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EXHIBIT 4.2
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RESTATED CREDIT AGREEMENT
Dated as of November 29, 1999
Among
WATER PIK, INC. AND LAARS, INC.
THE GUARANTORS NAMED HEREIN,
THE LENDERS NAMED HEREIN,
and
THE CHASE MANHATTAN BANK, AS AGENT
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TABLE OF CONTENTS
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I. DEFINITIONS ............................................................. 2
SECTION 1.01. Certain Defined Terms .................................... 2
SECTION 1.02. Accounting Terms ......................................... 25
II. THE LOANS ............................................................... 25
SECTION 2.01. Revolving Credit Commitments ............................. 25
SECTION 2.02. Loans .................................................... 27
SECTION 2.03. Notice of Loans .......................................... 29
SECTION 2.04. Notes; Repayment of Loans ................................ 29
SECTION 2.05. Interest on Loans ........................................ 31
SECTION 2.06. Fees ..................................................... 31
SECTION 2.07. Termination and Reduction of Revolving Credit
Commitments ............................................ 32
SECTION 2.08. Interest on Overdue Amounts; Alternate Rate of Interest .. 32
SECTION 2.09. Additional Repayment of Loans ............................ 33
SECTION 2.10. Reserve Requirements; Change in Circumstances ............ 36
SECTION 2.11. Change in Legality ....................................... 38
SECTION 2.12. Indemnity ................................................ 39
SECTION 2.13. Pro Rata Treatment; Assumption by and Delegation of
Authority to the Agent ................................. 40
SECTION 2.14. Sharing of Setoffs ....................................... 42
SECTION 2.15. Payments and Computations ................................ 43
SECTION 2.16. Taxes .................................................... 44
SECTION 2.17. Issuance of Letters of Credit ............................ 47
SECTION 2.18. Payment of Letters of Credit; Reimbursement .............. 48
SECTION 2.19. Agent's Actions with respect to Letters of Credit ........ 50
SECTION 2.20. Letter of Credit Fees .................................... 50
III. COLLATERAL SECURITY ..................................................... 51
SECTION 3.01. Security Documents ....................................... 51
SECTION 3.02. Filing and Recording ..................................... 51
IV. REPRESENTATIONS AND WARRANTIES .......................................... 52
SECTION 4.01. Organization, Legal Existence ............................ 52
SECTION 4.02. Authorization ............................................ 52
SECTION 4.03. Governmental Approvals ................................... 52
SECTION 4.04. Binding Effect ........................................... 53
SECTION 4.05. Material Adverse Change .................................. 53
SECTION 4.06. Litigation; Compliance with Laws; etc .................... 53
SECTION 4.07. Financial Statements ..................................... 53
SECTION 4.08. Federal Reserve Regulations .............................. 54
SECTION 4.09. Taxes .................................................... 55
SECTION 4.10. Employee Benefit Plans ................................... 55
SECTION 4.11. No Material Misstatements ................................ 57
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SECTION 4.12. Investment Company Act; Public Utility Holding Company
Act .................................................... 57
SECTION 4.13. Security Interest ........................................ 57
SECTION 4.14. Use of Proceeds .......................................... 57
SECTION 4.15. Subsidiaries ............................................. 57
SECTION 4.16. Title to Properties; Possession Under Leases;
Trademarks ............................................. 57
SECTION 4.17. Solvency ................................................. 58
SECTION 4.18. Permits, etc ............................................. 59
SECTION 4.19. Compliance with Environmental Laws ....................... 59
SECTION 4.20. No Change in Credit Criteria or Collection Policies ...... 60
SECTION 4.21. Employee Matters ......................................... 60
SECTION 4.22. Year 2000 ................................................ 60
V. CONDITIONS OF CREDIT EVENTS ............................................. 61
SECTION 5.01. All Credit Events ........................................ 61
SECTION 5.02. First Borrowing .......................................... 61
VI. AFFIRMATIVE COVENANTS ................................................... 66
SECTION 6.01. Legal Existence .......................................... 66
SECTION 6.02. Businesses and Properties ................................ 66
SECTION 6.03. Insurance ................................................ 67
SECTION 6.04. Taxes .................................................... 67
SECTION 6.05. Financial Statements, Reports, etc. ...................... 68
SECTION 6.06. Litigation and Other Notices ............................. 71
SECTION 6.07. ERISA .................................................... 72
SECTION 6.08. Maintaining Records; Access to Properties and
Inspections; Right to Audit ............................ 73
SECTION 6.09. Use of Proceeds .......................................... 73
SECTION 6.10. Fiscal Year-End .......................................... 73
SECTION 6.11. Further Assurances ....................................... 73
SECTION 6.12. Additional Grantors and Guarantors ....................... 73
SECTION 6.13. Environmental Laws ....................................... 74
SECTION 6.14. Pay Obligations to Lenders and Perform Other Covenants ... 76
SECTION 6.15. Maintain Operating Accounts .............................. 76
SECTION 6.16. Year 2000 ................................................ 76
VII. NEGATIVE COVENANTS ...................................................... 76
SECTION 7.01. Liens .................................................... 77
SECTION 7.02. Sale and Lease-Back Transactions ......................... 78
SECTION 7.03. Indebtedness ............................................. 78
SECTION 7.04. Dividends, Distributions and Payments .................... 79
SECTION 7.05. Consolidations, Mergers and Sales of Assets .............. 79
SECTION 7.06. Investments .............................................. 80
SECTION 7.07. Rental Obligations ....................................... 82
SECTION 7.08. Leverage Ratio ........................................... 82
SECTION 7.09. Fixed Charge Coverage Ratio; EBITDA ...................... 83
SECTION 7.10. Interest Coverage Ratio .................................. 83
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SECTION 7.11. Business ................................................. 83
SECTION 7.12. Sales of Receivables ..................................... 83
SECTION 7.13. Use of Proceeds .......................................... 84
SECTION 7.14. ERISA .................................................... 84
SECTION 7.15. Accounting Changes ....................................... 84
SECTION 7.16. Prepayment or Modification of Indebtedness; Modification
of Charter Documents ................................... 84
SECTION 7.17. Transactions with Affiliates ............................. 84
SECTION 7.18. Consulting Fees .......................................... 85
SECTION 7.19. Negative Pledges, etc .................................... 85
VIII. EVENTS OF DEFAULT ....................................................... 85
IX. AGENT ................................................................... 89
X. MANAGEMENT, COLLECTION AND STATUS OF RECEIVABLES AND
OTHER COLLATERAL ........................................................ 93
SECTION 10.01. Collection of Receivables; Management of Collateral ..... 93
SECTION 10.02. Receivables Documentation ............................... 95
SECTION 10.03. Status of Receivables and Other Collateral .............. 96
SECTION 10.04. Monthly Statement of Account ............................ 97
SECTION 10.05. Collateral Custodian .................................... 97
XI. MISCELLANEOUS ........................................................... 97
SECTION 11.01. Notices ................................................. 97
SECTION 11.02. Survival of Agreement ................................... 98
SECTION 11.03. Successors and Assigns; Participations .................. 98
SECTION 11.04. Expenses; Indemnity ..................................... 102
SECTION 11.05. Applicable Law .......................................... 103
SECTION 11.06. Right of Setoff ......................................... 103
SECTION 11.07. Payments on Business Days ............................... 103
SECTION 11.08. Waivers; Amendments ..................................... 104
SECTION 11.09. Severability ............................................ 105
SECTION 11.10. Entire Agreement; Waiver of Jury Trial, etc ............. 105
SECTION 11.11. Confidentiality ......................................... 106
SECTION 11.12. Submission to Jurisdiction .............................. 106
SECTION 11.13. Counterparts; Facsimile Signature ....................... 107
SECTION 11.14. Headings ................................................ 107
XII. GUARANTEES .............................................................. 107
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EXHIBITS
EXHIBIT A Form of Revolving Credit Note
EXHIBIT B Form of Opinion of Counsel
EXHIBIT C Form of Pledge Agreement
EXHIBIT D Form of Security Agreement
EXHIBIT E Form of Assignment and Acceptance
EXHIBIT F Form of Security Agreement - Patents and Trademarks
EXHIBIT G Form of Guarantee
SCHEDULES
SCHEDULE 2.01 Revolving Credit Commitments
SCHEDULE 2.02 Domestic Lending Offices
SCHEDULE 2.03 Eurodollar Lending Offices
SCHEDULE 4.01 Qualified Jurisdictions
SCHEDULE 4.05 Material Adverse Change
SCHEDULE 4.06(a) Litigation
SCHEDULE 4.06(b) Compliance with Laws
SCHEDULE 4.10 Employee Benefit Plans
SCHEDULE 4.15 Subsidiaries
SCHEDULE 4.19 Environmental Law Compliance
SCHEDULE 4.21 Employee Matters
SCHEDULE 6.05(g) Inventory Designations
SCHEDULE 6.05(k) Borrowing Base Certificate
SCHEDULE 7.01 Existing Liens
SCHEDULE 7.03 Existing Indebtedness
SCHEDULE 7.07 Rental Obligations
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RESTATED CREDIT AGREEMENT dated as of November 29,
1999, among WATER PIK, INC., a Delaware corporation
("Water Pik") and LAARS, INC., a Delaware
corporation ("Laars" and, together with Water Pik,
the "Borrowers"), the Guarantors named herein and
signatories hereto, the financial institutions from
time to time party hereto, initially consisting of
those financial institutions listed on Schedule 2.01
annexed hereto (collectively, the "Lenders"), and
THE CHASE MANHATTAN BANK, as agent for the Lenders
(in such capacity, the "Agent").
Allegheny Teledyne Incorporated ("ATI") and the Lenders are
parties to the Credit Agreement, dated as of November 29, 1999 (as in effect on
the date hereof, the "Existing Credit Agreement") providing for a loan to be
made to ATI in the principal amount not exceeding $34,000,000. Immediately prior
to the execution and delivery of this Agreement, the Borrowers, ATI and the
Lenders entered into an assumption agreement pursuant to which the Borrowers
assumed the existing obligations of ATI under the Existing Credit Agreement.
The Borrowers, the Lenders and the Agent have agreed to amend and
restate the Existing Credit Agreement to provide for such amendments on the
terms set forth in this Agreement, which Agreement shall become effective upon
the satisfaction of certain conditions precedent set forth herein.
It is the intent of the parties hereto that this Agreement not
constitute a novation of the obligations and liabilities existing under the
Existing Credit Agreement or evidence payment of all or any such obligations and
liabilities, that this Agreement restate in its entirety the Existing Credit
Agreement, and that from and after the Closing Date the Existing Credit
Agreement be of no further force or effect except as to evidence the incurrence
of the obligations thereunder.
Accordingly, in consideration of the mutual covenants contained
herein and subject to the satisfaction of the conditions set forth herein, the
Borrowers, the Lenders and the Agent hereby agree as follows:
The Borrowers have applied to the Lenders for Loans (such term and
all other capitalized terms used in this paragraph having the respective
meanings ascribed to such terms above or hereinafter) in the form of Revolving
Credit Loans to the Borrowers at any time and from time to time prior to the
Revolving Credit Termination Date in an aggregate principal amount not in excess
of $60,000,000 at any time outstanding. The proceeds of the Revolving Credit
Loans shall be used for general working capital and corporate purposes,
including, without limitation, Capital Expenditures and Permitted Acquisitions.
Holdings will guarantee the Loans in accordance with the provisions of a
Guarantee the execution and delivery of which shall be a precondition to the
effectiveness
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of this Agreement. The Grantors will provide Collateral in accordance with the
provisions of this Agreement and the Security Documents. The Lenders are
severally, and not jointly, willing to extend such Loans to the Borrowers
subject to the terms and conditions hereinafter set forth. Accordingly, the
Borrowers, the Guarantors, the Lenders and the Agent hereby agree as follows:
I. DEFINITIONS
SECTION 1.01. Certain Defined Terms. For purposes hereof, the
following terms shall have the meanings specified below:
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Loan for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the product of (i) the LIBO Rate in
effect for such Interest Period and (ii) Statutory Reserves. For purposes
hereof, "Statutory Reserves" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including, without
limitation, any marginal, special, emergency, or supplemental reserves)
expressed as a decimal established by the Board and any other banking authority
to which any Lender is subject for Eurocurrency Liabilities (as defined in
Regulation D). Such reserve percentages shall include, without limitation, those
imposed under Regulation D. Eurodollar Loans shall be deemed to constitute
Eurocurrency Liabilities and as such shall be deemed to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or
offsets which may be available from time to time to any Lender under Regulation
D. Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"Affiliate" of any person shall mean any other person which,
directly or indirectly, controls or is controlled by or is under common control
with such person and, without limiting the generality of the foregoing, includes
(i) any person which beneficially owns or holds 10% or more of any class of
voting securities of such person or 10% or more of the equity interest in such
person, (ii) any person of which such person beneficially owns or holds 10% or
more of any class of voting securities or in which such person beneficially owns
or holds 10% or more of the equity interest in such person and (iii) any
director, officer or employee of such person. For the purposes of this
definition, the term "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person, whether
through the ownership of voting securities or by contract or otherwise.
"Agent" shall have the meaning assigned to such term in the
preamble to this Agreement.
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"Alternate Base Loan" shall mean a Loan based on the Alternate
Base Rate in accordance with Article II hereof.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1%, and (c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. "Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Agent at its principal office in New York
City as its prime rate in effect at such time. "Base CD Rate" shall mean the sum
of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) Statutory
Reserves and (b) the Assessment Rate. "Three-Month Secondary CD Rate" shall
mean, for any day, the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall not be a
Business Day, the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if such
rate shall not be so reported on such day or such next preceding Business Day,
the average of the secondary market quotations for three-month certificates of
deposit of major money center banks in New York City received at approximately
10:00 a.m., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Agent from three New
York City negotiable certificate of deposit dealers of recognized standing
selected by it. "Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the maximum reserve percentage (including any marginal,
special, emergency or supplemental reserves) expressed as a decimal, established
by the Board and any other banking authority to which the Agent is subject, for
new negotiable nonpersonal time deposits in dollars of over $100,000 with
maturities approximately equal to three months. Statutory Reserves shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage. "Assessment Rate" shall mean, for any day, the annual
assessment rate (net of refunds and rounded upwards, if necessary, to the next
1/16 of 1%) estimated by the Agent (in good faith, but in no event in excess of
statutory or regulatory maximums) to be payable by the Agent to the Federal
Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such successor) of time deposits made in dollars at the Agent's
domestic offices during the current calendar year. "Federal Funds Effective
Rate" shall mean, for any day, the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for the day of
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate,
or both, for any reason, including, the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms hereof, the Alternate
Base Rate shall be determined without
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regard to clause (b) or (c), or both, of the first sentence of this definition,
as appropriate, until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime Rate,
the Base CD Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate, the Base CD Rate or the Federal
Funds Effective Rate, respectively.
"Applicable Lending Office" shall mean, with respect to each
Lender, such Lender's Domestic Lending Office in the case of an Alternate Base
Loan and such Lender's Eurodollar Lending Office in the case of a Eurodollar
Loan.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee and accepted by the Agent,
in substantially the form of Exhibit E annexed hereto.
"ATI" shall have the meaning assigned to such term in the preamble
to this Agreement.
"BI Event" shall have the meaning assigned to such term in Section
2.09(e)(i) hereof.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Borrowers" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Borrowing Base" shall have the meaning assigned to such term in
Section 2.01(b) hereof.
"Business Day" shall mean any day, other than a Saturday, Sunday
or legal holiday in the State of New York, on which banks are open for
substantially all their banking business in New York City except that, if any
determination of a "Business Day" shall relate to a Eurodollar Loan, the term
"Business Day" shall in addition exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"Canadian Sub" shall mean Water Pik Canada Ltd, a Canadian
corporation.
"Capital Expenditures" shall mean all expenditures for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs and
improvements) which should be capitalized under GAAP.
"Capitalized Lease Obligation" shall mean an obligation to pay
rent or other amounts under any lease of (or other arrangement conveying the
right to use) real and/or personal property which obligation is required to be
classified and accounted for as a
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capital lease on a balance sheet prepared in accordance with GAAP, and for
purposes hereof the amount of such obligation shall be the capitalized amount
thereof determined in
accordance with GAAP.
"Cash Interest Expense" shall mean, with respect to any person for
any period, the Interest Expense of such person for such period less all
non-cash items constituting Interest Expense during such period (including,
without limitation, amortization of debt discounts and payments of interest on
Indebtedness by issuance of Indebtedness).
"Casualty Event" shall have the meaning assigned to such term in
Section 2.09(e)(i) hereof.
"Change of Control" shall mean the occurrence of any of the
following events: (i) any "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934 (as amended from time
to time, the "Exchange Act")), shall file a Schedule 13D or 14D-1 under the
Exchange Act disclosing that such person or group has become the "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act) of more than twenty-five
percent (25%) of the total voting power of the then outstanding voting stock of
Holdings; or (ii) at any time Holdings ceases to own or control 100% of the
voting stock of each of the Borrowers (or of the Borrower surviving a merger of
the Borrowers).
"Closing Date" shall mean the date on which all of the conditions
to the occurrence of the first Credit Event hereunder shall have been satisfied,
but in no event later than December 1, 1999.
"Code" shall mean the Internal Revenue Code of 1986 and the rules
and regulations promulgated thereunder, as amended from time to time.
"Collateral" shall mean all collateral and security as described
in the Security Documents.
"Commitment Letter" shall mean that certain commitment letter
dated November 3, 1999 and accompanying fee letter from The Chase Manhattan Bank
to ATI.
"Consolidated" shall mean, in respect of any person, as applied to
any financial or accounting term, such term determined on a consolidated basis
in accordance with GAAP (except as otherwise required herein) for the person and
all consolidated subsidiaries thereof.
"Contaminant" shall mean all Hazardous Materials and all those
substances which are regulated by or form the basis of liability under Federal,
state or local environmental, health and safety statutes or regulations or any
other material or substance which constitutes a material health, safety or
environmental hazard to any person or property.
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"Credit Event" shall mean each borrowing and each issuance of a
Letter of Credit hereunder.
"Credits" shall mean the Revolving Credit Loans and Letters of
Credit.
"Cure Loans" shall have the meaning assigned to such terms in
Section 2.13(d) hereof.
"Default" shall mean any condition, act or event which, with
notice or lapse of time or both, would constitute an Event of Default.
"Dilution Reserve" shall mean a reserve of 1% for each one percent
that the dilution percentage determined in any field examination conducted by
the Agent exceeds 10% up to 15% and an additional reserve of 2% for each one
percent that such dilution percentage as so determined exceeds 15%.
"dollars" or the symbol "$" shall mean lawful currency of the
United States of America.
"Domestic Lending Office" shall mean, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office" opposite
its name in Schedule 2.02 annexed hereto, or such other office of such Lender as
such Lender may from time to time specify to the Borrowers and the Agent.
"Early Buy Program Receivable" shall mean a Receivable arising
from a domestic or Canadian sale made by Laars during the months of October
through February pursuant to its early buy program requiring the Customer to
make payment in three equal installments during March, April and May or April,
May and June.
"EBITDA" shall mean with respect to any person for any period the
sum of (i) Net Income, (ii) Interest Expense, (iii) depreciation and
amortization and other non-cash items properly deducted in determining Net
Income and (iv) federal, state and local income taxes, in each case of such
person for such period, computed and calculated in accordance with GAAP and
minus (v) non-cash items properly added in determining Net Income, in each case
for the corresponding period.
"Eligible Assignee" shall mean, with respect to any assignment of
the rights, interest and obligations of a Lender hereunder, a person that is at
the time of such assignment (a) a commercial bank organized under the laws of
the United States or any state thereof, organized under the laws of any other
country that is a member of the Organization of Economic Cooperation and
Development, or organized under the laws of a political subdivision of any such
country, or a finance company, insurance company or other financial institution,
in each case of the foregoing cases, having a net worth or combined capital and
surplus of at least $100,000,000, (b) already a Lender hereunder
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(whether as an original party to this Agreement or as the assignee of another
Lender), (c) a successor (whether by transfer of assets, merger, consolidation
or otherwise) to the commercial lending business of the assigning Lender, (d) an
affiliate of a Lender, or (e) any other person that has been consented to in
writing as an Eligible Assignee by the Borrowers and the Agent.
"Eligible Inventory" shall mean inventory of an Inventory Grantor
comprised solely of raw materials and finished goods (and specifically excluding
work in process, supplies, and packaging costs) which is, in the reasonable
opinion of the Agent, not obsolete, slow-moving or unmerchantable and is and at
all times shall continue to be acceptable to the Agent in all respects;
provided, however, that Eligible Inventory shall in no event include inventory
which (i) is not located at one of the addresses for locations of Collateral set
forth on Schedule I to the Security Agreement, as the same may be amended from
time to time, and with respect to which the Agent has not been granted and has
not perfected a valid, first priority security interest subject to Permitted
Liens (it being hereby agreed that to the extent applicable the Agent may, in
its sole discretion, require that a landlord waiver be obtained with respect to
any leased location in order that the applicable Inventory may be eligible,
provided, however, that Eligible Inventory may include up to $275,000 of
Inventory, in the aggregate at any time, located at locations where no landlord
waiver has been obtained (all such locations being set forth on Schedule I of
the Security Agreement)), (ii) which is in transit or (iii) has been returned or
rejected by a Customer. Standards of eligibility may be fixed and revised from
time to time solely by the Agent in the Agent's reasonable business judgment
based upon its lending practices consistent with practices customary in the
commercial finance industry generally. In determining eligibility, the Agent
may, but need not, rely on reports and schedules furnished by an Inventory
Grantor, but reliance by the Agent thereon from time to time shall not be deemed
to limit the right of the Agent to revise standards of eligibility at any time
as to both present and future inventory of the Inventory Grantors.
"Eligible Receivables" shall mean Receivables created by the
Receivables Grantors in the ordinary course of business arising out of the sale
or lease of goods or rendition of services by a Receivables Grantor, which are
and at all times shall continue to be reasonably acceptable to the Agent in all
respects. Standards of eligibility may be fixed and revised from time to time
solely by the Agent in the Agent's reasonable business judgment based upon its
lending practices consistent with practices customary in the commercial finance
industry generally. In general, without limiting the foregoing, a Receivable
shall in no event be deemed to be an Eligible Receivable unless: (a) all
payments due on the Receivable have been invoiced and the underlying goods
shipped or services performed, as the case may be; (b) the payment due on the
Receivable is not more than 90 days past the invoice date or in the case of an
Early Buy Program Receivable each installment payment has been made when due;
(c) the payments due on more than 50% of all Receivables (other than Early Buy
Program Receivables) from the same Customer are less than 90 days past the
invoice date; (d) the Receivable arose from a completed and bona fide
transaction (and with respect to a sale of goods, a transaction in which title
has passed to the Customer) which requires no further act under any
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circumstances on the part of the applicable Receivables Grantor in order to
cause such Receivable to be payable in full by the Customer; (e) the Receivable
is in full conformity with the representations and warranties made by the
applicable Receivables Grantor to the Agent and the Lenders with respect thereto
and is free and clear of all security interests and Liens of any nature
whatsoever other than any security interest deemed to be held by the applicable
Receivables Grantor or any security interest created pursuant to the Security
Documents or permitted by Section 7.01 hereof; (f) the Receivable constitutes an
"account" or "chattel paper" within the meaning of the Uniform Commercial Code
of the state in which the Receivable is located; (g) the Customer has not
asserted that the Receivable, and the applicable Receivables Grantor is not
aware that the Receivable, arises out of a ▇▇▇▇ and hold, consignment or
progress billing arrangement or is subject to any setoff, contras, net-out
contract, offset, deduction, dispute, credit, counterclaim or other defense
arising out of the transactions represented by the Receivables, but only to the
extent thereof, or independently thereof and the Customer has finally accepted
the goods from the sale out of which the Receivable arose and has not objected
to its liability thereon or returned, rejected or repossessed any of such goods,
except for complaints made or goods returned in the ordinary course of business
for which, in the case of goods returned, goods of equal or greater value have
been shipped in return; (h) the Receivable arose in the ordinary course of
business of the applicable Receivables Grantor; (i) the Customer is not (x) the
United States government or the government of any state or political subdivision
thereof or therein, or any agency or department of any thereof (unless there has
been full compliance to the satisfaction of the Agent with any applicable
assignment of claims statute) or (y) an Affiliate of Holdings, the applicable
Receivables Grantor or any subsidiary of any thereof or a supplier or creditor
of the applicable Receivables Grantor or any subsidiary thereof (provided that
such Receivable shall only be ineligible to the extent of amounts payable by
such applicable Receivables Grantor or subsidiary to such supplier or
outstanding to such creditor); (j) the Customer is a United States or Canadian
person or an obligor in the United States or Canada or an obligor located in
another jurisdiction if the applicable Receivable is covered by a letter of
credit or credit insurance in favor of, or assigned to, the Agent in form and
substance satisfactory to the Agent; (k) the Receivable complies with all
material requirements of all applicable laws and regulations, whether Federal,
state or local (including, without limitation, usury laws and laws, rules and
regulations relating to truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and
privacy); (l) to the knowledge of the applicable Receivables Grantor, the
Receivable is in full force and effect and constitutes a legal, valid and
binding obligation of the Customer enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally and by general equity principles; (m) the Receivable is denominated in
and provides for payment by the Customer in dollars (unless a currency swap or
similar hedge approved by the Agent has been entered into with respect to such
Receivable the effect of which is to cause payment to be denominated in dollars)
and is payable to an address within the United States; (n) the Receivable has
not been and is not required to be charged off or written off as uncollectible
in accordance with GAAP or the customary business practices of the applicable
Receivables Grantor; (o) the Agent on behalf of the Lenders possesses a
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valid, perfected first priority security interest in such Receivable (subject to
Permitted Liens) as security for payment of the Obligations; (p) the Receivable
is not with respect to a Customer located in New Jersey, Minnesota, or any other
state denying creditors access to its courts in the absence of a Notice of
Business Activities Report or other similar filing, unless the applicable
Receivables Grantor has either qualified as a foreign corporation authorized to
transact business in such state or has filed a Notice of Business Activities
Report or similar filing with the applicable state agency for the then current
year; (q) an event as described in paragraph (e) or (f) of Article VIII has not
occurred with respect to the Customer; and (r) the Agent is satisfied with the
credit standing of the Customer in relation to the amount of credit extended.
Notwithstanding the foregoing, all Receivables of an applicable Receivables
Grantor of any single Customer which, in the aggregate, exceed 10% (or 20% in
the case of WalMart, K-Mart or Home Depot or 25% in the case of South Central
Pool Supply, provided, that in each case the Agent shall be satisfied, in its
sole discretion, that the financial condition of the relevant account debtor at
such time has not significantly deteriorated since the Closing Date as
determined by the Agent, in its sole discretion, from whatever sources are
available to the Agent) of the total Eligible Receivables of such Receivables
Grantor at the time of any such determination shall be deemed not to be Eligible
Receivables to the extent of such excess.
"Environmental Claim" shall mean any written notice of violation,
claim, deficiency, demand, abatement or other order by any governmental
authority or any person for personal injury (including sickness, disease or
death), tangible or intangible property damage, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or deed or use restrictions, resulting from or based
upon (i) the existence, or the continuation of the existence, of a Release
(including, without limitation, sudden or non-sudden, accidental or
nonaccidental Releases), of, or exposure to, any Contaminant at, in, by or from
any of the properties of the Borrowers or their subsidiaries, (ii) the
environmental aspects of the transportation, storage, treatment or disposal of
Contaminants in connection with the operation of any of the properties of the
Borrowers or their subsidiaries or (iii) the violation, or alleged violation by
Borrowers or any of their subsidiaries, of any statutes, ordinances, orders,
rules, regulations, Permits or licenses of or from any governmental authority,
agency or court relating to environmental matters connected with any of the
properties of the Borrowers or their subsidiaries, under any applicable
Environmental Law.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Oil
Pollution Act of 1990 (33 U.S.C. Section 2701 et. seq.), the Safe Drinking Water
Act (42 U.S.C. Section 300f, et seq.), the Clear Air Act (42 U.S.C. Section 7401
et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Section 2601
et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Section 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.), as such laws have been and hereafter may be amended or
supplemented, and any related or analogous present or
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future Federal, state or local, statutes, rules, regulations, ordinances,
licenses, permits and interpretations and orders of regulatory and
administrative bodies.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder, as in
effect from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which together with any of the Borrowers or any subsidiary of any
thereof would be treated as a single employer under Section 302 of Title I or
Title IV of ERISA or with respect to Section 412 or Section 414(b), (c), (m) or
(o) of the Code.
"Eurodollar Lending Office" shall mean, with respect to any
Lender, the office of such Lender specified as its "Eurodollar Lending Office"
opposite its name in Schedule 2.03 annexed hereto (or, if no such office is
specified, its Domestic Lending Office), or such other office of such Lender as
such Lender may from time to time specify to the Borrowers and the Agent.
"Eurodollar Loan" shall mean a Loan based on the Adjusted LIBO
Rate in accordance with Article II hereof.
"Event of Default" shall have the meaning assigned to such term in
Article VIII hereof.
"Existing Credit Agreement" shall have the meaning assigned to
such term in the preamble to this Agreement.
"Final Maturity Date" shall mean the fifth anniversary of the
closing of the Existing Credit Agreement.
"Financial Officer" shall mean, with respect to any person, the
chief financial officer, controller, assistant controller, treasurer or
assistant treasurer of such person.
"FIRREA" shall mean the Financial Institutions Reform, Recovery
and Enforcement Act of 1989, as amended from time to time.
"Fiscal Year" shall mean the fiscal year of each of the Borrowers
for accounting purposes which in each case ends on the Sunday closest to
December 31 of each year.
"Fixed Charge Coverage Ratio" shall mean with respect to any
person at the time of determination thereof, the ratio of (i) Net Cash Flow to
(ii) Fixed Charge Expense.
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"Fixed Charge Expense" shall mean, with respect to any person for
any period, the aggregate of (i) regularly scheduled principal payments of
Indebtedness (including, without limitation, Subordinated Indebtedness) made or
to be made by such person and its subsidiaries during such period and (ii)
dividends and other distributions, (including in the case of the Borrowers,
management fees) during such period, in each case on a Consolidated basis in
accordance with GAAP, provided, however, for purposes of calculating the Fixed
Charge Coverage Ratio for the four fiscal quarter period ending September 30,
2001, "Fixed Charge Expense" shall include no more than $3,500,000 of dividends
paid by the Borrowers to Holdings, in accordance with Section 7.04 hereof, for
the purposes of advancing funds for the payment of principal amount due by
Canadian Sub on its subordinated debt.
"Funded Debt" shall mean with respect to any person as of the date
of determination thereof, (i) all Indebtedness of such person and its
subsidiaries on a Consolidated basis outstanding at such time which matures more
than one year after the date of calculation, (ii) that portion of Indebtedness
described in clause (i) which shall be due and payable within one year from such
date of calculation and (iii) any such Indebtedness maturing within one year
from such date of calculation which is renewable or extendable at the option of
the obligor to a date more than one year from such date and including in any
event the Revolving Credit Loans.
"GAAP" shall have the meaning assigned to such term in Section
1.02 hereof.
"Grantor" shall mean any Grantor, Pledgor or Debtor, as such terms
are defined in any of the Security Documents.
