EXHIBIT HH
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TERM LOAN AGREEMENT
DATED AS OF DECEMBER 28, 2007
AMONG
THE FINANCIAL INSTITUTIONS NAMED HEREIN
AS THE LENDERS
AND
HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD.
AS THE ADMINISTRATIVE AND COLLATERAL AGENT
AND
SALTON, INC.,
APPLICA INCORPORATED,
APPLICA CONSUMER PRODUCTS, INC.,
APPLICA AMERICAS, INC.,
APN HOLDING COMPANY, INC.,
HP DELAWARE, INC.,
HPG LLC,
APPLICA MEXICO HOLDINGS, INC.,
SONEX INTERNATIONAL CORPORATION,
HOME CREATIONS DIRECT LTD.,
SALTON HOLDINGS INC.,
ICEBOX LLC,
TOASTMASTER INC.,
FAMILY PRODUCTS INC.,
ONE:ONE COFFEE LLC, AND
SALTON TOASTMASTER LOGISTICS LLC
AS THE BORROWERS
AND
APPLICA ASIA LIMITED AND
APPLICA CANADA CORPORATION
AS GUARANTORS
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ARTICLE 1 TERM LOAN......................................................................................2
1.1 Term Loan..............................................................................2
1.2 Procedure for Term Loan................................................................3
1.3 Making of Term Loan....................................................................3
1.4 Multi-Borrower Provisions..............................................................4
ARTICLE 2 INTEREST AND FEES..............................................................................6
2.1 Interest...............................................................................6
2.2 Continuation and Conversion Elections..................................................7
2.3 Maximum Interest Rate..................................................................8
ARTICLE 3 PAYMENTS AND PREPAYMENTS.......................................................................9
3.1 Mandatory Payments of Term Loan........................................................9
3.2 Early Termination Fee..................................................................9
3.3 Reserved..............................................................................10
3.4 Reserved..............................................................................10
3.5 LIBOR Loan Prepayments................................................................10
3.6 Payments by the Loan Parties..........................................................10
3.7 Reserved..............................................................................10
3.8 Apportionment, Application and Reversal of Payments...................................10
3.9 Indemnity for Returned Payments.......................................................11
3.10 Agent's and Lenders' Books and Records; Monthly Statements............................11
ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY........................................................12
4.1 Taxes.................................................................................12
4.2 Illegality............................................................................13
4.3 Increased Costs and Reduction of Return...............................................14
4.4 Funding Losses........................................................................14
4.5 Inability to Determine Rates..........................................................15
4.6 Certificates of Agent.................................................................15
4.7 Obligation to Mitigate................................................................15
4.8 Survival..............................................................................16
ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.............................................16
5.1 Books and Records.....................................................................16
5.2 Financial Information.................................................................16
5.3 Notices to the Lenders................................................................19
5.4 Revisions or Updates to Schedules.....................................................21
ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS........................................................22
6.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents..22
6.2 Validity and Priority of Security Interest............................................22
6.3 Organization and Qualification........................................................22
6.4 Reserved..............................................................................23
6.5 Subsidiaries..........................................................................23
6.6 Financial Statements and Projections..................................................23
6.7 Reserved..............................................................................24
6.8 Solvency..............................................................................24
6.9 Debt..................................................................................24
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6.10 Distributions.........................................................................24
6.11 Real Estate; Leases...................................................................24
6.12 Proprietary Rights....................................................................24
6.13 Trade Names...........................................................................25
6.14 Litigation............................................................................25
6.15 Labor Disputes........................................................................25
6.16 Environmental Laws....................................................................25
6.17 No Violation of Law...................................................................26
6.18 No Default............................................................................26
6.19 Plan Compliance.......................................................................27
6.20 Taxes.................................................................................27
6.21 Regulated Entities....................................................................27
6.22 Margin Regulations....................................................................28
6.23 Copyrights, Patents, Trademarks and Licenses, etc.....................................28
6.24 Material Agreements...................................................................28
6.25 Bank Accounts.........................................................................28
6.26 Governmental Authorization............................................................28
6.27 Capitalization........................................................................28
6.28 No Material Adverse Change............................................................29
6.29 Full Disclosure.......................................................................29
6.30 Common Enterprise.....................................................................29
6.31 Anti-Terrorism Laws...................................................................29
ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS............................................................30
7.1 Taxes and Other Obligations...........................................................30
7.2 Legal Existence and Good Standing.....................................................31
7.3 Compliance with Law and Agreements; Maintenance of Licenses...........................31
7.4 Maintenance of Property; Inspection of Property.......................................31
7.5 Insurance.............................................................................31
7.6 Insurance and Condemnation Proceeds...................................................32
7.7 Environmental Laws....................................................................32
7.8 Compliance with ERISA.................................................................32
7.9 Asset Dispositions, Mergers, Dissolutions.............................................32
7.10 Distributions; Capital Change; Restricted Investments.................................34
7.11 Acquisitions..........................................................................34
7.12 Third Party Guaranties................................................................34
7.13 Debt..................................................................................34
7.14 Payments; Prepayments.................................................................35
7.15 Transactions with Affiliates..........................................................35
7.16 [Reserved]............................................................................35
7.17 [Reserved]............................................................................35
7.18 [Reserved]............................................................................35
7.19 [Reserved]............................................................................35
7.20 Investment Banking and Finder's Fees..................................................35
7.21 Business Conducted....................................................................35
7.22 Liens.................................................................................36
7.23 [Reserved]............................................................................36
7.24 New Subsidiaries......................................................................36
7.25 Fiscal Year...........................................................................36
7.26 [Reserved]............................................................................36
7.27 [Reserved]............................................................................36
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7.28 Use of Proceeds.......................................................................37
7.29 [Reserved]............................................................................37
7.30 Anti-Terrorism Laws...................................................................37
7.31 [Reserved]............................................................................37
7.32 Blocked Accounts......................................................................37
7.33 Additional Debt Documents.............................................................39
7.34 Applica Asia Covenants................................................................39
7.35 Post-Closing Covenants................................................................40
7.36 Further Assurances....................................................................41
ARTICLE 8 CONDITIONS OF LENDING.........................................................................41
8.1 Conditions Precedent to Making of Term Loan...........................................41
8.2 Limited Waiver of Conditions Precedent................................................45
ARTICLE 9 DEFAULT; REMEDIES.............................................................................45
9.1 Events of Default.....................................................................45
9.2 Remedies..............................................................................48
ARTICLE 10 TERM AND TERMINATION.........................................................................48
10.1 Term..................................................................................48
10.2 Termination by Agent..................................................................48
10.3 Effect of Termination.................................................................48
ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS.................................49
11.1 Amendments and Waivers................................................................49
11.2 Assignments; Participations...........................................................50
ARTICLE 12 THE AGENT....................................................................................52
12.1 Appointment and Authorization.........................................................52
12.2 Delegation of Duties..................................................................53
12.3 Liability of Agent....................................................................53
12.4 Reliance by Agent.....................................................................53
12.5 Notice of Default.....................................................................53
12.6 Credit Decision.......................................................................54
12.7 Indemnification.......................................................................54
12.8 Agent in Individual Capacity..........................................................55
12.9 Successor Agent.......................................................................55
12.10 Withholding Tax.......................................................................55
12.11 Collateral Matters....................................................................57
12.12 Restrictions on Actions by Lenders; Sharing of Payments...............................58
12.13 Agency for Perfection.................................................................58
12.14 Payments by Agent to Lenders..........................................................58
12.15 Settlement............................................................................59
12.16 Reserved..............................................................................60
12.17 Concerning the Collateral and the Related Loan Documents..............................60
12.18 Field Audit and Examination Reports; Disclaimer by Lenders............................61
12.19 Reserved..............................................................................61
12.20 Relation Among Lenders................................................................61
12.21 The Register..........................................................................62
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ARTICLE 13 JUDGMENT CURRENCY; SERVICE OF PROCESS........................................................62
13.1 Judgment Currency.....................................................................62
13.2 Agent for Service of Process..........................................................63
ARTICLE 14 MISCELLANEOUS................................................................................63
14.1 No Waivers; Cumulative Remedies.......................................................63
14.2 Severability..........................................................................63
14.3 Governing Law; Choice of Forum; Service of Process....................................63
14.4 WAIVER OF JURY TRIAL..................................................................64
14.5 Survival of Representations and Warranties............................................65
14.6 Other Security and Guaranties.........................................................65
14.7 Fees and Expenses.....................................................................65
14.8 Notices...............................................................................66
14.9 Waiver of Notices.....................................................................67
14.10 Binding Effect........................................................................67
14.11 Indemnity of the Agent and the Lenders by the Borrowers...............................68
14.12 Amendment and Restatement of Second Amended Credit Agreement; Release.................68
14.13 Final Agreement.......................................................................69
14.14 Counterparts..........................................................................69
14.15 Captions..............................................................................69
14.16 Right of Setoff.......................................................................69
14.17 Confidentiality.......................................................................70
14.18 Conflicts with Other Loan Documents...................................................71
14.19 Agency of the Borrowers for Each Other Loan Party.....................................71
14.20 Express Waivers By Loan Parties In Respect of Cross Guaranties and Cross
Collateralization.....................................................................72
14.21 USA PATRIOT Act Notice................................................................73
14.22 Intercreditor Agreement...............................................................73
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ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A DEFINED TERMS
ANNEX B COMMITMENTS
EXHIBIT A RESERVED
EXHIBIT B NOTICE OF BORROWING
EXHIBIT C NOTICE OF CONTINUATION/CONVERSION
EXHIBIT D ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULE 6.3 ORGANIZATION AND QUALIFICATIONS
SCHEDULE 6.5 SUBSIDIARIES AND AFFILIATES
SCHEDULE 6.9 DEBT
SCHEDULE 6.11 REAL ESTATE; LEASES
SCHEDULE 6.12 PROPRIETARY RIGHTS
SCHEDULE 6.13 TRADE NAMES
SCHEDULE 6.14 LITIGATION
SCHEDULE 6.15 LABOR DISPUTES
SCHEDULE 6.16 ENVIRONMENTAL LAW
SCHEDULE 6.19 PLAN COMPLIANCE
SCHEDULE 6.24 MATERIAL AGREEMENTS
SCHEDULE 6.25 BANK ACCOUNTS
SCHEDULE 6.27 CAPITALIZATION
SCHEDULE A-1 PERMITTED LIENS
SCHEDULE A-2 RESTRICTED INVESTMENTS
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TERM LOAN AGREEMENT
TERM LOAN AGREEMENT (the "AGREEMENT") is made as of December
28, 2007, by and among SALTON, INC., a Delaware corporation ("PARENT"), APPLICA
INCORPORATED, a Florida corporation ("APPLICA"), APN HOLDING COMPANY, INC., a
Delaware corporation ("APN"), APPLICA CONSUMER PRODUCTS, INC., a Florida
corporation ("ACP"), APPLICA AMERICAS, INC., a Delaware corporation ("AAI"), HP
DELAWARE, INC., a Delaware corporation ("HP"), HPG LLC, a Delaware limited
liability company ("HPG"), APPLICA MEXICO HOLDINGS, INC., a Delaware
corporation ("APPLICA MEXICO"), SONEX INTERNATIONAL CORPORATION, a Delaware
corporation ("SONEX"), HOME CREATIONS DIRECT LTD., a Delaware corporation
("HCD"), SALTON HOLDINGS INC., a Delaware corporation ("SHI"), ICEBOX LLC, an
Illinois limited liability company ("ICEBOX"), TOASTMASTER INC., a Missouri
corporation ("TOASTMASTER"), FAMILY PRODUCTS INC., a Delaware corporation
("FAMILY PRODUCTS"), ONE:ONE COFFEE LLC, a Delaware limited liability company
("ONE COFFEE"), and SALTON TOASTMASTER LOGISTICS LLC, a Delaware limited
liability company ("STL"; Parent, Applica, APN, ACP, AAI, HP, HPG, Applica
Mexico, Sonex, HCD, SHI, Icebox, Toastmaster, Family Products, One Coffee and
STL, being sometimes referred to herein individually as a "BORROWER" and
collectively as "BORROWERS"), and APPLICA ASIA LIMITED, a Hong Kong company
("APPLICA ASIA"), and APPLICA CANADA CORPORATION, a Nova Scotia company
("APPLICA CANADA"); the financial institutions listed on the signature pages
hereof and their respective successors and permitted assigns which become
"LENDERS" as provided herein; HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD.,
in its capacity as administrative agent and collateral agent for the Lenders
pursuant to ARTICLE 12 hereof (together with its successors in such capacity,
"AGENT"). Capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings ascribed thereto in ANNEX A, which is attached
hereto and incorporated herein. The rules of construction contained in ANNEX A
shall govern the interpretation of this Agreement, and all Annexes, Exhibits
and Schedules attached hereto are incorporated herein by reference.
RECITALS:
Parent, certain other Loan Parties, Agent, certain financial
institutions ("ORIGINAL LENDERS"), and the other parties named therein were
parties to a certain Reimbursement and Senior Secured Credit Agreement dated
October 1, 2007 (as at any time amended, modified, supplemented or restated,
the "ORIGINAL CREDIT Agreement"), pursuant to which the Original Lenders agreed
to reimburse certain obligations and make term loans and other financial
accommodations to Parent and its Subsidiaries. In connection with the Original
Credit Agreement, certain subsidiary guarantors of the Parent (the "ORIGINAL
GUARANTORS") executed the Subsidiary Guaranty, dated as of October 1, 2007 (as
at any time amended, modified, supplemented or restated, the "ORIGINAL
GUARANTEE"), in favor of the Agent pursuant to which the Original Guarantors
guaranteed the obligations of Parent and its Subsidiaries under the Original
Credit Agreement.
Harbinger Capital Partners Master Fund I, Ltd. and Harbinger
Capital Partners Special Situations Fund, L.P. (collectively, the "EQUITY
INVESTORS") have formed APN which owns all of the equity interests of Applica.
SFP Merger Sub, Inc., a Delaware corporation ("SFP") and wholly-owned
subsidiary of Parent, will be merged with and into APN, with APN being the
surviving corporation of such merger. After giving effect to such merger, all
of the issued and outstanding shares of common stock of APN will be owned by
Parent. As used in this Agreement, the foregoing series of transactions shall
be referred to as the "MERGER."
In connection with the Merger, Parent and the other Loan
Parties have requested that Lenders provide a credit facility to Borrowers to
finance their mutual and collective business enterprise and have requested that
the Original Credit Agreement and the Original Guarantee be amended and
restated in their entirety to become effective and binding on the Loan Parties
pursuant to the terms hereof, and the Agent and the Lenders (including the
Original Lenders that are parties hereto) have agreed, subject to the terms of
this Agreement, to amend and restate the Original Credit Agreement and the
Original Guarantee in their entirety to read as set forth herein, and it has
been agreed by the parties hereto that (a) the commitments which the Original
Lenders that are parties hereto agreed to extend to Parent under the Original
Credit Agreement and the commitments of new Lenders that become parties hereto
shall be extended or advanced upon the amended and restated terms and
conditions contained in this Agreement, (b) the Loans and other Obligations
outstanding under the Original Credit Agreement shall be governed by and deemed
to be outstanding under the amended and restated terms and conditions contained
herein and (c) the guarantees provided pursuant to the Original Guaranty by the
Original Guarantors that are parties hereto and the guarantees of new
Guarantors that became party hereto shall be governed by the amended and
restated terms and conditions contained in this Agreement.
All Obligations incurred pursuant hereto shall be secured by,
among other things, the Security Agreement, the Applica Canada Security
Agreement and the other Loan Documents and shall be guaranteed pursuant to the
Applica Asia Guaranty and the Applica Canada Guaranty. In addition, all
existing Obligations (and all Obligations incurred pursuant hereto) shall be
secured by, among other things, Liens on a portion of the assets of certain
Persons that, prior to the effective date of the Merger, constituted
Consolidated Applica Parties.
NOW, THEREFORE, the parties hereto hereby agree to amend and
restate the Original Credit Agreement and the Original Guaranty, and the
Original Credit Agreement and the Original Guaranty are hereby amended and
restated, in their entirety as follows:
ARTICLE 1
TERM LOAN
1.1 TERM LOAN. Subject to all of the terms and conditions of this
Agreement, each Lender severally, but not jointly, agrees to make a loan to
Borrowers on the Closing Date, in an amount not to exceed such Lender's Pro
Rata Share of the original principal amount of $110,000,000 (each, a "LOAN"
and, together, the "TERM LOAN"). Amounts paid or prepaid in respect of the Term
Loan may not be reborrowed.
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1.2 PROCEDURE FOR TERM LOAN.
(A)
(1) The Term Loan shall be made upon the Borrower
Agent's written notice delivered to the Agent in the form of a notice
of borrowing ("NOTICE OF BORROWING"), which must be received by the
Agent prior to 1:00 p.m. (New York time) on the Closing Date,
specifying the duration of the initial Interest Period for the Term
Loan (and if not specified, it shall be deemed a request for an
Interest Period of one month).
(2) In lieu of delivering a Notice of Borrowing, a
Responsible Officer may give Agent telephonic notice of such request
for advances to a Designated Account on or before the deadline set
forth in clause (1) above and the Agent at all times shall be entitled
to rely on such telephonic notice in making the Term Loan, regardless
of whether any written confirmation is received.
(B) RELIANCE UPON AUTHORITY. Prior to the Closing Date, the
Borrowers shall deliver to the Agent a notice setting forth an account
("DESIGNATED ACCOUNT") to which the Agent is authorized by the Borrowers to
transfer the proceeds of the Term Loan. The Designated Account must be
reasonably satisfactory to the Agent. The Agent is entitled to rely
conclusively on any individual's request for the Term Loan on behalf of the
Borrowers, so long as the proceeds thereof are to be transferred to a
Designated Account. The Agent has no duty to verify the identity of any
individual representing himself or herself as a person authorized by the
Borrowers to make such requests on their behalf.
(C) NO LIABILITY. The Agent shall not incur any liability
to the Loan Parties as a result of acting upon any notice referred to in
SECTIONS 1.2(B) AND (C), which the Agent believes in good faith to have been
given by an officer or other person duly authorized by the Borrowers to request
the Term Loan on its behalf. The crediting of the Term Loan to the Designated
Account or to such Persons as the Borrowers may direct shall conclusively
establish the obligation of the Borrowers to repay such Term Loan as provided
herein.
(D) Notwithstanding the foregoing, each Loan Party
authorizes Agent and Lenders to extend, convert or continue Loans, effect
selections of interest rates, and transfer funds to or on behalf of the Loan
Parties based on telephonic or e-mailed instructions. If requested to do so by
Agent, the Loan Parties shall confirm each such request by prompt delivery to
Agent of a Notice of Borrowing or Notice of Continuation/Conversion, if
applicable, but if it differs in any material respect from the action taken by
Agent or Lenders, the records of Agent and Lenders shall govern. Neither Agent
nor any Lender shall have any liability for any loss suffered by a Loan Party
as a result of Agent or any Lender acting upon its understanding of telephonic
or e-mailed instructions from a person believed in good faith by Agent or any
Lender to be a person authorized to give such instructions on a Loan Party's
behalf.
1.3 MAKING OF TERM LOAN. Promptly after receipt of the Notice of
Borrowing (or telephonic notice in lieu thereof) on the Closing Date, the Agent
shall notify the Lenders by telecopy, telephone or e-mail of the requested Term
Loan. Each Lender shall transfer its Pro Rata Share of the Term Loan to the
Agent in immediately available funds, to the account from time to time
designated by Agent, not later than 2:00 p.m. (New York time) on the Closing
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Date. After the Agent's receipt of all proceeds of such Term Loan, the Agent
shall make the proceeds of such Term Loan available to the Borrowers on the
Closing Date by transferring same day funds as directed by the Borrowers.
1.4 MULTI-BORROWER PROVISIONS.
(A) Each Borrower hereby designates ACP ("BORROWER AGENT")
as its representative and agent for all purposes under the Loan Documents,
including requesting the Term Loan, designation of any Interest Period,
delivery or receipt of communications, preparation and delivery of financial
reports, receipt and payment of Obligations, requests for waivers, amendments
or other accommodations, actions under the Loan Documents (including in respect
of compliance with covenants), and all other dealings with Agent or any Lender.
Borrower Agent hereby accepts such appointment. Agent and Lenders shall be
entitled to rely upon, and shall be fully protected in relying upon, any notice
or communication (including the Notice of Borrowing) delivered by Borrower
Agent on behalf of any Borrower. Agent and Lenders may give any notice or
communication with a Borrower hereunder to Borrower Agent on behalf of such
Borrower. Each of Agent and Lenders shall have the right, in its discretion, to
deal exclusively with Borrower Agent for any or all purposes under the Loan
Documents. Each Borrower agrees that any notice, election, communication,
representation, agreement or undertaking made on its behalf by Borrower Agent
shall be binding upon and enforceable against it.
(B) Each Borrower agrees that it is jointly and severally
liable for, and absolutely and unconditionally guarantees to Agent and Lenders
the prompt payment and performance of, all Obligations and all agreements under
the Loan Documents. Each Borrower agrees that its guaranty of obligations
hereunder constitutes a continuing guaranty of payment and performance and not
of collection, that such obligations shall not be discharged until full payment
of the Obligations, and that such obligations are absolute and unconditional,
irrespective of (a) the genuineness, validity, regularity, enforceability,
subordination or any future modification of, or change in, any Obligations or
Loan Document, or any other document, instrument or agreement to which any
Obligor is or may become a party or liable; (b) the absence of any action to
enforce this Agreement (including this Section) or any other Loan Document, or
any waiver, consent or indulgence of any kind by Agent or any Lender with
respect thereto; (c) the existence, value or condition of, or failure to
perfect a Lien or to preserve rights against, any security or guaranty for the
Obligations or any action, or the absence of any action, by Agent or any Lender
in respect thereof (including the release of any security or guaranty); (d) the
insolvency of any Loan Party; (e) any election by Agent or any Lender in an
insolvency proceeding for the application of SECTION 1111(B)(2) of the
Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower, as
debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (g)
the disallowance of any claims of Agent or any Lender against any Loan Party
for the repayment of any Obligations under Section 502 of the Bankruptcy Code
or otherwise; or (h) any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
except full payment of all Obligations.
(C) Each Borrower expressly waives all rights that it may
have now or in the future under any statute, at common law, in equity or
otherwise, to compel Agent or Lenders to marshal assets or to proceed against
any Loan Party, other Person or security for the payment or performance of any
Obligations before, or as a condition to, proceeding against such Borrower. It
is agreed among each Borrower, Agent and Lenders that the provisions of this
SECTION 1.6 are of the essence of the transaction contemplated by the Loan
Documents and that, but for such provisions, Agent and Lenders would decline to
make the Term Loan. Notwithstanding anything to the contrary in any Loan
4
Document, and except as set forth in this SECTION 1.6, each Borrower expressly
waives all rights at law or in equity to subrogation, reimbursement,
exoneration, contribution, indemnification or set off, as well as all defenses
available to a surety, guarantor or accommodation co-obligor. Each Borrower
acknowledges that its guaranty pursuant to this Section is necessary to the
conduct and promotion of its business, and can be expected to benefit such
business.
(D) Agent and Lenders may, in their discretion, pursue such
rights and remedies as they deem appropriate, including realization upon
Collateral by judicial foreclosure or non judicial sale or enforcement, without
affecting any rights and remedies under this SECTION 1.6. If, in taking any
action in connection with the exercise of any rights or remedies, Agent or any
Lender shall forfeit any other rights or remedies, including the right to enter
a deficiency judgment against any Borrower or other Person, whether because of
any Applicable Laws pertaining to "ELECTION OF REMEDIES" or otherwise, each
Borrower consents to such action and waives any claim based upon it, even if
the action may result in loss of any rights of subrogation that any Borrower
might otherwise have had. Any election of remedies that results in denial or
impairment of the right of Agent or any Lender to seek a deficiency judgment
against any Borrower shall not impair any other Borrower's obligation to pay
the full amount of the Obligations. Each Borrower waives all rights and
defenses arising out of an election of remedies, such as nonjudicial
foreclosure with respect to any security for the Obligations, even though that
election of remedies destroys such Borrower's rights of subrogation against any
other Person. Agent may bid all or a portion of the Obligations at any
foreclosure or trustee's sale or at any private sale, and the amount of such
bid need not be paid by Agent but shall be credited against the Obligations.
The amount of the successful bid at any such sale, whether Agent or any other
Person is the successful bidder, shall be conclusively deemed to be the fair
market value of the Collateral, and the difference between such bid amount and
the remaining balance of the Obligations shall be conclusively deemed to be the
amount of the Obligations guaranteed under this SECTION 1.6, notwithstanding
that any present or future law or court decision may have the effect of
reducing the amount of any deficiency claim to which Agent or any Lender might
otherwise be entitled but for such bidding at any such sale.
(E) Notwithstanding anything herein to the contrary, each
Borrower's liability under this SECTION 1.6 shall be limited to the greater of
(i) all amounts for which such Borrower is primarily liable, as described
below, and (ii) such Borrower's Allocable Amount. The "ALLOCABLE AMOUNT" for
any Borrower shall be the maximum amount that could then be recovered from such
Borrower under this SECTION 1.6 without rendering such payment voidable under
Section 548 of the Bankruptcy Code or under any applicable state fraudulent
transfer or conveyance act, or similar statute or common law.
(F) If any Borrower makes a payment under this SECTION 1.6
of any Obligations (other than amounts for which such Borrower is primarily
liable) (a "CO-BORROWER PAYMENT") that, taking into account all other
Co-Borrower Payments previously or concurrently made by any other Borrower,
exceeds the amount that such Borrower would otherwise have paid if each
Borrower had paid the aggregate Obligations satisfied by such Co-Borrower
Payments in the same proportion that such Borrower's Allocable Amount bore to
the total Allocable Amounts of all Borrowers, then such Borrower shall be
entitled to receive contribution and indemnification payments from, and to be
reimbursed by, each other Borrower for the amount of such excess, pro rata
based upon their respective Allocable Amounts in effect immediately prior to
such Co-Borrower Payment.
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(G) Nothing contained in this SECTION 1.6 shall limit the
liability of any Borrower to pay the Term Loan made directly or indirectly to
that Borrower (including portions thereof advanced to any other Borrower and
then re-loaned or otherwise transferred to, or for the benefit of, such
Borrower), and all accrued interest, fees, expenses and other related
Obligations with respect thereto, for which such Borrower shall be primarily
liable for all purposes hereunder.
(H) Each Borrower has requested that Agent and Lenders make
this credit facility available to Borrowers on a combined basis, in order to
finance Borrowers' business most efficiently and economically. Borrowers'
business is a mutual and collective enterprise, and Borrowers believe that
consolidation of their credit facility will enhance the borrowing power of each
Borrower and ease the administration of their relationship with Lenders, all to
the mutual advantage of Borrowers. Borrowers acknowledge and agree that Agent's
and Lenders' willingness to extend credit to Borrowers and to administer the
Collateral on a combined basis, as set forth herein, is done solely as an
accommodation to Borrowers and at Borrowers' request.
(I) Each Borrower hereby subordinates any claims, including
any right of payment, subrogation, contribution and indemnity, that it may have
at any time against any other Loan Party, howsoever arising, to the full
payment of all Obligations.
ARTICLE 2
INTEREST AND FEES
2.1 INTEREST.
(A) INTEREST RATES. The Term Loan shall bear interest on
the unpaid principal amount thereof (including, to the extent permitted by law,
on interest thereon not paid when due) from the date made until paid in full in
cash at a rate determined by reference to the Base Rate or the LIBOR Rate plus
the Applicable Margin, but not to exceed the Maximum Rate. Any of the Loans may
be converted into, or continued as LIBOR Loans, subject to and in the manner
provided in SECTION 2.2. If at any time Loans are outstanding with respect to
which the Borrowers have not delivered to the Agent a notice specifying the
basis for determining the interest rate applicable thereto, those Loans shall
bear interest at a rate determined by reference to the Base Rate until notice
to the contrary has been given to the Agent in accordance with this Agreement
and such notice has become effective. Except as otherwise provided herein, the
outstanding Obligations shall bear interest as follows:
(I) For all Base Rate Loans, at a fluctuating per
annum rate equal to the Base Rate plus the Applicable Margin;
and
(II) For all LIBOR Loans, at a per annum rate equal
to the LIBOR Rate plus the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate applicable
to Base Rate Loans as of the effective date of such change. All interest
charges shall be computed on the basis of a year of 360 days and actual days
elapsed (which results in more interest being paid than if computed on the
basis of a 365-day year). The Borrowers shall pay to the Agent, for the ratable
benefit of Lenders, interest accrued on all Base Rate Loans in arrears on the
first day of each month hereafter and on the Termination Date. The Borrowers
shall pay to the Agent, for the ratable benefit of Lenders, interest on all
LIBOR Loans in arrears on each LIBOR Interest Payment Date. For the purposes of
the INTEREST ACT (Canada), (i) whenever any interest or fee under this
Agreement or any other Loan Document is calculated using a rate based on a year
6
of 360 days, the rate determined pursuant to each calculation, when expressed
as an annual rate, is equivalent to (x) the applicable rate, (y) multiplied by
the actual number of days in the calendar year in which the period for which
such interest is payable (or compounded) ends, and (z) divided by 360, (ii) the
principle of deemed reinvestment of interest does not apply to any interest
calculation under this Agreement or any other Loan Document, and (iii) the
rates of interest stipulated in this Agreement or any other Loan Document are
intended to be nominal rates and not effective rates or yields.
(B) DEFAULT RATE. If an Event of Default occurs and is
continuing and the Agent or the Required Lenders in their discretion so elect,
then, while any such Event of Default is continuing, all of the Obligations
shall bear interest at the Default Rate applicable thereto.
2.2 CONTINUATION AND CONVERSION ELECTIONS.
(A) The Borrowers may:
(I) elect, as of any Business Day, in the case of
Base Rate Loans to convert any Base Rate Loans (or any part
thereof in an amount not less than $2,500,000, or that is in an
integral multiple of $500,000 in excess thereof) into LIBOR
Loans; or
(II) elect, as of the last day of the applicable
Interest Period, to continue any LIBOR Loans having Interest
Periods expiring on such day (or any part thereof in an amount
not less than $2,500,000, or that is in an integral multiple of
$500,000 in excess thereof);
provided, that if at any time the aggregate amount of LIBOR Loans in respect of
any Borrowing is reduced, by payment, prepayment, or conversion of part thereof
to be less than $1,000,000, such LIBOR Loans shall automatically convert into
Base Rate Loans; PROVIDED FURTHER that if the notice shall fail to specify the
duration of the Interest Period, such Interest Period shall be one month.
(B) The Borrower Agent shall deliver an irrevocable notice
of continuation/conversion ("NOTICE OF CONTINUATION/CONVERSION") to the Agent
not later than 11:00 a.m. (New York time) at least two (2) Business Days in
advance of the Continuation/Conversion Date, if the Loans are to be converted
into or continued as LIBOR Loans and specifying:
(I) the proposed Continuation/Conversion Date;
(II) the aggregate amount of Loans to be converted
or renewed;
(III) the type of Loans resulting from the proposed
conversion or continuation; and
(IV) the duration of the requested Interest Period,
PROVIDED, HOWEVER, the Borrowers may not select an Interest
Period that ends after the Stated Termination Date.
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(C) If upon the expiration of any Interest Period
applicable to LIBOR Loans, the Borrowers have failed to select timely a new
Interest Period to be applicable to LIBOR Loans or if any Default or Event of
Default then exists, the Borrowers shall be deemed to have elected to convert
such LIBOR Loans into Base Rate Loans effective as of the expiration date of
such Interest Period.
(D) The Agent will promptly notify each Lender of its
receipt of a Notice of Continuation/Conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given held
by each Lender.
(E) There may not be more than three (3) different LIBOR
Loans in effect hereunder at any time.
2.3 MAXIMUM INTEREST RATE.
In no event shall any interest rate provided for hereunder
exceed the maximum rate legally chargeable by any Lender under applicable law
for such Lender (including any laws of the United States, Canada, Hong Kong or
Puerto Rico or any state, division, territory or province thereof) with respect
to loans of the type provided for hereunder (the "MAXIMUM RATE"). If, in any
month, any interest rate, absent such limitation, would have exceeded the
Maximum Rate, then the interest rate for that month shall be the Maximum Rate,
and, if in future months, that interest rate would otherwise be less than the
Maximum Rate, then that interest rate shall remain at the Maximum Rate until
such time as the amount of interest paid hereunder equals the amount of
interest which would have been paid if the same had not been limited by the
Maximum Rate. In the event that, upon payment in full of the Obligations, the
total amount of interest paid or accrued under the terms of this Agreement is
less than the total amount of interest which would, but for this SECTION 2.3,
have been paid or accrued if the interest rate otherwise set forth in this
Agreement had at all times been in effect, then the Borrowers shall, to the
extent permitted by applicable law, pay the Agent, for the account of the
Lenders, an amount equal to the excess of (a) the lesser of (i) the amount of
interest which would have been charged if the Maximum Rate had, at all times,
been in effect or (ii) the amount of interest which would have accrued had the
interest rate otherwise set forth in this Agreement, at all times, been in
effect over (b) the amount of interest actually paid or accrued under this
Agreement. If a court of competent jurisdiction determines that the Agent
and/or any Lender has received interest and other charges hereunder in excess
of the Maximum Rate, such excess shall be deemed received on account of, and
shall automatically be applied to reduce, the Obligations other than interest,
in the inverse order of maturity, and if there are no Obligations outstanding,
the Agent and/or such Lender shall refund to the Borrowers such excess. Without
limiting the generality of this SECTION 2.3, if any provision of any of the
Loan Documents would obligate Applica Canada, Applica Asia or any other Foreign
Subsidiary to make any payment of interest with respect to any Obligations in
an amount calculated at a rate that would be prohibited by applicable law or
would result in the receipt of interest with respect to any Obligations at a
criminal rate (as such terms are construed under the Criminal Code (Canada) or
other applicable law), then such provision shall be deemed to be adjusted
solely with respect to Applica Canada, Applica Asia or such other Foreign
Subsidiary with retroactive effect to the maximum amount or rate of interest,
as the case may be, as would not be prohibited by applicable law with respect
to Applica Canada, Applica Asia or such other Foreign Subsidiary or result in
any Lender's receipt of interest with respect to any sums paid by Applica
Canada at a criminal rate.
