Exhibit 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of November 17, 2004
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
AS THE LENDERS
and
BANK OF AMERICA, N.A.
AS THE AGENT
GENERAL ELECTRIC CAPITAL CORPORATION
AS THE DOCUMENTATION AGENT
and
APPLICA INCORPORATED
AS THE BORROWER
and
ITS SUBSIDIARIES PARTY HERETO
AS GUARANTORS
TABLE OF CONTENTS
Article Page
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ARTICLE 1 LOANS AND LETTERS OF CREDIT.............................................................................2
1.1 Total Facility..................................................................................2
1.2 Revolving Loans.................................................................................2
1.3 Reserved........................................................................................5
1.4 Letters of Credit...............................................................................7
1.5 Bank Products..................................................................................11
ARTICLE 2 INTEREST AND FEES......................................................................................11
2.1 Interest.......................................................................................11
2.2 Continuation and Conversion Elections..........................................................12
2.3 Maximum Interest Rate..........................................................................13
2.4 Closing Fee and Arrangement Fee................................................................14
2.5 Unused Line Fee................................................................................14
2.6 Letter of Credit Fee...........................................................................14
ARTICLE 3 PAYMENTS AND PREPAYMENTS...............................................................................15
3.1 Revolving Loans................................................................................15
3.2 Termination of Facility........................................................................15
3.3 Optional Commitment Reductions.................................................................16
3.4 Payments From Distributions or Loans From Subsidiaries.........................................16
3.5 Payments From Asset Dispositions...............................................................16
3.6 Libor Rate Loan Prepayments....................................................................17
3.7 Payments by the Borrower.......................................................................17
3.8 Payments as Revolving Loans....................................................................17
3.9 Apportionment, Application and Reversal of Payments............................................17
3.10 Indemnity for Returned Payments................................................................18
3.11 Agent's and Lenders' Books and Records; Monthly Statements.....................................19
ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY.................................................................19
4.1 Taxes..........................................................................................19
4.2 Illegality.....................................................................................20
4.3 Increased Costs and Reduction of Return........................................................21
4.4 Funding Losses.................................................................................22
4.5 Inability to Determine Rates...................................................................22
4.6 Certificates of Agent..........................................................................23
4.7 Obligation to Mitigate.........................................................................23
4.8 Survival.......................................................................................24
ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES......................................................24
5.1 Books and Records..............................................................................24
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5.2 Financial Information..........................................................................24
5.3 Notices to the Lenders.........................................................................27
5.4 Revisions or Updates to Schedules..............................................................30
ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS.................................................................31
6.1 Authorization, Validity, and Enforceability of This Agreement and the Loan Documents...........31
6.2 Validity and Priority of Security Interest.....................................................31
6.3 Organization and Qualification.................................................................31
6.4 [Reserved].....................................................................................32
6.5 Subsidiaries...................................................................................32
6.6 Financial Statements and Projections...........................................................32
6.7 [Reserved].....................................................................................32
6.8 Solvency.......................................................................................32
6.9 Debt...........................................................................................33
6.10 Distributions..................................................................................33
6.11 Real Estate; Leases............................................................................33
6.12 Proprietary Rights.............................................................................33
6.13 Trade Names....................................................................................33
6.14 Litigation.....................................................................................34
6.15 Labor Disputes.................................................................................34
6.16 Environmental Laws.............................................................................34
6.17 No Violation of Law............................................................................35
6.18 No Default.....................................................................................35
6.19 Erisa Compliance...............................................................................35
6.20 Taxes..........................................................................................36
6.21 Regulated Entities.............................................................................36
6.22 Margin Regulations.............................................................................37
6.23 Copyrights, Patents, Trademarks and Licenses, Etc..............................................37
6.24 Material Agreements............................................................................37
6.25 Bank Accounts..................................................................................37
6.26 Governmental Authorization.....................................................................37
6.27 Investment Property............................................................................37
6.28 No Material Adverse Change.....................................................................38
6.29 Full Disclosure................................................................................38
6.30 Common Enterprise..............................................................................38
ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS.....................................................................39
7.1 Taxes and Other Obligations....................................................................40
7.2 Legal Existence and Good Standing..............................................................40
7.3 Compliance With Law and Agreements; Maintenance of Licenses....................................40
7.4 Maintenance of Property; Inspection of Property................................................40
7.5 Insurance......................................................................................41
7.6 Insurance and Condemnation Proceeds............................................................42
7.7 Environmental Laws.............................................................................42
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7.8 Compliance With Erisa..........................................................................44
7.9 Mergers, Consolidations or Sales...............................................................44
7.10 Distributions; Capital Change; Restricted Investments..........................................45
7.11 Reserved.......................................................................................45
7.12 Third Party Guaranties.........................................................................45
7.13 Debt...........................................................................................45
7.14 Prepayment.....................................................................................46
7.15 Transactions With Affiliates...................................................................46
7.16 [Reserved].....................................................................................46
7.17 [Reserved].....................................................................................46
7.18 Loan Party Guaranties..........................................................................46
7.19 [Reserved].....................................................................................47
7.20 Investment Banking and Finder's Fees...........................................................47
7.21 Business Conducted.............................................................................47
7.22 Liens..........................................................................................47
7.23 Sale and Leaseback Transactions................................................................47
7.24 New Subsidiaries...............................................................................47
7.25 Fiscal Year....................................................................................48
7.26 Senior Subordinated Debt.......................................................................48
7.27 Minimum Fixed Charge Coverage Ratio............................................................48
7.28 Use of Proceeds................................................................................48
7.29 Changes to Senior Subordinated Debt Offering Documents.........................................49
7.30 Anti-Terrorism Laws............................................................................50
7.31 Intercompany Security Interest.................................................................50
7.32 Applica Canada Blocked Account.................................................................50
7.33 Further Assurances.............................................................................50
ARTICLE 8 CONDITIONS OF LENDING..................................................................................51
8.1 Conditions Precedent to Making of Loans On the Closing Date....................................51
8.2 Conditions Precedent to Each Loan..............................................................55
ARTICLE 9 DEFAULT; REMEDIES......................................................................................56
9.1 Events of Default..............................................................................56
9.2 Remedies.......................................................................................59
ARTICLE 10 TERM AND TERMINATION..................................................................................60
10.1 Term and Termination...........................................................................60
ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS..........................................60
11.1 Amendments and Waivers.........................................................................60
11.2 Assignments; Participations....................................................................62
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ARTICLE 12 THE AGENT.............................................................................................64
12.1 Appointment and Authorization..................................................................64
12.2 Delegation of Duties...........................................................................65
12.3 Liability of Agent.............................................................................65
12.4 Reliance by Agent..............................................................................66
12.5 Notice of Default..............................................................................66
12.6 Credit Decision................................................................................66
12.7 Indemnification................................................................................67
12.8 Agent in Individual Capacity...................................................................67
12.9 Successor Agent................................................................................68
12.10 Withholding Tax................................................................................68
12.11 Collateral Matters.............................................................................70
12.12 Restrictions On Actions by Lenders; Sharing of Payments........................................71
12.13 Agency for Perfection..........................................................................72
12.14 Payments by Agent to Lenders...................................................................72
12.15 Settlement.....................................................................................72
12.16 Letters of Credit; Intra-lender Issues.........................................................76
12.17 Concerning the Collateral and the Related Loan Documents.......................................78
12.18 Field Audit and Examination Reports; Disclaimer by Lenders.....................................79
12.19 Notice of Bank Products........................................................................79
12.20 Relation Among Lenders.........................................................................79
12.21 Documentation Agent............................................................................80
ARTICLE 13 MISCELLANEOUS.........................................................................................80
13.1 No Waivers; Cumulative Remedies................................................................80
13.2 Severability...................................................................................80
13.3 Governing Law; Choice of Forum; Service of Process.............................................80
13.4 Waiver of Jury Trial...........................................................................81
13.5 Survival of Representations and Warranties.....................................................82
13.6 Other Security and Guaranties..................................................................82
13.7 Fees and Expenses..............................................................................82
13.8 Notices........................................................................................83
13.9 Waiver of Notices..............................................................................84
13.10 Binding Effect.................................................................................85
13.11 Indemnity of the Agent and the Lenders by the Borrower.........................................85
13.12 Prior Credit Agreement Superseded..............................................................86
13.13 Final Agreement................................................................................86
13.14 Counterparts...................................................................................86
13.15 Captions.......................................................................................87
13.16 Right of Setoff................................................................................87
13.17 Confidentiality................................................................................87
13.18 Conflicts With Other Loan Documents............................................................89
13.19 Agency of the Borrower for Each Other Loan Party...............................................89
13.20 Express Waivers by Loan Parties in Respect of Cross Guaranties and Cross Collateralization.....89
13.21 Judgment Currency..............................................................................91
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ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A - DEFINED TERMS
EXHIBIT A - [Reserved]
EXHIBIT B - BORROWING BASE CERTIFICATE
EXHIBIT C - FINANCIAL STATEMENTS
EXHIBIT D - NOTICE OF BORROWING
EXHIBIT E - NOTICE OF CONTINUATION/CONVERSION
EXHIBIT F - ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT G - COLLATERAL ACCESS AGREEMENT
EXHIBIT H - VENDOR LETTER
SCHEDULE 1.1 - ASSIGNMENT AND ACCEPTANCE
SCHEDULE 1.2 - COMMITMENTS
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 - ERISA COMPLIANCE
SCHEDULE 6.24 - MATERIAL AGREEMENTS
SCHEDULE 6.25 - BANK ACCOUNTS
v
SCHEDULE 6.27 - INVESTMENT PROPERTY
SCHEDULE A-1 - PERMITTED LIENS
SCHEDULE A-2 - RESTRICTED INVESTMENTS
vi
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (the "Agreement") is made on
November 17, 2004, by and among APPLICA INCORPORATED, a Florida corporation, and
each of its Subsidiaries party hereto; the financial institutions listed on the
signature pages hereof and their respective successors and permitted assigns
which become "Lenders" as provided herein; BANK OF AMERICA, N.A., a national
banking association with an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, in its capacity as collateral and administrative agent for the Lenders
pursuant to SECTION 12 hereof (together with its successors in such capacity,
"Agent"); BANC OF AMERICA SECURITIES LLC, a Delaware limited liability company,
as sole lead arranger (in such capacity, the "Lead Arranger"), and GENERAL
ELECTRIC CAPITAL CORPORATION, a Delaware corporation, with an office at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, in its capacity as
documentation agent for the Lenders (together with its successors in such
capacity, "Documentation 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:
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Loan Parties, Agent, certain financial
institutions ("Original Lenders"), and the other parties named therein are
parties to a certain Credit Agreement dated December 28, 2001 (as at any time
amended, modified, supplemented or restated, the "Original Credit Agreement"),
pursuant to which Original Lenders made certain revolving credit loans, letters
of credit, and other financial accommodations to Borrower and its Subsidiaries
in an amount not exceeding $205,000,000;
WHEREAS, the Loan Parties have requested that the Original
Credit Agreement be amended and restated in its entirety to become effective and
binding on the Loan Parties pursuant to the terms hereof, 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
in its 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 extended to the Borrower 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 and (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;
WHEREAS, all existing Obligations are and shall continue to be
(and all Obligations incurred pursuant hereto shall be) secured by, among other
things, the Security Agreement, the Applica Canada Security Agreement, the
Pledge Agreement and the other Loan Documents and shall be guaranteed pursuant
to the Subsidiary Guaranties, and the Applica Canada Guaranty, and
NOW, THEREFORE, the parties hereto hereby agree to amend and
restate the Original Credit Agreement and the Original Credit Agreement is
hereby amended and restated, in its entirety as follows:
ARTICLE 1
LOANS AND LETTERS OF CREDIT
1.1 TOTAL FACILITY.
Subject to all of the terms and conditions of this Agreement, the
Lenders agree to make available a total credit facility of up to $175,000,000
(the "Total Facility") to the Borrower from time to time during the term of this
Agreement. The Total Facility shall be composed of a revolving line of credit
consisting of Revolving Loans and Letters of Credit and Credit Support as
described in SECTION 1.2 and SECTION 1.4.
1.2 REVOLVING LOANS.
(a) AMOUNTS. Subject to the satisfaction of the conditions
precedent set forth in ARTICLE 8, each Lender severally, but not
jointly, agrees, upon the Borrower's request from time to time on any
Business Day during the period from and including the Closing Date to
the Termination Date, to make revolving loans (the "Revolving Loans")
to the Borrower in amounts not to exceed such Lender's Pro Rata Share
of Availability, except for Non-Ratable Loans and Agent Advances. The
Lenders, however, in their unanimous discretion, may elect to make
Revolving Loans or issue or arrange to have issued Letters of Credit in
excess of the Borrowing Base on one or more occasions, but if they do
so, neither the Agent nor the Lenders shall be deemed thereby to have
changed the limits of the Borrowing Base or to be obligated to exceed
such limits on any other occasion. If any Borrowing would exceed
Availability, the Lenders may refuse to make or may otherwise restrict
the making of Revolving Loans as the Lenders determine until such
excess has been eliminated, subject to the Agent's authority, in its
sole discretion, to make Agent Advances pursuant to the terms of
SECTION 1.2(I).
(b) PROCEDURE FOR BORROWING.
(1) Each Borrowing shall be made upon the Borrower's
irrevocable written notice or by facsimile transmission delivered to the Agent
in the form of a notice of borrowing ("Notice of Borrowing"), which must be
received by the Agent prior to (i) 5:00 p.m. (Atlanta, Georgia time) two
Business Days prior to the requested Funding Date, in the case of LIBOR Rate
Loans and (ii) 1:00 p.m. (Atlanta, Georgia time) on the requested Funding Date,
in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which in the case of
a LIBOR Rate Loan must equal or exceed $2,500,000 (and increments of $500,000 in
excess of such amount);
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(B) the requested Funding Date, which must be a
Business Day;
(C) whether the Revolving Loans requested are to be
Base Rate Revolving Loans, LIBOR Revolving Loans (and if not specified, it shall
be deemed a request for a Base Rate Revolving Loan) or Revolving Loans
constituting Seasonal Inventory Advances; and
(D) the duration of the Interest Period for LIBOR
Revolving Loans (and if not specified, it shall be deemed a request for an
Interest Period of one month); and
(E) whether the proceeds of such Borrowing are to be
deposited to a Designated Account or sent by wire transfer to a third party, in
which case the Borrower shall provide the Agent with wire transfer instructions
satisfactory to the Agent;
provided, however, that with respect to the Borrowing to be made on the Closing
Date, such Borrowings will consist of Base Rate Revolving Loans only.