"Guarantee" shall mean any obligation, contingent or otherwise, of
any person guaranteeing or having the economic effect of guaranteeing or giving
financial assistance in respect of the repayment of any Indebtedness or
obligation of any other person in any manner, whether directly or indirectly,
and shall in any event include the Holdings Guarantee, and shall include,
without limitation, any obligation of such person, direct or indirect, to (i)
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or obligation or to purchase (or to advance or supply funds for the
purchase of) any security for the payment of such Indebtedness or obligation,
(ii) purchase property, securities or services for the purpose of assuring the
owner of such Indebtedness or obligation of the payment of such Indebtedness or
obligation, or (iii) maintain working capital, equity capital, available cash or
other financial condition of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or obligation; provided, however, that the term
Guarantee shall not include endorsements for collection or collections for
deposit, in either case in the ordinary course of business.
"Guarantor" shall mean, collectively, Holdings, each subsidiary of
a Borrower existing on the Closing Date and each subsidiary of a Borrower which
becomes a guarantor of the Obligations after the date hereof.
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"Hazardous Material" shall mean any pollutant, contaminant,
chemical, or industrial or hazardous, toxic or dangerous goods, waste, substance
or material, defined or regulated as such in (or for purposes of) any
Environmental Law and any other toxic, reactive, or flammable chemicals,
including (without limitation) any asbestos, any petroleum (including crude oil
or any fraction), any radioactive substance and any polychlorinated biphenyls;
provided, in the event that any Environmental Law is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall apply
subsequent to the effective date of such amendment; and provided, further, to
the extent that the applicable laws of any state establish a meaning for
"hazardous material," "hazardous substance," "hazardous waste," "solid waste" or
"toxic substance" which is broader than that specified in any Federal
Environmental Law, such broader meaning shall apply.
"Holdings" shall mean Water Pik Technologies, Inc., a Delaware
corporation, together with its successors and assigns.
"Holdings Guarantee" shall mean the Guarantee by Holdings of the
Obligations substantially in the form of Exhibit G hereto, as amended, modified
or supplemented from time to time.
"Indebtedness" shall mean, with respect to any person, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or other similar instruments or upon which interest charges
are customarily paid, (c) all obligations of such person for the deferred
purchase price of property or services, except current accounts payable arising
in the ordinary course of business and not overdue beyond such period as is
commercially reasonable for such person's business, (d) all obligations of such
person under conditional sale or other title retention agreements relating to
property purchased by such person and all Capitalized Lease Obligations, (e) all
payment obligations of such person with respect to interest rate or currency
protection agreements, (f) all obligations of such person as an account party
under any letter of credit or in respect of bankers' acceptances, (g) all
obligations of any third party secured by property or assets of such person
(regardless of whether or not such person is liable for repayment of such
obligations), (h) all Guarantees of such person and (i) the redemption price of
all redeemable preferred stock of such person, but only to the extent that such
stock is redeemable at the option of the holder or requires sinking fund or
similar payments at any time prior to the Final Maturity Date.
"Indemnitees" shall have the meaning assigned to such term in
Section 11.04(c) hereof.
"Information" shall have the meaning assigned to such term in
Section 11.11 hereof.
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"Interest Coverage Ratio" shall mean, with respect to any person
for any period, the ratio of (i) EBITDA, less all non-financed Capital
Expenditures for such period ending on or prior to the date of determination, to
(ii) the Cash Interest Expense of such person for such period.
"Interest Expense" shall mean, with respect to any person for any
period, the interest expense of such person during such period determined on a
Consolidated basis in accordance with GAAP, and shall in any event include,
without limitation, (i) the amortization of debt discounts, (ii) the
amortization of all fees payable in connection with the incurrence of
Indebtedness to the extent included in interest expense, (iii) the portion of
any Capitalized Lease Obligation allocable to interest expense, (iv) all fixed
and all calculable dividend payments on preferred stock, and (v) payments of
interest expense in kind.
"Interest Margin" and "Revolving Credit Commitment Fee Margin"
shall mean, with respect to any Loan, the amount as set forth below as
corresponds to the Leverage Ratio computed for Holdings and its subsidiaries on
a Consolidated basis for the four consecutive fiscal quarter period ending prior
to the date of determination set forth below, determined three (3) Business Days
after the delivery of the financial statements to the Agent required pursuant to
Section 6.05(a) or (b) hereof, as applicable, together with the corresponding
compliance certificates required pursuant to Section 6.05(e) hereof (which
certificate shall notify the Agent of any change to the applicable Interest
Margin from the previous four consecutive fiscal quarter period), commencing
with the financial statements and certificates for the fiscal quarter
immediately following the fiscal quarter in which Holdings has completed a
Public Offering, or if the Borrowers shall fail to timely deliver such
statements and certificates for any such period or during the continuance of an
Event of Default, then at the highest Interest Margin and Revolving Credit
Commitment Fee Margin provided for herein; provided, however, each of the
Interest Margins provided for herein shall be increased by 0.25% for any Loans
supported by M&E Availability (which, for purposes hereof and the following
paragraph, shall be calculated on the basis that Revolving Credit Loans shall be
deemed as first drawn against Eligible Inventory and Eligible Receivables until
fully utilized and then as drawn against M&E Availability):
Alternate Base Revolving Credit
LIBO Rate Rate Interest Commitment Fee
Leverage Ratio Interest Margin Margin Margin
-------------- --------------- -------------- ----------------
Greater than 2.00:1.00 2.25% 0.50% 0.50%
Equal to or less than 2.00% 0.50% 0.50%
2.00:1.00 but greater than
1.75:1.00
Equal to or less than 1.75% 0.375% 0.375%
1.75:1.00 but greater than
1.50:1.00
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Alternate Base Revolving Credit
LIBO Rate Rate Interest Commitment Fee
Leverage Ratio Interest Margin Margin Margin
-------------- --------------- -------------- ----------------
Equal to or less than 1.50% 0.375% 0.25%
1.50:1.00 but greater than
1.25:1.00
1.25:1.00 or less 1.25% 0.25% 0.175%
Unless and until a Public Offering has been completed, then the
applicable Interest Margin and Revolving Credit Commitment Fee Margin shall be
calculated in the manner provided in the preceding paragraph commencing with the
financial statements and certificates for the period ending December 31, 1999
except that the applicable Margins shall be determined as follows:
Alternate Base
LIBO Rate LIBO Rate Rate Interest Alternate Base
Interest Margin Interest Margin Margin For Rate Interest
For Loans Not For Loans Loans Not Margin For Loans
Leverage Supported By Supported By Supported By Supported By
Ratio M&E Availability M&E Availability M&E Availability M&E Availability
-------- ---------------- ---------------- ---------------- ----------------
Greater than 2.50% 2.75% 0.75% 1.00%
1.75:1.00
Less than or 2.00% 2.25% 0.50% 0.75%
equal to
1.75:1.00
In all instances in which the above Interest Rate Margins are
applicable, the Revolving Credit Commitment Fee Margin shall be 0.50%. On the
Closing Date, the LIBO Rate Interest Margin for Loans not supported by M&E
Availability shall be 2.00% and for those supported by M&E Availability shall be
2.25% and the Alternate Base Rate Interest Margin for Loans not supported by M&E
Availability shall be 0.50% and for those supported by M&E Availability shall be
0.75%; each shall thereafter be adjusted in accordance with the provisions
hereof.
"Interest Payment Date" shall mean (i) in the case of an Alternate
Base Loan, the first Business Day of each month, commencing December 1, 1999,
and (ii) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable thereto, and, in addition, in respect of any Eurodollar Loan
of more than three (3) months' duration, each earlier day which is three (3)
months after the first day of such Interest Period.
"Interest Period" shall mean, as to any Eurodollar Loan, the
period commencing on the date of such Eurodollar Loan and ending on the
numerically
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corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is one (1), two (2), three (3) or six (6) months
thereafter, as the Borrowers may elect with respect to its Eurodollar Loans;
provided, however, that (x) if an Interest Period would end on a day that is not
a Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, with respect to Eurodollar Loans, such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, (y) no Interest Period
shall end later than the Final Maturity Date and (z) interest shall accrue from
and including the first day of an Interest Period to but excluding the last day
of such Interest Period.
"Inventory Grantor" shall mean either Laars and Jandy Industries,
Inc. on a combined basis and any other after-acquired subsidiary of Laars which
complies with Section 6.12 hereof and as to which the Agent has completed a
field examination to its satisfaction or Water Pik and any after-acquired
subsidiary of Water Pik which complies with Section 6.12 hereof and as to which
the Agent has completed a field examination to its satisfaction.
"Laars" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Laars Availability" shall mean at any time (i) the lesser at such
time of (x) the Total Commitment and (y) the Laars Borrowing Base, minus (ii)
the sum at such time of (x) the unpaid principal balance of, and accrued
interest and fees on, the Revolving Credit Loans attributed to Laars and (y) the
Letter of Credit Usage with respect to Letters of Credit issued for the account
of Laars.
"Laars Borrowing Base" shall have the meaning assigned to such
term in Section 2.01 hereof.
"Lenders" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Letter of Credit" shall have the meaning assigned to such term in
Section 2.17 hereof.
"Letter of Credit Usage" shall mean at any time, (i) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (ii) the
unreimbursed drawings at such time under all such Letters of Credit.
"Leverage Ratio" with respect to any person for any period shall
mean the ratio of (i) Funded Debt as at the date of determination to (ii) EBITDA
of such person for such period.
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"LIBO Rate" shall mean, with respect to any Eurodollar Loan for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the rate at which dollar deposits approximately
equal in principal amount to the Agent's portion of such Eurodollar Loan and for
a maturity equal to the applicable Interest Period are offered in immediately
available funds to the principal London office of the Agent in the London
interbank market at approximately 11:00 a.m., London time, two (2) Business Days
prior to the first day of such Interest Period.
"Lien" shall mean, with respect to any asset, (i) any mortgage,
lien, pledge, encumbrance, charge or security interest in or on such asset, (ii)
the interest of a vendor or a lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset, (iii)
in the case of securities, any purchase option, call or similar right of a third
party with respect to such securities or (iv) any other right of or arrangement
with any creditor to have such creditor's claim satisfied out of such assets, or
the proceeds therefrom, prior to the general creditors of the owner thereof.
"Loan" shall mean any Revolving Credit Loan.
"Loan Documents" shall mean this Agreement, each Security
Document, each Guarantee executed and delivered at any time with respect to the
Obligations, the Notes, the fee letter annexed to the Commitment Letter and each
other document, instrument or agreement now or hereafter delivered to the Agent
or any Lender in connection herewith or therewith.
"Loan Party" shall mean each Borrower, each Grantor and each
Guarantor, including Holdings.
"M&E Availability" shall mean $10,000,000 in the case of Laars and
$10,000,000 in the case of Water Pik, reduced in the case of Laars by $500,000
and in the case of Water Pik by $500,000 on the last day of each calendar
quarter commencing March 31, 2000 and as further reduced in the case of Laars by
$2,500,000 and in the case of Water Pik by $2,500,000 upon completion of a
Public Offering by Holdings and as may also be reduced from time to time upon
the sale of the assets which were part of the appraisals of the Borrowers
delivered to the Agent pursuant to Section 5.02(i)(xi) and which require a
prepayment pursuant to Section 2.09 (d) hereof (such reduction in M&E
Availability for the applicable Borrower to be in the amount such disposed
assets were appraised in the applicable appraisal or to the extent not readily
ascertainable from such appraisal, a reasonable estimation of the appraised
value as determined by the Agent, in each case, less a proportion, as reasonably
determined by the Agent, of the reduction of the M&E Availability by operation
of the provisions of this paragraph).
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
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"Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, prospects, operations or financial or other condition
of any Loan Party (other than Holdings), (ii) the ability of any Loan Party to
perform or pay the Obligations in accordance with the terms hereof or of any
other Loan Document, (iii) the rights of, or benefits available to, the Lenders
or the Agent under any Loan Document or (iv) the Agent's Lien on any material
portion of the Collateral or the priority of such Lien subject to Permitted
Liens.
"Mortgages" shall mean the real property mortgages and deeds of
trust dated as of the date hereof, and executed by the Grantor(s) in favor of
the Agent, for its own benefit and for the benefit of the Lenders, as amended,
modified or supplemented from time to time.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA.
"Net Amount of Eligible Inventory" shall mean, at any time, the
aggregate value, less warranty reserves, computed at the lower of cost (on a
FIFO basis) and current market value, of Eligible Inventory of the Inventory
Grantor.
"Net Amount of Eligible Receivables" shall mean and include at any
time, without duplication, the gross amount of Eligible Receivables at such time
less (i) sales, excise or similar taxes, (ii) warranty reserves, accrued rebates
and accrued co-op advertising and (iii) returns, discounts, claims, credits,
rebates and allowances of any nature at any time issued, owing, granted,
outstanding, if claimed.
"Net Cash Flow" shall mean, with respect to any person for any
period, without duplication of addition or subtraction of items, (A) the sum for
such period of (i) Net Income, (ii) depreciation and amortization, (iii) the
change (expressed as a positive number in the event of an increase or a negative
number in the event of a decrease) in deferred tax liabilities, (iv) other
noncash items properly deducted in arriving at Net Income and (v) the change
(expressed as a negative number in the event of an increase or a positive number
in the event of a decrease), if any, in deferred tax assets minus (B) all
non-financed Capital Expenditures during such period.
"Net Income" shall mean, with respect to any person for any
period, the aggregate income (or loss) of such person for such period which
shall be an amount equal to net revenues and other proper items of income for
such person less the aggregate for such person of any and all items that are
treated as expenses under GAAP, and less Federal, state and local income taxes,
but excluding any extraordinary gains or losses or any gains or losses from the
sale or disposition of assets other than in the ordinary course of business, all
computed and calculated in accordance with GAAP.
"Net Proceeds" shall mean (a) with respect to the sale or other
disposition of any asset by a Loan Party the excess, if any, of (i) the
aggregate amount received in cash
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(including any cash received by way of deferred payment pursuant to a note
receivable, other non-cash consideration or otherwise, but only as and when such
cash is so received) in connection with such sale or other disposition, over
(ii) the sum of (A) the amount of any Indebtedness which is secured by any such
asset or which is required to be, and is, repaid in connection with the sale or
other disposition thereof (other than Indebtedness hereunder), (B) the
reasonable out-of-pocket expenses and fees incurred by a Loan Party with respect
to legal, investment banking, brokerage, advisor and accounting and other
professional fees, sales commissions and disbursements and all other reasonable
fees, expenses and charges, in each case actually incurred in connection with
such sale or disposition, (C) all income and transfer taxes payable by any Loan
Party in connection with such sale or other disposition, whether actually paid
or estimated by a Loan Party to be payable in cash in connection with such
disposition or the payment of dividends or the making of other distributions to
a Loan Party of the proceeds thereof and (D) reserves, required to be
established in accordance with GAAP or the definitive agreements relating to
such disposition, with respect to such disposition, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations; (b) with respect to the issuance, sale or other disposition of any
stock or debt securities by a Loan Party the excess of (i) the aggregate amount
received in cash (including any cash received by way of deferred payment
pursuant to a note receivable, other non-cash consideration or otherwise, but
only as and when such cash is so received) in connection with such issuance,
sale or other disposition, over (ii) the sum of (A) the reasonable fees,
commissions, discounts and other out-of-pocket expenses including, without
limitation, related legal, investment banking and accounting fees and
disbursements incurred by such Loan Party in connection with such issuance, sale
or other disposition, and (B) all income and transfer taxes payable by a Loan
Party in connection with such issuance, sale or other disposition, whether
payable at such time or thereafter, and (C) with respect to any Casualty Event
or BI Event, the aggregate amount of proceeds of insurance received by a Loan
Party with respect to such Casualty Event or BI Event, less (i) reasonable
expenses incurred by each Loan Party in connection therewith and (ii) all
indebtedness secured by any asset affected thereby and required to be, and in
fact, repaid in connection therewith and (iii) all income and transfer taxes
payable by any Loan Party in connection therewith.
"Non Pro Rata Loan" shall have the meaning assigned to such term
in Section 2.13(d) hereof.
"Notes" shall mean the Revolving Credit Notes.
"Obligations" shall mean all obligations, liabilities and
Indebtedness of the Borrowers to the Lenders and the Agent, whether now existing
or hereafter created, direct or indirect, due or not, whether created directly
or acquired by assignment, participation or otherwise, the Security Documents
and other Loan Documents, the principal of and interest on the Loans and the
payment or performance of all other obligations, liabilities, and Indebtedness
of the Borrowers to the Lenders and the Agent hereunder, under the Letters of
Credit or under any one or more of the other Loan Documents (including the
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payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, and interest that, but for the
filing of a petition in bankruptcy with respect to any Borrower, would accrue on
such obligations, whether or not a claim is allowed against such Borrower for
such interest in the related bankruptcy proceeding), including without
limitation all fees, costs, expenses and indemnity obligations hereunder and
thereunder.
"Other Taxes" shall have the meaning assigned to such term in
Section 2.16(b) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean any employee pension benefit plan within
the meaning of Section 3(2) of ERISA which is subject to the provisions of Title
IV of ERISA or Section 412 of the Code with respect to which any of the
Borrowers or any ERISA Affiliate has liability.
"Permits" shall have the meaning assigned to such term in Section
4.18 hereof.
"Permitted Acquisitions" shall mean the acquisition by either
Borrower of all or substantially all of the assets or stock of any person
engaged in a business which is reasonably related to that of the Borrower making
such acquisition where the total consideration (including, without limitation,
assumed Indebtedness, cash, securities or other property) for any such
acquisition does not exceed $40,000,000 and that the total of Loans in
connection with any such acquisition will not exceed $30,000,000 (with any
additional consideration consisting of common equity of Holdings, Subordinated
Indebtedness or other subordinated securities on terms and conditions acceptable
to the Agent) after review by the Agent of the information described below;
provided, that all such acquisitions are approved by the Board of Directors and
stockholders, if required, of the acquiree and are not otherwise hostile; and
provided, further, that both before and immediately after giving effect to any
such acquisition no Default or Event of Default exists; and provided, further,
that both before and immediately after giving effect to a proposed acquisition,
the Borrower making such acquisition shall have applicable Availability of not
less than $5,000,000 (and, in the case of the other Borrower making an
intercompany loan to the Borrower making an acquisition, such other Borrower
shall, both before and immediately after giving effect to such intercompany
loan, also have applicable Availability of not less than $5,000,000)) and the
Leverage Ratio of Holdings and its subsidiaries on a Consolidated basis shall
not be greater than 3.00:1.00 and the ratio of Funded Debt (less Subordinated
Indebtedness) to EBITDA of Holdings and its subsidiaries on a Consolidated basis
shall not be greater than 2.50 to 1.00, both calculated on a pro forma and going
forward basis (based on the projections delivered pursuant to Section 6.05(h)
hereof, as supplemented through the Final Maturity Date) (all such compliance to
be confirmed by an officer's certificate in a form satisfactory to the Agent).
For purposes hereof, "pro forma basis" shall mean the recalculation of the
applicable financial covenants
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as if the proposed acquiree (or the business related to the assets to be
acquired from the proposed acquiree) were Consolidated with Holdings for the
twelve months immediately preceding the date of such acquisition, with such
adjustments as may be approved by the Agent. In connection with any such
acquisition, the Borrowers shall give the Agent thirty (30) days' prior written
notice of each such proposed acquisition, and together with such notice and also
on the date of consummation of such proposed acquisition, the Borrowers shall
furnish the Agent with the other items required by this definition, financial
statements (for the three prior years, if available), projections supplemental
to those delivered pursuant to Section 6.05(h), revised to give effect to the
proposed Permitted Acquisition, all instruments, documents, certificates, Lien
searches, resolutions and opinions which in the reasonable discretion of the
Agent are required to maintain compliance with the provisions of this Agreement,
including, without limitation, Section 6.12 hereof and such other information
which the Agent may reasonably request. The Agent shall promptly undertake a
review of such information and shall expeditiously inform the Borrowers as to
whether the required criteria has been satisfied.
"Permitted Overadvances" shall mean (i) involuntary overadvances
that may result from time to time due to the fact that any borrowing formulas
set forth in the Loan Documents were unintentionally exceeded (whether at the
time of any Loan or at the time of the issuance of any Letter of Credit or
otherwise) for any reason (other than the Agent's gross negligence or willful
misconduct), including Collateral believed to be eligible in fact being or
becoming ineligible and the return of uncollected checks or other items applied
to the reduction of the Loans, Letters of Credit or other Obligations, and
overadvances made by the Agent without Lenders' consent for up to two weeks
after discovering the unintentional overadvance, provided that the Agent does
not during that period voluntarily increase the amount by which the borrowing
formulas had been exceeded as of the start of that period, and (ii) voluntary
overadvances made by the Agent in its sole discretion which shall (x) not cause
the Obligations to exceed Laars Availability, Water Pik Availability or Total
Availability, as applicable, by an amount in excess of $1,000,000 at any one
time outstanding, and (y) not be made on a date which is beyond ten (10) days
after the first voluntary overadvance is made during such overadvance period, or
(z) be with the consent of all Lenders. To the extent any Permitted Overadvances
are made, each Lender shall bear its pro rata (based on its Revolving Credit
Commitment) share thereof.
"person" shall mean any natural person, corporation, business
trust, limited liability company, association, company, joint venture, limited
liability partnership, partnership or government or any agency or political
subdivision thereof.
"Plan" shall mean any employee benefit plan, other than a
multiemployer plan, within the meaning of Section 3(3) of ERISA and which is
maintained (in whole or in part) for employees of the Borrowers, any subsidiary
or any ERISA Affiliate.
"Pledge Agreement" shall mean the Pledge Agreement dated as of the
date hereof, between the Grantor(s) and the Agent, for its own benefit and for
the benefit of the
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Lenders, in substantially the form of Exhibit C annexed hereto, as amended,
modified or supplemented from time to time.
"Pledged Stock" shall have the meaning assigned to such term in
the Pledge Agreement.
"Public Offering" shall mean an offering by Holdings of its equity
securities resulting in the realization of Net Proceeds of $25,000,000 or more.
"Receivables" shall mean and include all of the Receivables
Grantors' accounts, instruments, documents, chattel paper and general
intangibles, whether secured or unsecured, whether now existing or hereafter
created or arising, and whether or not specifically assigned to the Agent for
its own benefit and/or the ratable benefit of the Lenders.
"Receivables Grantor" shall mean either Laars and Jandy
Industries, Inc. on a combined basis and any other after-acquired subsidiary of
Laars which complies with Section 6.12 hereof and as to which the Agent has
completed a field examination to its satisfaction or Water Pik and any
after-acquired subsidiary of Water Pik which complies with Section 6.12 hereof
and as to which the Agent has completed a field examination to its satisfaction.
"Register" shall have the meaning assigned to such term in Section
11.03(e) hereof.
"Regulation D" shall mean Regulation D of the Board, as the same
is from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation T" shall mean Regulation T of the Board, as the same
is from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board, as the same
is from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board, as the same
is from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Release" shall mean any releasing, spilling, leaking, seepage,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, in each case as defined in Environmental Law,
and shall include any "Threatened Release," as defined in Environmental Law;
provided, in the event that any Environmental Law is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall apply
subsequent to the effective date of such amendment.
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"Remedial Work" shall mean any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial work of any kind or
nature with respect to any property of any Loan Party or their subsidiaries
(whether such property is owned, leased, subleased or used), including, without
limitation, with respect to Contaminants and the Release thereof.
"Reportable Event" shall mean a Reportable Event as defined in
Section 4043(c) of ERISA with respect to which the notice requirements have not
been waived.
"Required Lenders" shall mean, at any time, Lenders holding Loans,
exposure under the Letter of Credit Usage and unused Revolving Credit
Commitments representing at least 51% of the aggregate of (a) the aggregate
principal amount of Loans at such time, (b) the Letter of Credit Usage at such
time and (c) the aggregate unused Revolving Credit Commitments at such time, all
after giving effect to the terms of Section 2.13(d)(v).
"Responsible Officer" shall mean, with respect to any person, any
vice president or president, or the chief financial officer, controller,
assistant controller, treasurer or assistant treasurer of such person.
"Revolving Credit Alternate Base Loan" shall mean a Revolving
Credit Loan that is an Alternate Base Loan.
"Revolving Credit Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Revolving Credit Loans hereunder
and participate in Letters of Credit in an aggregate amount at any time
outstanding not in excess of the amount opposite the name of such Lender in the
column entitled "Revolving Credit Commitment" in the table appearing in Schedule
2.01, or if applicable, the amount set forth in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder, as such amount may be
(a) reduced from time to time pursuant to this Agreement including, without
limitation, Section 2.07 hereof and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 11.03 hereof.
"Revolving Credit Commitment Fee" shall have the meaning set forth
in Section 2.06(a) hereof.
"Revolving Credit Eurodollar Loan" shall mean a Revolving Credit
Loan that is a Eurodollar Loan.
"Revolving Credit Loan" shall mean a Revolving Credit Loan made
pursuant to Sections 2.01 and 2.02 hereof.
"Revolving Credit Notes" shall mean the Revolving Credit Notes of
the Borrowers, executed and delivered as provided in Section 2.04 hereof, in
substantially the
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form of Exhibit A annexed hereto, as amended, modified or supplemented from time
to time.
"Revolving Credit Termination Date" shall mean the earlier to
occur of (i) the Final Maturity Date and (ii) such date as the Revolving Credit
Loans shall otherwise be payable in full and the Revolving Credit Commitment
shall terminate, expire or be canceled in accordance with the terms of this
Agreement.
"Security Agreement" shall mean the Security Agreement dated as of
the date hereof, between the Grantor(s) and the Agent, for its own benefit and
for the benefit of the Lenders, substantially in the form of Exhibit D annexed
hereto, as amended, modified or supplemented from time to time.
"Security Agreement - Patents and Trademarks" shall mean the
Security Agreement and Mortgage - Patents and Trademarks, dated as of the date
hereof, between the Debtor(s), as such term is defined therein, and the Agent,
for its own benefit and for the benefit of the Lenders, substantially in the
form of Exhibit F annexed hereto, as amended, modified or supplemented from time
to time.
"Security Documents" shall mean the Pledge Agreement, the Security
Agreement, the Security Agreement - Patents and Trademarks, the Mortgages and
each other agreement now existing or hereafter created providing collateral
security for the payment or performance of any Obligations.
"Stock Acquisition and Retention Program" shall mean the Stock
Acquisition and Retention Program of Holdings.
"Subordinated Indebtedness" shall mean, with respect to any of the
Borrowers or Holdings, Indebtedness subordinated in right of payment to such
person's monetary obligations under this Agreement or the other Loan Documents
(as applicable) upon terms reasonably satisfactory to and approved in writing by
the Required Lenders. For purposes of the definition of "Fixed Charge Expense"
and Section 7.16 hereof "Subordinated Indebtedness" shall include the
subordinated indebtedness of the Canadian Sub.
"subsidiary" shall mean, with respect to any person, any
corporation, association or other business entity of which securities or other
ownership interests representing more than 50% of the equity or more than 50% of
the ordinary voting power are, at the time as of which any determination is
being made, owned or controlled, directly or indirectly, by the parent of such
person or one or more subsidiaries of the parent of such person.
"Taxes" shall have the meaning assigned to such term in Section
2.16(a) hereof.
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"Total Availability" at any time shall mean the sum of Laars
Availability and Water Pik Availability.
"Total Commitment" shall mean the sum of the Lenders' Revolving
Credit Commitments, as the same may be reduced from time to time pursuant to
this Agreement including, without limitation, Section 2.07 hereof.
"Transactions" shall have the meaning assigned to such term in
Section 4.02 hereof.
"Water Pik" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Water Pik Availability" shall mean at any time (i) the lesser at
such time of (x) the Total Commitment and (y) the Water Pik Borrowing Base,
minus (ii) the sum at such time of (x) the unpaid principal balance of, and
accrued interest and fees on, the Revolving Credit Loans attributed to Water Pik
and (y) the Letter of Credit Usage with respect to Letters of Credit issued for
the account of Water Pik.
"Water Pik Borrowing Base" shall have the meaning assigned to such
term in Section 2.01 hereof.
SECTION 1.02. Accounting Terms. Unless otherwise expressly
provided herein, each accounting term used herein shall have the meaning given
it under generally accepted accounting principles in effect from time to time in
the United States applied on a basis consistent with those used in preparing the
financial statements referred to in Section 6.05 hereof ("GAAP"); provided,
however, that each reference in Article VII hereof, or in the definition of any
term used in Article VII hereof, to GAAP shall mean GAAP as in effect on the
date hereof.
II. THE LOANS
SECTION 2.01. Revolving Credit Commitments. Subject to the terms
and conditions and relying upon the representations and warranties herein set
forth, each Lender, severally and not jointly, agrees to make Revolving Credit
Loans to the Borrowers, at any time and from time to time from the date hereof
to the Revolving Credit Termination Date, in an aggregate principal amount at
any time outstanding not to exceed the amount of such Lender's Revolving Credit
Commitment set forth opposite its name in Schedule 2.01(b) annexed hereto, as
such Revolving Credit Commitment may be reduced from time to time in accordance
with the provisions of this Agreement. Notwithstanding the foregoing, (A) the
aggregate principal amount of Revolving Credit Loans outstanding at any time to
the Borrowers shall not exceed (i) the lesser of (x) the Total Commitment (as
such amount may be reduced from time to time pursuant to this Agreement) and (y)
the Borrowing Base (as hereinafter defined) minus (ii) the Letter of Credit
Usage at such time
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(not to exceed $5,000,000 at any time) and minus (iii) all accrued interest,
fees and expenses at such time and (B) the aggregate principal amount of
Revolving Credit Loans outstanding at any time to (i) Laars shall not exceed an
amount equal to the sum (the "Laars Borrowing Base") of (x) up to 80% of the Net
Amount of Eligible Accounts of such Receivables Grantor, plus (y) up to 50% of
the Net Amount of Eligible Inventory of such Inventory Grantor, plus (z) the M&E
Availability attributable to Laars, minus the Letter of Credit Usage of Laars at
such time and (ii) Water Pik shall not exceed an amount equal to the sum (the
"Water Pik Borrowing Base" and, together with the Laars Borrowing Base, the
"Borrowing Base") of (x) up to 80% of the Net Amount of Eligible Accounts of
such Receivables Grantor plus (y) up to 50% of the Net Amount of Eligible
Inventory of such Receivables Grantor, plus (z) the M&E Availability
attributable to Water Pik, minus the Letter of Credit Usage of Water Pik at such
time.
Notwithstanding the foregoing, it is hereby acknowledged and
agreed that (i) the advance rate with respect to Eligible Receivables may be
reduced at any time by the Agent in its reasonable discretion if a receivable
dilution percentage in excess of ten percent (10%) is confirmed in any field
examination conducted by or on behalf of the Agent and (ii) reserves may be
reasonably established at any time by the Agent in its sole reasonable
discretion including, without limitation, the Dilution Reserve and reserves with
respect to (x) exposure under foreign exchange contracts, hedging and other
financial instruments and (y) collateral locations at which collateral valued at
$100,000 or more is located and provided not more than $275,000 in the aggregate
for all such locations for which landlord waiver and consent agreements in form
and substance satisfactory to the Agent have not been obtained.
