b) such Liens do not apply to any
other property or assets of the applicable Loan Party; or (iii) against the Real
Estate Assets as contemplated by Sections 3.1 and 5.4 of this Agreement and
listed on Schedule 8.1 annexed hereto.
SECTION 8.2 INDEBTEDNESS. The Borrower shall not, and shall not
permit Auburn or Burlen to, incur, create, assume or become in any manner liable
with respect to, or permit to exist, any Indebtedness except:
(i) the Obligations;
(ii) Indebtedness for capital expenditures as permitted
pursuant to Section 8.8 of this Agreement;
(iii) Indebtedness existing on the Closing Date as described
or referred to in Schedule 8.2 annexed hereto;
49
(iv) unsecured short-term trade obligations of the Borrower
and other accrued liabilities incurred, currently payable and paid in the
ordinary course of its business;
(v) endorsements of instruments for deposit or collection in
the ordinary course of business;
(vi) taxes accrued but not yet due and payable, or being
contested in good faith as permitted by Section 7.4 of this Agreement;
(vii) obligations arising under long term pension plans
subject to ERISA; and
(viii) Indebtedness in the aggregate amount not to exceed
$4,753,200, to Bank of America, fully secured by cash collateral in amount equal
thereto, which Indebtedness shall be fully discharged on or before February 28,
2005.
(ix) intercompany Indebtedness, as permitted by Section 8.7
(iii) of this Agreement.
SECTION 8.3 CONSOLIDATIONS, MERGERS OR ACQUISITIONS. The Borrower
shall not, and shall not permit Auburn or Burlen, to recapitalize, consolidate
or merge with or otherwise acquire all or substantially all of the assets or
properties of any Person without the express written consent of each Bank.
SECTION 8.4 GUARANTIES. No Loan Party shall guarantee, endorse or
otherwise in any way become directly or contingently liable for or in connection
with the obligations of any other Person, except (i) endorsements of negotiable
instruments for collection in the ordinary course of business (ii) guarantees
made in the ordinary course of business up to an aggregate amount of $250,000
outstanding at any time, and (iii) guaranties in favor of the Banks entered into
in connection with this Agreement.
SECTION 8.5 DISPOSAL OF PROPERTY. No Loan Party shall sell, lease,
transfer or otherwise dispose of any of properties, assets (whether tangible or
intangible) or rights, except (i) sales of Inventory to customers in the
ordinary course of business, and (ii) sales of obsolete or surplus Equipment.
SECTION 8.6 INVESTMENTS. No Loan Party shall purchase or acquire
obligations or stock of, or any other interest in, any Person, except (i)
obligations issued or guaranteed by the United States of America or any agency
thereof (ii) commercial paper with maturities of not more than 180 days and a
published rating of not less than A-1 or P-1 (or the equivalent rating), (iii)
certificates of time deposit and bankers' acceptances having maturities of not
more than 180 days and repurchase agreements backed by United States government
securities of a commercial bank if (A) such bank is a Bank or (B) has a combined
capital and surplus of at least $500,000,000, or (C) its debt obligations, or
those of a holding company of which it is a subsidiary, are rated not less than
A (or the equivalent rating) by a nationally recognized investment rating
agency, and (iv) U.S. money market funds that invest solely in obligations
50
issued or guaranteed by the United States of America or an agency thereof.
SECTION 8.7 LOANS. No Loan Party shall make advances, loans or
extensions of credit to any Person, except with respect to (i) the extension of
commercial trade credit in connection with the sale of Inventory in the ordinary
course of its business; (ii) loans to its employees in the ordinary course of
business not to exceed the aggregate amount of $75,000 at any time outstanding;
and (iii) intercompany loans and advances or extensions of credit to or from the
Borrower, Auburn, Burlen or Delta Galil.
SECTION 8.8 CAPITAL EXPENDITURES. The Borrower shall not, and shall
not permit Auburn or Burlen to, contract for, purchase or make any expenditure
or commitments for fixed or capital assets (including capitalized leases) in
2005 in an amount in excess of (a) $1,500,000 plus (b) $2,500,000 for roof
repairs by Burlen in the aggregate for all of the Loan Parties and in any
subsequent fiscal year reporting period of the Borrower in an amount in excess
of $1,500,000 in the aggregate for all of the Loan Parties.
SECTION 8.9 DIVIDENDS. The Borrower shall not declare pay or make
any dividend or distribution on any shares of the common stock or preferred
stock of the Borrower (other than dividends or distributions payable in its
stock, or split-ups or reclassifications of its stock) or apply any of its
funds, property or assets to the purchase, redemption or other retirement of any
common or preferred stock, or of any options to purchase or acquire any such
shares of common or preferred stock of the Borrower, unless it shall have
received the prior written consent of the Agent.
SECTION 8.10 NATURE OF BUSINESS. No Loan Party shall substantially
change the nature of the business in which it is presently engaged, nor,
purchase or invest, directly or indirectly, in any material assets or property
other than in the ordinary course of business for assets or property which are
useful in, necessary for and are to be used in its business as presently
conducted.
SECTION 8.11 TRANSACTIONS WITH AFFILIATES. No Loan Party shall
directly or indirectly, purchase, acquire or lease any property from, or sell,
transfer or lease any property to, or otherwise deal with, any Affiliate, except
transactions disclosed in the ordinary course of business, on an arm's-length
basis on terms not less favorable than terms which would have been obtainable
from a Person other than an Affiliate.
SECTION 8.12 LEASES. No Loan Party shall, as lessee, enter into any
lease arrangement for real or personal property (unless capitalized and
permitted under Section 8.8 hereof) if after giving effect thereto, aggregate
annual rental payments for all Loan Parties for all leased property would exceed
$1,600,000 in any one fiscal year.
SECTION 8.13 SUBSIDIARIES AND GUARANTORS. No Loan Party shall (i)
form any subsidiary unless (a) such subsidiary (A) expressly joins in this
Agreement as a Borrower and becomes jointly and severally liable for the
Obligations of the Borrower hereunder, under each Note, and under any of the
Loan Documents between the Borrower and either Bank, or (B) executes a guaranty,
satisfactory in form and substance to the Agent, and if requested grant the
Agent a security interest in its assets, in each case for the benefit of the
Banks and (b) the Agent
51
shall have received all documents, including legal opinions, it may reasonably
require, including but not limited to compliance with each of the foregoing
conditions, (ii) enter into any partnership, joint venture or similar
arrangement, other than in the ordinary course of business, without the prior
written consent of the Banks, or (iii) issue any shares of their stock, unless
in the case of Auburn and Burlen the certificates evidencing such shares,
together with stock powers sufficient to permit the transfer of such shares upon
delivery, are delivered to the Agent as collateral under the Pledge Agreement.
SECTION 8.14 COMPLIANCE WITH ERISA. The Borrower shall not (i) (a)
maintain, or permit any Affiliate to maintain, or (b) become obligated to
contribute, or permit any Affiliate to become obligated to contribute, to any
Plan, other than those Plans disclosed on Schedule 8.14 annexed hereto, (ii)
engage or permit any Affiliate to engage, in any non-exempt "prohibited
transaction", as that term is defined in Section 406 of ERISA and Section 4975
of the Code, (iii) incur, or permit any Affiliate to incur, any "accumulated
funding deficiency", as that term is defined in Section 302 of ERISA or Section
412 of the Code, (iv) terminate, or permit any Affiliate to terminate, any Plan
where such event could result in any liability of the Borrower or any Affiliate
or the imposition of a lien on the property of the Borrower or any Affiliate
pursuant to Section 4068 of ERISA, (v) assume or permit any Affiliate to assume,
any obligation to contribute to any Multiemployer Plan, (vi) incur, or permit
any Affiliate to incur, any withdrawal liability to any Multiemployer Plan;
(vii) fail promptly to notify the Agent of the occurrence of any "termination
event" as defined under ERISA (viii) fail to comply with the requirements of
ERISA or the Code or other applicable laws in respect of any Plan, (ix) fail to
meet, or permit any member of the Affiliate to fail to meet, all minimum funding
requirements under ERISA or the Code or postpone or delay or allow any Affiliate
to postpone or delay any funding requirement with respect to any Plan.
SECTION 8.15 AMENDMENT OF CERTIFICATE OF INCORPORATION OR BY-LAWS.
The Borrower shall not, and shall not permit Auburn or Burlen to, amend its
Certificate of Incorporation or By-Laws without the prior written consent of the
Banks, except that no consent need be obtained for ministerial technical changes
(i.e. change of agent or address for service of process), but in the event of
any such change, the Borrower shall deliver true and complete copies of the
revised documents to the Agent, and the Agent shall provide the Banks with the
copies.
SECTION 8.16 CHANGE FISCAL YEAR. No Loan Party shall change (i) its
fiscal year, (ii) its accounting treatment and reporting practices except as
required by GAAP or (iii) its tax reporting treatment except (a) as required by
law, and (b) Burlen shall make an election under Section 332(h) of the Internal
Revenue Code to change its tax status from an "S" corporation to a "C"
corporation.
SECTION 8.17 PREPAYMENT OF INDEBTEDNESS. No Loan Party shall prepay
any Indebtedness other than in the case of the Borrower Indebtedness to the
Banks as, and to the extent, permitted pursuant to this Agreement, except for
certain Industrial Revenue Bonds referred to on Schedule 8.2.
SECTION 8.18 FIXED CHARGE COVERAGE The Borrower shall not permit the
ratio of its (i)
52
EBITDA1, to (ii) Fixed Charges, for each twelve (12) month period ending as set
forth below, to be less than the ratio set forth below for the corresponding
period set forth below. Compliance with this covenant shall be measured on a
quarterly basis for a rolling twelve (12) month period.
Period Ratio
------ -----
For the twelve (12) month period ending June 30, 2005 1.05 to 1.0
For the twelve (12) month period ending September 30, 2005 1.05 to 1.0
For the twelve (12) month period ending December 31, 2005 1.15 to 1.0
For the twelve (12) month period ending March 31, 2006 1.25 to 1.0
For the twelve (12) month period ending June 30, 2006 1.25 to 1.0
For the twelve (12) month period ending September 30, 2006 1.3 to 1.0
For the twelve (12) month period ending December 31, 2006 1.3 to 1.0
For the twelve (12) month period ending March 31, 2007 1.5 to 1.0
For the twelve (12) month period ending June 30, 2007 1.5 to 1.0
For the twelve (12) month period ending September 30, 2007 1.5 to 1.0
For the twelve (12) month period ending December 31, 2007 1.5 to 1.0
For the twelve (12) month period ending March 31, 2008 1.6 to 1.0
For the twelve (12) month period ending June 30, 2008 1.6 to 1.0
For the twelve (12) month period ending September 30, 2008 1.6 to 1.0
For the twelve (12) month period ending December 31, 2008 1.6 to 1.0
For the twelve (12) month period ending March 31, 2009 1.6 to 1.0
For the twelve (12) month period ending June 30, 2009 1.6 to 1.0
For the twelve (12) month period ending September 30, 2009 1.6 to 1.0
For the twelve (12) month period ending December 31, 2009 1.6 to 1.0
---------------------
1 For the purpose of this covenant, and the covenants provided in Sections 8.19
and 8.20, if there is any material change in GAAP which would result in a
breach, the Banks, in good faith, will consider appropriate revisions to the
covenants.
53
SECTION 8.19 NET WORTH RATIO. The Borrower shall not permit the ratio
of its (i) Net Worth consolidated (without duplication) with the Net Worth of
the other Loan Parties, to (ii) its Total Assets consolidated (without
duplication) with the Total Assets of the other Loan Parties for each period set
forth below, to be less than the ratio set forth below for the corresponding
period set forth below. Compliance with this covenant shall be measured on a
quarterly basis for a rolling twelve (12) month period.