8
ARTICLE 3
PAYMENTS AND PREPAYMENTS
3.1 MANDATORY PAYMENTS OF TERM LOAN.
(A) The Borrowers shall repay the aggregate principal
balance of the Term Loan, together with all accrued and unpaid interest thereon
as follows: (i) thirteen (13) equal installments of $5,000,000 each, on the
last day of each September, December, March and June, commencing on September
30, 2009; and (ii) on the Termination Date, a final payment in an amount equal
to the outstanding amount of all principal and accrued interest thereon. All
payments required to be made hereunder or under any of the other Loan Documents
shall be made in Dollars.
(B) Subject to the Additional Debt Intercreditor Agreement,
all proceeds of any Asset Disposition with respect to any Collateral by a Loan
Party received by a Loan Party (other than Applica Canada, in which event the
Loan Parties shall transfer an amount equal to such Net Proceeds to Agent for
application to the Obligations to the extent required hereunder and after the
date on which Applica Canada is required hereunder or by the Applica Canada
Security Agreement or otherwise following the occurrence and during the
continuance of an Event of Default, Applica Canada shall remit proceeds of its
Collateral to the Agent) shall be paid to the Agent, promptly upon the receipt
thereof by such Loan Party, for application to the Term Loan, except as
provided in SECTION 7.9. Notwithstanding the foregoing and provided no Event of
Default has occurred and is continuing, such prepayment shall not be required
to the extent the Borrower reinvests such proceeds of such Asset Disposition,
or a portion thereof, in assets of a kind then used or usable in the business
of the Borrowers, within three hundred sixty-five (365) days after the date of
such Asset Disposition or enters into a binding commitment thereof within said
three hundred sixty-five (365) day period and subsequently makes such
reinvestment. No provision contained in this SECTION 3.1 shall constitute a
consent to any Asset Disposition that is not otherwise permitted by the express
terms of this Agreement.
3.2 EARLY TERMINATION FEE.
In the event that the Borrowers shall prepay the Obligations at
any time, in whole or in part, or the Termination Date occurs, for any reason,
prior to the Stated Termination Date, the Borrowers shall pay to the Agent, for
the ratable benefit of the Lenders, a fee (the "EARLY TERMINATION FEE") in
respect of amounts which are paid or become payable by reason thereof equal to
the following: (i) 6.5% of the amount of Term Loan prepaid if the Termination
Date shall occur at any time on or before December 28, 2008; (ii) 5.2% of the
amount of Term Loan prepaid if the Termination Date shall occur at any time on
or after December 29, 2008 but on or before December 28, 2009; (iii) 3.9% of
the amount of Term Loan prepaid if the Termination Date shall occur at any time
on or after December 29, 2009 but on or prior to December 28, 2010; (iv) 2.6%
of the amount of Term Loan prepaid if the Termination Date shall occur at any
time on or after December 29, 2010; and (v) 1.3% of the amount of Term Loan
prepaid if the Termination Date shall occur at any time on or after December
29, 2011 but on or prior to the Termination Date. All parties to this Agreement
agree and acknowledge that the Lenders will have suffered damages on account of
the early termination of this Agreement and that, in view of the difficulty in
ascertaining the amount of such damages, the Early Termination Fee constitutes
reasonable compensation and liquidated damages to compensate the Lenders on
account thereof.
9
3.3 RESERVED.
3.4 RESERVED.
3.5 LIBOR LOAN PREPAYMENTS.
Except as otherwise expressly provided in this Agreement, in
connection with any prepayment, if any LIBOR Loans are prepaid prior to the
expiration date of the Interest Period applicable thereto, the Borrowers shall
pay to the Agent on behalf of the Lenders the amounts described in SECTION 4.4.
3.6 PAYMENTS BY THE LOAN PARTIES.
(A) All payments to be made by the Loan Parties shall be
made without set off, recoupment or counterclaim. Except as otherwise expressly
provided herein, all payments by the Loan Parties shall be made to the Agent
for the account of the Lenders at the Payment Account or such other account
designated by the Agent in writing and shall be made in Dollars and in
immediately available funds, no later than 12:00 noon (New York time) on the
date such payment is due and shall be deemed to have been received (subject to
final collection) on the Business Day that Agent receives such items in
immediately available funds for purposes of calculating the amount of interest
accrued thereon. Any payment received by Agent after 12:00 noon (New York time)
shall be deemed to have been received on the next Business Day thereafter and
any applicable interest and other charges shall continue to accrue for such
period.
(B) Subject to the provisions set forth in the definition
of "INTEREST PERIOD," whenever any payment is due on a day other than a
Business Day, such payment shall be due on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
3.7 RESERVED.
3.8 APPORTIONMENT, APPLICATION AND REVERSAL OF PAYMENTS.
Principal and interest payments shall be apportioned ratably
among the Lenders (according to the unpaid principal balance of the Term Loan
to which such payments relate held by each Lender) and payment of the fees
shall, as applicable, be apportioned ratably among the Lenders, except for fees
payable solely to Agent. All payments shall be remitted to the Agent and all
such payments not relating to principal or interest of the Term Loan, or not
constituting payment of specific fees, and all proceeds of Accounts or other
Collateral received by the Agent, shall be applied, ratably, subject to the
provisions of this Agreement, first, to pay any fees, indemnities or expense
reimbursements then due to the Agent from the Borrowers; second, to pay any
fees, indemnities or expense reimbursements then due to the Lenders from the
Borrowers; third, to pay interest due in respect of the Term Loan; fourth, to
pay or prepay principal of the Term Loan; and fifth, to the payment of any
other Obligations. Notwithstanding anything to the contrary contained in this
Agreement, neither Agent nor any Lender shall apply any payments which it
receives to any LIBOR Loan, unless (a) so directed by the Borrowers, (b) an
Event of Default has occurred and is continuing or (c) such payments are
applied on the expiration date of the Interest Period applicable to any such
10
LIBOR Loan. For so long as an Event of Default has occurred and is continuing,
the Agent and the Lenders shall have the continuing and exclusive right to
apply and reverse and reapply any and all such proceeds and payments to any
portion of the Obligations.
3.9 INDEMNITY FOR RETURNED PAYMENTS.
If after receipt of any payment which is applied to the payment
of all or any part of the Obligations, the Agent, any Lender, or any Affiliate
of the Agent or a Lender is for any reason compelled to surrender such payment
or proceeds to any Person because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible setoff, or a diversion of trust funds, or for
any other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continued and this Agreement shall continue in full force
as if such payment or proceeds had not been received by the Agent or such
Lender and the Borrowers shall be liable to pay to the Agent and the Lenders,
and hereby do indemnify the Agent and the Lenders and hold the Agent and the
Lenders harmless for the amount of such payment or proceeds surrendered. The
provisions of this SECTION 3.10 shall be and remain effective notwithstanding
any contrary action which may have been taken by the Agent or any Lender in
reliance upon such payment or application of proceeds, and any such contrary
action so taken shall be without prejudice to the Agent's and the Lenders'
rights under this Agreement and shall be deemed to have been conditioned upon
such payment or application of proceeds having become final and irrevocable.
The provisions of this SECTION 3.10 shall survive the termination of this
Agreement.
3.10 AGENT'S AND LENDERS' BOOKS AND RECORDS; MONTHLY STATEMENTS.
The Agent shall record the principal amount of the Loans owing
to each Lender from time to time on its books. In addition, each Lender may
note the date and amount of each payment or prepayment of principal of such
Lender's Loans in its books and records. Failure by Agent or any Lender to make
such notation shall not affect the obligations of the Borrowers with respect to
the Loans. The Loan Parties agree that the Agent's and each Lender's books and
records showing the Obligations and the transactions pursuant to this Agreement
and the other Loan Documents shall be admissible in any action or proceeding
arising therefrom, and shall constitute rebuttably presumptive proof thereof,
irrespective of whether any Obligation is also evidenced by a promissory note
or other instrument. The Agent will provide to the Borrowers a monthly
statement of Loans, payments, and other transactions pursuant to this
Agreement. Such statement shall be deemed correct, accurate, and binding on the
Loan Parties and an account stated (except for corrections of errors discovered
by the Agent), unless the Borrowers notify the Agent in writing to the contrary
within thirty (30) days after such statement is rendered. In the event a timely
written notice of objections is given by the Borrowers, only the items to which
exception is expressly made will be considered to be disputed.
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ARTICLE 4
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 TAXES.
(A) Any and all payments by any Loan Party to a Lender or
the Agent under this Agreement and any other Loan Document shall be made free
and clear of, and without deduction or withholding for any Indemnified Taxes.
If a Loan Party shall be required by law to deduct or withhold any Indemnified
Taxes from or in respect of any sum payable hereunder to any Lender or Agent,
then:
(I) the sum payable shall be increased as necessary
so that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional
sums payable under this Section) such Lender or Agent, as the
case may be, receives an amount equal to the sum it would have
received had no such deductions or withholdings been made;
(II) the Loan Parties shall make such deductions and
withholdings;
(III) the Loan Parties shall pay the full amount
deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable law or, if being
contested in good faith, set up adequate reserves for such
Indemnified Taxes; and
(IV) the Loan Parties shall also pay to each Lender
or Agent for the account of such Lender, at the time interest
is paid, all additional amounts which the respective Lender
documents (in reasonable detail) as being necessary to preserve
the after-tax yield such Lender would have received if such
Taxes had not been imposed.
(B) In addition, the Loan Parties shall pay all Other
Taxes.
(C) The Loan Parties agree to indemnify and hold harmless
each Lender and the Agent for the full amount of Indemnified Taxes and Other
Taxes (including any Taxes imposed by any jurisdiction on amounts payable under
this Section) paid by any Lender or Agent and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto. Payment under this indemnification shall be made within thirty
(30) days after the date such Lender or Agent makes written demand therefor.
(D) Without limiting the generality of the foregoing
provisions of this SECTION 4.1, with respect to each payment under any of the
Loan Documents by Applica Canada or Applica Asia to any Lender that is not, in
respect of such payment, a resident of Canada for the purposes of the Tax
imposed pursuant to Part XIII of the ITA, or a resident of Hong Kong for any
similar applicable law of Hong Kong, including any fees or charges payable
pursuant to this Agreement, such amount shall be increased as necessary so that
after all required deductions or withholdings of such Tax are made (including
deductions or withholdings applicable to additional sums paid under this
Section), the Agent and such Lender receive an amount equal to the sum that it
would have received had no such Tax been required and Applica Canada or Applica
Asia (as applicable) shall forthwith on written demand by the Agent to be
accompanied by reasonable substantiation thereof,or any Lender remit to the
Agent or such Lender, as the case may be, the full amount of the aforesaid
increase.
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(E) At the Agent's written request, within thirty (30) days
after the date of any payment by the Loan Parties of Taxes or Other Taxes, the
Loan Parties shall furnish the Agent the original or a certified copy of a
receipt evidencing payment thereof, or other evidence of payment satisfactory
to the Agent.
(F) If the Loan Parties are required to pay additional
amounts to any Lender or the Agent pursuant to SUBSECTIONS (B) OR (C) of this
Section, then such Lender shall use reasonable efforts (consistent with legal
and regulatory restrictions) to change the jurisdiction of its lending office
so as to eliminate any such additional payment by the Loan Parties which may
thereafter accrue, if such change in the judgment of such Lender is not
otherwise disadvantageous to such Lender.
(G) In respect of amounts paid or credited by a Loan Party
that is resident in Canada for purposes of the ITA to or for the benefit of a
particular Lender that is an "AUTHORIZED FOREIGN BANK" for purposes of the ITA,
the obligations under this SECTION 4.1 to pay an additional amount shall apply
where the particular Lender is liable for tax under Part XIII of the ITA in
respect of such payment, even if the Loan Party is not required under the ITA
to deduct or withhold an amount in respect of Taxes on such payment and this
SECTION 4.1 shall apply, mutatis mutandis, as if the Loan Party was required to
deduct or withhold an amount in respect of such Taxes.
(H) Without prejudice to the survival of any other
agreement contained herein, the agreements and obligations contained in this
SECTION 4.1 shall survive the payment in full of principal, interest, fees and
any other amounts payable hereunder and the termination of this Agreement and
any other Loan Document.
4.2 ILLEGALITY.
(A) If any Lender determines, based upon advice from legal
counsel, that the introduction of any Requirement of Law, or any change in any
Requirement of Law, or in the interpretation or administration of any
Requirement of Law, has made it unlawful, or that any central bank or other
Governmental Authority has asserted that it is unlawful, for any Lender or its
applicable lending office to make LIBOR Loans, then, on notice thereof by that
Lender to the Borrowers through the Agent, any obligation of that Lender to
make LIBOR Loans shall be suspended until that Lender notifies the Agent and
the Borrowers that the circumstances giving rise to such determination no
longer exist.
(B) If a Lender determines that it is unlawful to maintain
any LIBOR Loan, the Borrowers shall, upon receipt of notice of such fact and
demand from such Lender (with a copy to the Agent), prepay in full such LIBOR
Loans of that Lender then outstanding, together with interest accrued thereon
and amounts required under SECTION 4.4, either on the last day of the Interest
Period thereof, if that Lender may lawfully continue to maintain such LIBOR
Loans to such day, or immediately, if that Lender may not lawfully continue to
maintain such LIBOR Loans. In the event such Lender shall have determined that
it is no longer unlawful for it to maintain a LIBOR Loan, it shall promptly
give notice to the Borrowers and Agent. If the Borrowers are required to so
prepay any LIBOR Loans, then concurrently with such prepayment, the Borrowers
shall borrow from the affected Lender, in the amount of such repayment, a Base
Rate Loan. Notwithstanding anything to the contrary in this Agreement, the
Borrowers shall not be liable for any losses, or be required to reimburse an
Lender as set forth in SECTION 4.4 to the extent a LIBOR Loan has been prepaid
in accordance with this SECTION 4.2.
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4.3 INCREASED COSTS AND REDUCTION OF RETURN.
(A) If any Lender determines, based upon advice from legal
counsel, that due to either (i) the introduction of or any change in the
interpretation of any Requirement of Law or (ii) the compliance by that Lender
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to such Lender of agreeing to make or making, funding or
maintaining any LIBOR Loans, then the Borrowers shall be liable for, and shall
from time to time, upon demand (with a copy of such demand to be sent to the
Agent), pay to the Agent for the account of such Lender, additional amounts as
are sufficient to compensate such Lender for such increased costs or,
alternatively, in the case where the increased costs are material to Borrowers
or are in excess of the cost of a Base Rate Loan, the Borrowers may choose to
prepay such LIBOR Loan and concurrently with such prepayment, the Borrowers
shall borrow from the affected Lender, a Base Rate Loan in the amount of such
repayment; PROVIDED, HOWEVER, that no Lender shall be entitled to claim any
additional amount hereunder with respect to the period which is more than
thirty (30) days prior to the date the Lender actually became aware of such
additional amounts; PROVIDED, FURTHER, that notwithstanding anything to the
contrary in this Agreement, the Borrowers shall not be liable for any losses,
or be required to reimburse any Lender as set forth in SECTION 4.4 to the
extent a LIBOR Loan has been prepaid in accordance with this SECTION 4.3(A).
(B) If any Lender shall have determined, based upon advice
from legal counsel, that (i) the introduction of any Capital Adequacy
Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any
change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by such Lender or
any corporation or other entity controlling such Lender with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by such Lender or any corporation or other entity
controlling such Lender and (taking into consideration such Lender's or such
corporation's or other entity's policies with respect to capital adequacy and
such Lender's desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitments, loans, credits or
obligations under this Agreement, then, upon written demand of such Lender to
the Borrowers through the Agent and submission of reasonable substantiation
thereof, the Borrowers shall pay to such Lender, from time to time as specified
by such Lender, additional amounts sufficient to compensate such Lender for
such non-material increase; PROVIDED, however, that no Lender shall be entitled
to claim any such additional amount with respect to the period which is more
than thirty (30) days prior to the date the Lender actually became aware of
such additional amounts.
4.4 FUNDING LOSSES.
The Borrowers shall reimburse each Lender and hold each Lender
harmless from any loss or expense which such Lender may sustain or incur as a
consequence of:
(A) the failure of the Borrowers to make on a timely basis
any payment of principal of any LIBOR Loan;
(B) the failure of the Borrowers to borrow, continue or
convert a Loan after the Borrowers have given (or is deemed to have given) a
Notice of Borrowing or a Notice of Continuation/Conversion; or
14
(C) the prepayment or other payment (including after
acceleration thereof) of any LIBOR Loans on a day that is not the last day of
the relevant Interest Period;
excluding any such loss of anticipated profit but including any loss or expense
arising from the liquidation or reemployment of funds obtained by it to
maintain its LIBOR Loans or from fees payable to terminate the deposits from
which such funds were obtained. Borrowers shall also pay any customary
administrative fees charged by any Lender in connection with the foregoing.
4.5 INABILITY TO DETERMINE RATES.
If the Agent determines that for any reason adequate and
reasonable means do not exist for determining the LIBOR Rate for any requested
Interest Period with respect to a proposed LIBOR Loan, or that the LIBOR Rate
for any requested Interest Period with respect to a proposed LIBOR Loan does
not adequately and fairly reflect the cost to the Lenders of funding such Loan,
the Agent will promptly so notify the Borrowers and each Lender. Thereafter,
the obligation of the Lenders to make or maintain LIBOR Loans hereunder shall
be suspended until the Agent revokes such notice in writing. Upon receipt of
such notice, the Borrowers may revoke any Notice of Continuation/Conversion
then submitted by it. If the Borrowers do not revoke such Notice, the Lenders
shall make, convert or continue the Loans, as proposed by the Borrowers, in the
amount specified in the applicable notice submitted by the Borrowers, but such
Loans shall be made, converted or continued as Base Rate Loans instead of LIBOR
Loans.
4.6 CERTIFICATES OF AGENT.
If any Lender claims reimbursement or compensation under this
Article 4, Agent shall deliver to the Borrowers (with a copy to the affected
Lender) a certificate setting forth in reasonable detail the amount payable to
the affected Lender, and such certificate shall be conclusive and binding on
the Borrowers in the absence of manifest error.
4.7 OBLIGATION TO MITIGATE.
(A) Subject to SECTION 4.7(B) below, each Lender and the
Agent agrees that, as promptly as practicable after the officer of such Lender
or Agent responsible for administering the Loans of such Lender or the Agent,
as the case may be, becomes aware of the occurrence of any event or the
existence of a condition that would cause such Lender to receive increased
payments from the Borrowers under SECTION 4.1, SECTION 4.2 or SECTION 4.3, it
will, to the extent not inconsistent with the formal internal policies of such
Lender or the Agent and any applicable Requirement of Law, use reasonable
efforts (i) to make, issue, fund or maintain the Commitment of such Lender or
the affected Loans of such Lender or the Agent through another lending office
of such Lender or the Agent or (ii) take such other actions as such Lender or
the Agent may deem reasonable to cause the additional amounts that the
Borrowers would be required to pay the Lender or the Agent under SECTION 4.1,
SECTION 4.2 or SECTION 4.3 to be reduced.
(B) The Borrowers may, in their sole discretion, on ten
(10) Business Days prior written notice to the Agent and the applicable Lender,
cause a Lender who has (i) incurred increased costs or is unable to make LIBOR
Loans, or (ii) made any claim for taxes under SECTION 4.1 hereof, (and such
Lender shall) to assign, pursuant to SECTION 11.2 hereof, all of its rights and
obligations under this Agreement to an Eligible Assignee designated by the
Borrowers and reasonably acceptable to the Agent which is willing to become a
15
Lender for a purchase price equal to the outstanding principal amount of the
Loans payable to such Lender plus any accrued but unpaid interest on such
Loans, and any accrued but unpaid fees with respect to such Agreement;
PROVIDED, HOWEVER, that any expenses or other amounts which would be owing to
such Lender pursuant to any indemnification provision hereof (including, if
applicable, SECTION 4.4 hereof) shall be payable by the Borrowers as if the
Borrowers had prepaid the Loans of such Lender rather than such Lender having
assigned its interest hereunder. The Borrowers or such assignee shall pay the
applicable processing fee under SECTION 11.2 hereof.
4.8 SURVIVAL.
The agreements and obligations of the Borrowers in this Article
4 shall survive the payment of all other Obligations.
ARTICLE 5
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
5.1 BOOKS AND RECORDS.
The Borrowers shall maintain, at all times, correct and
complete books, records and accounts in which complete, correct and timely
entries are made of its transactions in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to SECTION 5.2(A). The Borrowers shall, by means of appropriate
entries, reflect in such accounts and in all Financial Statements proper
liabilities and reserves for all taxes and proper provision for depreciation
and amortization of property and bad debts, all in accordance with GAAP. The
Loan Parties shall maintain at all times books and records pertaining to the
Collateral in such detail, form and scope as required under the Security
Agreement as to the Borrowers party thereto, as required under the Applica
Canada Security Agreement as to Applica Canada, and as required under the
Applica Asia Security Agreement as to Applica Asia.
5.2 FINANCIAL INFORMATION.
The Loan Parties shall promptly furnish to the Agent all such
financial information regarding any Loan Party's or other Consolidated Member's
financial and business affairs as the Agent shall reasonably request. Without
limiting the foregoing, the Loan Parties will furnish to the Agent, via
electronic notice or otherwise, in sufficient copies for distribution by the
Agent to each Lender (and upon receipt, the Agent shall promptly distribute to
the Lenders), in such reasonable detail as the Agent or the Lenders shall
request, the following:
(A) As soon as available, and in any event within ninety
(90) days after the close of each Fiscal Year, audited consolidated balance
sheets, income statements, cash flow statements and changes in stockholders'
equity and unaudited consolidating balance sheets and income statements for the
Consolidated Members for such Fiscal Year, setting forth in each case in
comparative form figures for the previous Fiscal Year, all in reasonable
detail, fairly presenting the financial position and the results of operations
of the Consolidated Members as at the date thereof and for the Fiscal Year then
ended, and prepared in accordance with GAAP. Such statements shall be examined
in accordance with generally accepted auditing standards and be accompanied by
a report thereon that is not subject to an Impermissible Qualification by
independent certified public accountants selected by the Loan Parties and
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reasonably satisfactory to the Agent. Such statements also shall be accompanied
by a report regarding the Loan Parties prepared in accordance with special
procedures reasonably required by the Agent in connection with such audit. Each
Loan Party hereby authorizes the Agent to communicate, together with a
representative of the Loan Parties, directly with its certified public
accountants and, by this provision, authorizes those accountants to disclose to
the Agent any and all financial statements and other supporting financial
documents and schedules relating to the Consolidated Members and to discuss
directly with the Agent and a representative of the Loan Parties the finances
and affairs of the Consolidated Members.
(B) As soon as available, and in any event within
forty-five (45) days after the end of each Fiscal Quarter (other than the
fourth Fiscal Quarter of each Fiscal Year), consolidated unaudited balance
sheets of the Consolidated Members as at the end of such Fiscal Quarter, and
consolidated unaudited income statements and cash flow statements for the
Consolidated Members for such Fiscal Quarter and for the period from the
beginning of the Fiscal Year to the end of such quarter, all in reasonable
detail, fairly presenting the financial position and results of operations of
the Consolidated Members as at the date thereof and for such periods, and, in
each case, in comparable form, figures for the corresponding period in the
prior Fiscal Year and prepared in accordance with GAAP applied consistently
with the audited Financial Statements required to be delivered pursuant to
SECTION 5.2(A). The Loan Parties shall certify by a certificate signed by their
chief financial officer that all such statements have been prepared in
accordance with GAAP and present fairly the financial position of the
Consolidated Members as at the dates thereof and its results of operations for
the periods then ended.
(C) As soon as available, and in any event within
forty-five (45) days after the end of each Fiscal Quarter other than the fourth
Fiscal Quarter of each Fiscal Year (but within sixty (60) days after the end of
the Fiscal Quarter ending December 31, 2007), consolidated unaudited balance
sheets of the Reporting Loan Parties as at the end of such Fiscal Quarter, and
consolidated unaudited income statements for the Reporting Loan Parties for
such Fiscal Quarter and for the period from the beginning of the Fiscal Year to
the end of such quarter, all in reasonable detail, fairly presenting the
financial position and results of operations of the Reporting Loan Parties as
at the date thereof and for such periods, and, in each case, in comparable
form, figures for the corresponding period in the prior Fiscal Year and the
Latest Projections for the then current Fiscal Year, and prepared in accordance
with GAAP applied consistently with the audited Financial Statements required
to be delivered pursuant to SECTION 5.2(A). The Reporting Loan Parties shall
certify by a certificate signed by their chief financial officer that all such
statements have been prepared in accordance with GAAP and present fairly the
financial position of the Reporting Loan Parties as at the dates thereof and
its results of operations for the periods then ended.
(D) As soon as available, and in any event within thirty
(30) days after the end of each month commencing with the month of January
2008, consolidated unaudited balance sheets of the Reporting Loan Parties as at
the end of such month, and consolidated unaudited income statements for the
Reporting Loan Parties for such month and for the period from the beginning of
the Fiscal Year to the end of such month, all in reasonable detail, fairly
presenting the financial position and results of operations of the Reporting
Loan Parties as at the date thereof and for such periods, including an
itemization of depreciation, amortization and Unfinanced Capital Expenditures,
and, in each case, in comparable form, figures for the corresponding period in
the prior Fiscal Year and the Latest Projections for the then current Fiscal
Year, and prepared in accordance with GAAP applied consistently with the
audited Financial Statements required to be delivered pursuant to SECTION
5.2(A). The Reporting Loan Parties shall certify by a certificate signed by
their chief financial officer that all such statements have been prepared in
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accordance with GAAP and present fairly the financial position of the Reporting
Loan Parties as at the dates thereof and its results of operations for the
periods then ended, subject to normal year-end adjustments and the absence of
footnotes.
(E) With each of the audited Financial Statements delivered
pursuant to SECTION 5.2(A), a certificate of the independent certified public
accountants that examined such statement to the effect that they have reviewed
and are familiar with this Agreement and that, in examining such Financial
Statements, they did not become aware of any fact or condition which then
constituted a Default or Event of Default with respect to a financial covenant,
except for those, if any, described in reasonable detail in such certificate.
(F) Within thirty (30) days after the end of each month, a
certificate of the chief financial officer of the Loan Parties (i) setting
forth in reasonable detail the calculations required to establish that the
Reporting Loan Parties were in compliance with the covenant set forth in
SECTION 7.27 during the period covered in such Financial Statements and as at
the end thereof irrespective of whether compliance with the covenant set forth
in SECTION 7.27 was required during such period, and (ii) stating that, except
as explained in reasonable detail in such certificate, (A) all of the
representations and warranties of the Loan Parties contained in this Agreement
and the other Loan Documents are correct and complete in all material respects
as at the date of such certificate as if made at such time, except for those
that speak as of a particular date, (B) the Loan Parties are, at the date of
such certificate, in compliance in all material respects with all covenants and
agreements in this Agreement and the other Loan Documents, and (C) no Default
or Event of Default then exists or existed during the period covered by the
Financial Statements for such month. If such certificate discloses that a
representation or warranty is not correct or complete, or that a covenant has
not been complied with, or that a Default or Event of Default existed or
exists, such certificate shall set forth what action the Borrowers have taken
or propose to take with respect thereto.
(G) As soon as available, and in any event within
forty-five (45) days after the end of each Fiscal Quarter, a certificate of the
chief financial officer of the Loan Parties (i) describing and analyzing in
reasonable detail all material trends, changes, and developments in the
business of the Loan Parties and (ii) explaining the variances of the figures
in the corresponding budgets and prior Fiscal Year financial statements. The
Loan Parties' obligation to deliver to Agent a certificate of the type
contemplated by this Section 5.2(g) shall be satisfied by filings by the Loan
Parties with the Securities and Exchange Commission under the Exchange Act
(including sections of such filings entitled "Management's Discussion and
Analysis") so that the Loan Parties shall be obligated to deliver such a
certificate to Agent only if they no longer are required to file applicable
financial information with the Securities and Exchange Commission under the
Exchange Act.
(H) No later than forty-five (45) days after the Fiscal
Year beginning July 1, 2008, and no later than the beginning of each Fiscal
Year thereafter, annual forecasts (to include forecasted consolidated balance
sheets, income statements and cash flow statements) for the Reporting Loan
Parties as at the end of and for each month of such Fiscal Year.
(I) Promptly after filing with the PBGC, the IRS or other
applicable Governmental Authority, a copy of each annual report or other filing
filed with respect to each Plan of the Loan Party.
(J) Promptly upon the filing thereof, copies of all
reports, if any, to or other documents filed by any Consolidated Member with
the Securities and Exchange Commission under the Exchange Act, and all material
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reports, notices, or statements sent by the Borrowers to holders of any equity
interests of Parent (other than routine non-material correspondence sent by the
trustee under any indenture under which the same is issued).
(K) As soon as available, and in any event not later than
fifteen (15) days after any Loan Party's receipt thereof, a copy of all
management reports and final management letters prepared by any independent
certified public accountants of any Loan Party.
(L) Promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which the Parent make
available to its shareholders.
(M) If requested by Agent in writing, promptly after filing
with the IRS or other applicable Governmental Authority, a copy of each tax
return filed by any Loan Party.
(N) As soon as available, and in any event within twenty
(20) days after the end of the first and second month of each Fiscal Quarter
(in each case, for such month), and within thirty (30) days after the end of
the last month of each Fiscal Quarter (in each case, for such month), a
Borrowing Base Certificate as of the last day of such month, and a report
showing the beginning and ending balances of all intercompany loans, advances
or investments ("Intercompany Accounts") for such month.
(O) Such additional information as the Agent and/or any
Lender may from time to time reasonably request regarding the financial and
business affairs of any Loan Party.
(P) On the last Business Day of each month, duplicate
original bank statements for the preceding month in respect of the Applica
Canada Blocked Agreement and the Applica Asia Blocked Agreement.
5.3 NOTICES TO THE LENDERS.
The Loan Parties shall notify the Agent and the Lenders in
writing of the following matters at the following times:
(A) Immediately after becoming aware of any Default or
Event of Default;
(B) Immediately after becoming aware of the assertion by
the holder of any Debt of any Borrower or any Subsidiary in a face amount in
excess of $1,000,000 that a default exists with respect thereto or that any
Loan Party is not in compliance with the terms thereof, or the threat or
commencement by such holder of any enforcement action because of such asserted
default or non-compliance;
(C) Immediately after becoming aware of any event or
circumstance which could reasonably be expected to have a Material Adverse
Effect;
(D) Immediately after becoming aware of any pending or
threatened action, suit, or proceeding, by any Person, or any pending or
threatened investigation by a Governmental Authority, which could reasonably be
expected to have a Material Adverse Effect;
(E) Immediately after becoming aware of any pending or
threatened strike, work stoppage, unfair labor practice claim, or other labor
dispute affecting any Loan Party in a manner which could reasonably be expected
to have a Material Adverse Effect;
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(F) Immediately after becoming aware of any violation of
any Requirement of Law affecting any Loan Party which could reasonably be
expected to have a Material Adverse Effect;
(G) Immediately after receipt of any notice of any
violation by any Loan Party of any Environmental Law which could reasonably be
expected to have a Material Adverse Effect or that any Governmental Authority
has asserted in writing that any Loan Party is not in compliance with any
Environmental Law or is investigating any Loan Party where such non-compliance
could reasonably be expected to have a Material Adverse Effect;
(H) Immediately after receipt of any written notice that
any Loan Party is or may be liable to any Person as a result of the Release or
threatened Release or that any Loan Party is subject to investigation by any
Governmental Authority evaluating whether any remedial action is needed to
respond to the Release or threatened Release of any Contaminant which, in
either case, is reasonably likely to give rise to liability in excess of
$1,000,000;
(I) Immediately after receipt of any written notice of the
imposition of any Environmental Lien against any property of any Loan Party for
an amount in excess of $1,000,000;
(J) Any change in any Loan Party's name as it appears in
the state of its incorporation or other organization, jurisdiction of
incorporation or organization, type of entity, organizational identification
number, locations of Collateral other than those set forth in SECTION 4 of the
Security Agreement, or form of organization, trade names under which a Loan
Party sells Inventory or creates Accounts, or to which instruments in payment
of Accounts may be made payable, in each case at least ten (10) days prior
thereto;
(K) Within ten (10) Business Days after any Loan Party or
any ERISA Affiliate knows that an ERISA Event or a prohibited transaction (as
defined in Sections 406 of ERISA and 4975 of the Code) has occurred, which
could reasonably be expected to have a Material Adverse Effect, and, when
known, any action taken or threatened by the IRS, the CRA, the DOL, the PBGC,
the FSCO or any other Governmental Authority with respect thereto;
(L) Upon Agent's written request, or, in the event that
such filing reflects a change with respect to the matters covered thereby,
which could reasonably be expected to have a Material Adverse Effect within
three (3) Business Days after the filing thereof with the PBGC, the DOL, the
IRS, the FSCO or any other applicable Governmental Authority as applicable,
copies of the following: (i) each annual report (form 5500 series), including
SCHEDULE B thereto, filed with the PBGC, the FSCO, the DOL, the IRS or the CRA
with respect to each Pension Plan and in the case of any Pension Plan governed
by the PBA, each report, valuation, request for amendment, whole or partial
withdrawal or termination or other variation, (ii) a copy of each funding
waiver request filed with the PBGC, the DOL, the IRS, the CRA, the FSCO or any
other applicable Governmental Authority with respect to any Pension Plan and
all communications received by the Borrowers or any ERISA Affiliate from the
PBGC, the CRA, the DOL, the IRS, the FSCO or any other applicable Governmental
Authority with respect to such request, and (iii) a copy of each other filing
or notice filed with the PBGC, the DOL, the FSCO, the IRS, the CRA or any other
applicable Governmental Authority, with respect to each Plan by either a Loan
Party or any ERISA Affiliate;
(M) Upon Agent's written request, copies of each actuarial
report for any Pension Plan or Multi-employer Plan and annual report received
for any Multi-employer Plan; and within three (3) Business Days after receipt
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thereof by a Loan Party or any ERISA Affiliate, copies of the following: (i)
any notices of the PBGC, the FSCO or any other applicable Governmental
Authority's intention to terminate a Pension Plan or to have a trustee
appointed to administer such Plan; (ii) any favorable or unfavorable
determination letter from the IRS, the FSCO or any other applicable
Governmental Authority regarding the qualification of a Pension Plan under
Section 401(a) of the Code, the PBA or other applicable laws; or (iii) any
notice from a Multi-employer Plan regarding the imposition of withdrawal
liability;
(N) Within three (3) Business Days after the occurrence
thereof: (i) any changes in the benefits of any existing Pension Plan which
increase a Loan Parties' annual costs with respect thereto by an amount in
excess of $1,000,000, or the establishment of any new Pension Plan which could
reasonably be expected to have an annual aggregate cost of $1,000,000 or more,
or the commencement of contributions to any Pension Plan to which the Loan
Parties or any ERISA Affiliate was not previously contributing; or (ii) any
material failure by a Loan Party or any ERISA Affiliate to make a required
installment or any other required payment under Section 412 of the Code, the
PBA or other applicable laws on or before the due date for such installment or
payment; or
(O) Within three (3) Business Days after a Loan Party or
any ERISA Affiliate knows or has reason to know that any of the following
events has or will occur: (i) a Multi-employer Plan has been or will be
terminated; (ii) the administrator or plan sponsor of a Multi-employer Plan
intends to terminate a Multi-employer Plan; or (iii) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multi-employer Plan, or (iv) Reportable Event or Termination Event in respect
of any Pension Plan.