Subject to the foregoing and within the foregoing limits, the
Borrowers may borrow, repay (or, subject to the provisions of Section 2.09
hereof, prepay) and reborrow Revolving Credit Loans, on and after the Closing
Date and prior to the Revolving Credit Termination Date, subject to the terms,
provisions and limitations set forth herein, including, without limitation, the
requirement that no Revolving Credit Loan shall be made hereunder if after
giving effect thereto (A) with respect to all Borrowers, the sum of (i) the
aggregate principal amount of the Revolving Credit Loans outstanding hereunder,
plus (ii) the Letter of Credit Usage, plus (iii) accrued interest, fees and
expenses, would exceed the lesser of (i) the Total Commitment (as such amount
may be reduced pursuant to the provisions of this Agreement) and (ii) the
Borrowing Base, (B) with respect to Laars, the sum of (i) the aggregate
principal amount of the Revolving Credit Loans outstanding hereunder to Laars
plus (ii) the Letter of Credit Usage with respect to Letters of Credit issued
for the account of Laars, would exceed the lesser of (i) the Total Commitment
(as such amount may be reduced pursuant to the provisions of this Agreement) and
(ii) the Laars Borrowing Base and (C) with respect to Water Pik, the sum of (i)
the aggregate principal amount of Revolving Credit Loans outstanding hereunder
to Water Pik plus (ii) the Letter of Credit Usage with respect to Letters of
Credit issued for the account of Water Pik, would exceed the lesser of (i) the
Total Commitment (as such amount may be reduced pursuant to the provisions of
this Agreement) and (ii) the Water Pik Borrowing Base. In accordance with
Section 6.05(k) hereof, a Responsible Officer of each Borrower shall
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furnish on each date required thereunder a separate Borrowing Base Certificate
with respect to such Borrower.
SECTION 2.02. Loans. (a) The Revolving Credit Loans made by the
Lenders on any date shall be in integral multiples of $100,000 (except that the
foregoing limitation shall not be applicable to the extent that the proceeds of
such Loans are requested to be disbursed to each of the Borrower's controlled
disbursement accounts, if any, maintained with the Agent); provided, however,
that the Eurodollar Loans made on any date shall be in a minimum aggregate
principal amount equal to the product of $500,000 times the number of Lenders on
such date.
(b) Loans shall be made ratably by the Lenders in accordance with
their respective Revolving Credit Commitments; provided, however, that the
failure of any Lender to make any Loan shall not in itself relieve any other
Lender of its obligation to lend hereunder. The initial Revolving Credit Loans
shall be made by the Lenders against delivery of Revolving Credit Notes, payable
to the order of the Lenders, as referred to in Section 2.04 hereof.
(c) Each Loan shall be either an Alternate Base Loan or a
Eurodollar Loan as the Borrowers may request pursuant to Section 2.03 hereof.
Each Lender may fulfill its obligations under this Agreement by causing its
Applicable Lending Office to make such Loan; provided, however, that the
exercise of such option shall not affect the obligation of the Borrowers to
repay such Loan in accordance with the terms of the applicable Note. Loans of
more than one type may be outstanding at the same time, provided, however, not
more than five (5) Eurodollar Loans may be outstanding at any one time.
(d) Subject to the provisions of paragraph (e) below, each Lender
shall make its Revolving Credit Loans on the proposed dates thereof by paying
the amount required to the Agent in New York, New York in immediately available
funds not later than 1:00 p.m., New York City time, and the Agent shall as soon
as practicable, but in no event later than 4:00 p.m., New York City time, credit
the amounts so received to the general deposit account of the Borrowers with the
Agent in immediately available funds or, if Loans are not to be made on such
date because any condition precedent to a borrowing herein specified is not met,
return the amounts so received to the respective Lenders.
(e) The Borrowers shall have the right at any time upon prior
irrevocable written, facsimile or telephonic notice (promptly confirmed by
written or facsimile notice) to the Agent given in the manner and at the times
specified in Section 2.03 hereof with respect to the Loans into which conversion
or continuation is to be made, to convert all or any portion of Eurodollar Loans
into Alternate Base Loans, to convert all or any portion of Alternate Base Loans
into Eurodollar Loans (specifying the Interest Period to be applicable thereto),
to convert the Interest Period with respect to all or any portion of any
Eurodollar Loans to another permissible Interest Period, and to continue all or
any portion of any Eurodollar Loans into a subsequent Interest Period, subject
to the terms and conditions of this Agreement (including the last sentence of
Section 2.02(c) hereof) and to the following:
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(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective principal
amounts of the Loans comprising the conversion or continuation,
and in the case of a conversion or continuation of fewer than all
the Loans, the aggregate principal amount of Loans converted or
continued shall not be less than $100,000 in the case of Alternate
Base Loans (except that the foregoing limitation shall not be
applicable to the extent that the proceeds of such Loans are
requested to be disbursed to the Borrowers' controlled
disbursement account, if any, maintained with the Agent) or
$500,000 times the number of Lenders on such date in the case of
Eurodollar Loans and shall be an integral multiple of $100,000;
(ii) accrued interest on a Eurodollar Loan (or portion
thereof) being converted shall be paid by the Borrowers at the
time of conversion;
(iii) if any Eurodollar Loan is converted at any time other
than the end of an Interest Period applicable thereto, the
Borrowers shall make such payments associated therewith as are
required pursuant to Section 2.12;
(iv) any portion of a Revolving Credit Eurodollar Loan which
is subject to an Interest Period ending on a date that is less
than one month prior to the Revolving Credit Termination Date may
not be converted into, or continued as, a Eurodollar Loan and
shall be automatically converted at the end of such Interest
Period into a Revolving Credit Alternate Base Loan; and
(v) at the time of any conversion to, or continuation of, a
Eurodollar Loan, no Default or Event of Default shall have
occurred and be continuing.
The Interest Period applicable to any Eurodollar Loan resulting
from a conversion shall be specified by the Borrowers in the irrevocable notice
of conversion delivered pursuant to this Section; provided, however, that if no
such Interest Period shall be specified, the Borrowers shall be deemed to have
selected an Interest Period of one month's duration; and, provided further, that
no such Interest Period may be for more than one month for the period commencing
on the Closing Date and ending on the earlier to occur of (x) the 120th day
following the Closing Date and (y) the completion to the satisfaction of The
Chase Manhattan Bank of the syndication of its portion of the Total Commitment
and the Loans and other Credits thereunder. If the Borrowers shall not have
given timely notice to continue any Eurodollar Loan into a subsequent Interest
Period (and shall not otherwise have given notice to convert such Loan), such
Loan (unless repaid or required to be repaid pursuant to the terms hereof) shall
automatically be converted into an Alternate Base Loan. The Agent shall promptly
advise the Lenders of any notice given pursuant to this Section and of each
Lender's portion of the continuation or conversion hereunder.
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SECTION 2.03. Notice of Loans. The Borrowers shall, through a
Responsible Officer of any of the Borrowers, give the Agent irrevocable written,
facsimile or telephonic notice (promptly confirmed by written or facsimile
notice) of each borrowing (including, without limitation, a conversion or
continuation as permitted by Section 2.02(e) hereof) not later than 1:00 p.m.,
New York City time, (i) three (3) Business Days before a proposed Eurodollar
Loan borrowing or conversion or continuation and (ii) on the Business Day of an
Alternate Base Loan borrowing or conversion or continuation (except that no such
confirmation will be required, unless requested by the Agent, to the extent that
the proceeds of such borrowing are requested to be disbursed to Borrowers'
controlled disbursement account, if any, maintained with the Agent). Such notice
shall specify (w) whether the Loans then being requested are to be for the
account of Laars or Water Pik and are to be Alternate Base Loans or Eurodollar
Loans, it being agreed that all Loans made on the Closing Date shall be
Alternate Base Loans, (x) the date of such borrowing (which shall be a Business
Day) and amount thereof and (y) if such Loans are to be Eurodollar Loans, the
Interest Period with respect thereto. If no election as to the type of Loan is
specified in any such notice, all such Loans shall be Alternate Base Loans. If
no Interest Period with respect to any Eurodollar Loan is specified in any such
notice, then an Interest Period of one month's duration shall be deemed to have
been selected; provided, however, that no such Interest Period may be for more
than one month for the period commencing on the Closing Date and ending on the
earlier to occur of (x) the 120th day following the Closing Date and (y) the
completion to the satisfaction of The Chase Manhattan Bank of the syndication of
its portion of the Total Commitment and the Loans and other Credits thereunder.
The Agent shall promptly advise the Lenders of any notice given pursuant to this
Section 2.03 and of each Lender's portion of the requested borrowing.
SECTION 2.04. Notes; Repayment of Loans. (a) All Revolving Credit
Loans made by a Lender to the Borrowers shall be evidenced by a single Revolving
Credit Note, duly executed on behalf of the Borrowers, dated the Closing Date,
in substantially the form of Exhibit A annexed hereto, delivered and payable to
such Lender in a principal amount equal to its Revolving Credit Commitment on
such date. The outstanding balance of each Revolving Credit Loan, as evidenced
by any such Revolving Credit Note, shall mature and be due and payable on the
Revolving Credit Termination Date.
(b) Each Revolving Credit Note shall bear interest from its date
on the outstanding principal balance thereof, as provided in Section 2.05
hereof.
(c) Each Lender, or the Agent on its behalf, shall, and is hereby
authorized by the Borrowers to, endorse on the schedule attached to the
Revolving Credit Note of such Lender (or on a continuation of such schedule
attached to such Note and made a part thereof) an appropriate notation
evidencing the date and amount of each Loan to the Borrowers from such Lender,
as well as the date and amount of each payment and prepayment with respect
thereto; provided, however, that the failure of any person to make such a
notation on a Note shall not affect any obligations of the Borrowers under such
Note. Any such notation shall be conclusive and binding as to the date and
amount of such
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Loan or portion thereof, or payment or prepayment of principal or interest
thereon, absent manifest error.
(d) Notwithstanding that each request for a Loan shall identify
the Borrower for whose account such borrowing is being made, each Borrower shall
be jointly and severally liable with the other Borrower for the Obligations, and
each of the Obligations shall be secured by all of the Collateral. Each of the
Borrowers acknowledges that it is jointly and severally liable under this
Agreement and the other Loan Documents. All Credits extended to any of the
Borrowers or requested by any of the Borrowers shall be deemed to be Credits
extended for each of the Borrowers, and each of the Borrowers hereby authorizes
each other of the Borrowers to effectuate Credits on its behalf. Notwithstanding
anything to the contrary contained in this Agreement or any of the other Loan
Documents, the Agent and the Lenders shall be entitled to rely upon any request,
notice or other communication received by them from any of the Borrowers on
behalf of all Borrowers, and shall be entitled to treat their giving of any
notice hereunder to any of the Borrowers as notice to each and all Borrowers.
Each of the Borrowers agrees that the joint and several liability
of the Borrowers provided for in this subsection (d) shall not be impaired or
affected by any modification, supplement, extension or amendment or any contract
or agreement to which the other Borrower(s) may hereafter agree (other than an
agreement signed by the Agent and the Lenders specifically releasing such
liability), nor by any delay, extension of time, renewal, compromise or other
indulgence granted by the Agent or any Lender with respect to any of the
Obligations, nor by any other agreements or arrangements whatsoever with the
other Borrower(s) or with any other person, each of the Borrowers hereby waiving
all notice of such delay, extension, release, substitution, renewal, compromise
or other indulgence, and hereby consenting to be bound thereby as fully and
effectually as if it had expressly agreed thereto in advance. The liability of
each of the Borrowers is direct and unconditional as to all of the Obligations,
and may be enforced without requiring the Agent or any Lender first to resort to
any other right, remedy or security. Each of the Borrowers hereby expressly
waives promptness, diligence, notice of acceptance and any other notice with
respect to any of the Obligations, the Notes, this Agreement or any other Loan
Document and any requirement that the Agent or any Lender protect, secure,
perfect or insure any Lien or any property subject thereto or exhaust any right
or take any action against any of the Borrowers or any other person or any
collateral.
Each of the Borrowers hereby irrevocably subordinates and makes
junior to the Obligations each of the other Borrower's "claims" (as defined in
Section 101(5) of the Bankruptcy Code) to which such Borrowers are or would be
entitled by virtue of the provisions of the first paragraph of this subsection
(e) or the performance of such Borrower's obligations thereunder including,
without limitation, any right of subrogation (whether contractual, under Section
509 of the Bankruptcy Code or otherwise), reimbursement, contribution,
exoneration or similar right, or indemnity, or any right of recourse to security
for any of the Obligations unless and until all of the Obligations to the Agent
and the Lenders have been indefeasibly paid in full.
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SECTION 2.05. Interest on Loans. (a) Subject to the provisions of
Section 2.05(c) and Section 2.08 hereof, each Alternate Base Loan shall bear
interest at a rate per annum equal to the Alternate Base Rate plus the
applicable Interest Margin.
(b) Subject to the provisions of Section 2.05(c) and Section 2.08
hereof, each Eurodollar Loan shall bear interest at a rate per annum equal to
the Adjusted LIBO Rate plus the applicable Interest Margin.
(c) Interest on each Loan shall be payable in arrears on each
applicable Interest Payment Date and the Revolving Credit Termination Date.
Interest on each Alternate Base Loan shall be computed based on the number of
days elapsed in a year of 365 days and each Eurodollar Loan shall be computed
based on the number of days elapsed in a year of 360 days. The Agent shall
determine each interest rate applicable to the Loans and shall promptly advise
the Borrowers and the Lenders of the interest rate so determined.
SECTION 2.06. Fees. The Borrowers shall pay each Lender, through
the Agent, (i) on the first Business Day of each January, April, July and
October commencing January 1, 2000, (ii) on the date of any reduction of the
Revolving Credit Commitments pursuant to this Agreement including, without
limitation, Section 2.07 hereof and (iii) on the Revolving Credit Termination
Date, in immediately available funds, a commitment fee (the "Revolving Credit
Commitment Fee") equal to the Revolving Credit Commitment Fee Margin per annum
on the average daily unused amount of the Revolving Credit Commitment of such
Lender, during the preceding quarter (or shorter period commencing with the
Closing Date or ending with the Revolving Credit Termination Date) ending
immediately prior to such date it being understood that Letter of Credit Usage
shall constitute "use" of the Revolving Credit Commitment in a corresponding
amount. The Revolving Credit Commitment Fee due to each Lender under this
Section 2.06 shall commence to accrue on the date hereof and cease to accrue on
the earlier of (i) the Revolving Credit Termination Date and (ii) the
termination of the Revolving Credit Commitment of such Lender pursuant to this
Agreement including, without limitation, pursuant to Section 2.07 hereof. The
Revolving Credit Commitment Fee shall be calculated on the basis of the actual
number of days elapsed in a year of 365 days.
SECTION 2.07. Termination and Reduction of Revolving Credit
Commitments. (a) Upon at least three (3) Business Days' prior irrevocable
written notice (or facsimile notice promptly confirmed in writing) to the Agent,
the Borrowers may at any time in whole permanently terminate, or from time to
time in part permanently reduce, the Total Commitment, ratably among the Lenders
in accordance with the amounts of their Revolving Credit Commitments; provided,
however, that the Total Commitment shall not be reduced at any time to an amount
less than the Revolving Credit Loans outstanding under the Revolving Credit
Commitments and the Letter of Credit Usage at such time. Each partial reduction
of the Total Commitment shall be in a minimum of $500,000 or an integral
multiple of $100,000.
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(b) Simultaneously with any termination or reduction of the Total
Commitment pursuant to paragraph (a) of this Section 2.07, the Borrowers shall
pay to each Lender, through the Agent, the Revolving Credit Commitment Fee due
and owing through and including the date of such termination or reduction on the
amount of the Revolving Credit Commitment of such Lender so terminated or
reduced.
(c) The Revolving Credit Commitment of each Lender shall
automatically and permanently terminate on the Revolving Credit Termination
Date, and all Revolving Credit Loans still outstanding on such date shall be due
and payable in full together with accrued interest thereon.
SECTION 2.08. Interest on Overdue Amounts; Alternate Rate of
Interest. (a) Upon the occurrence and continuance of an Event of Default, the
Borrowers shall on demand from time to time pay interest, to the extent
permitted by law, on all Obligations outstanding up to the time such Event of
Default has been cured or waived at a rate per annum equal to two percent (2%)
in excess of the rates otherwise applicable to the Obligations outstanding
pursuant to Section 2.05 in the case of Loans or Section 2.20 in the case of the
letter of credit fees with respect to Letters of Credit.
(b) In the event, and on each occasion, that on the day two (2)
Business Days prior to the commencement of any Interest Period for a Eurodollar
Loan the Agent shall have determined that dollar deposits in the amount of each
Eurodollar Loan are not generally available in the London interbank market, or
that the rate at which dollar deposits are being offered will not reflect
adequately and fairly the cost to any Lender of making or maintaining such
Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Agent shall as soon as
practicable thereafter give written notice (or facsimile notice promptly
confirmed in writing) of such determination to the Borrowers and the Lenders,
and any request by the Borrowers for the making of a Eurodollar Loan pursuant to
Section 2.03 hereof or conversion or continuation of any Loan into a Eurodollar
Loan pursuant to Section 2.02 hereof shall, until the circumstances giving rise
to such notice no longer exist, be deemed to be a request for an Alternate Base
Loan. Each determination by the Agent made hereunder shall be conclusive absent
manifest error.
SECTION 2.09. Additional Repayment of Loans. (a) Subject to the
terms and conditions contained in this Section 2.09 and elsewhere in this
Agreement, the Borrowers shall have the right to prepay any Loan at any time in
whole or from time to time in part (except in the case of a Eurodollar Loan only
on the last day of an Interest Period) without penalty (except as otherwise
provided for herein); provided, however, that each such partial prepayment of a
Loan shall be in an integral multiple of $100,000 (or such lesser amount to the
extent the provisions of Section 10.01 are applicable); provided, further, that
unless the Total Commitment is also being terminated at least $1.00 of Loans
shall remain outstanding at all times.
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(b) On the date of any termination or reduction of the Total
Commitment pursuant to Section 2.07(a) hereof or elsewhere in this Agreement,
the Borrowers shall pay or prepay so much of the Revolving Credit Loans as shall
be necessary in order that each of Laars Availability, Water Pik Availability
and Total Availability equals or exceeds zero following such termination or
reduction. Any prepayments required by this paragraph (b) shall be applied to
outstanding Revolving Credit Alternate Base Loans up to the full amount thereof
before they are applied to outstanding Revolving Credit Eurodollar Loans;
provided, however, that the Borrowers shall not be required to make any
prepayment of any Eurodollar Loan pursuant to this Section until the last day of
the Interest Period with respect thereto so long as an amount equal to such
prepayment is deposited by the Borrowers in a cash collateral account with the
Agent to be held in such account on terms satisfactory to the Agent (if not
previously applied, such cash collateral may be applied by the Agent on the last
day of the applicable Interest Period to repay outstanding Eurodollar Loans as
they become due).
(c) The Borrowers shall make prepayments of the Revolving Credit
Loans from time to time such that each of Laars Availability, Water Pik
Availability and Total Availability equals or exceeds zero at all times. Any
prepayments required by this paragraph (c) shall be applied to outstanding
Revolving Credit Alternate Base Loans up to the full amount thereof before they
are applied to outstanding Revolving Credit Eurodollar Loans; provided, however,
that the Borrowers shall not be required to make any prepayment of any
Eurodollar Loan pursuant to this Section until the last day of the Interest
Period with respect thereto so long as an amount equal to such prepayment is
deposited by the Borrowers in a cash collateral account with the Agent to be
held in such account on terms satisfactory to the Agent (if not previously
applied, such cash collateral may be applied by the Agent on the last day of the
applicable Interest Period to repay outstanding Eurodollar Loans as they become
due).
(d) Within three Business Days of (i) the sale or other
disposition of any assets of any of the Borrowers or their subsidiaries
(excluding sales of assets permitted pursuant to Sections 7.05(a) and (b)
hereof) or of the capital stock of any of the Borrowers (subject to Section 7.05
hereof) or (ii) the consummation of the issuance of any debt securities of any
of the Borrowers (other than as permitted pursuant to Section 7.03 hereof), the
Borrowers shall make a mandatory prepayment of the Loans in an amount equal to
100% of the Net Proceeds, which Proceeds shall be applied as set forth in
paragraph (f) below. Nothing contained in this paragraph (d) shall be or be
deemed to be a consent to the sale of any assets or stock or the issuance of any
stock or debt securities.
(e) (i) Except as provided in clause (ii) below, promptly and in
any event not more than three (3) Business Days following the receipt by the
Agent or any of the Borrowers or any subsidiary of any of the Borrowers of any
net proceeds of (x) any casualty insurance required to be maintained pursuant to
Section 6.03 hereof on account of each separate loss, damage or injury (each, a
"Casualty Event") in excess of $100,000 (or, if there shall be continuing a
Default or an Event of Default, of the full amount of Net Proceeds) to any asset
of such Borrowers or such subsidiary (including, without limitation,
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any Collateral), or (y) any business interruption insurance required to be
maintained pursuant to Section 6.03 hereof on account of any business
interruption event (each, a "BI Event") in excess of $100,000 (or, if there
shall be continuing a Default or Event of Default, of the full amount of Net
Proceeds), such Borrowers or subsidiary shall notify the Agent of such receipt
in writing or by telephone promptly confirmed in writing, and not later than
three (3) Business Days following receipt by the Agent or such Borrowers or
subsidiary of any such Proceeds, there shall become due and payable a prepayment
of the Loans in an amount equal to 100% of such proceeds. Prepayments from such
Net Proceeds shall be applied as set forth in paragraph (f) below.
(ii) In the case of the receipt of Net Proceeds described in clause
(i) above with respect to a Casualty Event or BI Event, the Borrowers may elect,
by written notice delivered to the Agent not later than the day on which a
prepayment would otherwise be required under clause (i), (x) in the case of Net
Proceeds received with respect to a BI Event, to use such Proceeds in the
ordinary course of such Borrower's business and (y) in the case of Net Proceeds
received with respect to any Casualty Event, to apply all or a portion of such
Net Proceeds for the purpose of replacing, repairing, restoring or rebuilding
(referred to herein as a "Rebuilding") the relevant tangible property, and, in
any such event, any required prepayment under clause (i) above shall be reduced
dollar for dollar by the amount of such election under clause (x) or clause (y)
of this sentence. An election under this clause (ii) shall not be effective
unless: (x) at the time of such election there is continuing no Default or Event
of Default; (y) the Borrowers shall have certified to the Agent that: (i) the
Net Proceeds of the insurance adjustment with respect to a Casualty Event,
together with other funds available to the Borrowers shall be sufficient to
complete such Rebuilding in accordance with all applicable laws, regulations and
ordinances; and (ii) no Default or Event of Default has arisen or will arise as
a result of such BI Event, Casualty Event or Rebuilding; and (z) if the amount
of Net Proceeds in question exceeds (i) at any time before the consummation of a
Public Offering, $500,000 or (ii) at any time after the consummation of a Public
Offering, $1,000,000, the Borrowers shall have obtained the written consent of
the Required Lenders to such election.
(iii) In the event of an election under clause (ii) above, pending
application of the Net Proceeds to business operations with respect to a BI
Event or to Rebuilding with respect to a Casualty Event, the Borrowers shall not
later than the time at which prepayment would have been, in the absence of such
election, required under clause (i) above, apply such Net Proceeds to the
prepayment of the outstanding principal balance, if any, of the Revolving Credit
Loans (not in permanent reduction of the Revolving Credit Commitment), and
deposit (the "Special Deposit") with the Agent, the balance, if any, of such Net
Proceeds remaining after such application, pursuant to agreements in form, scope
and substance reasonably satisfactory to the Agent. The Special Deposit,
together with all earnings on such Special Deposit, shall be available to the
Borrowers solely for the applicable Rebuilding or ordinary course business
operations, as the case may be; provided, however, that at such time as a
Default or Event of Default shall occur, the balance of the Special Deposit and
earnings thereon may be applied by the Agent to repay the Obligations in such
order as the Agent shall elect. The Agent shall be entitled to
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require proof, as a condition to the making of any withdrawal from the Special
Deposit, that the proceeds of such withdrawal are being applied for the purposes
permitted hereunder, and, in the case of Rebuilding, that the withdrawal is
equivalent to the value of the improvements being rebuilt.
(f) When making a prepayment, whether mandatory or otherwise,
pursuant to paragraph (a) above (other than circumstances when Section 10.01 is
applicable), the Borrowers shall furnish to the Agent, not later than 1:00 p.m.
(New York City time) (i) three (3) Business Days prior to the date of such
prepayment of Alternate Base Loans and (ii) five (5) Business Days prior to the
date of such prepayment of Eurodollar Loans, written, facsimile or telephonic
notice (promptly confirmed by written or facsimile notice) of prepayment which
shall specify the prepayment date and the principal amount of each Loan (or
portion thereof) to be prepaid, which notice shall be irrevocable and shall
commit the Borrowers to prepay such Loan by the amount stated therein on the
date stated therein. Prepayments made pursuant to paragraph (d) or (e) above
shall be applied as follows: to outstanding Revolving Credit Alternate Base
Loans up to the full amount thereof and then to Revolving Credit Eurodollar
Loans up to the full amount thereof; provided, however, that the Borrowers shall
not be required to make any prepayment of any Revolving Credit Eurodollar Loan
required pursuant to this Section 2.09(f) until the last day of the Interest
Period with respect thereto so long as an amount equal to such prepayment is
deposited by the Borrowers into a cash collateral account with the Agent to be
held in such account pursuant to terms satisfactory to the Agent (if not
previously applied, such cash collateral may be applied by the Agent on the last
day of the applicable Interest Periods to repay outstanding Eurodollar Loans as
they become due). All prepayments pursuant to Section 2.09 shall be accompanied
by accrued interest on the principal amount being prepaid to the date of
prepayment.
(g) All prepayments under this Section 2.09 shall be subject to
Section 2.12 hereof.
(h) Except as otherwise expressly provided in this Section 2.09,
payments with respect to any paragraph of this Section 2.09 are in addition to
payments made or required to be made under any other paragraph of this Section
2.09.
SECTION 2.10. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
(or in the case of any assignee of any Lender, the date of assignment) any
change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law), or any change in GAAP or regulatory accounting principles applicable to
the Agent or any Lender, shall: (i) subject the Agent or any Lender (which shall
for the purpose of this Section 2.10 include any assignee or lending office of
the Agent or any Lender) to any charge, fee, deduction or withholding of any
kind or to any tax with respect to any amount paid or to be paid to either the
Agent or any Lender with respect to any Eurodollar Loans made by such Lender to
the Borrowers or with respect to the obligations of any Lender
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under Sections 2.17 through 2.20 hereof or under any Letter of Credit (other
than (x) taxes imposed on the overall net income of the Agent or such Lender and
(y) franchise taxes imposed on the Agent or such Lender, in either case by the
jurisdiction in which such Lender or the Agent has its principal office or its
lending office with respect to such Eurodollar Loan or any political subdivision
or taxing authority of either thereof); (ii) change the basis of taxation of
payments to any Lender or the Agent of the principal of or interest on any
Eurodollar Loan or any other fees or amounts payable with respect to any Letter
of Credit or otherwise hereunder (other than taxes imposed on the overall net
income of such Lender or the Agent by the jurisdiction in which such Lender or
the Agent has its principal office or by any political subdivision or taxing
authority therein); (iii) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or loans or loan commitments extended by, or Letters of Credit
issued and maintained by such Lender; or (iv) impose on any Lender or, with
respect to Eurodollar Loans, the London interbank market, any other condition
affecting this Agreement, Letters of Credit issued and maintained by or
Eurodollar Loans made by such Lender; and the result of any of the foregoing
shall be to increase the cost to any such Lender of making or maintaining any
Eurodollar Loan or Letter of Credit, or to reduce the amount of any payment
(whether of principal, interest, fee, compensation or otherwise) receivable by
such Lender or to require such Lender to make any payment in respect of any
Eurodollar Loan or Letter of Credit, then the Borrowers shall pay to such Lender
or the Agent, as the case may be, upon such Lender's or the Agent's demand, such
additional amount or amounts as will compensate such Lender or the Agent for
such additional costs or reduction. The Agent and each Lender agree to give
notice to the Borrowers of any such change in law, regulation, interpretation or
administration with reasonable promptness after becoming actually aware thereof
and of the applicability thereof to the Transactions. Notwithstanding anything
contained herein to the contrary, nothing in clause (i) or (ii) of this Section
2.10(a) shall be deemed to (x) permit the Agent or any Lender to recover any
amount thereunder which would not be recoverable under Section 2.16 hereof or
(y) require the Borrowers to make any payment of any amount to the extent that
such payment would duplicate any payment made by the Borrowers pursuant to
Section 2.16 hereof.
(b) If at any time and from time to time after the date of this
Agreement, any Lender shall determine that the adoption of any applicable
governmental law, rule, regulation or guideline regarding capital adequacy, or
any change in any applicable law, rule, regulation or guideline regarding
capital adequacy, including, without limitation, the July 1988 report of the
Basle Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or any
change in the interpretation or administration of any thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Lender (or its
lending office) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or will have the effect of reducing the rate of return on
such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of its obligations hereunder to a level below
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that which such Lender could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's policies and the policies of
such Lender's holding company with respect to capital adequacy), then from time
to time the Borrowers shall pay to such Lender such additional amount or amounts
as will compensate such Lender for such reduction. Each Lender agrees to give
notice to the Borrowers of any adoption of, change in, or change in
interpretation or administration of, any such law, rule, regulation or guideline
with reasonable promptness after becoming actually aware thereof and of the
applicability thereof to the Transactions. Notwithstanding any other provision
in this paragraph (b), none of any Lender or the Agent shall be entitled to
demand compensation pursuant to this paragraph (b) if it shall not be the
general practice of such Lender or the Agent, as applicable, to demand such
compensation in similar circumstances under comparable provisions of other
comparable credit agreements.
(c) A statement of any Lender or the Agent setting forth such
amount or amounts, supported by calculations in reasonable detail, as shall be
necessary to compensate such Lender (or the Agent) as specified in paragraphs
(a) and (b) above shall be delivered to the Borrowers and shall be conclusive
absent manifest error. The Borrowers shall pay such Lender or the Agent, as the
case may be, the amount shown as due on any such statement within ten (10) days
after its receipt of the same.
(d) Failure on the part of any Lender or the Agent to demand
compensation for any increased costs, reduction in amounts received or
receivable with respect to any Interest Period or any Letter of Credit or
reduction in the rate of return earned on such Lender's capital, shall not
constitute a waiver of such Lender's or the Agent's rights to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in rate of return in such Interest Period or in any
other Interest Period or with respect to such Letter of Credit. The protection
under this Section 2.10 shall be available to each Lender and the Agent
regardless of any possible contention of the invalidity or inapplicability of
any law, regulation or other condition which shall give rise to any demand by
such Lender or the Agent for compensation. Notwithstanding the foregoing, the
Borrowers shall not be required to compensate a Lender or the Agent pursuant to
this Section for any increased costs or reductions incurred more than six months
prior to the date that such Lender or the Agent, as the case may be, notifies
the Borrowers of the change giving rise to such increased costs or reductions
and of such Lender's or the Agent's intention to claim compensation therefor;
provided that, if the change giving rise to such increased costs or reductions
is retroactive, then the six-month period referred to above shall be extended by
a period of time equal to the period from the date of such change through and
including the earliest date of such retroactive effect.