Period Ratio
------ -----
For the twelve (12) month period ending June 30, 2005 0.2 to 1.0
For the twelve (12) month period ending September 30, 2005 0.2 to 1.0
For the twelve (12) month period ending December 31, 2005 0.2 to 1.0
For the twelve (12) month period ending March 31, 2006 0.25 to 1.0
For the twelve (12) month period ending June 30, 2006 0.25 to 1.0
For the twelve (12) month period ending September 30, 2006 0.3 to 1.0
For the twelve (12) month period ending December 31, 2006 0.3 to 1.0
For the twelve (12) month period ending March 31, 2007 0.4 to 1.0
For the twelve (12) month period ending June 30, 2007 0.4 to 1.0
For the twelve (12) month period ending September 30, 2007 0.4 to 1.0
For the twelve (12) month period ending December 31, 2007 0.4 to 1.0
For the twelve (12) month period ending March 31, 2008 0.4 to 1.0
For the twelve (12) month period ending June 30, 2008 0.4 to 1.0
For the twelve (12) month period ending September 30, 2008 0.4 to 1.0
For the twelve (12) month period ending December 31, 2008 0.4 to 1.0
For the twelve (12) month period ending March 31, 2009 0.4 to 1.0
For the twelve (12) month period ending June 30, 2009 0.4 to 1.0
For the twelve (12) month period ending September 30, 2009 0.4 to 1.0
For the twelve (12) month period ending December 31, 2009 0.4 to 1.0
54
SECTION 8.20 LEVERAGE RATIO. The Borrower shall not permit the ratio
of: (i) the sum of its (a) Loans (b) Letters of Credit, and (c) Acceptances at
the end of each period set forth below, to EBITDA be higher than the ratio set
forth below for the corresponding period. Compliance with this covenant shall be
measured on a quarterly basis for a rolling twelve (12) month period.
Period Ratio
------ -----
For the twelve (12) month period ending June 30, 2005 5.0 to 1.0
For the twelve (12) month period ending September 30, 2005 5.0 to 1.0
For the twelve (12) month period ending December 31, 2005 4.5 to 1.0
For the twelve (12) month period ending March 31, 2006 4.0 to 1.0
For the twelve (12) month period ending June 30, 2006 4.0 to 1.0
For the twelve (12) month period ending September 30, 2006 4.0 to 1.0
For the twelve (12) month period ending December 31, 2006 4.0 to 1.0
For the twelve (12) month period ending March 31, 2007 3.5 to 1.0
For the twelve (12) month period ending June 30, 2007 3.5 to 1.0
For the twelve (12) month period ending September 30, 2007 3.5 to 1.0
For the twelve (12) month period ending December 31, 2007 3.5 to 1.0
For the twelve (12) month period ending March 31, 2008 3.0 to 1.0
For the twelve (12) month period ending June 30, 2008 3.0 to 1.0
For the twelve (12) month period ending September 30, 2008 3.0 to 1.0
For the twelve (12) month period ending December 31, 2008 3.0 to 1.0
For the twelve (12) month period ending March 31, 2009 3.0 to 1.0
For the twelve (12) month period ending June 30, 2009 3.0 to 1.0
For the twelve (12) month period ending September 30, 2009 3.0 to 1.0
For the twelve (12) month period ending December 31, 2009 3.0 to 1.0
55
SECTION 8.21 DELTA GALIL DEBT. The Borrower shall make no payments of
principal, or interest at a rate which exceeds the Term Loan Rate, on its
Indebtedness to Delta Galil in the principal amount of $10,000,000 nor shall the
Borrower agree to or make payments of interest on any other or future
Indebtedness to Delta Galil at an interest rate which exceeds the Term Loan
Rate.
ARTICLE 9
EVENTS OF DEFAULT
SECTION 9.1 EVENTS OF DEFAULT. Each of the following events, whether
or not caused by or within the control of the Borrower, shall constitute an
event of default (an "Event of Default") under this Agreement:
9.1.1 FAILURE TO MAKE PAYMENTS WHEN DUE. The Borrower or any Guarantor
shall fail to pay any payments of principal or interest or any other Obligations
when due whether on the due date thereof or any time fixed for prepayment or by
acceleration thereof or otherwise.
9.1.2 BREACH OF COVENANTS. The Borrower or any Guarantor shall fail or
neglect duly and punctually to perform, comply with or observe any of its
covenants, obligations or agreements (i) described in Article 8; or (ii)
described in any other Loan Document or any other provision of this Agreement
not otherwise referred to in this Section 9.1 and the same is not cured within
five (5) Business Days after written notice thereof shall have been given to the
Borrower or the applicable Guarantor by the Agent.
9.1.3 BREACH OF WARRANTY. Any representation or warranty now or
hereafter made or deemed made by the Borrower in this Agreement, or the Borrower
or any Guarantor in any of the other Loan Documents or any certificate, report
or other document furnished in connection with this Agreement, is untrue or
incorrect in any material respect when made.
9.1.4 JUDGMENTS, LIENS. A judgment or judgments in the aggregate shall
be entered against the Borrower or a Guarantor in an amount (as to the Borrower
and all Guarantors) which is in excess of $250,000 (excluding the Burlen
Judgment Lien) and such judgment shall not be satisfied, fully bonded,
discharged or vacated and shall remain in effect for thirty (30) consecutive
days without a stay of enforcement or execution, or a nonconsensual Lien which
is not a Permitted Encumbrance shall be filed against any Collateral or property
of the Borrower or a Guarantor and which shall not be fully bonded, vacated,
discharged or released with forty-five (45) days of the date of filing.
9.1.5 ATTACHMENT. All or any material part of the Collateral, the
Auburn Collateral or the Burlen Collateral is attached, seized, subjected to a
writ or distress warrant, or is levied upon, or comes within the possession of
any receiver, trustee, custodian or assignee for the benefit of creditors and
such attachment is not vacated within thirty (30) days.
56
9.1.6 BANKRUPTCY; APPOINTMENT OF RECEIVER.
9.1.6.1 An involuntary proceeding shall be commenced against the
Borrower or a Guarantor under any applicable bankruptcy, insolvency,
reorganization, receivership, arrangement or readjustment of debt or other
similar law now or hereinafter in effect, which proceeding is not dismissed,
stayed or vacated within thirty (30) days thereafter; or a decree or order of a
court having jurisdiction for the appointment of a receiver, liquidator,
administrator, trustee, custodian or other officer having similar powers over
the Borrower or a Guarantor or over all or a substantial part of the property of
the Borrower or a Guarantor shall have been entered; or an interim receiver,
trustee or other custodian of the Borrower or a Guarantor or of all or a
substantial part of the property of the Borrower or a Guarantor shall have been
appointed or a warrant of attachment, execution or similar process against any
substantial part of the property of the Borrower or any Guarantor shall have
been issued, and in any such event not been stayed, dismissed, bonded or
discharged within thirty (30) days of entry, appointment or issuance.
9.1.6.2 The Borrower or a Guarantor shall permit, or acquiesce
in, an order for relief entered with respect to it under, or shall commence a
voluntary case or proceeding under, any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect; or shall consent to the entry of
an order for relief in an involuntary proceeding or to the conversion of an
involuntary proceeding to a voluntary proceeding, 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 its property; or the Borrower
or a Guarantor shall make any assignment for the benefit of creditors or shall
be unable or fail, or admit in writing its inability, to pay its debts as such
debts become due; or the Borrower or any Guarantor or any of their respective
Boards of Directors takes any corporate action to authorize any of the
foregoing.
9.1.7 OTHER LOAN DOCUMENTS. A default or event of default shall have
occurred under any of the other Loan Documents beyond any grace or cure period
permitted therein.
9.1.8 INJUNCTION. The Borrower or any Guarantor is enjoined,
restrained, or in any way prevented by order of any court or any administrative
or regulatory agency from conducting all or any material part of its business
affairs and such order is not lifted or stayed within ten (10) Business Days.
9.1.9 DEFAULT UNDER OTHER AGREEMENTS. A breach by the Borrower or any
Guarantor shall occur under any other agreement, document or instrument (other
than an agreement, document or instrument evidencing the lending of money by
such party), whether heretofore, now or hereafter existing between the Borrower
or any Guarantor and any Person which breach causes a Material Adverse Effect
and such breach continues for more than five (5) Business Days beyond any
applicable grace period.
9.1.10 DEFAULT AS TO OTHER INDEBTEDNESS. The Borrower or any Guarantor
shall fail to make any payment due on any obligation in respect of any
Indebtedness or any guaranty of such Indebtedness having an outstanding
principal amount in excess of $100,000, and shall fail to cure such default
within any applicable grace period, or any other breach, default or event of
default, however defined, shall occur under any instrument, agreement or
indenture which shall cause an
57
Indebtedness in excess of $100,000 to be accelerated or immediately due and
payable.
9.1.11 MATERIAL ADVERSE CHANGE. An adverse change deemed material by
the Banks, in the exercise of their sole, absolute and reasonable discretion, in
the business, properties, management, operations, methodology or system of
financial reporting, or financial condition of the Borrower or any Guarantor
shall occur.
9.1.12 OWNERSHIP OF THE BORROWER. There shall occur a change in the
ownership of the Borrower or any Guarantor other than Delta Galil, such that
Delta Galil shall directly or indirectly fail to own and control one hundred
(100%) percent, on a fully diluted basis, of the outstanding voting stock of the
Borrower and each such Guarantor.
9.1.13 LOSS OF COLLATERAL. There shall occur the loss, theft,
substantial damage to or destruction of any portion of the Collateral, the
Auburn Collateral, the Burlen Collateral or Real Estate Assets, not fully
covered by insurance, which by itself or with other such losses, thefts, damages
or destruction of the Collateral, the Auburn Collateral, or Burlen Collateral
shall materially impair the operations of any Loan Party, or there shall occur
the exercise of the right of condemnation or eminent domain or any portion of
the Collateral, the Auburn Collateral or the Burlen Collateral which by itself
or with other such exercises of the right of condemnation or eminent domain
shall materially impair the operations of any Loan Party.
9.1.14 ENVIRONMENTAL LIEN. If any governmental or quasi-governmental
Person asserts or creates a Lien in an amount in excess of $50,000 upon any or
all of the assets, equipment, property, or other facilities of the Borrower by
reason of the occurrence of a Release in an amount in violation of any
Environmental Law or Environmental Complaint, which shall not be fully bonded,
vacated, discharged or released within thirty (30) days of the date of filing.
9.1.15 UNENFORCEABILITY OF ANY LOAN DOCUMENT. This Agreement or any of
the other Loan Documents shall for any reason cease to be, or be asserted by the
Borrower or a Guarantor or any other Person not to be legal, valid or
enforceable in accordance with its terms, or the security interest or lien
purported to be created by any of the Loan Documents shall for any reason cease
to be, or be asserted by the Borrower or a Guarantor, not to be, a valid, first
priority perfected security interest in any Collateral (except to the extent
otherwise permitted under this Agreement or any of the Loan Documents).
9.1.16 DELTA GALIL MATERIAL ADVERSE EFFECT. One or more circumstance or
events, financial or otherwise, shall occur which in the opinion of the Banks
would have a Material Adverse Effect on Delta Galil; including but not limited
to a failure to meet any financial obligation to any of the Banks or any of
their Affiliates.
9.1.17 DELTA GALIL GUARANTEES. Either of the Delta Galil Guarantees
shall be terminated or be unenforceable.
9.1.18 WALMART SALES. The aggregate sales of Inventory by the Loan
Parties to Walmart, Inc. shall be less than $100,000,000 in any fiscal year of
the Borrower.
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9.1.19 CONDITIONS SUBSEQUENT. Any of the conditions subsequent set
forth in Sections 3.2, and 3.3 and 3.4 of this Agreement shall not be satisfied
within the time periods provided therein.
ARTICLE 10
RIGHTS AND REMEDIES
SECTION 10.1 ACCELERATION; TERMINATION. If an Event of Default has
occurred, and at any time thereafter while it is continuing, the Agent upon
receipt of instructions from the Required Lenders shall, if so requested by the
Required Lenders (a) terminate the obligation to lend and (b), without limiting
the ability to do so at any other times, the Agent on behalf of the Banks upon
receipt of instructions from the Required Lenders shall demand payment of the
Obligations, and thereupon the Obligations shall become due and payable
immediately and the Agent and the Banks' obligations under this Agreement shall
terminate, PROVIDED, HOWEVER, that if an Event of Default specified in Section
9.1.6 of this Agreement occurs, the Obligations shall automatically become due
and payable immediately, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived by the Borrower, and the Banks'
obligations under this Agreement shall automatically terminate immediately,
without any notice or demand.