(2) In lieu of delivering a Notice of Borrowing, (I)
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
(i) above and the Agent at all times shall be entitled to rely on such
telephonic notice in making such Revolving Loans, regardless of whether any
written confirmation is received, or (II) whenever a presentment or request for
payment is made against a Designated Account in an amount greater than the then
available balance therein, such presentment or request shall be deemed to be a
request for a Base Rate Revolving Loan on the date of such presentment in an
amount equal to the excess of such check or other presented payment item over
the available balance therein.
(3) The Borrower shall have no right to request a
LIBOR Rate Loan while a Default or Event of Default has occurred and is
continuing.
(c) RELIANCE UPON AUTHORITY. Prior to the Closing Date, the
Borrower shall deliver to the Agent a notice setting forth an account
("Designated Account") to which the Agent is authorized by the Borrower
to transfer the proceeds of the Revolving Loans requested hereunder.
The Borrower may designate a replacement account from time to time by
written notice. All such Designated Accounts must be reasonably
satisfactory to the Agent. The Agent is entitled to rely conclusively
on any individual's request for Revolving Loans on behalf of the
Borrower, 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 Borrower to make such requests on its behalf.
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(d) 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
Borrower to request Revolving Loans on its behalf. The crediting of
Revolving Loans to a Designated Account or to such Persons as the
Borrower may direct pursuant to SECTION 1.2(B)(E) shall conclusively
establish the obligation of the Borrower to repay such Revolving Loans
as provided herein.
(e) NOTICE IRREVOCABLE. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to SECTION 1.2(B) shall be
irrevocable and the Borrower shall be bound to borrow the funds
requested therein in accordance therewith.
(f) AGENT'S ELECTION. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof), the Agent shall elect
to have the terms of SECTION 1.2(G) or the terms of SECTION 1.2(H)
apply to such requested Borrowing. If the Bank declines in its sole
discretion to make a Non-Ratable Loan pursuant to SECTION 1.2(H), the
terms of SECTION 1.2(G) shall apply to the requested Borrowing.
(g) MAKING OF REVOLVING LOANS. If Agent elects to have the
terms of this SECTION 1.2(G) apply to a requested Borrowing, then
promptly after receipt of a Notice of Borrowing or telephonic notice in
lieu thereof, the Agent shall notify the Lenders by telecopy, telephone
or e-mail of the requested Borrowing. Each Lender shall transfer its
Pro Rata Share of the requested Borrowing available to the Agent in
immediately available funds, to the account from time to time
designated by Agent, not later than 2:00 p.m. (Atlanta, Georgia time)
on the applicable Funding Date. After the Agent's receipt of all
proceeds of such Revolving Loans, the Agent shall make the proceeds of
such Revolving Loans available to the Borrower on the applicable
Funding Date by transferring same day funds to the account designated
by the Borrower; PROVIDED, HOWEVER, that except as may otherwise be
provided by this Agreement, the amount of Revolving Loans so made on
any date shall not exceed the Availability on such date.
(h) MAKING OF NON-RATABLE LOANS. If Agent elects, with the
consent of the Bank, to have the terms of this SECTION 1.2(H) apply to
a requested Borrowing, the Bank shall make a Revolving Loan in the
amount of that Borrowing available to the Borrower on the applicable
Funding Date by transferring same day funds to Borrowers' Designated
Account. Each Revolving Loan made solely by the Bank pursuant to this
Section is herein referred to as a "Non-Ratable Loan", and such
Revolving Loans are collectively referred to as the "Non-Ratable
Loans." Each Non-Ratable Loan shall be subject to all the terms and
conditions applicable to other Revolving Loans except that all payments
thereon shall be payable to the Bank solely for its own account. The
aggregate amount of Non-Ratable Loans outstanding at any time shall not
exceed $15,000,000. The Agent shall not request the Bank to make any
Non-Ratable
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Loan if (1) the Agent has received written notice from any Lender that
one or more of the applicable conditions precedent set forth in ARTICLE
8 will not be satisfied on the requested Funding Date for the
applicable Borrowing, or (2) the requested Borrowing would exceed
Availability on that Funding Date. The Non-Ratable Loans shall be
secured by the Agent's Liens in and to the Collateral and shall
constitute LIBOR Rate Loans hereunder to the extent the Borrower is
then entitled to additional Borrowings as LIBOR Rate Loans, and any
amounts in excess thereof shall constitute Base Rate Revolving Loans
hereunder.
(i) AGENT ADVANCES. Subject to the limitations set forth
below, the Agent is authorized by the Borrower and the Lenders, from
time to time in the Agent's sole discretion, (A) after the occurrence
of a Default or an Event of Default, or (B) at any time that any of the
other conditions precedent set forth in ARTICLE 8 have not been
satisfied, to make Base Rate Revolving Loans to the Borrower on behalf
of the Lenders in an aggregate amount outstanding at any time not to
exceed 5% of the Borrowing Base (but not to exceed in the aggregate,
with all of the Revolving Loans outstanding, the Maximum Revolver
Amount) for a period not to exceed thirty (30) continuous days, which
Agent, in its reasonable business judgment, deems necessary or
desirable (1) to preserve or protect the Collateral, or any portion
thereof, (2) to enhance the likelihood of, or maximize the amount of,
repayment of the Loans and other Obligations, or (3) to pay any other
amount chargeable to the Borrower pursuant to the terms of this
Agreement, including costs, fees and expenses as described in SECTION
13.7 (any of such advances are herein referred to as "Agent Advances");
PROVIDED, that the Required Lenders may at any time revoke the Agent's
authorization to make Agent Advances. Any such revocation must be in
writing and shall become effective prospectively upon the Agent's
receipt thereof. The Agent Advances shall be secured by the Agent's
Liens in and to the Collateral and shall constitute Base Rate Revolving
Loans and Obligations hereunder.
1.3 INCREASE IN COMMITMENTS.
(a) So long as no Default or Event of Default has occurred and
is continuing, the Borrower may request that the Commitments be
increased by up to $50,000,000 and, upon such request, Agent may
solicit additional financial institutions to become Lenders for
purposes of this Agreement, or to encourage any Lender to increase its
Commitment, PROVIDED that (i) each Lender which is a party to this
Agreement prior to such increase shall have the first option, and may
elect, to fund its Pro Rata Share of the amount of the increase in the
Commitment (or any such greater amount in the event that one or more
Lenders does not elect to fund its respective Pro Rata Share of the
amount of the increase in the Commitment), thereby increasing its
Commitment hereunder, but no Lender shall have any obligation to do so,
(ii) in the event that it becomes necessary to include a new financial
institution to fund the amount of the increase in the Commitment, each
such financial institution shall be reasonably
5
acceptable to Agent and each such financial institution shall become a
Lender hereunder and agree to become party to, and shall assume and
agree to be bound by, this Agreement, subject to all terms and
conditions hereof; (iii) in the event that it becomes necessary to
include a new financial institution to fund the amount of the increase
in the Commitment, the Agent shall use its best efforts to solicit such
additional financial institution or institutions to become Lenders;
(iv) no Lender shall have an obligation to the Loan Parties, Agent or
the Lead Arranger or any other Lender to increase its Commitment or its
Pro Rata Share of the Commitments; and (v) in no event shall the
addition of any Lender or Lenders or the increase in the Revolver
Commitment of any Lender under this SECTION 1.3 increase the
Commitments (A) in any single instance by less than $5,000,000 or (B)
to an aggregate amount greater than $225,000,000. Upon the addition of
any Lender, or the increase in the Commitment of any Lender, SCHEDULE
1.2 shall be amended by Agent and the Loan Parties to reflect such
addition or such increase, and Agent shall deliver to the Lenders, the
Lead Arranger, the Bank and the Borrower copies of such SCHEDULE 1.2.
Any new financial institution added as a new Lender pursuant to this
SECTION 1.3 shall be required to have a Commitment of not less than
$10,000,000. In connection with any such addition of a new Lender,
Borrower shall pay to Agent, for its own account, a fee in an amount to
be mutually agreed upon among Agent, the Lead Arranger and the Borrower
for processing any new Lender, except to the extent that such New
Lender was solicited directly by Borrower, in which case no such fee
shall be payable.
(b) If any requested increase in the Commitments is agreed to
in accordance with Section 1.3(a) above, Agent and the Borrower shall
determine the effective date of such increase (the "Increase Effective
Date"). Agent, with the consent and approval of the Borrower, shall
promptly confirm in writing to the Lenders the final allocation of such
increase and the Increase Effective Date and, each new Lender, and each
existing Lender that has increased its Revolver Commitment, shall
purchase Revolving Loans and the undrawn amount of outstanding Letters
of Credit from each other Lender in an amount such that, after such
purchase or purchases, the amount of outstanding Revolving Loans and
outstanding Letters of Credit from each Lender shall equal such
Lender's Pro Rata Share of the Commitments, as modified to give effect
to such increase, multiplied by the aggregate amount of outstanding
Revolving Loans and Letters of Credit from all Lenders. As a condition
precedent to the effectiveness of such increase, the Borrower shall
deliver to Agent a certificate dated as of the Increase Effective Date
(in sufficient copies for each Lender) signed by a responsible officer
of Borrower on behalf of the Loan Parties, including a Compliance
Certificate demonstrating compliance with the terms of this Agreement
and certification that, before and after giving effect to such
increase, the representations and warranties contained in Section 6 are
true and correct in all material respects on and as of the Increase
Effective Date (except to the extent any such representation or
warranty is stated to relate solely to an earlier date) and no Default
or Event of Default has occurred and is continuing. The Borrower shall
6
prepay any Revolving Loans which are LIBOR Revolving Loans and which
are outstanding on the Increase Effective Date (and pay any costs
incurred in connection with such prepayment pursuant to Section 4.3) to
the extent necessary to keep the outstanding Revolving Loans and
Letters of Credit ratable with any revised Pro Rata Shares of the
Commitments arising from any nonratable increase in the Commitments.
1.4 LETTERS OF CREDIT.
(a) AGREEMENT TO ISSUE OR CAUSE TO ISSUE. Subject to the terms
and conditions of this Agreement, the Agent agrees, upon the request
from time to time of the Borrower, in accordance with Section 1.4(d),
for the issuance of a Letter of Credit for the account of the Borrower
or another Loan Party as directed by the Borrower in writing, (i) to
cause the Letter of Credit Issuer to issue for the account of the
Borrower one or more commercial/documentary and/or standby letters of
credit (each a "Letter of Credit") and/or (ii) to provide credit
support or other enhancement to a Letter of Credit Issuer acceptable to
the Letter of Credit Issuer which issues a Letter of Credit for the
account of the Borrower (any such credit support or enhancement being
herein referred to as a "Credit Support") from time to time during the
term of this Agreement.
(b) AMOUNTS; OUTSIDE EXPIRATION DATE. The Agent shall not have
any obligation to issue or cause to be issued any Letter of Credit or
to provide Credit Support for any Letter of Credit at any time if: (i)
the maximum face amount of the requested Letter of Credit is greater
than the Unused Letter of Credit Subfacility at such time; (ii) the
maximum undrawn amount of the requested Letter of Credit and all
commissions, fees, and charges due from the Borrower in connection with
the opening thereof would exceed Availability at such time; or (iii)
such Letter of Credit has an expiration date less than 15 days prior to
the Stated Termination Date or more than 12 months from the date of
issuance for standby letters of credit or more than 6 months from the
date of issuance for documentary letters of credit. With respect to any
Letter of Credit which contains any "evergreen" or automatic renewal
provision, each Lender shall be deemed to have consented to any such
extension or renewal unless any such Lender shall have provided to the
Agent, written notice that it declines to consent to any such extension
or renewal at least thirty (30) days prior to the date on which the
Letter of Credit Issuer is entitled to decline to extend or renew the
Letter of Credit. If all of the requirements of this SECTION 1.4 are
met and no Default or Event of Default has occurred and is continuing,
no Lender shall decline to consent to any such extension or renewal.
(c) OTHER CONDITIONS. In addition to conditions precedent
contained in ARTICLE 8, the obligation of the Agent to issue or to
cause to be issued any Letter of Credit or to provide Credit Support
for any Letter of Credit is subject to the
7
following conditions precedent having been satisfied in a manner
reasonably satisfactory to the Agent:
(1) the Borrower shall have delivered to the Letter
of Credit Issuer, at such times and in such manner as such Letter of Credit
Issuer may prescribe, an application in form and substance satisfactory to such
Letter of Credit Issuer and reasonably satisfactory to the Agent for the
issuance of the Letter of Credit and such other documents as may be required
pursuant to the terms thereof, and the form, terms and purpose of the proposed
Letter of Credit shall be reasonably satisfactory to the Agent and the Letter of
Credit Issuer; and
(2) as of the date of issuance, no order of any
court, arbitrator or Governmental Authority shall purport by its terms to enjoin
or restrain money center banks generally from issuing letters of credit of the
type and in the amount of the proposed Letter of Credit, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or the issuance of such Letters of Credit.
(d) ISSUANCE OF LETTERS OF CREDIT.
(1) REQUEST FOR ISSUANCE. The Borrower shall notify
Agent by telephonic facsimile or electronic notice (via the Bank's "Bank Window"
system) of a requested Letter of Credit at least three (3) Business Days prior
to the proposed issuance date. Such notice shall be irrevocable and must specify
the original face amount of the Letter of Credit requested, the Business Day of
issuance of such requested Letter of Credit, whether such Letter of Credit may
be drawn in a single or in partial draws, the Business Day on which the
requested Letter of Credit is to expire, the purpose for which such Letter of
Credit is to be issued, and the beneficiary of the requested Letter of Credit.
The Borrower shall attach to such notice the proposed form of the Letter of
Credit.
(2) RESPONSIBILITIES OF THE AGENT; ISSUANCE. As of
the Business Day immediately preceding the requested issuance date of the Letter
of Credit, the Agent shall determine the amount of the applicable Unused Letter
of Credit Subfacility and Availability. If (i) the face amount of the requested
Letter of Credit is less than the Unused Letter of Credit Subfacility and (ii)
the amount of such requested Letter of Credit and all commissions, fees, and
charges due from the Borrower in connection with the opening thereof would not
exceed Availability, the Agent shall cause the Letter of Credit Issuer to issue
the requested Letter of Credit on the requested issuance date so long as the
other conditions hereof are met.