(e) Any Lender claiming any additional amounts payable pursuant to
this Section 2.10 agrees to use reasonable efforts (consistent with legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such a designation would avoid the need for, or reduce the amount
of, any such additional amounts and would not, in the reasonable judgment of
such Lender, be otherwise disadvantageous to such Lender.
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SECTION 2.11. Change in Legality. (a) Notwithstanding anything to
the contrary herein contained, 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 Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations to
make Eurodollar Loans as contemplated hereby, then, by written notice to
Borrowers and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made
by such Lender hereunder, whereupon the Borrowers shall be
prohibited from requesting Eurodollar Loans from such Lender
hereunder unless such declaration is subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans, made by
such Lender be converted to Alternate Base Loans, in which event
(A) all such Eurodollar Loans shall be automatically converted to
Alternate Base Loans as of the effective date of such notice as
provided in paragraph (b) below and (B) all payments of principal
which would otherwise have been applied to repay the converted
Eurodollar Loans shall instead be applied to repay the Alternate
Base Loans resulting from the conversion of such Eurodollar Loans.
(b) For purposes of Section 2.11(a) hereof, a notice to the
Borrowers by any Lender shall be effective, if lawful, on the last day of the
then current Interest Period or, if there are then two or more current Interest
Periods, on the last day of each such Interest Period, respectively; otherwise,
such notice shall be effective with respect to the Borrowers on the date of
receipt by the Borrowers.
SECTION 2.12. Indemnity. The Borrowers shall indemnify the Agent
and each Lender against any loss or reasonable expense (including, but not
limited to, any loss or reasonable expense sustained or incurred or to be
sustained or incurred by reason of or in connection with the execution and
delivery or assignment of, or payment under, any Letter of Credit, or in
liquidating or employing deposits from third parties acquired to affect or
maintain any Loan or part thereof as a Eurodollar Loan) which the Agent or such
Lender may sustain or incur as a consequence of the following events (regardless
of whether such events occur as a result of the occurrence of an Event of
Default or the exercise of any right or remedy of the Agent or the Lenders under
this Agreement or any other agreement, or at law): any failure of the Borrowers
to fulfill on the date of any Credit Event the applicable conditions set forth
in Article V hereof applicable to it; any failure of the Borrowers to borrow
hereunder after irrevocable notice of borrowing pursuant to Section 2.03 hereof
has been given; any payment, prepayment or conversion of a Eurodollar Loan on a
date other than the last day of the relevant Interest Period; any default in
payment or prepayment of the principal amount of any Loan or any part thereof or
interest accrued thereon, or with respect to any Letter of Credit, in each case
as and when due and payable (at the due date thereof, by irrevocable notice of
prepayment or otherwise); or the occurrence of an
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Event of Default. Such loss or reasonable expense shall include, without
limitation, an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the principal or other amount so paid, prepaid or
converted or not borrowed for the period from the date of such payment,
prepayment or conversion or failure to borrow to, in the case of a Loan, the
last day of the Interest Period for such Loan (or, in the case of a failure to
borrow, the Interest Period for such Loan which would have commenced on the date
of such failure to borrow), at the applicable rate of interest for such Loan
provided for herein over (ii) the sum of (A) the Interest Margin and (B) the
amount of interest (as reasonably determined by such Lender) that would be
realized by such Lender in reemploying the funds so paid, prepaid or converted
or not borrowed for such period or Interest Period, as the case may be. Any such
Lender shall provide to the Borrowers a statement, signed by an officer of such
Lender, explaining any loss or expense and setting forth, if applicable, the
computation pursuant to the preceding sentence, and such statement shall be
conclusive absent manifest error. The Borrowers shall pay such Lender the amount
shown as due on any such statement within ten (10) days after the receipt of the
same. The indemnities contained herein shall survive the expiration or
termination of this Agreement and of the Letters of Credit.
SECTION 2.13. Pro Rata Treatment; Assumption by and Delegation of
Authority to the Agent. (a) Except as permitted under Sections 2.10, 2.11,
2.15(c) and 2.16 hereof, or as described in subsection (d) below each borrowing,
each payment or prepayment of principal of the Notes, each payment of interest
on the Notes, each payment of any fee or other amount payable hereunder and each
reduction of the Total Commitment shall be made pro rata among the Lenders in
the proportions that their Revolving Credit Commitments bear to the Total
Commitment.
(b) Notwithstanding the occurrence or continuance of a Default or
Event of Default or other failure of any condition to the making of Loans or
occurrence of other Credit Events hereunder subsequent to the Credit Events on
the Closing Date, unless the Agent shall have been notified in writing by any
Lender in accordance with the provisions of paragraph (c) below prior to the
date of a proposed Credit Event that such Lender will not make the amount that
would constitute its pro rata share of the applicable Credits on such date
available to the Agent, the Agent may assume that such Lender has made such
amount available to the Agent on such date, and the Agent may, in reliance upon
such assumption, make available to the Borrowers a corresponding amount. If such
amount is made available to the Agent on a date after such Credit Event date,
such Lender shall pay to the Agent on demand an amount equal to the product of
(i) the daily average Federal funds rate during such period as quoted by the
Agent, times (ii) the amount of such Lender's pro rata share of such Credits,
times (iii) a fraction the numerator of which is the number of days that elapse
from and including such Credit Event date to the date on which such Lender's pro
rata share of such Credits shall have become immediately available to the Agent
and the denominator of which is 360. A certificate of the Agent submitted to any
Lender with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error. If such Lender's pro rata share of
such Credits is not in fact made available to the Agent by such Lender within
three Business Days of such Credit Event date, the Agent (without releasing such
Lender from any liability it might have to the
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Agent or any Borrower by reason of its failure to fund) shall be entitled to
recover such amount with interest thereon at the rate per annum applicable to
the Loans hereunder, on demand, from the Borrowers.
(c) Unless and until the Agent shall have received notice from the
Required Lenders as to the existence of a Default, an Event of Default or some
other circumstance which would relieve the Lenders of their respective
obligations to extend Credits hereunder, which notice shall be in writing and
shall be signed by the Required Lenders and shall expressly state that the
Required Lenders do not intend to make available to the Agent such Lenders'
ratable share of Credits extended after the effective date of such notice, the
Agent shall be entitled to continue to make the assumptions described in Section
2.13(b) above. After receipt of the notice described in the preceding sentence,
which shall become effective on the third Business Day after receipt of such
notice by the Agent (unless otherwise agreed by the Agent), the Agent shall be
entitled to make the assumptions described in Section 2.13(b) above as to any
Credits as to which it has not received a written notice to the contrary prior
to 11:00 a.m. (New York City time) on the Business Day next preceding the day on
which such Credits are to be extended. The Agent shall not be required to extend
any Credits as to which it shall have received notice by a Lender of such
Lender's intention not to make its ratable portion of such Credits available to
the Agent. Any withdrawal of authorization as described under this Section
2.13(c) shall not affect the validity of any Credits extended prior to the
effectiveness thereof.
(d) In the event that any Lender fails to fund its ratable portion
(based on its Revolving Credit Commitment) of any Revolving Credit Loan which
such Lender is obligated to fund under the terms of this Agreement (the funded
portion of such borrowing being hereinafter referred to as a "Non Pro Rata
Loan"), until the earlier of such Lender's cure of such failure or the
termination of the Total Revolving Credit Commitment, in the Agent's sole
discretion, the proceeds of all amounts thereafter repaid to Agent by Borrowers
and otherwise required to be applied to such Lender's share of all other
Obligations pursuant to the terms of this Agreement, may be advanced to
Borrowers by Agent on behalf of such Lender to cure, in full or in part, such
failure by such Lender, but shall nevertheless be deemed to have been paid to
such Lender in satisfaction of such other Obligations. Notwithstanding anything
in this Agreement to the contrary:
(i) the foregoing provisions to this subsection (d) shall
apply only with respect to the proceeds of payments of Obligations
and shall not affect the conversion or continuation of Loans
pursuant to Section 2.02;
(ii) any such Lender shall be deemed to have cured its failure
to fund at such time as an amount equal to such Lender's ratable
portion (based on its applicable Revolving Credit Commitment) of
the requested principal portion of such Revolving Credit Loan is
fully funded to Borrowers whether made by such Lender itself or by
operation of the terms of this subsection (d)
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and whether or not the Non Pro Rata Loan with respect thereto has
been converted or continued;
(iii) amounts advanced to Borrowers to cure, in full or in
part, any such Lender's failure to fund its Revolving Credit Loans
("Cure Loans") shall bear interest at the rate applicable to
Alternate Base Loans under Section 2.05 in effect from time to
time, and for all other purposes of this Agreement shall be
treated as if they were Alternate Base Loans;
(iv) Regardless of whether or not an Event of Default has
occurred and is continuing, and notwithstanding the instructions
of Borrowers as to their desired application, all repayments of
principal which would be applied to the outstanding Revolving
Credit Alternate Base Loans shall be applied first, ratably to
Revolving Credit Alternate Base Loans constituting Non Pro Rata
Loans, second, ratably to Revolving Credit Alternate Base Loans
other than those constituting Non Pro Rata or Cure Loans and,
third, ratably to Revolving Credit Alternate Base Loans
constituting Cure Loans;
(v) for so long as, and until the earlier of any such Lender's
cure of the failure to fund its ratable portion (based on its
applicable Revolving Credit Commitment) of any Revolving Credit
Loan and the termination of the Total Revolving Credit Commitment,
the term "Required Lenders" for all purposes of this Agreement
shall exclude all Lenders whose failure to fund their ratable
portion (based on their respective applicable Revolving Credit
Commitments) of any Revolving Credit Loan have not been cured; and
(vi) for so long as, and until any such Lender's failure to
fund its ratable portion (based on its applicable Revolving Credit
Commitment) of any Revolving Credit Loan is cured in accordance
with this subsection (d), such Lender shall not be entitled to any
Revolving Credit Commitment Fee with respect to its Revolving
Credit Commitment.
SECTION 2.14. Sharing of Setoffs. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrowers, including, but not limited to, a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, obtain
payment (voluntary or involuntary) in respect of a Note and exposure under the
Letter of Credit Usage held by it as a result of which the unpaid principal
portion of the Notes and exposure under the Letter of Credit Usage held by it
shall be proportionately less than the unpaid principal portion of the Notes and
exposure under the Letter of Credit Usage held by any other Lender, it shall be
deemed to have simultaneously purchased from such other Lender a participation
in the Notes and exposure under the Letter of Credit Usage held by such other
Lender, so that the aggregate unpaid principal amount of the Notes and exposure
under the Letter of Credit
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Usage and participations in Notes or exposure under the Letter of Credit Usage
held by it shall be in the same proportion to the aggregate unpaid principal
amount of all Notes or exposure under the Letter of Credit Usage then
outstanding as the principal amount of the Notes or exposure under the Letter of
Credit Usage held by it prior to such exercise of banker's lien, setoff or
counterclaim was to the principal amount of all Notes or exposure under the
Letter of Credit Usage outstanding prior to such exercise of banker's lien,
setoff or counterclaim; provided, however, that if any such purchase or
purchases or adjustments shall be made pursuant to this Section 2.14 and the
payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustments restored without interest. The
Borrowers expressly consent to the foregoing arrangements and agree that any
Lender holding a participation in a Note and exposure under the Letter of Credit
Usage deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrowers to such Lender as fully as if such Lender held a Note and
exposure under the Letter of Credit Usage in the amount of such participation.
SECTION 2.15. Payments and Computations. (a) The Borrowers shall
make each payment hereunder and under any instrument delivered hereunder not
later than 1:00 p.m. (New York City time) on the day when due in lawful money of
the United States (in freely transferable dollars) to the Agent at its offices
at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ for the account of the
Lenders, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Agent, be deemed to have been received on the next succeeding Business Day for
purposes of calculating interest thereon. The Agent shall distribute any such
payments received by it for the account of any other person to the appropriate
recipient promptly following receipt thereof. The Agent may charge, when due and
payable, the Borrowers' account with the Agent for all interest, principal and
Revolving Credit Commitment Fees or other fees owing to the Agent or the Lenders
on or with respect to this Agreement and/or the Loans and other Loan Documents.
If at any time there is not sufficient availability to cover any of the payments
referred to in the prior sentence, and in any event upon the occurrence of any
Default, the Borrowers shall make any such payments upon demand.
(b) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
Agent from a Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender without setoff,
counterclaim or deduction of any kind. If Agent determines at any time that any
amount received by Agent under this Agreement must be returned to Borrowers or
paid to any other person pursuant to any solvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement, Agent will not be
required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is
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required to pay to Borrowers or such other person, without setoff, counterclaim
or deduction of any kind.
(c) The outstanding principal balance of Revolving Credit Loans
may fluctuate from day to day, through Agent's disbursement of funds to, and
receipt of funds from, Borrowers. In order to minimize the frequency of
transfers of funds between Agent and each Lender, Revolving Credit Loans and
payments may be settled according to the following procedures. On the third
Business Day of each week, or more frequently (including daily), if Agent so
elects (each such day being a "Settlement Date"), Agent will advise each Lender
by telephone, telex or telecopy of the amount of each such Lender's actual
dollar investment and its ratable portion (based on its applicable Revolving
Credit Commitment) of the outstanding principal balance of Revolving Credit
Loans as of the close of business on the third Business Day immediately
preceding the Settlement Date. In the event that payments are necessary to
adjust the amount of such Lender's actual dollar investment in the outstanding
principal balance of Revolving Credit Loans to such Lender's ratable portion
(based on its applicable Revolving Credit Commitment) of the outstanding
principal balance of Revolving Credit Loans as of any Settlement Date (based on
the outstanding balances as of the close of business on the third Business Day
immediately preceding such Settlement Date), the party from which such payment
is due will pay the other, in immediately available funds, by wire transfer to
the other's account not later than 2:00 p.m. (New York time) on the Business Day
immediately following the Settlement Date. Notwithstanding the foregoing, if
Agent so elects, Agent may require that each Lender make its ratable portion
(based on its applicable Revolving Credit Commitment) of any requested Revolving
Credit Loan available to Agent for disbursement on the date of funding
applicable to such Revolving Credit Loan in accordance with Section 2.03 hereof.
Notwithstanding these procedures, each Lender's obligation to fund its portion
of each Revolving Credit Loan made by Agent to Borrower will commence on the
date such advance is made by Agent.
SECTION 2.16. Taxes. (a) Any and all payments by the Borrowers
hereunder shall be made, in accordance with Section 2.15 hereof, free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed or based on the Agent's or any Lender's (or any
transferee's or assignee's, including a participation holder's (any such entity
a "Transferee")) net income, and franchise or capital taxes imposed on the Agent
or any Lender (or Transferee) by the United States or any jurisdiction under the
laws of which it is organized or any political subdivision thereof (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrowers shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Lenders (or any Transferee) or the Agent, (i) the sum payable
shall be increased by the amount necessary so that after making all required
deductions (including without limitation deductions applicable to additional
sums payable under this Section 2.16) such Lender (or any Transferee) or the
Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrowers shall make
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such deductions and (iii) the Borrowers shall pay the full amount deducted to
the relevant tax authority or other authority in accordance with applicable law.
(b) In addition, the Borrowers agree to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other Taxes").
(c) The Borrowers will indemnify each Lender (or Transferee) and
the Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.16) paid by such Lender (or Transferee) or the
Agent (as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted by the relevant tax authority
or other authority. This indemnification shall be made within 30 days from the
date such Lender (or Transferee) or the Agent (as the case may be) makes written
demand therefor. If any Lender (or Transferee) or the Agent receives a refund in
respect of any Taxes or Other Taxes for which such Lender (or Transferee) or the
Agent has received payment from the Borrowers hereunder, such Lender (or
Transferee) or the Agent shall promptly notify the Borrowers of such refund and
such Lender (or Transferee) or the Agent shall, within 30 days of receipt of a
request by the Borrowers, repay such refund to the Borrowers, net of all
out-of-pocket expenses and without interest, provided that the Borrowers, upon
the request of such Lender (or Transferee) or the Agent, agrees to return such
refund (plus any penalties, interest or other charges) to such Lender (or
Transferee) or the Agent in the event such Lender (or Transferee) or the Agent
is required to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrowers in respect of any payment to any Lender (or
Transferee) or the Agent, the Borrowers will furnish to the Agent, at its
address referred to in Section 11.01 hereof, such certificates, receipts and
other documents as may be reasonably required to evidence payment thereof.
(e) Without prejudice to the survival of any other agreement
hereunder, the agreements and obligations contained in this Section 2.16 shall
survive the payment in full of principal and interest hereunder.
(f) Each Lender (or Transferee) that is organized outside of the
United States and that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrowers are
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrowers (with a copy to the
Agent) on the date hereof (or, in the case of a Transferee, on the date of the
transfer) and from time to time as required for renewal under applicable law
duly completed copies of United States Internal Revenue Service Form 1001 or
4224 (or
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any successor or additional forms), as appropriate, indicating in each case that
such Lender is entitled to receive payments under this Agreement without any (or
without full) deduction or withholding of any United States federal income
taxes. The Agent (if the Agent is an entity organized outside the United States)
and each Lender (or Transferee) that is organized outside the United States
shall promptly notify the Borrowers and the Agent of any change in its
Applicable Lending Office and upon written request of the Borrowers the Agent or
such Lender (or Transferee), as the case may be, shall, prior to the immediately
following due date of any payment by the Borrowers or any Guarantor hereunder or
under any other Loan Document, deliver to the Borrowers or such Guarantor, as
the case may be (with copies to the Agent), such certificates, documents or
other evidence, as required by the Code or Treasury Regulations issued pursuant
thereto, including, to the extent applicable, Internal Revenue Service Form
4224, Form 1001 and any other certificate or statement of exemption required by
Treasury Regulation Section 1.1441-4(a) or Section 1.1441-6(c) or any subsequent
version thereof, properly completed and duly executed by the Agent or such
Lender (or Transferee), as the case may be, establishing that such payment is
not subject to withholding under the Code to any greater extent than was the
case prior to the change in Applicable Lending Office. The Borrowers shall be
entitled to rely on such forms in their possession until receipt of any revised
or successor form pursuant to this Section 2.16(f). If the Agent or a Lender (or
Transferee) fails to provide a certificate, document or other evidence required
pursuant to this Section 2.16(f), then the Borrowers or the Agent shall be
entitled to deduct or withhold on payments to the Agent or such Lender (or
Transferee) as a result of such failure, as required by law.
(g) Borrowers shall not be required to pay any additional amounts
to the Agent or any Lender (or Transferee) in respect of United States
withholding tax pursuant to paragraph (a) above if the obligation to pay such
additional amounts would not have arisen but for a failure by the Agent or such
Lender (or Transferee) to comply with the provisions of paragraph (f) above
unless such failure results from (i) a change in applicable law, regulation or
official interpretation thereof or (ii) an amendment, modification or revocation
of any applicable tax treaty or a change in official position regarding the
application or interpretation thereof, in each case after the Closing Date (and,
in the case of a Transferee, after the date of assignment or transfer);
provided, however, Borrowers shall be required to pay those amounts to the Agent
or any Lender (or Transferee) that it was required to pay hereunder prior to the
failure of the Agent or such Lender (or Transferee) to comply with the
provisions of such paragraph (f).
(h) Each Lender (or Transferee) and the Agent shall use reasonable
efforts (consistent with legal and regulatory restrictions) to avoid or minimize
any amounts which might otherwise be payable pursuant to this Section 2.16
(including seeking refunds of any amounts that are reasonably believed not to
have been correctly or legally asserted); provided, however, that such efforts
shall not include the taking of any actions by such Lender (or Transferee) or
the Agent that would result in any tax, costs or other expense to such Lender
(or Transferee) or the Agent (other than a tax, cost or other expense for which
such Lender (or Transferee) or the Agent shall have been reimbursed or
indemnified by the
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Borrowers pursuant to this Agreement or otherwise) or any action which would or
might in the reasonable opinion of such Lender (or Transferee) or the Agent have
an adverse effect upon its business, operations or financial condition or
otherwise be disadvantageous to such Lender (or Transferee) or the Agent.
SECTION 2.17. Issuance of Letters of Credit. Upon the request of a
Borrower, and subject to the conditions set forth in Article V hereof and such
other conditions to the opening of Letters of Credit as the Agent requires of
its customers generally, the Agent shall from time to time open documentary and
standby letters of credit (each, together with the letters of credit being
assumed by the Borrowers on the Closing Date, a "Letter of Credit") for the
account of such Borrower, the aggregate undrawn amount of all outstanding
Letters of Credit to all Borrowers not at any time to exceed $5,000,000;
provided, however, that the face amount of any Letter of Credit that (A) the
Borrowers may request the Agent to open at any time shall not exceed the lesser
of (i) the Total Commitment at such time (as such may have been reduced in
accordance with the terms of this Agreement) and (ii) the Borrowing Base at such
time, minus (i) the Letter of Credit Usage at such time and (ii) the aggregate
principal amount of Revolving Credit Loans, accrued interest, fees and expenses
outstanding at such time, (B) Laars may request the Agent to open at any time
shall not exceed the Laars Borrowing Base minus the undrawn amount of all
outstanding Letters of Credit at such time as to which Laars or any of its
subsidiaries is the account party and the aggregate principal amount of the
Revolving Credit Loans outstanding for the account of Laars at such time, and
(C) Water Pik may request the Agent to open at any time shall not exceed the
Water Pik Borrowing Base minus the undrawn amounts of all Letters of Credit at
such time as to which Water Pik or any of its subsidiaries is the account party
and the aggregate outstanding principal amount of the Revolving Credit Loans
outstanding for the account of Water Pik at such time. The issuance of each
Letter of Credit shall be made on at least three Business Days' prior written
notice from the Borrowers to the Agent, at its Domestic Lending Office, which
written notice shall be an application for a Letter of Credit on the Agent's
customary form completed to the satisfaction of the Agent, together with the
proposed form of the Letter of Credit (which shall be satisfactory to the Agent)
and such other certificates, documents and other papers and information as the
Agent may reasonably request. The Agent shall not at any time be obligated to
issue any Letter of Credit if such issuance would conflict with, or cause the
Agent or any Lender to exceed any limits imposed by, any applicable requirements
of law. The expiration date of any (i) documentary Letter of Credit shall not be
later than 180 days from the date of issuance thereof and (ii) any standby
Letter of Credit shall not be later than one year from the date of issuance
thereof, and, in any event, no Letter of Credit shall have an expiration date
later than 30 days prior to the Revolving Credit Termination Date.
Notwithstanding the foregoing, a Letter of Credit may provide for automatic
extensions of its expiration date for one or more successive one year periods
provided that the Agent has the right to terminate the Letter of Credit on each
such annual expiration date (upon at least 60 days notice) and no renewal term
may extend the term of the Letter of Credit to a date that is later than the
30th day prior to the Revolving Credit Termination Date. The Letters of Credit
shall be issued with respect of transactions occurring in the ordinary course of
business of the Borrowers.
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SECTION 2.18. Payment of Letters of Credit; Reimbursement. Upon
the issuance of any Letter of Credit, the Agent shall notify each Lender of the
principal amount, the number, and the expiration date thereof and the amount of
such Lender's participation therein. By the issuance of a Letter of Credit
hereunder and without further action on the part of the Agent or the Lenders,
each Lender hereby accepts from the Agent a participation (which participation
shall be nonrecourse to the Agent) in such Letter of Credit equal to such
Lender's pro rata (based on its Revolving Credit Commitment) share of such
Letter of Credit, effective upon the issuance of such Letter of Credit. Each
Lender hereby absolutely and unconditionally assumes, as primary obligor and not
as a surety, and agrees to pay and discharge, and to indemnify and hold the
Agent harmless from liability in respect of, such Lender's pro rata share of the
amount of any drawing under a Letter of Credit. Each Lender acknowledges and
agrees that its obligation to acquire participations in each Letter of Credit
issued by the Agent and its obligation to make the payments specified herein,
and the right of the Agent to receive the same, in the manner specified herein,
are absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, (i) the occurrence and continuance of
a Default or an Event of Default hereunder; (ii) any lack of validity or
enforceability of this Agreement or any of the other Loan Documents; (iii) the
existence of any claim, setoff, defense or other right which a Borrower may have
at any time against a beneficiary named in such Letter of Credit or any
transferee of such Letter of Credit (or any person for whom any such transferee
may be acting), the Agent, any Lender, or any other person, whether in
connection with this Agreement, such Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any underlying
transactions between any Borrower or any other party and the beneficiary named
in such Letter of Credit); (iv) any draft, certificate or any other document
presented under such Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; (v) the surrender or impairment of any security for
the performance or observance of any of the terms of any of the Loan Documents;
(vi) any failure by the Agent to provide any notices required pursuant to this
Agreement relating to such Letter of Credit; or (vii) any payment under any of
the Letters of Credit against presentation of a draft or certificate which does
not comply with the terms of such Letter of Credit and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever. The Agent shall review, on behalf of the Lenders, each draft and any
accompanying documents presented under a Letter of Credit and shall notify each
Lender of any such presentment. Promptly after it shall have ascertained that
any draft and any accompanying documents presented under such Letter of Credit
appear on their face to be in substantial conformity with the terms and
conditions of the Letter of Credit, the Agent shall give telephonic or facsimile
notice to the Lenders and the Borrowers of the receipt and amount of such draft
and the date on which payment thereon will be made, and the Lenders shall, by
11:00 a.m., New York City time on the date such payment is to be made, pay the
amounts required to the Agent in New York, New York in immediately available
funds, and the Agent, not later than 3:00 p.m. on such day, shall make the
appropriate payment to the beneficiary of such Letter of Credit. If in
accordance with the prior sentence the Lenders shall pay any draft presented
under a Letter of Credit, then the Agent, on behalf of the Lenders, shall charge
the revolving credit loan account of
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the Borrowers with the Agent for the amount thereof, together with the Agent's
customary overdraft fee in the event the funds available in such account shall
not be sufficient to reimburse the Lenders for such payment and the Borrowers
shall not otherwise have discharged such reimbursement obligation by 11:00 a.m.,
New York City time, on the date of such payment. If the Lenders have not been
reimbursed with respect to such drawing as provided above, the Borrowers shall
pay to the Agent, for the account of the Lenders, the amount of the drawing
together with interest on such amount at a rate per annum (computed on the basis
of the actual number of days elapsed over a year of 360 days) equal to the rate
applicable to Alternate Base Loans hereunder plus two percent (2%), payable on
demand. The obligations of the Borrowers under this Section 2.18 to reimburse
the Lenders and the Agent for all drawings under Letters of Credit shall be
joint and several, absolute, unconditional and irrevocable and shall be
satisfied strictly in accordance with their terms, irrespective of:
(a) any lack of validity or enforceability of any Letter of
Credit;
(b) the existence of any claim, setoff, defense or other right
which the Borrowers or any other person may at any time have against the
beneficiary under any Letter of Credit, the Agent or any Lender (other than the
defense of payment in accordance with the terms of this Agreement or a defense
based on the gross negligence or willful misconduct of the Agent or any Lender)
or any other person in connection with this Agreement or any other transaction;
(c) any draft or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;
(d) payment by the Agent or any Lender under any Letter of Credit
against presentation of a draft or other document which does not comply with the
terms of such Letter of Credit; and
(e) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing that might, but for the provisions of this
Section, constitute legal or equitable discharge of the Borrowers' obligations
under this Section.
It is understood that in making any payment under any Letter of
Credit (x) the Agent's and any Lender's exclusive reliance on the documents
presented to it under such Letter of Credit as to any and all matters set forth
therein, including, without limitation, reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary equals the amount of such draft and whether or not any document
presented pursuant to such Letter of Credit proves to be insufficient in any
respect, if such document on its face appears to be in order, and whether or not
any other statement or any other document presented pursuant to such Letter of
Credit proves to be forged or invalid or any statement therein proves to be
inaccurate or untrue in any respect whatsoever and (y) any noncompliance in any
immaterial respect of the documents
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presented under such Letter of Credit with the terms thereof shall, in each
case, not be deemed willful misconduct or gross negligence of the Agent or any
Lender.
SECTION 2.19. Agent's Actions with respect to Letters of Credit.
Any Letter of Credit may, in the discretion of the Agent or its correspondents,
be interpreted by them (to the extent not inconsistent with such Letter of
Credit) in accordance with the Uniform Customs and Practice for Documentary
Credits of the International Chamber of Commerce, as adopted or amended from
time to time, or any other rules, regulations and customs prevailing at the
place where any Letter of Credit is available or the drafts are drawn or
negotiated. The Agent and its correspondents may accept and act upon the name,
signature, or act of any party purporting to be the executor, administrator,
receiver, trustee in bankruptcy, or other legal representative of any party
designated in any Letter of Credit in the place of the name, signature, or act
of such party.
SECTION 2.20. Letter of Credit Fees. The Borrowers agree to pay to
the Agent for the account of each Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at a rate per annum
equal to the margin over the Adjusted LIBO Rate applicable to interest on
Eurodollar Loans then currently in effect (without regard to any increase in the
Applicable Margin for any Eurodollar Loan supported by M&E Availability) less
0.25% on the average daily amount of such Lender's pro rata share of the Letter
of Credit Usage (excluding any portion attributable to unreimbursed drawings)
during the period from and including the Closing Date to but excluding the later
of the date on which such Lender's Revolving Credit Commitment terminates and
the date on which such Lender ceases to have any share of the Letter of Credit
Usage, as well as the Agent's standard fees with respect to the issuance,
amendment, renewal or extension of any Letter of Credit or processing of
drawings thereunder. Participation fees accrued through and including the last
day of March, June, September and December of each year shall be payable on the
first Business Day following each such period, commencing January 1, 2000;
provided that all such fees shall be payable on the date on which the Revolving
Credit Commitment terminates and any such fees accruing after the date on which
the Revolving Credit Commitment terminates shall be payable on demand. Any other
fees payable to the Agent pursuant to this paragraph shall be charged to the
Borrowers' loan account. All participation fees shall be computed on the basis
of a year of 365 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
III. COLLATERAL SECURITY
SECTION 3.01. Security Documents. The Obligations shall be secured
by the Collateral described in the Security Documents and are entitled to the
benefits thereof. The Borrowers shall duly execute and deliver, or cause each
other Grantor to duly execute and deliver, the Security Documents, all consents
of third parties necessary to permit the effective granting of the Liens created
in such agreements, financing statements pursuant to the Uniform Commercial Code
and other documents, all in form and substance
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satisfactory to the Agent, as may be reasonably required by the Agent to grant
to the Lenders a valid, perfected and enforceable first priority Lien on and
security interest in (subject only to the Liens permitted under Section 7.01
hereof) the Collateral.