Under all circumstances, the Agent and the Banks' rights and remedies
throughout this Article 10 under this Agreement and any other Loan Documents
shall survive any termination of its obligation to lend until all of the
Obligations under this Agreement or any other Loan Documents have been fully and
finally paid. Without limiting the generality of the foregoing, notwithstanding
any termination of this Agreement, until all of the Obligations shall have been
fully and finally paid and satisfied, the Banks shall retain their security
interest in and to all of the Collateral, the Auburn Collateral and the Burlen
Collateral, and the Borrower shall continue to remit collections of Accounts and
proceeds as provided herein.
Each Event of Default under this Agreement shall be deemed continuing
until it is waived in writing by, or cured to the satisfaction of the Banks,
which is evidenced by a written statement signed by an authorized officer of the
Agent that such Event of Default has been satisfied.
SECTION 10.2 RIGHTS AND REMEDIES GENERALLY. Upon the occurrence of an
Event of Default, the Agent on its behalf and on behalf of each Bank shall have,
in addition to any other rights and remedies contained in this Agreement or in
any of the other Loan Documents, all of the rights and remedies of a secured
party under the Uniform Commercial Code or other applicable laws, all of which
rights and remedies shall be cumulative, and non-exclusive, to the extent
permitted by law.
SECTION 10.3 ENTRY UPON PREMISES AND ACCESS TO INFORMATION. Upon the
occurrence and during the continuation of an Event of Default, the Agent shall
have the right to enter upon any premises (without any obligation to pay rent to
the Borrower, Auburn or Burlen) where the Collateral, the Auburn Collateral or
the Burlen Collateral is located (or where the Agent believes it to be located)
or any other place or places where the Collateral, the Auburn Collateral or the
Burlen Collateral is located (or where the Agent believes it to be located) and
to remove the Collateral, the Auburn Collateral, or the
59
Burlen Collateral therefrom for such time as the Agent may desire in order to
collect or liquidate the Collateral, the Auburn Collateral or the Burlen
Collateral. In lieu of or in addition to the foregoing, the Agent may require
the applicable Loan Party to assemble the Collateral, the Auburn Collateral or
the Burlen Collateral and make it available to the Agent at a place or places to
be designated by the Agent. Upon the occurrence and during the continuation of
an Event of Default, the Agent shall have the right to obtain access to each
Loan Party's data processing equipment, computer hardware and software relating
to or containing information regarding the Collateral, the Auburn Collateral or
the Burlen Collateral and to use all of the foregoing and the information
contained therein in any manner the Agent reasonably deems appropriate.
SECTION 10.4 DISPOSITION OF COLLATERAL BY AGENT.
10.4.1 MANNER OF DISPOSITION. Any sale, lease or other disposition by
the Agent of the Collateral, the Auburn Collateral or the Burlen Collateral, or
any part thereof, after the occurrence of and during the continuation of an
Event of Default may be for cash or other value in any number of lots at public
or private sale, and the Agent or any Bank may purchase all or any part of the
Collateral, the Auburn Collateral or the Burlen Collateral, at public or, if
permitted by law, private sale and in lieu of actual payment of such purchase
price may set off the amount of such purchase price against the Obligations. Any
sales of the Collateral, the Auburn Collateral or the Burlen Collateral may be
adjourned from time to time with or without notice. The Agent may, in its sole
and absolute discretion, cause the Collateral, the Auburn Collateral or the
Burlen Collateral, as is applicable, to remain on the Borrower's, Auburn's or
Burlen's premises, as applicable, at the Borrower's expense, pending sale or
other disposition thereof. The Agent shall have the right to conduct such sales
on the Borrower's, Auburn's or Burlen's premises or elsewhere, at the Borrower's
expense, on such occasion or occasions as the Agent may see fit. The Borrower
shall, and shall cause each of Auburn and Burlen to, execute and deliver, or
cause to be executed and delivered, such instruments, document assignments,
deeds, waivers, certificates and affidavits and take such further action as the
Agent shall require in connection with respect to such sale. Any notice required
by law to be given by the Agent or any Bank with respect to any of the
Collateral, the Auburn Collateral or the Burlen Collateral which is deposited in
the United States mail, certified or registered, postage prepaid and duly
addressed to the applicable Loan Party, at the address specified herein, in the
Auburn Security Agreement, or the Burlen Security Agreement as is applicable, at
least ten (10) Business days prior to a sale, lease, disposition or other
intended action with respect to any of the Collateral, the Auburn Collateral or
the Burlen Collateral shall constitute fair and reasonable notice of any such
action. The commencement of any legal or equitable action or the rendering of
any judgment or decree for any deficiency shall not affect the Agent or any
Bank's security interest in the Collateral, the Auburn Collateral or the Burlen
Collateral until the Obligations are fully and finally paid. The Borrower agrees
that neither the Agent nor any Bank has any obligation to preserve any rights to
the Collateral, the Auburn Collateral or the Burlen Collateral against any
Person. The Agent and each Bank is hereby granted a license or other right to
use, without charge and until the Obligations are fully and finally paid, the
Borrower's, Auburn's and Burlen's labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks, service marks, advertising
matter, or any property of a similar nature in completing the
60
production and advertising for sale of any Collateral, the Auburn Collateral or
the Burlen Collateral.
10.4.2 PROCEEDS OF DISPOSITION. The net proceeds realized by Agent upon
any such sale or disposition, after deducting therefrom the expenses related
thereto such as for the retaking, holding, preparing for sale and selling any of
the Collateral, the Auburn Collateral or the Burlen Collateral and all
reasonable attorneys' fees incurred by the Agent in connection therewith, shall
be applied as provided herein toward satisfaction of the Obligations based upon
each Bank's Pro Rata Share. The Agent shall account to the Borrower for any
surplus realized upon, and the Borrower shall remain liable to the Agent and the
Banks for any deficiency remaining after such sale or other disposition.
SECTION 10.5 MARSHALLING; PAYMENTS SET ASIDE. The Agent shall be
under no obligation to make any demand upon or pursue or exhaust any rights or
remedies against the Borrower or others with respect to payment of the
Obligations, or to pursue or exhaust any rights or remedies with respect to any
of the Collateral, the Auburn Collateral or the Burlen Collateral or any other
security for the Obligations, or to marshal any assets in favor of the Borrower,
Auburn, Burlen, or any other Person against or in payment of any or all of the
Obligations.
SECTION 10.6 SET-OFF. Upon the occurrence and during the continuation
of an Event of Default, each Loan Party irrevocably authorizes the Agent and
each Bank and any of their Affiliates at any time and from time to time, to the
fullest extent permitted by law, 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 such party to or for the credit or the
account of the Borrower against any and all of the Obligations of the Borrower
now or hereafter existing under this Agreement or any other Loan Documents,
irrespective of whether or not such party shall have made any demand under this
Agreement or any other Loan Document and although such Obligations may be
unmatured. The Agent and each Bank and any applicable Affiliate shall notify the
Borrower and each other after any such set-off and application is made by it or
its Affiliate, PROVIDED that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Agent, the Banks
and their Affiliates under this Section 10.6 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which they may
have hereunder or otherwise. Any set-off by the Agent or any Bank shall be for
the benefit and credit of the Banks according to their respective Pro Rata
Shares, and Agent and each Bank shall promptly remit such amount, if any, so
set-off in excess of its Pro Rata Share to the other Banks as shall be necessary
to pay each its full Pro Rata Share thereof.
SECTION 10.7 NOTIFICATION OF ACCOUNTS. The Borrower irrevocably
authorizes the Agent upon the occurrence and continuation of an Event of Default
to instruct all of the Account Debtors to make payments on the Accounts directly
to the Agent. In such event, the Agent may charge the collection costs and
expenses to any account maintained by the Borrower at any Bank.
SECTION 10.8 SETTLEMENT OF ACCOUNTS. The Agent, without notice to or
the consent of the Borrower, upon the occurrence and during the continuation of
an Event of Default (1) may ▇▇▇ upon or otherwise collect, extend the time of
payment of, or compromise or settle for cash, credit or otherwise upon any
terms, any of the Accounts or any securities, instruments or
61
insurance applicable thereto and/or release the obligor thereon; (2) is
authorized and empowered to accept the return of the goods represented by any of
the Accounts; and (3) shall have the right to receive, endorse, assign and/or
deliver in its name or the name of the Borrower any and all checks, drafts and
other instruments for the payment of money relating to the Accounts, and the
Borrower hereby waives notice of presentment, protest and non-payment of any
instrument so endorsed.
SECTION 10.9 COLLATERAL CUSTODIAN. Upon the occurrence and during the
continuation of an Event of Default, the Agent may at any time and from time to
time employ and maintain on the premises of any or all of the Loan Parties, a
custodian selected by the Agent who shall have full authority to do all acts
necessary to protect the Banks' interests and to report to the Agent thereon.
The Borrower hereby agrees to cooperate with any such custodian and to do, or
cause Auburn and/or Burlen to do, whatever the Agent may reasonably request to
preserve the Collateral and/or the Auburn Collateral and/or the Burlen
Collateral. All reasonable costs and expenses incurred by the Agent by reason of
the employment of the custodian shall be charged to the Borrower's accounts, and
added to the Obligations.
SECTION 10.10 WAIVER OF DEMAND. The Borrower hereby waives demand,
presentment, protest and notice of nonpayment. The Borrower also waives the
benefit of all laws pertaining to or otherwise concerning any valuation,
appraisal and exemption of their property.
SECTION 10.11 REINSTATEMENT If claim is ever made upon the Agent or
any of the Banks for repayment, return, restoration or other recovery of any
amount or amounts received by any of them in payment or on account of any of the
liabilities of the Borrower to the Agent or any of the Banks repays all or part
of said amount: (i) because such payment or application of proceeds is or may be
avoided, invalidated, declared a fraudulent conveyance, impermissible setoff or
a diversion of trust funds; or (ii) for any other reason, including, without
limitation, by reason of (a) any judgment, decree or order of any court or
administrative body having jurisdiction over the Agent and Banks or any of their
property, or (b) any settlement or compromise of any such claim effected by the
Agent or the Banks with any such claimant (including the Borrower or any other
Loan Party), then and in such event each Loan Party agrees that any such
judgment, decree, order, settlement or compromise shall be binding upon it,
notwithstanding the cancellation of any of the Notes or other instrument
evidencing any liability of it, and it shall be and remain liable to the Agent
and Banks for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by the Agent or the Banks, as is
applicable. The Borrower hereby indemnifies and shall reimburse and hold the
Agent and Banks harmless for the amount so repaid and for all other claims,
actions, suits, proceedings, liabilities, losses, costs and expenses of every
kind (including, without limitation, the disbursements, expenses and fees of the
Agent and Banks' attorneys) that may be imposed upon, incurred by or asserted
against any of them in connection with defending any such claim for repayment
and collecting such amount from the Borrower. The provisions of this paragraph
shall survive the termination of this Agreement, and any satisfaction and
discharge of the Borrower by virtue of any payment or court order or any state
or federal law.
SECTION 10.12 WAIVER OF NOTICE. UPON THE OCCURRENCE OF AND DURING THE
CONTINUATION OF AN EVENT OF A DEFAULT, THE BORROWER (PURSUANT
62
TO AUTHORITY GRANTED BY ITS BOARD OF DIRECTORS) HEREBY WAIVES ALL RIGHTS TO
NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE AGENT OR ANY BANK OF
ITS RIGHTS TO REPOSSESS THE COLLATERAL WITHOUT JUDICIAL PROCESS OR TO APPLY,
ATTACH OR LEVY UPON THE COLLATERAL WITHOUT PRIOR NOTICE OR HEARING.
SECTION 10.13 CROSS-COLLATERALIZATION. The security interests, liens
and other rights and interests in and relative to any of the property of the
Borrower, Auburn or Burlen now or hereafter granted to the Agent or any Bank by
or in any instrument or agreement, including but not limited to this Agreement
and the other Loan Documents, shall serve as security for any and all
Obligations of the Borrower to the Agent and each of the Banks, and, the Agent
and each Bank may resort to any security held by it in such order and manner as
it may elect.