(3) NO EXTENSIONS OR AMENDMENT. Other than in
accordance with the last two sentences of Section 1.4(b) hereof, Agent shall not
be obligated to cause the Letter of Credit Issuer to extend or amend any Letter
of Credit issued pursuant hereto unless the requirements of this SECTION 1.4 are
met as though a new Letter of Credit were being requested and issued.
8
(e) PAYMENTS PURSUANT TO LETTERS OF CREDIT. The Borrower
agrees to reimburse immediately the Letter of Credit Issuer for any
draw under any Letter of Credit and the Agent for the account of the
Lenders upon any payment pursuant to any Credit Support, in each case
in accordance with its respective terms, and to pay the Letter of
Credit Issuer the amount of all other charges and fees payable to the
Letter of Credit Issuer in connection with any Letter of Credit
immediately when due, irrespective of any claim, setoff, defense or
other right which the Borrower may have at any time against the Letter
of Credit Issuer or any other Person. Each drawing under any Letter of
Credit shall constitute a request by the Borrower at whose request such
Letter of Credit or Credit Support was issued for a Borrowing of a Base
Rate Revolving Loan in the amount of such drawing. The Funding Date
with respect to such borrowing shall be the date of such drawing.
(f) INDEMNIFICATION; EXONERATION; POWER OF ATTORNEY.
(1) INDEMNIFICATION. In addition to amounts payable
as elsewhere provided in this SECTION 1.4, each Loan Party agrees to protect,
indemnify, pay and save the Lenders and the Agent harmless from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) which any Lender or the Agent
(other than a Lender in its capacity as Letter of Credit Issuer) may incur or be
subject to as a consequence, direct or indirect, of the issuance of any Letter
of Credit or the provision of any Credit Support or enhancement in connection
therewith. The Loan Parties' obligations under this Section shall survive
payment of all other Obligations.
(2) ASSUMPTION OF RISK BY THE BORROWER. As among the
Borrower, the Lenders, and Agent (excluding any Lender in its capacity as a
Letter of Credit Issuer), the Borrower assumes all risks of the acts and
omissions of, or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, the Lenders and the Agent (excluding any Lender in its capacity
as a Letter of Credit Issuer) shall not be responsible for: (A) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any Person in connection with the application for and issuance of
and presentation of drafts with respect to any of the Letters of Credit, even if
it should prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (C) the
failure of the beneficiary of any Letter of Credit to comply duly with
conditions required in order to draw upon such Letter of Credit; (D) errors,
omissions, interruptions, or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(E) errors in interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (G) the misapplication by
the beneficiary of any Letter of Credit of the proceeds of any drawing under
such Letter of Credit; (H) any consequences arising from causes beyond the
control of the Lenders or the
9
Agent, including any act or omission, whether rightful or wrongful, of any
present or future DE JURE or DE FACTO Governmental Authority or (I) the Letter
of Credit Issuer's honor of a draw for which the draw or any certificate fails
to comply in any respect with the terms of the Letter of Credit. None of the
foregoing shall affect, impair or prevent the vesting of any rights or powers of
the Agent or any Lender under this SECTION 1.4(F).
(3) EXONERATION. Without limiting the foregoing, no
action or omission whatsoever by Agent or any Lender (excluding any Lender in
its capacity as a Letter of Credit Issuer) shall result in any liability of
Agent or and Lender to any Loan Party, or relieve such Loan Party of any of its
obligations hereunder to any such Person.
(4) RIGHTS AGAINST LETTER OF CREDIT ISSUER. Nothing
contained in this Agreement is intended to limit the Borrower's rights, if any,
with respect to the Letter of Credit Issuer which arise as a result of the
letter of credit application and related documents executed by and between the
Borrower and the Letter of Credit Issuer.
(5) ACCOUNT PARTY. The Borrower hereby authorizes and
directs any Letter of Credit Issuer to name any Loan Party as the "Account
Party" therein and to deliver to the Agent all instruments, documents and other
writings and property received by the Letter of Credit Issuer pursuant to the
Letter of Credit, and to accept and rely upon the Agent's instructions and
agreements with respect to all matters arising in connection with the Letter of
Credit or the application therefor.
(g) SUPPORTING LETTER OF CREDIT; CASH COLLATERAL. If,
notwithstanding the provisions of SECTION 1.4(B) and SECTION 10.1, any
Letter of Credit or Credit Support is outstanding upon the termination
of this Agreement, then upon such termination the Borrower shall
deposit with the Agent, for the ratable benefit of the Agent and the
Lenders, with respect to each Letter of Credit or Credit Support then
outstanding, a standby letter of credit (a "Supporting Letter of
Credit") in form and substance reasonably satisfactory to Agent, issued
by an issuer satisfactory to the Agent in an amount equal to the
greatest amount for which such Letter of Credit or such Credit Support
may be drawn plus any fees and expenses associated with such Letter of
Credit or such Credit Support, under which Supporting Letter of Credit
the Agent is entitled to draw amounts necessary to reimburse the Agent
and the Lenders for payments to be made by the Agent and the Lenders
under such Letter of Credit or Credit Support and any fees and expenses
associated with such Letter of Credit or Credit Support. Such
Supporting Letter of Credit shall be held by the Agent, for the ratable
benefit of the Agent and the Lenders, as security for, and to provide
for the payment of, the aggregate undrawn amount of such Letters of
Credit or such Credit Support remaining outstanding.
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1.5 BANK PRODUCTS.
The Loan Parties may request and the Agent may, in its sole and
absolute discretion, arrange for any Consolidated Member to obtain from the Bank
or any Lender or its Affiliates Bank Products although the Loan Parties are not
required to do so. If Bank Products are provided by the Bank or an Affiliate of
the Bank or a Lender, the Loan Parties agree to indemnify and hold the Agent and
the Lenders harmless from any and all costs and obligations now or hereafter
incurred by the Agent or any of the Lenders which arise from any indemnity given
by the Agent to its Affiliates or the Affiliates of such Lender related to such
Bank Products; provided, however, nothing contained herein is intended to limit
a Consolidated Member's rights, with respect to the Bank, a Lender or their
respective Affiliates, if any, which arise as a result of the execution of
documents by and between a Consolidated Member and the Bank or such Lender or
their Affiliates which relate to Bank Products. The agreement contained in this
Section shall survive termination of this Agreement. Each Loan Party
acknowledges and agrees that the obtaining of Bank Products from the Bank or a
Lender or its Affiliates (a) is in the sole and absolute discretion of the Bank,
such Lender or their Affiliates, and (b) is subject to all rules and regulations
of the Bank, such Lender or their Affiliates.
ARTICLE 2
INTEREST AND FEES
2.1 INTEREST.
(a) INTEREST RATES. All outstanding Revolving Loans 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
Margins, but not to exceed the Maximum Rate, PROVIDED that Seasonal
Inventory Advances shall bear interest on the unpaid principal amount
thereof from the date made until paid in full in cash at a rate per
annum equal to the Base Rate PLUS 2.00%, but not to exceed the Maximum
Rate. Any of the Loans may be converted into, or continued as LIBOR
Rate Loans, subject to and in the manner provided in SECTION 2.2,
PROVIDED that Borrower shall not be entitled to convert Seasonal
Inventory Advances from Base Rate Loans to LIBOR Rate Loans. If at any
time Loans are outstanding with respect to which the Borrower has not
delivered to the Agent a notice specifying the basis for determining
the interest rate applicable thereto in accordance herewith, 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 Revolving Loans at a
fluctuating per annum rate equal to the Base Rate plus the
Applicable Margin; and
(ii) For all LIBOR Revolving Loans at a per annum
rate equal to the LIBOR Rate PLUS the Applicable Margin.
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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 Borrower 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 Borrower shall pay to the
Agent, for the ratable benefit of Lenders, interest on all LIBOR Rate Loans in
arrears on each LIBOR Interest Payment Date.
(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 Borrower 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
Rate Loans; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any LIBOR Rate 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 Rate 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 Rate 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 shall deliver by telephonic facsimile notice
of continuation/conversion ("NOTICE OF CONTINUATION/CONVERSION") to the
Agent not later than 5:00 p.m. (Atlanta, Georgia 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 Rate Loans and
specifying:
(i) the proposed Continuation/Conversion Date;
(ii) the aggregate amount of Loans to be converted or
renewed;
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(iii) the type of Loans resulting from the proposed
conversion or continuation; and
(iv) the duration of the requested Interest Period,
PROVIDED, HOWEVER, the Borrower may not select an Interest
Period that ends after the Stated Termination Date.
(c) If upon the expiration of any Interest Period applicable
to LIBOR Rate Loans, the Borrower has failed to select timely a new
Interest Period to be applicable to LIBOR Rate Loans or if any Default
or Event of Default then exists, the Borrower shall be deemed to have
elected to convert such LIBOR Rate 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 seven (7) different LIBOR Rate
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 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 Borrower 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 Borrower such excess.
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2.4 CLOSING FEE AND ARRANGEMENT FEE.
The Borrower agrees to pay the Agent for the ratable benefit of the
Lenders on the Closing Date a closing fee (the "Closing Fee"), and an
arrangement fee (the "Arrangement Fee"), each as set forth in the Fee Letter.
2.5 UNUSED LINE FEE.
On the first day of each month and on the Termination Date the Borrower
agrees to pay to the Agent for the account of the Lenders an unused line fee
("Unused Line Fee") at a percentage rate per annum equal to (i) the Applicable
Unused Line Fee on any applicable date, times (ii) the amount by which the
Maximum Revolver Amount exceeded the Average Credit Facility Outstandings for
the immediately preceding month. The Unused Line Fee shall be computed on the
basis of a 360-day year for the actual number of days elapsed.
2.6 LETTER OF CREDIT FEE.
The Borrower agrees to pay to the Agent, for the account of the
Lenders, in accordance with their respective Pro Rata Shares, for each Letter of
Credit, a fee (the "Letter of Credit Fee") equal to the Applicable Margin per
annum in effect for LIBOR Revolving Loans on any applicable date on the undrawn
face amount of each Letter of Credit and to Agent for the benefit of the Letter
of Credit Issuer a fronting fee of 0.125% per annum of the undrawn face amount
of each Letter of Credit, and to the Letter of Credit Issuer, all out-of-pocket
costs, fees and expenses incurred by the Letter of Credit Issuer in connection
with the application for, processing of, issuance of, or amendment to any Letter
of Credit. The Letter of Credit Fee shall be payable monthly in arrears on the
first day of each month following any month in which a Letter of Credit is
outstanding and on the Termination Date. The Letter of Credit Fee shall be
computed on the basis of a 360-day year for the actual number of days elapsed.
2.7 ADMINISTRATION FEE.
The Borrower agrees to pay the Agent on the Closing Date and on each
anniversary of the Closing Date the administration fee (the "Administration
Fee") as set forth in the Fee Letter.
2.8 COLLECTIONS FEE.
The Borrower agrees to pay the Agent on the first day of each month
after the Closing Date the collections fee (the "Collections Fee") as set forth
in the Fee Letter; PROVIDED, HOWEVER, that no Collections Fee shall be payable
with respect to collected funds received by Agent in a Payment Account.
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ARTICLE 3
PAYMENTS AND PREPAYMENTS
3.1 REVOLVING LOANS.
The Borrower shall repay the outstanding principal balance of the
Revolving Loans, plus all accrued but unpaid interest thereon, on the
Termination Date. The Borrower may prepay Revolving Loans at any time, and
reborrow subject to the terms of this Agreement. In addition, and without
limiting the generality of the foregoing, upon demand the Borrower shall pay to
the Agent, for account of the Lenders, the amount, without duplication, by which
the Aggregate Revolver Outstandings exceeds the lesser of the Borrowing Base or
the Maximum Revolver Amount.
3.2 TERMINATION OF FACILITY.
The Borrower may terminate this Agreement upon at least ten (10)
Business Days' notice to the Agent and the Lenders, upon (a) the payment in full
of all outstanding Revolving Loans, together with accrued interest thereon, and
the cancellation and return of all outstanding Letters of Credit, (b) the
payment of the early termination fee set forth below, (c) the payment in full in
cash of all reimbursable expenses and other Obligations, and (d) with respect to
any LIBOR Rate Loans prepaid, payment of the amounts due under Section 4.4, if
any. If this Agreement is terminated at any time prior to the Stated Termination
Date, whether pursuant to this Section or pursuant to Section 9.2, the Borrower
shall, in addition to the foregoing, pay to the Agent, for the account of the
Lenders, an early termination fee determined in accordance with the following
table:
Period During Which Early Early Termination
Termination Occurs Fee
On or prior to the first Anniversary 1% of the Maximum Revolver Amount
Date
After the first Anniversary Date but on 0.5% of the Maximum Revolver Amount
or prior to the second Anniversary Date
After the second Anniversary Date but 0.25% of the Maximum Revolver Amount
prior to the third Anniversary Date
The Third Anniversary Date and None
thereafter
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Notwithstanding the foregoing, in the event Borrower refinances the
Total Facility with a credit facility provided by another lending department of
Agent, the early termination fee will not apply.
3.3 OPTIONAL COMMITMENT REDUCTIONS.
The Borrower shall, by notice from a Responsible Officer, have the
right from time to time but not more frequently than once each calendar month,
upon not less than three (3) Business Days' written notice to Agent, effective
upon receipt, to permanently reduce the total Commitments. Agent shall give each
Lender, within one (1) Business Day of receipt of such notice, telefacsimile
notice, or telephonic notice (confirmed in writing), of such reduction. Each
such reduction shall be in the aggregate amount of $5,000,000 or such greater
amount which is in an integral multiple of $1,000,000, or the entire remaining
total Commitments, and shall permanently reduce the total Commitments. Each
reduction of the total Commitments shall be accompanied by payment of the
Revolving Loans to the extent that the principal amount of Revolving Loans
outstanding, plus Non-Ratable Loans outstanding, plus Letters of Credit
outstanding exceeds the lesser of (i) the total Commitments or (ii) the
Borrowing Base, after giving effect to such reduction, together with accrued and
unpaid interest on the amounts prepaid. No such reduction shall result in the
payment of any LIBOR Rate Loans other than on the last day of the Interest
Period of such LIBOR Rate Loan unless such prepayment is accompanied by amounts
due, if any, under Section 4.4 hereof. Notwithstanding the foregoing, if any of
the Commitments are reduced at any time or times prior to the Stated Termination
Date, the Borrower shall pay to the Agent in each instance, for the account of
the Lenders, an early termination fee on the portion of the Commitments so
reduced (the "Commitment Reduction Amount") in accordance with the applicable
provisions of Section 3.2; provided, however, that the reference to "Maximum
Revolver Amount" as used therein shall be deemed to refer to the Commitment
Reduction Amount for purposes of calculating the amount of such early
termination fees.