SECTION 3.02. Filing and Recording. The Borrowers shall, at their
sole cost and expense, cause all instruments and documents given as evidence of
security pursuant to this Agreement to be duly recorded and/or filed or
otherwise perfected in all places necessary, in the opinion of the Agent, and
take such other actions as the Agent may reasonably request, in order to perfect
and protect the Liens of the Agent and Lenders in the Collateral. The Borrowers,
to the extent permitted by law, hereby authorize the Agent to file any financing
statement in respect of any Lien created pursuant to the Security Documents
which may at any time be required or which, in the opinion of the Agent, may at
any time be desirable although the same may have been executed only by the Agent
or, at the option of the Agent, to sign such financing statement on behalf of
the Borrowers and file the same, and the Borrowers hereby irrevocably designate
the Agent, its agents, representatives and designees as its agent and
attorney-in-fact for this purpose. In the event that any re-recording or
refiling thereof (or the filing of any statements of continuation or assignment
of any financing statement) is required to protect and preserve such Lien, the
Borrowers shall, at the Borrowers' cost and expense, cause the same to be
recorded and/or refiled at the time and in the manner requested by the Agent.
IV. REPRESENTATIONS AND WARRANTIES
Each of the Borrowers and each of the Guarantors and Holdings
jointly and severally represents and warrants to each of the Lenders that both
before and after giving effect to the consummation of the Transactions:
SECTION 4.01. Organization, Legal Existence. Each of the Loan
Parties and their subsidiaries is a legal entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, has the requisite power and authority to own its property and
assets and to carry on its business as now conducted and as currently proposed
to be conducted and is qualified to do business in every jurisdiction where the
nature of its business so requires (all such jurisdictions being listed in
Schedule 4.01 annexed hereto) except where the failure to so qualify or be in
good standing would not result in a Material Adverse Effect. Each of the Loan
Parties has the corporate power to execute, deliver and perform its obligations
under this Agreement and the other Loan Documents to which it is a party, and
with respect to the Borrowers to borrow hereunder and to execute and deliver the
Notes.
SECTION 4.02. Authorization. The execution, delivery and
performance by each of the Loan Parties of this Agreement and each of the other
Loan Documents to which it is a party, the borrowings hereunder by the
Borrowers, the execution and delivery by the Borrowers of the Notes, the grant
of security interests in the Collateral created by the Security Documents and
the transactions contemplated to occur in connection with the
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Existing Credit Agreement (collectively, the "Transactions") (a) have been duly
authorized by all requisite corporate and, if required, stockholder action on
the part of the applicable Loan Party and (b) will not (i) violate (A) any
provision of law, statute, rule or regulation or the certificate or articles of
incorporation or other applicable constitutive documents or the by-laws of the
Loan Parties, or their respective subsidiaries, as the case may be, (B) any
order of any court, or any rule, regulation or order of any other agency of
government binding upon the Loan Parties, or their respective subsidiaries, or
(C) any provision of any material indenture, agreement or other instrument to
which the Loan Parties, or their respective subsidiaries, or any of their
respective properties or assets are or may be bound, (ii) be in conflict with,
result in a breach of or constitute (alone or with notice or lapse of time or
both) a default under any material indenture, agreement or other instrument
referred to in (b)(i)(C) above except where any such conflict, violation, breach
or default referred to in (i) or (ii) would not result in a Material Adverse
Effect or (iii) result in the creation or imposition of any Lien of any nature
whatsoever (other than in favor of the Agent, for its own benefit and for the
benefit of the Lenders, as contemplated by this Agreement and the Security
Documents) upon any property or assets of the Loan Parties, or their respective
subsidiaries.
SECTION 4.03. Governmental Approvals. No registration or filing
with consent or approval of, or other action by, any Federal, state or other
governmental agency, authority or regulatory body is or will be required in
connection with the Transactions, except for (a) such registrations, filings,
consents, approvals or actions the failure of which to obtain or make would not
have a Material Adverse Effect or (b) such as have been made or obtained or (c)
the filings necessary to perfect the Liens created by the Security Documents.
SECTION 4.04. Binding Effect. This Agreement and each of the other
Loan Documents to which it is a party constitutes, and each of the Notes when
duly executed and delivered by the Borrowers will constitute, a legal, valid and
binding obligation of the applicable Loan Party enforceable against such Loan
Party in accordance with its terms subject (a) as to the enforcement of
remedies, to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforcement of creditors' rights generally,
from time to time in effect and (b) to general principles of equity.
SECTION 4.05. Material Adverse Change. Except as set forth in
Schedule 4.05 annexed hereto, there has been no material adverse change in the
business, assets, operations or financial condition of Holdings and its
subsidiaries since December 31, 1998.
SECTION 4.06. Litigation; Compliance with Laws; etc. (a) Except as
set forth in Schedule 4.06(a) annexed hereto, there are not any actions, suits
or proceedings at law or in equity or by or before any governmental
instrumentality or other agency or regulatory authority now pending or, to the
knowledge of any Responsible Officer of any Borrower, threatened against or
affecting any of the Loan Parties or any of their subsidiaries or the
businesses, assets or rights of any of the Loan Parties or any of their
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subsidiaries (i) which involve any of the Transactions or (ii) as to which it is
probable (within the meaning of Statement of Financial Accounting Standards No.
5) that there will be an adverse determination and which, if adversely
determined, would, individually or in the aggregate, materially impair the
ability of any of the Loan Parties or any of their subsidiaries to conduct
business substantially as now conducted, or result in a Material Adverse Effect.
(b) Except as set forth in Schedule 4.06(b) annexed hereto, no
Loan Party or subsidiary thereof are in violation of any law, or in default with
respect to any judgment, writ, injunction, decree, rule or regulation of any
court or governmental agency or instrumentality where such violation or default
would result in a Material Adverse Effect.
SECTION 4.07. Financial Statements. (a) The Borrowers have
heretofore furnished to the Agent Consolidated statements of income of Holdings
for the Fiscal Year ending December 31, 1996 and Consolidated balance sheets and
statements of income of Holdings for the Fiscal Years ending December 31, 1997
and 1998, for the six months ended June 30, 1999, and for the nine months ended
September 30, 1999, audited by independent public accountants in the case of the
statements for December 31, 1997 and December 31, 1998 and comparative with
September 30, 1998 in the case of the September 30, 1999 statements. Such
balance sheets and statements of income present fairly the Consolidated
financial condition and results of operations of Holdings as of the dates and
for the periods indicated, and such balance sheets and the notes thereto
disclose all liabilities required by GAAP of Holdings and its subsidiaries, as
of the dates thereof.
(b) The Borrowers have heretofore furnished to the Agent monthly
for August through December 1999 and for each month of 2000 and annually
thereafter through the Final Maturity Date (i) projected income statements,
balance sheets and cash flows of Holdings on a Consolidated basis and (ii)
projected income statements for each of the Borrowers, in each case together
with computations of the Laars Borrowing Base and Water Pik Borrowing Base and a
schedule confirming the ability of the Borrowers to consummate the Transactions
and demonstrating prospective compliance with all financial covenants contained
in this Agreement, such projections disclosing all material assumptions made by
Borrowers in formulating such projections and giving effect to the Transactions.
The projections are based upon reasonable estimates and material assumptions,
all of which are reasonable in light of the conditions which existed at the time
the projections were made, have been prepared on the basis of the material
assumptions stated therein, and reflect as of the Closing Date the reasonable
estimate of the results of operations of the Borrowers and Holdings on a
Consolidated basis and other information projected therein.
(c) The Borrowers have heretofore furnished to the Agent a
Consolidated pro forma balance sheet and income statement of Holdings for
September 30, 1999 and which sets forth information before and after giving
effect to the Transactions.
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(d) The financial statements referred to in this Section 4.07 have
been prepared in accordance with GAAP.
SECTION 4.08. Federal Reserve Regulations. (a) No Loan Parties or
subsidiary thereof are engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to purchase or carry Margin Stock or to extend credit to others for the purpose
of purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including, without limitation, Regulation T, U or X thereof. If requested by any
Lender, the Borrowers or any subsidiary of any thereof shall furnish to such
Lender a statement on Federal Reserve Form U-1 referred to in said Regulation U.
SECTION 4.09. Taxes. The Loan Parties and each of their respective
subsidiaries has filed or caused to be filed all Federal, state, local and
foreign tax returns which are required to be filed by it, on or prior to the
date hereof, other than tax returns in respect of taxes that (x) are not
franchise, capital or income taxes, (y) in the aggregate are not material and
(z) would not, if unpaid, result in the imposition of any material Lien on any
property or assets of any Loan Party or any of its subsidiaries. Each of the
Loan Parties and each of their subsidiaries have paid or caused to be paid all
taxes shown to be due and payable on such filed returns or on any assessments
received by it, other than (i) any taxes or assessments the validity of which
such Loan Party or such subsidiary is contesting in good faith by appropriate
proceedings, and with respect to which such Loan Party or such subsidiary shall,
to the extent required by GAAP have set aside on its books adequate reserves and
(ii) taxes other than income, capital or franchise taxes that in the aggregate
are not material and which would not, if unpaid, result in the imposition of any
material Lien on any property or assets of any Loan Party or any of its
subsidiaries. Other than audits and extensions affecting Jandy Industries, Inc.
prior to the Closing Date, no Federal income tax returns of any of the Loan
Parties or any of their subsidiaries have been audited by the United States
Internal Revenue Service and no Loan Party or subsidiary thereof have as of the
date hereof requested or been granted any extension of time to file any Federal,
state, local or foreign tax return. None of the Loan Parties or their
subsidiaries are party to or have any obligation under any tax sharing agreement
other than the Tax Sharing and Indemnification Agreement entered into with ATI.
SECTION 4.10. Employee Benefit Plans. With respect to the
provisions of ERISA other than as set forth on Schedule 4.10:
(i) No Reportable Event has occurred or is continuing with respect
to any Pension Plan.
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(ii) No prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Code) has occurred with respect to any Plan
subject to Part 4 of Subtitle B of Title I of ERISA.
(iii) None of the Loan Parties or any ERISA Affiliate is now, or
has been during the preceding five years, obligated to contribute to a Pension
Plan or a Multiemployer Plan. None of the Loan Parties or any ERISA Affiliate
has (A) ceased operations at a facility so as to become subject to the
provisions of Section 4062(e) of ERISA, (B) withdrawn as a substantial employer
so as to become subject to the provisions of Section 4063 of ERISA, (C) ceased
making contributions to any Pension Plan subject to the provisions of Section
4064(a) of ERISA to which any of the Loan Parties, any subsidiary or any ERISA
Affiliate made contributions, (D) incurred or caused to occur a "complete
withdrawal" (within the meaning of Section 4203 of ERISA) or a "partial
withdrawal" (within the meaning of Section 4205 of ERISA) from a Multiemployer
Plan that is a Pension Plan so as to incur withdrawal liability under Section
4201 of ERISA (without regard to subsequent reduction or waiver of such
liability under Section 4207 or 4208 of ERISA), or (E) been a party to any
transaction or agreement under which the provisions of Section 4204 of ERISA
were applicable.
(iv) No notice of intent to terminate a Pension Plan has been
filed, nor has any Plan been terminated pursuant to the provisions of Section
4041(e) of ERISA.
(v) The PBGC has not instituted proceedings to terminate (or
appoint a trustee to administer) a Pension Plan and no event has occurred or
condition exists which might constitute grounds under the provisions of Section
4042 of ERISA for the termination of (or the appointment of a trustee to
administer) any such Plan.
(vi) With respect to each Pension Plan that is subject to the
provisions of Title I, Subtitle B, Part 3 of ERISA, the funding method used in
connection with such Plan is acceptable under ERISA, and the actuarial
assumptions and methods used in connection with funding such Pension Plan
satisfy the requirements of Section 302 of ERISA. The assets of each such
Pension Plan (other than the Multiemployer Plans) are at least equal to the
present value of the greater of (i) accrued benefits (both vested and
non-vested) under such Plan, or (ii) "benefit liabilities" (within the meaning
of Section 4001(a)(16) of ERISA) under such Plan, in each case as of the latest
actuarial valuation date for such Plan (determined in accordance with the same
actuarial assumptions and methods as those used by the Plan's actuary in its
valuation of such Plan as of such valuation date). No such Pension Plan has
incurred any "accumulated funding deficiency" (as defined in Section 412 of the
Code), whether or not waived.
(vii) There are no actions, suits or claims pending (other than
routine claims for benefits) or, to the knowledge of the Borrowers or any ERISA
Affiliate, which could reasonably be expected to be asserted, against any Plan
or the assets of any such Plan. No civil or criminal action brought pursuant to
the provisions of Title I, Subtitle B, Part 5 of ERISA is pending or threatened
against any fiduciary or any Plan. None of the Plans or
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any fiduciary thereof (in its capacity as such) has been the direct or indirect
subject of any audit, investigation or examination by any governmental or
quasi-governmental agency.
(viii) All of the Plans comply currently, and have complied in the
past, both as to form and operation, with their terms and with the provisions of
ERISA and the Code, and all other applicable laws, rules and regulations; all
necessary governmental approvals for the Plans have been obtained and a
favorable determination as to the qualification under Section 401(a) of the Code
of each of the Plans which is an employee pension benefit plan (within the
meaning of Section 3(2) of ERISA) has been made by the Internal Revenue Service
and a recognition of exemption from federal income taxation under Section 501(c)
of the Code of each of the funded employee welfare benefit plans (within the
meaning of Section 3(1) of ERISA) has been made by the Internal Revenue Service,
and nothing has occurred since the date of each such determination or
recognition letter that would adversely affect such qualification.
SECTION 4.11. No Material Misstatements. No information, report,
financial statement, exhibit or schedule prepared or furnished by or on behalf
of the Borrowers to the Agent or any Lender in connection with any of the
Transactions or this Agreement, the Security Documents, the Notes or any other
Loan Documents or included therein contained or contains any material
misstatement of fact or omitted or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
SECTION 4.12. Investment Company Act; Public Utility Holding
Company Act. No Loan Parties or subsidiary thereof is an "investment company" as
defined in, or is otherwise subject to regulation under, the Investment Company
Act of 1940. No Loan Parties or subsidiary thereof is a "holding company" as
that term is defined in or is otherwise subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 4.13. Security Interest. Each of the Security Documents
creates and grants to the Agent, for its own benefit and for the benefit of the
Lenders, a legal, valid and perfected first priority (except as permitted
pursuant to Section 7.01 hereof) Lien in the Collateral identified therein. Such
Collateral is not subject to any other Liens whatsoever, except Liens permitted
by Section 7.01 hereof.
SECTION 4.14. Use of Proceeds. All proceeds of each borrowing
under the Revolving Credit Commitment shall be used to provide for working
capital requirements and for general corporate purposes of the Borrowers
including, without limitation, Capital Expenditures, Permitted Acquisitions and
payments permitted pursuant to Section 7.04 hereof.
SECTION 4.15. Subsidiaries. As of the Closing Date, Schedule 4.15
annexed hereto sets forth each subsidiary of Holdings, its jurisdiction of
incorporation, its capitalization and ownership of capital stock of each such
subsidiary.
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SECTION 4.16. Title to Properties; Possession Under Leases;
Trademarks. (a) Each of the Loan Parties and each subsidiary has good and
marketable title to, or valid leasehold interest in, all of its respective
properties and assets shown on the most recent balance sheet referred to in
Section 4.07(a) hereof and all assets and properties acquired since the date of
such balance sheet, except for such properties as are no longer used or useful
in the conduct of its business or as have been disposed of in the ordinary
course of business, and except for minor defects in title that do not interfere
with the ability of any of the Loan Parties or any subsidiary thereof to conduct
its business as now conducted. All such assets and properties are free and clear
of all Liens other than those permitted by Section 7.01 hereof.
(b) Each of the Loan Parties and each of their subsidiaries has
complied with all obligations under all leases to which it is a party and under
which it is in occupancy, and all such leases are in full force and effect and
each of the Loan Parties and each of their subsidiaries enjoys peaceful and
undisturbed possession under all such leases.
(c) Each of the Loan Parties and each of their subsidiaries owns
or controls all material trademarks, trademark rights, trade names, trade name
rights, copyrights, patents, patent rights and licenses which are necessary for
the conduct of the business of such Loan Parties and such subsidiary. To the
best of the knowledge of the Loan Parties and their subsidiaries, no Loan Party
nor any subsidiary thereof is infringing upon or otherwise acting adversely to
any of such trademarks, trademark rights, trade names, trade name rights,
copyrights, patent rights or licenses owned by any other person or persons. To
the best of the knowledge of the Loan Parties and their subsidiaries, there is
no claim or action by any such other person pending, or to the knowledge of any
Responsible Officer of any Borrower or any subsidiary thereof, threatened,
against any of the Loan Parties or any subsidiary thereof with respect to any of
the rights or property referred to in this Section 4.16(c).
SECTION 4.17. Solvency. (a) The fair salable value of the assets
of each Borrower and its Consolidated subsidiaries is not less than the amount
that will be required to be paid on or in respect of the probable liability on
the existing debts and other liabilities (including contingent liabilities but
excluding any liability for amounts borrowed by the other Borrower hereunder) of
such Borrower and its Consolidated subsidiaries, as they become absolute and
mature.
(b) The assets of each Borrower and its Consolidated subsidiaries
do not constitute unreasonably small capital for such Borrower and its
Consolidated subsidiaries to carry out their business as now conducted and as
proposed to be conducted including the capital needs of such Borrower and its
Consolidated subsidiaries, taking into account the particular capital
requirements of the business conducted by such Borrower and its Consolidated
subsidiaries and projected capital requirements and capital availability
thereof.
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(c) No Borrower nor any subsidiary thereof intends to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be received by such Borrower and such subsidiary,
and of amounts to be payable on or in respect of debt of such Borrower and such
subsidiary). The cash flow of each Borrower and its Consolidated subsidiaries,
after taking into account all anticipated uses of the cash of such Borrower and
its Consolidated subsidiaries, will at all times be sufficient to pay all such
amounts on or in respect of debt of such Borrower and its Consolidated
subsidiaries when such amounts are required to be paid.
(d) No Borrower nor any subsidiary thereof believes that final
judgments against it in actions for money damages presently pending will be
rendered at a time when, or in an amount such that, it will be unable to satisfy
any such judgments promptly in accordance with their terms (taking into account
the maximum reasonable amount of such judgments in any such actions and the
earliest reasonable time at which such judgments might be rendered). The cash
flow of such Borrower and its Consolidated subsidiaries, after taking into
account all other anticipated uses of the cash of such Borrower and its
Consolidated subsidiaries (including the payments on or in respect of debt
referred to in paragraph (c) of this Section), will at all times be sufficient
to pay all such judgments promptly in accordance with their terms.
SECTION 4.18. Permits, etc. Each of the Loan Parties and each of
their subsidiaries possesses all material licenses, permits, approvals and
consents, including, without limitation, all material environmental, health and
safety licenses, permits, approvals and consents of all Federal, state and local
governmental authorities as required to conduct properly its business
(collectively, "Permits"), each such Permit is and will be in full force and
effect, each of the Loan Parties and each subsidiary is in compliance in all
material respects with all such Permits, and no event (including, without
limitation, any violation of any law, rule or regulation) has occurred which
allows the revocation or termination of any such Permit or any restriction
thereon.
SECTION 4.19. Compliance with Environmental Laws. Except as
disclosed in Schedule 4.19 hereto: (i) the operations of the Loan Parties and
their subsidiaries comply in all material respects with all applicable
Environmental Laws; (ii) the Loan Parties and their subsidiaries and all of
their present facilities or operations, as well as to the knowledge of the Loan
Parties and their subsidiaries their past facilities or operations, are not
subject to any judicial proceeding or administrative proceeding or any
outstanding written order or agreement with any governmental authority or
private party respecting (a) any Environmental Law, (b) any Remedial Work, or
(c) any Environmental Claims arising from the Release of a Contaminant into the
environment which would reasonably be expected to result in a Material Adverse
Effect; (iii) to the best of the knowledge of the Loan Parties and their
subsidiaries, none of their operations is the subject of any Federal or state
investigation evaluating whether any Remedial Work is needed to respond to a
Release of any Contaminant into the environment which would reasonably be
expected to result in a Material Adverse Effect; (iv) none of the Loan Parties
or any subsidiaries of the Loan Parties nor any predecessor of any of the Loan
Parties or any subsidiaries of the
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Loan Parties has filed any notice under any Environmental Law indicating past or
present treatment, storage, or disposal of a Hazardous Material or reporting a
spill or Release of a Contaminant into the environment which would reasonably be
expected to result in a Material Adverse Effect; (v) to the best of the
knowledge of the Loan Parties and their subsidiaries, none of the Loan Parties
or their subsidiaries has any contingent liability in connection with any
Release of any Contaminant into the environment which would reasonably be
expected to result in a Material Adverse Effect; (vi) none of the operations of
the Loan Parties or their subsidiaries involve the generation, transportation,
treatment or disposal of Hazardous Materials except in material compliance with
applicable laws; (vii) neither the Loan Parties nor their subsidiaries have
disposed of any Contaminant by placing it in or on the ground or waters of any
premises owned, leased or used by any of them and to the knowledge of the Loan
Parties and their subsidiaries neither has any lessee, prior owner, or other
person except in material compliance with applicable laws; (viii) no underground
storage tanks or surface impoundments are on any property of the Loan Parties
and their subsidiaries except as are registered and are in compliance with
applicable law; and (ix) no Lien in favor of any governmental authority for (A)
any liability under any Environmental Law or regulations, or (B) damages arising
from or costs incurred by such governmental authority in response to a Release
of a Contaminant into the environment, has been filed or attached to the
property of the Loan Parties and their subsidiaries which would reasonably be
expected to result in a Material Adverse Effect.
SECTION 4.20. No Change in Credit Criteria or Collection Policies.
There has been no material change in credit criteria or collection policies
concerning account receivables of any of the Borrowers since December 31, 1998.
Without duplication, all Eligible Receivables of the Borrowers are valid,
binding and enforceable obligations of account debtors and are not subject to
any claims, defenses or setoffs. All account receivables (other than Eligible
Receivables) are valid, binding and enforceable obligations of account debtors.
SECTION 4.21. Employee Matters. Except as disclosed in Schedule
4.21 hereto, (a) neither the Loan Parties nor any of their subsidiaries nor any
of such person's employees are subject to any collective bargaining agreement,
(b) to the knowledge of the Loan Parties, no petition for certification or union
election is pending with respect to the employees of the Loan Parties or any of
their subsidiaries and no union or collective bargaining unit has sought such
certification or recognition with respect to the employees of the Loan Parties
or any of their subsidiaries and (c) there are no strikes, slowdowns, work
stoppages or controversies pending or, to the knowledge of the Loan Parties
threatened between the Loan Parties or any of their respective subsidiaries and
their respective employees, other than employee grievances arising in the
ordinary course of business none of which could have, either individually or in
the aggregate, a Material Adverse Effect.
SECTION 4.22. Year 2000. The cost to the Borrowers of
reprogramming and testing of the Borrowers' and their subsidiaries' computer
systems and related equipment to permit proper functioning in and following the
year 2000 (including, without
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limitation, reprogramming errors) will not reasonably be expected to result in a
Material Adverse Effect.
V. CONDITIONS OF CREDIT EVENTS
The obligation of each Lender to make Loans and extend other
Credits hereunder shall be subject to the following conditions precedent:
SECTION 5.01. All Credit Events. On each date on which a Credit
Event is to occur:
(a) The Agent shall have received a notice of borrowing as
required by Section 2.03 hereof or a request for the issuance of a Letter
of Credit pursuant to Section 2.17 hereof.
(b) The representations and warranties set forth in Article IV
hereof and in any documents delivered herewith, including, without
limitation, the Loan Documents, shall be true and correct in all material
respects with the same effect as though made on and as of such date
(except insofar as such representations and warranties relate expressly
to an earlier date).
(c) Each of the Borrowers shall be in compliance with all the
terms and provisions contained herein on its part to be observed or
performed, and at the time of and immediately after such Credit Event no
Default or Event of Default shall have occurred and be continuing.
(d) The Agent shall have received a certificate signed by the
Financial Officer of each of the Borrowers (i) as to the compliance with
(b) and (c) above and (ii) with respect to each Revolving Credit Loan and
each Letter of Credit, demonstrating that after giving effect thereto
each of Laars Availability, Water Pik Availability and Total Availability
is zero or greater.
SECTION 5.02. First Borrowing. The obligations of the Lenders in
respect of the first Credit Event hereunder is subject to the following
additional conditions precedent:
(a) The Lenders shall have received the favorable written opinion
of counsel for the Borrowers and each of the Guarantors and Grantors,
substantially in the form of Exhibit B hereto, dated the Closing Date,
addressed to the Lenders and satisfactory to the Agent.
(b) The Lenders shall have received (i) a copy of the certificate
or articles of incorporation or constitutive documents, in each case as
amended to date, of each of the Borrowers, the Grantors and the
Guarantors, certified as of a recent date by
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the Secretary of State or other appropriate official of the state of its
organization, and a certificate as to the good standing of each from such
Secretary of State or other official, and a certificate of good standing
from the appropriate official of each state in which it is qualified to
do business, in each case dated as of a recent date; (ii) a certificate
of the Secretary of each Borrower, Grantor and Guarantor, dated the
Closing Date and certifying (A) that attached thereto is a true and
complete copy of such person's By-laws as in effect on the date of such
certificate and at all times since a date prior to the date of the
resolution described in item (B) below, (B) that attached thereto is a
true and complete copy of a resolution adopted by such person's Board of
Directors authorizing the execution, delivery and performance of this
Agreement, the Security Documents, the Notes, the other Loan Documents
and the Credit Events hereunder, as applicable, and that such resolution
has not been modified, rescinded or amended and is in full force and
effect, (C) that such person's certificate or articles of incorporation
or constitutive documents has not been amended since the date of the last
amendment thereto shown on the certificate of good standing furnished
pursuant to (i) above, and (D) as to the incumbency and specimen
signature of each of such person's officers executing this Agreement, the
Notes, each Security Document or any other Loan Document delivered in
connection herewith or therewith, as applicable; (iii) a certificate of
another of such person's officers as to incumbency and signature of its
Secretary; and (iv) such other documents as the Agent or any Lender may
reasonably request.
(c) The Agent shall have received a certificate, dated the Closing
Date and signed by the Financial Officer of each Borrower, confirming
compliance with the conditions precedent set forth in paragraphs (b) and
(c) of Section 5.01 hereof and the conditions set forth in this Section
5.02.
(d) Each Lender shall have received its Revolving Credit Note duly
executed by the Borrowers, payable to its order and otherwise complying
with the provisions of Section 2.04 hereof.
(e) The Agent shall have received the Security Documents
(including, without limitation, the Mortgages together with title
insurance in form, scope and amount satisfactory in all respects to the
Agent and certificates evidencing the Pledged Stock, together with
undated stock powers executed in blank, each duly executed by the
applicable Grantors.
(f) The Agent shall have received certified copies of requests for
copies or information on Form UCC-11 or certificates satisfactory to the
Lenders of a UCC Reporter Service, listing all effective financing
statements which name as debtor any Borrower, any Guarantor or any
Grantor and which are filed in the appropriate offices in the states in
which are located the chief executive office and other operating offices
of such person, together with copies of such financing statements.
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With respect to any Liens not permitted pursuant to Section 7.01 hereof,
the Agent shall have received termination statements in form and
substance satisfactory to it.
(g) Each document (including, without limitation, each Uniform
Commercial Code financing statement) required by law or requested by the
Agent to be filed, registered or recorded in order to create in favor of
the Agent for its own benefit and for the benefit of the Lenders a first
priority perfected Lien in the Collateral shall have been properly filed,
registered or recorded in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested. The
Agent shall have received an acknowledgment copy, or other evidence
satisfactory to it, of each such filing, registration or recordation.
(h) The Agent shall have received the results of a search of tax
and other Liens, and judgments and of the Uniform Commercial Code filings
made with respect to each of the Borrowers and each Grantor in the
jurisdictions in which the Borrowers are doing business and/or in which
any Collateral is located, and in which Uniform Commercial Code filings
have been made against each Borrower, each Guarantor and each Grantor
pursuant to paragraph (g) above.
(i) The Lenders and the Agent shall have received and determined
to be in form and substance satisfactory to them:
(i) the most recent (dated within thirty (30) days of the
Closing Date) schedule and aging of accounts receivable and
inventory designations of the Borrowers;
(ii) evidence that the Borrowers have not less than
$9,000,000 in Total Availability on the Closing Date;
(iii) the results of machinery and equipment appraisals of
the Borrowers' property conducted by MB Valuation Services
Incorporated on an orderly liquidation value indicating an
aggregate value of not less than $10,000,000, in form and
substance reasonably satisfactory to the Agent;
(iv) a copy of a field examination of the Borrowers' books
and records;
(v) evidence of the compliance by the Borrowers with Section
6.03 hereof;
(vi) the financial statements described in Section 4.07
hereof;
(vii) evidence that the Transactions are in compliance with
all applicable laws and regulations;
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(viii) the results of an environmental audit with respect to
the Borrowers' and subsidiaries' properties and operations
conducted by PES Environmental Inc. and Dames & ▇▇▇▇▇ and the
scope, methodology and results of such environmental audit shall
be satisfactory to the Agent in all respects;
(ix) evidence of payment of all fees owed to the Agent and
the Lenders by the Borrowers under this Agreement, the Commitment
Letter or otherwise;
(x) evidence that other than those third party consents
which, if not received by the Borrowers, will not have a Material
Adverse Effect, all requisite third party consents (including,
without limitation, consents with respect to each of the Borrowers
and each of the Grantors and Guarantors) to the Transactions have
been received;
(xi) the results of appraisals conducted by ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Associates, Inc. and ▇▇▇▇-Shelger
Associates of the real property and improvements owned in fee or
leased to the Borrowers with respect to which Mortgages are to be
taken, in each case in compliance with the requirements of FIRREA
and applicable regulations and indicating an aggregate value of
not less than $26,000,000 in form and substance reasonably
satisfactory to the Agent;
(xii) copies of all major customer and supplier contracts and
all management agreements, licensing agreements and joint venture
agreements with respect to each Borrower;
(xiii) evidence that, except as set forth on Schedule 4.05
there has been no material adverse change in the business, assets,
operations or financial condition of Holdings and its subsidiaries
since December 31, 1998;
(xiv) evidence of the repayment in full of exiting credit
arrangements and the termination of all commitments to lend
thereunder, and the termination of all security interests securing
such indebtedness as required under paragraph (f) above; and
(xv) evidence that there are no actions, suits or proceedings
at law or in equity or by or before any governmental
instrumentality or other agency or regulatory authority now
pending or threatened against or affecting any Borrowers or any
subsidiary thereof or any of their respective businesses, assets
or rights which involve any of the Transactions.
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(j) The Agent and the Lenders shall have had the opportunity, if
they so choose, to examine the books of account and other records and
files of the Borrowers, subsidiaries, the Grantors and the Guarantors and
to make copies thereof, to conduct customer and supplier checkings and to
conduct a pre-closing audit which shall include, without limitation,
verification of Eligible Receivables, payment of payroll taxes and
accounts payable and formulation of an opening Borrowing Base, and the
results of such examination, checking and audit shall have been
satisfactory to the Agent and Lenders in all respects.
(k) The Agent shall have received and had the opportunity to
review and determine to be in form and substance satisfactory to it:
(i) a schedule of litigation and contingent liabilities and
an analysis of the expected disposition thereof;
(ii) copies of all lease agreements entered into by any of
the Borrowers and their subsidiaries and in connection with any
real property leases appropriate landlord and/or mortgagee waivers
or rent escrow arrangements with the Agent (covering at least six
months' rent);
(iii) copies of all loan agreements, notes and other
documentation evidencing Indebtedness for borrowed money of any of
Holdings, the Borrowers, their subsidiaries, Grantors or
Guarantors; and
(iv) copies of the Separation and Distribution Agreement,
non-employee director stock compensation plan, Tax Sharing and
Indemnification Agreement and Interim Services Agreement, all with
ATI, and an agreement by ATI to subordinate its claims as a result
of a failure of the spinoff of Holdings to qualify as a tax-free
distribution under the tax sharing and indemnification agreement
to the Obligations.