SECTION 10.14 AUBURN AND BURLEN AUTHORIZATION. Each of Auburn and
Burlen, by its execution of this Agreement authorizes and consents to the
Agent's and each Bank's exercise all of their rights and remedies set forth in
this Agreement with respect to the Auburn Collateral or the Burlen Collateral.
ARTICLE 11
THE AGENT
SECTION 11.1 APPOINTMENT OF AGENT. Each Bank hereby designates BLUSA
as Agent to act as herein specified. Each Bank hereby irrevocably authorizes,
and each holder of any Note or participation in any Letter of Credit or
Acceptance, by the acceptance of a Note or participation in a Letter of Credit,
shall be deemed irrevocably to authorize the Agent to take such action on its
behalf under the provisions of this Agreement, the Notes and other Loan
Documents and any other instruments and agreements referred to herein and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agent
shall hold all collateral and all payments of principal, interest, fees, charges
and expenses received pursuant to this Agreement or any other Loan Document for
the ratable benefit of the Banks based upon their Pro Rata Shares (except to the
extent any of such amounts are for the account of the Agent or the Issuer). The
Agent may perform any of its duties hereunder by or through its agents or
employees. The provisions of this Article 11 are solely for the benefit of the
Agent and the Banks, and neither the Borrower nor any Guarantor shall have any
rights as a third party beneficiary of any of the provisions hereof. Neither the
Agent nor any of is directors, officers, employees or agents shall be liable as
such for any action taken or omitted to be taken by it or them hereunder or
under any of the other Loan Documents or in connection herewith or therewith at
the request or with the approval of the Required Lenders (or, if otherwise
specifically required hereunder or thereunder, the consent of all of the Banks).
In performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for the
Borrower or any Guarantor.
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SECTION 11.2 NATURE OF DUTIES OF AGENT. The Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement.
Neither the Agent nor any of its officers, directors, employees or agents shall
be liable for any action taken or omitted by it as such hereunder or in
connection herewith, unless caused by its or their gross negligence or willful
misconduct. The Agent shall exercise the same standard of care in performing its
duties and discharging its responsibilities as Agent for the Banks as it
exercises when acting solely for its own account as a lender. The duties of the
Agent shall be mechanical and administrative in nature; the Agent shall not have
by reason of this Agreement a fiduciary relationship in respect of any Bank; and
nothing in this Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in respect of this
Agreement except as expressly set forth herein. The Agent, by fax, shall send
each Bank (i) a copy of each request for an Advance within one (1) day after the
Agent's receipt of the request, and (ii) within one (1) day after the receipt of
its request, notice of each request for a Letter of Credit and Acceptances. The
Agent is hereby expressly authorized on behalf of the Banks, without hereby
limiting any implied authority, (a) to receive on behalf of each of the Banks
any payment of principal of or interest on the Loans, any amounts due in respect
of Letters of Credit and Acceptance, fees and all other amounts accrued
hereunder paid to the Agent, and to distribute to each Bank its Pro Rata Share
of all payments so received (except as otherwise provided in Section 2.7.3, or
elsewhere herein to the extent any of such amounts are for the account of the
Agent or the Issuer), (b) to distribute to each Bank copies of all notices,
agreements and other material as provided for in this Agreement and the other
Loan Documents as received by the Agent (but without obligating the Agent to do
so except as expressly set forth herein) and (c) to take all actions with
respect to this Agreement and the other Loan Documents as are specifically
delegated to the Agent. The Banks hereby acknowledge that the Agent shall be
under no duty to take any discretionary action permitted to be taken by the
Agent pursuant to the provisions of this Agreement or any of the other Loan
Documents unless it shall be requested in writing to do so by the Required
Lenders, or all of the Banks.
SECTION 11.3 LACK OF RELIANCE ON AGENT. Independently and without
reliance upon the Agent, each Bank, to the extent it deems appropriate, has made
and shall continue to make (a) its own independent investigation of the
financial or other condition and affairs of the Borrower in connection with the
taking or not taking of any action in connection herewith and (b) its own
appraisal of the creditworthiness of the Borrower, and, except as expressly
provided in this Agreement, the Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Bank with any credit
or other information with respect thereto, whether coming into its possession
before the making of any Advance, issuing any Letters of Credit, or creating an
Acceptance or at any time or times thereafter. The Agent shall not be
responsible to any Bank for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, priority or sufficiency
of this Agreement or any of the other Loan Documents or the financial or other
condition of the Borrower or any Guarantor. The Agent shall not be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement or any other Loan Document, or
the financial condition of the Borrower or any Guarantor, or the existence or
possible existence of any Default or Event of Default, unless specifically
requested to do so in writing by a Bank.
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SECTION 11.4 INSTRUCTIONS TO AGENT.
11.4.1 REQUIRED CONSENTS. Whenever the Agent, before taking any action,
is required to obtain the consent of the Banks or the Required Lenders it shall
give each Bank notice thereof, including the action to be taken. Each Bank
within eight (8) Business Days from the giving of such notice shall give the
Agent notice as to whether or not it consents to the taking of such action. If a
Bank shall not timely respond to the Agent, it shall be deemed not to have given
its consent.
11.4.2 RIGHT TO REQUEST INSTRUCTIONS FROM THE BANKS. The Agent also
shall have the right to request instructions from each Bank. If the Agent shall
request instructions from any Bank with respect to any act or action (including
the failure to act) in connection with this Agreement, the Agent shall be
entitled to refrain from such act or taking such action unless and until the
Agent shall have received instructions from such Bank and the Agent shall not
incur liability to any Person by reason of so refraining. Without limiting the
foregoing, no Bank shall have any right of action whatsoever against the Agent
as a result of the Agent acting or refraining from acting hereunder in
accordance with the instructions of such Bank.
SECTION 11.5 RELIANCE BY AGENT. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message,
cablegram, order or other documentary, teletransmission or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person. The Agent may consult with legal counsel (including
counsel for the Borrower with respect to matters concerning the Borrower),
independent public accountants and other experts selected by it and shall not be
liable nor any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts. Without
limiting the generality of the foregoing, the Agent shall, in the absence of
knowledge to the contrary, be entitled to accept any certificate furnished
pursuant to this Agreement or any of the other Loan Document as conclusive
evidence of the facts stated therein and shall be entitled to rely on any note,
notice, consent, certificate, affidavit, letter, telegram, teletype message,
statement, order or other document which it believes in good faith to be genuine
and correct and to have been signed or sent by the proper person or persons. It
is understood and agreed that the Agent may exercise its rights and powers under
other agreements and instruments to which it is or may be a party, and engage in
other transactions with the Borrower, as though it were not Agent of the Banks
hereunder.
SECTION 11.6 INDEMNIFICATION OF AGENT. To the extent the Agent is not
reimbursed by the Borrower, each Bank agrees to reimburse and indemnify the
Agent, and any of its directors, officers, employees or agents on demand in
proportion to its Pro Rata Share, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including counsel fees, disbursements and compensation of agents and
employees rendered on behalf of the Banks) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in performing its duties hereunder, in any way relating to or arising out
of this Agreement or any other Loan Document, provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties,
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actions, judgments, suits, costs, expenses or disbursements resulting from the
Agent's gross negligence or willful misconduct. Notwithstanding anything to the
contrary contained herein, no Bank shall be required to reimburse the Agent for
ordinary administrative expenses incurred by Agent in connection with the Loans.
SECTION 11.7 THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to
its obligation to lend under this Agreement, the Loans made by it, and its
participation in Letters of Credit issued and Acceptances created hereunder, the
Agent shall have the same rights and powers hereunder as any other Bank, or
participation interest and may exercise the same as though it was not performing
the duties specified herein. The Agent and each Bank may accept deposits from,
lend money to, acquire equity interests in, and generally engage in any kind of
banking, trust, financial advisor or other business with the Borrower or any
Guarantor or any Affiliate of the Borrower or any Guarantor as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Borrower or any Guarantor for services in connection with
this Agreement and otherwise without having to account for the same to any Bank.
SECTION 11.8 SUCCESSOR AGENT.
11.8.1 The Agent may, on notice to the Banks and the Borrower, may
resign at any time (effective upon the appointment of a successor Agent pursuant
to the provisions of this Section 11.8.1) by giving written notice thereof to
the Banks and the Borrower. Upon any such resignation, Bank Hapoalim B.M. shall
have the right upon seven (7) days' notice to the Agent and each other Bank, to
agree by notice to the other Banks to serve as a successor Agent. If Bank
Hapoalim B.M. does not agree to serve as successor agent, the Banks within ten
(10) days after the expiration of such seven (7) day period shall appoint a
successor Agent. If no successor Agent shall have been so appointed, and shall
have accepted such appointment, within thirty (30) days after the retiring
Agent's giving of notice of resignation, then, upon five (5) days' notice and
approval by the Borrower (which approval shall not be unreasonably withheld),
the retiring Agent may, on behalf of Banks, appoint a successor Agent, which
shall be a bank or a trust company or other financial institution which
maintains an office in the United States, or a commercial bank organized under
the laws of the United States of America or of any State thereof, or any
Affiliate of such bank or trust company or other financial institution which is
engaged in the banking business, having a combined capital and surplus of at
least $50,000,000.
11.8.2 If the Commitment of the Agent in its capacity as a Bank, at any
time shall fall below the greater of (i) $10,000,000, or (ii) fifty percent
(50%) of the Commitment of the Bank with the smallest Commitment of all of the
Banks, then and in such event upon notice to the Agent given by Banks holding in
the aggregate at least fifty percent (50%) Pro Rata Share of the total
Commitment of all of the Banks, the Agent shall be deemed to have resigned as is
provided for in Section 11.8.1, and the provisions thereof with respect to the
appointment of a successor Agent shall control. For the purposes of this Section
11.8.2 only, in determining a Bank's total Commitment of all of the Banks, a
Bank's Commitment shall include (i) any portion thereof in which an Affiliate of
such Bank holds a participation, and (ii) any Commitment acquired by an
Affiliate by means of an assignment, as provided for in Section 12.14.3 of this
Agreement.
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11.8.3 Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement from and after such date. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 11.8 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
11.8.4 In the event any Bank claims that Agent is in material breach of
this Agreement, it shall promptly notify the Agent thereof, which notice shall
set forth in detail the nature of the claimed default. In the event of such
material breach by the Agent of its duties hereunder, which breach is not cured
within thirty (30) days after notice from any Bank, the Agent may be removed by
Banks holding more than fifty (50%) percent of the total commitment of all of
the Banks (exclusive of the Commitment of the Agent in its capacity as a Bank,
and without having any effect upon any Loans, or Letters of Credit, or
Acceptances made by the Agent as a Bank) for cause and the provisions of this
Section 11.8 shall apply to the appointment of a successor Agent. In the case of
any removal of the Agent under the provisions of this Section 11.8.4 hereof, the
Agent shall also no longer be required to act as an Issuer, except in so far as
it is a Bank, and such obligation shall be responsibility of the successor Agent
who shall have all its rights, powers, privileges and duties.
SECTION 11.9 COLLATERAL MATTERS.
11.9.1 Each Bank authorizes and directs the Agent to enter into each of
the Loan Documents for the benefit of the Banks. Each Bank hereby agrees, that,
except as otherwise set forth herein, any action taken by any Bank in accordance
with the provisions of this Agreement or the Loan Documents, and the exercise by
any of the Banks of its rights set forth herein shall be authorized and binding
upon all of the Banks, it being agreed however, that only the Agent shall have
the authority to act hereunder. The Agent is hereby authorized on behalf of each
of the Banks, without the necessity of any notice to or further consent from any
Bank, from time to time prior to an Event of Default, to take any action with
respect to any Collateral, the Auburn Collateral or the Burlen Collateral, which
may be necessary to perfect and maintain perfected the security interest in and
Liens upon the Collateral, the Auburn collateral, or the Burlen Collateral
granted pursuant hereto or pursuant to any other Loan Document.