Each notice given under this Section shall describe the subject
matter thereof in reasonable detail, and shall set forth the action that the
Loan Party or any ERISA Affiliate, as applicable, has taken or proposes to take
with respect thereto.
5.4 REVISIONS OR UPDATES TO SCHEDULES.
Should any of the information or disclosures provided on any of
the schedules originally attached hereto become outdated or incorrect in any
material respect, the Borrowers from time to time shall deliver to the Agent
and the Lenders, together with an officer's certificate of the type required
pursuant to SECTION 5.2(H), such revisions or updates to such schedule(s)
whereupon such schedules shall be deemed to be amended by such revisions or
updates, as may be necessary or appropriate to update or correct such
schedule(s), PROVIDED, HOWEVER, that, notwithstanding the foregoing, (a) no
such revisions or updates to SCHEDULES 6.5, 6.11-6.16, 6.19, 6.24, 6.25 OR 6.27
shall be deemed to have amended, modified, or superseded any such schedules as
originally attached hereto, or to have cured any breach of warranty or
representation resulting from the inaccuracy or incompleteness of any such
schedules, unless and until the Agent shall have received and acknowledged to
the Loan Parties in writing such revisions or updates to any such schedules and
(b) no such revisions or updates to SCHEDULE 6.9 shall be deemed to have
amended, modified, or superseded such Schedule as originally attached hereto,
or to have cured any breach of warranty or representation resulting from the
inaccuracy or incompleteness of such schedule, unless and until the Required
Lenders shall have received and acknowledged to the Loan Parties in writing
such revisions or updates to such schedule; PROVIDED FURTHER, however, that
Agent's receipt and acknowledgment to Loan Parties of any revisions or updates
21
to such schedules shall not affect the application of, and obligations of the
Loan Parties to comply with, any relevant provision of Article 7 of this
Agreement.
ARTICLE 6
GENERAL WARRANTIES AND REPRESENTATIONS
To induce Agent and the Lenders to enter into this Agreement
and to make available the Commitments, each Borrower warrants and represents to
Agent and each Lender that:
6.1 AUTHORIZATION, VALIDITY, AND ENFORCEABILITY OF THIS AGREEMENT
AND THE LOAN DOCUMENTS.
Each Loan Party has the power and authority to execute, deliver
and perform this Agreement and the other Loan Documents to which it is a party,
to incur the Obligations, and to grant to the Agent Liens upon and security
interests in the Collateral. Each Loan Party has taken all necessary action
(including obtaining approval of its stockholders if necessary) to authorize
its execution, delivery, and performance of this Agreement and the other Loan
Documents to which it is a party. This Agreement and the other Loan Documents
to which it is a party have been duly executed and delivered by each Loan
Party, and, assuming this Agreement and the other Loan Documents constitute the
legal, valid and binding obligations of Agent and each of the Lenders hereto,
constitute the legal, valid and binding obligations of each Loan Party,
enforceable against it in accordance with their respective terms. Each Loan
Party's execution, delivery, and performance of this Agreement and the other
Loan Documents to which it is a party do not and will not conflict with, or
constitute a violation or breach of, or result in the imposition of any Lien
upon the property of an Loan Party or any of its Subsidiaries, by reason of the
terms of (a) any contract, mortgage, lease, agreement, indenture, or instrument
to which such Loan Party or any of its Subsidiaries is a party or which is
binding upon it, (b) any Requirement of Law applicable to the such Loan Party
or any of its Subsidiaries, or (c) the certificate or articles of incorporation
or by-laws or the limited liability company or limited partnership agreement of
the Loan Parties or any of their Subsidiaries.
6.2 VALIDITY AND PRIORITY OF SECURITY INTEREST.
The provisions of this Agreement, and the other Loan Documents
create legal and valid Liens on all the Collateral in favor of the Agent, for
the ratable benefit of the Agent and the Lenders, and such Liens constitute
perfected and continuing Liens on all the Collateral, having priority over all
other Liens on the Collateral, except to the extent provided for in the
Additional Debt Intercreditor Agreement and except for those Liens identified
in clauses (a), (c), (d), (e), (g), (h), (i) and (j) of the definition of
Permitted Liens securing all the Obligations, and enforceable against the Loan
Parties and all third parties.
6.3 ORGANIZATION AND QUALIFICATION.
Each Loan Party:
(A) is duly organized or incorporated and validly existing
in good standing under the laws of the jurisdiction of its organization or
incorporation;
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(B) is qualified to do business and is in good standing in
the jurisdictions set forth on SCHEDULE 6.3 which are the only jurisdictions in
which qualification is necessary in order for it to own or lease its property
and conduct its business, except where the failure to so qualify would have a
Material Adverse Effect; and
(C) has all requisite power and authority to conduct its
business and to own its property.
6.4 RESERVED.
6.5 SUBSIDIARIES.
SCHEDULE 6.5 is a correct and complete list of the name and
relationship to the Borrowers of each and all of the Borrowers' Subsidiaries
(specifying whether such Subsidiaries are Domestic Subsidiaries or Foreign
Subsidiaries). Each Subsidiary is (a) duly incorporated or organized and
validly existing in good standing under the laws of its jurisdiction of
incorporation or organization set forth on SCHEDULE 6.5, (b) qualified to do
business and in good standing in each jurisdiction in which the failure to so
qualify or be in good standing could reasonably be expected to have a Material
Adverse Effect and (c) has all requisite power and authority to conduct its
business and own its property.
6.6 FINANCIAL STATEMENTS AND PROJECTIONS.
(A) The Borrowers have delivered to the Agent and the
Lenders the audited balance sheet and related statements of income, retained
earnings, cash flows, and changes in stockholders equity for the Consolidated
Applica Parties as of June 30, 2007, and for the six months then ended,
accompanied by the report thereon of the Borrowers' independent certified
public accountants, Xxxxx Xxxxxxxx LLP. The Borrowers have also delivered to
the Agent and the Lenders the unaudited balance sheet and related statements of
income for the Consolidated Applica Parties as of October 31, 2007. All such
Financial Statements have been prepared in accordance with GAAP and present
accurately and fairly in all material respects the financial position of the
Consolidated Applica Parties as at the dates thereof and their results of
operations for the periods then ended.
(B) The Borrowers have delivered to the Agent and the
Lenders the audited balance sheet and related statements of income, retained
earnings, cash flows, and changes in stockholders equity for the Consolidated
Salton Parties as of June 30, 2007, and for the Fiscal Year then ended,
accompanied by the report thereon of the Borrowers' independent certified
public accountants, Xxxxx Xxxxxxxx LLP. The Borrowers have also delivered to
the Agent and the Lenders the unaudited balance sheet and related statements of
income for the Consolidated Salton Parties as of October 31, 2007. All such
Financial Statements have been prepared in accordance with GAAP and present
accurately and fairly in all material respects the financial position of the
Consolidated Salton entities as at the dates thereof and their results of
operations for the periods then ended.
(C) The Latest Projections when submitted to the Agent as
required herein represent the Loan Parties' good faith estimate of the future
financial performance of the Loan Parties for the periods set forth therein.
The Latest Projections have been prepared on the basis of the assumptions set
forth therein, which the Loan Parties believe are fair and reasonable in light
of current and reasonably foreseeable business conditions at the time submitted
23
to the Lenders; PROVIDED, HOWEVER, it being recognized by Agent and Lenders
that such projections are not to be viewed as facts and that actual results
during the period or periods covered by any such projections will likely differ
from the projected results.
(D) All Financial Statements hereafter delivered to Agent
and Lenders pursuant to this Agreement shall be prepared in accordance with
GAAP and fairly present the financial positions and results of operations of
the Persons described therein at the dates and for the periods indicated.
6.7 RESERVED.
6.8 SOLVENCY.
Each Loan Party is Solvent prior to and after giving effect to
the Term Loan to be made on the Closing Date and shall remain Solvent during
the term of this Agreement.
6.9 DEBT.
After giving effect to the making of the Term Loan on the
Closing Date, the Loan Parties have no material Debt, except (a) the
Obligations; (b) Debt described on SCHEDULE 6.9 and (c) other Debt as permitted
under SECTION 7.13.
6.10 DISTRIBUTIONS.
Except as set forth on SCHEDULE 6.10, since June 30, 2007, no
Distribution has been declared, paid, or made upon or in respect of any Capital
Stock of any Borrower or any Capital Stock of any other Loan Party (unless and
to the extent that such Distribution was made to another Loan Party.
6.11 REAL ESTATE; LEASES.
SCHEDULE 6.11 sets forth, as of the Closing Date, a correct and
complete list of all Real Estate, all leases and subleases of real property
held by each Loan Party as lessee or sublessee, and all leases and subleases of
real property held by each Loan Party as lessor, or sublessor in excess of
$100,000 annually. To the knowledge of each Loan Party, each of such leases and
subleases is valid and enforceable in accordance with its terms and is in full
force and effect, and no default by any party to any such lease or sublease
exists. To the knowledge of each Loan Party or party hereto, each Loan Party
has good and marketable title in fee simple to the Real Estate identified on
SCHEDULE 6.11 as owned by such Loan Party, or valid leasehold interests in all
Real Estate designated therein as "LEASED" by such Loan Party, free of all
Liens except Permitted Liens and those Liens that, when taken as a whole, could
not reasonably be expected to have a Material Adverse Effect.
6.12 PROPRIETARY RIGHTS.
SCHEDULE 6.12 sets forth a correct and complete list of all of
each Loan Party's material Proprietary Rights. None of the material Proprietary
Rights is subject to any licensing agreement or similar arrangement except as
set forth on SCHEDULE 6.12. To the knowledge of each Loan Party, none of the
24
Proprietary Rights infringes on or conflicts with any other Person's property,
and no other Person's property infringes on or conflicts with the Proprietary
Rights. The Proprietary Rights described on SCHEDULE 6.12 constitute all of the
property of such type necessary to the current and anticipated future conduct
of the Loan Parties' business.
6.13 TRADE NAMES.
All trade names or styles under which the Loan Parties
currently or currently intend to sell Inventory or create Accounts, or to which
Instruments in payment of Accounts may be made payable, are listed on SCHEDULE
6.13.
6.14 LITIGATION.
Except as set forth on SCHEDULE 6.14, there is no pending, or
to the knowledge of any Loan Party, threatened, action, suit, proceeding, or
counterclaim by any Person, or to the knowledge of any Loan Party,
investigation by any Governmental Authority, or any basis for any of the
foregoing, which could reasonably be expected to have a Material Adverse
Effect.
6.15 LABOR DISPUTES.
Except as set forth on SCHEDULE 6.15 or as required by the laws
of a foreign jurisdiction as a condition to do business in such jurisdiction,
as of the Closing Date (a) there is no collective bargaining agreement or other
material labor contract covering employees of any Loan Party, (b) no such
collective bargaining agreement or other labor contract is scheduled to expire
during the term of this Agreement, (c) to the knowledge of any Loan Party, no
union or other labor organization is seeking to organize, or to be recognized
as, a collective bargaining unit of employees of any Loan Party or for any
similar purpose, and (d) there is no pending or, to the knowledge of any Loan
Party, threatened, strike, work stoppage, material unfair labor practice claim,
or other material labor dispute against or affecting any Loan Party or its
employees which could be reasonably expected to have a Material Adverse Effect.
6.16 ENVIRONMENTAL LAWS.
Except as otherwise disclosed on SCHEDULE 6.16 or as could not
reasonably be expected to have a Material Adverse Effect:
(A) The Loan Parties have complied in all respects with all
Environmental Laws except as could not reasonably be expected to have a
Material Adverse Effect and no Loan Party nor any of its presently owned real
property or presently conducted operations or any property now or previously in
its charge, management or control to the extent any Loan Party was the
non-complying party in connection with any property previously in its charge,
management or control, nor to the knowledge of a Loan Party, its previously
owned real property or prior operations, is subject to any enforcement order
from or liability agreement with any Governmental Authority or private Person
respecting (i) compliance with any Environmental Law or (ii) any potential
liabilities and costs or remedial action arising from the Release or threatened
Release of a Contaminant.
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(B) Each Loan Party has obtained all permits necessary for
its current operations under Environmental Laws and all such permits are in
good standing and each Loan Party is in compliance with all material terms and
conditions of such permits, except where the failure to obtain or comply with
such permits could not reasonably be expected to have a Material Adverse
Effect.
(C) No Loan Party, nor, to the knowledge of a Loan Party,
any of its predecessors in interest, has been or is in violation of any
applicable law relating to the storage, treatment or disposal of any hazardous
waste.
(D) No Loan Party has received any summons, complaint,
order or similar written notice indicating that it is not currently in
compliance with, or that any Governmental Authority is investigating its
compliance with, any Environmental Laws or that it is or may be liable to any
other Person as a result of a Release or threatened Release of a Contaminant.
(E) To the knowledge of the Loan Party, none of the present
or past operations of the Loan Parties is the subject of any investigation by
any Governmental Authority evaluating whether any remedial action is needed to
respond to a Release or threatened Release of a Contaminant.
(F) No Loan Party has filed, within the past five (5)
years, any notice under any requirement of Environmental Law reporting a spill
or accidental and unpermitted Release or discharge of a Contaminant into the
environment.
(G) No Loan Party has entered into any negotiations or
settlement agreements with any Person (including the prior owner of its
property and any Governmental Authority) imposing material obligations or
liabilities on any Loan Party with respect to any remedial action in response
to the Release of a Contaminant or environmentally related claim.
(H) None of the products manufactured, distributed or sold
by a Loan Party during the period commencing on the date hereof and ending on
the Stated Termination Date contain asbestos containing material.
(I) No Environmental Lien has attached to any of the Real
Estate.
6.17 NO VIOLATION OF LAW.
No Loan Party is in violation of any law, statute, regulation,
ordinance, judgment, order, or decree applicable to it which violation could
reasonably be expected to have a Material Adverse Effect.
6.18 NO DEFAULT.
No Loan Party is in default under any of the Additional Debt
Documents or under any other note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to which a Loan Party is a party or by which it is
bound which default that could reasonably be expected to have a Material
Adverse Effect.
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6.19 PLAN COMPLIANCE.
Except as specifically disclosed in SCHEDULE 6.19:
(A) Each Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Code, the PBA and other federal,
provincial, territorial or state law, except where the lack of such compliance
could not reasonably be expected to have a Material Adverse Effect. Each
Pension Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter or opinion letter from the IRS and to
the knowledge of the Loan Parties, nothing has occurred which would cause the
loss of such qualification except where the lack or absence of such
qualification could not reasonably be expected to have a Material Adverse
Effect. The Loan Parties and each ERISA Affiliate has made all required
contributions to any Plan when due other than any contributions that could not
reasonably be expected to have a Material Adverse Effect, and no application
for a funding waiver or an extension of any amortization period has been made
with respect to any Pension Plan.
(B) There are no pending or, to the knowledge of the Loan
Parties, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(C) Except as could not reasonably be expected to have a
Material Adverse Effect: (i) no ERISA Event has occurred or is reasonably
expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability;
(iii) neither the Loan Parties nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect
to any Pension Plan (other than premiums due and not delinquent under Section
4007 of ERISA); (iv) neither the Loan Parties nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multi-employer Plan; and (v) neither the Loan Parties nor any ERISA Affiliate
has engaged in a transaction that could be subject to Section 4069 or 4212(c)
of ERISA.
6.20 TAXES.
Each Loan Party has filed all federal, provincial, state and
other material Tax returns and reports required to be filed, and has paid all
federal, provincial, state and other material Taxes, assessments, fees and
other governmental charges levied or imposed upon them or their properties,
income, franchises or assets otherwise due and payable unless such unpaid Taxes
and assessments would constitute a Permitted Lien or are being Properly
Contested.
6.21 REGULATED ENTITIES.
No Loan Party nor any Person controlling a Loan Party is an
"INVESTMENT COMPANY" within the meaning of the Investment Company Act of 1940.
No Loan Party is subject to regulation under the Federal Power Act, the
Interstate Commerce Act, any state public utilities code or law, or any other
federal or state statute or regulation limiting its ability to incur
indebtedness.
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6.22 MARGIN REGULATIONS.
No Loan Party is engaged in the business of purchasing or
selling Margin Stock or extending credit for the purpose of purchasing or
carrying Margin Stock.
6.23 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC.
Each Loan Party owns or is licensed or otherwise has the right
to use all of the material patents, trademarks, service marks, trade names,
copyrights, contractual franchises, licenses, authorizations and other
intellectual property rights that are reasonably necessary for the operation of
its businesses, without conflict with the rights of any other Person. To the
knowledge of the Loan Parties, no slogan or other advertising device, product,
process, method, substance, part or other material now employed by the Loan
Parties infringes upon any rights held by any other Person which infringement
could reasonably be expected to have a Material Adverse Effect. No claim or
litigation regarding any of the foregoing is pending or, to the knowledge of
any Borrower, threatened, which, in either case, could reasonably be expected
to have a Material Adverse Effect.
6.24 MATERIAL AGREEMENTS.
SCHEDULE 6.24 hereto sets forth all Material Contracts to which
any Loan Party is a party or is bound as of the Closing Date.
6.25 BANK ACCOUNTS.
SCHEDULE 6.25 contains as of the Closing Date a complete and
accurate list of all bank accounts maintained by each Loan Party with any bank
or other financial institution.
6.26 GOVERNMENTAL AUTHORIZATION.
No approval, consent, exemption, authorization, or other action
by, or notice to, or filing with, any Governmental Authority or other Person is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, a Loan Party of this Agreement or any other Loan
Document.
6.27 CAPITALIZATION.
SCHEDULE 6.27 sets forth, in each case as of the Closing Date
(after giving effect to all of the Transactions), the number of authorized
shares of Capital Stock of each of the Loan Parties and their first tier direct
Foreign Subsidiaries, the number of such shares or other interests that are
outstanding and the names of the record and beneficial owners of all such
shares of Parent and each such Subsidiary. All such issued and outstanding
shares or other interests are validly issued, fully paid and non-assessable.
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6.28 NO MATERIAL ADVERSE CHANGE.
No Material Adverse Effect has occurred since June 30, 2007,
except as otherwise disclosed (a) in the Borrowers' filings with the Securities
and Exchange Commission under the Exchange Act or (b) to Agent and Lenders in
writing prior to the Closing Date.
6.29 FULL DISCLOSURE.
None of the representations or warranties made by the Loan
Party in the Loan Documents as of the date such representations and warranties
are made, and none of the statements contained in any exhibit, report,
statement or certificate furnished by or on behalf of any Loan Party in
connection with the Loan Documents (including the offering and disclosure
materials delivered by or on behalf of the Loan Parties to the Lenders prior to
the Closing Date), contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
6.30 COMMON ENTERPRISE.
The successful operation and condition of each of the Loan
Parties is dependent on the continued successful performance of the functions
of the group of Loan Parties as a whole and the successful operation of each
Loan Party is dependent on the successful performance and operation of each of
the other Loan Parties. Each of the Loan Parties expects to derive benefit (and
its board of directors or other governing body has determined that it may
reasonably be expected to derive benefit), directly and indirectly, from
successful operations of each of the other Loan Parties. Each Loan Party
expects to derive benefit (and the boards of directors or other governing body
of each such Loan Party have determined that it may reasonably be expected to
derive benefit), directly and indirectly, from the credit extended by the
Lenders to the Loan Parties hereunder, both in their separate capacities and as
members of a group of companies. Each Loan Party has determined that execution,
delivery, and performance of this Agreement and any other Loan Documents to be
executed by such Loan Party is within its corporate purpose, will be of direct
and indirect benefit to such Loan Party, and is in its best interest.
6.31 ANTI-TERRORISM LAWS.
(A) GENERAL. No Loan Party or any Consolidated Member is in
violation of any Anti-Terrorism Law or engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding,
or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism
Law.
(B) EXECUTIVE ORDER NO. 13224.
(I) No Consolidated Member is any of the following
(each a "BLOCKED PERSON"):
(1) a Person that is listed in the Annex
to, or is otherwise subject to the
provisions of, Executive Order No.
13224;
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(2) a Person owned or controlled by, or
acting for or on behalf of, any Person
that is listed in the Annex to, or is
otherwise subject to the provisions of,
Executive Order No. 13224;
(3) a Person or entity with which any bank
or other financial institution is
prohibited from dealing or otherwise
engaging in any transaction by any
Anti-Terrorism Law;
(4) a Person or entity that commits,
threatens or conspires to commit or
supports "terrorism" as defined in
Executive Order No. 13224;
(5) a Person or entity that is named as a
"specially designated national" on the
most current list published by the U.S.
Treasury Department Office of Foreign
Asset Control at its official website
or any replacement website or other
replacement official publication of
such list; or
(6) a Person or entity who is affiliated
with a Person or entity listed above.
(C) No Loan Party or any Consolidated Member (i) conducts
any business or engages in making or receiving any contribution of funds, goods
or services to or for the benefit of any Blocked Person or (ii) deals in, or
otherwise engages in any transaction relating to, any property or interests in
property blocked pursuant to Executive Order No. 13224.
ARTICLE 7
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Loan Party covenants to Agent and each Lender that so long
as any of the Obligations remain outstanding or this Agreement or any of the
Commitments are in effect:
7.1 TAXES AND OTHER OBLIGATIONS.
Each Loan Party shall (a) file when due (after taking into
account any applicable extensions) all federal, state, provincial and other
material Tax returns and other material reports which it is required to file;
(b) pay, or provide for the payment, when due, of all federal, state,
provincial and other material Taxes, fees, assessments and other material
governmental charges against it or upon its properties, income franchises or
assets, make all required Tax withholdings and other Tax remittances and
deposits, and provide to Agent and the Lenders, upon request, satisfactory
evidence of its timely compliance with the foregoing; and (c) pay when due all
Debt owed by it and all valid claims of materialmen, mechanics, carriers,
warehousemen, landlords, contractors, subcontractors, processors and other like
Persons, and all other indebtedness owed by it and perform and discharge in a
timely manner all other obligations undertaken by it; PROVIDED, HOWEVER, so
long as a Loan Party has notified Agent in writing, no Loan Party need pay any
Tax, fee, assessment, or governmental charge that is being Properly Contested.
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7.2 LEGAL EXISTENCE AND GOOD STANDING.
Each Loan Party shall maintain its legal existence and its
qualification and good standing in all jurisdictions in which the failure to
maintain such existence and qualification or good standing could reasonably be
expected to have a Material Adverse Effect.
7.3 COMPLIANCE WITH LAW AND AGREEMENTS; MAINTENANCE OF LICENSES.
Each Loan Party shall comply in all respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it
or its business (including the Federal Fair Labor Standards Act and all
Environmental Laws) except where the failure to comply could not reasonably be
expected to have a Material Adverse Effect. Each Loan Party shall obtain and
maintain all licenses, permits, franchises, and governmental authorizations
necessary to own its property and to conduct its business as conducted on the
Closing Date. No Loan Party shall modify, amend or alter its certificate or
articles of incorporation, or its limited liability company operating agreement
or limited partnership agreement, as applicable, other than in a manner which
does not adversely affect the rights of the Lenders or the Agent.
7.4 MAINTENANCE OF PROPERTY; INSPECTION OF PROPERTY.
Each Loan Party shall maintain all of its property necessary
and useful in the conduct of its business, in good operating condition and
repair in accordance with the standard of the Borrowers' industry and
consistent with such Loan Party's past conduct, ordinary wear and tear
excepted.
7.5 INSURANCE.
(A) Each Loan Party shall maintain with financially sound
and reputable insurers, and in the manner customarily insured by similar
businesses owning such properties, insurance against loss or damage by fire
with extended coverage; theft, burglary, pilferage and loss in transit; public
liability and third party property damage; larceny, embezzlement or other
criminal liability; business interruption; public liability and third party
property damage; and such other hazards or of such other types as is customary
for Persons engaged in the same or similar business.
(B) Subject to the Additional Debt Intercreditor Agreement,
each of the Loan Parties shall cause Agent, for the benefit of Agent and the
Lenders, to be named as secured party and loss payee or additional insured on
all insurance policies covering Collateral. Each policy of insurance shall
contain a clause or endorsement requiring the insurer to give not less than
thirty (30) days prior written notice to Agent in the event of cancellation of
the policy for any reason whatsoever and a clause or endorsement in respect of
the insured property stating that the interest of Agent with respect to the
Collateral shall not be impaired or invalidated by any act or neglect of the
insured Person or the owner of any premises for purposes more hazardous than
are permitted by such policy. All premiums for such insurance shall be paid by
the Borrowers when due, and certificates of insurance and, if requested by
Agent, photocopies of the policies, shall be delivered to Agent, in each case
in sufficient quantity for distribution by the Agent to each of the Lenders.
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7.6 INSURANCE AND CONDEMNATION PROCEEDS.
Each Loan Party shall promptly upon becoming aware, notify the
Agent and the Lenders of any material loss, damage, or destruction to the
Collateral, whether or not covered by insurance. Subject to the Additional Debt
Intercreditor Agreement, Agent is hereby authorized to collect all insurance
and condemnation proceeds in respect of Collateral directly and, after
deducting from such proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Agent shall apply such
proceeds, ratably, to the reduction of the Obligations in the order provided
for in SECTION 3.9. With respect to any such proceeds payable to Applica
Canada, the Borrowers shall transfer an amount equal to such proceeds to the
Agent for application to the Obligations in accordance with SECTION 3.9.
7.7 ENVIRONMENTAL LAWS.
Each Loan Party shall conduct, and shall cause each Loan Party
to conduct its business in compliance with all Environmental Laws applicable to
it, including those relating to the generation, handling, use, storage, and
disposal of any Contaminant, except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect. Each Loan Party shall
take, and shall cause each Loan Party to take, prompt and appropriate action to
respond to any non-compliance with Environmental Laws and shall regularly
report to the Agent on such response.
7.8 COMPLIANCE WITH ERISA.
Except as could not reasonably be expected to have a Material
Adverse Effect, each Loan Party shall and shall cause each of its ERISA
Affiliates to: (a) maintain each Plan in compliance in all material respects
with the applicable provisions of ERISA, the Code, the PBA and other federal,
provincial or state law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; (c) make all required
contributions to any Plan subject to Section 412 of the Code; (d) not engage in
a prohibited transaction or violation of the fiduciary responsibility rules
with respect to any Plan; and (e) not engage in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA.
7.9 ASSET DISPOSITIONS, MERGERS, DISSOLUTIONS.
(A) No Loan Party shall transfer, sell, assign, lease as
lessor, or otherwise dispose of all or any part of its property (including any
Collateral), except, when no Default or Event of Default exists and would not
result therefrom, for (i) sales of Inventory in the ordinary course of its
business; (ii) a transfer of property (including Proprietary Rights) to a Loan
Party by another Loan Party; (iii) a termination, transfer or other disposition
of a lease of Real Estate or personal property that is not necessary to the
conduct of such Loan Party's business in the ordinary course, could not
reasonably be expected to have a Material Adverse Effect and does not result
from a such Loan Party's default or failure to perform under such lease; (iv) a
disposition of property that does not constitute Collateral; (v) a sale of
Inventory (and Proprietary Rights related thereto) of a division or line of
business of a Loan Party other than in the ordinary course of business in
connection with and as part of the sale by such Loan Party of such division or
line of business, PROVIDED that (A) the Loan Parties shall provide to Agent,
not less than 5 Business Days prior to the closing of such sale, written notice
of such sale (which notice shall describe in detail the division or line of
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business to be sold, the Inventory (and Proprietary Rights related thereto) to
be sold in connection therewith and as part thereof and the economic and other
material terms of such sale), (B) all Net Proceeds from such sale received by a
Loan Party (other than Applica Canada, in which event the Borrowers shall
transfer an amount equal to such Net Proceeds to Agent for application to the
Obligations and after the date on which Applica Canada is required hereunder or
by the Applica Canada Security Agreement or otherwise following the occurrence
and during the continuance of an Event of Default, Applica Canada shall remit
proceeds of its Collateral to Agent) are promptly remitted to Agent for
application to the Obligations to the extent required hereunder, (C) no Default
or Event of Default exists at the time of or after giving effect to such sale;
(vi) other sales, transfers or distributions (including Proprietary Rights) not
exceeding $50,000,000 in any year; (vii) the conversion of Cash Equivalents to
cash and the use of such cash to pay any of the Obligations or in the ordinary
course of business of a Loan Party; or (viii) a sale (including a sale of
Proprietary Rights) that has been consented to in writing by the Required
Lenders, PROVIDED that, to the extent not otherwise provided hereinabove, in
each of the cases described above in this SECTION 7.9, and subject to the
Additional Debt Intercreditor Agreement, all Net Proceeds (to the extent
constituting proceeds of Collateral) received by a Loan Party (other than
Applica Canada, in which event the Borrowers shall transfer an amount equal to
such Net Proceeds to Agent for application to the Obligations to the extent
required hereunder and after the date on which Applica Canada is required
hereunder or by the Applica Canada Security Agreement or otherwise following
the occurrence and during the continuance of an Event of Default, Applica
Canada shall remit proceeds of its Collateral to the Agent) are promptly
remitted to the Agent for application to the Obligations.
(B) No Loan Party shall enter into a transaction of merger,
reorganization, consolidation or amalgamation except: (i) on or about the
Closing Date, (A) SFP may merge with and into APN, with APN as the survivor of
such merger, and (B) Applica may merge with and into ACP, with ACP as the
survivor of such merger; and (ii) at any time after the Closing Date, when no
Default or Event of Default exists and would not result therefrom, that (W)(1)
Applica Mexico may merge with and into HP, with HP as the survivor of such
merger, and (2) each of One Coffee, Sonex, HCD, SHI, Icebox, STL, Toastmaster,
Family Products and APN may be merged with and into ACP, with ACP as the
survivor of such merger, (X) any Domestic Subsidiary may merge or amalgamate
into a Borrower, with such Borrower as the survivor of such merger; (Y) any
Domestic Subsidiary may merge into any other Domestic Subsidiary, provided that
if a Borrower is a party to such merger it shall be the survivor of such
merger; and (Z) any Loan Party that is not a Borrower may merge or amalgamate
into another Person that is not a Subsidiary if the Loan Party is the surviving
party to such merger or amalgamation, provided that the requirements of the
Security Agreement and all other Loan Documents are at all times satisfied and
such merger or amalgamation does not violate any other provision of this
Agreement.
(C) As long as no Default or Event of Default exists or
would result therefrom and provided the Borrowers give the Agent and the
Lenders at least five (5) Business Days prior written notice, a Loan Party,
other than a Borrower, may wind up, dissolve, or liquidate if none of the
Collateral (except Collateral having a fair value of $1,000,000 or less, in
aggregate) is sold or otherwise disposed of except on terms acceptable to the
Agent (acting at the direction or with the consent of the Required Lenders or
pursuant to this SECTION 7.9) or if such Collateral is sold or otherwise
disposed of to another Loan Party, any Net Proceeds of Collateral received by a
Loan Party (other than Applica Canada, in which event the Borrowers shall
transfer an amount equal to such Net Proceeds to Agent for application to the
Obligations and after the date on which Applica Canada is required hereunder or
by the Applica Canada Security Agreement or otherwise following the occurrence
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and during the continuance of an Event of Default, Applica Canada shall remit
proceeds of its Collateral to the Agent) in connection with any such winding
up, dissolution or liquidation are, to the extent required hereunder, promptly
remitted to the Agent for application to the Obligations, and any remaining
property not sold or otherwise disposed of is transferred to the Borrowers or
another Loan Party subject to the Agent's Liens.
7.10 DISTRIBUTIONS; CAPITAL CHANGE; RESTRICTED INVESTMENTS.
No Loan Party shall (i) directly or indirectly declare or make,
or incur any liability to make, any Distribution, except for Permitted
Distributions, (ii) make any change in its capital structure which could have a
Material Adverse Effect or (iii) make or have any Restricted Investment;
7.11 ACQUISITIONS.
No Loan Party shall make any Acquisition other than a Permitted
Acquisition.
7.12 THIRD PARTY GUARANTIES.
No Loan Party shall make, issue, or become liable on any
Guaranty, except (a) Guaranties of the Obligations in favor of the Agent, (b)
Guaranties in favor of the holders of the Additional Debt, or (c) unsecured
Guaranties of Debt incurred by a Foreign Subsidiary in an aggregate principal
amount at any time outstanding not to exceed $5,000,000.