(l) Messrs. ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP, counsel
to the Agent, shall have received payment in full for all reasonable
legal fees charged, and all costs and expenses incurred, by such counsel
through the Closing Date in connection with the transactions contemplated
under this Agreement, the Security Documents and the other Loan Documents
and instruments in connection herewith and therewith.
(m) The Agent and the Lenders shall have received evidence that
the spinoff of Holdings by ATI and the transactions related thereto have
been completed.
(n) The corporate structure and capitalization of Holdings and the
Borrowers shall be satisfactory to the Lenders in all respects.
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(o) All legal matters in connection with the Transactions shall be
satisfactory to the Agent, the Lenders and their respective counsel in
their sole reasonable discretion.
(p) The Borrowers shall have executed and delivered to the Agent a
disbursement authorization letter with respect to the disbursement of the
proceeds of the Credit Events made on the Closing Date, in form and
substance satisfactory to the Agent.
(q) The Agent and the Lenders shall have received a fully executed
copy of a Guarantee by Holdings, substantially in the form of Exhibit G
hereto.
(r) The Borrowers and the Agent (or another financial institution
acceptable to the Agent) shall have entered into lockbox and cash
management arrangements pursuant to documentation satisfactory in form
and substance to the Agent.
(s) The Agent shall have received such other documents as the
Lenders or the Agent or Agent's counsel shall reasonably deem necessary.
VI. AFFIRMATIVE COVENANTS
Each of the Borrowers and Holdings covenant and agree with each
Lender that, so long as this Agreement shall remain in effect or the principal
of or interest on any Note, any amount under any Letter of Credit or any fee,
expense or other Obligation payable hereunder or in connection with any of the
Transactions shall be unpaid, it will, and will cause each of its subsidiaries
(other than Canadian Sub) and, with respect to Section 6.07 hereof, each ERISA
Affiliate, to:
SECTION 6.01. Legal Existence. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence.
SECTION 6.02. Businesses and Properties. At all times do or cause
to be done all things necessary, using reasonable business judgment, to
preserve, renew and keep in full force and effect the rights, licenses, Permits,
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its businesses; maintain and operate such businesses in the same
general manner in which they are presently conducted and operated; comply in all
material respects with all applicable laws, rules, regulations and governmental
orders (whether Federal, state or local in all applicable jurisdictions)
applicable to the operation of such businesses whether now in effect or
hereafter enacted (including, without limitation, all applicable laws, rules,
regulations and governmental orders relating to employment matters, public and
employee health and safety and all Environmental Laws) and with any and all
other applicable laws, rules, regulations and governmental orders, the lack of
compliance of any of which would have a Material Adverse Effect; and at all
times maintain, preserve and protect all property
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material to the conduct of such businesses and keep such property in good
repair, working order and condition (reasonable wear and tear excepted) and from
time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times.
SECTION 6.03. Insurance. (a) Keep its insurable properties
adequately insured at all times by financially sound and reputable insurers, (b)
maintain such other insurance, to such extent and against such risks, including
fire and other risks insured against by extended coverage, as is customary with
companies similarly situated and in the same or similar businesses, provided,
however, that such insurance shall insure the property of the Borrowers against
all risk of physical damage, including, without limitation, loss by fire,
explosion, theft, fraud and such other casualties as may be reasonably
satisfactory to the Agent, but in no event at any time in an amount less than
the replacement value of the Collateral, (c) maintain in full force and effect
public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by any Borrowers or any of their
subsidiaries, in such amount as the Agent shall reasonably deem necessary, (d)
maintain product liability and business interruption insurance to such extent as
is customary with companies similarly situated and in the same or similar
businesses (and to the extent business interruption insurance is so maintained,
assign such insurance to the Agent for its own benefit and the benefit of the
Lenders), and (e) maintain such other insurance as may be required by law or as
may be reasonably requested by the Agent for purposes of assuring compliance
with this Section 6.03. All insurance covering tangible personal property
subject to a Lien in favor of the Agent for its own benefit and for the benefit
of the Lenders granted pursuant to the Security Documents shall provide that, in
the case of each separate loss the full amount of insurance proceeds shall be
payable to the Agent and shall further provide for at least 30 days' prior
written notice to the Agent of the cancellation or substantial modification
thereof. The Agent shall be named as an additional insured on all other
insurance.
SECTION 6.04. Taxes. Pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its property before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, might give rise to Liens upon such
properties or any part thereof; provided, however, that such payment and
discharge shall not be required with respect to (i) any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and the applicable party,
shall have set aside on its books adequate reserves with respect thereto in
accordance with GAAP and such contest operates to suspend collection of the
contested tax, assessment, charge, levy or claims and enforcement of a Lien or
(ii) any tax, assessment, charge, levy or claims, the failure to pay and
discharge when due which, individually or in the aggregate would not have a
Material Adverse Effect.
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SECTION 6.05. Financial Statements, Reports, etc. Furnish to the
Agent, with copies for each of the Lenders:
(a) within 90 days after the end of each Fiscal Year, (i)
Consolidated and consolidating balance sheets and Consolidated and
consolidating income statements showing the financial position of
Holdings and its subsidiaries as of the close of such Fiscal Year and the
results of their operations during such year, and (ii) a Consolidated and
consolidating statement of shareholders' equity and a Consolidated and
consolidating statement of cash flow, as of the close of such Fiscal
Year, comparing such financial position and results of operations to such
financial condition and results of operations for the comparable period
during the immediately preceding Fiscal Year all the foregoing financial
statements to be audited by independent public accountants acceptable to
the Agent (which report shall not contain any qualification except with
respect to new accounting principles mandated by the Financial Accounting
Standards Board), and to be in form and substance acceptable to the
Agent, together with supplemental consolidating balance sheets and
statements of income, shareholders equity and cash flow prepared by such
independent public accountants as being fairly stated in relation to such
audited financial statements taken as a whole and together with
management's discussion and analysis as filed with the Securities
Exchange Commission;
(b) within 45 days after the end of each of the first three (3)
fiscal quarters of Holdings, (i) unaudited Consolidated and consolidating
balance sheets and Consolidated and consolidating income statements
showing the financial position and results of operations of Holdings and
its subsidiaries as of the end of each such quarter, (ii) a Consolidated
and consolidating statement of shareholders' equity and (iii) a
Consolidated and consolidating statement of cash flow, in each case for
the fiscal quarter just ended and for the period commencing at the end of
the immediately preceding Fiscal Year and ending with the last day of
such quarter, and comparing such financial position and results of
operations to the projections for the applicable period provided under
paragraph (h) below and to the results for the comparable period during
the immediately preceding Fiscal Year, in each case prepared and attested
to by the Financial Officer of Holdings as presenting fairly, in all
material respects, the financial position and results of operations of
Holdings and its subsidiaries and as having been prepared in accordance
with GAAP (except the absence of footnote disclosure), in each case
subject to normal year-end audit adjustments, together with management's
discussion and analysis as filed with the Securities Exchange Commission;
(c) within 35 days after the end of each month (i) unaudited
Consolidated and consolidating balance sheets and income statements
showing the financial position and results of operations of Holdings and
its subsidiaries as of the end of each such month, (ii) a Consolidated
and consolidating unconsolidated statement of shareholders' equity and
(iii) a Consolidated and consolidating statement of cash
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flow, in each case for the month just ended and for the period commencing
at the end of the immediately preceding Fiscal Year and ending with the
last day of such month, and comparing such financial position and results
of operations to the projections for the applicable period provided under
paragraph (h) below and, beginning with the receipt of the January 2001
financial statements, to the results for the comparable period during the
immediately preceding Fiscal Year, prepared and attested to by the
Financial Officer of Holdings as presenting fairly, in all material
respects, the financial position and results of operations of Holdings
and its subsidiaries and as having been prepared in accordance with GAAP
(except the absence of footnote disclosure), in each case subject to
normal year-end audit adjustments;
(d) promptly after the same become publicly available, copies of
such registration statements, annual, periodic and other reports, and
such proxy statements and other information, if any, as shall be filed by
Holdings or any subsidiaries with the Securities and Exchange Commission
pursuant to the requirements of the Securities Act of 1933 or the
Securities Exchange Act of 1934;
(e) (i) concurrently with any delivery under (a) or (b) above, a
certificate of the firm or person referred to therein (x) which
certificate shall, in the case of the certificate of the Financial
Officer of Holdings, certify that to the best of his or her knowledge no
Default or Event of Default has occurred (including with the delivery
under (a) or (b) above calculations demonstrating compliance, as of the
dates of the financial statements being furnished, with the covenants set
forth in Sections 7.08, 7.09 and 7.10 hereof) and, if such a Default or
Event of Default has occurred, specifying the nature and extent thereof
and any corrective action taken or proposed to be taken with respect
thereto and (y) which certificate, in the case of the certificate
furnished by the independent public accountants referred in paragraph (a)
above, may be limited to accounting matters and disclaim responsibility
for legal interpretations, but shall in any event certify that to the
best of such accountants' knowledge, as of the dates of the financial
statements being furnished no Default or Event of Default has occurred
under any of the covenants set forth in Sections 7.08, 7.09 and 7.10
hereof and, if such a Default or Event of Default has occurred,
specifying the nature and extent thereof and any corrective action taken
or proposed to be taken with respect thereto, and shall in addition
certify that in the course of preparing the audit and the certificate
referred to herein, such accountants have not become aware of the
occurrence of any other Default or Event of Default and, if such a
Default or Event of Default has occurred, specifying the nature thereof;
provided, however, that any certificate delivered concurrently with (a)
above shall be accompanied by a supplemental certificate confirming the
accuracy of the accountants' certificate and signed by the Financial
Officers of Holdings;
(f) if a Default or Event of Default shall have occurred and be
continuing, concurrently with any delivery under (a) above, a management
letter prepared by the independent public accountants who reported on the
financial statements delivered
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under (a) above, with respect to the internal audit and financial
controls of Holdings and its subsidiaries, and at the request of the
Agent, copies of all such management letters not previously delivered to
the Agent;
(g) within 20 days of the end of each fiscal month, an aging
schedule of the Receivables (setting forth the Early Buy Program
Receivables apart from other Receivables) in the form of the aging
schedule of Receivables dated November 24, 1999 previously furnished to
the Agent and a certificate, substantially in the form of Schedule
6.05(g) hereto, executed by the Financial Officer of the Borrowers with
respect to inventory designations, together with an executive summary
with respect to each Borrower's top ten accounts for which Receivables
are more than 90 days past due, comparing the total of such past due
Receivables for the month then ended to the total of past due Receivables
for the previous month, executed by the Financial Officer of each
Borrower, provided, however, upon the occurrence and continuance of a
Default or Event of Default or, at any time that Total Availability is
less than $5,000,000, then the foregoing shall be delivered as often
(including daily) as the Agent may request;
(h) within 25 days prior to the beginning of each Fiscal Year, a
summary of business plans and financial operation projections (including,
without limitation, with respect to Capital Expenditures) for the
Borrowers and their respective subsidiaries for such Fiscal Year
(including monthly balance sheets, statements of income and of cash flow)
and annual projections for the following three years prepared by
management and in form, substance and detail (including, without
limitation, principal assumptions) satisfactory to the Agent;
(i) within 20 days after the end of each month, an aging schedule
of the payables of each Borrower and its subsidiaries, a copy of the bank
statement of each Borrower with respect to each lock-box account and such
other sales, collections, debit and credit adjustment schedules as the
Agent may request, provided, however, upon the occurrence and continuance
of a Default or Event of Default or, at any time that Total Availability
is less than $5,000,000, then such schedules shall be delivered as often
(including daily) as the Agent may request;
(j) as soon as practicable, copies of any financial information
delivered to shareholders (and which has not already been delivered
pursuant to (d) above) and copies of all reports, forms, filings, loan
documents and financial information submitted to governmental agencies,
which might reasonably be construed as disclosing a Material Adverse
Effect;
(k) within 20 days after the end of each fiscal month, a
certificate, substantially in the form of Schedule 6.05(k) hereto,
executed by a Financial Officer of each Borrower setting forth the Laars
Borrowing Base and Water Pik Borrowing Base, respectively, and Laars
Availability and Water Pik Availability, respectively, provided, however,
upon the occurrence and continuance of a Default or Event of
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Default or, at any time that Total Availability is less than $5,000,000,
then such certificate shall be delivered as often (including daily) as
the Agent may request;
(l) immediately upon becoming aware thereof, notice to the Agent
of the breach by any party of any material agreement with any of the
Borrowers; and
(m) such other information as the Agent or any Lender may
reasonably request.
SECTION 6.06. Litigation and Other Notices. Give the Agent prompt
written notice of the following:
(a) the issuance by any court or governmental agency or authority
of any injunction, order, decision or other restraint prohibiting, or
having the effect of prohibiting, the making of the Loans or occurrence
of other Credit Events, or invalidating, or having the effect of
invalidating, any provision of this Agreement, the Notes or the other
Loan Documents, or the initiation of any litigation or similar proceeding
seeking any such injunction, order, decision or other restraint;
(b) the filing or commencement of any action, suit or proceeding
against any Borrowers or any of their subsidiaries, whether at law or in
equity or by or before any court or any Federal, state, municipal or
other governmental agency or authority, (i) which is material and is
brought by or on behalf of any governmental agency or authority, or in
which injunctive or other equitable relief is sought or (ii) as to which
it is probable (within the meaning of Statement of Financial Accounting
Standards No. 5) that there will be an adverse determination and which,
if adversely determined, would (A) reasonably be expected to result in
liability of one or more Borrowers or a subsidiary thereof in an
aggregate amount more than $250,000, not reimbursable by insurance, or
(B) materially impair the right of any Borrowers or a subsidiary thereof
to perform its obligations under this Agreement, any Note or any other
Loan Document to which it is a party;
(c) any Default or Event of Default, specifying the nature and
extent thereof and the action (if any) which is proposed to be taken with
respect thereto; and
(d) any development in the business or affairs of any Borrowers or
any of their subsidiaries which has had or which is likely to have, in
the reasonable judgment of any Responsible Officer of such Borrower, a
Material Adverse Effect.
SECTION 6.07. ERISA. (a) Pay and discharge promptly any liability
imposed upon it pursuant to the provisions of Title IV of ERISA; provided,
however, that neither the Borrowers nor any ERISA Affiliate shall be required to
pay any such liability if (1) the amount, applicability or validity thereof
shall be diligently contested in good faith by appropriate proceedings, and (2)
such person shall have set aside on its books reserves which, in the opinion of
the independent certified public accountants of such person, are adequate with
respect thereto.
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(b) Deliver to the Agent, promptly, and in any event within 5
days, after (i) the occurrence of any Reportable Event, a copy of the materials
that are filed with the PBGC, (ii) any Borrowers or any ERISA Affiliate or an
administrator of any Pension Plan files with participants, beneficiaries or the
PBGC a notice of intent to terminate any such Plan, a copy of any such notice,
(iii) the receipt of notice by any Borrowers or any ERISA Affiliate or an
administrator of any Pension Plan from the PBGC of the PBGC's intention to
terminate any Pension Plan or to appoint a trustee to administer any such Plan,
a copy of such notice, (iv) the filing thereof with the Internal Revenue
Service, if requested by the Agent, copies of each annual report that is filed
on Treasury Form 5500 with respect to any Plan, together with certified
financial statements (if any) for the Plan and any actuarial statements on
Schedule B to such Form 5500, (v) any Borrowers or any ERISA Affiliate knows or
has reason to know of any event or condition which might constitute grounds
under the provisions of Section 4042 of ERISA for the termination of (or the
appointment of a trustee to administer) any Pension Plan, an explanation of such
event or condition, (vi) the receipt by any Borrowers or any ERISA Affiliate of
an assessment of withdrawal liability under Section 4201 of ERISA from a
Multiemployer Plan, a copy of such assessment, (vii) any Borrowers or any ERISA
Affiliate knows or has reason to know of any event or condition which might
cause any one of them to incur a liability under Section 4062, 4063, 4064 or
4069 of ERISA or Section 412(n) or 4971 of the Code, an explanation of such
event or condition, and (viii) any Borrowers or any ERISA Affiliate knows or has
reason to know that an application is to be, or has been, made to the Secretary
of the Treasury for a waiver of the minimum funding standard under the
provisions of Section 412 of the Code, a copy of such application, and in each
case described in clauses (i) through (iii) and (v) through (vii) together with
a statement signed by the Financial Officer setting forth details as to such
Reportable Event, notice, event or condition and the action which such Borrowers
or such ERISA Affiliate proposes to take with respect thereto.
SECTION 6.08. Maintaining Records; Access to Properties and
Inspections; Right to Audit. Maintain financial records in accordance with
accepted financial practices, maintain its computer systems and software so as
to calculate, compare and sequence from, into and between the twentieth century
(through 1999), in the year 2000 and the twenty-first century, including leap
year calculations and, upon notice (which may be telephonic), at all reasonable
times during business hours (or at any time upon the occurrence and continuance
of an Event of Default) and as often as any Lender may request, permit any
authorized representative designated by such Lender to visit and inspect the
properties and financial records of the Borrowers and their subsidiaries and to
make extracts from such financial records at such Lender's expense, and permit
any authorized representative designated by such Lender to discuss the affairs,
finances and condition of the Borrowers and their subsidiaries with the
appropriate Financial Officer and such other officers as the Borrowers shall
deem appropriate and the Borrowers' independent public accountants, as
applicable. The Agent agrees that it shall schedule any meeting with any such
independent public accountant through the Borrowers and a Responsible Officer of
one or more Borrowers shall have the right to be present at any such meeting. At
the Borrowers' expense, the Agent shall have the right to conduct a full
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audit of the existence and condition of the accounts receivables, inventory,
books and records of the Borrowers and their subsidiaries and to review their
compliance with the terms and conditions of this Agreement and the other Loan
Documents up to four times each Fiscal Year; provided, that if a Default or
Event of Default shall have occurred and be continuing the Agent shall have the
right to conduct such audits as often as it may request at the Borrowers'
expense.
SECTION 6.09. Use of Proceeds. Use the proceeds of the Credit
Events only for the purposes set forth in Section 4.14 hereof.
SECTION 6.10. Fiscal Year-End. Cause its Fiscal Year to end on the
Sunday closest to December 31 in each year.
SECTION 6.11. Further Assurances. Execute any and all further
documents and take all further actions which may be required under applicable
law, or which the Agent may reasonably request, to grant, preserve, protect and
perfect the first priority Lien created by the Security Documents in the
Collateral.
SECTION 6.12. Additional Grantors and Guarantors. Promptly inform
the Agent of the creation or acquisition of any direct or indirect subsidiary
(subject to the provisions of Section 7.06 hereof) and cause each direct or
indirect subsidiary not in existence on the date hereof to enter into a
Guarantee of the Obligations in form and substance satisfactory to the Agent,
and to execute the Security Documents, as applicable, as a Grantor, and cause
the direct parent of each such subsidiary to pledge all of the capital stock of
such subsidiary pursuant to the Pledge Agreement and cause each such subsidiary
to pledge its accounts receivable and all other assets pursuant to the Security
Agreement.
SECTION 6.13. Environmental Laws. (a) Comply, and cause each of
their subsidiaries or tenants or other licensed users of their properties to
comply, in all material respects with the provisions of all Environmental Laws,
and shall keep their properties and the properties of their subsidiaries free of
any Lien imposed pursuant to any Environmental Law. The Borrowers shall not
cause or suffer or permit, and shall not suffer or permit any of their
subsidiaries to cause or suffer or permit, the property of the Borrowers or
their subsidiaries to be used for the generation, production, processing,
handling, storage, transporting or disposal of any Hazardous Material, except
for Hazardous Materials used, generated, produced, processed, handled, stored,
transported or disposed of in the ordinary course of business of the Borrowers
and their subsidiaries, in which case such Hazardous Materials shall be used,
stored, generated, treated and disposed of only in material compliance with
Environmental Law.
(b) Supply to the Agent copies of all environmental Permits and
all material environmental submissions by the Borrowers or any of their
subsidiaries to any governmental body and of the reports of all environmental
audits and of all other environmental tests, studies or assessments (including
the data derived from any sampling
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or survey of asbestos, soil, or subsurface or other materials or conditions)
that may be conducted or performed (by or on behalf of the Borrowers or any of
their subsidiaries) on or regarding the properties owned, operated, leased or
occupied by the Borrowers or any of their subsidiaries or regarding any
conditions that might have been affected by Hazardous Materials on or Released
or removed from such properties. The Borrowers shall also permit and authorize,
and shall cause their subsidiaries to permit and authorize, the consultants,
attorneys or other persons that prepare such submissions or reports or perform
such audits, tests, studies or assessments to discuss such submissions, reports
or audits with the Agent and the Lenders.
(c) Promptly (and in no event more than five Business Days after
the Borrowers become aware or are otherwise informed of such event) provide oral
and written notice to the Agent upon the happening of any of the following:
(i) any Borrower, any subsidiary of any Borrower, or any
tenant or other occupant of any property of such Borrowers or such
subsidiary receives written notice of any claim, complaint, charge
or notice of a material violation or potential violation of any
Environmental Law;
(ii) there has been a spill or other Release of Hazardous
Materials upon, under or about or affecting any of the properties
owned, operated, leased or occupied by any Borrowers or any
subsidiary of any Borrowers in amounts that are required to be
reported under Environmental Law, or Hazardous Materials at levels
or in amounts that may have to be reported, remedied or responded
to under Environmental Law are detected on or in the soil or
groundwater;
(iii) any Borrowers or any subsidiary of any Borrowers are or
may be liable for any costs in excess of $125,000 of cleaning up
or otherwise remedying a Release of Hazardous Materials;
(iv) any part of the properties owned, operated, leased or
occupied by any Borrowers or any subsidiary of any Borrowers are
or may be subject to a Lien under any Environmental Law; or
(v) any Borrowers or any subsidiary of any Borrowers
undertakes any material Remedial Work with respect to any
Hazardous Materials.
(d) Without in any way limiting the scope of Section 11.04(c) and
in addition to any obligations thereunder, each of the Borrowers hereby
indemnifies and agrees to hold the Agent and the Lenders harmless from and
against any liability, loss, damage, suit, action or proceeding arising out of
its business or the business of its subsidiaries pertaining to Hazardous
Materials, including, but not limited to, claims of any governmental body or any
third person arising under any Environmental Law or under tort, contract or
common law. To the extent laws of the United States or any applicable state or
local law in
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which property owned, operated, leased or occupied by any Borrowers or any
subsidiary of any Borrowers are located provide that a Lien upon such property
of such Borrowers or such subsidiary may be obtained for the removal of
Hazardous Materials which have been or may be Released, no later than sixty days
after notice that a Release has occurred is given by the Agent to such Borrowers
or such subsidiary, such Borrowers or such subsidiary shall deliver to the Agent
a report issued by a qualified third party engineer assessing the existence and
extent of any Hazardous Materials located upon or beneath the specified
property. To the extent any Hazardous Materials located therein or thereunder
either subject the property to Lien or require removal to safeguard the health
of any persons, the removal thereof shall be an affirmative covenant of the
Borrowers hereunder.
(e) In the event that any Remedial Work is required to be
performed by any Borrowers or any subsidiary of any Borrowers under any
applicable Environmental Law, any judicial order, or by any governmental entity,
such Borrowers or such subsidiary shall commence all such Remedial Work at or
prior to the time required therefor under such Environmental Law or applicable
judicial orders and thereafter diligently prosecute to completion all such
Remedial Work in accordance with and within the time allowed under such
applicable Environmental Laws or judicial orders; provided, however, that such
Remedial Work shall not be required so long as it shall be contested in good
faith by appropriate proceedings and the applicable party shall have set aside
on its books adequate reserves with respect thereto in accordance with GAAP and
such contest operates to suspend any requirement that such Remedial Work be
performed.
SECTION 6.14. Pay Obligations to Lenders and Perform Other
Covenants. (a) Make full and timely payment of the Obligations, whether now
existing or hereafter arising, (b) duly comply with all the terms and covenants
contained in this Agreement (including, without limitation, the borrowing
limitations and mandatory prepayments in accordance with Article II hereof) and
in each of the other Loan Documents, all at the times and places and in the
manner set forth therein, subject to applicable cure and grace periods, and (c)
except for the filing of continuation statements and the making of other filings
by the Agent as secured party or assignee, at all times take all actions
necessary to maintain the Liens and security interests provided for under or
pursuant to this Agreement and the Security Documents as valid and perfected
first Liens on the property intended to be covered thereby (subject only to
Liens expressly permitted hereunder) and supply all information to the Agent
necessary for such maintenance.
SECTION 6.15. Maintain Operating Accounts. Maintain all of its
operating accounts and cash management arrangements with the Agent or with other
financial institutions approved by the Agent and on terms (which shall include
obtaining blocked account agreements or tri-party lockbox agreements)
satisfactory to the Agent in its reasonable discretion.
SECTION 6.16. Year 2000. Take all actions necessary to permit the
proper functioning, in and following the year 2000 of (a) the Borrowers'
computer systems and (b)
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equipment containing embedded microchips (including systems and equipment
supplied by others or with which the Borrowers' systems interface and which are
within the control of the Borrowers and the testing of all such systems and
equipment, as so programmed, unless the failure to take such actions would not
reasonably be expected to have a Material Adverse Effect.
VII. NEGATIVE COVENANTS
Each of the Borrowers and Holdings covenant and agree with each
Lender that, so long as this Agreement shall remain in effect or the principal
of or interest on any Note, any amount under any Letter of Credit, or any fee,
expense or other Obligation payable hereunder or in connection with any of the
Transactions shall be unpaid, it will not and will not cause or permit any of
their subsidiaries (other than the Canadian Sub) and, in the case of Section
7.14 hereof, any ERISA Affiliate to, either directly or indirectly:
SECTION 7.01. Liens. Incur, create, assume or permit to exist any
Lien on any of its property or assets (including the stock of any direct or
indirect subsidiary), whether owned at the date hereof or hereafter acquired, or
assign or convey any rights to or security interests in any future revenues,
except:
(a) Liens incurred and pledges and deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, old-age pensions and other social security benefits (not
including any lien described in Section 412(m) of the Code);
(b) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and vendors' liens and other similar liens,
incurred in good faith in the ordinary course of business and securing
obligations which are not overdue for a period of more than 15 days or
which are being contested in compliance with Section 6.04;
(c) Liens securing the payment of taxes, assessments and
governmental charges or levies, that are not delinquent or are being
diligently contested in compliance with Section 6.04;
(d) zoning restrictions, easements, rights of way, licenses,
flowage rights, reservations, provisions, covenants, conditions, waivers,
restrictions on the use of property or minor defects or irregularities of
title and similar encumbrances (and with respect to leasehold interests,
mortgages, obligations, liens and other encumbrances incurred, created,
assumed or permitted to exist and arising by, through or under a landlord
or owner of the leased property, with or without consent of the lessee)
which do not in the aggregate materially detract from the value of its
property or assets or materially impair the use thereof in the operation
of its business;
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(e) Purchase money Liens granted in connection with the incurrence
of Indebtedness permitted by Section 7.03(vii) hereof, to the vendor or
person financing the construction or acquisition of property, plant or
equipment provided that (i) such Lien is limited to the particular assets
constructed or acquired, (ii) the debt secured by the Lien does not
exceed 90% of the amount financed for the construction or acquisition
cost (including transaction costs and indemnities customarily secured by
a Lien of such type) of the specific assets on which the Lien is granted,
(iii) such Lien arises and the Indebtedness secured thereby is created
within 30 days of the completion of such construction or of such
acquisition or are incurred to extend, renew or refinance such Liens and
Indebtedness incurred within such 30-day period and (iv) such transaction
does not otherwise violate this Agreement;
(f) Liens existing on the date of this Agreement and set forth in
Schedule 7.01 annexed hereto and the extension, renewal or refunding of
the Indebtedness secured thereby to the extent permitted by Section
7.03(ii) hereof;
(g) Liens created in favor of the Agent for its own benefit and
the benefit of the Lenders pursuant to the Loan Documents;
(h) Liens and deposits securing the performance of bids, tenders,
leases, contracts (other than for the repayment of borrowed money),
statutory obligations, surety, customs and appeal bonds, performance
bonds and other obligations of like nature, incurred as an incident to
and in the ordinary course of business;
(i) Judgment Liens securing judgments and decrees, which would not
constitute an Event of Default under paragraph (j) of Article VIII; or
(j) Liens on property prior to the acquisition thereof by a
Borrower, a Guarantor or any subsidiary thereof, provided that such Lien
is not created in contemplation of or in connection with such
acquisition, such Lien does not apply to any other property and such Lien
does not materially interfere with the use, occupancy and operation of
any property, materially reduce the fair market value of such property
but for such Lien or result in any material increase in the cost of
operating, occupying or owning (or leasing) such property.
SECTION 7.02. Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby any Borrower or any
of its subsidiaries shall sell or transfer any property, real or personal, and
used or useful in its business, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property which such Borrower or
such subsidiary intends to use for substantially the same purpose or purposes as
the property being sold or transferred.
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SECTION 7.03. Indebtedness. Incur, create, assume or permit to
exist any Indebtedness other than (i) Indebtedness secured by Liens permitted
under Section 7.01, (ii) Indebtedness (including, without limitation,
Guarantees) existing on the date hereof and listed in Schedule 7.03 annexed
hereto, and the extension, renewal or refunding thereof, but not any increase in
the principal, interest, fees or amortization from that existing on the date
hereof, (iii) Indebtedness incurred hereunder or under the other Loan Documents,
(iv) Indebtedness to trade creditors incurred in the ordinary course of
business, (v) Guarantees constituting the endorsement of negotiable instruments
for deposit or collection in the ordinary course of business, (vi) Guarantees of
the Obligations, (vii) purchase money Indebtedness (including Capitalized Lease
Obligations) to finance Capital Expenditures provided that any Lien granted with
respect to such Indebtedness is permitted by Section 7.01(e) hereof, (viii)
Subordinated Indebtedness in connection with Permitted Acquisitions, (ix)
Indebtedness (other than the Obligations) of a Borrower to another Borrower to
the extent permitted pursuant to Section 7.06 hereof and (x) other unsecured
Indebtedness in addition to that permitted pursuant to the other subsections of
this Section 7.03 not to exceed $1,000,000 in the aggregate at any one time
outstanding prior to the completion of the Public Offering and $3,000,000 in the
aggregate at any one time outstanding after the completion of the Public
Offering.