11.9.2 The Banks hereby authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral, the Auburn Collateral or the Burlen Collateral (a) upon termination
of this Agreement and payment and satisfaction of all of the Obligations at any
time arising under or in respect of this Agreement or the Loan Documents or the
transactions contemplated hereby or thereby, or (b) if approved, authorized or
ratified in writing by each Bank. Upon request by the Agent at any time, each
Bank will confirm in writing the Agent's authority to release particular types
or items of collateral pursuant to this Section 11.9.2.
11.9.3 Upon any sale and transfer of any Collateral, Auburn Collateral
or Burlen Collateral which is expressly permitted pursuant to the terms of this
Agreement, and upon at
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least five (5) Business Days' prior written request by the Borrower, the Agent
shall (and is hereby irrevocably authorized by the Banks to) execute such
documents as may be necessary to evidence the release of the Liens granted to
the Agent for the benefit of the Banks herein or pursuant hereto upon the
collateral that was sold or transferred; provided that (a) the Agent shall not
be required to execute any such document on terms which, in the Agent's opinion,
would expose the Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty
and (b) such release shall not in any manner discharge, affect or impair the
Obligations or any Liens upon (or obligations of the Borrower in respect of) all
interests in any Collateral, Auburn Collateral or Burlen Collateral retained by
the Borrower, Auburn or Burlen including, without limitation, the proceeds of
the sale, all of which shall continue to constitute part of the Collateral, the
Auburn Collateral or the Burlen Collateral. In the event of any sale or transfer
of any Collateral, the Auburn Collateral or the Burlen Collateral or any
foreclosure with respect to any of such collateral, the Agent shall be
authorized to deduct all of the expenses reasonably incurred by the Agent from
the proceeds of any such sale, transfer or foreclosure.
11.9.4 The Agent shall have no obligation whatsoever to the Banks or to
any other Person to assure that the Collateral, the Auburn Collateral or the
Burlen Collateral exists or is owned by the applicable Loan Party or is cared
for, protected or insured or that the Liens granted to the Agent herein or
pursuant hereto have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise or to continue exercising at all or in any manner or under any duty
of care, disclosure or fidelity any of the rights, authorities and powers
granted or available to the Agent in this Agreement or in any other Loan
Document, it being understood and agreed that in respect of such Collateral, the
Auburn Collateral and the Burlen Collateral, or any act, omission or event
related thereto, the Agent may act in any manner it may deem appropriate, in its
sole discretion, given the Agent's own interest in such collateral as one of the
Banks and that the Agent shall have no duty or liability whatsoever to the
Banks, except for its gross negligence or willful misconduct.
SECTION 11.10 ACTIONS WITH RESPECT TO DEFAULTS. In the event that the
Agent receives notice of the occurrence of a Default or an Event of Default, the
Agent shall promptly give notice thereof to the Banks, and shall take such
action with respect to such Event of Default or other condition or event as it
shall be directed to take by the Required Lenders; provided, that, until the
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable and in the best
interests of the Banks.
SECTION 11.11 DELIVERY OF INFORMATION. The Agent shall not be required
to deliver to any Bank originals or copies of any documents, instruments,
notices, communications or other information received by the Agent from the
Borrower, any Bank or any other Person under or in connection with this
Agreement or any other Loan Document, except (i) if sent or received pursuant to
Articles 7 and 9 of this Agreement, (ii) as specifically provided in this
Agreement or any other Loan Document and (iii) as specifically requested from
time to time in writing by any Bank with respect to a specific document,
instrument, notice or other written communication received by and in the
possession of the Agent at the time of receipt of such request and then only in
accordance with such specific request.
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ARTICLE 12
MISCELLANEOUS
SECTION 12.1 EXPENSES. The Borrower agrees upon demand to pay, or
reimburse the Agent and each Bank for all reasonable costs, fees, expenses and
liabilities incurred by the Agent and each Bank or for which any of them becomes
obligated in connection with or arising out of (i) the negotiation, preparation,
closing and enforcement of this Agreement, any amendment hereof, any agreements,
documents and instruments in any way relating hereto and any of their rights
hereunder, (ii) the exercise by the Agent or any Bank of any of their rights
without respect to the Collateral, the Auburn Collateral, or the Burlen
Collateral and the Obligations, including, without limitation, protecting its
interests in any bankruptcy proceeding involving the Borrower, (iii) any
Advance, Letter of Credit or Acceptance requested pursuant to this Agreement
(iv) any inspection or verification of the Collateral, the Auburn Collateral, or
the Burlen Collateral or the financial condition of any Loan Party (which may
include the internal charges of the Agent or any Bank or any of the Affiliates),
and (v) any actual or potential liability of the Borrower, any Loan Party, their
Affiliates, or the Agent or any Bank by reason of any Environmental Complaint,
Release, threatened Release or any other environmental, health or safety matter
concerning the Borrower, its Affiliates, the Collateral, the Auburn Collateral
or the Burlen Collateral or the Premises without regard to whether the Borrower
is complying with Section 7.14 of this Agreement, all of the foregoing to
include, without limitation, all reasonable fees for the employment of
professionals including but not limited to, legal fees and disbursements,
accountants, asset based lender review auditors as provided herein, appraisers
of real estate and environmental engineers and consultants, all lien search and
title fees, and all title insurance premiums, all filing and recording fees, and
all travel expenses. All of the foregoing shall be part of the Obligations,
payable on demand, together with interest thereon at the Prime Rate.
SECTION 12.2 INDEMNITY. The Borrower further agrees to defend,
protect, indemnify and hold harmless the Agent, each Bank and their respective
officers, directors, employees, attorneys and agents from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel which may be imposed on, incurred by, or asserted against such
Persons, whether direct or indirect or consequential) relating to or arising out
of the Loan Documents, the Collateral, the Auburn Collateral or the Burlen
Collateral, or any Loan Party's assets or any act, event or transaction related
or attendant hereto or thereto, the making of an Advance or the use of the
proceeds of the Loans, Letters of Credit or Acceptances any amount required to
be expended in connection therewith, together with interest thereon at the Prime
Rate, being part of the Obligations, payable on demand; PROVIDED that the
Borrower shall have no obligation with respect to any matter which is
determined, by final order of a court of competent jurisdiction, to have been
caused by or to have resulted from the gross negligence or willful misconduct of
that Person.
SECTION 12.3 NO AGENCY. Nothing herein contained shall be construed
to constitute the Borrower as agent of the Agent or any Bank for any purpose
whatsoever, and neither the Agent
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nor any Bank shall be responsible or liable for any shortage, discrepancy,
damage, loss or destruction of any part of the Collateral, the Auburn Collateral
or the Burlen Collateral wherever the same may be located and regardless of the
cause thereof, unless arising from the Agent or such Bank's gross negligence or
willful act. Neither the Agent nor any Bank shall, under any circumstances or in
any event whatsoever, have any liability for any error or omission or delay of
any kind occurring in the settlement, collection or payment of any of the
Accounts or any instrument received in payment thereof or for any damage
resulting therefrom unless arising from the Agent or such Bank's gross
negligence or willful act. Neither the Agent nor any Bank, by anything herein or
in any assignment or otherwise, assumes any of the Borrower's obligations under
any contract or agreement assigned to it, and none of them shall be responsible
in any way for the performance by the Borrower of any of the terms and
conditions thereof.
SECTION 12.4 EXPENDITURES. In the event any Loan Party shall fail to
pay taxes, insurance premiums, assessments, costs or expenses which such Loan
Party is required to pay under terms hereof, or fails to keep the Collateral,
the Auburn Collateral, or the Burlen Collateral provided by it to secure the
Obligations free from security interests, liens or encumbrances, except as
permitted herein, the Agent or any Bank may, in its sole and absolute
discretion, make expenditure for any or all of the above and any amount so
expended, together with interest thereon at the Prime Rate of Bank Leumi USA,
shall be part of the Obligations, payable on demand.
SECTION 12.5 LIMITATION OF LIABILITY. Neither the Agent nor any Bank
nor any of their Affiliates, directors officers, agents, attorneys or employees
shall be liable to the Borrower for any action taken or omitted to be taken, by
it or them or any of them under the Loan Documents or in connection therewith or
with the Collateral, Auburn Collateral or Burlen Collateral except that no such
Person shall be relieved of any liability for its own or any other such Person's
gross negligence or willful misconduct as determined by final order of a court
of competent jurisdiction.
SECTION 12.6 RELIANCE BY BANKS. All covenants, agreements,
representations and warranties made herein by the Borrower shall,
notwithstanding any investigation made by or submitted to the Agent or any Bank,
be deemed to have been relied upon by the Agent and each Bank. The Agent and
each Bank shall be entitled to rely upon any notice, consent, certificate,
affidavit, statement, paper, document, writing or other communication reasonably
believed by it to be genuine and to have been signed, sent or made by the proper
Person or Persons, and upon opinions and advice of legal counsel, independent
public accountants and other experts selected by it. The Agent and each Bank
shall be entitled to rely, and in entering into this Agreement and the other
Loan Documents in fact has relied, upon the representations, warranties and
other information respecting the Borrower or Guarantor contained in this
Agreement and the other Loan Documents notwithstanding any investigation,
analysis or evaluation that may be made by analysis or evaluation or that may
have been made or from time to time may be made by the Agent or any Bank or its
designees of all or any part of the assets, business, operations, properties,
condition (financial or otherwise) of the Borrower or any other Person.
SECTION 12.7 APPLICABLE LAW. This Agreement, and the other Loan
Documents shall be governed by, and construed in accordance with, the laws of
the State of New York, without
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reference to the principles of conflicts of laws.
SECTION 12.8 SUBMISSION TO JURISDICTION; WAIVER OF BOND. THE BORROWER
AND THE BANKS HEREBY MUTUALLY CONSENT TO THE JURISDICTION OF ANY LOCAL, STATE OR
FEDERAL COURT SITUATED IN THE STATE AND COUNTY OF NEW YORK AND WAIVE ANY
OBJECTION WHICH THEY MAY HAVE PERTAINING TO IMPROPER VENUE OR FORUM NON
CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT. THE BORROWER
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL - RETURN RECEIPT REQUESTED
DIRECTED TO IT AT THE ADDRESS SPECIFIED HEREIN AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED THREE (3) BUSINESS DAYS AFTER SUCH PROCESS SHALL HAVE
BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE BORROWER WAIVES, TO THE
EXTENT PERMITTED BY LAW, ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH
MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY BANK OR THE AGENT. NOTHING
CONTAINED HEREIN SHALL AFFECT THE RIGHT OF A BANK OR THE AGENT TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF A BANK OR
AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION.
SECTION 12.9 TITLES. The article, section and subsection titles
contained in this Agreement shall be without substantive meaning or content of
any kind whatsoever and are not part of the agreement between the parties.
SECTION 12.10 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Agent and each Bank, and their
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of each Bank.
SECTION 12.11 NOTICES. Except as otherwise expressly provided for
herein and except as to any service of legal process, any notice or other
communication required or desired to be given hereunder shall be in writing and
shall be deemed to have been validly given upon the earlier of actual receipt by
manual delivery or teletransmission one (1) day after depositing with a
reputable overnight courier service or three (3) days after being mailed by
registered or certified mail, postage prepaid, to the party entitled to such
notice or other communication at the address of such party as set forth herein.
Counsel for a party can give any notices on behalf of its client.
Notices to the Agent shall be sent to:
Bank Leumi USA
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President
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Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with copies to each Bank (which copies shall not
constitute notice) at its address set forth on
Schedule 1.1 annexed hereto.
Notices to the Borrower shall be sent to:
Delta Galil USA Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: 212-326-0806
SECTION 12.12 SEVERABILITY. In case any one or more of the provisions
contained in this Agreement or any other Loan Document should be invalid,
illegal, or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby so long as it does not impair on
the ability of the Agent or any Bank to recover the moneys lent and applicable
interest thereon and expenses as provided herein.
SECTION 12.13 SUCCESSORS AND ASSIGNS; PARTICIPATIONS.
12.13.1 Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and permitted
assigns of such party; and all covenants, promises and agreements by or on
behalf of the Borrower and each Guarantor, any Affiliate, the Agent or the
Banks, that are contained in this Agreement shall bind and inure to the benefit
of their respective successors and permitted assigns. Without limiting the
generality of the foregoing, the Borrower specifically confirms that any Bank
may at any time and from time to time pledge or otherwise grant a security
interest in any Revolving Loan, the Term Loan, the Revolving Note or Term Note
(or any part thereof) to any Federal Reserve Bank. The Borrower may not assign
or transfer any of its rights or obligations hereunder without the prior written
consent of all the Banks.