7.13 DEBT.
No Loan Party shall incur or maintain any Debt, other than: (a)
the Obligations; (b) Debt described on SCHEDULE 6.9; (c) Capital Leases of
Equipment and purchase money secured Debt incurred to purchase Equipment
provided that (i) Liens securing the same attach only to the Equipment acquired
by the incurrence of such Debt, and (ii) the aggregate amount of such Debt
(including Capital Leases) outstanding does not exceed $10,000,000 at any time;
(d) Debt consisting of Permitted Intercompany Advances to the extent consistent
with SECTION 7.28; (e) Debt evidencing a refinancing, refunding, renewal or
extension of the Debt described on SCHEDULE 6.9; provided that (i) the
principal amount thereof is not increased, (ii) the Liens, if any, securing
such refunded, renewed or extended Debt do not attach to any assets in addition
to those assets, if any, securing the Debt to be refunded, renewed or extended,
(iii) no Person that is not an obligor or guarantor of such Debt as of the
Closing Date shall become an obligor or guarantor thereof, and (iv) the terms
of such refinancing, refunding, renewal or extension are not materially less
favorable to such Loan Party, the Agent or the Lenders than the original Debt;
(f) Debt in respect of Hedge Agreements entered into for non-speculative
purposes related to hedging interest rates, currency values and commodities in
connection with the Core Business; (g) the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; (h) Debt arising by reason of Guaranties by a Loan Party
permitted under SECTION 7.12(B); (i) the Additional Debt in an amount not to
exceed $302,500,000; and (j) other unsecured Debt in an aggregate principal
amount at any time outstanding not to exceed $1,000,000.
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7.14 PAYMENTS; PREPAYMENTS.
No Loan Party shall prepay voluntarily any Subordinated Debt,
except as permitted by the terms of this Agreement or any other Loan Document.
7.15 TRANSACTIONS WITH AFFILIATES.
Except as permitted under SECTION 7.9, SECTION 7.10, SECTION
7.12, SECTION 7.13(A), SECTION 7.13(D), SECTION 7.13(H), SECTION 7.28 and
except as set forth below, no Loan Party shall sell, transfer, distribute, or
pay any money or property, including, but not limited to, any fees or expenses
of any nature (including, but not limited to, any fees or expenses for
management services) to any Affiliate that is not a Loan Party or lend or
advance money or property to any Affiliate that is not a Loan Party, or invest
in (by capital contribution or otherwise) or purchase or repurchase any Capital
Stock or indebtedness, or any property, of any Affiliate that is not a Loan
Party, or become liable on any Guaranty of the indebtedness, dividends, or
other obligations of any Affiliate that is not a Loan Party. Notwithstanding
the foregoing, if no Default or Event of Default is in existence or would
result therefrom, any Loan Party may engage in transactions with an Affiliate
in the ordinary course of such Loan Party's business consistent with past
practices and upon terms no less favorable to such Loan Party than would be
obtained in a comparable arm's-length transaction with a third party who is not
an Affiliate.
7.16 [RESERVED].
7.17 [RESERVED].
7.18 [RESERVED].
7.19 [RESERVED].
7.20 INVESTMENT BANKING AND FINDER'S FEES.
With the exception of the fees due to the Lead Arranger, no
Loan Party shall pay or agree to pay, or reimburse any other party with respect
to, any investment banking or similar or related fee, underwriter's fee,
finder's fee, or broker's fee to any Person in connection with this Agreement.
The Loan Parties shall defend and indemnify the Agent and the Lenders and their
Affiliates against and hold them harmless from all claims of any Person that a
Loan Party is obligated to pay for any such fees, and all costs and expenses
(including attorneys' fees) incurred by the Agent and/or any Lender and their
Affiliates in connection therewith.
7.21 BUSINESS CONDUCTED.
The Loan Parties shall not and shall not permit any of their
Subsidiaries to, engage directly or indirectly, in any line of business other
than the Core Business or those businesses that reasonably and rationally
develop from such Core Business from time to time.
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7.22 LIENS.
No Loan Party shall create, incur, assume, or permit to exist
any Lien on any property now owned or hereafter acquired by any of them, except
(a) Permitted Liens, and (b) Liens securing Capital Leases and purchase money
Debt permitted in SECTION 7.13.
7.23 [RESERVED].
7.24 NEW SUBSIDIARIES.
The Loan Parties shall not, directly or indirectly, organize,
create, acquire, or permit to exist any Subsidiary except for non first tier
level Foreign Subsidiaries and as otherwise permitted by this SECTION 7.24. The
Loan Parties shall (a) in the event of the acquisition or creation of any
Subsidiary (a "New Subsidiary") cause to be delivered to Agent, for the benefit
of itself and the Lenders; (b) in the event of the acquisition or creation of
any Domestic Subsidiary, cause to be delivered to Agent, for the benefit of
itself and the Lenders, each of the following, in each case to be duly executed
and delivered by such Subsidiary within (30) Business Days of the acquisition
or creation of such Subsidiary (i) a Guaranty with respect to all of the
Obligations, (ii) a security agreement in substantially the form of the
Security Agreement, and (iii) if such Subsidiary has any material leased
locations where Inventory is located, a Collateral Access Agreement with
respect thereto; and (c) in the event of the acquisition or creation of any
Subsidiary subject to the provisions of clauses (a) or (b) above, cause to be
delivered to Agent for the benefit of the Lenders each of the following within
the time periods indicated therein: (i) an opinion of counsel to such
Subsidiary dated as of the date of the delivery of the other documents required
to be delivered pursuant to this SECTION 7.24 and addressed to the Agent and
Lenders, in form and substance identical to the opinion of counsel delivered
pursuant to SECTION 8.1(A)(XVIII) hereof on the Closing Date with respect to
any Guarantor; and (ii) current certified copies of the Organizational
Documents and Operating Documents of such Subsidiary, minutes of duly called
and conducted meetings (or duly effected consent actions) of the Board of
Directors, or appropriate committees thereof (and, if required by such
Organizational Documents or Operating Documents or by applicable law, of the
shareholders), of such Subsidiary authorizing it to enter into the agreements
required under this SECTION 7.24 and evidence satisfactory to Agent
(confirmation of the receipt of which will be provided by Agent to the Lenders)
that such Subsidiary is Solvent as of such date after giving effect to such
Guaranty and Security Agreement.
7.25 FISCAL YEAR.
Except as set forth on SCHEDULE 7.25, the Borrowers shall not
change, and shall not permit any other Loan Party to change, their Fiscal Year.
7.26 [RESERVED].
7.27 [RESERVED].
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7.28 USE OF PROCEEDS.
The Loan proceeds shall be used by the Borrowers solely for one
or more of the following purposes:
(I) to refinance existing Debt of the Borrowers
(the "REFINANCING") and to finance part of the Merger,
(II) to pay fees and expenses related to the
Transaction, and
(III) to finance the ongoing working capital and
other general corporate purposes of (a) the Loan Parties, and
(b) other Subsidiaries. In no event shall any portion of the
Loan proceeds be used by a Loan Party or any Subsidiary,
directly or indirectly, to purchase or carry Margin Stock, to
repay or otherwise refinance indebtedness of a Loan Party or
others incurred to purchase or carry Margin Stock, to extend
credit for the purpose of purchasing or carrying any Margin
Stock, or to acquire any security in any transaction that is
subject to Section 13 or 14 of the Exchange Act or any other
applicable laws, other than a Permitted Acquisition.
7.29 [RESERVED].
7.30 ANTI-TERRORISM LAWS.
No Loan Party shall conduct any business or engage in any
transaction or dealing with any Blocked Person (as defined in SECTION 6.31(B)),
including the making or receiving any contribution of funds, goods or services
to or for the benefit of any Blocked Person; deal in, or otherwise engage in
any transaction relating to, any property or interests in property blocked
pursuant to Executive Order No. 13224; or engage in or conspire to engage in
any transaction with the intent to evade, avoid or violate, any of the
prohibitions set forth in Executive Order No. 13224 or the USA PATRIOT Act.
Loan Parties shall deliver to Agent and Lenders any certification or other
evidence reasonably requested from time to time by Agent or any Lender
confirming Loan Parties' compliance with this SECTION 7.30.
7.31 [RESERVED].
7.32 BLOCKED ACCOUNTS.
Subject to the Additional Debt Intercreditor Agreement:
(A) The Borrowers and Applica Canada shall promptly
establish and maintain Blocked Accounts, pursuant to lockbox or other
arrangements acceptable to the Agent, with such Blocked Accounts to be
maintained with Bank or such other banks as may be selected by the Borrowers
and be reasonably acceptable to Agent. The Borrowers and Applica Canada shall
issue to such banks irrevocable letters of instruction directing such banks to
deposit all payments or other remittances received in the lockboxes to the
Blocked Accounts.
(B) The Borrowers and Applica Canada shall enter into
agreements, in form satisfactory to the Agent, with the banks at which the
Blocked Accounts are maintained. Pursuant to such agreements, (a) prior to any
such bank's receipt of a Springing Dominion Notice from the Agent (or, at any
37
time that Additional Debt is outstanding or commitments under the Additional
Debt Documents exist, the Additional Debt Agent), such bank shall remit all
funds deposited into the Blocked Accounts pursuant to the instructions of the
Borrowers or Applica Canada, as applicable, and (b) after such bank's receipt
of a Springing Dominion Notice, such bank shall immediately, and without
further consent of or notice to Borrowers or any other Loan Party, transfer to
the Agent (or, at any time that Additional Debt is outstanding or commitments
under the Additional Debt Documents exist, the Additional Debt Agent) all
monies deposited to such Borrower Blocked Accounts solely pursuant to the
instructions of the Agent (or, at any time that Additional Debt is outstanding
or commitments under the Additional Debt Documents exist, the Additional Debt
Agent) until delivery of further notice by the Agent (or, at any time that
Additional Debt is outstanding or commitments under the Additional Debt
Documents exist, the Additional Debt Agent); PROVIDED, THAT the Agent agrees
not to deliver a Springing Dominion Notice until the commencement of a
Springing Period. If a Springing Period subsequently ends, then the Agent will
withdraw the Springing Dominion Notice until the commencement of a subsequent
Springing Period.
(C) All funds deposited in the Blocked Accounts shall be
subject to Liens of the Agent. The Borrowers and Applica Canada shall obtain
the agreements (in favor of and in form and content satisfactory to the Agent)
by the banks at which the Blocked Accounts are maintained to waive any offset
rights against the funds deposited into the Blocked Accounts, except offset
rights for customary administrative charges. No Agent or Lender assumes any
responsibility to Borrowers or any other Loan Party for any such lockbox
arrangements or Blocked Accounts, including any claim of accord and
satisfaction or release with respect to deposits accepted by any bank
thereunder.
(D) The Borrowers and Applica Canada shall request in
writing that all payments on Accounts or otherwise relating to Collateral of
Borrowers or Applica Canada are made directly to the Blocked Accounts (or a
lockbox relating to the Blocked Accounts). If Borrowers receive, or Applica
Canada receives, cash or payment items with respect to any Collateral, they
shall hold the same in trust for the Agent (or, at any time that Additional
Debt is outstanding or commitments under the Additional Debt Documents exist,
the Additional Debt Agent) and promptly (not later than the second Business Day
after receipt) deposit the same into a Blocked Account.
(E) At any time other than during a Springing Period, the
Borrowers and Applica Canada may retain all cash balances contained in the
Blocked Accounts. During a Springing Period, the Borrowers and Applica Canada
shall not retain any such balances, and the Agent (or, at any time that
Additional Debt is outstanding or commitments under the Additional Debt
Documents exist, the Additional Debt Agent) shall have the sole and exclusive
right to withdraw funds from time to time in the Blocked Accounts and all
amounts so collected by the Agent shall be remitted to the Payment Account in
accordance with SECTION 3.7.
(F) At any time other than during a Springing Period,
Applica Americas may retain all cash balances in the Applica Americas Blocked
Account. At any time during a Springing Period, Applica Americas shall not
retain any such balances (other than any portion thereof attributable to
Argentine operations of Applica Americas), and the Agent (or, at any time that
Additional Debt is outstanding or commitments under the Additional Debt
Documents exist, the Additional Debt Agent) shall have the sole and exclusive
right to withdraw funds (other than any portion thereof attributable to
Argentine operations of Applica Americas), from time to time in the Applica
Americas Blocked Account and all amounts so collected by the Agent shall be
remitted to the Payment Account in accordance with SECTION 3.7.
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7.33 ADDITIONAL DEBT DOCUMENTS.
The Borrowers will not: (a) agree or consent to amend or modify
any of the Additional Debt Documents if as a result thereof the holders of the
Additional Debt would be in breach of their covenants in the Additional Debt
Intercreditor Agreement or (b) fail to provide prompt written notice to Agent
of any amendment to or modification of any of the Additional Debt Documents,
including any amendment or modification that would have the effect of extending
the Termination Date (as defined in the Additional Debt Documents) for payment
of the Additional Debt. The Borrowers covenant and agree that they will furnish
to the Agent prompt written notice of the occurrence of any Default or Event of
Default as defined in and occurring under the Additional Debt Documents.
7.34 APPLICA ASIA COVENANTS.
(A) Applica Asia may from time to time be requested by
Applica Consumer Products and Applica Canada to collect, or otherwise be in
possession of, payments in respect of Accounts of Applica Consumer Products or
Applica Canada owing by certain customers of Applica Consumer Products or
Applica Canada to which goods are sold and delivered from locations outside of
the United States and Canada to a customer in the United States or Canada (each
such Account of Applica Consumer Products or Applica Canada being referred to
as an "APPLICA ASIA SERVICED ACCOUNT"). The Borrowers shall promptly notify the
Agent in writing of each Account of Applica Consumer Products or Applica Canada
that is an Applica Asia Serviced Account, to the extent that any such Account
is to be included in the Borrowing Base, at the time that any such Account is
included in the Borrowing Base. Applica Asia shall promptly cause all payments
received by it with respect to any Applica Asia Serviced Accounts to be
deposited into one or more depository accounts (with each such depository
account to be subject to the Applica Asia Blocked Account Agreements) and shall
cause each depository bank in which it may deposit any such payments or
proceeds to be automatically wire transferred to the Payment Account or such
other bank account as may be designated by the Agent in writing from time to
time. Pending any such remittance to the Agent, Applica Asia shall hold all
such payments (and any other proceeds of Collateral in its possession from time
to time) as the bailee and agent, for Lien perfection purposes, of the Agent
and Lenders and in trust for the benefit of the Agent and Lenders. Applica Asia
shall not commingle any other monies with any payments received in respect of
the Applica Asia Serviced Accounts, except other proceeds of Collateral, and
shall promptly remit all such payments and other Collateral proceeds to the
Agent for application to the Obligations in accordance with the terms of this
Agreement. Each such remittance by Applica Asia shall be without setoff,
deduction or recoupment. In no event shall Applica Asia permit any Lien or
other encumbrance to exist with respect to any depository account into which it
may deposit such payments or Collateral proceeds. If payments are received by
Applica Asia from any customer of Applica Consumer Products or Applica Canada
in a currency other than Dollars, Applica Asia shall promptly remit to the
Agent, in accordance with the foregoing terms of this Section, the Dollar
Equivalent of the currency received by Applica Asia.
(B) Applica Asia, Applica Consumer Products and Applica
Canada acknowledge, represent, stipulate and agree that (i) all goods sold and
delivered by Applica Consumer Products to any Person, irrespective of the name
under which any invoice is rendered for such sale or the identity of the Loan
Party that may collect any amount owing in connection with any such sale, shall
be and constitute Accounts owned solely by Applica Consumer Products and all
such invoices shall in any event indicate on their face that amounts due and
payable in connection with such sale shall be due and owing to Applica Consumer
39
Products or Applica Asia on behalf of Applica Consumer Products, whether or not
amounts owing in connection therewith are to be remitted to or are collected by
Applica Asia; (ii) all goods sold and delivered by Applica Canada to any
Person, irrespective of the name under which any invoice is rendered for such
sale or the identity of the Loan Party that may collect any amount owing in
connection with any such sale, shall be and constitute Accounts owned solely by
Applica Canada and all such invoices shall in any event indicate on their face
that amounts due and payable in connection with such sale shall be due and
owing to Applica Canada or to Applica Asia on behalf of Applica Canada, whether
or not amounts owing in connection therewith are to be remitted to or are
collected by Applica Asia; and (iii) all invoices with respect to any Applica
Asia Serviced Account shall show the seller and payee on the face of the
invoice as Applica Canada or Applica Consumer Products, as appropriate, or
Applica Asia "as agent" for either of them.
(C) Applica Asia hereby subordinates any and all
liabilities, claims or Debts at any time or times owing by Applica Consumer
Products or Applica Canada to Applica Asia, whether now owed or hereafter
incurred or arising, whether evidenced by any note, instrument or other
agreement and whether arising under the applicable Agency Agreement or
otherwise, to the full and final payment of the Obligations, PROVIDED that,
prior to the occurrence of any Event of Default, Applica Consumer Products and
Applica Canada are authorized to make payments to Applica Asia pursuant to the
terms of the applicable Agency Agreement as in effect on the date hereof or as
hereafter amended with the consent of the Agent.
7.35 POST-CLOSING COVENANTS.
After the Closing Date, the Loan Parties shall cooperate with
the Agent and Lenders, diligently and in good faith, to cause to be executed,
delivered or otherwise procured for the benefit of itself and Lenders, the
following documents and agreements:
(A) From and after the Closing Date, no Loan Parties shall
pay to SHK a commission on goods purchased by such Loan Party from SHK.
(B) (A) UCC or PPSA financing statements with respect to
all Collateral held by Loan Parties not party to the Original Credit Agreement
as may be requested by the Agent, duly executed by the respective Loan Parties,
to the extent any such Liens may be perfected under the UCC or PPSA, and (B)
with respect to any Loan Party not party to the Original Credit Agreement
located in, or organized under the laws of, Canada, all filings and
recordations required by Requirements of Law of Canada (including under the
PPSA), as the case may be, in all jurisdictions that the Agent may deem
necessary or desirable in order to perfect the Agent's Lien in all the
Collateral, including Accounts and Deposit Accounts of such Loan Party.
(C) Any notices in respect of account control agreements of
the Loan Parties under the Additional Debt Documents to notify depositary banks
as to Agent's lien.
(D) The execution and delivery of the Applica Canada
Security Agreement by Applica Canada.
(E) The execution and delivery of the Applica Canada
Guaranty.
(F) Any Intellectual Property Notices or other filings or
notices required in respect of patents, trademarks, copyrights and other
intellectual property.
40
(G) Not later than January 31, 2008, execute and deliver to
Agent, in form and substance reasonably acceptable to Agent, a deed of trust
with respect to Real Estate owned by the Loan Parties located at (i) 0000 X.
Xxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxx 00000, (ii) 0000 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx, (iii) 000 X. Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxxx, and (iv)
00000 Xxxxx Xxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000.
7.36 FURTHER ASSURANCES.
The Loan Parties shall execute and deliver, or cause to be
executed and delivered, to the Agent such documents and agreements, and shall
take or cause to be taken such actions as the Agent may, from time to time,
reasonably request to carry out the terms and conditions of this Agreement and
the other Loan Documents.
ARTICLE 8
CONDITIONS OF LENDING
8.1 CONDITIONS PRECEDENT TO MAKING OF TERM LOAN.
The obligation of the Lenders to make the Term Loan hereunder
on the Closing Date is subject to the following conditions precedent having
been satisfied in a manner satisfactory to the Agent and each Lender:
(A) The Agent shall have received each of the following
documents, all of which shall be satisfactory in form and substance to the
Agent and the Lenders:
(I) copies of the certificate of incorporation and
organizational document of each of the Loan Parties, with all
amendments, if any, certified by the appropriate Governmental
Authority (PROVIDED that upon request by any Loan Party and
with the consent of the Agent, any such certificate, to the
extent not provided on the Closing Date, may be provided within
thirty (30) days of the Closing Date, so long as an uncertified
copy thereof has been delivered to the Agent together with a
written statement by a Responsible Officer confirming that such
copy is true, correct, and complete), and the bylaws,
regulations, operating agreement, or similar governing document
of each Loan Party, in each case certified by the corporate
secretary, general partner, or comparable authorized
representative of such Loan Party, as being true and correct
and in effect on the Closing Date;
(II) certificates of incumbency and specimen
signatures with respect to each Person authorized to execute
and deliver this Agreement and the other Loan Documents on
behalf of each Loan Party and each other Person executing any
document, certificate, or instrument to be delivered in
connection with this Agreement and the other Loan Documents
and, in the case of the Borrowers, to request the Term Loan;
(III) a certificate evidencing the existence of each
Loan Party, and certificates evidencing the good standing of
each Loan Party in the jurisdiction of its organization and in
each other jurisdiction in which it is required to be qualified
as a foreign business entity to transact its business as
presently conducted, PROVIDED that upon request by any Loan
Party and with the consent of the Agent, certificates of good
41
standing for any Loan Party from a Governmental Authority other
than the jurisdiction of its organization, legal domicile and
chief executive office, to the extent not provided on the
Closing Date, may be provided within thirty (30) days of the
Closing Date;
(IV) this Agreement and the other Loan Documents
duly executed and delivered by each Loan Party and each other
Person that is a party thereto;
(V) certified copies of all action taken by each
Loan Party to authorize the execution, delivery, and
performance of this Agreement, the other Loan Documents, and
with respect to the Borrowers, the borrowing of the Term Loan;
(VI) a certificate of each Loan Party signed by a
Responsible Officer:
(A) stating that all of the representations
and warranties made or deemed to be made under this
Agreement are true and correct as of the Closing Date,
after giving effect to the Loans to be made at such
time and the application of the proceeds thereof,
(B) stating that no Default or Event of
Default exists,
(C) specifying the account of the Borrowers
which is a Designated Account, and
(D) certifying as to such other factual
matters as may be reasonably requested by the Agent;
(VII) (A) duly executed UCC-3 termination statements
or assignments with respect to the UCC and such other releases
or instruments, in each case in form and substance satisfactory
to the Agent, as in each case shall be necessary to terminate
and satisfy all Liens, except Permitted Liens, on the property
of the Loan Parties, to the extent the Agent's Liens therein
may be perfected under the UCC and (B) releases, terminations
or other instruments under the Requirements of Law of Canada
(including under the PPSA and other applicable law), and such
other releases or instruments, in each case in form and
substance satisfactory to the Agent, in each case as shall be
necessary to terminate and satisfy all Liens, except Permitted
Liens, on all the Collateral, including the Accounts and
Deposit Accounts of any Loan Party;
(VIII) the amendment and restatement of the Security
Agreement and the Pledge Agreement.
(IX) payment in immediately available funds of the
$1,877,600.00 upfront fee;
(X) the Additional Debt Intercreditor Agreement
duly executed and delivered by the holders of the Additional
Debt;
42
(XI) a certificate, signed by the chief financial
officer of the Borrowers, that, after giving PRO FORMA effect
to the Transaction, each Borrower and other Loan Party is
Solvent; and
(XII) such other documents and instruments as the
Agent or any Lender may reasonably request.
(B) No Event of Default shall exist or would exist after
giving effect to the Transaction, including the Term Loan to be made;
(C) Agent shall have received evidence, in form, scope, and
substance, reasonably satisfactory to the Agent, of all insurance coverage as
required by this Agreement;
(D) All proceedings taken in connection with the execution
of this Agreement, the other Loan Documents, and all documents and papers
relating thereto shall be reasonably satisfactory in form, scope, and substance
to the Agent and the Lenders;
(E) Without limiting the generality of the items described
above, the Loan Parties and each Person guaranteeing or securing payment of the
Obligations shall have delivered or caused to be delivered to the Agent (in
form and substance reasonably satisfactory to the Agent), the financial
statements, instruments, resolutions, documents, agreements, certificates,
opinions and other items required by the Agent hereunder;
(F) Agent shall have received: such pro forma financial
statements and annual forecasts (to include forecasted consolidated balance
sheets, income statements and cash flow statements) as it may reasonably
request, including, without limitation, annual forecasts for the period
commencing on July 1, 2008 and ending on June 30, 2012, for the Consolidated
Members and Loan Parties, with the 12-month period commencing on January 1,
2008 and ending on December 31, 2008 to be provided on a month-by-month basis;
(G) Agent shall have received satisfactory evidence that
the Additional Debt facility has been consummated on terms reasonably
acceptable to Agent, and Agent shall have received true, correct and complete
copies of the Additional Debt Documents certified by a Responsible Officer;
(H) Agent shall have received satisfactory evidence that
the Merger has been consummated in accordance with the Merger Agreement and all
applicable law and regulatory approvals and otherwise on terms reasonably
acceptable to Agent, and Agent shall have received true, correct and complete
copies of the Merger Agreement (including all schedules and exhibits thereto)
certified by a Responsible Officer;
(I) The final material terms and conditions of each aspect
of the Transaction, including all tax aspects thereof, shall be consistent with
the description thereof received in writing from Borrowers prior to the Closing
Date and otherwise reasonably satisfactory to Agent and Lenders (including a
determination of the exposure, if any, of taxes owing by the Consolidated
Salton Parties to CRA or any other Governmental Authority in connection with
the Consolidated Salton Parties' Canadian operations prior to the Closing
Date), and Agent shall have received all agreements, instruments and documents
relating to the Transaction certified by a Responsible Officer;
(J) [Intentionally Omitted];
43
(K) Agent shall have received satisfactory evidence that at
least 92% of the ownership interest in the Parent shall be owned, directly or
indirectly, by Equity Investors, that 100% of the ownership interest in ACP
shall be owned indirectly by Parent, that all Capital Stock of the Loan Parties
shall be owned directly or indirectly by Parent;
(L) All notices to, or consents, authorizations or
approvals of, all Governmental Authorities and all other Persons (including,
without limitation, Xxxx-Xxxxx-Xxxxxx clearance) necessary in connection with
the Transaction have been provided and received, and all applicable waiting
periods have expired without any action being taken by any Governmental
Authority that could restrain, prevent or impose any material adverse
conditions on the Loan Parties or such transactions or that could threaten any
of the foregoing, and no applicable law or regulation shall be applicable which
in the reasonable judgment of Agent could have such effect;
(M) There shall be no pending or threatened action, suit,
or proceeding, by any Person, or any pending or threatened investigation by a
Governmental Authority, which could reasonably be expected to have a Material
Adverse Effect;
(N) Agent and Lenders shall be reasonably satisfied with
the amount, terms, conditions and holders of all intercompany Debt between the
Loan Parties and all Subsidiaries that are not Loan Parties and all other Debt
and material liabilities owing by Loan Parties to other Persons outstanding on
and after the Closing Date;
(O) Agent and Lenders shall be reasonably satisfied that
(i) the Loan Parties will be able to meet their obligations under all Pension
Plans, (ii) except for the employee benefit plans of Toastmaster, the Pension
Plans of the other Loan Parties and their ERISA Affiliates are, in all material
respects, funded in accordance with the minimum statutory requirements, and
(iii) no ERISA Event has occurred or is contemplated as to any such Pension
Plan. Agent and Lenders shall also be reasonably satisfied with the shortfall
with respect to the employee benefit plan of Parent and the impact of any
required catch-up payments on the Borrowers.
(P) Agent and Lenders shall have satisfactory evidence that
all Canadian assets and operations of the Consolidated Salton Parties shall
have been assigned, transferred or otherwise conveyed to Applica Canada,
including receipt by Agent and Lenders of (i) a true and correct copy of a xxxx
of sale and/or other agreement evidencing the conveyance of such assets and
operations by the Consolidated Salton Parties to Applica Canada, and (ii) a
true and correct copy of the assignment of the lease of Real Estate located in
Canada under which one or more of the Consolidated Salton Parties is the tenant
and other material agreements relating to the Consolidated Salton Parties'
Canadian operations and any requisite consent to such assignment.
The acceptance by the Borrowers of the Term Loan shall be
deemed to be a representation and warranty made by the Loan Parties to the
effect that all of the conditions precedent to the making of such Term Loans
have been satisfied, with the same effect as delivery to the Agent and the
Lenders of a certificate signed by a Responsible Officer of the Loan Parties,
dated the Closing Date, to such effect. Execution and delivery to the Agent by
a Lender of a counterpart of this Agreement shall be deemed confirmation by
such Lender that (i) the decision of such Lender to execute and deliver to the
Agent an executed counterpart of this Agreement was made by such Lender
independently and without reliance on the Agent or any other Lender as to the
satisfaction of any condition precedent set forth in this SECTION 8.1, and (ii)
all documents sent to such Lender for approval, consent, or satisfaction were
acceptable to such Lender.
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8.2 LIMITED WAIVER OF CONDITIONS PRECEDENT.
If Lenders shall make the Term Loan or otherwise extend credit
to Borrowers at any time when any of the conditions precedent set forth in
SECTION 8.1 are not satisfied (regardless of whether the failure of
satisfaction of any such conditions precedent was known or unknown to the Agent
or any Lender), the funding of such Loan or other extension of credit shall not
operate as a waiver of the right of the Agent and Lenders to insist upon the
satisfaction of all conditions precedent with respect to each subsequent
Borrowing requested by the Borrowers or a waiver of any Default or Event of
Default as a consequence of the failure of any such conditions to be satisfied,
unless the Agent, with the prior written consent or at the direction of the
Required Lenders, in writing waives the satisfaction of any conditions
precedent, in which event such waiver shall only be applicable for the specific
instance given and only to the extent and for the period of time expressly
stated in such waiver.
ARTICLE 9
DEFAULT; REMEDIES
9.1 EVENTS OF DEFAULT.
It shall constitute an event of default ("EVENT OF DEFAULT") if
any one or more of the following shall occur for any reason:
(A) any failure by the Borrowers to pay the principal of or
interest or premium on any of the Obligations or any fee or other amount owing
hereunder when due, whether upon demand or otherwise;
(B) any representation or warranty made or deemed made by a
Loan Party in this Agreement or by a Loan Party in any of the other Loan
Documents, any Financial Statement, or any certificate furnished by any Loan
Party at any time to the Agent or any Lender shall prove to be untrue in any
material respect as of the date on which made, deemed made, or furnished;
(C) (i) any default shall occur in the observance or
performance of any of the covenants and agreements contained in SECTIONS
5.2(N), 7.9-7.32 of this Agreement or SECTION 11 of the Security Agreement, or
any Loan Party shall fail to remit proceeds of Accounts or Inventory of a
Borrower to the Agent as required by this Agreement or any of the other Loan
Documents, (ii) any default shall occur in the observance or performance of any
of the covenants and agreements contained in SECTIONS 5.2 (A)-(F), 5.3 (A)-(J),
or 7.34 (other than a default of a kind described in clause (i) of this SECTION
9.1(C)) or any Loan Party shall fail to remit proceeds of Collateral (other
than proceeds of Accounts or Inventory of a Borrower) to the Agent as required
by any of the Loan Documents; and such default shall continue for five (5) days
or more; or (iii) any default shall occur in the observance or performance of
any of the other covenants or agreements contained in any other Section of this
Agreement or any other Loan Document, any other Loan Documents, or any other
agreement entered into at any time to which any Loan Party and the Agent or any
Lender are a party and such default shall continue for twenty (20) days or
more;
(D) any default which has not been waived shall occur with
respect to (i) Debt of the Borrowers evidenced by or arising under the
Additional Debt Documents, (ii) Debt of the Borrowers' Affiliates under the UK
Credit Facility or (iii) any Debt (other than the Obligations and Debt
contemplated by clauses (i) or (ii) hereof) of any Loan Party in an outstanding
45
principal amount which exceeds $2,500,000, or under any agreement or instrument
under or pursuant to which any such Debt may have been issued, created,
assumed, or guaranteed by any Loan Party, and such default shall continue for
more than the period of grace, if any, therein specified, if the effect thereof
(with or without the giving of notice or further lapse of time or both) is to
accelerate, or to permit the holders of any such Debt to accelerate, the
maturity of any such Debt; or any such Debt shall be declared due and payable
or be required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof;
(E) any Loan Party shall (i) file a voluntary petition in
bankruptcy or file a voluntary petition or an answer or file any proposal or
notice of intent to file a proposal or otherwise commence any action or
proceeding seeking reorganization, arrangement, consolidation or readjustment
of its debts or which seeks to stay or has the effect of staying any creditor
or for any other relief under the Bankruptcy Code, as amended, or under any
other bankruptcy, insolvency, liquidation, winding up, corporate or similar act
or law, provincial, territorial state, federal or foreign (including the BIA or
the CCAA), now or hereafter existing, or consent to, approve of, or acquiesce
in, any such petition, proposal, action or proceeding; (ii) apply for or
acquiesce in the appointment of a receiver, interim receiver, assignee,
liquidator, sequestrator, custodian, monitor, administrator, trustee or similar
officer for it or for all or any part of its property; (iii) make an assignment
for the benefit of creditors; or (iv) be unable generally to pay its debts as
they become due;
(F) an involuntary petition shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of any Loan Party or for any other
relief under the Bankruptcy Code, as amended, or under any other bankruptcy,
insolvency, liquidation, winding up, corporate or similar act or law (including
the BIA or the CCAA), provincial, territorial state, federal or foreign, now or
hereafter existing and either such petition, proposal or proceeding shall not
be dismissed within forty-five (45) days after the filing or commencement
thereof or an order of relief shall be entered with respect thereto;
(G) a receiver, interim receiver, assignee, liquidator,
sequestrator, custodian, monitor, administrator, trustee or similar officer for
any Loan Party or for all or any part of its property shall be appointed or a
warrant of attachment, execution, writ of seizure or seizure and sale or
similar process shall be issued against any part of the property of any Loan
Party or any distress or analogous process is levied upon all or any part of
any Loan Party;
(H) any Loan Party shall file a certificate of dissolution
or like process under applicable law or shall be liquidated, dissolved or
wound-up or shall commence or have commenced against it any action or
proceeding for dissolution, winding-up or liquidation, or shall take any
corporate action in furtherance thereof, except as permitted under SECTION
7.9(C);
(I) all or any material part of the Collateral shall be
taken or impaired through condemnation and Availability on the date of
condemnation is less than $30,000,000; or all or any material part of the
property of any Loan Party shall be nationalized, expropriated or otherwise
appropriated, or custody or control of such property or of such Loan Party
shall be assumed by any Governmental Authority or any court of competent
jurisdiction at the instance of any Governmental Authority or any other Person,
except where contested in good faith by proper proceedings diligently pursued
where a stay of enforcement is in effect;
(J) any Loan Document (including the Applica Canada
Guaranty, the Applica Asia Guaranty or any other Guaranty from a Loan Party)
shall be terminated, rescinded, revoked or declared void or invalid or
46
unenforceable (or any Loan Party shall attempt or purport to terminate,
rescind, revoke or declare void, invalid or unenforceable any Loan Document) or
any material Loan Document is challenged by any Loan Party or any Affiliate;
(K) one or more judgments, orders, decrees or arbitration
awards is entered against any one or more Loan Parties for $2,500,000 or more
in excess of the amount of insurance coverage provided by independent third
party insurers which do not dispute coverage and (whether or not covered by
insurance), any such judgment, order, decree or arbitration award shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of thirty (30)
days after the entry thereof;
(L) payment by a Loan Party under an agreement of Guaranty
issued by such Loan Party with respect to any Debt of a Foreign Subsidiary, or
entry of a judgment, order, decree or arbitration award against a Loan Party
with respect to any such agreement of Guaranty, in either case in an aggregate
amount in excess of $10,000,000 during the term of this Agreement;
(M) any loss, theft, damage or destruction of any item or
items of Collateral or other property of any Loan Party occurs which could
reasonably be expected to cause a Material Adverse Effect and is not adequately
covered by insurance;
(N) there is filed against any Loan Party any action, suit
or proceeding under any federal, state or foreign racketeering, money,
laundering or proceeds of crime statute (including the Racketeer Influenced and
Corrupt Organization Act of 1970), which action, suit or proceeding (i) is not
dismissed within one hundred twenty (120) days, and (ii) could reasonably be
expected to result in the confiscation or forfeiture of any material portion of
the Collateral;
(O) for any reason other than the failure of the Agent
after the Closing Date to take any action available to it to maintain
perfection of the Agent's Liens, pursuant to the Loan Documents, any material
Loan Document ceases to be in full force and effect or any Lien with respect to
any material portion of the Collateral intended to be secured thereby ceases to
be, or is not, valid, perfected and prior to all other Liens (other than
Permitted Liens) or is terminated, revoked or declared void;
(P) (i) an ERISA Event shall occur with respect to a
Pension Plan or Multi-employer Plan which has resulted or could reasonably be
expected to result in liability of the Loan Parties or any ERISA Affiliate
under applicable laws in an aggregate amount in excess of $2,500,000; (ii) the
aggregate amount of Unfunded Pension Liability among all Pension Plans
(excluding the Salton Europe Pension and Life Assurance Scheme) at any time
exceeds $5,000,000; (iii) the Loan Parties or any ERISA Affiliate shall fail to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multi-employer Plan or any other required amounts, in an
aggregate amount in excess of $2,500,000; or (iv) any Lien (save for
contribution amounts not yet due) arises in connection with any Plan;
(Q) (i) a Change of Control shall occur or (ii) Applica
Canada or Applica Asia ceases to be a Wholly-Owned Subsidiary of Applica
(whether directly or indirectly through one or more other Wholly-Owned
Subsidiaries); or
(R) the Black & Xxxxxx License Agreement shall be
terminated, revoked or declared void or invalid or unenforceable for any
reason.