SECTION 7.04. Dividends, Distributions and Payments. Declare or
pay, directly and indirectly, any cash dividends or make any other distribution,
whether in cash, property, securities or a combination thereof, with respect to
(whether by reduction of capital or otherwise) any shares of its capital stock
or directly or indirectly redeem, purchase, retire or otherwise acquire for
value (or permit any subsidiary to purchase or acquire) any shares of any class
of its capital stock or set aside any amount for any such purpose except that
(x) any wholly-owned subsidiary of a Borrower may pay dividends or make other
distributions to such Borrower and (y) (i) so long as both before and after
giving effect to the payment of such dividends or other distributions no Default
or Event of Default has occurred and is continuing any Borrower may pay taxes
owed by the Consolidated entity as and when such taxes are due and may pay
corporate overhead of the Consolidated entity in an amount not to exceed
$1,000,000 in any Fiscal Year and (ii) so long as both before and after giving
effect to the payment of such dividends or other distributions (A) no Default or
Event of Default has occurred and is continuing, (B) the Fixed Charge Coverage
Ratio of the Borrowers and their respective subsidiaries on an combined basis
for the twelve month period ending prior to the date of such dividend is
1.25:1.00 or greater and (C) Total Availability is $5,000,000 or greater, any
Borrower may pay dividends to Holdings solely for the purposes of advancing
funds for the payment of principal amount due by Canadian Sub on its
subordinated debt as and when due in accordance with the amortization schedule
in effect on the Closing Date.
SECTION 7.05. Consolidations, Mergers and Sales of Assets.
Consolidate with or merge into any other person, or sell, lease, transfer or
assign to any persons or otherwise dispose of (whether in one transaction or a
series of transactions) any portion of its assets (whether now owned or
hereafter acquired), or permit another person to merge
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into it, or acquire all or substantially all the capital stock or assets of any
other person; provided, however, that the foregoing shall not prohibit:
(a) purchases and sales of inventory in the ordinary course;
(b) (i) sales of assets (excluding capital stock of a subsidiary)
not to exceed, in the aggregate, $250,000 prior to the consummation of a
Public Offering and $1,000,000 thereafter, in any Fiscal Year (in each
case excluding up to $400,000 of proceeds from the sale of the property
in San Antonio, Texas), and (ii) sales of worn out, obsolete, scrap or
surplus assets;
(c) sales of accounts receivable permitted by Section 7.16;
(d) liquidation of investments permitted pursuant to Sections
7.06(a) through (e);
(e) Permitted Acquisitions;
(f) so long as at the time thereof and immediately after giving
effect thereto no Default or Event of Default shall have occurred and be
continuing, the merger or consolidation of any subsidiary of a Borrower
incorporated in the United States with or into such Borrower in which no
person other than such Borrower receives consideration and the Agent in
its sole discretion is satisfied that the surviving person has assumed
all Obligations of the person merging with or consolidating into such
surviving person and that there has been no Material Adverse Effect with
respect to the Collateral;
(g) so long as at the time thereof and immediately after giving
effect thereto no Default or Event of Default shall have occurred and be
continuing, and provided that the Required Lenders have given their prior
written consent to do so, which consent may be withheld for any reason by
the Required Lenders in their sole discretion, the merger or
consolidation of either or both Borrowers with or into Holdings; and
(h) so long as at the time thereof and immediately after giving
effect thereto no Default or Event of Default shall have occurred and be
continuing, and provided that the Required Lenders have given their prior
written consent to do so, which consent shall not be unreasonably
withheld, the merger or consolidation of either Borrower with or into the
other Borrower.
SECTION 7.06. Investments. Own, purchase or acquire any stock,
obligations, assets (not in the ordinary course of business) or securities of,
or any interest in, or make any capital contribution or loan or advance to, any
other person, or make any other investments, except:
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(a) certificates of deposit, time deposits and money market
accounts in dollars of any commercial banks registered to do business in
any state of the United States (i) having capital and surplus in excess
of $500,000,000 and (ii) whose long-term debt rating is at least
investment grade as determined by either Standard & Poor's Ratings Group
or ▇▇▇▇▇'▇ Investors Service, Inc. and certificates of deposit in dollars
offered by money market mutual funds meeting the criteria in (c) below;
(b) readily marketable direct obligations of the United States
government or any agency thereof which are backed by the full faith and
credit of the United States;
(c) investments in money market mutual funds having assets in
excess of $2,000,000,000;
(d) commercial paper at the time of acquisition having a rating of
at least A- 1 or P-1 from Standard & Poor's Ratings Group or ▇▇▇▇▇'▇
Investors Service, Inc., respectively;
(e) federally tax exempt securities rated A or better by either
Standard & Poor's Ratings Group or ▇▇▇▇▇'▇ Investors Service, Inc.;
(f) investments in the stock of any subsidiary existing on the
Closing Date and Permitted Acquisitions;
(g) investments in non-cash consideration received in connection
with a permitted sale of assets (subject to the granting of a Lien as
required by the Security Documents);
(h) investments arising from transactions by any Borrower or any
of its subsidiaries with customers or suppliers in the ordinary course of
business, including, without limitation, endorsements of negotiable
instruments and debt obligations and other investments received in
connection with the bankruptcy or reorganization of customers and
suppliers or in settlement of delinquent obligations of, or other
disputes with, customers or suppliers, arising in the ordinary course of
business (subject to the granting of a Lien as required by the Security
Documents);
(i) (other than loans made to employees of the Loan Parties
pursuant to the Stock Acquisition and Retention Program which shall
consist of non-cash advances to such employees and shall have no negative
financial impact on any Loan Party) loans or advances to employees to
cover payroll, travel and similar expenses, arising in the ordinary
course, so long as the aggregate amount of such loans and advances does
not exceed $1,000,000 at any one time outstanding;
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(j) Capital Expenditures and other purchases permitted under other
provisions of this Agreement;
(k) Indebtedness representing loans and advances by one Borrower
to another Borrower not to exceed $5,000,000 at any one time outstanding
prior to the completion of the Public Offering and $10,000,000 at any one
time outstanding after completion of the Public Offering, provided that
in each instance such loans and advances are evidenced by promissory
notes pledged to the Agent for the ratable benefit of the Lenders;
(l) transactions permitted pursuant to Section 7.05; and
(m) investments consisting of loans, advances and other investments
in partnerships, joint ventures and similar investments with persons that
are not Affiliates of the Borrowers so long as the aggregate principal
amount thereof at any time outstanding shall not exceed $1,000,000;
provided that, in each case mentioned in (a), (b), (d) and (e) above, such
obligations shall mature not more than one year from the date of acquisition
thereof.
SECTION 7.07. Rental Obligations. Incur, create, assume or permit
to exist, in respect of leases of real and personal property (other than finance
leases), rental obligations or other commitments thereunder to make any direct
or indirect payment, whether as rent or otherwise, for fixed or minimum rentals,
percentage rentals, property taxes, or insurance premiums, except in ordinary
course of business.
SECTION 7.08. Leverage Ratio. Permit the Leverage Ratio of (A)
Holdings and its subsidiaries on a Consolidated basis and (B) the Borrowers and
their respective subsidiaries on a combined basis for the four consecutive
fiscal quarter period ending on the dates set forth below to be greater than the
respective amounts set forth below opposite such dates (for the fiscal quarters
ending January 2, 2000, March 31, 2000 and June 30, 2000 Leverage Ratio shall be
calculated on a trailing four fiscal quarter basis):
If no Public Offering shall have been consummated:
Quarter Ending Ratio for Holdings Ratio for the Borrowers
1/2/00 through and including the
Final Maturity Date 2.75:1.00 2.25:1.00
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After the consummation of a Public Offering:
Quarter Ending Ratio for Holdings Ratio for the Borrowers
The date ending the fiscal
quarter such Public Offering was
consummated in through and
including the Final Maturity Date 3.00:1.00 2.50:1.00
SECTION 7.09. Fixed Charge Coverage Ratio; EBITDA. (A) Permit the
Fixed Charge Coverage Ratio of the Borrowers and their respective subsidiaries
on a combined basis for the four consecutive fiscal quarter periods ending on
the dates set forth below to be less than the respective amounts set forth below
opposite such dates:
Quarter Ending Ratio
12/31/00 through and including 1.25:1.00
the Final Maturity Date
(B) Permit EBITDA of the Borrowers and their respective subsidiaries on a
combined basis for the four consecutive fiscal quarter periods ending January 2,
2000, March 31, 2000, June 30, 2000 and September 30, 2000 to be less than
$24,000,000 (for the fiscal quarters ending January 2, 2000, March 31, 2000 and
June 30, 2000 EBITDA shall be calculated on a trailing four fiscal quarter
basis).
SECTION 7.10. Interest Coverage Ratio. Permit the Interest
Coverage Ratio of the Borrowers and their respective subsidiaries on a combined
basis for the four consecutive fiscal quarter periods ending on the dates set
forth below (or, with respect to the determination to be made on June 30, 2000,
for the three consecutive fiscal quarter period ending on such date) to be less
than the respective amounts set forth below opposite such dates:
Quarter Ending Ratio
6/30/00 through and including 2.50:1.00
the Final Maturity Date
SECTION 7.11. Business. Alter the nature of its business as
operated on the date of this Agreement in any material respect.
SECTION 7.12. Sales of Receivables. Sell, assign, discount,
transfer, or otherwise dispose of any accounts receivable, promissory notes,
drafts or trade acceptances or other rights to receive payment held by it, with
or without recourse, except
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(i) for the purpose of collection or settlement in the ordinary course of
business or (ii) the sale of any such accounts to the Agent for the ratable
benefit of the Lenders.
SECTION 7.13. Use of Proceeds. Permit the proceeds of any Credit
Event to be used for any purpose which entails a violation of, or is
inconsistent with, Regulation T, U or X of the Board, or for any purpose other
than those set forth in Section 4.14 hereof.
SECTION 7.14. ERISA. (a) Engage in any transaction in connection
with which any Borrower or any ERISA Affiliate could be subject to either a
material civil penalty assessed pursuant to the provisions of Section 502 of
ERISA or a material tax imposed under the provisions of Section 4975 of the
Code.
(b) Terminate any Pension Plan in a "distress termination" under
Section 4041 of ERISA, or take any other action which could result in a material
liability of any Borrower or any ERISA Affiliate to the PBGC.
(c) Fail to make payment when due of all amounts which, under the
provisions of any Plan, any Borrower or any ERISA Affiliate are required to pay
as contributions thereto, or, with respect to any Pension Plan, permit to exist
any material "accumulated funding deficiency" (within the meaning of Section 302
of ERISA and Section 412 of the Code), whether or not waived, with respect
thereto.
(d) Adopt an amendment to any Pension Plan requiring the provision
of security under Section 307 of ERISA or Section 401(a)(29) of the Code.
SECTION 7.15. Accounting Changes. Make any change in their
accounting treatment or financial reporting practices except as required or
permitted by GAAP.
SECTION 7.16. Prepayment or Modification of Indebtedness;
Modification of Charter Documents. (a) Directly or indirectly prepay, redeem,
purchase or retire (except according to its terms) any Indebtedness, including,
without limitation, any Subordinated Indebtedness, other than Indebtedness
incurred hereunder.
(b) Modify, amend or otherwise alter the terms and provisions of
any Subordinated Indebtedness.
(c) Modify, amend or alter their certificates or articles of
incorporation or other constitutive documents or preferred stock/certificates of
designations.
SECTION 7.17. Transactions with Affiliates. Except as otherwise
specifically set forth in this Agreement (including the transactions
contemplated by the spinoff of Holdings by ATI), directly or indirectly
purchase, acquire or lease any property from, or sell, transfer or lease any
property to, or enter into any other transaction with, any stockholder,
Affiliate or agent of any Borrower, except at prices and on terms not less
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favorable to it than that which would have been obtained in an arm's-length
transaction with a non-affiliated third party.
SECTION 7.18. Consulting Fees. Pay any management, consulting or
other fees of any kind to Holdings, any subsidiary thereof or any subsidiary of
any Borrower, or to any Affiliate of Holdings, any of its subsidiaries or of the
Borrowers or any of the Borrowers' subsidiaries except as permitted pursuant to
Section 7.04.
SECTION 7.19. Negative Pledges, etc. Enter into any agreement
(other than this Agreement or any other Loan Document or any agreement relating
to any Indebtedness permitted pursuant to Sections 7.03(ii) and (vii) but only
with respect to the property securing such Indebtedness) which (a) prohibits the
creation or assumption of any Lien upon any of the Collateral, including,
without limitation, any hereafter acquired property, or (b) specifically
prohibits the amendment or other modification of this Agreement or any other
Loan Document.
VIII. EVENTS OF DEFAULT
In case of the happening of any of the following events (herein
called "Events of Default"):
(a) any representation or warranty made or deemed made by any Loan
Party or subsidiary thereof in or in connection with this Agreement, any
of the Security Documents, the Notes or other Loan Documents or any
Credit Events hereunder, shall prove to have been incorrect in any
material respect when made or deemed to be made;
(b) default shall be made in the payment of any principal of any
Note when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any
Note, or any fee or any other amount payable hereunder, or under the
Notes, Letters of Credit, or any other Loan Document or the Commitment
Letter or in connection with any other Credit Event or the Transactions
when and as the same shall become due and payable;
(d) default shall be made in the due observance or performance of
any covenant, condition or agreement to be observed or performed on the
part of any Loan Party pursuant to the terms of (i) Article VI or Article
VII hereof, any of the Notes, or any of the Security Documents or (ii)
any other terms of this Agreement (other than as specified in (a), (b),
(c) or (d)(i) above) and such default with respect to any such other
terms shall remain unremedied for a period of 20 days;
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(e) any Loan Party or subsidiary thereof shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title
11 of the United States Code or any other Federal, state or foreign
bankruptcy, insolvency, liquidation, reorganization or similar law, (ii)
consent to the institution of, or fail to contravene in a timely and
appropriate manner, any such proceeding or the filing of any such
petition, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator or similar official for any Loan Party
or subsidiary thereof or for a substantial part of its property or
assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become
due, (vii) be wound up or (viii) take corporate action for the purpose of
effecting any of the foregoing;
(f) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of any Loan Party or subsidiary thereof, or of a
substantial part of the property or assets of any Loan Party or
subsidiary thereof, under Title 11 of the United States Code or any other
Federal state or foreign bankruptcy, insolvency, receivership or similar
law, (ii) the appointment of a receiver, trustee, custodian, sequestrator
or similar official for any Loan Party or subsidiary thereof or for a
substantial part of the property of any Loan Party, or (iii) the
winding-up or liquidation of any Loan Party or subsidiary thereof; and
such proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall continue
unstayed and in effect for 30 days;
(g) default shall be made with respect to any Indebtedness of any
Loan Party or subsidiary thereof (excluding Indebtedness outstanding
hereunder) which either individually or taken together with other
Indebtedness as to which a default has occurred shall exceed $250,000
prior to completion of the Public Offering or $1,000,000 after completion
of the Public Offering if the effect of any such default shall be to
accelerate, or to permit the holder or obligee of any such Indebtedness
(or any trustee on behalf of such holder or obligee) at its option to
accelerate, the maturity of such Indebtedness;
(h) (i) a Reportable Event shall have occurred with respect to a
Pension Plan, (ii) the filing by any Loan Party or subsidiary thereof,
any ERISA Affiliate, or an administrator of any Plan of a notice of
intent to terminate such a Plan in a "distress termination" under the
provisions of Section 4041 of ERISA, (iii) the receipt of notice by any
Loan Party or subsidiary thereof, any ERISA Affiliate, or an
administrator of a Plan that the PBGC has instituted proceedings to
terminate (or appoint a trustee to administer) such a Pension Plan, (iv)
any other event or condition exists which might, in the opinion of the
Agent, constitute grounds under the provisions of Section 4042 of ERISA
for the termination of (or the appointment of a trustee to administer)
any Pension Plan by the PBGC, (v) a Pension Plan shall fail to maintain
the minimum funding standard required by Section 412 of the Code
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for any plan year or a waiver of such standard is sought or granted under
the provisions of Section 412(d) of the Code, (vi) any Loan Party or
subsidiary thereof or any ERISA Affiliate has incurred, or is likely to
incur, a material liability under the provisions of Section 4062, 4063,
4064 or 4201, if applicable, of ERISA, (vii) any Loan Party or subsidiary
thereof or any ERISA Affiliate fails to pay the full amount of an
installment required under Section 412(m) of the Code, (viii) the
occurrence of any other event or condition with respect to any Plan which
would constitute an event of default under any other agreement entered
into by any Loan Party or subsidiary thereof or any ERISA Affiliate, and
in each case in clauses (i) through (viii) of this subsection (h), such
event or condition, together with all other such events or conditions, if
any, could subject any Loan Party or any ERISA Affiliate to any taxes,
penalties or other liabilities which, in the opinion of the Agent, could
have a Material Adverse Effect with respect to any Loan Party or any
ERISA Affiliate;
(i) any Loan Party or any ERISA Affiliate (i) shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred any
material withdrawal liability to such Multiemployer Plan, and (ii) does
not have reasonable grounds for contesting such withdrawal liability and
is not in fact contesting such withdrawal liability in a timely and
appropriate manner;
(j) a judgment or decree for the payment of money, a fine or
penalty (in each case, if not reimbursed by insurance policies of any
Loan Party or subsidiary thereof) which when taken together with all
other such judgments, decrees, fines and penalties shall exceed $250,000
shall be rendered by a court or other tribunal against any Loan Party or
subsidiary thereof and (i) shall remain undischarged or unbonded for a
period of 30 consecutive days during which the execution of such
judgment, decree, fine or penalty shall not have been stayed effectively
or (ii) any judgment creditor or other person shall legally commence
actions to levy upon assets or properties to enforce such judgment,
decree, fine or penalty or (iii) there shall be filed against any Loan
Party any tax lien or notice of levy if any such event would reasonably
be expected to result in a Material Adverse Effect;
(k) this Agreement, any Note, any of the Security Documents, any
Guarantee or other Loan Documents shall for any reason cease to be, or
shall be asserted by any Loan Party or subsidiary thereof not to be, a
legal, valid and binding obligation of any Loan Party or subsidiary
thereof, enforceable in accordance with its terms, or the Lien purported
to be created by any of the Security Documents shall for any reason cease
to be, or be asserted by any Loan Party or subsidiary thereof not to be,
a valid, first priority perfected Lien (except to the extent otherwise
permitted under this Agreement or any of the Security Documents);
(l) a Change of Control shall occur; or
(m) any material damage to, or loss, theft or destruction of, any
material Collateral, whether or not insured, or any strike, lockout,
labor dispute, embargo,
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condemnation, act of God or public enemy, or other casualty which causes,
for more than thirty (30) consecutive days beyond the coverage period of
any applicable business interruption insurance, the cessation or
substantial curtailment of revenue producing activities at any facility
of a Loan Party or subsidiary thereof, if in the case of any of the
foregoing, if any such event or circumstance would reasonably be expected
to result in a Material Adverse Effect;
then, and in any such event (other than an event described in paragraph (e) or
(f) above), and at any time thereafter during the continuance of such event, the
Agent may, and upon the written request of the Required Lenders shall, by
written notice (or facsimile notice promptly confirmed in writing) to the
Borrowers, take any or all of the following actions at the same or different
times: (i) terminate forthwith all or any portion of the Total Commitment and
the obligations of the Lenders to issue Letters of Credit hereunder, (ii)
declare the Notes and any amounts then owing to the Lenders on account of
drawings under any Letters of Credit to be forthwith due and payable, and (iii)
require that the Borrowers remit to the Agent cash collateral in an amount equal
to the aggregate undrawn amount of all outstanding Letters of Credit at such
time, such cash collateral to be held by the Agent for its own benefit and the
benefit of the Lenders in a cash collateral account on terms and conditions
satisfactory to the Agent, whereupon the principal of such Notes, together with
accrued interest and fees thereon and any amounts then owing to the Lenders on
account of drawings under any Letters of Credit and other liabilities of the
Borrowers accrued hereunder, shall become forthwith due and payable both as to
principal and interest, without presentment, demand, protest or any other notice
of any kind, all of which are hereby expressly waived by the Borrowers, anything
contained herein or in the Notes to the contrary notwithstanding; provided,
however, that with respect to a default described in paragraph (e) or (f) above,
the Total Commitment and the obligation of the Lenders to issue Letters of
Credit shall automatically terminate and the principal of the Notes, together
with accrued interest and fees thereon and any amounts then owing to the Lenders
on account of drawings under any Letters of Credit and any other liabilities of
the Borrowers accrued hereunder shall automatically become due and payable, both
as to principal and interest, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrowers,
anything contained herein or in the Notes to the contrary notwithstanding.
IX. AGENT
In order to expedite the transactions contemplated by this
Agreement, The Chase Manhattan Bank is hereby appointed to act as Agent on
behalf of the Lenders. Each of the Lenders and each subsequent holder of any
Note or issuer of any Letter of Credit by its acceptance thereof, irrevocably
authorizes the Agent to take such action on its behalf and to exercise such
powers hereunder and under the Security Documents and other Loan Documents as
are specifically delegated to or required of the Agent by the terms hereof and
the terms thereof together with such actions and powers as are reasonably
incidental thereto. Neither the Agent nor any of its directors, officers,
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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 Security Documents and
other Loan Documents or in connection herewith or therewith (a) at the request
or with the approval of the Required Lenders (or, if otherwise specifically
required hereunder or thereunder, the consent of all the Lenders) or (b) in the
absence of its or their own gross negligence or willful misconduct.
The Agent is hereby expressly authorized on behalf of the Lenders,
without hereby limiting any implied authority, (a) to receive on behalf of each
of the Lenders any payment of principal of or interest on the Notes outstanding
hereunder and all other amounts accrued hereunder which are paid to the Agent,
and promptly to distribute to each Lender its proper share of all payments so
received, (b) to distribute to each Lender copies of all notices, agreements and
other material as provided for in this Agreement or in the Security Documents
and other Loan Documents as received by the Agent, (c) to maintain, in
accordance with its customary business practices, ledgers and records reflecting
the status of the Loans, the Collateral and related matters, (d) to open and
maintain bank accounts and lock boxes as the Agent deems necessary and
appropriate in accordance with the Loan Documents with respect to the
Collateral, (e) to take all actions with respect to this Agreement and the
Security Documents and other Loan Documents as are specifically delegated to the
Agent or incidental thereto, and (f) to incur and pay such expenses as the Agent
may deem necessary or appropriate in connection with the foregoing.
In the event that (a) any Borrowers fail to pay when due the
principal of or interest on any Note, any amount payable under any Letter of
Credit, or any fee payable hereunder or (b) the Agent receives written notice of
the occurrence of a Default or an Event of Default (the Agent being deemed not
to have knowledge of any Default or Event of Default unless and until written
notice thereof is given to the Agent by any Borrower or a Lender), the Agent
within a reasonable time shall give written notice thereof to the Lenders, 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,
however, that, unless and until the Agent shall have received such directions,
the Agent may take such action or refrain from taking such action hereunder or
under the Security Documents or other Loan Documents with respect to a Default
or Event of Default as it shall deem advisable in the best interests of the
Lenders.
The Agent shall not be responsible in any manner to any of the
Lenders for the effectiveness, enforceability, perfection, value, genuineness,
validity or due execution of this Agreement, the Notes or any of the other Loan
Documents or Collateral or any other agreements or certificates, requests,
financial statements, notices or opinions of counsel or for any recitals,
statements, warranties or representations contained herein or in any such
instrument or be under any obligation to ascertain or inquire as to the
performance or observance of any of the terms, provisions, covenants,
conditions, agreements or obligations of this Agreement or any of the other Loan
Documents or any other agreements on the part of the Borrowers and, without
limiting the generality of the foregoing, the Agent shall, in the absence of
knowledge to the contrary, be entitled to
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accept any certificate furnished pursuant to this Agreement or any of the other
Loan Documents 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 Borrowers, as
though it were not Agent of the Lenders hereunder.
The Agent shall promptly give notice to the Lenders of the receipt
or sending of any notice, schedule, report, projection, financial statement or
other document or information pursuant to this Agreement or any of the other
Loan Documents and shall promptly forward a copy thereof to each Lender.
Neither the Agent nor any of its directors, officers, employees or
agents shall have any responsibility to the Borrowers on account of the failure
or delay in performance or breach by any Lender other than the Agent of any of
its obligations hereunder or to any Lender on account of the failure of or delay
in performance or breach by any other Lender or the Borrowers of any of their
respective obligations hereunder or in connection herewith.
The Agent may consult with legal counsel selected by it in
connection with matters arising under this Agreement or any of the other Loan
Documents and any action taken or suffered in good faith by it in accordance
with the opinion of such counsel shall be full justification and protection to
it. The Agent may exercise any of its powers and rights and perform any duty
under this Agreement or any of the other Loan Documents through agents or
attorneys.
The Agent and the Borrowers may deem and treat the payee of any
Note as the holder thereof until written notice of transfer shall have been
delivered as provided herein by such payee to the Agent and the Borrowers.
With respect to the Loans made hereunder, the Notes issued to it
and any other Credit Event applicable to it, the Agent in its individual
capacity and not as an Agent shall have the same rights, powers and duties
hereunder and under any other agreement executed in connection herewith as any
other Lender and may exercise the same as though it were not the Agent, and the
Agent and its affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrowers or other affiliate thereof as
if it were not the Agent. Each of the Lenders hereby acknowledges that the Agent
and/or one or more Affiliates of the Agent may at any time and from time to time
be a holder of equity interests in a Loan Party.
Each Lender agrees (i) to reimburse the Agent in the amount of
such Lender's pro rata share (based on its Revolving Credit Commitment
hereunder) of any expenses incurred for its own benefit and/or for the benefit
of the Lenders by the Agent, including counsel fees and compensation of agents
and employees paid for services
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rendered on behalf of the Lenders, not reimbursed by the Borrowers and (ii) to
indemnify and hold harmless the Agent and any of its directors, officers,
employees or agents, on demand, in the amount of its pro rata share, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against it in
its capacity as the Agent or any of them in any way relating to or arising out
of this Agreement or any of the other Loan Documents or any action taken or
omitted by it or any of them under this Agreement or any of the other Loan
Documents, to the extent not reimbursed by the Borrowers; provided, however,
that no Lender shall be liable to the Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgment, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent or any of its directors, officers, employees or agents.
The foregoing agreement shall survive the repayment of all Obligations and the
termination of this Agreement.
With respect to the release of Collateral, Lenders hereby
irrevocably authorize the Agent, at its option and in its discretion, to release
any Lien granted to or held by the Agent upon any property covered by this
Agreement or the other Loan Documents (i) upon termination of the Total
Commitments and payment and satisfaction of all Obligations; (ii) constituting
property being sold or disposed of in compliance with the provisions of this
Agreement (and the Agent may rely in good faith conclusively on any such
certificate, without further inquiry); (iii) constituting Collateral and the
proceeds thereof having a value not in excess of $2,000,000 during the term of
this Agreement (provided the Net Proceeds realized are applied in accordance
with Sections 2.09(d) and (f) hereof); or (iv) constituting property leased to
any of the Borrowers or any subsidiary under a lease which has expired or been
terminated in a transaction permitted under this Agreement or is about to expire
and which has not been, and is not intended by the applicable Borrower or such
subsidiary to be, renewed or extended; provided, however, that (x) the Agent
shall not be required to execute any release 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 (y) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens upon (or obligations of any Loan Party, in
respect of), all interests retained by any Loan Party, including (without
limitation) the proceeds of any sale, all of which shall continue to constitute
part of the property covered by this Agreement or the Loan Documents.
With respect to perfecting Lenders' security interest in
Collateral which, in accordance with Article 9 of the Uniform Commercial Code or
any comparable provision of any Lien perfection statute in any applicable
jurisdiction, can be perfected only by possession, each Lender hereby appoints
each other Lender for the purpose of perfecting such interest. Should any Lender
(other than the Agent) obtain possession of any such Collateral, such Lender
shall notify the Agent, and, promptly upon the Agent's request, shall deliver
such Collateral to the Agent or in accordance with the Agent's instructions.
Each Lender agrees that it will not have any right individually to enforce or
seek to enforce this
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Agreement or any Loan Document or to realize upon any Collateral for the Loans,
it being understood and agreed that such rights and remedies may be exercised
only by the Agent.
In the event that a petition seeking relief under Title 11 of the
United States Code or any other Federal, state or foreign bankruptcy,
insolvency, liquidation or similar law is filed by or against any Loan Party,
the Agent is authorized to file a proof of claim on behalf of itself and the
Lenders in such proceeding for the total amount of Obligations owed by such Loan
Party. With respect to any such proof of claim which the Agent may file, each
Lender acknowledges that without reliance on such proof of claim, such Lender
shall make its own evaluation as to whether an individual proof of claim must be
filed in respect of such Obligations owed to such Lender and, if so, take the
steps necessary to prepare and timely file such individual claim.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and any other Loan Document to which such
Lender is party. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document, any related agreement or any document furnished
hereunder.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders and
the Borrowers. Upon any such resignation, the Lenders shall have the right to
appoint a successor Agent with the consent of the Borrowers which shall not be
unreasonable withheld (but no such consent shall be required if an Event of
Default has occurred and is continuing). If no successor Agent shall have been
so appointed by such Lenders and shall have accepted such appointment within 30
days after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a
bank with an office (or an affiliate with an office) in New York, New York,
having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor bank, such
successor 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 hereunder and under each of the
other Loan Documents. After any Agent's resignation hereunder, the provisions of
this Article shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Agent.
The Lenders 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. The
Lenders further hereby acknowledge that the
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Agent is not acting as the fiduciary of, or the trustee for, any of the Lenders
and except as expressly set forth herein, the Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
communicated to the Agent by or relating to the Borrowers or any of their
respective subsidiaries.
X. MANAGEMENT, COLLECTION AND STATUS OF RECEIVABLES
AND OTHER COLLATERAL
SECTION 10.01. Collection of Receivables; Management of
Collateral. (a) At the request of the Agent, the Borrowers will, at their own
cost and expense, (i) arrange for remittances on Receivables to be made directly
to lockboxes designated by the Agent or in such other manner as the Agent may
direct (including triparty agreements satisfactory to the Agent), and (ii)
promptly deposit, or cause to be deposited, all payments received by the
Borrowers on account of Receivables, whether in the form of cash, checks, notes,
drafts, bills of exchange, money orders or otherwise, in one or more accounts
designated by the Agent in precisely the form received (but with any
endorsements of the Borrowers necessary for deposit or collection), and until
such payments are deposited, such payments shall be deemed to be held in trust
by the Borrowers for and as the Lenders' property and shall not be commingled
with the Borrowers' other funds. If at any time (i) until the completion of a
Public Offering Total Availability shall be less than $5,000,000, (ii) after the
completion of such Public Offering Total Availability shall be less than
$5,000,000 or (iii) a Default or Event of Default shall have occurred and be
continuing, all remittances and payments that are deposited in accordance with
the foregoing will be applied by the Agent to reduce the outstanding balance (or
if such balance is reduced to zero, to be held by the Agent as cash collateral),
of the Revolving Credit Loans, subject to final collection in cash of the item
deposited and, if such lockboxes are maintained with the Agent, subject to the
assessment of a two-day collection charge.
Upon the occurrence and continuance of an Event of Default, the
Agent may send a notice of assignment and/or notice of the Agent's security
interest to any and all Customers or any third party holding or otherwise
concerned with any of the Collateral, and thereafter the Agent shall have the
sole right to collect the Receivables and/or take possession of the Collateral
and the books and records relating thereto. The Borrowers shall not, without the
Agent's prior written consent, grant any extension of the time of payment of any
Receivable, compromise or settle any Receivable for less than the full amount
thereof, release, in whole or in part, any person or property liable for the
payment thereof, or allow any credit or discount whatsoever thereon except,
prior to the occurrence and continuance of an Event of Default, in the ordinary
course of business.