12.13.2 Each Bank, without the consent of the Borrower and at no expense
to the Borrower, may sell participations to one or more banks or other entities
in all or a portion of its
72
rights and obligations under this Agreement (including, without limitation, all
or a portion of the Loans owing to it); provided, however, that (i) such Bank's
obligations under this Agreement (including, without limitation, its Commitment)
shall remain unchanged, (ii) such Bank shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the banks or
other entities buying participations shall be entitled to benefits of Article II
hereof, but only to the extent any of the Sections in such Article would be
available to the Bank which sold such participation, and (iv) the Borrower, the
Agent and the other Banks shall continue to deal solely and directly with the
Bank in connection with such Bank's rights and obligations under this Agreement;
provided, further, however, that each Bank shall retain the sole right and
responsibility to enforce the obligations of the Borrower and the Guarantors,
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement, other than amendments,
modifications or waivers with respect to any fees payable hereunder or the
amount of principal or the rate of interest payable on, or the dates fixed for
any payment of principal of or interest on the Loans or any reimbursement
agreement with respect to any Letter of Credit or the release of any Collateral,
Auburn Collateral or Burlen Collateral.
12.13.3 Each Bank (an "Assigning Bank") on notice to the Agent and the
other Bank, and subject to its rights as herein provided, may assign by
novation, to an Affiliate of such Assigning Bank, to any other Bank or to any
one or more commercial banks having capital and surplus in excess of
$1,000,000,000, all or a portion of its interests, rights and obligations under
this Agreement and the other Loan Documents (including, without limitation, all
or a portion of its Bank Commitment) provided, however, that (i) prior to or
concurrently with such assignment, the Assigning Bank shall obtain the prior
written consent (which shall not be unreasonably withheld) of each other Bank;
except that the consent of each other Bank shall not be required for an
assignment to an Affiliate of the Assigning Bank or to another Bank, (ii) each
such assignment shall be of a constant, and not a varying, percentage of all of
the Assigning Bank's rights and obligations under this Agreement, which shall
include the same percentage interest in each of the Loans made by the Assigning
Bank and its participation obligation with respect to Letters of Credit and
Acceptances, (iii) except in the case of an assignment to another Bank or to an
Affiliate of the Assigning Bank, the amount of the portion of the Bank
Commitment of the assigning Bank being assigned pursuant to each such assignment
(determined as of the date the notice of with respect to such assignment is
delivered to the Agent) shall not be less than $10,000,000, unless the Agent and
the other Banks otherwise consent, and (iv) the parties to each such assignment
shall execute and deliver to the Agent, with the consent of the Agent attached
(if and to the extent required under the provisions of this Section 12.13.3) for
recording in the Register (as defined below), an assignment and consent in such
form as the Agent reasonably shall require (an "Assignment"), together with a
processing and recordation fee of $10,000. A Bank in receipt of a notice from an
Assigning Bank of its intention to assign a portion of its Bank Commitment to a
bank which is neither an Affiliate of the Assigning Bank nor a Bank shall have
the right to either (i) acquire by assignment the portion of the Bank Commitment
to be assigned by the Assigning Bank or (ii) to join with the Assigning Bank
and, on the same terms and conditions, assign to such unaffiliated third party
bank an amount equal to its Pro Rata Share of the total amount of the Bank
Commitment to be assigned as herein provided. The recipient Bank shall give the
Assigning Bank notice of its intention to exercise its right to acquire the part
of the Assigning Banks' Bank Commitment to be assigned, or to participate in
such assignment within three (3) Business Days of its receipt of the notice of
the intention to assign. Upon such
73
execution, delivery, and recording and after receipt of the written consent of
the other Bank (if and to the extent required hereunder), from and after the
effective date specified in each Assignment, which effective date shall be at
least five (5) Business Days after the execution thereof, (x) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment, have the rights and obligations of a Bank hereunder and under the
other Loan Documents and (y) the Bank which is the assignor thereunder shall, to
the extent provided in such Assignment, be released from its obligations under
this Agreement (and, in the case of an Assignment covering all or the remaining
portion of an assigning Bank's rights and obligations under this Agreement, such
Bank shall cease to be a party hereto).
12.13.4 By executing and delivering an Assignment, the Bank which is the
assignor thereunder and the assignee thereunder confirm to, and agree with, each
other and the other parties hereto as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the interest being
assigned thereunder free any adverse claim, such Bank makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, perfection, genuineness,
sufficiency or value of this Agreement, the other Loan Documents, any
Collateral, any Auburn Collateral, or any Burlen Collateral with respect thereto
or any other instrument or document furnished pursuant hereto or thereto; (ii)
such Bank makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Borrower or any Guarantor or the
performance or observance by any Borrower or any Guarantor of any of their
respective obligations under this Agreement, or any of the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; (iii)
such assignee confirms that it has received a copy of this Agreement, and of the
other Loan Documents, together with copies of financial statements and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment; (iv) such assignee
shall, independently and without reliance upon the Agent, such Bank or any other
Bank and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee appoints and authorizes the Agent
to take such action as the Agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Agent by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vi) such assignee agrees
that it shall perform in accordance with their terms all of the obligations
which by the terms of this Agreement are required to be performed by it as a
Bank.
12.13.5 The Agent shall maintain at its address referred to in Section
12.11 hereof a copy of each Assignment delivered to it and a register for the
recordation of the names and addresses of the Banks and the Bank Commitment of
each Bank from time to time, and each Bank's Pro Rata Share of the Commitment of
all of the Banks and the Term Loan then outstanding (the "Register"). The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Banks may treat each person whose name is
recorded in the Register as a Bank hereunder for all purposes of this Agreement.
The Register shall be available for inspection by the Borrower or any Bank at
any reasonable time and from time to time upon reasonable prior notice.
74
12.13.6 Upon its receipt of an Assignment executed by an Assigning Bank
and the assignee and the written consent to such assignment from the other Bank
(if and to the extent required under Section 12.13.3 hereof), the Agent shall,
if such Assignment has been completed to its reasonable satisfaction, (i) accept
such Assignment, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Banks and the Borrower.
12.13.7 Notwithstanding any other provision herein, any Bank may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 12.14, disclose to the assignee or
participant or proposed assignee or participant, any information, including,
without limitation, any information relating to the Borrower or Guarantor
furnished to such Bank by or on behalf of the Borrower or Guarantor in
connection with this Agreement; PROVIDED, HOWEVER, that prior to any such
disclosure, each such assignee or participant or proposed assignee or
participant shall agree to preserve the confidentiality of any confidential
information relating to the Borrower or any Guarantor received from such Bank.
SECTION 12.14 WAIVERS AND AMENDMENTS. (a) No failure or delay of the
Agent or any Bank in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Agent and the Banks
hereunder are cumulative and not exclusive of any rights or remedies which they
may otherwise have. No waiver of any provision of this Agreement or any other
Loan Document nor consent to any departure by the Borrower therefrom shall in
any event be effective unless the same shall be authorized as provided in
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand on the Borrower in any case shall entitle it to any other or further
notice or demand in similar or other circumstances.
(b) Neither this Agreement or any other Loan Document, nor
any provision hereof or thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower
and the Required Lenders; PROVIDED, HOWEVER, that no such agreement shall (i)
change the principal amount of, or extend or advance the maturity of or the
dates for the payment of principal of or interest on any of the Loans or reduce
the rate of interest on any of the Loans, (ii) change the Pro Rata Share of any
Bank or amend or modify or waive the provisions of this Section 12.4, Section
2.7, Section 2.11.4, Section 2.12, Section 7.12, Section 8.1 through Section
8.20 and Articles 9 and 11 hereof or the definition of "Maturity Date",
"Required Lenders" or "Borrowing Base", (iii) release any material portion of
the Collateral, the Auburn Collateral or the Burlen Collateral (iv) release the
Borrower or any Guarantor from such Person's obligations under this Agreement or
any other Loan Document; (v) extend any cure period in which to cure a monetary
default or the forbearance of any right or remedy able to be exercised pursuant
to the terms of the Loan Documents in connection with a monetary default; and
(vi) consent to an assignment by the Borrower of any of the Borrower's rights or
obligations under this Agreement or the other Loan Documents; in each case
without the prior written consent of all of the Banks; and PROVIDED, FURTHER,
HOWEVER, that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Agent under this Agreement or the other Loan Documents
without the written
75
consent of the Agent.
SECTION 12.15 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement or any other Loan
Documents shall survive the execution and delivery of this Agreement and shall
continue in full force and effect as long as any Obligation is outstanding.
SECTION 12.16 COMPLETE AGREEMENT. This Agreement and the other Loan
Documents set forth exhaustively the complete undertaking and agreement of the
Agent, each Bank and the Borrower as to the subject matter hereof, and there are
no other agreements or understandings binding upon them. Without limiting the
foregoing, the Borrower expressly acknowledges and agrees that neither the Agent
nor any Bank has made any commitments and assumed no obligations whatsoever with
respect to any consent or waiver which may have been or may at any time be
requested by the Borrower as to the restrictions set forth in any provision of
this Agreement.
SECTION 12.17 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
Agreement. Delivery of a facsimile copy of an executed counterpart of a
signature page shall be effective as a manually executed signature page to this
Agreement.
SECTION 12.18 NO PRESUMPTION. The parties acknowledge and agree that:
each party and its counsel have reviewed and have had an opportunity to
negotiate the terms and provisions of the Agreement and the other Loan Documents
and have contributed or have been offered the opportunity to contribute to their
revision; the normal rule of construction, to the effect that any ambiguities
are resolved against the drafting party, shall not be employed in the
interpretation of them; and their terms and provisions shall be construed fairly
as to all parties hereto and not in favor of or against any party, regardless of
which party was generally responsible for the preparation of this Agreement and
the other Loan Documents.
SECTION 12.19 NO THIRD PARTY BENEFICIARIES. The terms and provisions
of this Agreement are for the exclusive benefit of the parties hereto, and no
other person, including creditors of any party hereto, shall have any right or
claim against any party by reason of those provisions or be entitled to enforce
any of those terms and provisions against any party.
SECTION 12.20 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH
BANK ACKNOWLEDGES THAT THE PROMPT RESOLUTION OF DISPUTES IS IN THE INTERESTS OF
ALL PARTIES AND THAT A TRIAL WITH A JUDGE AS THE SOLE FINDER OF FACT WOULD BE
THE MOST EXPEDITIOUS MANNER TO RESOLVE SUCH DISPUTES. THE BORROWER, THE AGENT
AND THE BANKS HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY
JURY IN ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH
OR IN ANY WAY RELATED TO THIS AGREEMENT AND/OR THE LOAN DOCUMENTS. THE PARTIES
ACKNOWLEDGE THAT THEY MAKE THIS WAIVER KNOWINGLY AND VOLUNTARILY, AFTER
EXTENSIVE CONSIDERATION WITH THEIR RESPECTIVE
76
ATTORNEYS OF THE RAMIFICATIONS OF THIS WAIVER.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
77
IN WITNESS WHEREOF, this Agreement has been duly executed on December 9,
2004, and is effective as of the day and year first above written.
DELTA GALIL USA INC.
By:
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President for Finance and
Secretary
BANK LEUMI USA
By:
-------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Senior Vice President
By:
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Vice President
BANK HAPOALIM, B.M.
By:
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇
Vice President
By:
-------------------------------------
The undersigned agrees to observe and perform, and to be bound by, all of the
provisions of this Second Amended and Restated Credit and Security Agreement
relating to it, including, with limitation, the provisions of Article 10.
Auburn Hosiery ▇▇▇▇▇, Inc. Burlen Corp.
By:__________________________ By:________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Treasurer ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Treasurer
and Secretary and Assistant Secretary
The Terms and conditions of this Agreement are approved.
DELTA GALIL INDUSTRIES LTD.