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9.2 REMEDIES.
(I) If a Default or an Event of Default has
occurred and is continuing, the Agent may, in its discretion,
and shall, at the direction of the Required Lenders, do one or
more of the following at any time or times and in any order,
without notice to or demand on the Borrowers: (A) terminate
this Agreement; (B) declare any or all Obligations to be
immediately due and payable; provided, HOWEVER, that upon the
occurrence of any Event of Default described in Sections
9.1(e), 9.1(F), 9.1(G), 9.1(H), all Obligations shall
automatically become immediately due and payable without notice
or demand of any kind and (C) pursue its other rights and
remedies under the Loan Documents and applicable law.
(II) If an Event of Default has occurred and is
continuing: the Agent shall have for the benefit of the
Lenders, in addition to all other rights of the Agent and the
Lenders, the rights and remedies of a secured party under the
Loan Documents, the UCC, the PPSA, and other applicable law.
ARTICLE 10
TERM AND TERMINATION
10.1 TERM.
The term of this Agreement shall end on the Stated Termination
Date unless sooner terminated by the Borrowers pursuant to SECTION 3.2 or by
the Agent pursuant to SECTION 10.2.
10.2 TERMINATION BY AGENT.
The Agent may (and, upon direction from the Required Lenders,
shall) terminate this Agreement, without notice, upon or after the occurrence
and during the continuance of an Event of Default. Upon the effective date of
any such termination of this Agreement for any reason whatsoever, all
Obligations (including all unpaid principal, and accrued and unpaid interest)
shall become immediately due and payable and shall be paid forthwith by the
Borrowers.
10.3 EFFECT OF TERMINATION. Notwithstanding the termination of this
Agreement, until all Obligations are indefeasibly paid and performed in full in
cash, the Loan Parties shall remain bound by the terms of this Agreement and
shall not be relieved of any of their Obligations hereunder or under any other
Loan Document, and the Agent and the Lenders shall retain all their rights and
remedies hereunder (including the Agent's Liens in and all rights and remedies
with respect to all then existing and after-arising Collateral). In no event
shall any termination of this Agreement, whether such termination is made by
the Borrowers or the Agent, operate to terminate or otherwise affect any
indemnification liability or obligation of any Loan Party under this Agreement
or any of the other Loan Documents, all of which indemnification liabilities
and obligations shall survive any such termination and continue in full force
and effect.
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ARTICLE 11
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
11.1 AMENDMENTS AND WAIVERS.
(A) (i) Subject to clause (II) of this SECTION 11.1(A), no
amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent with respect to any departure by the Loan Parties
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by the Agent at the written request of the Required
Lenders), the Loan Parties (except that no consent of the Loan Parties shall be
required in the case of amendments of ARTICLE 12 as long as such amendment does
not impose any additional, or change any, obligations on the Loan Parties) and
the Borrower Agent and then any such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; (ii)
notwithstanding the foregoing, no such waiver, amendment, or consent shall,
unless consented to in writing by each affected Lender (or the Agent with the
consent of each affected Lender) and the Borrower Agent, do any of the
following:
(A) Increase or extend the Commitment of
any Lender (other than as contemplated in Section 1.5;
(B) postpone or delay any date fixed by
this Agreement or any other Loan Document for any
payment of principal, interest, fees or other amounts
due to the Lenders (or any of them) hereunder or under
any other Loan Document;
(C) reduce the principal of, or the rate of
interest specified herein on any Loan, or any fees or
other amounts payable hereunder or under any other Loan
Document;
(D) change the percentage of the aggregate
unpaid principal amount of the Loans which is required
for the Lenders or any of them to take any action
hereunder;
(E) amend this Section or any provision of
this Agreement providing for consent or other action by
all Lenders;
(F) release any Loan Parties from their
obligations under this Agreement or any of the other
Loan Documents, release any Guaranties of the
Obligations, contractually subordinate the priority of
Agent's Liens or release Collateral other than as
permitted by SECTION 12.11; or
(G) amend the definition of "Required
Lenders" or "Pro Rata Share".
(B) If the Agent requests the consent of the Lenders to any
proposed amendment, waiver or consent (a "Proposed Change") that requires the
consent of the Required Lenders, the Supermajority Lenders or all Lenders and
Lenders holding forty percent (40%) or more of the Commitments provide their
consent to such Proposed Change, but the consent of one or more other Lenders
is not obtained (each such Lender whose consent is not obtained as described in
this clause (b) being referred to as a "NON-CONSENTING LENDER") within a period
49
of five (5) Business Days after the date of request for such consent by the
Agent, then, so long as the Agent is not a Non-Consenting Lender, at the Loan
Parties' request, the Agent or an Eligible Assignee (but no Non-Consenting
Lender or group of Non-Consenting Lenders) shall have the right (but not the
obligation), with the Agent's approval, to purchase from any Non-Consenting
Lender, and each Non-Consenting Lender agrees that it shall sell, such
Non-Consenting Lender's Commitment for an amount equal to the principal balance
thereof and all accrued interest and fees (except any fees arising in
connection with such purchase that would otherwise arise under SECTION 4.4, for
which the Loan Parties shall not be liable) with respect thereto through the
date of sale pursuant to an Assignment and Acceptance Agreement, without
premium or discount.
11.2 ASSIGNMENTS; PARTICIPATIONS.
(A) Any Lender may, with the written consent of the Agent
(which consent shall not be unreasonably delayed or withheld) and, if no Event
of Default exists, the Borrower Agent (which consent shall not be unreasonably
delayed or withheld), assign and delegate to one or more Eligible Assignees
(provided that no consent of the Agent or the Borrower Agent shall be required
in connection with any assignment and delegation by a Lender to another Lender
or an Affiliate of, or a fund managed by, such Lender) (each an "ASSIGNEE")
all, or any ratable part of all, of the Loans, the Commitments and the other
rights and obligations of such Lender hereunder, in a minimum amount of
$5,000,000 (provided that, unless an assignor Lender has assigned and delegated
all of its Loans and Commitments, no such assignment and/or delegation shall be
permitted unless, after giving effect thereto, such assignor Lender retains a
Commitment in a minimum amount of $5,000,000; PROVIDED, HOWEVER, that the Loan
Parties and the Agent may continue to deal solely and directly with such Lender
in connection with the interest so assigned to an Assignee until (i) written
notice of such assignment, together with payment instructions, addresses and
related information with respect to the Assignee, shall have been given to the
Loan Parties and the Agent by such Lender and the Assignee; (ii) such Lender
and its Assignee shall have delivered to the Loan Parties and the Agent an
Assignment and Acceptance in the form of EXHIBIT D ("ASSIGNMENT AND
Acceptance") together with any note or notes subject to such assignment, (iii)
except for an assignment to an Affiliate, the Assignee has paid to the Agent a
processing and recordation fee in the amount of $5,000 and (iv) Agent shall
have received any forms required by SECTION 12.10.
(B) From and after the date that the Agent notifies the
assignor Lender that it has received an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations have
been assigned to it pursuant to such Assignment and Acceptance, shall have the
rights and obligations of a Lender under the Loan Documents, and (ii) the
assignor Lender shall, to the extent that rights and obligations hereunder and
under the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (other than its rights to be
indemnified for Indemnified Taxes under SECTION 4.1(C)) and 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).
(C) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning 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, genuineness,
50
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto or the attachment, perfection, or priority of any Lien granted
by the Loan Parties to the Agent or any Lender in the Collateral; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Loan Parties or
any of them or the performance or observance by any Loan Party of any of its
obligations under this Agreement or any other Loan Document furnished pursuant
hereto; (iii) such Assignee confirms that it has received a copy of this
Agreement, together with 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 assigning Lender or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such Assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof, together with such powers, including the discretionary rights and
incidental power, 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.
(D) Immediately upon satisfaction of the requirements of
SECTION 11.2(A), this Agreement shall be deemed to be amended to the extent,
but only to the extent, necessary to reflect the addition of the Assignee.
(E) Any Lender may at any time sell to one or more
commercial banks, financial institutions, or other Persons not Affiliates of a
Loan Party (a "PARTICIPANT") participating interests in any Loans, the
Commitment of that Lender and the other interests of that Lender (the
"ORIGINATING LENDER") hereunder and under the other Loan Documents; PROVIDED,
HOWEVER, that (i) the originating Lender's obligations under this Agreement
shall remain unchanged, (ii) the originating Lender shall remain solely
responsible for the performance of such obligations, (iii) the Loan Parties and
the Agent shall continue to deal solely and directly with the originating
Lender in connection with the originating Lender's rights and obligations under
this Agreement and the other Loan Documents, and (iv) no Lender shall transfer
or grant any participating interest under which the Participant has rights to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document except the matters set forth in SECTION
11.1(A) (I), (II) AND (III), and all amounts payable by the Loan Parties
hereunder shall be determined as if such Lender had not sold such
participation; except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of set-off
in respect of its participating interest in amounts owing under this Agreement
to the same extent and subject to the same limitation as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.
(F) Notwithstanding any other provision in this Agreement,
any Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
51
ARTICLE 12
THE AGENT
12.1 APPOINTMENT AND AUTHORIZATION.
Each Lender hereby designates and appoints Harbinger Capital
Partners Master Fund I, Ltd. as its Agent under this Agreement and the other
Loan Documents and each Lender hereby irrevocably authorizes the Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Each
Lender authorizes the Agent to enter into each of the Loan Documents described
herein to which the Agent is to be a party on or after the Closing Date, and
each Lender acknowledges that prior to the Closing Date, Agent entered into
certain Loan Documents as described herein or otherwise made available to
Lenders (including the Additional Debt Intercreditor Agreement), and, to the
extent that any Lender is not otherwise a party to any such Loan Documents,
acknowledges and agrees that Agent may bind each Lender to the terms thereof
and to take or refrain from taking all actions authorized or permitted
thereunder. The Agent agrees to act as such on the express conditions contained
in this ARTICLE 12. The provisions of this ARTICLE 12 are solely for the
benefit of the Agent and the Lenders and the Loan Parties shall have no rights
as a third party beneficiary of any of the provisions contained herein, nor
shall anything contained in this ARTICLE 12 limit any rights the Loan Parties
have or may have as against Agent, any Lender or any other Agent-Related
Person. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Loan Document, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall
the Agent have or be deemed to have any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any
applicable law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship
between independent contracting parties. Except as expressly otherwise provided
in this Agreement, the Agent shall have and may use its sole discretion with
respect to exercising or refraining from exercising any discretionary rights or
taking or refraining from taking any actions which the Agent is expressly
entitled to take or assert under this Agreement and the other Loan Documents,
including the exercise of remedies pursuant to SECTION 9.2, and, with respect
to any such action so taken, if exercised in good faith, Agent shall have no
liability to the Lenders for any errors in judgment.
52
12.2 DELEGATION OF DUTIES.
The Agent may execute any of its duties under this Agreement or
any other Loan Document by or through agents, employees or attorneys in fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. The Agent shall not be responsible for the negligence or
misconduct of any agent or attorney in fact that it selects as long as such
selection was made without gross negligence or willful misconduct.
12.3 LIABILITY OF AGENT.
None of the Agent Related Persons shall (i) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Lenders for any recital, statement,
representation or warranty made by any Loan Party or any other Consolidated
Member, or any officer thereof, contained in this Agreement or in any other
Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Loan Party or any other
Consolidated Member or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party or any other Consolidated Member.
12.4 RELIANCE BY AGENT.
The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Loan Parties), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the Required Lenders (or all Lenders if so required by
SECTION 11.1) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders.
12.5 NOTICE OF DEFAULT.
The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default, unless the Agent shall have
received written notice from a Lender or any of the Loan Parties referring to
53
this Agreement, describing such Default or Event of Default and stating that
such notice is a "NOTICE OF DEFAULT." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall promptly take such action with
respect to such Default or Event of Default as may be requested by the Required
Lenders in accordance with SECTION 9; PROVIDED, HOWEVER, that unless and until
the Agent has received any such request, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.
12.6 CREDIT DECISION.
Each Lender acknowledges that none of the Agent Related Persons
has made any representation or warranty to it, and that no act by the Agent
hereinafter taken, including any review of the affairs of the Loan Parties and
their Affiliates, shall be deemed to constitute any representation or warranty
by any Agent-Related Person to any Lender. Each Lender represents to the Agent
that it has, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Loan Parties or the other Consolidated Members, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Loan
Parties. Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrowers.
Except for notices, reports and other documents expressly herein required to be
furnished to the Lenders by the Agent, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of any Loan Party or any other Consolidated
Member which may come into the possession of any of the Agent Related Persons.
12.7 INDEMNIFICATION.
Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent Related Persons
(to the extent not reimbursed by or on behalf of the Loan Parties and without
limiting the obligation of the Loan Parties to do so), in accordance with their
Pro Rata Shares, from and against any and all Indemnified Liabilities as such
term is defined in SECTION 14.11; PROVIDED, HOWEVER, that no Lender shall be
liable for the payment to the Agent Related Persons of any portion of such
Indemnified Liabilities to the extent determined in a final, non-appealable
judgment by a court of competent jurisdiction to result from such Person's
gross negligence or willful misconduct or from the breach of any
representation, warranty or covenant contained herein or in another Loan
Document by such Indemnified Person. Without limitation of the foregoing, each
Lender shall reimburse the Agent upon demand for its Pro Rata Share of any
costs or out of pocket expenses (including Attorney Costs) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
54
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any
document contemplated by or referred to herein, to the extent that the Agent is
not reimbursed for such expenses by or on behalf of the Loan Parties. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.
12.8 AGENT IN INDIVIDUAL CAPACITY.
The Agent and its branches and Affiliates may make loans to,
issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Loan Parties and
other Consolidated Members and their Affiliates as though the Agent were not
the Agent hereunder and without notice to or consent of the Lenders. The Agent
or its branches and Affiliates may receive information regarding the Loan
Parties and other Consolidated Members, their Affiliates and Account Debtors
(including information that may be subject to confidentiality obligations in
favor of the Loan Parties and other Consolidated Members) and acknowledge that
except as required by the Loan Documents and applicable law, the Agent shall be
under no obligation to provide such information to them. With respect to its
Loans, the Agent shall have the same rights and powers under this Agreement as
any other Lender and may exercise the same as though it were not the Agent, and
the terms "Lender" and "Lenders" include the Agent in its individual capacity.
12.9 SUCCESSOR AGENT.
The Agent may resign as Agent upon at least thirty (30) days
prior notice to the Lenders and the Borrowers, such resignation to be effective
upon the acceptance of a successor agent to its appointment as Agent. In the
event the Agent sells all of its Term Loan as part of a sale, transfer or other
disposition by the Agent of substantially all of its loan portfolio, the Agent
shall resign as Agent and such purchaser or transferee shall become the
successor Agent hereunder. Subject to the foregoing, if the Agent resigns under
this Agreement, the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders. If no successor agent is appointed prior to
the effective date of the resignation of the Agent, the Agent may appoint,
after consulting with the Lenders and the Loan Parties, a successor agent from
among the Lenders. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article 12 shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. Notwithstanding anything herein to the contrary, the Borrowers shall
have the right to consult with the Agent and the Lenders in the choice of any
such successor Agent so long as no Event of Default exists.
12.10 WITHHOLDING TAX.
(A) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the Code and such Lender claims exemption from, or
55
a reduction of, U.S. withholding tax under SECTIONS 1441 or 1442 of the Code,
such Lender agrees with and in favor of the Agent, to deliver to the Agent:
(I) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States of America
tax treaty, properly completed IRS Forms W-8BEN and W-8ECI
before the payment of any interest in the first calendar year
and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this
Agreement;
(II) if such Lender claims that interest paid under
this Agreement is exempt from United States of America
withholding tax because it is effectively connected with a
United States of America trade or business of such Lender, two
properly completed and executed copies of IRS Form W-8ECI
before the payment of any interest is due in the first taxable
year of such Lender and in each succeeding taxable year of such
Lender during which interest may be paid under this Agreement,
and IRS Form W 9; and
(III) such other form or forms as may be required
under the Code or other laws of the United States of America as
a condition to exemption from, or reduction of, United States
of America withholding tax.
Such Lender agrees to promptly notify the Agent of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(B) If any Lender claims exemption from, or reduction of,
withholding tax under a United States of America tax treaty by providing IRS
Form FW-8BEN and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations owing to such Lender, such
Lender agrees to notify the Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Loan Parties to such Lender.
To the extent of such percentage amount, the Agent will treat such Lender's IRS
Form W-8BEN as no longer valid.
(C) If any Lender claiming exemption from United States of
America withholding tax by filing IRS Form W-8ECI with the Agent sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations owing to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
SECTIONS 1441 and 1442 of the Code.
(D) If any Lender is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any interest payment to
such Lender an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required by
SUBSECTION (A) of this Section are not delivered to the Agent, then the Agent
may withhold from any interest payment to such Lender not providing such forms
or other documentation an amount equivalent to the applicable withholding tax.
(E) If the IRS or any other Governmental Authority of the
United States of America or other jurisdiction asserts a claim that the Agent
did not properly withhold tax from amounts paid to or for the account of any
Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify the Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify the Agent
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fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this Section,
together with all costs and expenses (including Attorney Costs). The obligation
of the Lenders under this subsection shall survive the payment of all
Obligations and the resignation or replacement of the Agent. For any period
with respect to which a Lender has failed to provide the Loan Parties and Agent
with the appropriate form pursuant to this Section 12.10 (unless such failure
is due to a change in treaty, law, or regulation occurring subsequent to the
date on which a form originally was required to be provided), such Lender shall
not be entitled to indemnification under SECTION 4.1(A), 4.1(B) OR 4.1(C)
hereof with respect to Taxes imposed by the United States; PROVIDED, HOWEVER,
that should a Lender, which is otherwise exempt from or subject to a reduced
rate of withholding tax, become subject to Taxes because of its failure to
deliver a form required hereunder, the Loan Parties shall take such steps as
such Lender shall reasonably request to assist such Lender to recover such
Taxes at such Lender's expense.
12.11 COLLATERAL MATTERS.
(A) The Lenders hereby irrevocably authorize the Agent, at
its option and in its sole discretion, to release any Agent's Liens upon any
Collateral (i) upon the payment and satisfaction in full of all Loans and all
other Obligations; (ii) constituting property being sold or disposed of if the
applicable Loan Party certifies to the Agent that the sale or disposition is
made in compliance with SECTION 7.9 and SECTION 3.1 (and the Agent may rely
conclusively on any such certificate, without further inquiry); (iii)
constituting property in which no Loan Party owned an interest at the time the
Lien was granted or at any time thereafter; or (iv) constituting property
leased to a Loan Party under a lease which has expired or been terminated in a
transaction permitted under this Agreement. Except as provided above, the Agent
will not release any of the Agent's Liens without the prior written
authorization of the Lenders; PROVIDED that the Agent may, in its discretion,
release the Agent's Liens on Collateral valued in the aggregate not in excess
of $2,000,000 during each Fiscal Year without the prior written authorization
of the Lenders and the Agent may release the Agent's Liens on Collateral valued
in the aggregate not in excess of $4,000,000 during each Fiscal Year with the
prior written authorization of Required Lenders. Upon request by the Agent or
the Loan Parties at any time, the Lenders will confirm in writing the Agent's
authority to release any Agent's Liens upon particular types or items of
Collateral pursuant to this SECTION 12.11.
(B) Upon receipt by the Agent of any authorization required
pursuant to SECTION 12.11(A) from the Lenders of the Agent's authority to
release Agent's Liens upon particular types or items of Collateral, and upon at
least five (5) Business Days prior written request by the Loan Parties, the
Agent shall (and is hereby irrevocably authorized by the Lenders to) execute
such documents as may be necessary to evidence the release of the Agent's Liens
upon such Collateral; PROVIDED, HOWEVER, that (i) the Agent shall not be
required to execute any such document on terms which, in the Agent's opinion,
would expose the Agent to liability or create any material obligation or entail
any material consequence other than the release of such Liens without recourse
or warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens (other than those expressly being released)
upon (or obligations of the Loan Parties in respect of) all interests retained
by any Loan Party, including the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.
(C) The Agent shall have no obligation whatsoever to any of
the Lenders to assure that the Collateral exists or is owned by any Loan Party
or is cared for, protected or insured or has been encumbered, or that the
Agent's Liens have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
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to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Agent pursuant to any of the
Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Agent may act in
any manner it may deem appropriate, in its sole discretion given the Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
the Agent shall have no other duty or liability whatsoever to any Lender as to
any of the foregoing.
12.12 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(A) Each of the Lenders agrees that it shall not, without
the express consent of all Lenders, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of all Lenders, set off against
the Obligations, any amounts owing by such Lender to a Loan Party or any
accounts of a Loan Party now or hereafter maintained with such Lender. Each of
the Lenders further agrees that it shall not, unless specifically requested to
do so by the Agent, take or cause to be taken any action to enforce its rights
under this Agreement or against any Loan Party, including the commencement of
any legal or equitable proceedings, to foreclose any Lien on, or otherwise
enforce any security interest in, any of the Collateral.
(B) If at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations of any Loan Party to such Lender
arising under, or relating to, this Agreement or the other Loan Documents,
except for any such proceeds or payments received by such Lender from the Agent
pursuant to the terms of this Agreement, or (ii) payments from the Agent in
excess of such Lender's ratable portion of all such distributions by the Agent,
such Lender shall promptly (1) turn the same over to the Agent, in kind, and
with such endorsements as may be required to negotiate the same to the Agent,
or in same day funds, as applicable, for the account of all of the Lenders and
for application to the Obligations in accordance with the applicable provisions
of this Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; PROVIDED, HOWEVER, that if all or part
of such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest
except to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
12.13 AGENCY FOR PERFECTION.
Each Lender hereby appoints each other Lender as agent for the
purpose of perfecting the Lenders' security interest in assets which, in
accordance with Article 9 of the UCC or the applicable provisions of the PPSA
or other applicable law can be perfected only by possession. Should any Lender
(other than the Agent) obtain possession of any such Collateral, such Lender
shall notify the Agent thereof, and, promptly upon the Agent's request therefor
shall deliver such Collateral to the Agent or in accordance with the Agent's
instructions.
12.14 PAYMENTS BY AGENT TO LENDERS.
All payments to be made by the Agent to the Lenders shall be
made by bank wire transfer or internal transfer of immediately available funds
to each Lender pursuant to wire transfer instructions delivered in writing to
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the Agent on or prior to the Closing Date (or if such Lender is an Assignee, on
the applicable Assignment and Acceptance), or pursuant to such other wire
transfer instructions as each party may designate for itself by written notice
to the Agent. Concurrently with each such payment, the Agent shall identify
whether such payment (or any portion thereof) represents principal, premium or
interest on the Term Loans or otherwise. Unless the Agent receives notice from
the Loan Parties prior to the date on which any payment is due to the Lenders
that the Loan Parties will not make such payment in full as and when required,
the Agent may assume that the Loan Parties has made such payment in full to the
Agent on such date in immediately available funds and the Agent may (but shall
not be so required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent the Loan Parties have not made such payment in full to the
Agent, each Lender shall repay to the Agent on demand such amount distributed
to such Lender, together with interest thereon at the Federal Funds Rate for
each day from the date such amount is distributed to such Lender until the date
repaid.
12.15 SETTLEMENT.
(A)
(I) Each Lender's portion of the Term Loans is
intended by the Lenders to be equal at all times to such
Lender's Pro Rata Share of the outstanding Loans.
Notwithstanding such agreement, the Agent and the other Lenders
agree (which agreement shall not be for the benefit of or
enforceable by the Loan Parties or any other Consolidated
Members) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among them
as to the Loans shall take place on a periodic basis reasonably
selected by the Agent.
(II) All Loans shall be made by the Lenders
simultaneously and in accordance with their Pro Rata Shares. It
is understood that (i) no Lender shall be responsible for any
failure by any other Lender to perform its obligation to make
any Loans hereunder, nor shall any Commitment of any Lender be
increased or decreased as a result of any failure by any other
Lender to perform its obligation to make any Loans hereunder,
(ii) no failure by any Lender to perform its obligation to make
any Loans hereunder shall excuse any other Lender from its
obligation to make any Loans hereunder, and (iii) the
obligations of each Lender hereunder shall be several, not
joint and several.
(III) Unless the Agent receives notice from a Lender
on or prior to the Closing Date that such Lender will not make
available as and when required hereunder to the Agent that
Lender's Pro Rata Share of the Term Loan, the Agent may assume
that each Lender has made such amount available to the Agent in
immediately available funds on the Closing Date. Furthermore,
the Agent may, in reliance upon such assumption, make available
to the Loan Parties on such date a corresponding amount. If any
Lender has not transferred its full Pro Rata Share to the Agent
in immediately available funds and the Agent has transferred
corresponding amount to the Loan Parties on the Business Day
following the Closing Date that Lender shall make such amount
available to the Agent, together with interest at the Federal
Funds Rate for that day. A notice by the Agent submitted to any
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Lender with respect to amounts owing shall be conclusive,
absent manifest error. If each Lender's full Pro Rata Share is
transferred to the Agent as required, the amount transferred to
the Agent shall constitute that Lender's Loan for all purposes
of this Agreement. If that amount is not transferred to the
Agent on the Business Day following the Closing Date, the Agent
will notify the Loan Parties of such failure to fund and, upon
demand by the Agent, the Loan Parties shall pay such amount to
the Agent for the Agent's account, together with interest
thereon for each day elapsed since the Closing Date, at a rate
per annum equal to the Interest Rate applicable at the time to
the Loans comprising that particular Borrowing. The failure of
any Lender to make its Pro Rata share of the Term Loan on the
Closing Date (any such Lender, prior to the cure of such
failure, being hereinafter referred to as a "DEFAULTING
LENDER") shall not relieve any other Lender of its obligation
hereunder to make it Pro Rata Share of the Term Loan on the
Closing Date. No Lender shall be responsible for any other
Lender's failure to advance such other Lenders' Pro Rata Share
of any Borrowing.
(B) RETENTION OF DEFAULTING LENDER'S PAYMENTS. The Agent
shall not be obligated to transfer to a Defaulting Lender any payments made by
Loan Parties to the Agent for the Defaulting Lender's benefit; nor shall a
Defaulting Lender be entitled to the sharing of any payments hereunder. Amounts
payable to a Defaulting Lender shall instead be paid to or retained by the
Agent. In its discretion, the Agent may loan the amount of all such payments
received or retained by it for the account of such Defaulting Lender. Any
amounts so loaned to the Loan Parties shall bear interest at the rate
applicable to Base Rate Loans and for all other purposes of this Agreement
shall be treated as if they were Loans, PROVIDED, HOWEVER, that for purposes of
voting or consenting to matters with respect to the Loan Documents and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a
"Lender". This Section shall remain effective with respect to such Lender until
such time as the Defaulting Lender shall no longer be in default of any of its
obligations under this Agreement. The terms of this Section shall not be
construed to increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by the Loan Parties of their duties and
obligations hereunder.
(C) REMOVAL OF DEFAULTING LENDER. At the Borrowers'
request, the Agent or an Eligible Assignee reasonably acceptable to the Agent
and the Borrowers shall have the right (but not the obligation) to purchase
from any Defaulting Lender, and each Defaulting Lender shall, upon such
request, sell and assign to the Agent or such Eligible Assignee, all of the
Defaulting Lender's outstanding Commitments hereunder. Such sale shall be
consummated promptly after Agent has arranged for a purchase by Agent or an
Eligible Assignee pursuant to an Assignment and Acceptance, and at a price
equal to the outstanding principal balance of the Defaulting Lender's Loans,
plus accrued interest and fees (except any fees in connection with such sale
that would otherwise arise under SECTION 4.4 hereof, for which the Borrowers
shall not be liable), without premium or discount.
12.16 RESERVED.
12.17 CONCERNING THE COLLATERAL AND THE RELATED LOAN DOCUMENTS.
Each Lender authorizes and directs the Agent to enter into the
other Loan Documents, for the ratable benefit and obligation of the Agent and
the Lenders. Each Lender agrees that any action taken by the Agent or Required
Lenders in accordance with the terms of this Agreement or the other Loan
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Documents, and the exercise by the Agent or the Required Lenders, as
applicable, of their respective powers set forth therein or herein, together
with such other powers that are reasonably incidental thereto, shall be binding
upon all of the Lenders. The Lenders acknowledge that the Term Loan, Hedge
Agreements, and all interest, fees and expenses hereunder constitute one Debt,
secured pari passu by all of the Collateral.
12.18 FIELD AUDIT AND EXAMINATION REPORTS; DISCLAIMER BY LENDERS.
(A) By signing this Agreement, each Lender:
(I) is deemed to have requested that the Agent
furnish such Lender, promptly after it becomes available, a
copy of each field audit or examination report (each a "REPORT"
and collectively, "REPORTS") prepared by or on behalf of the
Agent;
(II) expressly agrees and acknowledges that the
Agent does not (i) make any representation or warranty as to
the accuracy of any Report, nor (ii) shall it be liable for any
information contained in any Report;
(III) expressly agrees and acknowledges that the
Reports are not comprehensive audits or examinations, that the
Agent or other party performing any audit or examination will
inspect only specific information regarding the Loan Parties
and will rely significantly upon the Loan Parties' books and
records, as well as on representations of the Loan Parties'
personnel;
(IV) agrees to keep all Reports confidential and
strictly for its internal use, and not to distribute except to
its participants, or use any Report in any other manner; and
(V) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees:
(i) to hold the Agent and any such other Lender preparing a
Report harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw
from any Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may
make to the Borrowers, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a
loan or loans of the Borrowers; and (ii) to pay and protect,
and indemnify, defend and hold the Agent and any such other
Lender preparing a Report harmless from and against, the
claims, actions, proceedings, damages, costs, expenses and
other amounts (including Attorney Costs) incurred by the Agent
and any such other Lender preparing a Report as the direct or
indirect result of any third parties who might obtain all or
part of any Report through the indemnifying Lender.