(b) (i) Each of the Borrowers hereby constitute the Agent or the
Agent's designee as such Borrower's attorney-in-fact with power to endorse such
Borrower's name upon any notes, acceptances, checks, drafts, money orders or
other evidences of payment or Collateral that may come into its possession; to
sign such Borrower's name on any invoice or ▇▇▇▇ of lading relating to any
Receivables, drafts against Customers, assignments
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and verifications of Receivables and notices to Customers; to send verifications
of Receivables; upon the occurrence of an Event of Default, to notify the Postal
Service authorities to change the address for delivery of mail addressed to such
Borrowers to such address as the Agent may designate; and to do all other acts
and things necessary to carry out this Agreement. All acts of said attorney or
designee are hereby ratified and approved, and said attorney or designee shall
not be liable for any acts of omission or commission, for any error of judgment
or for any mistake of fact or law, provided that the Agent or its designee shall
not be relieved of liability to the extent it is determined by a final judicial
decision that its act, error or mistake constituted gross negligence or willful
misconduct. This power of attorney being coupled with an interest is irrevocable
until all of the Obligations are paid in full and this Agreement and the Total
Commitment is terminated.
(ii) The Agent, without notice to or consent of the Borrowers, upon
the occurrence and during the continuance of an Event of Default, (A) 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 Receivables or
any securities, instruments or insurance applicable thereto and/or release the
obligor thereon; (B) is authorized and empowered to accept the return of the
goods represented by any of the Receivables; and (C) shall have the right to
receive, endorse, assign and/or deliver in its name or the name of any of the
Borrowers any and all checks, drafts and other instruments for the payment of
money relating to the Receivables, and each of the Borrowers hereby waive notice
of presentment, protest and non-payment of any instrument so endorsed.
(c) Nothing herein contained shall be construed to constitute any
Borrower as agent of the Agent or any Lender for any purpose whatsoever, and the
Agent shall not be responsible or liable for any shortage, discrepancy, damage,
loss or destruction of any part of the Collateral wherever the same may be
located and regardless of the cause thereof (except to the extent it is
determined by a final judicial decision that the Agent's or a Lender's act or
omission constituted gross negligence or willful misconduct). The Agent and the
Lenders shall not, 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 Receivables or any instrument
received in payment thereof or for any damage resulting therefrom (except to the
extent it is determined by a final judicial decision that the Agent's or such
Lender's error, omission or delay constituted gross negligence or willful
misconduct). The Agent and the Lenders do not, by anything herein or in any
assignment or otherwise, assume any of the Borrowers' obligations under any
contract or agreement assigned to the Agent or the Lenders, and the Agent and
the Lenders shall not be responsible in any way for the performance by the
Borrowers of any of the terms and conditions thereof.
(d) If any of the Receivables includes a charge for any tax
payable to any governmental tax authority, the Agent is hereby authorized (but
in no event obligated) in its discretion to pay the amount thereof to the proper
taxing authority for the account of the applicable Borrower and to charge such
Borrower's account therefor. The Borrowers shall
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notify the Agent if any Receivables include any tax due to any such taxing
authority and, in the absence of such notice, the Agent shall have the right to
retain the full proceeds of such Receivables and shall not be liable for any
taxes that may be due from any Borrower by reason of the sale and delivery
creating such Receivables.
SECTION 10.02. Receivables Documentation. The Borrowers will, in
addition to the monthly Receivables agings delivered pursuant to this Agreement,
at such intervals as the Agent may require, furnish, or cause to be furnished,
such further schedules and/or information as the Agent may require relating to
the Receivables, including, without limitation, sales invoices. In addition, the
Borrowers shall notify the Agent of any non-compliance in respect of the
representations, warranties and covenants contained in Section 10.03 hereof. The
items to be provided under this Section 10.02 are to be in form satisfactory to
the Agent and are to be executed and delivered to the Agent from time to time
solely for its convenience in maintaining records of the Collateral; the
Borrowers' failure to give any of such items to the Agent shall not affect,
terminate, modify or otherwise limit the Agent's Lien or security interest in
the Collateral.
SECTION 10.03. Status of Receivables and Other Collateral. Each of
the Borrowers covenants, represents and warrants that: (a) it shall be the sole
owner, free and clear of all Liens except in favor of the Agent or otherwise
permitted hereunder, of and fully authorized to sell, transfer, pledge and/or
grant a security interest in each and every item of said Collateral owned by it;
(b) it will not seek to qualify, or maintain the qualification of, a Receivable
as an Eligible Receivable unless such Receivable shall be a good and valid
account representing an undisputed bona fide indebtedness incurred or an amount
indisputably owed by the Customer therein named, for a fixed sum as set forth in
the invoice relating thereto with respect to an absolute sale and delivery upon
the specified terms of goods sold by a Borrower, or work, labor and/or services
theretofore rendered by a Borrower; (c) it will not seek to qualify, or maintain
the qualification of, a Receivable as an Eligible Receivable unless such
Receivable or portion thereof which it seeks to so qualify is not subject to any
defense, offset, counterclaim, discount or allowance (as of the time of its
creation) except as may be stated in the invoice relating thereto or discounts
and allowances as may be customary in such Borrower's business; (d) none of the
transactions underlying or giving rise to any Eligible Receivable shall violate
any applicable state or Federal laws or regulations in any material respect, and
all documents relating to any Eligible Receivable shall be legally sufficient
under such laws or regulations and shall be legally enforceable in accordance
with their terms (subject as to enforcement of remedies to applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally from time to time in
effect and to general principles of equity); (e) it will not seek to qualify, or
maintain the qualification of, a Receivable as an Eligible Receivable unless to
the best of its knowledge, each Customer, guarantor or endorser with respect to
such Receivable is solvent and will continue to be fully able to pay all
Eligible Receivables on which it is obligated in full when due; (f) it will not
seek to qualify, or maintain the qualification of, a Receivable as an Eligible
Receivable unless all documents and agreements relating to such Receivable shall
be true and correct and in all respects what they purport to be; (g) it
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will not seek to qualify, or maintain the qualification of, a Receivable as an
Eligible Receivable unless to the best of its knowledge, all signatures and
endorsements that appear on all documents and agreements relating to such
Receivable shall be genuine and all signatories and endorsers with respect
thereto shall have full capacity to contract; (h) it shall maintain books and
records pertaining to the Collateral in such detail, form and scope as are
customary for businesses similarly situated; (i) it will not seek to qualify, or
maintain the qualification of, a Receivable as an Eligible Receivable unless it
shall have immediately notified the Agent as to any accounts arising out of
contracts with the United States or any department, agency or instrumentality
thereof, and shall have executed any instruments and taken any steps required by
the Agent in order that all monies due or to become due under any such contract
shall be assigned to the Agent and notice thereof given to the United States
Government under the Federal Assignment of Claims Act; (j) it will, immediately
upon learning thereof, report to the Agent any material loss or destruction of,
or substantial damage to, any of the Collateral, and any other matters affecting
the value, enforceability or collectability of any of the Collateral; (k) if any
amount payable under or in connection with any Receivable is evidenced by a
promissory note or other instrument, as such terms are defined in the Uniform
Commercial Code, such promissory note or instrument shall be immediately
pledged, endorsed, assigned and delivered to the Agent as additional collateral;
(l) it nor any other Borrower shall not re-date any invoice or sale or make
sales on extended dating beyond that customary in the industry; (m) it and each
other Borrower shall conduct a physical count of its inventory at such intervals
as the Agent may request and promptly supply the Agent with a copy of such
counts accompanied by a report of the value (based on the lower of cost (on a
FIFO basis) or market value) of such inventory, and (n) it nor any other
Borrower is not nor shall it be entitled to pledge the Lenders' credit on any
purchases or for any purpose whatsoever.
SECTION 10.04. Monthly Statement of Account. The Agent shall
render to the Borrowers each month a statement of the Borrowers' account, which
shall constitute an account stated and shall be deemed to be correct and
accepted by and be binding upon the Borrowers unless the Agent receives a
written statement of the Borrowers' exceptions within 30 days after such
statement was rendered to the Borrowers.
SECTION 10.05. Collateral Custodian. Upon the occurrence and
continuance of an Event of Default, the Agent may at any time and from time to
time employ and maintain in the premises of the Borrowers a custodian selected
by the Agent who shall have full authority to do all acts necessary to protect
the Agent's and Lenders' interests and to report to the Agent thereon. The
Borrowers hereby agree to cooperate with any such custodian and to do whatever
the Agent may reasonably request to preserve the Collateral. All costs and
expenses incurred by the Agent by reason of the employment of the custodian
shall be charged to the Borrowers' account and added to the Obligations.
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XI. MISCELLANEOUS
SECTION 11.01. Notices. Notices, consents and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service or mailed by certified or registered mail or sent by
telecopy addressed,
(a) if to all or any of the Borrowers, Guarantors, or Grantors, at
c/o Water Pik Technologies, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (Telecopy No.
949-719-6472), with a copy to ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ Bldg., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ (Telecopy No. 412-355-6501);
(b) if to the Agent, at The Chase Manhattan Bank, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: WPTI Account
Executive (Telecopy No. 212-332-4297), with a copy to Kaye, Scholer, et
al., LLP, at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. (Telecopy No. 212-836-6475); and
(c) if to any Lender, at the address set forth below its name in
Schedule 2.01 annexed hereto or in the Assignment and Acceptance pursuant
to which such Lender became a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if hand delivered or sent by overnight courier service or three
days after being sent by registered or certified mail, postage prepaid, return
receipt requested, if by mail, or when receipt is acknowledged if sent by
telecopy, in each case addressed to such party as provided in this Section 11.01
or in accordance with the latest unrevoked direction from such party.
SECTION 11.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Borrower or any subsidiary thereof
herein and in the certificates or other instruments prepared or delivered in
connection with this Agreement, any of the Security Documents, any Guarantee or
any other Loan Document, shall be considered to have been relied upon by the
Lenders and shall survive the making by the Lenders of the Loans and the
execution and delivery to the Lenders of the Notes and the occurrence of any
other Credit Event and shall continue in full force and effect as long as the
principal of or any accrued interest on the Notes or any other fee or amount
payable under the Notes or this Agreement or any other Loan Document is
outstanding and unpaid and so long as the Total Commitment has not been
terminated.
SECTION 11.03. Successors and Assigns; Participations. (a)
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and
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agreements by or on behalf of any Loan Party, any ERISA Affiliate, any
subsidiary of any thereof, the Agent or the Lenders, that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns. Without limiting the generality of the foregoing, the Borrowers
specifically confirm that any Lender may at any time and from time to time
pledge or otherwise grant a security interest in any Loan or any Note (or any
part thereof) to any Federal Reserve Bank. No Borrower may assign or transfer
any of its rights or obligations hereunder without the written consent of all
the Lenders.
(b) Each Lender, without the consent of the Borrowers or the
Agent, may sell participations to one or more banks or other entities in all or
a portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Revolving Credit Commitment) and the Loans
owing to it and undrawn Letters of Credit and the Notes held by it); provided,
however, that (i) such Lender's obligations under this Agreement (including,
without limitation, its Revolving Credit Commitment) shall remain unchanged,
(ii) such Lender 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 the cost protection provisions contained in
Sections 2.10, 2.12 and 2.16 hereof, but only to the extent any of such Sections
would be available to the Lender which sold such participation, and (iv) the
Borrowers, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement; provided, further, however, that such Lender
shall retain the sole right and responsibility to enforce the obligations of the
Loan Parties relating to the Loans, 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
decreasing any fees payable hereunder or the amount of principal or the rate of
interest payable on the Loans, or extending the dates fixed for any payment of
principal of or interest on, the Loans or increasing or extending the Revolving
Credit Commitments or the release of all Collateral.
(c) Each Lender may assign by novation, to any one or more banks
or other entities with the prior written consent of the Borrowers not to be
unreasonably withheld (but no such consent shall be required for assignments
between and among the Lenders or after the occurrence and during the continuance
of a Default or an Event of Default or with respect to Eligible Assignees) and
with the prior written consent of the Agent, 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 Revolving Credit
Commitment and the same portion of the Loans and undrawn Letters of Credit at
the time owing to it and the Note or Notes held by it), provided, however, that
(i) each such assignment shall be of a constant, and not a varying, percentage
of all of the assigning Lender's rights and obligations under this Agreement,
which shall include the same percentage interest in the Loans, Letters of Credit
and Notes, (ii) the amount of the Revolving Credit Commitment of the assigning
Lender being assigned pursuant to each such assignment (determined as of the
date the Assignment and Acceptance with respect to such assignment is delivered
to the Agent) shall be in a minimum principal amount of $5,000,000 (unless to
another Lender, in which event there shall be no minimum
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requirement) for the Revolving Credit Commitment of such Lender and the amount
of the Revolving Credit Commitment of such Lender shall not be less than
$5,000,000 or shall be zero (unless such Lender's minimum hold position shall
fall below $5,000,000 by reason of an assignment to another Lender), (iii) the
parties to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register (as defined below), an Assignment and
Acceptance, together with any Note subject to such assignment and a processing
and recordation fee of $3,000 and (iv) the Assignee, if it shall not be a
Lender, shall deliver to the Agent an Administrative Questionnaire in the form
provided to such Assignee by the Agent. Upon such execution, delivery,
acceptance and recording and after receipt of the written consent of the Agent,
from and after the effective date specified in each Assignment and Acceptance,
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 and Acceptance, have the rights and
obligations of a Lender hereunder and under the other Loan Documents and (y) the
Lender which is assignor thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto but shall continue to be entitled
to the benefits of Sections 2.10, 2.12, 2.16 and 11.04, as well as any fees
accrued for its account hereunder and not yet paid).
(d) By executing and delivering an Assignment and Acceptance, the
Lender which is 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 and clear of any adverse claim, and that
its Revolving Credit Commitment and the outstanding balance of its Loans and
participations in Letters of Credit, in each case without giving effect to
assignments thereof which have not become effective, are as set forth in such
Assignment and Acceptance, such Lender 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 or any Collateral with respect
thereto or any other instrument or document furnished pursuant hereto or
thereto; (ii) such Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or the
performance or observance by any Loan Party of any of its respective obligations
under this Agreement, any Guarantees or any of the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; (iii) such
assignee represents and warrants that it is legally authorized to enter into
such Assignment and Acceptance and confirms that it has received a copy of this
Agreement, any Guarantees 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 and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, such Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
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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 will 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 Lender.
(e) The Agent shall maintain at its address referred to in Section
11.01 hereof a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders and the
Revolving Credit Commitment of, and principal amount of the Loans owing to, each
Lender from time to time (the "Register"). The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers, the Agent and
the Lenders may treat each person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrowers or any Lender at any reasonable time
and from time to time upon reasonable prior notice. Effective upon the
assignment of an interest hereunder, Schedule 2.01 shall be amended by the Agent
to reflect such assignment.
(f) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an assignee together with any Note or Notes subject to
such assignment, any processing and recordation fee and, if required, an
Administrative Questionnaire and the written consent to such assignment, the
Agent shall, if such Assignment and Acceptance has been completed and is
precisely in the form of Exhibit E annexed hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Lenders and the Borrowers. Within
five (5) Business Days after receipt of such notice, the Borrowers, at their own
expense, shall execute and deliver to the Agent in exchange for each surrendered
Note or Notes a new Note or Notes to the order of such assignee in an amount
equal to its portion of the Revolving Credit Commitment assumed by it pursuant
to such Assignment and Acceptance and, if the assigning Lender has retained any
Revolving Credit Commitment hereunder, a new Note or Notes to the order of the
assigning Lender in an amount equal to the Revolving Credit Commitment retained
by it hereunder. Such new Note or Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Note or
Notes, shall be dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of Exhibit A. Notes surrendered to
the Borrowers shall be canceled by the Borrowers.
(g) Notwithstanding any other provision herein, any Lender may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 11.03, disclose to the assignee or
participant or proposed assignee or participant, any information, including,
without limitation, any Information, relating to the Borrowers furnished to such
Lender by or on behalf of the Borrowers in connection with this Agreement;
provided, however, that prior to any such disclosure, each
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such assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any confidential Information relating to the
Borrowers received from such Lender.
SECTION 11.04. Expenses; Indemnity. (a) Each of the Borrowers
agrees to pay all reasonable out-of-pocket expenses incurred by the Agent and
Lenders in connection with the preparation of this Agreement and the other Loan
Documents or with any amendments, modifications, waivers, extensions, renewals,
renegotiations or "workouts" of the provisions hereof or thereof (whether or not
the transactions hereby contemplated shall be consummated) or incurred by the
Agent or any of the Lenders in connection with the enforcement or protection of
its rights in connection with this Agreement or any of the other Loan Documents
or with the Loans made or the Notes or Letters of Credit issued hereunder, or in
connection with any pending or threatened action, proceeding, or investigation
relating to the foregoing, including but not limited to the reasonable fees and
disbursements of counsel for the Agent and ongoing field examination expenses
and charges, and, in connection with such enforcement or protection, the
reasonable fees and disbursements of counsel for the Lenders. Each of the
Borrowers further indemnifies the Lenders from and agrees to hold them harmless
against any documentary taxes, assessments or charges made by any governmental
authority by reason of the execution and delivery of this Agreement or the
Notes.
(b) Each of the Borrowers indemnifies the Agent and each Lender
and their respective directors, officers, employees and agents against, and
agrees to hold the Agent, each Lender and each such person harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees and expenses, incurred by or asserted against the Lender
or any such person arising out of, in any way connected with, or as a result of
(i) the use of any of the proceeds of the Loans, (ii) this Agreement, the
Guarantees, any of the Security Documents or the other documents contemplated
hereby or thereby, (iii) the performance by the parties hereto and thereto of
their respective obligations hereunder and thereunder (including but not limited
to the making of the Total Commitment) and consummation of the transactions
contemplated hereby and thereby, (iv) breach of any representation or warranty,
or (v) any claim, litigation, investigation or proceedings relating to any of
the foregoing, whether or not the Agent, any Lender or any such person is a
party thereto; provided, however, that such indemnity shall not, as to the Agent
or any Lender, apply to any such losses, claims, damages, liabilities or related
expenses to the extent that they result from the gross negligence or willful
misconduct of the Agent or any Lender.
(c) Each of the Borrowers indemnifies, and agrees to defend and
hold harmless the Agent and the Lenders and their respective officers,
directors, shareholders, agents and employees (collectively, the "Indemnitees")
from and against any loss, cost, damage, liability, lien, deficiency, fine,
penalty or expense (including, without limitation, reasonable attorneys' fees
and reasonable expenses for investigation, removal, cleanup and remedial costs
and modification costs incurred to permit, continue or resume normal operations
of any property or assets or business of the Borrowers or any subsidiary
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thereof) arising from a violation of, or failure to comply with any
Environmental Law and to remove any Lien arising therefrom except to the extent
caused by the gross negligence or willful misconduct of any Indemnitee, which
any of the Indemnitees may incur or which may be claimed or recorded against any
of the Indemnitees by any person.
(d) The provisions of this Section 11.04 shall remain operative
and in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or the Notes, or any investigation made by or on
behalf of the Agent or any Lender. All amounts due under this Section 11.04
shall be payable on written demand therefor.
SECTION 11.05. Applicable Law. THIS AGREEMENT, THE NOTES AND THE
OTHER LOAN DOCUMENTS, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL
OBLIGATION LAW OF THE STATE OF NEW YORK, SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION.
SECTION 11.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, upon the request of the Agent, each Lender shall and
is hereby authorized 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 Lender to or for the credit or the account of any of the
Borrowers against any and all of the obligations of the Borrowers now or
hereafter existing under this Agreement and the Notes held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement or the Notes and although such obligations may be unmatured. Each
Lender agrees to notify promptly the Agent and the Borrowers after any such
setoff and application made by such Lender, but the failure to give such notice
shall not affect the validity of such setoff and application. The rights of each
Lender under this Section are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which may be available
to such Lender.
SECTION 11.07. Payments on Business Days. (a) Should the principal
of or interest on the Notes or any fee or other amount payable hereunder become
due and payable on other than a Business Day, payment in respect thereof may be
made on the next succeeding Business Day (except as otherwise specified in the
definition of "Interest Period"), and such extension of time shall in such case
be included in computing interest, if any, in connection with such payment.
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(b) All payments by any of the Borrowers hereunder and all Loans
made by the Lenders hereunder shall be made in lawful money of the United States
of America in immediately available funds at the office of the Agent set forth
in Section 11.01 hereof.
SECTION 11.08. Waivers; Amendments. (a) No failure or delay of any
Lender 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 Lenders 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 the Notes nor consent to any
departure by any of the Borrowers 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 any of the Borrowers in
any case shall entitle it to any other or further notice or demand in similar or
other circumstances. Each holder of any of the Notes shall be bound by any
amendment, modification, waiver or consent authorized as provided herein,
whether or not such Note shall have been marked to indicate such amendment,
modification, waiver or consent.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrowers 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
Note or reduce the rate of interest on any Note, or decrease any fees payable
pro rata to the Lenders, (ii) change the Revolving Credit Commitment of any
Lender, increase any percentage or amount contained in the definition of
Borrowing Base or make overadvances other than Permitted Overadvances or amend
or modify the provisions of this Section, Section 2.06, Section 2.13, Section
4.14 or Section 11.04 hereof or the definition of "Required Lenders," or (iii)
release any Guarantee or any material portion of Collateral or share or
subordinate any Lien priority, in each case without the prior written consent of
each Lender affected thereby 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
consent of the Agent. Each Lender and holder of any Note shall be bound by any
modification, amendment or waiver authorized in accordance with this Section
regardless of whether its Notes shall be marked to make reference thereto, and
any consent by any Lender or holder of a Note pursuant to this Section shall
bind any person subsequently acquiring a Note from it, whether or not such Note
shall be so marked.
(c) In the event that the Borrowers request, with respect to this
Agreement or any other Loan Document, an amendment, modification or waiver and
such amendment, modification or waiver would require the unanimous consent of
all of the Lenders in accordance with Section 11.08(b) above, and such
amendment, modification or waiver is
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agreed to in writing by the Borrowers and the Required Lenders but not by all of
the Lenders, then notwithstanding anything to the contrary in Section 11.08(b)
above, with the written consent of the Borrowers and such Required Lenders, the
Borrowers and Required Lenders may, but shall not be obligated to, amend this
Agreement without the consent of the Lender or Lenders who did not agree to the
proposed amendment, modification or waiver (the "Minority Lenders") solely to
provide for (i) the termination of the Revolving Credit Commitment of each
Minority Lender, (ii) the assignment in accordance with Section 11.03 hereof to
one or more persons of each Minority Lender's interests, rights and obligations
under this Agreement (including, without limitation, all of such Minority
Lender's Revolving Credit Commitment as well as its portion of all outstanding
Loans and the Note or Notes held by such Minority Lender) and the other Loan
Documents and/or an increase in the Revolving Credit Commitment of one or more
Required Lenders, in each case so that after giving effect thereto the Total
Commitment shall be in the same amounts as prior to the events described in this
paragraph, (iii) the repayment to the Minority Lenders in full of all Loans
outstanding and accrued interest thereon at the time of the assignment and/or
increase in Revolving Credit Commitments described in clause (ii) above with the
proceeds of Loans made by such persons who are to become Lenders by assignment
or with the proceeds of Loans made by Required Lenders who have agreed to
increase their Revolving Credit Commitment, (iv) the payment to the Minority
Lenders by the Borrowers of all fees and other compensation due and owing such
Minority Lenders under the terms of this Agreement and the other Loan Documents
and (v) such other modifications as the Required Lenders and Borrowers shall
deem necessary in order to effect the changes specified in clauses (i) through
(iv) hereof.
SECTION 11.09. Severability. In the event any one or more of the
provisions contained in this Agreement or in the Notes or any of the other Loan
Documents should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein or therein shall not in any way be affected or impaired thereby.
SECTION 11.10. Entire Agreement; Waiver of Jury Trial, etc. (a)
This Agreement, the Notes and the other Loan Documents constitute the entire
contract between the parties hereto relative to the subject matter hereof. Any
previous agreement among the parties hereto with respect to the Transactions is
superseded by this Agreement, the Notes and the other Loan Documents. Except as
expressly provided herein or in the Notes or the Loan Documents (other than this
Agreement), nothing in this Agreement, the Notes or in the other Loan Documents,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, the Notes or the other Loan Documents.
(b) Except as prohibited by law, each party hereto hereby waives
any right it may have to a trial by jury in respect of any litigation directly
or indirectly arising out of, under or in connection with this Agreement, the
Notes, any of the other Loan Documents or the Transactions.
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(c) Except as prohibited by law, each party hereto hereby waives
any right it may have to claim or recover in any litigation referred to in
paragraph (b) of this Section 11.10 any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages.
(d) Each party hereto (i) certifies that no representative, agent
or attorney of any Lender has represented, expressly or otherwise, that such
Lender would not, in the event of litigation, seek to enforce the foregoing
waivers and (ii) acknowledges that it has been induced to enter into this
Agreement, the Notes or the other Loan Documents, as applicable, by, among other
things, the mutual waivers and certifications herein.
SECTION 11.11. Confidentiality. The Agent and each of the Lenders
agree to keep confidential (and to cause their respective officers, directors,
employees, agents and representatives to keep confidential) all information,
materials and documents furnished to the Agent or any Lender (the
"Information"). Notwithstanding the foregoing, the Agent and each Lender shall
be permitted to disclose Information (i) to such of its officers, directors,
employees, agents and representatives as need to know such Information in
connection with its participation in any of the Transactions or the
administration of this Agreement or the other Loan Documents; (ii) to the extent
required by applicable laws and regulations or by any subpoena or similar legal
process, or requested by any governmental agency or authority; (iii) to the
extent such Information (A) becomes publicly available other than as a result of
a breach of this Agreement, (B) becomes available to the Agent or such Lender on
a non-confidential basis from a source other than any Loan Party or any of its
subsidiaries or (C) was available to the Agent or such Lender on a
non-confidential basis prior to its disclosure to the Agent or such Lender by
any Loan Parties or any of their respective subsidiaries; (iv) to the extent any
Loan Parties or any of their respective subsidiaries shall have consented to
such disclosure in writing; (v) in connection with the sale of any Collateral
pursuant to the provisions of any of the other Loan Documents; or (vi) pursuant
to Section 11.03(g) hereof.
SECTION 11.12. Submission to Jurisdiction. (a) Any legal action or
proceeding with respect to this Agreement or the Notes or any other Loan
Document may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Agreement, each of the Loan Parties hereby accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts.
(b) Each of the Loan Parties hereby irrevocably waive, in
connection with any such action or proceeding, any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions.
(c) Each of the Loan Parties hereby irrevocably consents to the
service of process of any of the aforementioned courts in any such action or
proceeding by the
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mailing of copies thereof by registered or certified mail, postage prepaid, to
each such person, as the case may be, at its address set forth in Section 11.01
hereof.
(d) Nothing herein shall affect the right of the Agent or any
Lender to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against any Loan Party in any other
jurisdiction.
SECTION 11.13. Counterparts; Facsimile Signature. This Agreement
may be executed in counterparts, each of which shall constitute an original but
all of which when taken together shall constitute but one contract, and shall
become effective when copies hereof which, when taken together, bear the
signatures of each of the parties hereto shall be delivered to the Agent.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed signature page
hereto.
SECTION 11.14. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only and are not
to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
XII. GUARANTEES
Each Guarantor, and each Borrower with respect to the Obligations
of the other Borrower, unconditionally guarantees, as a primary obligor and not
merely as a surety, jointly and severally with each other Guarantor, the due and
punctual payment of the principal of and interest on each of the Notes, when and
as due, whether at maturity, by acceleration, by notice of prepayment or
otherwise, and the due and punctual payment and performance of all other
Obligations. Each Guarantor further agrees that the Obligations may be extended
and renewed, in whole or in part, without notice to or further assent from it,
and that it will remain bound upon its guarantee notwithstanding any extension
or renewal of any Obligations.
Each Guarantor waives presentment to, demand of payment from and
protest to the Borrowers of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. The
obligations of a Guarantor hereunder shall not be affected by (a) the failure of
any Lender or the Agent to assert any claim or demand or to enforce any right or
remedy against the Borrowers or any other Guarantor under the provisions of this
Agreement, the Notes or any of the other Loan Documents or otherwise; (b) any
rescission, waiver, amendment or modification of any of the terms or provisions
of this Agreement, the Notes, any of the other Loan Documents, any guarantee or
any other agreement; (c) the release of any security held by the Agent for the
Obligations or any of them; (d) the failure of any Lender or the Agent to
exercise any right or remedy against any other Guarantor of the Obligations; or
(e) the failure of any Lender or the Agent to take, register, perfect or
preserve any security for any of the Obligations.
102
108
Each Guarantor further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by the Agent or any Lender to any security
(including, without limitation, any Collateral) held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
any Lender or the Agent in favor of any of the Borrowers or any other person.
The obligations of each Guarantor hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of each Guarantor hereunder
shall not be discharged or impaired or otherwise affected by the failure of the
Agent or any Lender to assert any claim or demand or to enforce any remedy under
this Agreement, the Notes or under any other Loan Document, any guarantee or any
other agreement, by any waiver or modification of any provision thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or omission which may or might otherwise in any
manner or to any extent vary the risk or reduce or extinguish the liability of
such Guarantor or otherwise operate as a discharge of such Guarantor as a matter
of law or equity.
Each Guarantor further agrees that its guarantee shall be a
continuing guarantee and shall stand as a guarantee of full and final payment
and performance of all Obligations from time to time and shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal of or interest on any Obligation is rescinded or must
otherwise be returned by the Agent or any Lender upon the bankruptcy or
reorganization of any of the Borrowers or otherwise.
Each Guarantor hereby waives and releases in favor of the Lenders
and the Agent all rights of subrogation against or in respect of each of the
Borrowers and its property and all rights of indemnification, contribution and
reimbursement from each of the Borrowers and its property, in each case in
connection with this guarantee and any payments made hereunder, and regardless
of whether such rights arise by operation of law, pursuant to contract or
otherwise until such time as the Obligations have been fully and finally
performed and paid.
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103
109
IN WITNESS WHEREOF, the Borrowers, Guarantors, the Agent and the
Lenders have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
LAARS, INC.
By: /s/ S. L. Main
----------------------------
Name: S. L. Main
Title: Controller
WATER PIK, INC.
By: /s/ S. L. Main
----------------------------
Name: S. L. Main
Title: Controller
JANDY INDUSTRIES, INC.,
as a Guarantor
By: /s/ S. L. Main
----------------------------
Name: S. L. Main
Title: Controller
WATER PIK TECHNOLOGIES, INC., solely
with respect to Articles IV, VI and VII
By: /s/ S. L. Main
----------------------------
Name: S. L. Main
Title: Controller
110
THE CHASE MANHATTAN BANK,
as Agent and as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: V. P.
BANK ONE, N.A., as a Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Assistant Vice President
MELLON BANK, N.A., as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION, as
a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: VP.
UNION BANK OF CALIFORNIA, N.A., as a
Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
The registrant hereby agrees to furnish supplementally to the
Commission, upon request, a copy of any omitted schedule to any of the
agreements contained or incorporated by reference herein.