3.4 PAYMENTS FROM DISTRIBUTIONS OR LOANS FROM SUBSIDIARIES.
All proceeds or other cash payments received by the Borrower
constituting proceeds of a Distribution, loan or other advance to the Borrower
shall be paid to the Agent, promptly upon the receipt thereof by the Borrower,
for application to the Revolving Loans.
3.5 PAYMENTS FROM ASSET DISPOSITIONS.
All proceeds of any Asset Disposition by a Consolidated Member received
by a Loan Party shall be paid to the Agent, promptly upon the receipt thereof by
the Borrower, for application to the Revolving Loans except as provided in
SECTION 7.14. No provision contained in this Section 3.5 shall constitute a
consent to any Asset Disposition that is not otherwise permitted by the express
terms of this Agreement.
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3.6 LIBOR RATE LOAN PREPAYMENTS.
Except as otherwise expressly provided in this Agreement, in connection
with any prepayment, if any LIBOR Rate Loans are prepaid prior to the expiration
date of the Interest Period applicable thereto, the Borrower shall pay to the
Lenders the amounts described in Section 4.4.
3.7 PAYMENTS BY THE BORROWER.
(a) All payments to be made by the Borrower shall be made
without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Borrower or other forms
of payment received by the Agent 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 (Atlanta, Georgia
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 (i)
determining Availability, (ii) calculating the Unused Line Fee pursuant
to Section 2.5 of this Agreement, and (iii) calculating the amount of
interest accrued thereon. Any payment received by Agent after 12:00
noon (Atlanta, Georgia 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.
3.8 PAYMENTS AS REVOLVING LOANS.
At the election of Agent, all payments of principal, interest,
reimbursement obligations in connection with Letters of Credit and Credit
Support for Letters of Credit, fees, premiums, reimbursable expenses and other
sums payable hereunder, may be paid from the proceeds of Revolving Loans made
hereunder. The Borrower hereby irrevocably authorizes the Agent to charge the
Loan Account for the purpose of paying all amounts from time to time due
hereunder and agrees that all such amounts charged shall constitute Base Rate
Revolving Loans (including Non-Ratable Loans and Agent Advances).
3.9 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 Loans to which such
payments relate held by each Lender) and payments of the fees shall, as
applicable, be apportioned ratably among the Lenders, except for fees payable
solely to Agent and the Letter of Credit Issuer and except as provided in
Section 11.1(b). All payments shall be remitted to the Agent and all such
payments
17
not relating to principal or interest of specific Loans, 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 Borrower; second, to pay any fees or expense
reimbursements then due to the Lenders from the Borrower; third, to pay interest
due in respect of all Loans, including Non-Ratable Loans and Agent Advances;
fourth, to pay or prepay principal of the Non-Ratable Loans and Agent Advances;
fifth, to pay or prepay principal of the Seasonal Inventory Advances; sixth, to
pay or prepay principal of the Revolving Loans (other than Non-Ratable Loans,
Agent Advances and Seasonal Inventory Advances) and unpaid reimbursement
obligations in respect of Letters of Credit; seventh, to pay an amount to Agent
equal to all outstanding Letter of Credit Obligations to be held as cash
collateral for such Obligations; eighth, to the payment of any amounts relating
to Bank Products due to the Agent or any Lender or its Affiliates of which Agent
shall have received timely notice pursuant to SECTION 12.19; and ninth, to the
payment of any other Obligations, including any Obligations related to Bank
Products owing to a Lender or its Affiliate of which Agent has not received
timely notice pursuant to SECTION 12.19. Notwithstanding anything to the
contrary contained in this Agreement, neither Agent nor any Lender shall apply
any payments which it receives to any LIBOR Rate Loan, unless (a) so directed by
the Borrower, (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 LIBOR Rate Loan. For so long as 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.
3.10 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, the Bank or any Affiliate
of the Bank 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 Borrower shall be liable to pay to the Agent and the Lenders, and hereby
does 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.
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3.11 AGENT'S AND LENDERS' BOOKS AND RECORDS; MONTHLY STATEMENTS.
The Agent shall record the principal amount of the Loans owing to each
Lender, the undrawn face amount of all outstanding Letters of Credit and the
aggregate amount of unpaid reimbursement obligations outstanding with respect to
the Letters of Credit 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 Borrower with respect to
the Loans or the Letters of Credit. 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 Borrower 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 reversals and
reapplications of payments made as provided in Section 3.8 and corrections of
errors discovered by the Agent), unless the Borrower notifies 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
Borrower, only the items to which exception is expressly made will be considered
to be disputed.
ARTICLE 4
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 TAXES.
(a) Any and all payments by the Loan Parties to each 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
Taxes. In addition, the Loan Parties shall pay all Taxes relating to
present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment
made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.
(b) The Loan Parties agree to indemnify and hold harmless each
Lender and the Agent for the full amount of 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 30 days after the date such Lender or Agent makes written demand
therefor.
(c) If the Loan Parties shall be required by law to deduct or
withhold any Taxes from or in respect of any sum payable hereunder to
any Lender or Agent, then:
19
(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
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.
(d) At the Agent's request, within 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.
(e) If the Loan Parties are required to pay additional amounts
to any Lender or the Agent pursuant to SUBSECTION (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.
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 Rate
Loans, then, on notice thereof by that Lender to the Borrower through
the Agent, any obligation of that Lender to make LIBOR Rate Loans shall
be suspended until that Lender notifies the Agent and the Borrower that
the circumstances giving rise to such determination no longer exist.
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(b) If a Lender determines that it is unlawful to maintain any
LIBOR Rate Loan, the Borrower shall, upon receipt of notice of such
fact and demand from such Lender (with a copy to the Agent), prepay in
full such LIBOR Rate 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 Rate Loans to such day, or
immediately, if that Lender may not lawfully continue to maintain such
LIBOR Rate Loans. In the event such Lender shall have determined that
it is no longer unlawful for it to maintain a LIBOR Rate Loan, it shall
promptly give notice to the Borrower and Agent. If the Borrower is
required to so prepay any LIBOR Rate Loans, then concurrently with such
prepayment, the Borrower 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 Borrower 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 Rate Loan has been prepaid in
accordance with this Section 4.2.
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 law or regulation 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 Rate Loans, then the
Borrower 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 affected Lender's increased costs are material, the
Borrower may choose to prepay such LIBOR Rate Loan and concurrently
with such prepayment, the Borrower 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 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 Borrower 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 Rate 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
21
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 demand of such Lender to the Borrower through the Agent, the
Borrower 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 30 days prior to the date the Lender actually
became aware of such additional amounts.
4.4 FUNDING LOSSES.
The Borrower 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 Borrower to make on a timely basis any
payment of principal of any LIBOR Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert
a Loan after the Borrower has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Continuation/Conversion; or
(c) the prepayment or other payment (including after
acceleration thereof) of any LIBOR Rate Loans on a day that is not the
last day of the relevant Interest Period;
including any such loss of anticipated profit and any loss or expense arising
from the liquidation or reemployment of funds obtained by it to maintain its
LIBOR Rate Loans or from fees payable to terminate the deposits from which such
funds were obtained. Borrower 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 Rate Loan, or that the LIBOR Rate for
any requested Interest Period with respect to a proposed LIBOR Rate Loan does
not adequately and fairly reflect the cost to the Lenders of funding such Loan,
the Agent will promptly so notify the Borrower and each Lender. Thereafter, the
obligation of the Lenders to make or maintain LIBOR Rate Loans hereunder shall
be suspended until the Agent revokes such notice in writing. Upon receipt of
such notice, the Borrower may revoke any Notice of Borrowing or Notice of
Continuation/Conversion then
22
submitted by it. If the Borrower does not revoke such Notice, the Lenders shall
make, convert or continue the Loans, as proposed by the Borrower, in the amount
specified in the applicable notice submitted by the Borrower, but such Loans
shall be made, converted or continued as Base Rate Loans instead of LIBOR Rate
Loans.
4.6 CERTIFICATES OF AGENT.
If any Lender claims reimbursement or compensation under this Article
4, Agent shall deliver to the Borrower (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
Borrower in the absence of manifest error.
4.7 OBLIGATION TO MITIGATE.
(a) Subject to Section 4.7(b) below, each Lender, Letter of
Credit Issuer, Agent and Bank agrees that, as promptly as practicable
after the officer of such Lender, Letter of Credit Issuer, Agent or
Bank responsible for administering the Loans or Letters of Credit of
such Lender, Letter of Credit Issuer, Agent or Bank, as the case may
be, becomes aware of the occurrence of any event or the existence of a
condition that would cause such Lender, Letter of Credit Issuer or Bank
to receive increased payments from the Borrower 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, Letter of Credit
Issuer, the Agent or the Bank and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or
maintain the Commitments of such Lender or the affected Loans or
Letters of Credit of such Lender, Letter of Credit Issuer, the Agent or
the Bank through another lending or letter of credit office of such
Lender, Letter of Credit Issuer, the Agent or the Bank, or (ii) take
such other actions as Lender, Letter of Credit Issuer, the Agent or the
Bank may deem reasonable to cause the additional amounts that the
Borrower would be required to pay the Lender, Letter of Credit Issuer,
the Agent or the Bank under Section 4.1, Section 4.2 or Section 4.3 to
be reduced.
(b) The Borrower may, in its 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 Rate 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 Borrower and
acceptable to the Agent which is willing to become a Lender for a
purchase price equal to the outstanding principal amount of the
Revolving Loans payable to such Lender plus any accrued but unpaid
interest on such Revolving Loans, 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)
23
shall be payable by the Borrower as if the Borrower had prepaid the
Revolving Loans of such Lender rather than such Lender having assigned
its interest hereunder. The Borrower or such assignee shall pay the
applicable processing fee under Section 11.2 hereof.
4.8 SURVIVAL.
The agreements and obligations of the Borrower 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 Borrower 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
Borrower 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 Borrower and its Domestic
Subsidiaries party thereto and as required under the Applica Canada Security
Agreement as to Applica Canada.
5.2 FINANCIAL INFORMATION.
The Loan Parties shall promptly furnish to the Agent all such financial
information regarding any 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 detail as
the Agent or the Lenders shall request, the following:
(a) As soon as available, but in any event not later than
ninety (90) days after the close of each Fiscal Year, consolidated
audited balance sheets, income statements, cash flow statements and
changes in stockholders' equity for the Consolidated Members for such
Fiscal Year and consolidating unaudited balance sheets, income
statements and cash flow statements prepared in accordance with the
footnotes regarding condensed and consolidating financial statements in
the Borrower's financial statements filed with the SEC in relation to
the Debt evidenced by the Senior Subordinated Debt Offering Documents,
for the Consolidated Members for such Fiscal Year, and the accompanying
notes thereto, 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
24
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 by and, in the case of such
statements performed on a consolidated basis, accompanied by a report
thereon unqualified in any respect of independent certified public
accountants selected by the Borrower and reasonably satisfactory to the
Agent. Each Loan Party hereby authorizes the Agent to communicate,
together with a representative of the Borrower, 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 Borrower the finances and affairs of the
Consolidated Members.
(b) As soon as available, but in any event not later than
forty-five (45) days after the end of each fiscal quarter, consolidated
unaudited balance sheets, income statements and cash flow statements
for the Consolidated Members for such fiscal quarter and consolidating
unaudited balance sheets, income statements and cash flow statements
prepared in accordance with the footnotes regarding condensed and
consolidating financial statements in the Borrower's financial
statements filed with the SEC in relation to the Debt evidenced by the
Senior Subordinated Debt Offering Documents, for the Consolidated
Members for such 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 Borrower shall certify by
a certificate signed by its chief financial officer that all such
statements have been prepared in accordance with GAAP and present
fairly the Consolidated Members' financial position 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.
(c) As soon as available, but in any event not later than
thirty (30) days after the end of each month, consolidated unaudited
balance sheets of the Consolidated Members as at the end of such month,
and consolidated unaudited income statements and cash flow statements
for the Consolidated Members 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 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
Borrower shall certify by a certificate signed by
25
its chief financial officer that all such statements have been prepared
in accordance with GAAP and present fairly the Consolidated Members'
financial position 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.
(d) 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.
(e) With each of the annual audited Financial Statements
delivered pursuant to SECTION 5.2(A), and within 45 days after the end
of each fiscal quarter, a certificate of the chief financial officer of
the Borrower setting forth in reasonable detail the calculations
required to establish that the Loan Parties were in compliance with the
covenants set forth in SECTIONS 7.26 through 7.28 during the period
covered in such Financial Statements and as at the end thereof. Within
45 days after the end of each fiscal quarter, a certificate of the
chief financial officer of the Borrower 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 of its respective covenants and agreements
in this Agreement and the other Loan Documents, (C) no Default or Event
of Default then exists or existed during the period covered by the
Financial Statements for such fiscal quarter, (D) describing and
analyzing in reasonable detail all material trends, changes, and
developments in each and all Financial Statements or, alternatively,
refer to the applicable documents filed by the Borrower with the
Securities and Exchange Commission in accordance with the Exchange Act
including, but not limited to, sections of such filings entitled
"Management's Discussion and Analysis"; and (E) explaining the
variances of the figures in the corresponding budgets and prior Fiscal
Year financial statements. 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 Borrower has taken or proposes to take with respect thereto.
(f) No sooner than sixty (60) days prior to the beginning of
each Fiscal Year, annual forecasts (to include forecasted consolidated
balance sheets, income statements and cash flow statements) for the
Consolidated Members as at the end of and for each month of such Fiscal
Year. No later than thirty (30) days after the beginning of each Fiscal
Year, annual forecast statements of profits and losses
26
on a consolidating basis for the Loan Parties as at the end of and for
each month of such Fiscal Year.
(g) Promptly after filing with the PBGC and the IRS, a copy of
each annual report or other filing filed with respect to each Plan of
the Consolidated Members.
(h) 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 reports, notices, or statements sent by the Borrower to
holders of any equity interests of the Borrower (other than routine
non-material correspondence sent by the trustee under any indenture
under which the same is issued).
(i) As soon as available, but in any event not later than 15
days after any Loan Party's receipt thereof, a copy of all management
reports and management letters prepared by any independent certified
public accountants of any Loan Party.