12.19 RESERVED.
12.20 RELATION AMONG LENDERS. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
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12.21 THE REGISTER. The Agent shall maintain a register (the
"REGISTER"), which shall include a master account and a subsidiary account for
each Lender and in which accounts (taken together) shall be recorded (i) the
type of each Loan comprising the Borrowing and any Interest Period applicable
thereto, (ii) the effective date and amount of each Assignment and Acceptance
delivered to and accepted by it and the parties thereto, (iii) the amount of
any principal or interest due and payable or to become due and payable from
Borrowers to each Lender hereunder or under the notes payable by the Borrowers
to such Lender, and (iv) the amount of any sum received by the Agent from
Borrowers or any other Loan Party and each Lender's Pro Rata Share thereof. The
Register shall be available for inspection by Borrowers or any Lender at the
offices of Agent at any reasonable time and from time to time upon reasonable
prior notice. Any failure of the Agent to record in the Register, or any error
in doing so, shall not limit or otherwise affect the obligation of Borrowers
hereunder (or under any note) to pay any amount owing with respect to the Loans
or provide the basis for any claim against Agent. The Obligations are
registered obligations and the right, title and interest of any Lender and
their assignees in and to such Obligations shall be transferable only upon
notation of such transfer in the Register. Solely for purposes of this Section
12.21 and for tax purposes only, the Agent shall be Borrowers' agent for
purposes of maintaining the Register (but the Agent shall have no liability
whatsoever to any Borrower or any other Person on account of any inaccuracies
contained in the Register). This Section 12.21 shall be construed so that the
Obligations are at all times maintained in "REGISTERED FORM" within the meaning
of Sections 163(f), 871(h)(2) and 881(c)(2) of the Internal Revenue Code and
any related regulations (and any other relevant or successor provisions of the
Internal Revenue Code or such regulations).
ARTICLE 13
JUDGMENT CURRENCY; SERVICE OF PROCESS
13.1 JUDGMENT CURRENCY.
If for the purpose of obtaining judgment in any court it is
necessary to convert an amount due hereunder in the currency in which it is due
(the "ORIGINAL CURRENCY") into another currency (the "SECOND Currency"), the
rate of exchange applied shall be that at which, in accordance with normal
banking procedures, the Agent or any Lender could purchase in the New York
foreign exchange market, the Original Currency with the Second Currency on the
date on which judgment is given, or the preceding Business Day if such date is
not a Business Day. Each Loan Party agrees that its obligation in respect of
any Original Currency due from it hereunder shall, notwithstanding any judgment
or payment in such other currency, be discharged only to the extent that, on
the Business Day following the date the Agent receives payment of any sum so
adjudged to be due hereunder in the Second Currency, the Agent may, in
accordance with normal banking procedures, purchase, in the New York foreign
exchange market, the Original Currency with the amount of the Second Currency
so paid; and if the amount of the Original Currency so purchased or could have
been so purchased is less than the amount originally due in the Original
Currency, each Loan Party agrees, as a separate obligation and notwithstanding
any such payment or judgment, to indemnify the Agent or any Lender against such
loss. The term "rate of exchange" in this Section 13.1 means the spot rate at
which Agent or any Lender, in accordance with normal practices, is able on the
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relevant date to purchase the Original Currency with the Second Currency, and
includes any premium and costs of exchange payable in connection with such
purchase.
13.2 AGENT FOR SERVICE OF PROCESS.
Applica Canada and Applica Asia each hereby irrevocably
designates and appoints the Borrower Agent, at the address for Borrower Agent
shown herein, as the Agent of Applica Canada and Applica Asia to receive
service of process in legal actions arising out of or related to this Agreement
or any of the other Loan Documents and expressly agrees that service upon
Borrower Agent shall constitute service upon Applica Canada and Applica Asia.
ARTICLE 14
MISCELLANEOUS
14.1 NO WAIVERS; CUMULATIVE REMEDIES.
No failure by the Agent or any Lender to exercise any right,
remedy, or option under this Agreement or any present or future supplement
thereto, or in any other agreement between or among the Loan Parties and the
Agent and/or any Lender, or delay by the Agent or any Lender in exercising the
same, will operate as a waiver thereof. No waiver by the Agent or any Lender
will be effective unless it is in writing, and then only to the extent
specifically stated. No waiver by the Agent or the Lenders on any occasion
shall affect or diminish the Agent's and each Lender's rights thereafter to
require strict performance by the Loan Parties of any provision of this
Agreement. The Agent and the Lenders may proceed directly to collect the
Obligations without any prior recourse to the Collateral. The Agent's and each
Lender's rights under this Agreement will be cumulative and not exclusive of
any other right or remedy which the Agent or any Lender may have.
14.2 SEVERABILITY.
The illegality or unenforceability of any provision of this
Agreement or any Loan Document or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this Agreement or any instrument or agreement
required hereunder.
14.3 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS.
(A) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION
ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE
CHOICE OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE
OF NEW YORK; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
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(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS STATE OR
FEDERAL COURTS LOCATED IN THE STATES OF NEW YORK, FLORIDA OR GEORGIA, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE LOAN PARTIES, THE AGENT
AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE LOAN PARTIES, THE AGENT
AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING 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 ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE LOAN PARTIES OR THEIR
PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS
DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER
SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES
THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING
SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.
(C) EACH OF THE LOAN PARTIES HEREBY WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE
ADDRESS SET FORTH IN SECTION 14.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED SEVEN (7) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE
U.S. MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF
AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY
LAW.
14.4 WAIVER OF JURY TRIAL. EACH OF THE LOAN PARTIES, EACH OF THE
LENDERS AND THE AGENT IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED
PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. THE LOAN PARTIES, THE LENDERS AND THE AGENT EACH AGREE
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT
A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS
TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
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14.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All of the Loan Parties' representations and warranties
contained in this Agreement shall survive the execution, delivery, and
acceptance thereof by the parties, notwithstanding any investigation by the
Agent or the Lenders or their respective agents.
14.6 OTHER SECURITY AND GUARANTIES.
The Agent, may, without notice or demand and without affecting
any Loan Party's obligations hereunder or under any other Loan Document, from
time to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce or release such collateral or any part thereof; and (b) accept and hold
any endorsement or guaranty of payment of all or any part of the Obligations
and release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or
any part of the Obligations, or any other Person in any way obligated to pay
all or any part of the Obligations.
14.7 FEES AND EXPENSES.
Each Loan Party agrees to pay to the Agent, for its benefit, on
demand, all costs and expenses that Agent pays or incurs in connection with the
negotiation, preparation, syndication, consummation, administration,
enforcement, and termination of this Agreement or any of the other Loan
Documents, including: (a) Attorney Costs incurred by the Agent in connection
with the negotiation, preparation, syndication and consummation of this
Agreement or any of the other Loan Documents; (b) costs and expenses (including
attorneys' and paralegals' fees and disbursements) for any amendment,
supplement, waiver, consent, or subsequent closing in connection with the Loan
Documents and the transactions contemplated thereby; (c) costs and expenses of
lien and title searches; (d) taxes, fees and other charges for filing financing
statements and continuations, and other actions to perfect, protect, and
continue the Agent's Liens (including costs and expenses paid or incurred by
the Agent in connection with the consummation of Agreement); (e) sums paid or
incurred to pay any amount or take any action required of any Loan Party under
the Loan Documents that such Loan Party fails to pay or take; (f) costs of
appraisals, inspections, and verifications of the ABL Collateral, including
reasonable travel, lodging, and meals for inspections of the ABL Collateral and
the Loan Parties' operations by the Agent plus the Agent's then customary
charge for field examinations and audits and the preparation of reports thereof
(such charge is currently $850 per day (or portion thereof) for each Person
retained or employed by the Agent with respect to each field examination or
audit), provided, that unless otherwise agreed by the Borrowers and the Agent,
the Borrowers shall not be obligated to the Agent for any expenses set forth in
this clause (f) for travel and visits to Loan Parties' facilities located
outside of the United States or Canada; and (g) without duplication, costs and
expenses of forwarding loan proceeds, collecting checks and other items of
payment, and establishing and maintaining Payment Accounts and lock boxes, and
costs and expenses of preserving and protecting the Collateral. In addition,
each Loan Party agrees to pay costs and expenses incurred by the Agent
(including Attorneys' Costs) to the Agent, for its benefit, on demand, and to
the other Lenders for their benefit, on demand, and all reasonable fees,
65
expenses and disbursements incurred by such other Lenders, including reasonable
attorneys' fees and disbursements, in each case, paid or incurred to obtain
payment of the Obligations, enforce the Agent's Liens, sell or otherwise
realize upon the Collateral, and otherwise enforce the provisions of the Loan
Documents, or to defend any claims made or threatened against the Agent or any
Lender arising out of the transactions contemplated hereby (including
preparations for and consultations concerning any such matters). If, for any
reason (including inaccurate reporting by the Borrowers on financial statements
or otherwise), it is determined that a higher Applicable Margin should have
applied to a period than was actually applied, then the proper margin shall be
applied retroactively and the Borrowers shall pay to Agent, on written demand,
for the Pro Rata benefit of Lenders, an amount equal to the difference between
the amount of interest and fees that would have accrued using the proper margin
and the amount actually paid. The foregoing shall not be construed to limit any
other provisions of the Loan Documents regarding costs, expenses or other
amounts to be paid by the Loan Parties.
14.8 NOTICES.
(A) Except as otherwise expressly provided herein, all
notices, demands and requests that any party is required or elects to give to
any other shall be in writing, or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including delivery by overnight mail and courier
service, (b) four (4) days after it shall have been mailed by United States
mail, first class, certified or registered, with postage prepaid, or (c) in the
case of notice by such a telecommunications device, when properly transmitted,
in each case addressed to the party to be notified as follows:
If to the Agent:
Harbinger Capital Partners Master Fund I, Ltd.
c/o Harbinger Capital Partners Offshore Manager, LLC
Xxx Xxxxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx XxXxxxxxxx
Telecopy No.: (000) 000-0000
If to a Loan Party:
Applica Consumer Products, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Telecopy No.: (000) 000-0000
Email: xxxxx.xxxxxxxxx@xxxxxxxxxxx.xxx
66
with a copy to:
Applica Consumer Products, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
Email: xxxx.xxxxxxxxxxx@xxxxxxxxxxx.xxx
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
(B) Electronic mail and internet websites may be used only
for routine communications, such as financial statements, Borrowing Base
Certificates and other information required by SECTION 5.2, administrative
matters, distribution of Loan Documents for execution, and matters permitted
under SECTION 1.2(K). Agent and Lenders make no assurances as to the privacy
and security of electronic communications. Electronic mail and voicemail may
not be used as effective notice under the Loan Documents except as otherwise
provided herein.
(C) Agent and Lenders may rely upon any notices purportedly
given by or on behalf of any Loan Party even if such notices were not made in a
manner specified herein, were incomplete or were not confirmed, or if the terms
thereof, as understood by the recipient, varied from a later confirmation. Each
Loan Party shall indemnify and hold harmless each Indemnified Person from any
liabilities, losses, costs and expenses arising from any telephonic
communication purportedly given by or on behalf of a Loan Party.
14.9 WAIVER OF NOTICES.
Unless otherwise expressly provided herein, the Loan Parties
waive presentment, and notice of demand or dishonor and protest as to any
instrument, notice of intent to accelerate the Obligations and notice of
acceleration of the Obligations, as well as any and all other notices to which
they might otherwise be entitled. No notice to or demand on a Loan Party which
the Agent or any Lender may elect to give shall entitle the Loan Parties to any
or further notice or demand in the same, similar or other circumstances.
14.10 BINDING EFFECT.
The provisions of this Agreement shall be binding upon and
inure to the benefit of the respective representatives, successors, and assigns
of the parties hereto; PROVIDED, HOWEVER, that no interest herein may be
assigned by any Loan Party without prior written consent of the Agent and each
Lender. The rights and benefits of the Agent and the Lenders hereunder shall,
if such Persons so agree, inure to any party acquiring any interest in the
Obligations or any part thereof.
67
14.11 INDEMNITY OF THE AGENT AND THE LENDERS BY THE BORROWERS.
(A) Each Loan Party agrees to defend, indemnify and hold
the Agent-Related Persons, and each Lender, its Affiliates, and each of their
respective officers, directors, employees, counsel, representatives, agents and
attorneys in fact (each, an "INDEMNIFIED PERSON") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including
Attorney Costs) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the termination,
resignation or replacement of the Agent or replacement of any Lender) be
imposed on, incurred by or asserted against any such Person in any way relating
to or arising out of this Agreement or any document contemplated by or referred
to herein, or the transactions contemplated hereby, or any action taken or
omitted by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate proceeding) related to or
arising out of this Agreement, any other Loan Document, or the Loans or the use
of the proceeds thereof, whether or not any Indemnified Person is a party
thereto (all the foregoing, collectively, the "INDEMNIFIED LIABILITIES");
provided that the Loan Parties shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities determined in a
final, non-appealable judgment by a court of competent jurisdiction to result
solely from the gross negligence or willful misconduct of such Indemnified
Person. The agreements in this Section shall survive termination of the
Commitments and payment of all other Obligations.
(B) Each Loan Party agrees to indemnify, defend and hold
harmless the Agent and the Lenders and their Affiliates from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance relating to a Loan Party's or
other Consolidated Member's operations, business or property. This indemnity
will apply whether the hazardous substance is on, under or about the Loan
Party's or other Consolidated Members' property or operations or property
leased to a Loan Party or other Consolidated Member. The indemnity includes but
is not limited to Attorneys Costs. The indemnity extends to the Agent and the
Lenders, their Affiliates, and all of their directors, officers, employees,
agents, successors, attorneys and assigns. "Hazardous substances" means any
substance, material or waste that is or becomes designated or regulated as
"toxic," "hazardous," "pollutant," or "contaminant" or a similar designation or
regulation under any federal, state or local law (whether under common law,
statute, regulation or otherwise) or judicial or administrative interpretation
of such, including petroleum or natural gas. This indemnity will survive
repayment of all other Obligations.
14.12 AMENDMENT AND RESTATEMENT OF SECOND AMENDED CREDIT AGREEMENT;
RELEASE.
(A) This Agreement amends and restates, but does not
discharge or satisfy any obligation of any party under, the Original Credit
Agreement and the Original Guaranty and nothing herein shall constitute a
novation or accord and satisfaction with respect to the Original Credit
Agreement, the Original Guaranty or any of the Obligations. All "Obligations"
under the Original Credit Agreement (to the extent not paid on or prior to the
date hereof) and Original Guaranty, and all security interests, Liens, and
collateral assignments granted to the Agent under the Original Credit
Agreement, Original Guaranty or any of the other "Loan Documents" defined
therein (other than the Pledge Agreements and Intellectual Property Notices),
hereby are renewed and continued in full force and effect, and hereafter shall
be governed by this Agreement or, to the extent appropriate, such other Loan
Documents as further amended, restated or modified from time to time. All
68
existing "Loan Documents" previously executed in connection with the Original
Credit Agreement and the Original Guaranty (other than the Pledge Agreements
and Intellectual Property Notices), shall continue in full force and effect,
except to the extent such agreement is amended, restated or replaced in
connection with this Agreement. Each of the parties hereto ratifies and
reaffirms the Original Credit Agreement and the Original Guaranty as each is
amended and restated hereby, and agrees that this Agreement embodies the entire
understanding of the parties with respect to the subject matter hereof.
(B) EACH LOAN PARTY HEREBY RELEASES, ACQUITS AND FOREVER
DISCHARGES AGENT AND EACH LENDER, AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
AGENTS, CONSULTANTS, LEGAL COUNSEL, SUCCESSORS AND ASSIGNS, FROM ALL CLAIMS,
DEMANDS, SUITS, ACTIONS, CAUSES OF ACTION, RECKONINGS, AND LIABILITIES OF ANY
NATURE, WHETHER KNOWN OR UNKNOWN, DUE OR TO BECOME DUE, ABSOLUTE OR CONTINGENT,
LEGAL OR EQUITABLE OR DISPUTED OR UNDISPUTED, THAT ANY LOAN PARTY HAS OR MAY
CLAIM TO HAVE AGAINST AGENT OR ANY LENDER AND THAT ARISES OUT OF OR RELATES TO
ANY ACT, FAILURE TO ACT, TRANSACTION OR OCCURRENCE UNDER, IN CONNECTION WITH OR
RELATED TO THE ORIGINAL CREDIT AGREEMENT, THE ORIGINAL GUARANTY OR ANY OF THE
OTHER LOAN DOCUMENTS, PROVIDED THAT NOTHING THEREIN SHALL OPERATE TO RELEASE
AGENT OR ANY LENDER FROM PERFORMING ANY OF THEIR AGREEMENTS UNDER THIS
AGREEMENT.
14.13 FINAL AGREEMENT.
This Agreement, together with the other Loan Documents, is
intended by the Loan Parties, the Agent and the Lenders to be the final,
complete, and exclusive expression of the agreement among them. This Agreement
and the other Loan Documents supersede any and all prior oral or written
agreements relating to the subject matter hereof, except for the Fee Letter.
Nothing contained herein shall be deemed to be or operate as a novation or an
accord and satisfaction of any of the Obligations. No modification, rescission,
waiver, release, or amendment of any provision of this Agreement or any other
Loan Document shall be made, except by a written agreement signed by the Loan
Parties and a duly authorized officer of each of the Agent and the requisite
Lenders.
14.14 COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
including facsimile copies thereof, and by the Agent, each Lender and the Loan
Parties in separate counterparts, each of which shall be an original, but all
of which shall together constitute one and the same agreement; signature pages
may be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
14.15 CAPTIONS.
The captions contained in this Agreement are for convenience of
reference only, are without substantive meaning and should not be construed to
modify, enlarge, or restrict any provision.
69
14.16 RIGHT OF SETOFF.
In addition to any rights and remedies of the Lenders provided
by law, if an Event of Default exists or the Loans have been accelerated, each
Lender is authorized (subject to the terms of SECTION 12.12(B)) at any time and
from time to time, without prior notice to the Loan Parties, any such notice
being waived by the Loan Parties 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 by, and other indebtedness at any time
owing by, such Lender or any Affiliate of such Lender to or for the credit or
the account of the Loan Parties against any and all Obligations owing to such
Lender or its Affiliates, now or hereafter existing, irrespective of whether or
not the Agent or such Lender shall have made demand under this Agreement or any
Loan Document and although such Obligations may be contingent or unmatured.
Each Lender agrees promptly to notify the Loan Parties and the Agent after any
such set off and application made by such Lender; PROVIDED, HOWEVER, that the
failure to give such notice shall not affect the validity of such set off and
application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT
OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY
OF A LOAN PARTY HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN
UNANIMOUS CONSENT OF THE LENDERS.
14.17 CONFIDENTIALITY.
The Agent and each Lender (each, a "LENDING PARTY") agrees to
keep Confidential any information furnished or made available to it by any Loan
Party (each, a "DISCLOSING PARTY") that is marked as confidential or, with
respect to verbal information, explicitly identified as confidential when
furnished ("CONFIDENTIAL INFORMATION").
(A) For purposes of this Agreement, the term "Confidential
Information" shall not include information that (i) is in the Lending Party's
possession prior to it being provided by or on behalf of the Disclosing Party,
provided that such information is not known by the Lending Party to be subject
to another confidentiality agreement with, or other legal or contractual
obligation of confidentiality to, a Disclosing Party (ii) is or becomes
publicly available (other than through a breach of this Agreement by any
Lending Party), or (iii) becomes available to the Lending Party on a
non-confidential basis, provided that the source of such information was not
known by the Lending Party to be bound by a confidentiality agreement or other
legal or contractual obligation of confidentiality with respect to such
information.
(B) Notwithstanding the foregoing, a Lending Party may
disclose Confidential Information to: (i) any governmental agency or regulatory
body having or reasonably claiming to have authority to regulate or oversee any
aspect of the Lending Party's business in connection with the exercise of such
authority or claimed authority; (ii) the extent necessary or appropriate to
effect or preserve the Lending Party's security (if any) hereunder or to
enforce any right or remedy provided pursuant to this Agreement or in
connection with any claims asserted by or against the Lending Party or any
Borrower or any other person or entity involved herewith; (iii) its directors,
officers, employees, attorneys, accountants, and auditors (collectively, the
"Representatives") whom it reasonably determines need to know such information;
and the Lending Party agrees inform the Representatives to whom it discloses
Confidential Information of the confidential nature of the Confidential
Information; (iv) pursuant to subpoena or other court process; (v) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (vi) to the extent reasonably required in connection with
any litigation or proceeding (including, but not limited to, any bankruptcy
70
proceeding) to which any Lending Party or their respective Affiliates may be
party; and (vii) any bank or financial institution or other entity to which the
Lending Party has sold or desires to sell an interest or participation in the
Commitment and the Loan Documents, provided that any such recipient of such
Confidential Information agrees in writing to keep such Confidential
Information confidential as specified in this SECTION 14.17; PROVIDED, HOWEVER,
in the event a Lending Party is requested or required (by interrogatory, court
order, subpoena, administrative proceeding, civil investigatory demand, or any
similar legal process) to disclose any of the Confidential Information, the
Lending Party, in the absence of a protective order, may disclose such
information without liability. The Lending Party, however, shall, to the extent
permitted by law and as promptly as practicable, make reasonable efforts to
notify the Disclosing Party and the Borrowers prior to such disclosure by the
Lending Party so that the Disclosing Party may seek at its sole expense a
protective order or other appropriate remedy.
(C) Each Lending Party acknowledges that, under certain
circumstances, the United States securities laws may prohibit a person who has
received material, non-public information from an issuer from purchasing or
selling securities of such issuer or from communicating such information to any
other person under circumstances in which it is reasonably foreseeable that
such other person is likely to purchase or sell such securities. Each Lending
Party further acknowledges that certain Confidential Information could be
considered material non-public information and agrees that it will not, and it
will use reasonable efforts to ensure that its Representatives will not, trade
in the securities of the Parent on the basis of such information or communicate
such information to any other person under circumstances in which it is
reasonably foreseeable that such other person is likely to purchase or sell
such securities.
(D) This SECTION 14.17 shall survive the termination of
this Agreement.
14.18 CONFLICTS WITH OTHER LOAN DOCUMENTS.
Unless otherwise expressly provided in this Agreement (or in
another Loan Document by specific reference to the applicable provision
contained in this Agreement), if any provision contained in this Agreement
conflicts with any provision of any other Loan Document, the provision
contained in this Agreement shall govern and control.
14.19 AGENCY OF THE BORROWERS FOR EACH OTHER LOAN PARTY.
Each of the Loan Parties irrevocably appoints the Borrower
Agent as its agent for all purposes relevant to this Agreement, including the
giving and receipt of notices and execution and delivery of all documents,
instruments, and certificates contemplated herein (including, without
limitation, execution and delivery to the Agent of Borrowing Base Certificates,
Notices of Borrowing, and Notices of Continuation/Conversion) and all
modifications hereto. Any agreement, acknowledgment, consent, direction,
certification, or other action which might otherwise be valid or effective only
if given or taken by all or any of the Loan Parties or acting singly, shall be
valid and effective if given or taken only by the Borrower Agent, whether or
not any of the other Loan Parties joins therein, and the Agent and the Lenders
shall have no duty or obligation to make further inquiry with respect to the
authority of the Borrower Agent under this SECTION 14.19, provided that nothing
in this SECTION 14.19 shall limit the effectiveness of, or the right of the
Agent and the Lenders to rely upon, any notice (including a Notice of Borrowing
71
or a Notice of Continuation/Conversion), document, instrument, certificate,
acknowledgment, consent, direction, certification, or other action delivered by
a Borrower or other Loan Party pursuant to this Agreement.
14.20 EXPRESS WAIVERS BY LOAN PARTIES IN RESPECT OF CROSS GUARANTIES
AND CROSS COLLATERALIZATION.
Each Loan Party agrees as follows:
(A) Each Loan Party hereby waives: (i) notice of acceptance
of this Agreement; (ii) notice of the making of any Loans or any other
financial accommodations made or extended under the Loan Documents or the
creation or existence of any Obligations; (iii) notice of the amount of the
Obligations, subject, however, to such Loan Party's right to make inquiry of
the Agent to ascertain the amount of the Obligations at any reasonable time;
(iv) notice of any adverse change in the financial condition of any other Loan
Party or of any other fact that might increase such Loan Party's risk with
respect to such other Loan Party under the Loan Documents; (v) notice of
presentment for payment, demand, protest, and notice thereof as to any
promissory notes or other instruments among the Loan Documents; and (vii) all
other notices (except if such notice is specifically required to be given to
such Loan Party hereunder or under any of the other Loan Documents to which
such Loan Party is a party) and demands to which such Loan Party might
otherwise be entitled;
(B) Each Loan Party hereby waives the right by statute or
otherwise to require the Agent or any Lender to institute suit against any
other Loan Party or to exhaust any rights and remedies which the Agent or any
Lender has or may have against any other Loan Party. Each Loan Party further
waives any defense arising by reason of any disability or other defense of any
other Loan Party (other than the defense that the Obligations shall have been
fully and finally performed and indefeasibly paid) or by reason of the
cessation from any cause whatsoever of the liability of any such Loan Party in
respect thereof.
(C) Each Loan Party hereby waives and agrees not to assert
against the Agent or any Lender: (i) any defense (legal or equitable), setoff,
counterclaim, or claim which such Loan Party may now or at any time hereafter
have against any other Loan Party; (ii) any defense, setoff, counterclaim, or
claim of any kind or nature available to any other Loan Party against the Agent
or any Lender arising directly or indirectly from the present or future lack of
perfection, sufficiency, validity, or enforceability of the Obligations or any
security therefor; (iii) any right or defense arising by reason of any claim or
defense based upon an election of remedies by the Agent or any Lender under any
applicable law; (iv) the benefit of any statute of limitations affecting any
other Loan Party's liability hereunder;
(D) Each Loan Party consents and agrees that, without
notice to or by such Loan Party and without affecting or impairing the
obligations of such Loan Party hereunder, the Agent may (subject to any
requirement for consent of any of the Lenders to the extent required by this
Agreement), by action or inaction: (i) compromise, settle, extend the duration
or the time for the payment of, or discharge the performance of, or may refuse
to or otherwise not enforce the Loan Documents; (ii) release all or any one or
more parties to any one or more of the Loan Documents or grant other
indulgences to any other Loan Party in respect thereof, (iii) amend or modify
in any manner and at any time (or from time to time) any of the Loan Documents;
or (iv) release or substitute any Person liable for payment of the Obligations,
or enforce, exchange, release, or waive any security for the Obligations or any
Guaranty of the Obligations;
72
(E) Each Loan Party represents and warrants to the Agent
and the Lenders that such Loan Party is currently informed of the financial
condition of all other Loan Parties and all other circumstances which a
diligent inquiry would reveal and which bear upon the risk of nonpayment of the
Obligations. Each Loan Party further represents and warrants that such Loan
Party has read and understands the terms and conditions of the Loan Documents.
Each Loan Party agrees that neither the Agent nor any Lender has any
responsibility to inform any Loan Party of the financial condition of any other
Loan Party or of any other circumstances which bear upon the risk of nonpayment
or nonperformance of the Obligations.
14.21 USA PATRIOT ACT NOTICE.
The Agent and Lenders each hereby notifies each Loan Party
that, pursuant to the requirements of the USA PATRIOT Act, it is required to
obtain, verify and record information that identifies such Loan Party, which
information includes the name and address of each Loan Party and other
information that will allow the Agent and each Lender to identify such Loan
Party in accordance with the USA PATRIOT Act.
14.22 INTERCREDITOR AGREEMENT.
The Loan Parties, Agent and Lenders acknowledge that the
exercise of certain of the Agent's rights and remedies hereunder may be subject
to the provisions of the Additional Debt Intercreditor Agreement. Each Lender
and each other Person party hereto from time to time (other than the Loan
Parties) hereby (A) acknowledges that is has received a copy of the Additional
Debt Intercreditor Agreement, (B) consents to the provisions of the Additional
Debt Intercreditor Agreement, (C) agrees that it will be bound by and comply
with the provisions of the Additional Debt Intercreditor Agreement, including
the purchase option provisions contained therein, and (D) authorizes and
instructs the Agent on its behalf to enter into the Additional Debt
Intercreditor Agreement as "Term Agent" thereunder.
[Signatures commence on following page]
73
IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
BORROWERS
SALTON, INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
APPLICA INCORPORATED, a Florida corporation
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
APPLICA CONSUMER PRODUCTS, INC.,
a Florida corporation
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
APN HOLDING COMPANY, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
APPLICA AMERICAS, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President, General Counsel and
Corporate Secretary
HP DELAWARE, INC., a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President, General Counsel
and Corporate Secretary
1
HPG LLC, a Delaware limited
liability company
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President, General Counsel
and Corporate Secretary
APPLICA MEXICO HOLDINGS, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President, General Counsel
and Corporate Secretary
SONEX INTERNATIONAL CORPORATION,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President, General Counsel
and Corporate Secretary
HOME CREATIONS DIRECT LTD.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President, General Counsel
and Corporate Secretary
SALTON HOLDINGS INC., a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President, General Counsel
and Corporate Secretary
2
ICEBOX LLC, an Illinois limited
liability company
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President, General Counsel
and Corporate Secretary
TOASTMASTER INC., a Missouri corporation
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President, General Counsel
and Corporate Secretary
FAMILY PRODUCTS INC., a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President, General Counsel
and Corporate Secretary
ONE:ONE COFFEE LLC, a Delaware limited
liability company
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President, General Counsel
and Corporate Secretary
SALTON TOASTMASTER LOGISTICS LLC,
a Delaware limited liability company
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President, General Counsel
and Corporate Secretary
3
GUARANTORS
APPLICA CANADA CORPORATION,
a Nova Scotia company
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President, General Counsel
and Corporate Secretary
APPLICA ASIA LIMITED, a Hong Kong company
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President, General Counsel
and Corporate Secretary
4
ADMINISTRATIVE AGENT
HARBINGER CAPITAL PARTNERS MASTER
FUND I, LTD.
By: Harbinger Capital Partners Offshore
Manager, L.L.C.
Its: Investment Manager
By: /s/ Xxxxxxx X. Xxxxx, Xx.
------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Executive Vice President - General
Counsel & Secretary
COLLATERAL AGENT
HARBINGER CAPITAL PARTNERS MASTER
FUND I, LTD.
By: Harbinger Capital Partners Offshore
Manager, L.L.C.
Its: Investment Manager
By: /s/ Xxxxxxx X. Xxxxx, Xx.
------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Executive Vice President - General
Counsel & Secretary
5
LENDERS
HARBINGER CAPITAL PARTNERS MASTER
FUND I, LTD.
By: Harbinger Capital Partners Offshore
Manager, L.L.C.
Its: Investment Manager
By: /s/ Xxxxxxx X. Xxxxx, Xx.
------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Executive Vice President - General
Counsel & Secretary
HARBINGER CAPITAL PARTNERS SPECIAL
SITUATIONS FUND, L.P.
By: Harbinger Capital Partners Special
Situations GP, LLC.
Its: General Partner
By: /s/ Xxxxxxx X. Xxxxx, Xx.
------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Executive Vice President - General
Counsel & Secretary
6
ANNEX A
TO
CREDIT AGREEMENT
1. DEFINITIONS. Capitalized terms used in the Loan
Documents shall have the following meanings (unless otherwise defined therein),
and all Section references in the following definitions shall refer to Sections
of this Agreement:
"ABL COLLATERAL" means the Revolver Loan Primary Collateral as
defined in clause (ii) of the definition thereof in the Additional Debt
Intercreditor Agreement.
"ACCOUNT" has the meaning given to the term "account" in the
UCC or PPSA, as applicable, and includes any rights to payment for the sale or
lease of goods or rendition of services, whether or not they have been earned
by performance.
"ACCOUNT DEBTOR" means each Person obligated in any way on or
in connection with an Account, Chattel Paper or General Intangibles (including
a payment intangible).
"ACQUISITION" means the acquisition of (i) a controlling equity
interest in another Person (including the purchase of an option, warrant or
convertible or similar type security to acquire such a controlling interest at
the time it becomes exercisable by the holder thereof), whether by purchase of
such equity interest or upon exercise of an option or warrant for, or
conversion of securities into, such equity interest, or (ii) assets of another
Person which constitute any material part of the assets of such Person or of a
line or lines of business conducted by such Person.
"ADDITIONAL DEBT" means the Debt owing under the Additional
Debt Documents.
"ADDITIONAL DEBT AGENT" means Bank of America, N.A., as agent
under the Additional Debt Documents, or any successor agent thereunder.
"ADDITIONAL DEBT DOCUMENTS" means: (i) the Third Amended and
Restated Credit Agreement dated as of the date hereof, among the Additional
Debt Agent, certain Loan Parties party thereto, the holders of the Additional
Debt and certain other parties party thereto; (ii) the Security Agreement dated
as of the date hereof, among certain Loan Parties and the Additional Debt Agent
in favor of certain of their the holders of the Additional Debt; and (iii) all
other agreements, instruments or documents executed or delivered by any Loan
Parties thereof in connection with the foregoing.
"ADDITIONAL DEBT INTERCREDITOR AGREEMENT" means the
Intercreditor Agreement dated as of the Closing Date among the Additional Debt
Agent, the holders of Additional Debt, the Agent and the Lenders.
"AFFILIATE" means, as to any Person, including any Consolidated
Member (the "SUBJECT PERSON"), any other Person which, directly or indirectly,
is in control of, is controlled by, or is under common control with, the
subject Person or which owns, directly or indirectly, ten percent (10%) or more
of the outstanding equity interest of the subject Person. A Person shall be
deemed to control another Person if the controlling Person possesses, directly
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or indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"AGENCY AGREEMENT" means, when used with reference to Applica
Consumer Products, the Agency Agreement in effect between Applica Consumer
Products and Applica Asia, pursuant to which Applica Asia shall furnish to
Applica Consumer Products various purchasing and handling services with respect
to the importation of various types of products from various countries as more
fully set forth therein; and, when used with reference to Applica Canada, the
Agency Agreement in effect between Applica Canada and Applica Asia, pursuant to
which Applica Asia shall furnish to Applica Canada various purchasing and
handling services with respect to the importation of various types of products
from various countries as more fully set forth therein.
"AGENT" means Harbinger Capital Partners Master Fund I, Ltd. in
its capacity as administrative and collateral agent for the Lenders, and any
successor administrative and collateral agent.
"AGENT-RELATED PERSONS" means Agent, together with its
Affiliates, and the officers, directors, employees, counsel, representatives,
agents and attorneys-in-fact of Agent and such Affiliates.
"AGENT'S LIENS" means the Liens in the Collateral granted to
the Agent, for the benefit of the Lenders and the Agent, pursuant to this
Agreement and the other Loan Documents.