By:
--------------------------
78
SCHEDULE 1.1
PRO RATA SHARE
Bank Leumi USA
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇, Vice President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇ 50%
Bank Hapoalim B.M.*
1177 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇, Vice President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇ 50%
*Copies of notices shall also go to:
Bank Hapoalim B.M.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
SCHEDULE 3.3.1: REAL ESTATE COLLATERALIZATION DOCUMENTS
A. REAL ESTATE COLLATERALIZATION DOCUMENTS
1. Amended and Restated Open-End Mortgage and Security Agreement and
Assignment of Leases and Rents by the Borrower to the Agent, as agent for the
Banks, to be recorded in the Recorder's Office of the County of Lycoming,
Pennsylvania, and in the Recorder's Office of the County of Tioga, Pennsylvania,
encumbering premises at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ("Wellsboro
Premises") and ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ("Williamsport
Premises")
2. UCC-1 financing statements between the Borrower, as debtor, and the
Agent, as Agent for the Banks, as secured party, to be filed in the Real Estate
Records of Lycoming County, Pennsylvania, in the Real Estate Records of Tioga
County, Pennsylvania, and with the Secretary of the Commonwealth of Pennsylvania
3. Policy of title insurance issued by Lawyers Title Insurance Corporation
for the Wellsboro Premises and the Williamsport Premises
4. Survey affidavit for the Wellsboro Premises
5. Survey affidavit for the Williamsport Premises
6. Title affidavit for the Wellsboro Premises
7. Title affidavit for the Williamsport Premises
8. The Borrower's letter affirming the provisions of Section 5.4 and
Section 6.20 of the Agreement with respect to Assignment of Lessee's Interest in
Lease by the Borrower to the Agent, dated as of September 11, 2000, with respect
to its lease of premises ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
B. REAL ESTATE COLLATERALIZATION DOCUMENTS
1. Amended and Restated Deed of Trust by the Borrower to Lawyers Title
Insurance Corporation, as Trustees for the Agent, for the benefit of the Banks
as beneficiaries to be recorded in the Office of the Register of Deeds of
Richmond County, North Carolina, with respect to premises at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("Rockingham Premises")
2. UCC-1 financing statements between Borrower, as debtor, and the Agent
for the benefit of the Banks, as secured party, to be filed with the Register of
Deeds of Richmond County, North Carolina, and with the Secretary of State of the
North Carolina.
3. Policy of title insurance issued by Lawyers Title Insurance Corporation
for the Rockingham Premises
4. Survey affidavit for the Rockingham Premises
5. Title affidavit for the Rockingham Premises
SCHEDULE 6.1: CORPORATE EXISTENCE AND OWNERSHIP
Delta Galil Industries, Ltd.
SCHEDULE 6.5: EQUIPMENT AND INVENTORY LOCATIONS
Borrower Locations:
-------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Equipment only)
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(Contents only)
Zip Buena Vista Processing Zone
San ▇▇▇▇▇ Sula
Honduras, C.A.
Auburn Locations:
-----------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Equipment only)
G&G Contracting
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇
(Equipment only)
Calceta Aerobicas, S.A. de C.V. (Contractor)
▇▇▇▇▇▇▇ Las ▇▇▇▇▇ #123-E
Fraccionamiento Industrial Las ▇▇▇▇▇
Tlalnepantla, ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
(Equipment only)
Burlen Locations:
-----------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Union Textile International, S.A
▇▇▇▇ ▇▇▇▇▇▇ Industrial de ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, Dominican Republic
Quick Manufacturing
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ #▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SCHEDULE 6.6: CORPORATE NAMES
Auburn currently operates under the fictitious names ▇▇▇▇▇▇ Sports Socks
and Converse Accessories.
SCHEDULE 6.11: INTELLECTUAL PROPERTY: PATENTS, TRADEMARKS,
COPYRIGHTS AND LICENSES
PATENTS, PATENT APPLICATIONS, COPYRIGHTS
None.
TRADEMARKS AND LICENSED MARKS OF BORROWER
--------------------------- --------------- ------------------------------------
REGISTRATION NO. DATE ▇▇▇▇
---------------- ---- ----
--------------------------- --------------- ------------------------------------
1,475,978 HANG UPS
--------------------------- --------------- ------------------------------------
181,556 KICK-A-WAY
--------------------------- --------------- ------------------------------------
1,322,278 KICK-A-WAY
--------------------------- --------------- ------------------------------------
1,186,905 LOVEPATS
--------------------------- --------------- ------------------------------------
1,207,348 LOVEPATS LOGO
--------------------------- --------------- ------------------------------------
1,290,229 UNDERWEAR-▇▇▇▇▇
--------------------------- --------------- ------------------------------------
870,132 KICKAWAY
--------------------------- --------------- ------------------------------------
582,953 WUNDIES
--------------------------- --------------- ------------------------------------
78342307 FLEXIFIT
--------------------------- --------------- ------------------------------------
78203532 SMART SEAMLESS
--------------------------- --------------- ------------------------------------
76392753 BODY FORCE
--------------------------- --------------- ------------------------------------
76299812 OUT OF SIGHT
--------------------------- --------------- ------------------------------------
2657385 THE COMFORT PANTY
--------------------------- --------------- ------------------------------------
2669868 SHORT ▇▇▇▇▇
--------------------------- --------------- ------------------------------------
2572049 GIRL TALK
--------------------------- --------------- ------------------------------------
2293495 LONG ▇▇▇▇▇
--------------------------- --------------- ------------------------------------
2395949 MODERN LACE
--------------------------- --------------- ------------------------------------
2248301 SHEER ROMANCE
--------------------------- --------------- ------------------------------------
2410997 SECRET DESIRE
--------------------------- --------------- ------------------------------------
2250251 SHEER DREAMS
--------------------------- --------------- ------------------------------------
1882310 SECRET IMAGES
--------------------------- --------------- ------------------------------------
1835500 HIDDEN SECRETS
--------------------------- --------------- ------------------------------------
1912577 SILK SECRETS
--------------------------- --------------- ------------------------------------
1807616 INNER SECRETS
--------------------------- --------------- ------------------------------------
1935700 SECRETS
--------------------------- --------------- ------------------------------------
1475111 MY BEST FITTING BRA
--------------------------- --------------- ------------------------------------
1280796 SECRETLY YOURS
--------------------------- --------------- ------------------------------------
1325951 SECRETLY YOURS
--------------------------- --------------- ------------------------------------
FOREIGN TRADEMARKS(2)
The company is allowing foreign trademarks to expire due to non-use. No
representation is made to the validity of foreign marks.
---------------- ------------------------ --------------- ----------------------
COUNTRY REGISTRATION NO. DATE ▇▇▇▇
------- ---------------- ---- ----
---------------- ------------------------ --------------- ----------------------
Bangladesh 38709 (Application No.) LOVEPATS Logo
---------------- ------------------------ --------------- ----------------------
Canada 22838 KICKAWAY
---------------- ------------------------ --------------- ----------------------
Canada 126539 WUNDIES
---------------- ------------------------ --------------- ----------------------
Chile 442735 PATCHES
---------------- ------------------------ --------------- ----------------------
China 753566 LOVEPATS Logo
---------------- ------------------------ --------------- ----------------------
France 1633578 LOVEPATS Logo
---------------- ------------------------ --------------- ----------------------
Germany 2005217 LOVEPATS Logo
---------------- ------------------------ --------------- ----------------------
Great Britain 1450555 LOVEPATS Logo
---------------- ------------------------ --------------- ----------------------
Hungary 140931 LOVEPATS Logo
---------------- ------------------------ --------------- ----------------------
Italy 663228 LOVEPATS Logo
---------------- ------------------------ --------------- ----------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ LOVEPATS Logo
---------------- ------------------------ --------------- ----------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ PATCHES
---------------- ------------------------ --------------- ----------------------
Poland 88633 LOVEPATS Logo
---------------- ------------------------ --------------- ----------------------
Romania 21675 LOVEPATS Logo
---------------- ------------------------ --------------- ----------------------
Spain 1790442 LOVEPATS Logo
---------------- ------------------------ --------------- ----------------------
Turkey 148441 LOVEPATS Logo
---------------- ------------------------ --------------- ----------------------
---------------------
2 The Dialogue intellectual property database does not include trademark
information for the following countries, and therefore, marks in these countries
that are listed on this Schedule cannot be confirmed by publicly available
means: ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and Turkey.
LICENSED TRADEMARKS
-------------------
--------------------------------------- ----------------------------------------
Barbie Danskin
--------------------------------------- ----------------------------------------
▇▇▇▇▇ Pocket Freestyle
--------------------------------------- ----------------------------------------
Disneys' Properties Danskin NOW
--------------------------------------- ----------------------------------------
PowerPuff Girls Maidenform
--------------------------------------- ----------------------------------------
Looney Tunes Sweet Nothings
--------------------------------------- ----------------------------------------
Yo Girl! ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------- ----------------------------------------
Earth 2 ▇▇▇▇ Starter
--------------------------------------- ----------------------------------------
▇▇▇▇ Is Red ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------- ----------------------------------------
Miffy & Friends
--------------------------------------- ----------------------------------------
Rainbow Brite
--------------------------------------- ----------------------------------------
Maya & ▇▇▇▇▇▇
--------------------------------------- ----------------------------------------
LOGOS
-----
Please see ANNEX B attached.
TRADEMARKS OF AUBURN
--------------------------- --------------- ------------------------------------
REGISTRATION NO. DATE ▇▇▇▇
---------------- ---- ----
--------------------------- --------------- ------------------------------------
1324675 SHEER ECSTASY
--------------------------- --------------- ------------------------------------
1369090 LIGHT FANTASTICS
--------------------------- --------------- ------------------------------------
LICENSED MARKS OF AUBURN
▇ ▇▇▇▇▇▇ (script) and "W" (script)
o Converse, All Star and the "Star and Chevron" design
TRADEMARKS OF BURLEN
--------------------------- --------------- ------------------------------------
REGISTRATION NO. DATE ▇▇▇▇
---------------- ---- ----
--------------------------- --------------- ------------------------------------
1133137 SECRET SKIN
--------------------------- --------------- ------------------------------------
0565254 "BE-FREE"
--------------------------- --------------- ------------------------------------
78448451(3) JUST RELAX
--------------------------- --------------- ------------------------------------
LICENSED MARKS OF BURLEN
o License Agreement dated as of July 2, 2003 between Stony
Apparel Corporation and Burlen granting a license to Eye
Shadow(TM). In the opinion of management of the Borrower
and Burlen, this license is de minimis and licensor
consent to assignment of such ▇▇▇▇ shall not be
obtained.
---------------------
3 This is the Serial Number for the Just Relax trademark, not the Registration
Number. The Application for Registration was submitted on July 9, 2004 and a
Registration Number has not yet been assigned.
SCHEDULE 6.17: SUBSIDIARIES
Secretly Yours Ltd. (HK)*: (100 % owned by Borrower)
Secret Images Ltd. (HK)*: 50% owned by Borrower and 50% owned
by Secretly Yours Ltd. (HK))
Secrets Ltd. (HK)* 50% owned by Borrower and 50% owned
by Secretly Yours Ltd. (HK))
Wundies Inc. (NY)+ (100% owned by Borrower)
---------------------
* Acts solely as purchasing agent.
+ Wundies Inc. is inactive and is currently in the process of being dissolved.
SCHEDULE 6.18: LITIGATION AND PROCEEDINGS
1. ZIARI, LLC ("ZIARI") V. KOBRA INT'L LTD. ("KOBRA"), DELTA GALIL
INDUSTRIES LTD., DELTA GALIL USA INC. ("BORROWER"), AND DELTA TEXTILES
NEW YORK, LTD (COLLECTIVELY, THE "DELTA COMPANIES").
This action was commenced against the Delta Companies in October 2004 in
the Supreme Court, New York County. The Delta Companies must serve their
answer by December 20, 2004. The complaint alleges tortious interference
by the Delta Companies with Ziari's contractual and economic relations
with Kobra. The complaint seeks "an amount to be determined at trial but
believed to be in excess of $100,000" in compensatory damages and $5
million in punitive damages. Currently, the Delta Companies are engaged
in settlement discussions with Ziari and Kobra and anticipate and quick
settlement requiring no monetary payments by Delta Companies.