(j) Promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which the Borrower
makes available to its shareholders.
(k) If requested by Agent in writing, promptly after filing
with the IRS, a copy of each tax return filed by the any Consolidated
Member.
(l) As soon as available, but in any event within 15 days
after the end of each month (for such month) (i) a Borrowing Base
Certificate supporting information in accordance with Section 9 of the
Security Agreement, (ii) a report showing the beginning and ending
balances of all intercompany loans, advances or investments
("Intercompany Accounts") for such month, and (iii) a calculation of
the Applica Canada Formula Amount and the Applica Consumer Products
Formula Amount as of the last day of such month.
(m) 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 Consolidated Member.
(n) On the last Business Day of each month, duplicate original
bank statements for the preceding month in respect of the Applica
Canada 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:
27
(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 Capital Stock of the Borrower or the holder of any Debt
of the Borrower or any Subsidiary in a face amount in excess of
$1,000,000 that a default exists with respect thereto or that any
Consolidated Member 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 Consolidated Member in a manner which could
reasonably be expected to have a Material Adverse Effect;
(f) Immediately after becoming aware of any violation of any
law, statute, regulation, or ordinance of a Governmental Authority
affecting the any Consolidated Member which could reasonably be
expected to have a Material Adverse Effect;
(g) Immediately after receipt of any notice of any violation
by the any Consolidated Member 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 Consolidated
Member is not in compliance with any Environmental Law or is
investigating any Consolidated Member;
(h) Immediately after receipt of any written notice that any
Consolidated Member is or may be liable to any Person as a result of
the Release or threatened Release of any Contaminant or that any
Consolidated Member 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
Consolidated Member;
28
(j) Any change in any Loan Party's name as it appears in the
state of its incorporation or other organization, state 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 create
Accounts, or to which instruments in payment of Accounts may be made
payable, in each case at least ten (10) days prior thereto, and, with
regard to any other Consolidated Member, such information as of the
first day of the following fiscal quarter;
(k) Within ten (10) Business Days after any Loan Party or any
ERISA Affiliate knows or has reason to know, 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 DOL, the PBGC 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, or the Pension Commission of Ontario 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 DOL or the IRS with
respect to each Plan and in the case of any 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 or the
Pension Commission of Ontario or any other applicable Governmental
Authority with respect to any Plan and all communications received by
the Borrower or any ERISA Affiliate from the PBGC, the DOL, the IRS or
the Pension Commission of Ontario 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 IRS or the Pension
Commission of Ontario 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 Plan or Multi-employer Plan and annual report for any
Multi-employer Plan; and within three (3) Business Days after receipt
thereof by a Loan Party or any ERISA Affiliate, copies of the
following: (i) any notices of the PBGC, the Pension Commission of
Ontario or any other applicable Governmental Authority intention to
terminate a Plan or to have a trustee appointed to administer such
Plan; (ii) any favorable or unfavorable determination letter from the
IRS, the Pension Commission of Ontario or any other applicable
Governmental Authority regarding the qualification of a Plan under
Section 401(a) of the Code, the PBA or
29
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 Plan which
increase a Loan Parties' annual costs with respect thereto by an amount
in excess of $500,000, or the establishment of any new Plan which could
reasonably be expected to have an annual aggregate cost of $500,000 or
more, or the commencement of contributions to any Plan to which the
Loan Parties or any ERISA Affiliate was not previously contributing; or
(ii) any 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 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 Borrower 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(E), 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 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 accepted in writing such revisions or updates to
any such schedules and (b) no such revisions or updates to SCHEDULES 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 accepted in writing such revisions or
updates to such schedule.
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ARTICLE 6
GENERAL WARRANTIES AND REPRESENTATIONS
Each Loan Party warrants and represents to Agent and the Lenders that,
after giving the effect to the Refinancing:
6.1 AUTHORIZATION, VALIDITY, AND ENFORCEABILITY OF THIS AGREEMENT AND
THE LOAN DOCUMENTS.
Each Obligated 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 Obligated 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 Obligated
Party, and, assuming this Agreement and the other Loan Documents constitute the
legal, valid and binding obligations of Agent, Bank and each of the Lenders
hereto, constitute the legal, valid and binding obligations of each Obligated
Party, enforceable against it in accordance with their respective terms. Each
Obligated 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 Obligated Party or any of its Subsidiaries, by reason of
the terms of (a) any contract, mortgage, lease, agreement, indenture, or
instrument to which such Obligated Party or any of its Subsidiaries is a party
or which is binding upon it, (b) any Requirement of Law applicable to the such
Obligated 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 Obligated 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 for those Liens identified in clauses (a),
(c), (d), (e), (g), (h) and (i) of the definition of Permitted Liens securing
all the Obligations, and enforceable against the Obligated Parties and all third
parties.
6.3 ORGANIZATION AND QUALIFICATION.
Each Obligated Party (a) is duly organized or incorporated and validly
existing in good standing under the laws of the state of its organization or
incorporation, (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
31
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 Borrower of each and all of the Borrower's 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 state of incorporation or
organization set forth on SCHEDULE 6.5, and (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 Borrower has 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 Members as of December 31, 2003, and for the Fiscal Year
then ended, accompanied by the report thereon of the Borrower's
independent certified public accountants, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP. The
Borrower has also delivered to the Agent and the Lenders the unaudited
balance sheet and related statements of income and cash flows for the
Consolidated Members as of August 31, 2004. Such financial statements
are attached hereto as EXHIBIT C. All such financial statements have
been prepared in accordance with GAAP (except for the quarterly or
monthly financial statements) and present accurately and fairly in all
material respects the financial position of the Consolidated Members as
at the dates thereof and their results of operations for the periods
then ended.
(b) The Latest Projections when submitted to the Agent as
required herein represent the Loan Party's good faith estimate of the
future financial performance of the Consolidated Members 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 to the Lenders.
6.7 [Reserved].
6.8 SOLVENCY.
Each Loan Party is Solvent prior to and after giving effect to the
Borrowings to be made on the Closing Date and the issuance of the Letters of
Credit to be issued on the Closing Date and shall remain solvent during the term
of this Agreement.
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6.9 DEBT.
After giving effect to the making of the Revolving Loans to be made 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.
Since December 31, 2003, no Distribution has been declared, paid, or
made upon or in respect of any Capital Stock of the Borrower.
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.
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. 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 and each Loan Party has good, indefeasible, and
merchantable title to all of its other property reflected on the December 31,
2003 Financial Statements delivered to Agent and the Lenders, except as disposed
of in the ordinary course of business since the date thereof, free of all Liens
except Permitted Liens.
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
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.
33
6.14 LITIGATION.
Except as set forth on SCHEDULE 6.14, there is no pending, or to the
knowledge of any Loan Party, there is not 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, as of the Closing Date (a) there
is no collective bargaining agreement or other 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.
6.16 ENVIRONMENTAL LAWS.
Except as otherwise disclosed on SCHEDULE 6.16:
(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.
(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
34
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 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 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 with respect to any 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 could reasonably be expected to
have a Material Adverse Effect.
6.19 ERISA 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 or state law, except where the lack of such
compliance could not reasonably be expected to have a Material Adverse
Effect. Each Plan which is intended to qualify under Section 401(a) of
the Code has received a favorable determination letter from the IRS and
to the best knowledge of the Loan Parties, nothing has
35
occurred which would cause the loss of such qualification. 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 Plan.
(b) There are no pending or, to the best 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; (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; and (vi) no Lien has arisen, ▇▇▇▇▇▇
or inchoate, in respect of a Loan Party or its property in connection
with any Plan (save for contributions amounts not yet due).
6.20 TAXES.
Each Loan Party has filed all federal, provincial, state and other tax
returns and reports required to be filed, and have paid all federal, provincial,
state and other taxes, assessments, fees and other governmental charges levied
or imposed upon them or their properties, income or assets otherwise due and
payable unless (i) such unpaid taxes and assessments would constitute a
Permitted Lien or (ii) such Taxes are being contested in good faith and there
are adequate reserves for such Taxes.
6.21 REGULATED ENTITIES.
No Consolidated Member nor any Person controlling a Consolidated Member
is an "Investment Company" within the meaning of the Investment Company Act of
1940. No Consolidated Member is subject to regulation under the Public Utility
Holding Company Act of 1935, 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.
36
6.22 MARGIN REGULATIONS.
No Consolidated Member 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 patents, trademarks, service marks, trade names, copyrights,
contractual franchises, licenses, rights of way, authorizations and other 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 Consolidated Members
infringes upon any rights held by any other Person which 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 the Borrower, threatened,
and no patent, invention, device, application, principle or any statute, law,
rule, regulation, standard or code is pending or, to the knowledge of the Loan
Parties, proposed, which, in either case, could reasonably be expected to have a
Material Adverse Effect.
6.24 MATERIAL AGREEMENTS.
SCHEDULE 6.24 hereto sets forth as of the Closing Date all Material
Contracts to which any Loan Party is a party or is bound as of the date hereof.
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 INVESTMENT PROPERTY.
(a) SCHEDULE 6.27 sets forth a correct and complete list of all
material Investment Property owned by each Loan Party. Each Loan Party is the
legal and beneficial owner of such Investment Property, as so reflected, free
and clear of any Lien (other than Permitted Liens), and has not sold, granted
any option with respect to, assigned or transferred, or otherwise disposed of
any of its rights or interest therein.
(b) To the extent any Loan Party is the owner of or becomes the issuer
of any Investment Property that is Collateral (each such Person which issues any
such Investment
37
Property being referred to herein as an "ISSUER"): (i) the Issuer's shareholders
that are Loan Parties and the ownership interest of each such shareholder are as
set forth on SCHEDULE 6.27, and each such shareholder is the registered owner
thereof on the books of the Issuer; (ii) the Issuer acknowledges the Agent's
Lien; (iii) to the extent required to perfect the Agent's Liens, such security
interest, collateral assignment, lien, and pledge in favor of the Agent has been
registered on the books of the Issuer for such purpose as of the date hereof,
and (iv) the Issuer is not aware of any liens, restrictions, or adverse claims
which exist on any such Investment Property other than the Agent's Lien.
6.28 NO MATERIAL ADVERSE CHANGE.
No Material Adverse Effect has occurred since December 31, 2003, except
as otherwise disclosed (a) in the Borrower's filings with the Securities and
Exchange Commission under the Exchange Act and (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.
38
6.31 ANTI-TERRORISM LAWS.
(a) GENERAL. No Loan Party or any of its Affiliates 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 Loan Party or any of its Affiliates 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;
(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 of its Affiliates (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 is in effect:
39
7.1 TAXES AND OTHER OBLIGATIONS.
Each Consolidated Member shall (a) file when due (after taking into
account any applicable extensions) all tax returns and other reports which it is
required to file; (b) pay, or provide for the payment, when due, of all taxes,
fees, assessments and other governmental charges against it or upon its
property, income and franchises, make all required withholding and other tax
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, 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 Consolidated Member need pay any tax, fee,
assessment, or governmental charge (i) it is contesting in good faith by
appropriate proceedings diligently pursued, (ii) as to which a Consolidated
Member has established proper reserves as required under GAAP, and (iii) the
nonpayment of which does not result in the imposition of a Lien (other than a
Permitted Lien).
7.2 LEGAL EXISTENCE AND GOOD STANDING.
Each Consolidated Member 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 Consolidated Member 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 Consolidated Member 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 Consolidated Member 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.
(a) Each Consolidated Member shall maintain all of its
respective property necessary and useful in the conduct of its
business, in good operating condition and repair in accordance with the
standard of the Borrower's industry and consistent with the Borrower's
or Subsidiary's past conduct, ordinary wear and tear excepted.
(b) Each Consolidated Member shall permit representatives and
independent contractors of the Agent or a Lender (in the case of the
Agent, at the expense of the Borrower not to exceed three (3) times per
calendar year for
40
field exams and appraisals of the Collateral within the United States
and Canada unless an Event of Default has occurred and is continuing,
and in the case of any Lender, at such Lender's expense) to visit and
inspect any of its properties, to appraise the Collateral, to examine
its corporate, financial and operating records, and make copies thereof
or abstracts therefrom and to discuss its affairs, finances and
accounts with its directors, officers and independent public
accountants, at such reasonable times during normal business hours and
as soon as may be reasonably desired, upon reasonable advance notice to
such Consolidated Member and such visits and inspections shall not
interfere materially with the business of any such Consolidated Member;
PROVIDED, that if the Borrower shall have maintained a Fixed Charge
Coverage Ratio of more than 1.0 to 1.0 for a period of at least 30
consecutive days, for so long thereafter that Borrower maintains such
Fixed Charge Coverage Ratio, the Borrower shall not be responsible for
the Agent's costs of more than two (2) such appraisals during any
calendar year; PROVIDED, FURTHER, that at any time an Event of Default
exists, the Agent or any Lender may do any of the foregoing at the
expense of the Loan Parties at any time during normal business hours
and without advance notice.
7.5 INSURANCE.
(a) Each Loan Party shall maintain with financially sound and
reputable insurers, and in the manners as are customarily insured
against by similar business owning such properties similarly situated,
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, as
Agent, in its discretion, or acting at the direction of the Required
Lenders, shall reasonably specify, in amounts, and under policies
reasonably acceptable to Agent and the Required Lenders. Without
limiting the foregoing, in the event that any Inventory or Equipment is
located within an area that has been identified by the Director of the
Federal Emergency Management Agency as a Special Flood Hazard Area
("SFHA"), the Loan Parties shall purchase and maintain flood insurance
on any such Equipment and Inventory located in a SFHA.
(b) Each of the Loan Parties shall cause Agent, for the
ratable benefit of Agent and the Lenders, to be named as secured party
or mortgagee and sole loss payee or additional insured on all insurance
policies covering Collateral, in a manner reasonably acceptable to
Agent. 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 stating that the
interest of Agent 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
41
permitted by such policy. All premiums for such insurance shall be paid
by the Borrower when due, and certificates of insurance and, if
requested by Agent or any Lender, 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. If any Loan Party
fails to procure such insurance or to pay the premiums therefor when
due, the Agent may, and at the direction of the Required Lenders shall,
do so from the proceeds of Revolving Loans.
7.6 INSURANCE AND CONDEMNATION PROCEEDS.
Each Loan Party shall promptly upon becoming aware, notify Agent and
the Lenders of any material loss, damage, or destruction to the Collateral,
whether or not covered by insurance. Agent is hereby authorized to collect all
insurance and condemnation proceeds in respect of Collateral directly and to
apply or remit them as follows:
(i) With respect to insurance and condemnation
proceeds relating to Collateral other than Fixed Assets, 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.