"AGREEMENT" means the Agreement to which this ANNEX A is
attached, as from time to time amended, modified or restated.
"ALLOCABLE AMOUNT" has the meaning specified in SECTION 1.6(F).
"ANTI-TERRORISM LAWS" mean any laws relating to terrorism or
money laundering, including Executive Order No. 13224, the USA PATRIOT Act and
the Proceeds of Crime Act.
"APPLICA AMERICAS BLOCKED ACCOUNT" means each blocked account
established and regulated pursuant to the Applica Americas Blocked Account
Agreement.
"APPLICA AMERICAS BLOCKED ACCOUNT AGREEMENT" means each Blocked
Account Agreement to be entered into among Applica Americas, its depository
banks and Agent.
"APPLICA ASIA BLOCKED ACCOUNT AGREEMENTS" means the Blocked
Account Agreements to be entered into among Applica Asia, its depository bank
and Agent.
"APPLICA ASIA GUARANTY" means the Debenture dated the Closing
Date, among Applica Asia, ACP, Applica Canada and Agent, pursuant to which
Applica Asia guarantees payment of the Obligations.
"APPLICA ASIA SERVICED ACCOUNT" has the meaning specified in
SECTION 7.34(A).
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"APPLICA CANADA BLOCKED ACCOUNT" means the blocked account
established and regulated pursuant to the Applica Canada Blocked Account
Agreement.
"APPLICA CANADA BLOCKED ACCOUNT AGREEMENT" means the Blocked
Account Agreements entered into among Applica Canada, The Bank of Nova Scotia
and the Agent.
"APPLICA CANADA GUARANTY" means the Guarantee executed by
Applica Canada on the Closing Date pursuant to which Applica Canada guarantees
the payment of the Obligations.
"APPLICA CANADA SECURITY AGREEMENT" means the General Security
Agreement, dated as of the Closing Date, executed and delivered by Applica
Canada in favor of Agent for the benefit of itself and the Lenders.
"APPLICABLE MARGIN" means, as of the Closing Date,
(i) with respect to Base Rate Loans, 5.5%; and
(ii) with respect to LIBOR Loans, 6.5%.
"ASSET DISPOSITION" means, with respect to any Person, the
sale, lease or other disposition of any asset of such Person other than the
sale of Inventory or the use of cash in the ordinary course of business.
"ASSIGNEE" has the meaning specified in SECTION 11.2(A).
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in
SECTION 11.2(A).
"ATTORNEY COSTS" means and includes all reasonable fees,
expenses and disbursements of any law firm or other counsel engaged by the
Agent or Lead Arranger.
"AVAILABILITY" has the meaning specified in the Additional Debt
Documents.
"BANK" means Bank of America, N.A., a national banking
association, or any successor entity thereto.
"BANKRUPTCY CODE" means Title 11 of the United States Code (11
U.S.C. ss. 101 ET SEQ.).
"BASE RATE" means, for any day, the rate of interest in effect
for such day as publicly announced from time to time by Bank of America, N.A.
in Atlanta, Georgia as its "prime rate" (the "prime rate" being a rate set by
Bank of America, N.A. based upon various factors including Bank of America,
N.A.'s costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be priced
at, above, or below such announced rate). Any change in the prime rate
announced by Bank of America, N.A. shall take effect at the opening of business
on the day specified in the public announcement of such change. Each Interest
Rate based upon the Base Rate shall be adjusted simultaneously with any change
in the Base Rate.
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"BASE RATE LOAN" means those portions of the Term Loan during
any period which bear interest based on the Base Rate.
"BIA" means the BANKRUPTCY AND INSOLVENCY ACT (Canada) and all
regulations thereunder.
"BLACK & XXXXXX LICENSE AGREEMENT" means the Trademark License
Agreement, dated as of June 26, 1998 (as amended or restated), between The
Black & Xxxxxx Corporation and Parent, as assignee of Applica.
"BLOCKED ACCOUNT AGREEMENT" means an agreement, including,
inter alia, a collection account agreement, among one or more of the Loan
Parties, the Agent and a Clearing Bank, in form and substance reasonably
satisfactory to the Agent, concerning the collection of payments which
represent the proceeds of Accounts or of any other Collateral.
"BLOCKED ACCOUNTS" means, collectively, the Applica Americas
Blocked Account, the Applica Asia Blocked Account, the Applica Canada Blocked
Account and the Borrower Blocked Account.
"BORROWER AGENT" has the meaning specified in SECTION 1.6.
"BORROWER BLOCKED ACCOUNT" means each blocked account and
lockbox established and regulated pursuant to a Borrower Blocked Account
Agreement, and over which Agent shall have exclusive control and dominion
during a Springing Period.
"BORROWER BLOCKED ACCOUNT AGREEMENT" means each agreement
specified in SECTION 7.32(C).
"BORROWING" means the borrowing hereunder made by the Borrowers
on the Closing Date
"BORROWING BASE" has the meaning specified in the Additional
Debt Documents.
"BORROWING BASE CERTIFICATE" has the meaning specified in the
Additional Debt Documents.
"BUSINESS DAY" means (a) any day that is not a Saturday,
Sunday, or a day on which banks in New York are required or permitted to be
closed, and (b) with respect to all notices, determinations, fundings and
payments in connection with the LIBOR Rate or LIBOR Loans, any day that is a
Business Day pursuant to clause (a) above and that is also a day on which
trading in Dollars is carried on by and between banks in the London interbank
market.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a
bank.
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"CAPITAL EXPENDITURES" means all obligations incurred or
expenditures made in respect of any fixed asset or improvement, or replacement,
substitution, or addition thereto, which has a useful life of more than one
year, including costs arising in connection with the acquisition of such asset
by way of increased product or service charges or in connection with a Capital
Lease, and other items presented in accordance with GAAP.
"CAPITAL LEASE" means any lease of property which, in
accordance with GAAP, should be reflected as a capital lease on a consolidated
balance sheet.
"CAPITAL STOCK" means, for any Person, any and all corporate
stock, units, shares, partnership interests, membership interests, equity
interests, rights, securities, or other equivalent evidences of ownership
(however designated) issued to such Person.
"CCAA" means the Companies' Creditors Arrangement Act (Canada)
and the regulations promulgated thereunder.
"CHANGE OF CONTROL" means (a) if any Person or group of Persons
acting in concert, other than Equity Investors and their Subsidiaries, shall
own or control, directly or indirectly, more than 51% of the outstanding
securities of the Parent having voting rights in the election of directors,
determined on a fully diluted basis and taking into account any outstanding
securities or contract rights exercisable, exchangeable or convertible into
equity interests, or (b) if Parent ceases to own and control, directly or
indirectly, all of the outstanding securities of APN having voting rights in
the election of directors, determined on a fully diluted basis and taking into
account any outstanding securities or contract rights exercisable, exchangeable
or convertible into equity interests, (c) if APN ceases to own and control,
directly or indirectly, all of the outstanding securities of Applica having
voting rights in the election of directors, determined on a fully diluted basis
and taking into account any outstanding securities or contract rights
exercisable, exchangeable or convertible into equity interests, or (d) if
Parent or Applica ceases to own and control, directly or indirectly, all of the
outstanding securities of any other Loan Party having voting rights in the
election of directors, determined on a fully diluted basis and taking into
account any outstanding securities or contract rights exercisable, exchangeable
or convertible into equity interests except as otherwise permitted by this
Agreement.
"CHATTEL PAPER" shall have the meaning specified in the
Security Agreement.
"CLEARING BANK" means any banking institution with whom a
Payment Account has been established pursuant to a Blocked Account Agreement.
"CLOSING DATE" means December 28, 2007.
"CO-BORROWER PAYMENT" has the meaning specified in SECTION 1.6.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" has the meaning specified in the Security
Agreement.
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"COMMITMENT" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"COMMITMENT" on ANNEX B attached to the Agreement, or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 11.2, and "COMMITMENTS"
means, collectively, the aggregate amount of the Commitments of all of the
Lenders.
"CONFIDENTIAL INFORMATION" has the meaning specified in SECTION
14.17.
"CONSOLIDATED APPLICA PARTIES" means Applica and its
Subsidiaries prior to the Closing Date.
"CONSOLIDATED MEMBERS" means the Parent and its Subsidiaries
and "Consolidated Member" means any of the foregoing.
"Consolidated Salton Parties" means Salton and its Subsidiaries
prior to the Closing Date.
"CONTAMINANT" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated
biphenyls ("PCBS"), or any constituent of any such substance or waste.
"CONTINUATION/CONVERSION DATE" means the date on which a Loan
is converted into or continued as a LIBOR Loan.
"CORE BUSINESS" means, with respect to the Loan Parties, the
business of manufacturing, distributing and marketing household and outdoor
appliances and non-electric products, personal care products, lighting
products, table top products, pet products, water filtration products and
related items consistent with past practices.
"COST OF ACQUISITION" means, with respect to any Acquisition,
as at the date of consummation of any such Acquisition, the sum of the
following (without duplication): (i) the value of the capital stock, warrants
or options to acquire capital stock of a Loan Party to be transferred to a
seller in connection therewith, (ii) any cash or other property and the unpaid
principal amount of any debt instrument given as consideration, (iii) any Debt
assumed by a Loan Party in connection with such Acquisition, and (iv) out of
pocket transaction costs for the services and expenses of attorneys,
accountants and consultants incurred in effecting such a transaction, and other
similar transaction costs so incurred. For purposes of determining the Cost of
Acquisition for any transaction, (A) the capital stock of a Loan Party shall be
valued (I) at its market value as reported on the New York Stock Exchange with
respect to shares that are freely tradable, and (II) with respect to shares
that are not freely tradable, as determined by the Board of Directors of the
Borrowers party to such Acquisition and, if requested by Agent, determined to
be a reasonable valuation by the independent public accountants referred to in
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SECTION 5.2 hereof, (B) the capital stock of any Subsidiary shall be valued as
determined by the Board of Directors of the Borrowers party to such Acquisition
or such Subsidiary and, if requested by Agent, determined to be a reasonable
valuation by the independent public accountants referred to in SECTION 5.2
hereof, and (C) with respect to any Acquisition accomplished pursuant to the
exercise of options or warrants or the conversion of securities, the Cost of
Acquisition shall include both the cost of acquiring such option, warrant or
convertible security as well as the cost of exercise or conversion.
"CRA" means the Canada Revenue Agency.
"DEBT" means, without duplication, with respect any Person (the
"SUBJECT PERSON"), all liabilities, obligations and indebtedness of the subject
Person to any other Person, of any kind or nature, now or hereafter owing,
arising, due or payable, howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise,
consisting of indebtedness for borrowed money or the deferred purchase price of
property, excluding purchases of property, product, merchandise and services in
the ordinary course of business, but including (a) in the case of the Loan
Parties, all Obligations; (b) all obligations and liabilities of any Person
secured by any Lien on the subject Person's property, even though the subject
Person shall not have assumed or become liable for the payment thereof; (except
unperfected Liens incurred in the ordinary course of business and not in
connection with the borrowing of money); PROVIDED, however, that all such
obligations and liabilities which are limited in recourse to such property
shall be included in Debt only to the extent of the book value of such property
as would be shown on a balance sheet of the subject Person prepared in
accordance with GAAP; (c) all obligations or liabilities created or arising
under any Capital Lease or conditional sale or other title retention agreement
with respect to property used or acquired by the subject Person, even if the
rights and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property, PROVIDED that all such obligations and
liabilities which are limited in recourse to such property shall be included in
Debt only to the extent of the book value of such property as would be shown on
a balance sheet of the subject Person prepared in accordance with GAAP; (d) all
obligations and liabilities under Guaranties; (e) the present value (discounted
at the Base Rate) of lease payments due under synthetic leases; and (f) all
obligations and liabilities under any asset securitization or sale/leaseback
transaction; PROVIDED, FURTHER, HOWEVER, that in no event shall the term Debt
include the capital stock surplus, retained earnings, minority interests in the
common stock of Subsidiaries, lease obligations (other than pursuant to (c) or
(e) above), reserves for deferred income taxes and investment credits, other
deferred credits or reserves.
"DEFAULT" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured, waived, or
otherwise remedied during such time) constitute an Event of Default.
"DEFAULT RATE" means a fluctuating per annum interest rate at
all times equal to the sum of (a) the otherwise applicable Interest Rate plus
(b) two percent (2%) per annum. Each Default Rate shall be adjusted
simultaneously with any change in the applicable Interest Rate.
"DEFAULTING LENDER" has the meaning specified in SECTION
12.15(C).
"DEPOSIT ACCOUNTS" shall have the meaning specified in the
Security Agreement.
"DESIGNATED ACCOUNT" has the meaning specified in SECTION
1.2(C).
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"DIRECT FOREIGN SUBSIDIARY" means any Foreign Subsidiary whose
outstanding voting Capital Stock is owned by a Loan Party or a Domestic
Subsidiary.
"DISCLOSING PARTY" has the meaning specified in SECTION 14.17.
"DISTRIBUTION" means, in respect of any Person (other than a
natural Person): (a) the payment or making of any dividend or other
distribution of property in respect of such Person's Capital Stock (excluding
any options or warrants for, or other rights with respect to, such stock),
other than distributions in such Person's Capital Stock of the same class; or
(b) the redemption or other acquisition of any Capital Stock (or any options or
warrants for such Capital Stock) of such Person.
"DOCUMENTS" shall have the meaning specified in the Security
Agreement, and include bills of lading, warehouse receipts and other documents
of title.
"DOL" means the United States Department of Labor or any
successor department or agency.
"DOLLARS" and "$" means dollars in the lawful currency of the
United States. Unless otherwise specified, all payments under the Agreements
shall be made in Dollars.
"DOLLAR(CDN)" and "$(CDN)" means dollars in the lawful currency
of Canada.
"DOLLAR EQUIVALENT" means, on any date, with respect to any
amount denominated in Dollars, such amount in Dollars, and with respect to any
stated amount in a currency other than Dollars, the amount of Dollars that the
Agent determines (which determination shall be conclusive and binding absent
manifest error) would be necessary to be sold on such date at the applicable
Exchange Rate to obtain the stated amount of the other currency.
"DOMESTIC SUBSIDIARIES" means the Subsidiaries of the Borrowers
organized or incorporated under the laws of a state in the United States and
denominated as a "DOMESTIC SUBSIDIARY" in SCHEDULE 6.5.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank, commercial
finance company, financial institution or other asset based lender, in each
case having total assets in excess of $1,000,000,000; (b) any Lender listed on
the signature pages of this Agreement; (c) any Affiliate of, or a fund managed
by, any Lender; and (d) if an Event of Default has occurred and is continuing,
any Person reasonably acceptable to the Agent.
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for a Release or
injury to the environment.
"ENVIRONMENTAL LAWS" means all federal, state, provincial,
territorial, local or foreign laws, statutes, common law duties, rules,
regulations, ordinances, orders-in-council and codes, together with all
administrative orders, directed duties, licenses, authorizations and permits
A-8
of, and agreements with, any Governmental Authority, in each case relating to
environmental, health, safety and land use matters.
"ENVIRONMENTAL LIEN" means a Lien in favor of any Governmental
Authority or any other Person for (a) any liability under Environmental Laws,
or (b) damages arising from, or costs incurred by such Governmental Authority
in response to, a Release or threatened Release of a Contaminant into the
environment.
"EQUIPMENT" shall have the meaning specified in the Security
Agreement.
"EQUITY CONTRIBUTION" means a net capital contribution to the
Borrowers of at least $100,000,000 in common or preferred equity from Equity
Investors and certain other investors.
"EQUITY INVESTORS" shall have the meaning given to it in the
Recitals hereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with a Loan Party within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code). Notwithstanding
the foregoing, the term "ERISA Affiliate" shall not include Salton Europe
Limited.
"ERISA EVENT" means (a) a Reportable Event and or Termination
Event with respect to a Pension Plan, (b) a withdrawal by a Loan Party or any
ERISA Affiliate from a Pension Plan during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or employer
under the PBA or a cessation of operations which is treated as such a
withdrawal, (c) a complete or partial withdrawal by a Loan Party or any ERISA
Affiliate from a Multi-employer Plan or notification that a Multi-employer Plan
or plan regulated or governed by the PBA is in reorganization, (d) the filing
of a notice of intent to terminate, the treatment of a Plan amendment as a
termination or the commencement of proceedings by the PBGC or other applicable
Governmental Authority to terminate a Pension Plan or Multi-employer Plan, (e)
the occurrence of an event or condition which might reasonably be expected to
constitute grounds for the termination of, or the appointment of a trustee to
administer, any Pension Plan or Multi-employer Plan, (f) the imposition of any
liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA or PBA or other applicable law of any
jurisdiction, upon a Loan Party or any ERISA Affiliate; or (g) failure to make
or remit any contribution when due in respect of any Plan.
"EVENT OF DEFAULT" has the meaning specified in SECTION 9.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
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"EXCHANGE RATE" means on any date, (i) with respect to Canadian
dollars or any other foreign currency in relation to Dollars, the spot rate as
quoted by Bank of America, N.A. at its noon spot rate at which Dollars are
offered on such date for Canadian dollars or such other foreign currency, as
applicable, and (ii) with respect to Dollars in relation to Canadian dollars or
any other foreign currency, the spot rate as quoted by Bank of America, N.A. at
its noon spot rate at which Canadian dollars or such other foreign currency, as
applicable, are offered on such date for Dollars.
"EXCLUDED TAXES" means taxes imposed on or measured by net
income or net profits and franchise taxes of each Lender and the Agent, imposed
pursuant to the laws of the jurisdiction under the laws of which the Lender or
Agent is organized, in which such person is resident for tax purposes or in
which the principal office or applicable lending office of such Lender or Agent
is located or in which it is otherwise deemed to be engaged in a trade or
business for Tax purposes or any subdivision thereof or therein, and any branch
profits taxes imposed by the United States of America or any similar tax
imposed by any jurisdiction on the Lender or Agent.
"EXECUTIVE ORDER NO. 13224" means Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001, as the same has been, or
shall hereafter be, renewed, extended, amended or replaced.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate charged to
Bank of America, N.A. on such day on such transactions as determined by the
Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"FINANCIAL STATEMENTS" means, according to the context in which
it is used, the financial statements referred to in SECTIONS 5.2 and 6.6 or any
other financial statements required to be given to the Agent and the Lenders
pursuant to this Agreement.
"FISCAL QUARTER" means, with respect to the Loan Parties, a
period ending on March 31, June 30, September 30, or December 31 of each fiscal
year.
"FISCAL YEAR" means, with respect to the Loan Parties, their
fiscal year for financial accounting purposes.
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"FOREIGN SECURITY DOCUMENT" means a Guaranty, pledge, mortgage,
personal property mortgage, security agreement, assignment, security
instrument, hypothecation, charge or other agreement or document by which any
Foreign Subsidiary grants or otherwise conveys to the Agent or any Affiliate of
the Agent for the benefit of the Agent, or any agent or trustee for or on
behalf of the Agent or any such Affiliate, any Guaranty, pledge, lien, security
interest, hypothec, mortgage, charge, collateral assignment or similar interest
in property of such Foreign Subsidiary as security for the Obligations or any
portion thereof, and any and all renewals, extensions, modifications,
amendments or restatements thereof.
"FOREIGN SUBSIDIARY" means any direct or indirect Subsidiary of
the Borrowers other than the Domestic Subsidiaries, which shall include Applica
Canada, Applica Asia and such other Foreign Subsidiaries as are designated in
SCHEDULE 6.5.
"FSCO" means the Financial Services Commission of Ontario and
any Person succeeding to the functions thereof and includes the Superintendent
under such statute and any other Governmental Authority (succeeding to the
functions thereof) and established or appointed by the Financial Services
Commission of Xxxxxxx Xxx, 0000.
"FUNDED DEBT" of a Loan Party shall mean at any date, without
duplication, (i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such Person to pay the deferred
price of property or services, except trade accounts payable arising in the
ordinary course of business, (iv) all obligations of such Person as lessee
under Capitalized Leases, (v) all obligations of such Person to reimburse any
bank or other Person in respect of amounts payable under a banker's acceptance,
and (vi) all obligations of such Person to reimburse any bank or other Person
in respect of amounts paid or to be paid under a letter of credit or similar
instrument.
"FUNDING DATE" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles and
practices set forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to the
circumstances as of the date of the report. When the term GAAP is used in the
Agreement and the other Loan Documents in respect of Financial Statements other
than annual audited Financial Statements of the Consolidated Members, such
Financial Statements shall be subject to year-end adjustments, shall not be
required to include footnotes, shall not include changes in stockholders'
equity and shall not include certain other information required by GAAP.
However, all adjustments to such Financial Statements (consisting of normal
recurring accruals) that, in the opinion of management of the Loan Parties, are
necessary for a fair presentation of the financial statements have been
included. All such Financial Statements shall be consistent with historical
practices of the Consolidated Members or the Loan Parties, as applicable, and
shall present fairly the financial position of the Consolidated Members or the
Loan Parties, as applicable, subject to and in accordance with the foregoing.
"GENERAL INTANGIBLE" shall have the meaning specified in the
Security Agreement.
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"GOODS" shall have the meaning specified in the Security
Agreement.
"GOVERNMENTAL AUTHORITY" means any nation or government; any
state, county, province, territory, municipality, region or other political
subdivision thereof; any central bank (or similar monetary or regulatory
authority) thereof; any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any government or
court; any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing and any department,
agency, board, commission, tribunal, committee or instrumentality of any of the
foregoing.
"GUARANTOR" means Applica Canada, Applica Asia, and any other
Subsidiary or Affiliate of a Borrower or other Person that hereafter executes
and delivers to the Agent an agreement of Guaranty in respect of all or any
part of the Obligations.
"GUARANTY" means, with respect to any Person, all obligations
of such Person which in any manner directly or indirectly guarantee or assure,
or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligations of any other Person (the
"GUARANTEED OBLIGATIONS"), or assure or in effect assure the holder of the
guaranteed obligations against loss in respect thereof, including any such
obligations incurred through an agreement, contingent or otherwise: (a) to
purchase the guaranteed obligations or any property constituting security
therefor; (b) to advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital or other balance sheet
condition; or (c) to lease property or to purchase any debt or equity
securities or other property or services.
"HARBINGER MERGER" means the merger between APN Mergersub, Inc.
and Applica, with Applica being the surviving corporation, which occurred on
January 23, 2007.
"HEDGE AGREEMENTS" means any and all transactions, agreements
or documents now existing or hereafter entered into, which provides for an
interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging a Person's exposure to fluctuations in
interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.
"IMPERMISSIBLE QUALIFICATION" means any qualification or
exception to the opinion or certification of any independent public accountant
as to any financial statement of the Loan Parties which (i) is of a "going
concern" or similar nature, (ii) relates to the limited scope of examination of
matters relevant to such financial statements, or (iii) relates to the
treatment or classification of any item in such financial statement in which, a
condition to its removal, would require an adjustment to such item the effect
of which would be to cause the occurrence of an Event of Default.
"INDEMNIFIED LIABILITIES" shall have the meaning given to it in
SECTION 14.11(A).
"INDEMNIFIED TAXES" means all Taxes other than Excluded Taxes.
"INSTRUMENTS" shall have the meaning specified in the Security
Agreement.
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"INTELLECTUAL PROPERTY NOTICES" means any Notice of Grant of
Security Interest in patents, trademarks or copyrights executed by a Loan Party
in favor of the Agent prior to the Closing Date.
"INTEREST EXPENSE" shall mean, for any period, interest expense
(including capitalized interest) in respect of Indebtedness of Borrowers and
the other Loan Parties as determined in accordance with GAAP.
"INTEREST PERIOD" means, as to any LIBOR Loan, the period
commencing on the Funding Date of such Loan or on the Continuation/Conversion
Date on which such Loan is converted into or continued as a LIBOR Loan, and
ending on the date one, two, three or six months thereafter as selected by the
Borrowers in their Notice of Borrowing, in the form attached hereto as EXHIBIT
B, or Notice of Continuation/Conversion, in the form attached hereto as EXHIBIT
C, provided that:
(A) if any Interest Period would otherwise end on a
day that is not a Business Day, that Interest Period shall be extended
to the following Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the preceding Business
Day;
(B) any Interest Period pertaining to a LIBOR Loan
that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period;
and
(C) no Interest Period shall extend beyond the
Stated Termination Date.
"INTEREST RATE" means each or any of the interest rates,
including the Default Rate, set forth in SECTION 2.1.
"INVENTORY" has the meaning specified in the Security
Agreement.
"INVESTMENT PROPERTY" has the meaning specified in the Security
Agreement.
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"ITA" means the INCOME TAX ACT (Canada), as amended from time
to time, and the regulations made thereunder.
"LATEST PROJECTIONS" means: (a) on the Closing Date and
thereafter until the Agent receives new projections pursuant to SECTION 5.2(H),
the projections of the Reporting Loan Parties' balance sheets, income
statements and cash flows, for the period commencing on December 31, 2007 and
ending on June 30, 2012 and delivered to Agent prior to the Closing Date; and
(b) thereafter, the projections most recently received by Agent pursuant to
SECTION 5.2(H).
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"LENDER" and "LENDERS" have the meanings specified in the
introductory paragraph hereof.
"LENDING PARTY" has the meaning specified in SECTION 14.17.
"LIBOR INTEREST PAYMENT DATE" means, with respect to a LIBOR
Loan, the Termination Date and the last day of each Interest Period applicable
to such Loan or, with respect to each Interest Period of greater than three
months in duration, the last day of the third month of such Interest Period and
the last day of such Interest Period.
"LIBOR RATE" means, for any Interest Period, with respect to a
LIBOR Loan, the rate of interest per annum determined pursuant to the following
formula:
LIBOR Rate = OFFSHORE BASE RATE
1.00 - Eurodollar Reserve Percentage
Where,
"OFFSHORE BASE RATE" means, for any Loan bearing interest at
the LIBOR Rate the rate per annum appearing on Telerate Page 3750 (or any
successor page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period. If for
any reason such rate is not available, the Offshore Base Rate shall be, for any
Interest Period, the rate per annum appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; PROVIDED,
HOWEVER, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates. If for any
reason none of the foregoing rates is available, the Offshore Base Rate shall
be, for any Interest Period, the rate per annum determined by Agent as the rate
of interest at which dollar deposits in the approximate amount of the LIBOR
Loan comprising part of such Borrowing would be offered by the Bank of America,
N.A.'s London Branch to major banks in the offshore dollar market at their
request at or about 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest
Period.
"EURODOLLAR RESERVE PERCENTAGE" means, for any day during any
Interest Period, the reserve percentage (expressed as a decimal, rounded
upward, if necessary, to the next 1/100th of 1%) in effect on such day
applicable to member banks under Regulation D or any successor regulation
issued from time to time by the Federal Reserve Board for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) applicable with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities" under Regulation D). The
Offshore Rate for each outstanding LIBOR Loan shall be adjusted automatically
as of the effective date of any change in the Eurodollar Reserve Percentage.
"LIBOR LOAN" means, those portions of the Term Loan during any
period which bear interest based on the LIBOR Rate.
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"LIEN" means (a) any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute, or
contract, and including a security interest, security transfer, reservation of
title, hypothec, charge, claim, trust, deemed trust or lien arising from a
mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, agreement, security agreement, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes; and (b) any
contingent or other agreement to provide any of the foregoing.
"LOAN ACCOUNT" means the loan account of the Borrowers, which
account shall be maintained by the Agent.
"LOAN DOCUMENTS" means this Agreement, the Security Agreement,
the Applica Asia Documents, the Applica Canada Guaranty, any other Guaranty in
favor of the Agent, the Applica Canada Security Agreement, the Collateral
Access Agreements, the Additional Debt Intercreditor Agreement, the Blocked
Account Agreements, the Pledge Agreement and any other agreements, instruments,
and documents heretofore, now or hereafter evidencing, securing, guaranteeing
or otherwise relating to the Obligations, the Collateral, or any other aspect
of the transactions contemplated by this Agreement.
"LOAN PARTY" means each Borrower, each Guarantor, and each
other Person that is at any time from and after the Closing Date liable for the
payment of the whole or any part of the Obligations or that has granted in
favor of the Agent a Lien upon any of any of such Person's assets to secure
payment of any of the Obligations, and "LOAN PARTIES" means any two or more of
the foregoing.
"LOANS" means, collectively, all loans and advances provided
for in Article 1.
"MARGIN STOCK" means "MARGIN STOCK" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business, properties or
condition (financial or otherwise) or prospects of the Loan Parties taken as a
whole, or the Collateral; (b) a material impairment of the ability of any Loan
Party to perform under any Loan Document to which it is a party; or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against any Loan Party of any material Loan Document to which it
is a party.
"MATERIAL CONTRACTS" means an agreement to which a Loan Party
is a party (other than a Loan Document) (i) which would be deemed to be a
material contract as provided in Regulation S-K promulgated by the SEC under
the Securities Act of 1933 or (ii) for which breach, termination, cancellation,
non-performance or failure to renew could reasonably be expected to have a
Material Adverse Effect.
"MAXIMUM RATE" has the meaning specified in SECTION 2.3.
"MERGER" shall have the meaning given to it in the Recitals
hereto.
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"MERGER AGREEMENT" means the Agreement and Plan of Merger dated
as of October 1, 2007, among Parent, SFP Merger Sub, Inc. and APN.
"MULTI-EMPLOYER PLAN" means a "MULTI-EMPLOYER PLAN" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding six (6) years contributed to by any Borrower
or any ERISA Affiliate.
"NET PROCEEDS" means, in respect of an Asset Disposition of by
a Person, all proceeds received by and/or payable to such Person in
consideration thereof, net of (A) commissions and other reasonable and
customary transaction costs, fees and expenses properly attributable to such
transaction and payable by such Person in connection therewith (in each case,
paid to non-Affiliates), (B) transfer taxes, (C) amounts payable to holders of
senior Liens (other than the Agent's Liens and to the extent such Liens
constitute Permitted Liens), if any, and (D) an appropriate reserve for income
taxes in accordance with GAAP in connection therewith.
"NEW SUBSIDIARY" has the meaning specified in SECTION 7.24.
"NOTICE OF BORROWING" has the meaning specified in SECTION
1.1(B).
"NOTICE OF CONTINUATION/CONVERSION" has the meaning specified
in SECTION 2.2(B).
"OBLIGATIONS" means the following, in each case whether now in
existence or hereafter incurred or arising and whether or not evidenced by any
note or other document: (a) the principal of, and interest (including, without
limitation, interest accruing after the maturity of the Term Loan and interest
accruing after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to any Loan Party,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) and premium, if any, on the Term Loan; (b) all liabilities and
obligations under any indemnity given by any Loan Party under any of the Loan
Documents, including all of the Indemnified Liabilities; and (c) all other
advances, liabilities, obligations, covenants, duties, and debts owing by the
Borrowers or any of the other Loan Parties, or any of them, to the Agent and/or
any Lender, arising under or pursuant to this Agreement or any of the other
Loan Documents, whether arising from an extension of credit, opening of a
letter of credit, acceptance, loan, guaranty, indemnification or otherwise,
whether direct or indirect, absolute or contingent, due or to become due,
primary or secondary, as principal or guarantor, including all principal,
interest, charges, expenses, fees, attorneys' fees, filing fees and any other
sums chargeable to the Borrowers or other Loan Parties hereunder or under any
of the other Loan Documents (including fees, expenses and other charges
accruing after the maturity of the Agreement and fees, expenses and other
charges accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
any Loan Party, whether or not a claim for post-filing or post-petition fees,
expenses and other charges is allowed in such proceeding).
"OPERATING DOCUMENTS" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited liability
partnership or other legally authorized incorporated or unincorporated entity,
the bylaws, operating agreement, partnership agreement or limited agreement of
such entity.
"ORGANIZATION DOCUMENTS" means with respect to any corporation,
limited liability company, partnership, limited liability partnership or other
A-16
legally authorized incorporated or unincorporated entity, the articles of
incorporation, certificate of incorporation, articles of organization or
certificate of limited partnership of such entity.
"OTHER TAXES" means any present or future transfer, mortgage,
stamp or documentary taxes or any other excise or property taxes, charges,
financial institutions duties, debits, taxes or similar levies imposed by the
United States or any other jurisdiction that arise from any payment under this
Agreement or any other Loan Document or from the execution, delivery,
enforcement or registration of, or otherwise with respect to, this Agreement or
any other Loan Document.
"PARTICIPANT" means any Person who shall have been granted the
right by any Lender to participate in the financing provided by such Lender
under this Agreement, and who shall have entered into a participation agreement
in form and substance satisfactory to such Lender.
"PAYMENT ACCOUNT" has the meaning specified in the Security
Agreement.
"PBA" means the Pension Benefits Act of Ontario and all
regulations thereunder as amended from time to time, and any successor
legislation or other applicable legislation governing Canadian Plans.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"PENSION PLAN" means a pension plan (as defined in Section 3(2)
of ERISA or the applicable laws of any other jurisdiction including the PBA)
subject to Title IV of ERISA or the applicable laws of any other jurisdiction
including the PBA which any Loan Party or any ERISA Affiliate sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or has made contributions at any time during the immediately
preceding five (5) plan years.
"PERMITTED ACQUISITION" means an Acquisition effected with the
consent and approval of the board of directors or other applicable governing
body of the Person being acquired ("Target"), and with the duly obtained
approval of such shareholders or other holders of equity interests as such
Target may be required to obtain, so long as (i) immediately prior to and after
giving effect to the consummation of such Acquisition, no Event of Default has
or would exist; (ii) with respect to an Acquisition where the Cost of
Acquisition exceeds $10,000,000, substantially all of the sales and operating
profits generated by the Target (or its assets) so acquired or invested are
derived from a line or lines of business that are consistent with the Core
Business; (iii) pro forma historical financial statements as of the end of the
most recent fiscal quarter for the trailing twelve-month period giving effect
to such Acquisition are delivered to Agent not less than ten (10) Business Days
prior to the consummation of such Acquisition, together with a certificate of
A-17
an Responsible Officer stating that no Default or Event of Default exists
before or after giving effect to such Acquisition; and (iv) if the Target will
become a Loan Party in connection with such Acquisition, the Loan Parties shall
cause the Target to become a Borrower hereunder and grant to the Agent, for the
benefit of the Agent and the Lenders, a perfected, first priority Lien on
substantially all of the assets of the Target of a type that would constitute
Collateral under the Loan Documents with respect to which Agent has a first
priority Lien under the Additional Debt Intercreditor Agreement, all pursuant
to documentation in form and substance acceptable to the Agent in its
discretion.