2. ▇▇▇▇ MERCHANDISING CORP. V. WUNDIES INC.
This is an adversary proceeding instituted in October 2003 in connection
with the ▇▇▇▇ Department Stores, Inc. Chapter 11 proceeding pending in
the Unites States Bankruptcy Court for the Southern District of New York
(the "▇▇▇▇ Chapter 11 Case"). The complaint alleges preference payments
owed by Wundies Inc. in the amount of $45,864.00. Wundies Inc. served an
Answer in January 2004 denying the claim.
3. ▇▇▇▇ MERCHANDISING CORP. V. WUNDIES ENTERPRISES, INC., D/B/A KICKAWAY
This is an adversary proceeding instituted in October 2003 in connection
with the ▇▇▇▇ Chapter 11 Case. The complaint alleges preference payments
owed by Wundies Inc. in the amount of $147,541.53. Wundies Inc. served
an Answer in January 2004 denying the claim.
4. ▇▇▇▇ MERCHANDISING CORP. ▇. ▇▇▇▇▇▇ SPORT SOCKS CO. ("▇▇▇▇▇▇ SOCKS")
This is an adversary proceeding instituted in October 2003 in connection
with the ▇▇▇▇ Chapter 11 Case. (▇▇▇▇▇▇ Sport Socks Co. is a trade name
used by Auburn Hosiery ▇▇▇▇▇, Inc.) The complaint alleges preference
payments owed by ▇▇▇▇▇▇ Socks in the amount of $113,069.32. Due to
questions about the validity of service of the complaint, ▇▇▇▇▇▇ Socks
is presently in process of agreeing on a due date for its Answer.
SCHEDULE 6.19: ENVIRONMENTAL MATTERS
1. The Premises located at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, was
the subject of past releases of Hazardous Substances by former owners and/or
operators of the property, and was previously listed on the Georgia Hazardous
Site Inventory as Site #10473, pursuant to the Georgia Hazardous Site Response
Act. Measurable levels of Hazardous Substances are still present at the
property. During the investigation and ultimate removal of the Forstmann Road
property from the Hazardous Site Inventory, various governmental approvals were
received by Burlen from the Georgia Environmental Protection Division regarding
the Forstmann Road property. Burlen has entered into communications and
agreements with the Tift County Development Authority, Forstmann & Company and
J.P, ▇▇▇▇▇▇▇ with respect to liability for cleanup costs at the Forstmann Road
property. At one time, at least two underground storage tanks were present on
the Forstmann Road property, but were purportedly removed by a previous owner of
the property.
A history of the remediation of the Fortsmann Road property is listed below:
o Phase I Environmental Site Assessment, July 18, 1996, Consultech
Engineering;
o Phase II Soil Assessment Report, February 28, 1997, Consultech
Engineering;
o Report of Source Investigation and Ground-Water Sampling and
Analysis, April 8, 1997, LAW Engineering;
o Indemnity Agreement with Tift County Development Authority, July
18, 1997;
o Letter from Law Engineering to EPD, Regarding Submittal of
Additional Information Concerning the HSRA Reporting
Requirements, August 22, 1997;
o Letter from EPD to Burlen Corporation, Regarding Compliance
Status Report Call-In, December 21, 1998;
o Compliance Status Report, June 21, 1999, submitted on behalf of
Forstmann & Company by LAW Engineering;
o EPD Notice of Deficiency, October 15, 1999 to Forstmann &
Company, Inc.;
o Notice of Forstmann Bankruptcy to EPD, December 15, 1999;
o CSR Call-In Letter to Burlen Corp., December 22, 1999;
o Letter from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to ▇▇▇▇▇ ▇▇▇▇▇, EPD, Regarding CSR,
January 19, 2000;
o CSR Call-In Letter to ▇.▇. ▇▇▇▇▇▇▇, March 1, 2000;
o EPD Letter Re: Proposed Consent Order to ▇.▇. ▇▇▇▇▇▇▇, April 17,
2000;
o Letter to EPD Re: Extension of Deadline for Submission of
Revised CSR, May 17, 2000;
o EPD Letter Re: Administrative Order to ▇.▇. ▇▇▇▇▇▇▇, June 2,
2000;
o Revised Compliance Status Report and Corrective Action Plan,
August 2000, submitted on behalf of Burlen Corp. by LAW
Engineering;
o EPD Notice of Deficiency, December 18, 2000;
o EPD HSRA File Information, 1997-2000;
o Agreement Between Burlen Corp. and ▇.▇. ▇▇▇▇▇▇▇, February 6,
2001;
o Revised Compliance Status Report, May 2001, submitted on behalf
of Burlen Corp. and ▇.▇. ▇▇▇▇▇▇▇, Inc. by LAW Engineering;
o Letter from Law Engineering to EPD, Regarding Milestone
Schedule, May 25, 2001;
o Letter from Law Engineering to EPD, Regarding Revised CSR
Tables, July 19, 2001;
o EPD Concurrence With Compliance Status Report, August 28, 2001;
o Letter from Law Engineering to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Regarding
Results of Treatability Studies, August 31, 2001;
o Letter from Law Engineering to EPD, Regarding Re-Calculation of
Type 4 Risk Reduction Standards, October 12, 2001;
o Letter from EPD, Regarding Type 4 RRS Site Specific Calculation,
January 9, 2002;
o Letter from Law Engineering to EPD, Regarding Request for
Meeting, January 22, 2002;
o Letter from Law Engineering to EPD, Following Up on Meeting,
January (SIC - February) 20, 2002;
o Letter from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to EPD, Regarding Recording Deed of
Notice, January 23, 2002;
o Re-Certification and Continued Monitoring Plan, October 4, 2002,
submitted on behalf of Burlen Corp. and ▇.▇. ▇▇▇▇▇▇▇, Inc. by
MACTEC Engineering;
o Letter from EPD, Regarding CAP Notice of Deficiency, December
19, 2002;
o Response to Comments, February 18, 2003, MACTEC Engineering;
o EPD Letter Re: Response to CAP NOD, April 9, 2003;
o Revised Re-Certification and Continued Monitoring Plan, May 9,
2003, submitted on behalf of Burlen Corp. and ▇.▇. ▇▇▇▇▇▇▇, Inc.
by MACTEC Engineering;
o Notice to MACTEC Engineering of WestPoint ▇▇▇▇▇▇▇ and ▇.▇.
▇▇▇▇▇▇▇ Bankruptcy;
o EPD Letter Re: Approval of CAP, June 27, 2003;
o EPD Proposed Consent Order to Burlen Corp., August 20, 2003;
o Annual Site Reconnaissance Report, September 11, 2003, MACTEC
Engineering;
o Response to EPD Proposed Consent Order, September 22, 2003;
o Letter and Financial Assurance Documentation to EPD, September
22, 2003;
o EPD Letter Re: Removal From Hazardous Site Inventory, October
14, 2003;
o Administrative Order, October 14, 2003;
o 2004 Annual Site Reconnaissance and Groundwater Monitoring
Report, June 8, 2004, MACTEC Engineering; and
o September 10, 2004 Memorandum to L.A. SonnyBowen from ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ regarding the environmental status of the Forstmann Road
and ▇▇▇▇▇▇▇▇▇ Drive facilities.
2. The Real Property located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ has
experienced a release of petroleum from underground storage tanks located on an
adjacent property.
A history of the Environmental Complaint of the ▇▇▇▇▇▇▇▇▇ Drive property
is listed below:
o Phase I Environmental Site Assessment, December 17, 1996,
Consultech Engineering;
o Phase II Environmental Site Assessment, December 30, 1996,
Consultech Engineering;
o Phase I Environmental Site Assessment, August 9, 1999 [sic,
2000], Consultech Eng.;
o EPD Trip Report for ▇▇▇▇▇▇▇ Oil Company, February 13, 2002; and
o September 10, 2004 Memorandum to L.A. ▇▇▇▇▇ ▇▇▇▇▇ from ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ regarding the environmental status of the Forstmann Road
and ▇▇▇▇▇▇▇▇▇ Drive facilities.
SCHEDULE 8.1: LIENS
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
DEBTOR(S) JURISDICTION DATE FILED FILE NUMBER TYPE OF FILING SECURED PARTY(4)
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
Burlen Corp Tift County, Georgia 8/16/2000 Bk 683 Fixture NationsBank, N.A.
Pg 001
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
Burlen Corp. Georgia Cooperative 7/8/1994 1371994001196 UCC-1 NationsBank, N.A.
Authority
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
Burlen Corp. Georgia Cooperative 4/20/1999 1371999001025 Amendment NationsBank, N.A.
Authority (Address)
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
Burlen Corp. Georgia Cooperative 4/20/1999 1371999001026 Continuation of NationsBank, N.A.
Authority Above
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
Burlen Corp. Georgia Cooperative 8/16/2000 1372000001524 Amendment NationsBank, N.A.
Authority (Name: Bank of
America, N.A.)
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
Burlen Corp. Georgia Cooperative 2/9/2004 1342004000190 Continuation of Bank of America, N.A.
Authority Above
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
Burlen Corp. Georgia Cooperative 2/9/2004 1372004000191 Amendment Bank of America, N.A.
Authority (Address)
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
Burlen Corp. Georgia Cooperative 12/27/1995 0071995003714 UCC-1 Fuji Photo Film USA,
Authority Inc.
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
Burlen Corp. Georgia Cooperative 7/20/2000 0072000008732 Continuation Fuji Photo Film USA,
Authority of Above Inc.
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
Burlen Corp. Georgia Cooperative 5/2/1997 1371997001089 UCC-1 NationsBank, N.A.
Authority
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
Burlen Corp. Georgia Cooperative 8/16/2000 1372000001525 Amendment NationsBank, N.A.
Authority (Name: Bank of
America, N.A.)
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
Burlen Corp. Georgia Cooperative 1/28/2002 1372002000151 Continuation Bank of America, N.A.
Authority of Above
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
Burlen Corp. Georgia Cooperative 4/22/1998 1371998001077 UCC-1 NationsBank, N.A.
Authority
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
Burlen Corp. Georgia Cooperative 8/16/2000 1372000001523 Amendment NationsBank, N.A.
Authority (Name: Bank of
America, N.A.)
--------------------- ------------------------ ---------------- -------------------------- ----------------- ----------------------
---------------------
4 The obligations securing all lien filings listed in this Schedule 8.1 with
Bank of America, N.A. and/or NationsBank, N.A. as secured party are being paid
off at closing, and termination statements therefor shall be filed shortly
thereafter, except with respect to the first filing listed (Bk 683 Pg 001 filed
in Tift County, Georgia).
SCHEDULE 8.2 INDEBTEDNESS
o Industrial Revenue Bonds in the amount up to $3,043,158 backed up by a
Stand-by Letter of Credit in the amount of up to $3,043,158 issued to
▇▇▇▇▇ Fargo Bank Minnesota, N.A. f/k/a Norwest Bank Minnesota, N.A., to
be secured by cash collateral deposited with Bank of America, N.A. on
the Closing Date
o Various Trade Letters of Credit all expiring no later than April 30,
2005 in the amount of $1,424,425,50 to be secured by cash collateral
deposited with Bank of America, N.A. on the Closing Date
o Letter of Credit issued to the State of Georgia for worker's
compensation expiring on May 1, 2005 in the amount of $280,000 to be
secured by cash collateral deposited with Bank of America, N.A. on the
Closing Date
o Earn-out payments payable to Section 1.4 of the Stock Purchase Agreement
dated as of the date hereof among ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, Delta Galil and the Borrower
o Contingent payments payable pursuant to Sections 7.12 and 7.13 of the
Stock Purchase Agreement dated as of the date hereof among ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Delta Galil and the Borrower
o Intercompany loan in the amount of $10,000,000 made by Delta Galil to
the Borrower
SCHEDULE 8.14: EMPLOYER BENEFIT PLANS
1. Delta Galil USA Employees Profit Sharing and Savings Plan (f/k/a Wundies
Employees Profit Sharing and Savings Plan)
2. Wundies Employee Defined Benefit Pension Plan (all benefits were frozen
as of 1996)
3. Burlen Corporation Employees Profit Sharing and Savings Plan (401K)