(ii) With respect to insurance and condemnation
proceeds relating to Collateral consisting of Fixed Assets,
the Agent shall permit or require affected Loan Party to use
such proceeds, or any part thereof, to replace, repair,
restore or rebuild the relevant Fixed Assets in a diligent and
expeditious manner with materials and workmanship of
substantially the same quality as existed before the loss,
damage or destruction so long as (1) no Default or Event of
Default has occurred and is continuing, (2) the aggregate
proceeds do not exceed $500,000 and (3) such Loan Party first,
for such repairs using insurance and condemnation proceeds in
excess of $100,000 (i) provides Agent and the Required Lenders
with plans and specifications for any such repair or
restoration which shall be reasonably satisfactory to Agent
and the Required Lenders and (ii) demonstrates to the
reasonable satisfaction of Agent and the Required Lenders that
the funds available to it will be sufficient to complete such
project in the manner provided therein. In all other
circumstances, the Agent shall apply such insurance and
condemnation proceeds, ratably, to the reduction of the
Obligations in the order provided for in SECTION 3.9.
7.7 ENVIRONMENTAL LAWS.
(a) Each Loan Party shall conduct, and shall cause each other
Consolidated Member 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.
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Each Loan Party shall take, and shall cause each other Consolidated
Member 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.
(b) Without limiting the generality of the foregoing, each
Loan Party shall submit to the Agent and the Lenders annually,
commencing on the first Anniversary Date, and on each Anniversary Date
thereafter, an update of the status of each material environmental
compliance or liability issue, if any, concerning any Consolidated
Member or any of their respective properties or operations (whether
past or present). Agent or any Lender may request, in which case the
Loan Parties will promptly furnish or cause to be furnished to Agent,
copies of technical reports prepared by the Borrower and its
communications with any Governmental Authority to determine whether the
Borrower or any of its Subsidiaries is proceeding reasonably to
correct, cure or contest in good faith any such alleged non-compliance
or environmental liability. Where a material non-compliance or alleged
non-compliance by a Governmental Authority with Environmental Laws has
occurred, the Loan Parties shall, at Agent's or the Required Lenders'
request and at the Loan Parties' expense, (i) retain an independent
environmental engineer acceptable to Agent to evaluate the site,
including tests if appropriate, and prepare and deliver to Agent, in
sufficient quantity for distribution by Agent to the Lenders, a report
setting forth the results of such evaluation, a proposed plan for
responding to any environmental problems described therein, and an
estimate of the costs thereof, and (ii) provide to Agent and the
Lenders a supplemental report of such engineer whenever the scope of
the environmental problems, or the response thereto or the estimated
costs thereof, shall increase in any material respect.
(c) The Agent and its representatives will have the right at
any reasonable time (accompanied by a representative of the Borrower)
to enter and visit the Real Estate and any other place where any
property of any Consolidated Member is located for the purposes of
observing the Real Estate, taking and removing soil or groundwater
samples, and conducting tests on any part of the Real Estate. The Agent
is under no duty, however, to visit or observe the Real Estate or to
conduct tests, and any such acts by the Agent will be solely for the
purposes of protecting the Agent's Liens and preserving the Agent and
the Lenders' rights under the Loan Documents. No site visit,
observation or testing by the Agent and the Lenders will result in a
waiver of any Default or Event of Default or impose any liability on
the Agent or the Lenders. In no event will any site visit, observation
or testing by the Agent be a representation that hazardous substances
are or are not present in, on or under the Real Estate, or that there
has been or will be compliance with any Environmental Law. No
Consolidated Member nor any other party is entitled to rely on any site
visit, observation or testing by the Agent. The Agent and the Lenders
owe no duty of care to protect the Consolidated Members or any other
party against, or to inform any Consolidated Member or any other party
of, any hazardous substances or any
43
other adverse condition affecting the Real Estate. The Agent may in its
discretion disclose to a Consolidated Member or to any other party if
so required by law any report or findings made as a result of, or in
connection with, any site visit, observation or testing by the Agent.
The Loan Parties understand and agree that the Agent makes no warranty
or representation to the Consolidated Members or any other party
regarding the truth, accuracy or completeness of any such report or
findings that may be disclosed. The Loan Parties also understands that
depending on the results of any site visit, observation or testing by
the Agent and disclosed to any Consolidated Member, a Consolidated
Member may have a legal obligation to notify one or more environmental
agencies of the results, that such reporting requirements are
site-specific, and are to be evaluated by the Consolidated Members
without advice or assistance from the Agent. In each instance, the
Agent will give the Borrower reasonable notice before entering the Real
Estate or any other place the Agent is permitted to enter under this
SECTION 7.7(C). The Agent will make reasonable efforts to avoid
interfering with any Consolidated Member's use of the Real Estate or
any other property in exercising any rights provided hereunder.
7.8 COMPLIANCE WITH ERISA.
Except as could not reasonably be expected to have a Material Adverse
Effect, the 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; (e) not engage in a transaction that could be subject to Section 4069
or 4212(c) of ERISA and (f) not permit any Lien, ▇▇▇▇▇▇ or inchoate, to arise or
exist in connection with any Plan (save for contribution amounts not yet due).
7.9 MERGERS, CONSOLIDATIONS AND SALES.
No Loan Party shall enter into any transaction of merger,
reorganization, or consolidation, or transfer, sell, assign, lease as lessor, or
otherwise dispose of all or any part of its property, or wind up, liquidate or
dissolve, or agree to do any of the foregoing, except (a) for sales of Inventory
in the ordinary course of its business; (b) dispositions of Equipment which (i)
is replaced with Equipment of like kind, function and value, provided the
replacement Equipment shall be acquired prior to or substantially
contemporaneously with any disposition of the Equipment that is to be replaced,
and the replacement Equipment shall be free and clear of Liens other than
Permitted Liens or (ii) are in the ordinary course of its business that is
obsolete or no longer useable by the Borrower in its business with an orderly
liquidation value not to exceed $500,000 in any Fiscal Year; (c) dispositions of
accounts receivable pursuant to any Approved Receivables Program, including a
Factoring Agreement; or (d) the Permitted Mexico Facility Disposition; PROVIDED,
that (i) any Guarantor may merge or transfer all or any part of its
44
assets into or consolidate with a Loan Party, in each case, provided the
requirements of the Security Agreement are complied with as of the effective
date of the consummation of such merger, (ii) any Guarantor may merge into
another Person that is not a Subsidiary prior to such merger whereby such other
Person is the surviving corporation provided the requirements of the Security
Agreement and Section 7.24 hereof are complied with and such other Person
becomes a Subsidiary as of the effective date of the consummation of such merger
and that such merger would be a Permitted Acquisition but for the Subsidiary not
being the surviving corporation, and (iii) the Loan Parties may make a Permitted
Acquisition. Notwithstanding the foregoing or any other provision of this
Agreement, as long as no Default or Event of Default exists or would result
therefrom and provided the Borrower gives the Agent and the Lenders prior
written notice: (x) a Loan Party, other than the Borrower, may wind-up,
dissolve, or liquidate if (i) its property is transferred to the Borrower or
another Loan Party and (ii) the Person acquiring such property complies with its
obligations under SECTION 3.4 and SECTION 7.31 simultaneously with such
acquisition; and (y) a Loan Party, other than the Borrower, may merge or
consolidate with the Borrower or another Loan Party (provided the Borrower or
such other Loan Party is the survivor of any such merger or consolidation to
which it is a party).
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 Distributions by a Loan
Party to another Loan Party, (ii) make any change in its capital structure which
could have a Material Adverse Effect or (iii) make any Restricted Investment.
7.11 RESERVED.
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, or (b) unsecured
Guaranties of Debt incurred by a Foreign Subsidiary in an aggregate principal
amount at any time outstanding not to exceed $40,000,000.
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 $5,000,000 at any time; (d) Debt consisting
of intercompany loans and advances made between the Loan Parties to the extent
consistent with SECTION 7.29; (e) Debt evidencing a 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,
45
(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 refunding, renewal or extension are not materially less favorable to such
Consolidated Member, 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) Approved Receivables Programs to the extent approved by the Required
Lenders; and (j) other unsecured Debt in an aggregate principal amount at any
time outstanding not to exceed $1,000,000.
7.14 PREPAYMENT.
No Loan Party shall prepay voluntarily any Debt, except (a) the
Obligations in accordance with the terms of this Agreement, (b) in connection
with the Refinancing, or (c) a Permitted Senior Subordinated Debt Prepayments.
7.15 TRANSACTIONS WITH AFFILIATES.
Except as permitted under SECTION 7.9, SECTION 7.10, SECTION 7.12 or
SECTION 7.13 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
except for Permitted Officer Severance Payments, 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 Consolidated Member may engage in transactions with an Affiliate
in the ordinary course of such Consolidated Member's business consistent with
past practices and upon terms no less favorable to such Consolidated Member 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 LOAN PARTY GUARANTIES.
Each Loan Party other than the Borrower shall guarantee payment and
performance of the Obligations pursuant to a Guaranty Agreement (including,
without limitation, the Applica Canada Guaranty) in form and substance
satisfactory to the Agent, duly executed by each such Loan Party.
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7.19 [RESERVED].
7.20 INVESTMENT BANKING AND FINDER'S FEES.
No Consolidated Member 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 Consolidated Member 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 Consolidated Members shall not and shall not permit any of its
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.
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 SALE AND LEASEBACK TRANSACTIONS.
No Loan Party shall, directly or indirectly, enter into any arrangement
with any Person providing for a Loan Party to lease or rent property that a Loan
Party has sold or will sell or otherwise transfer to such Person, except with
respect to the Permitted Mexico Facility Disposition.
7.24 NEW SUBSIDIARIES.
The Loan Parties shall not, directly or indirectly, organize, create,
acquire, or permit to exist any Subsidiary except as 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 the Lenders a Pledge Agreement with respect to the Capital Stock of
such New Subsidiary substantially in the form of the Pledge Agreement executed
and delivered to Agent on the Closing Date within thirty (30) Business Days of
the acquisition or creation of a Subsidiary; provided, however, that if such New
Subsidiary is a Foreign Subsidiary, such pledge of Capital Stock shall be
limited to 65% of the outstanding voting stock of such New Subsidiary and shall
only be required if it is a Direct Foreign Subsidiary; (b) in the event of the
acquisition or creation of any Domestic Subsidiary, cause to be delivered to the
Agent for the benefit of the Lenders each of the following, in each case to be
duly executed and delivered by such Subsidiary within thirty (30) Business Days
of the acquisition or creation of such Subsidiary: (i) a Subsidiary Guaranty;
(ii) a security agreement in substantially the form of the
47
Security Agreement; (iii) if such Subsidiary has any material leased locations,
a Collateral Access Agreement with respect thereto; and (iv) if such Subsidiary
owns any real property, a Mortgage executed by such Subsidiary in form and
substance acceptable to the Agent; 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 Agent
and the 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 laws, 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, Security Agreement and Pledge Agreement.
7.25 FISCAL YEAR.
The Borrower shall not change and shall not permit the Loan Parties to
change its Fiscal Year.
7.26 SENIOR SUBORDINATED DEBT.
On or before April 30, 2008, the Borrower shall have retired, defeased,
refinanced (on terms reasonably acceptable to the Required Lenders) the Senior
Subordinated Debt or extended the maturity date of the Senior Subordinated Debt
beyond the Stated Termination Date.
7.27 MINIMUM FIXED CHARGE COVERAGE RATIO.
On each Measurement Date, the Borrower shall maintain a Fixed Charge
Coverage Ratio of not less than 1.0 to 1.0 as of the end of each month,
calculated as of the last day of each month for the period of twelve months then
ending. Once activated, the Fixed Charge Coverage Ratio requirement of this
Section 7.27 shall remain in effect until such time as (a) Borrower has
maintained the required Average Monthly Excess Availability for 2 consecutive
calendar months and (b) no Default or Event of Default then exists.
7.28 USE OF PROCEEDS.
The Loan proceeds shall be used by the Borrower solely for one or more
of the following purposes: (i) to satisfy in full and terminate any and all
obligations of the Borrower and its respective Subsidiaries under the Original
Credit Agreement (the "Refinancing"), (ii) to satisfy reimbursement Debt in
respect of Letters of Credit and (iii) to finance the ongoing working capital
and other general corporate purposes of the Borrower, Applica Consumer Products
to the extent of the Applica Consumer Products Formula Amount at any date, and
Applica Canada to the extent of the Applica Canada Formula Amount at
48
any date. The financing of the ongoing working capital and other general
corporate purposes of Loan Parties other than the Borrower, Applica Consumer
Products and Applica Canada shall be provided solely by Applica Consumer
Products to the extent expressly permitted under the terms of this Agreement. 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, other than a Permitted
Acquisition.
7.29 CHANGES TO SENIOR SUBORDINATED DEBT OFFERING DOCUMENTS.
The Loan Parties shall not modify or amend the terms of the Senior
Subordinated Debt Offering Documents if the effect of such amendment is to: (a)
increase the maximum principal amount of the Debt thereunder or the interest
rate payable in respect thereof; (b) change the dates upon which payments of
principal or interest are due under the Senior Subordinated Debt Offering
Documents; (c) modify any event of default or add any covenant with respect to
such Debt; (d) modify the payment, redemption or prepayment provisions of such
Debt; (e) modify the subordination provisions under the Senior Subordinated Debt
Offering Documents; or (f) modify any other term of the Senior Subordinated Debt
Offering Documents if such modification would materially increase the
obligations of any obligor thereunder or confer additional material rights to
the holder of such Debt in a manner adverse to the Loan Parties, the Borrower,
or any of the other Consolidated Members, Agent or any Lender.
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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 INTERCOMPANY SECURITY INTEREST.
At any time that Applica Consumer Products shall have a Tangible Net
Worth of less than $250,000,000, upon Agent's request the Loan Parties shall
enter into security agreements pursuant to which each Loan Party other than the
Borrower shall grant to the Borrower a security interest in the Collateral to
secure all Intercompany Accounts owing by them from time to time to the Borrower
and the Borrower shall collaterally assign such security interest to the Agent
for the benefit of the Lenders as additional security for the Obligations.