"PERMITTED DISTRIBUTION" means (a) a Distribution by a Loan
Party to another Loan Party, (b) an Upstream Payment, (c) the purchase of
Capital Stock of Parent by any of the Borrowers at any time during the period
commencing on the Closing Date and ending on June 30, 2008, with all
Distributions to facilitate such purchases not to exceed $3,000,000 in the
aggregate, PROVIDED that, at the time of and after giving pro forma effect to
any such Distribution pursuant to this clause (c), each of the Permitted
Distribution Conditions is satisfied. For the purposes of computing the Loan
Parties' compliance with the $3,000,000 cap in clause (c) of the foregoing
definition, there shall be no duplication of the amount of any Distribution
made pursuant to clauses (a) or (b) of the foregoing definition that is then
used by the recipient of such Distribution to effect a purchase of Capital
Stock as permitted in clause (c) of the foregoing definition.
"PERMITTED DISTRIBUTION CONDITIONS" means (a) no Default or
Event of Default exists, (b) the Loan Party making any Distribution is Solvent,
and (c) such Distribution does not violate any Requirement of Law.
"PERMITTED INTERCOMPANY ADVANCE" shall mean any loan or other
advance of money whether in the form of actual funds advanced or as a credit
against or reduction of amounts owing by a Loan Party to any Subsidiary or
Affiliate of a Loan Party that is not a Loan Party, PROVIDED that no Default or
Event of Default has occurred and is continuing at the time of, and no Default
or Event of Default would exist after giving pro forma effect to, such loan or
advance.
"PERMITTED LIENS" means:
(A) Liens for Taxes, fees, assessments or other charges of
a Governmental Authority (i) which are not (A) delinquent, (B) statutory Liens
for taxes, fees, assessments or other charges in an amount not to exceed
$500,000 or (ii) the payment of which is being Properly Contested;
(B) the Agent's Liens;
(C) Liens incurred or deposits made in the ordinary course
of business in connection with, or to secure payment of, obligations under
worker's compensation, unemployment insurance, social security and other
similar laws, or to secure the performance of bids, tenders or contracts (other
than for the repayment of Debt) or to secure indemnity, performance or other
similar bonds for the performance of bids, tenders or contracts (other than for
the repayment of Debt) or to secure statutory obligations (other than Liens
arising under ERISA or the PBA or Environmental Liens) or other similar
A-18
obligations or arising as a result of progress payments under government
contracts or surety or appeal bonds, or to secure indemnity, performance or
other similar bonds;
(D) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons, PROVIDED
that if any such Lien arises from the nonpayment of such claims or demands when
due, such claims or demands do not exceed $200,000 in the aggregate or are
being Properly Contested;
(E) Liens constituting encumbrances in the nature of
reservations, exceptions, encroachments, easements, rights of way, covenants
running with the land, and other similar title exceptions or encumbrances
affecting any Real Estate; PROVIDED that they could not reasonably be expected
to have a Material Adverse Effect;
(F) Liens arising from judgments and attachments in
connection with court proceedings provided that the attachment or enforcement
of such Liens would not result in an Event of Default hereunder and such Liens
are being contested in good faith by appropriate proceedings, adequate reserves
have been set aside and no material Property is subject to a material risk of
loss or forfeiture and the claims in respect of such Liens are fully covered by
insurance (subject to ordinary and customary deductibles) and a stay of
execution pending appeal or proceeding for review is in effect;
(G) Liens in respect of purchase-money Debt permitted to be
incurred pursuant to SECTION 7.13(C) hereof in connection with the acquisition
of Equipment; provided that (a) the original principal balance of the Debt
secured by such Lien constitutes not more than 100% of the purchase price of
the Equipment acquired and (b) such Lien extends only to the Equipment acquired
with the proceeds of the Debt so secured;
(H) Liens on real property securing Debt permitted under
SECTION 7.13;
(I) Liens, if any, which are described in SCHEDULE A-1 on
the Closing Date and Liens resulting from the refinancing of the related Debt,
provided that such refinancing is on the same or substantially similar terms,
the Debt secured thereby shall not be increased, and the Liens shall not cover
any additional property of the any Loan Party; and
(J) Liens to secure the Additional Debt, to the extent
permitted pursuant to SECTION 7.13(I), subject to the Additional Debt
Intercreditor Agreement.
"PERSON" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, Governmental Authority, or any other
entity.
"PLAN" means an employee benefit plan (as defined in Section
3(3) of ERISA or the applicable laws of any other jurisdiction) which any
Borrower or any other Loan Party sponsors or maintains or to which any Borrower
or any other Loan Party makes, is making, or is obligated to make contributions
and includes any Pension Plan.
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"PLEDGE AGREEMENT" means the Second Amended and Restated Stock
Pledge Agreement, dated as of the date hereof, among the Agent and certain Loan
Parties party thereto.
"PPSA" means, collectively, the Personal Property Security Acts
of the Provinces of Ontario and Nova Scotia (or any other applicable Canadian
province or territory), and all regulations thereunder, as amended from time to
time, and any successor legislation.
"PROCEEDS OF CRIME ACT" means the Proceeds of Crime (Money
Laundering) and TERRORIST FINANCING ACT (Canada) and the regulations
promulgated thereunder.
"PROPERLY CONTESTED" means, with respect to any obligation of a
Loan Party, (a) the obligation is subject to a bona fide dispute regarding
amount or the Loan Party's liability to pay, (b) the obligation is being
properly contested in good faith by appropriate proceedings promptly instituted
and diligently pursued, (c) appropriate reserves have been established in
accordance with GAAP, (d) non-payment could not have a Material Adverse Effect,
nor result in a material forfeiture of any assets of the Loan Party, (e) no
Lien (other than a Permitted Lien) is imposed on assets of the Loan Party,
unless bonded and stayed to the satisfaction of Agent, (f) if the obligation
results from entry of a judgment or other order, such judgment or order is
stayed pending appeal or other judicial review and (g) if such contest is
abandoned, settled or determined adversely (in whole or in part) to such Loan
Party, such Loan Party pays the obligation (and all penalties, interest and
other amounts due in connection therewith) within 30 days following such
abandonment, settlement or adverse determination.
"PROPOSED CHANGE" has the meaning specified in SECTION 11.1(B).
"PROPRIETARY RIGHTS" means, for each Loan Party, such Loan
Party's now owned and hereafter arising or acquired licenses, patents, patent
rights, copyrights, works which are the subject matter of copyrights,
trademarks, service marks, trade names, trade styles, patent, trademark and
service xxxx applications, and all licenses and rights related to any of the
foregoing, and all other rights under any of the foregoing, all extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any
of the foregoing.
"PRO RATA SHARE" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is such Lender's Commitment
and the denominator of which is the sum of all of the Lenders' Commitments, or
if no Commitments are outstanding, a fraction (expressed as a percentage), the
numerator of which is the amount of Obligations owed to such Lender and the
denominator of which is the aggregate amount of the Obligations owed to the
Lenders.
"REAL ESTATE" means, with respect to any Person, all of such
Person's now or hereafter owned or leased estates in real property, including,
without limitation, all fees, leaseholds and future interests, together with
all of such Person's now or hereafter owned or leased interests in the
improvements thereon, the fixtures attached thereto and the easements
appurtenant thereto.
"REFINANCING" has the meaning specified in SECTION 7.28.
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"REGISTER" has the meaning specified in SECTION 12.21.
"REGULATION D" means Regulation D of the Board of Governors of
the Federal Reserve System (or any successor body) as the same may be amended
or supplemented from time to time.
"RELEASE" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.
"REPORTABLE EVENT" means, any of the events set forth in
Section 4043 of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"REPORTING LOAN PARTIES" means all of the Loan Parties other
than Applica Americas and Applica Asia.
"REPRESENTATIVES" has the meaning specified in SECTION 14.16.
"REQUIRED LENDERS" means at any time Lenders whose Pro Rata
Shares aggregate more than 50%.
"REQUIREMENT OF LAW" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator declared final and binding by a Governmental Authority or of a
Governmental Authority, in each case applicable to or binding upon the Person
or any of its property or to which the Person or any of its property is
subject.
"RESPONSIBLE OFFICER" means, with respect to any Loan Party,
the chief executive officer, the president, the chief financial officer, the
secretary, the treasurer or assistant treasurer, the controller or any senior
vice president or any other officer having substantially the same authority and
responsibility; or, with respect to compliance with financial covenants and the
preparation of Borrowing Base Certificates, the chief financial officer or the
treasurer of the Borrower Agent, or any other officer having substantially the
same authority and responsibility.
"RESTRICTED INVESTMENT" means, with respect to any Loan Party,
any acquisition of property by such Loan Party in exchange for cash or other
property, whether in the form of an acquisition of stock, debt, or other
indebtedness or obligation, or the purchase or acquisition of any other
property, or a loan, advance, capital contribution, or subscription, except the
following: (a) acquisitions of Equipment to be used in the business of such
Loan Party; (b) acquisitions of Inventory in the ordinary course of business of
such Loan Party; (c) acquisitions of current assets acquired in the ordinary
course of business of the Loan Parties; (d) direct obligations of the United
States of America, or any agency thereof, or obligations guaranteed by the
United States of America, PROVIDED that such obligations mature within one year
from the date of acquisition thereof; (e) acquisitions of certificates of
deposit maturing within one year from the date of acquisition, bankers'
acceptances, Eurodollar bank deposits, or overnight bank deposits, in each case
A-21
issued by, created by, or with a bank or trust company organized under the laws
of the United States of America or any state thereof having capital and surplus
aggregating at least $100,000,000; (f) acquisitions of commercial paper given a
rating of "A2" or better by Standard & Poor's Corporation or "P2" or better by
Xxxxx'x Investors Service, Inc. and maturing not more than 90 days from the
date of creation thereof; (g) Hedge Agreements; (h) investments, loans and
advances existing as of the date hereof and as set forth in SCHEDULE A -2; (i)
Accounts arising and trade credit granted in the ordinary course of business
and any securities received in satisfaction or partial satisfaction thereof in
connection with accounts of financially troubled Persons to the extent
reasonably necessary in order to prevent or limit loss; (j) Permitted
Intercompany Advances to the extent funded in a manner consistent with SECTION
7.29; (k) Permitted Acquisitions; (l) for so long as no Event of Default exists
and the Borrowers have Availability of not less than $15,000,000 after giving
effect thereto, other loans, advances and investments in an aggregate principal
amount at any time outstanding not to exceed $10,000,000; (m) shares of mutual
funds, the shares of which mutual funds are at all times rated "AAA" by
Standard & Poor's; (n) cash or other cash equivalents owned by the Loan Parties
and in the possession or control of the Agent or an Affiliate of Agent and,
except during a Springing Period, invested in short term vehicles such as
repurchase agreements, overnight bank deposits, bankers' acceptances or other
investments as may be mutually acceptable to the Borrowers and the Agent; and
(o) obligations of any corporation organized under the laws of any state of the
United States of America or under the laws of any other nation, payable in the
United States of America, maturing not later than 180 days following the date
of issuance thereof and rated in an investment grade category by Standard &
Poor's and Moody's; PROVIDED, HOWEVER, that with respect to clauses (d) - (h)
and clauses (m) - (o), such investments are not subject to rights of offset
(other than nominal amounts for brokerage fees and other, similar charges of
financial intermediaries) in favor of any Person other than the Agent or a
Lender.
"SECURITY AGREEMENT" means the Second Amended and Restated
Security Agreement dated as of the Closing Date among the Loan Parties and
Agent, for the benefit of the Agent and the Lenders.
"SOLVENT" means, when used with respect to any Person, that at
the time of determination:
(A) the assets of such Person, at a fair valuation, are in
excess of the total amount of its debts (including contingent liabilities); and
(B) the present fair saleable value of its assets is greater
than its liability on its existing debts as such debts become absolute and
matured; and
(C) it is then able and expects to be able to pay its debts
(including contingent debts and other commitments) as they mature; and
(D) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the
amount of any contingent liability shall be computed as the amount that, in
A-22
light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.
"STATED TERMINATION DATE" means December 31, 2012.
"Subordinated Debt" means Debt of a Loan Party that is
expressly subordinate and junior in right of payment to the full and final
payment of the Obligations on terms (including maturity date, interest rate,
fees, repayment, covenants and subordination) satisfactory to Agent.
"SUBSIDIARY" of a Person, with respect to any Person (the
"SUBJECT PERSON"), means any corporation, association, partnership, limited
liability company, joint venture or other business entity of which more than
fifty percent (50%) of the voting stock or other equity interests (in the case
of Persons other than corporations), is owned or controlled directly or
indirectly by the subject Person, or one or more of the Subsidiaries of the
subject Person, or a combination thereof. Unless the context otherwise clearly
requires, references herein to a "Subsidiary" refer to a Subsidiary of the
Borrower.
"SUPERMAJORITY LENDERS" means, at any time, Lenders whose Pro
Rata Shares aggregate more than 66-2/3%.
"SUPPORTING OBLIGATIONS" shall have the meaning specified in
the Security Agreement.
"TAXES" means any and all present or future taxes, levies,
imposts, duties, fees, assessments, deductions, withholdings or other charges
of whatever nature and all liabilities with respect thereto, including any
present or future income, receipts, excise, property, sales, use, transfer,
goods and services, license, payroll, withholding, social security, franchise,
stamp or documentary taxes or similar levies imposed or levied at any time by
any Governmental Authority, but excluding, in the case of each Lender and the
Agent, Excluded Taxes.
"TERM LOAN" has the meaning specified in SECTION 1.1(A).
"TERMINATION DATE" means the earliest to occur of (i) the
Stated Termination Date, (ii) the date of termination by the Required Lenders
pursuant to SECTION 9.2, and (iii) the date this Agreement is otherwise
terminated for any reason whatsoever pursuant to the terms of this Agreement.
"TERMINATION EVENT" means (a) the whole or partial withdrawal
of any Borrower or any Subsidiary from a Pension Plan or Multi-employer Plan
during a plan year; or (b) the filing of a notice of intent to terminate in
whole or in part a Pension Plan or Multi-employer Plan or the treatment of a
Pension Plan or Multi-employer Plan amendment as a termination or partial
termination; or (c) the institution of proceedings by any Governmental
Authority to terminate in whole or in part or have a trustee appointed to
administer a Pension Plan or Multi-employer Plan; or (d) any other event or
condition which might constitute grounds for the termination of, winding up or
partial termination or winding up or the appointment of trustee to administer
any Pension Plan or Multi-employer Plan.
A-23
"TRANSACTION" means the Merger, the Equity Contribution, the
entering into and funding of the credit facility under this Agreement, the
issuance and sale or provision of the Additional Debt and all related
transactions.
"UCC" has the meaning specified in the Security Agreement.
"UK CREDIT FACILITY" means the credit facility among Salton
Europe Limited, Burdale Financial Limited, as agent, and certain other lenders
named therein.
"UNFINANCED CAPITAL EXPENDITURES" means Capital Expenditures
net of purchase money Debt incurred and Capital Leases entered into in
connection therewith.
"UNFUNDED PENSION LIABILITY" means the sum of (1) the amount by
which a Pension Plan (other than a Multi-employer Plan) fails to satisfy the
minimum funding standard pursuant to Section 412 of the Code for the applicable
plan year, exclusive of any waived funding deficiency, as that term is defined
in Section 412(d)(3) of the Code, and (2) with respect to any Pension Plan
regulated or governed by the PBA or applicable laws of any jurisdiction, any
unfunded liability or solvency deficiency as determined under the PBA or other
applicable laws.
"UNITED STATES" means the United States of America.
"UPSTREAM PAYMENT" means a Distribution by a Subsidiary of a
Loan Party that is not a Loan Party to such Loan Party.
"USA PATRIOT ACT" means the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001), as the same has been, or
shall hereafter be, renewed, extended, amended or replaced.
"WHOLLY-OWNED SUBSIDIARY" when used to determine the
relationship of a Subsidiary to a Person, means a Subsidiary all of the issued
and outstanding Capital Stock (other than directors' qualifying shares) of
which shall at the time be owned by such Person or one or more of such Person's
Wholly-Owned Subsidiaries or by such Person and one or more of such Person's
Wholly-Owned Subsidiaries.
(2) ACCOUNTING TERMS. Any accounting term used in the
Agreement shall have, unless otherwise specifically provided herein, the
meaning customarily given in accordance with GAAP, and all financial
computations in the Agreement shall be computed, unless otherwise specifically
provided therein, in accordance with GAAP as consistently applied and using the
same method for inventory valuation as used in the preparation of the Financial
Statements.
(3) INTERPRETIVE PROVISIONS. The meanings of defined terms
are equally applicable to the singular and plural forms of the defined terms.
(A) The words "hereof," "herein," "hereunder" and similar
words refer to the Agreement as a whole and not to any particular provision of
the Agreement; and Subsection, Section, Schedule and Exhibit references are to
the Agreement unless otherwise specified.
A-24
(B) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(C) The term "including" is not limiting and means
"including without limitation."
(D) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including," the
words "to" and "until" each mean "to but excluding" and the word "through"
means "to and including."
(E) The word "or" is not exclusive.
(F) Unless otherwise expressly provided herein, (i)
references to agreements (including any of the Loan Documents) and other
contractual instruments shall be deemed to include all subsequent amendments
and other modifications thereto and restatements thereof, but only to the
extent such amendments, other modifications or restatements are not prohibited
by the terms of any Loan Document, and (ii) references to any statute or
regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting
the statute or regulation.
(G) The captions and headings of the Agreement and other
Loan Documents are for convenience of reference only and shall not affect the
interpretation of the Agreement.
(H) The Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(I) For purposes of SECTION 9.1, a breach of the financial
covenant contained in SECTION 7.27 shall be deemed to have occurred as of any
date of determination thereof by Agent or as of the last day of any specified
measuring period, regardless of when the Financial Statements reflecting such
breach are delivered to Agent.
(J) The Agreement and the other Loan Documents are the
result of negotiations among and have been reviewed by counsel to the Agent,
the Borrowers and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the Agent
merely because of the Agent's or Lenders' involvement in their preparation.
(K) As used in this Agreement, and the other Loan
Documents, "knowledge" of the Borrowers shall mean the actual knowledge (after
due inquiry) of any Responsible Officer.
A-25
ANNEX B
COMMITMENTS
-------------------------------------------------------------------------------
PRO RATA
LENDER COMMITMENT SHARE(5 DECIMALS)
-------------------------------------------------------------------------------
Harbinger Capital Partners $73,333,700 66.66667%
Master Fund I, Ltd.
-------------------------------------------------------------------------------
Harbinger Capital Partners $36,666,300 33.33333%
Special Situations Fund, L.P.
-------------------------------------------------------------------------------
A-26
EXHIBIT B
NOTICE OF BORROWING
Date: December __, 2007
To: Harbinger Capital Partners Master Fund I, Ltd., as Administrative Agent
and Collateral Agent (collectively, the "AGENT") for the Lenders who are
parties to the Term Loan Agreement dated as of December ___, 2007 (the "LOAN
AGREEMENT"), among Salton, Inc., and certain of its affiliates, certain Lenders
which are signatories thereto, the Agent and certain other entities
Ladies and Gentlemen:
The undersigned, Applica Consumer Products, Inc. (the "BORROWER
AGENT"), refers to the Term Loan Agreement, the terms defined therein being
used herein as therein defined, and hereby gives you notice irrevocably of the
Borrowing specified below:
(A) The Business Day of the proposed Borrowing is December
__, 2007.
(B) The aggregate amount of the proposed Borrowing is
$[ ].
(C) The Borrowing is to be comprised of $ of Base
Rate and $ of LIBOR Loans.
(D) The duration of the Interest Period for the LIBOR
Loans, if any, included in the Borrowing shall be _____ months.
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the proposed
Borrowing, before and after giving effect thereto and to the application of the
proceeds therefrom:
(A) the representations and warranties contained in this
Agreement and the other Loan Documents are correct in all material respects on
and as of the date of such extension of credit as though made on and as of such
date, other than any such representation or warranty which relates to a
specified prior date and except to the extent the Agent and the Lenders have
been notified in writing by the Loan Parties that any representation or
warranty is not correct and the Required Lenders have explicitly waived in
writing compliance with such representation or warranty; and
(B) No Default or Event of Default has occurred and is
continuing, or would result from such proposed Borrowing.
APPLICA CONSUMER PRODUCTS, INC.,
AS BORROWER AGENT
By:
-------------------------------------
Title:
----------------------------------
B-1
EXHIBIT C
NOTICE OF CONTINUATION/CONVERSION
Date: ______________ , 200_
To: Harbinger Capital Partners Master Fund I, Ltd., as Agent for the
Lenders who are parties to the Term Loan Agreement dated as of December ___,
2007 (the "LOAN AGREEMENT"), among Salton, Inc., and certain of its affiliates,
certain Lenders which are signatories thereto, as Agent and certain other
entities
Ladies and Gentlemen:
The undersigned, Applica Consumer Products, Inc. (the "BORROWER
AGENT"), refers to the Loan Agreement, the terms defined therein being used
herein as therein defined, and hereby gives you notice irrevocably of the
[conversion] [continuation] of the Loans specified herein, that:
(A) The Continuation/Conversion Date is _________________
(B) The aggregate amount of the Loans to be [converted]
[continued] is $____________.
(C) The Loans are to be [converted into] [continued as]
[LIBOR Rate] [Base Rate] Loans.
(D) The duration of the Interest Period for the LIBOR Loans
included in the [conversion] [continuation] shall be months.
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the proposed
Continuation/Conversion Date, before and after giving effect thereto and to the
application of the proceeds therefrom:
(A) the representations and warranties contained in this
Agreement and the other Loan Documents are correct in all material respects on
and as of the date of such extension of credit as though made on and as of such
date, other than any such representation or warranty which relates to a
specified prior date and except to the extent the Agent and the Lenders have
been notified in writing by the Loan Parties that any representation or
warranty is not correct and the Required Lenders have explicitly waived in
writing compliance with such representation or warranty; and
(B) No Default or Event of Default has occurred and is
continuing, or would result from such proposed [conversion] [continuation].
APPLICA CONSUMER PRODUCTS, INC.,
AS BORROWER AGENT
By:
-------------------------------------
Title:
----------------------------------
C-1
EXHIBIT D
[FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "ASSIGNMENT AND
ACCEPTANCE") dated as of ____________________, 20___ is made between
________________________ (the "ASSIGNOR") and __________________________ (the
"ASSIGNEE").
RECITALS
WHEREAS, the Assignor is party to that certain Term Loan
Agreement dated as of December ___, 2007 (as amended, amended and restated,
modified, supplemented or renewed, the "LOAN AGREEMENT") among Salton, Inc., a
Delaware corporation, and certain of its affiliates (the "BORROWERS"), certain
of its other subsidiaries and affiliates, the several financial institutions
from time to time party thereto (including the Assignor, the "LENDERS"), and
Harbinger Capital Partners Master Fund I, Ltd., as agent for the Lenders (the
"AGENT"). Any terms defined in the Loan Agreement and not defined in this
Assignment and Acceptance are used herein as defined in the Loan Agreement;
WHEREAS, as provided under the Loan Agreement, the Assignor has
made a Term Loan (the "TERM Loan") to the Borrowers in the original aggregate
principal amount of $__________; and
WHEREAS, the Assignor wishes to assign to the Assignee [part of
the] [all] rights and obligations of the Assignor under the Loan Agreement in
respect of its Term Loan in an amount equal to $__________ (the "ASSIGNED
AMOUNT") on the terms and subject to the conditions set forth herein and the
Assignee wishes to accept assignment of such rights and to assume such
obligations from the Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:
(a) Subject to the terms and conditions of this Assignment
and Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except
as provided in this Assignment and Acceptance) __% (the "ASSIGNEE'S PERCENTAGE
SHARE") of (A) the Commitment, the Committed Loans and the L/C Obligations of
the Assignor and (B) all related rights, benefits, obligations, liabilities and
indemnities of the Assignor under and in connection with the Credit Agreement
and the Loan Documents.
(b) With effect on and after the Effective Date (as defined
in Section 5 hereof), the Assignee shall be a party to the Credit Agreement and
succeed to all of the rights and be obligated to perform all of the obligations
of a Lender under the Credit Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Amount. The Assignee agrees that it will perform
in accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Lender. It is the
intent of the parties hereto that the Commitment of the Assignor shall, as of
the Effective Date, be reduced by an amount equal to the Assigned Amount and
the Assignor shall relinquish its rights and be released from its obligations
under the Credit Agreement to the extent such obligations have been assumed by
D-1
the Assignee; PROVIDED, HOWEVER, the Assignor shall not relinquish its rights
under Sections __ and __ of the Credit Agreement to the extent such rights
relate to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption
set forth herein, on the Effective Date the Assignee's Commitment will be
$__________.
(d) After giving effect to the assignment and assumption
set forth herein, on the Effective Date the Assignor's Commitment will be
$__________.
1. PAYMENTS.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to $__________,
representing the Assignee's Pro Rata Share of the principal amount of all
Committed Loans.
(b) The Assignee further agrees to pay to the Agent a
processing fee in the amount specified in SECTION 11.2(A) of the Credit
Agreement.
2. REALLOCATION OF PAYMENTS.
Any interest, fees and other payments accrued to the Effective
Date with respect to the Commitment, and Committed Loans and L/C Obligations
shall be for the account of the Assignor. Any interest, fees and other payments
accrued on and after the Effective Date with respect to the Assigned Amount
shall be for the account of the Assignee. Each of the Assignor and the Assignee
agrees that it will hold in trust for the other party any interest, fees and
other amounts which it may receive to which the other party is entitled
pursuant to the preceding sentence and pay to the other party any such amounts
which it may receive promptly upon receipt.
3. INDEPENDENT CREDIT DECISION.
The Assignee (a) acknowledges that it has received a copy of
the Credit Agreement and the Schedules and Exhibits thereto, together with
copies of the most recent financial statements of the Borrowers, and such other
documents and information as it has deemed appropriate to make its own credit
and legal analysis and decision to enter into this Assignment and Acceptance;
and (b) agrees that it will, independently and without reliance upon the
Assignor, 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
credit and legal decisions in taking or not taking action under the Credit
Agreement.
4. EFFECTIVE DATE; NOTICES.
(a) As between the Assignor and the Assignee, the effective
date for this Assignment and Acceptance shall be __________, 200_ (the
"EFFECTIVE DATE"); PROVIDED that the following conditions precedent have been
satisfied on or before the Effective Date:
(i) this Assignment and Acceptance shall be
executed and delivered by the Assignor and the Assignee;
D-2
[(ii) the consent of the Agent and the Borrower Agent
required for an effective assignment of the Assigned Amount by the
Assignor to the Assignee shall have been duly obtained and shall be in
full force and effect as of the Effective Date;]
(iii) the Assignee shall pay to the Assignor all
amounts due to the Assignor under this Assignment and Acceptance;
[(iv) the Assignee shall have complied with SECTION
11.2 of the Credit Agreement (if applicable);]
(v) the processing fee referred to in SECTION 2(B)
hereof and in Section 11.2(a) of the Credit Agreement shall have been
paid to the Agent; and
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Borrowers and the Agent for
acknowledgment by the Agent, a Notice of Assignment in the form attached hereto
as SCHEDULE 1.
5. [AGENT. [INCLUDE ONLY IF ASSIGNOR IS AGENT]
(A) THE ASSIGNEE HEREBY APPOINTS AND AUTHORIZES THE
ASSIGNOR TO TAKE SUCH ACTION AS AGENT ON ITS BEHALF AND TO EXERCISE SUCH POWERS
UNDER THE CREDIT AGREEMENT AS ARE DELEGATED TO THE AGENT BY THE LENDERS
PURSUANT TO THE TERMS OF THE CREDIT AGREEMENT.
(B) THE ASSIGNEE SHALL ASSUME NO DUTIES OR OBLIGATIONS HELD
BY THE ASSIGNOR IN ITS CAPACITY AS AGENT UNDER THE CREDIT AGREEMENT.]
The Assignee (a) represents and warrants to the Lender, the
Agent and the Borrowers that under applicable law and treaties no tax will be
required to be withheld by the Lender with respect to any payments to be made
to the Assignee hereunder, (b) agrees to furnish (if it is organized under the
laws of any jurisdiction other than the United States or any State thereof) to
the Agent and the Borrowers prior to the time that the Agent or the Borrowers
are required to make any payment of principal, interest or fees hereunder,
duplicate executed originals of either U.S. Internal Revenue Service Form
W-8ECI or U.S. Internal Revenue Service Form W-8BEN (wherein the Assignee
claims entitlement to the benefits of a tax treaty that provides for a complete
exemption from U.S. federal income withholding tax on all payments hereunder)
and agrees to provide new Forms W-8ECI or W-8BEN upon the expiration of any
previously delivered form or comparable statements in accordance with
applicable U.S. law and regulations and amendments thereto, duly executed and
completed by the Assignee, and (c) agrees to comply with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.
D-3
6. REPRESENTATIONS AND WARRANTIES.
(a) The Assignor represents and warrants that (i) it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any Lien or other adverse claim; (ii)
it is duly organized and existing and it has the full power and authority to
take, and has taken, all action necessary to execute and deliver this
Assignment and Acceptance and any other documents required or permitted to be
executed or delivered by it in connection with this Assignment and Acceptance
and to fulfill its obligations hereunder; (iii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance; and (iv) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignor, enforceable against the Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
(b) The Assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto. The Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency,
financial condition or statements of the Borrowers, or the performance or
observance by the Borrowers or any of the Loan Parties, of any of their
respective obligations under the Credit Agreement or any other instrument or
document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is
duly organized and existing and it has full power and authority to take, and
has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance; and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance; (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles; [and (iv) it is an
Eligible Assignee.]
7. FURTHER ASSURANCES.
The Assignor and the Assignee each hereby agree to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Borrowers or the Agent, which may be required
in connection with the assignment and assumption contemplated hereby.
D-4
8. MISCELLANEOUS.
Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other or further breach thereof.
All payments made hereunder shall be made without any set-off
or counterclaim.
The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution
and performance of this Assignment and Acceptance.
This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. The Assignor and
the Assignee each irrevocably submits to the non-exclusive jurisdiction of any
State or Federal court sitting in New York over any suit, action or proceeding
arising out of or relating to this Assignment and Acceptance and irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. Each party to this
Assignment and Acceptance hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding.
THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY
RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
OR STATEMENTS (WHETHER ORAL OR WRITTEN).
[Signature Page Follows]
D-5
IN WITNESS WHEREOF, the Assignor and the Assignee have caused
this Assignment and Acceptance to be executed and delivered by their duly
authorized officers as of the date first above written.
[ASSIGNOR]
By:
---------------------------------------
Title:
------------------------------------
Address:
----------------------------------
[ASSIGNEE]
By:
---------------------------------------
Title:
------------------------------------
Address:
----------------------------------
D-6
SCHEDULE 1
TO
ASSIGNMENT AND ACCEPTANCE
Effective Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Percentage Assigned of Term Loan:
D-7
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_______________, 200_
Harbinger Capital Partners Master Fund I, Ltd.
c/o Harbinger Capital Partners Offshore Manager, LLC
Xxx Xxxxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx XxXxxxxxxx
Telecopy No.: (000) 000-0000
Attn:
Applica Consumer Products, Inc., as Borrower Agent
0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Treasurer
Telecopy No.: 000-000-0000
Re: Applica Consumer Products, Inc., et al.
Ladies and Gentlemen:
We refer to the Term Loan Agreement dated as of December __,
2007 (as amended, restated, modified, supplemented or renewed from time to time
the "LOAN AGREEMENT") among Applica Incorporated (the "BORROWER AGENT") and
certain of its affiliates (collectively with the Borrower Agent, the "LOAN
PARTIES"), the Lenders referred to therein and Harbinger Capital Partners
Master Fund I, Ltd. as agent for the Lenders (the "AGENT"). Terms defined in
the Loan Agreement are used herein as therein defined.
1. We hereby give you notice of, and request the consent
of the Agent [AND BORROWER Agent] to, the assignment by __________________ (the
"ASSIGNOR") to _______________ (the "ASSIGNEE") of _____% of the right, title
and interest of the Assignor in and to the Term Loan made by Assignor under the
Loan Agreement pursuant to the Assignment and Acceptance Agreement attached
hereto (the "ASSIGNMENT AND ACCEPTANCE").
2. The Assignee agrees that, upon receiving the consent of
the Agent [AND BORROWER AGENT] to such assignment, the Assignee will be bound
by the terms of the Credit Agreement as fully and to the same extent as if the
Assignee were the Lender originally holding such interest in the Credit
Agreement.
D-8
3. The following administrative details apply to the
Assignee:
(A) Notice Address:
Assignee name:
Address:
Attention:
Telephone: (___)
Telecopier: (___)
Telex (Answerback):
(B) Payment Instructions:
Account No.:
At:
Reference:
Attention:
4. The Agent is entitled to rely upon the representations,
warranties and covenants of each of the Assignor and Assignee contained in the
Assignment and Acceptance.
D-9
IN WITNESS WHEREOF, the Assignor and the Assignee have caused
this Notice of Assignment and Acceptance to be executed by their respective
duly authorized officials, officers or agents as of the date first above
mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:
---------------------------------------
Title:
------------------------------------
[NAME OF ASSIGNEE]
By:
---------------------------------------
Title:
------------------------------------
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
Harbinger Capital Partners Master Fund I, Ltd.,
as Agent
By:____________________________________
Title:_________________________________
APPLICA INCORPORATED, AS BORROWER AGENT
BY:___________________________________
D-10