7.32 APPLICA CANADA BLOCKED ACCOUNT.
For so long as (i) no Event of Default has occurred and is continuing
and (ii) Availability is not less than $10,000,000, Applica Canada may retain
all cash balances contained in the Applica Canada Blocked Account. After the
occurrence of an Event of Default or at any time on or after the date on which
Availability is less than $10,000,000, Applica Canada shall not be entitled to
retain any such balances and the Agent shall have the sole and exclusive right
to withdraw funds from time to time in the Applica Canada Blocked Account and
all amounts so collected by the Agent shall be applied to the Payment Account in
accordance with Section 3.7.
7.33 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.
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ARTICLE 8
CONDITIONS OF LENDING
8.1 CONDITIONS PRECEDENT TO MAKING OF LOANS ON THE CLOSING DATE.
The obligation of the Lenders to make the initial Loans on the Closing
Date, and the obligation of the Agent to cause the Letter of Credit Issuer to
issue any Letter of Credit or Credit Support on the Closing Date, are subject to
the following conditions precedent having been satisfied in a manner
satisfactory to the Agent and each Lender, to the extent not previously
satisfied in connection with the Original Credit Agreement:
(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) certified copies of the certificate of
incorporation, certificate of the 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 certified certificate of incorporation,
certificate of limited partnership, or comparable
organizational document for such Loan Party to the extent not
provided on the Closing Date, may be provided within thirty
(30) days of the Closing Date, PROVIDED that 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 Borrower, to request Borrowings and
the issuance of Letters of Credit or Credit Support;
(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 standing for any Loan Party from a Governmental
Authority other than the jurisdiction of its organization 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 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
51
Documents, and with respect to the Borrower, the Borrowings
and the issuance of Letters of Credit and/or Credit Support;
(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
and the issuance of any Letter(s) of Credit and/or
Credit Support at such time,
(B) stating that no Default or Event of
Default exists,
(C) specifying the account of the Borrower
which is a Designated Account, and
(D) certifying as to such other factual
matters as may be reasonably requested by the Agent;
(vii) with respect to any Letter of Credit or Credit
Support to be issued, all documentation required by SECTION
1.4, duly executed and delivered by each Loan Party, complying
with the requirements of such Section;
(viii) (A) UCC or PPSA financing statements and/or
amendments to existing UCC or PPSA financing statements with
respect to all Collateral as may be requested by the Agent
(and in all events in each state of incorporation of an
Obligated Party), 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 located
in, or organized under the laws of, Canada and all filings and
recordations required by Requirements of Law of Canada
(including without limitation under the PPSA and RDPRM),
respectively, 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 without
limitation, Accounts and Deposit Accounts of such Loan Party;
(ix) (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 without limitation 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
52
and satisfy all Liens, except Permitted Liens, on all the
Collateral, including without limitation, the Accounts and
Deposit Accounts of any Loan Party;
(x) as may be required by the Agent in its
discretion, notifications of security interests, in patents,
trademarks and copyrights under the Security Agreement, as
applicable, with respect to any and all Proprietary Rights, if
any, owned by any Loan Party which must be registered with any
Governmental Authority to perfect the Agent's Liens in such
Proprietary Rights, duly executed by each such Consolidated
Member, as applicable;
(xi) each Guaranty Agreement (including the Applica
Canada Guarantee), duly executed and delivered by each Person
required pursuant to SECTION 7.18;
(xii) (A) stock certificates and stock powers (duly
executed in blank) for all Capital Stock (to the extent
certificated) owned by a Loan Party in any Loan Party, in form
and substance satisfactory to the Agent and (B) as may be
required by the Agent in its discretion, "control" agreements
(pursuant to the UCC), each duly executed, as the Agent may
request with respect to any other Investment Property listed
in SCHEDULE 6.27;
(xiii) a Borrowing Base Certificate effective as of
the Business Day preceding the day such initial Loans are to
be funded or any such Letter of Credit or Credit Support is to
be issued;
(xiv) as requested by the Agent in its discretion, a
landlord's or mortgagee's waiver and consent agreement, in
form and substance reasonably acceptable to the Agent, duly
executed on behalf of each landlord or mortgagee, as the case
may be, of Real Estate on which any Collateral is located
PROVIDED, that the Agent may, in its discretion, establish,
without duplication, a reserve in an amount equal to three (3)
months rent with respect to the Collateral located on any Real
Estate for which the Agent has not received an acceptable
waiver and consent agreement);
(xv) Each Blocked Account Agreement (including each
Applica Canada Blocked Account Agreement) duly executed as
required by the Security Agreement;
(xvi) the Applica Canada Security Agreement duly
executed and delivered by Applica Canada;
(xvii) (A) the Agent shall have received satisfactory
evidence that the Agent has a valid, exclusive (other than
Permitted Liens), and perfected first priority security
interest, lien, collateral assignment, and pledge as of such
date in
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all Collateral as security for all Obligations, to the extent
any such Liens may be perfected under the UCC (excluding any
Liens on vehicles for which a certificate of title has been
issued and Liens perfected solely by possession, but only to
the extent the Agent has not requested perfection of its Liens
in such vehicles or possession of such Collateral) and (B)
with respect to any Loan Party located in, or organized under
the laws of Canada, the Agent shall have received satisfactory
evidence that the Agent has a valid, exclusive (other than
Permitted Liens), and perfected first priority Lien in all
personal Property of any such Loan Party, to the extent any
such Liens may be perfected under the Requirements of Law of
Canada including without limitation under the PPSA and other
applicable law respectively, as the case may be, in each case
in form and substance satisfactory to the Agent; PROVIDED
FURTHER, that upon the Agent's request, the Loan Parties shall
provide any additional agreement, document, instrument,
certificate, or other item relating to any Collateral as may
be required for perfection under any Requirement of Law;
(xviii) opinions of counsel for the Loan Parties,
each such opinion to be in a form, scope, and substance
reasonably satisfactory to the Agent, the Lenders, and their
respective counsel; and
(xix) such other documents and instruments as the
Agent or any Lender may reasonably request.
(b) After giving effect to the making of all Loans (including
any Loans made to finance payment or reimbursement for fees, costs, and
expenses then payable under or pursuant to this Agreement) and issuance
of all Letters of Credit and Credit Support and with all of their
obligations current, the Loan Parties shall have remaining Availability
in an amount not less than $25,000,000 on the Closing Date.
(c) All representations and warranties made hereunder and in
the other Loan Documents shall be true and correct as if made on the
Closing Date.
(d) No Event of Default shall exist or would exist after
giving effect to the Refinancing, the Loans to be made and the Letters
of Credit and Credit Support to be issued.
(e) Subject to Section 13.7 hereof, the Loan Parties shall
have paid all fees and expenses of Agent and the Attorney Costs
incurred in connection with any of the Loan Documents and the
transactions contemplated thereby to the extent invoiced.
(f) Agent shall have received evidence, in form, scope, and
substance, reasonably satisfactory to the Agent, of all insurance
coverage as required by this Agreement.
54
(g) 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.
(h) 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.
The acceptance by the Borrower of any Loans made or Letters of Credit or Credit
Support issued on the Closing Date 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 Loans or issuance of such Letters of Credit or
Credit Support 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.
8.2 Conditions Precedent to Each Loan.
The obligation of the Lenders to make each Loan, including the initial
Loans on the Closing Date, and the obligation of the Agent to cause the Letter
of Credit Issuer to issue any Letter of Credit or Credit Support shall be
subject to the further conditions precedent that on and as of the date of any
such extension of credit the following statements shall be true, and the
acceptance by the Borrower of any extension of credit shall be deemed to be a
statement to the effect set forth in clause (a), clause (b), and clause (c)
following with the same effect as the delivery to the Agent and the Lenders of a
certificate signed by a Responsible Officer of the Loan Parties, dated the date
of such extension of credit, stating that:
(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;
(b) No Default or Event of Default has occurred and is
continuing, or would result from such proposed Borrowing; and
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(c) The proposed Borrowing will not cause the aggregate
principal amount of all outstanding Revolving Loans PLUS the aggregate amount
available for drawing under all outstanding Letters of Credit and in respect of
any Credit Support, to exceed the Borrowing Base or the combined Commitments of
the Lenders.
Except as provided by SECTION 11.1(A), no Borrowing or issuance of any Letter of
Credit or Credit Support shall exceed the Availability, PROVIDED, HOWEVER, that
the foregoing conditions precedent are not conditions to the requirement for
each Lender participating in or reimbursing the Bank or the Agent for such
Lenders' Pro Rata Share of any Non-Ratable Loan or Agent Advance made in
accordance with the provisions of SECTION 1.2(H) and SECTION 1.2(I).
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 Borrower 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 Consolidated Member 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(L), 7.2, 7.5, 7.9-7.31, or Section 11 of the Security
Agreement, (ii) any default shall occur in the observance or
performance of any of the covenants and agreements contained in
SECTIONS 5.2 (A)-(F) OR 5.3 (A)-(J) 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 (including in respect of any Bank Products) 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 Borrower evidenced by or arising under the
Senior Subordinated Debt Offering Documents or (ii) any Debt (other
than the Obligations and Debt contemplated by clause (i) hereof) of any
Loan Party in an outstanding principal
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amount which exceeds $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 federal Bankruptcy Code, as amended, or under any other bankruptcy,
insolvency, liquidation, winding up, corporate or similar act or law,
provincial, state or federal (including without limitation, the BIA or
the Companies' Creditors Arrangement Act (Canada)), 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, 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 federal Bankruptcy Code, as amended, or under
any other bankruptcy, insolvency, liquidation, winding up, corporate or
similar act or law (including, without limitation, the BIA or the
Companies' Creditors Arrangement Act (Canada)), provincial, state or
federal, 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, 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 state law or shall be liquidated,
dissolved or wound-up or shall commence or have commenced against it
any action or proceeding for dissolution,
57
winding-up or liquidation, or shall take any corporate action in
furtherance thereof, except as permitted under Section 7.9(x);
(i) all or any material part of the property of any Loan Party
shall be nationalized, expropriated or condemned, seized 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 shall be terminated, revoked or declared
void or invalid or unenforceable 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 Loan Party involving in the aggregate
liability for all Loan Party (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute
coverage) as to any single or related or unrelated series of
transactions, incidents or conditions, of $1,000,000 or more, and,
whether or not covered by insurance, the same 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 a judgment, order, decree or arbitration award is entered
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 or state racketeering 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 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
58
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
$500,000; (ii) the aggregate amount of Unfunded Pension Liability among
all Pension Plans at any time exceeds $500,000; (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 in an aggregate amount in excess of $500,000; or
(iv) any Lien (save for contribution amounts not yet due) arises in
connection with any Plan;
(q) (i) there occurs a Change of Control of the Borrower or
(ii) any Loan Party or any Foreign Subsidiary ceases to be a
Wholly-Owned Subsidiary;
(r) the Black & ▇▇▇▇▇▇ License Agreement shall be terminated,
revoked or declared void or invalid or unenforceable for any reason; or
(s) there occurs an event having a Material Adverse Effect.
9.2 REMEDIES.
(a) If a Default or an Event of Default exists, 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 Borrower: (i) reduce the Maximum
Revolver Amount, or the advance rates against Eligible Accounts and/or
Eligible Inventory used in computing the Borrowing Base, or reduce one
or more of the other elements used in computing the Borrowing Base;
(ii) restrict the amount of or refuse to make Revolving Loans; and
(iii) restrict or refuse to provide Letters of Credit or Credit
Support. If an Event of Default exists, the Agent shall, at the
direction of the Required Lenders, do one or more of the following, in
addition to the actions described in the preceding sentence, at any
time or times and in any order, without notice to or demand on the
Borrower: (A) terminate the Commitments and 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), or 9.1(H), the Commitments shall
automatically and immediately expire and all Obligations shall
automatically become immediately due and payable without notice or
demand of any kind; (C) require the Loan Parties to cash collateralize
all outstanding Letter of Credit Obligations in an amount not less than
105% of the outstanding face amount of such Letter of Credit
Obligations and, if the Loan Parties fail to make such deposit
promptly, the
59
Lenders may (and shall upon the direction of the Required Lenders)
advance such amount as a Revolving Loan (whether or not such loan would
be in excess of the Borrowing Base). Any such deposit or advance shall
be held by the Agent as a reserve to fund future payments on any Letter
of Credit Obligations; and (D) pursue its other rights and remedies
under the Loan Documents and applicable law.
(b) 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 AND TERMINATION.
The term of this Agreement shall end on the Stated Termination Date
unless sooner terminated in accordance with the terms hereof. The Agent upon
direction from the Required Lenders shall terminate this Agreement without
notice upon the occurrence of an Event of Default. Upon the effective date of
termination of this Agreement for any reason whatsoever, all Obligations
(including all unpaid principal, accrued and unpaid interest and any early
termination or prepayment fees or penalties) shall become immediately due and
payable and the Loan Parties shall immediately arrange for the cancellation and
return of Letters of Credit then outstanding. 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).
ARTICLE 11
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
11.1 AMENDMENTS AND WAIVERS.
(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) and the Loan
Parties and then any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given;
PROVIDED, HOWEVER, that no such waiver, amendment, or consent shall,
unless in writing and signed by all the Lenders and the Loan Parties
and acknowledged by the Agent, do any of the following:
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(i) increase or extend the Commitment of any Lender),
except as expressly provided in SECTION 1.3;
(ii) 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;
(iii) 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;
(iv) change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Loans which is
required for the Lenders or any of them to take any action
hereunder;
(v) increase any of the percentages set forth in the
definition of the Borrowing Base or in Section 1.2(i);
(vi) amend this Section or any provision of this
Agreement providing for consent or other action by all
Lenders;
(vii) release any Loan Parties from their obligations
under this Agreement or any of the other Loan Documents,
release any Guaranties of the Obligations or release
Collateral other than as permitted by SECTION 12.11;
(viii) amend the definition of "Required Lenders;"
(ix) increase the Maximum Revolver Amount, the
Maximum Inventory Loan Amount, Letter of Credit Subfacility or
the maximum permitted amount of Non-Ratable Loans;
(x) reduce, amend, waive or eliminate the minimum
Availability requirement set forth in Section 7.28; or
(xi) amend the definition of "Borrowing Base" (other
than reduce the advance rates set forth therein) or
"In-Transit Inventory."
PROVIDED, HOWEVER, the Agent may, in its sole discretion and notwithstanding the
limitations contained in CLAUSES (V) and (XI) above and any other terms of this
Agreement, make Agent Advances in accordance with SECTION 1.2(I) and, PROVIDED
FURTHER, that no amendment, waiver or consent shall, unless in writing and
signed by the Agent, affect the rights or duties of the Agent under this
Agreement or any other Loan Document and PROVIDED FURTHER, that SCHEDULE 1.2
hereto (Commitments) may be amended from time to time by Agent alone to reflect
assignments of Commitments in accordance herewith.
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(b) If, in connection with any proposed amendment, waiver or
consent (a "Proposed Change") requiring the consent of all Lenders, the
consent of Required Lenders is obtained, but the consent of other
Lenders is not obtained (any such Lender whose consent is not obtained
as described in this clause (c) being referred to as a "Non-Consenting
Lender"), then, so long as the Agent is not a Non-Consenting Lender, at
the Loan Parties' request, the Agent or an Eligible Assignee shall have
the right (but not the obligation) with the Agent's approval, to
purchase from the Non-Consenting Lenders, and the Non-Consenting
Lenders agree that they shall sell, all the Non-Consenting Lenders'
Commitments for an amount equal to the principal balances 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 Assignment and Acceptance
Agreement(s), 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), assign
and delegate to one or more Eligible Assignees (provided that no
consent of the Agent shall be required in connection with any
assignment and delegation by a Lender to another Lender or an Affiliate
of 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 $10,000,000 (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 $10,000,000; 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 F ("ASSIGNMENT AND
ACCEPTANCE") together with any note or notes subject to such assignment
and (iii) except for an assignment to an Affiliate, the assignor Lender
or Assignee has paid to the Agent a processing fee in the amount of
$3,500.
(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, including, but not limited to, the obligation
to participate in Letters of Credit and Credit Support have been
assigned to it pursuant to such Assignment and Acceptance, shall have
the rights
62
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 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, 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 Consolidated Members 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 and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender PRO TANTO.
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(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of a
Consolidated Member (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.
ARTICLE 12
THE AGENT
12.1 APPOINTMENT AND AUTHORIZATION.
Each Lender hereby designates and appoints Bank 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. 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, Bank, any Lender, any Letter of
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Credit Issuer 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 (a) the determination of the applicability of
ineligibility criteria with respect to the calculation of the Borrowing Base,
(b) the making of Agent Advances pursuant to Section 1.2(i), and (c) 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.
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.
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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
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
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necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Borrower. 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 13.11; 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 resulting 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, 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 Bank and its 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 Consolidated Members and their Affiliates as though
the Bank were not the Agent hereunder and without notice to or consent of the
Lenders. The Bank or its Affiliates may receive information regarding the
Consolidated Members, their Affiliates and Account Debtors (including
information that may be subject to confidentiality obligations in favor of the
Consolidated Members) and acknowledge that except as required by the Loan
Documents and applicable law, the Agent and the Bank shall be under no
obligation to provide such information to them. With respect to its Loans, the
Bank 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 Bank in its individual capacity.
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12.9 SUCCESSOR AGENT.
The Agent may resign as Agent upon at least 30 days' prior notice to
the Lenders and the Borrower, such resignation to be effective upon the
acceptance of a successor agent to its appointment as Agent. In the event the
Bank sells all of its Commitment and Revolving Loans as part of a sale, transfer
or other disposition by the Bank of substantially all of its loan portfolio, the
Bank 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 Borrower 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 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.
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(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 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 a Loan Parties and Agent with the appropriate form pursuant to
this Section 12.10 hereof (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
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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 termination of the Commitments and payment
and satisfaction in full of all Loans and reimbursement obligations in
respect of Letters of Credit and Credit Support, and the termination of
all outstanding Letters of Credit (whether or not any of such
obligations are due) and all other Obligations; (ii) constituting
property being sold or disposed of if the Loan Party certifies to the
Agent that the sale or disposition is made in compliance with SECTION
7.9 and SECTION 3.5 (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 an
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 $1,000,000 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 $2,000,000 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.
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(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 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 an Loan
Party or any accounts of an 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
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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 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 Revolving 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 funded portion of the Revolving Loans is
intended by the Lenders to be equal at all times to such Lender's Pro
Rata Share of the outstanding Revolving Loans. Notwithstanding such
agreement, the Agent, the Bank, and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by the Loan
Parties or any other Consolidated Member) that in order to facilitate
the administration of this Agreement and the other Loan Documents,
settlement among them as to the Revolving Loans, the Non-Ratable Loans
and the Agent Advances shall take place on a periodic basis in
accordance with the following provisions:
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(ii) The Agent shall request settlement
("Settlement") with the Lenders on at least a weekly basis, or
on a more frequent basis at Agent's election, (A) on behalf of
the Bank, with respect to each outstanding Non-Ratable Loan,
(B) for itself, with respect to each Agent Advance, and (C)
with respect to collections received, in each case, by
notifying the Lenders of such requested Settlement by
telecopy, telephone or other similar form of transmission, of
such requested Settlement, no later than 12:00 noon (Atlanta,
Georgia time) on the date of such requested Settlement (the
"Settlement Date"). Each Lender (other than the Bank, in the
case of Non-Ratable Loans and the Agent in the case of Agent
Advances) shall transfer the amount of such Lender's Pro Rata
Share of the outstanding principal amount of the Non-Ratable
Loans and Agent Advances with respect to each Settlement to
the Agent, to Agent's account, not later than 2:00 p.m.
(Atlanta, Georgia time), on the Settlement Date applicable
thereto. Settlements may occur during the continuation of a
Default or an Event of Default and whether or not the
applicable conditions precedent set forth in ARTICLE 8 have
then been satisfied. Such amounts made available to the Agent
shall be applied against the amounts of the applicable
Non-Ratable Loan or Agent Advance and, together with the
portion of such Non-Ratable Loan or Agent Advance representing
the Bank's Pro Rata Share thereof, shall constitute Revolving
Loans of such Lenders. If any such amount is not transferred
to the Agent by any Lender on the Settlement Date applicable
thereto, the Agent shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the
Federal Funds Rate for the first three (3) days from and after
the Settlement Date and thereafter at the Interest Rate then
applicable to the Revolving Loans (A) on behalf of the Bank,
with respect to each outstanding Non-Ratable Loan, and (B) for
itself, with respect to each Agent Advance.
(iii) Notwithstanding the foregoing, not more than
one (1) Business Day after demand is made by the Agent
(whether before or after the occurrence of a Default or an
Event of Default and regardless of whether the Agent has
requested a Settlement with respect to a Non-Ratable Loan or
Agent Advance), each other Lender (A) shall irrevocably and
unconditionally purchase and receive from the Bank or the
Agent, as applicable, without recourse or warranty, an
undivided interest and participation in such Non-Ratable Loan
or Agent Advance equal to such Lender's Pro Rata Share of such
Non-Ratable Loan or Agent Advance and (B) if Settlement has
not previously occurred with respect to such Non-Ratable Loans
or Agent Advances, upon demand by Bank or Agent, as
applicable, shall pay to Bank or Agent, as applicable, as the
purchase price of such participation an amount equal to
one-hundred percent (100%) of such Lender's Pro Rata Share of
such Non-Ratable Loans or Agent Advances. If such amount is
not in fact made available to the Agent by any Lender, the
Agent shall be entitled to recover such amount on demand from
such Lender together with interest thereon at the Federal
Funds Rate for the first three (3) days from and after such
demand and thereafter at the Interest Rate then applicable to
Base Rate Revolving Loans.
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(iv) From and after the date, if any, on which any
Lender purchases an undivided interest and participation in
any Non-Ratable Loan or Agent Advance pursuant to CLAUSE (III)
above, the Agent shall promptly distribute to such Lender,
such Lender's Pro Rata Share of all payments of principal and
interest and all proceeds of Collateral received by the Agent
in respect of such Non-Ratable Loan or Agent Advance.
(v) Between Settlement Dates, the Agent, to the
extent no Agent Advances are outstanding, may pay over to the
Bank any payments received by the Agent, which in accordance
with the terms of this Agreement would be applied to the
reduction of the Revolving Loans, for application to the
Bank's Revolving Loans including Non-Ratable Loans. If, as of
any Settlement Date, collections received since the then
immediately preceding Settlement Date have been applied to the
Bank's Revolving Loans (other than to Non-Ratable Loans or
Agent Advances in which such Lender has not yet funded its
purchase of a participation pursuant to clause (iii) above),
as provided for in the previous sentence, the Bank shall pay
to the Agent for the accounts of the Lenders, to be applied to
the outstanding Revolving Loans of such Lenders, an amount
such that each Lender shall, upon receipt of such amount,
have, as of such Settlement Date, its Pro Rata Share of the
Revolving Loans. During the period between Settlement Dates,
the Bank with respect to Non-Ratable Loans, the Agent with
respect to Agent Advances, and each Lender with respect to the
Revolving Loans other than Non-Ratable Loans and Agent
Advances, shall be entitled to interest at the applicable rate
or rates payable under this Agreement on the actual average
daily amount of funds employed by the Bank, the Agent and the
other Lenders.
(b) LENDERS' FAILURE TO PERFORM. All Revolving Loans (other
than Non-Ratable Loans and Agent Advances) 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 Revolving 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 Revolving Loans hereunder, (ii) no failure by
any Lender to perform its obligation to make any Revolving Loans
hereunder shall excuse any other Lender from its obligation to make any
Revolving Loans hereunder, and (iii) the obligations of each Lender
hereunder shall be several, not joint and several.
(c) DEFAULTING LENDERS. Unless the Agent receives notice from
a Lender on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, at least one Business Day prior to
the date of such Borrowing, that such Lender will not make available as
and when required hereunder to the Agent that Lender's Pro Rata Share
of a Borrowing, the Agent may assume that each Lender has made such
amount available to the Agent in immediately available funds on the
Funding Date. Furthermore, the Agent may, in reliance upon such
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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 such Funding 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 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 Revolving Loan for all purposes of this Agreement. If that
amount is not transferred to the Agent on the Business Day following
the Funding 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 date of such Borrowing,
at a rate per annum equal to the Interest Rate applicable at the time
to the Revolving Loans comprising that particular Borrowing. The
failure of any Lender to make any Revolving Loan on any Funding 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 a Revolving Loan on that
Funding Date. No Lender shall be responsible for any other Lender's
failure to advance such other Lenders' Pro Rata Share of any Borrowing.
(d) 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 Revolving Loans
and for all other purposes of this Agreement shall be treated as if
they were Revolving 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". Until a Defaulting Lender cures its failure to fund
its Pro Rata Share of any Borrowing (A) such Defaulting Lender shall
not be entitled to any portion of the Unused Line Fee and (B) the
Unused Line Fee shall accrue in favor of the Lenders which have funded
their respective Pro Rata Shares of such requested Borrowing and shall
be allocated among such performing Lenders ratably based upon their
relative Commitments. 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.
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(e) REMOVAL OF DEFAULTING LENDER. At the Borrower's request,
the Agent or an Eligible Assignee reasonably acceptable to the Agent
and the Borrower 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 Borrower
shall not be liable), without premium or discount .
12.16 LETTERS OF CREDIT; INTRA-LENDER ISSUES.
(a) NOTICE OF LETTER OF CREDIT BALANCE. On each Settlement
Date the Agent shall notify each Lender of the issuance of all Letters
of Credit since the prior Settlement Date and indicate the expiry dates
and terms of any evergreen provisions therein.
(b) Participations in Letters of Credit.
(i) PURCHASE OF PARTICIPATIONS. Immediately upon
issuance of any Letter of Credit in accordance with SECTION
1.4(D), each Lender shall be deemed to have irrevocably and
unconditionally purchased and received without recourse or
warranty, an undivided interest and participation equal to
such Lender's Pro Rata Share of the face amount of such Letter
of Credit or the Credit Support provided through the Agent to
the Letter of Credit Issuer, if not the Bank, in connection
with the issuance of such Letter of Credit (including all
obligations of the Borrower with respect thereto, and any
security therefor or guaranty pertaining thereto).
(ii) SHARING OF REIMBURSEMENT OBLIGATION PAYMENTS.
Whenever the Agent receives a payment from the Loan Parties on
account of reimbursement obligations in respect of a Letter of
Credit or Credit Support as to which the Agent has previously
received for the account of the Letter of Credit Issuer
thereof payment from a Lender, the Agent shall promptly pay to
such Lender such Lender's Pro Rata Share of such payment from
the Borrower. Each such payment shall be made by the Agent on
the next Settlement Date.
(iii) DOCUMENTATION. Upon the request of any Lender,
the Agent shall furnish to such Lender copies of any Letter of
Credit, Credit Support for any Letter of Credit, reimbursement
agreements executed in connection therewith, applications for
any Letter of Credit, and such other documentation as may
reasonably be requested by such Lender.
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(iv) OBLIGATIONS IRREVOCABLE. The obligations of each
Lender to make payments to the Agent with respect to any
Letter of Credit or with respect to their participation
therein or with respect to any Credit Support for any Letter
of Credit or with respect to the Revolving Loans made as a
result of a drawing under a Letter of Credit and the
obligations of the Loan Parties for whose account the Letter
of Credit or Credit Support was issued to make payments to the
Agent, for the account of the Lenders, shall be irrevocable
and shall not be subject to any qualification or exception
whatsoever, including any of the following circumstances:
(1) any lack of validity or enforceability
of this Agreement or any of the other Loan Documents;
(2) the existence of any claim, setoff,
defense or other right which any Loan Party may have at any time against a
beneficiary named in a Letter of Credit or any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), any Lender,
the Agent, the issuer of such Letter of Credit, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any underlying
transactions between the Borrower or any other Person and the beneficiary named
in any Letter of Credit);
(3) any draft, certificate or any other
document presented under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(4) the surrender or impairment of any
security for the performance or observance of any of the terms of any of the
Loan Documents;
(5) the occurrence of any Default or Event
of Default; or
(6) the failure of the Borrower to satisfy
the applicable conditions precedent set forth in ARTICLE 8.
(c) RECOVERY OR AVOIDANCE OF PAYMENTS; REFUND OF PAYMENTS IN
ERROR. In the event any payment by or on behalf of the Borrower
received by the Agent with respect to any Letter of Credit or Credit
Support provided for any Letter of Credit and distributed by the Agent
to the Lenders on account of their respective participations therein is
thereafter set aside, avoided or recovered from the Agent in connection
with any receivership, liquidation or bankruptcy proceeding, the
Lenders shall, upon demand by the Agent, pay to the Agent their
respective Pro Rata Shares of such amount set aside, avoided or
recovered, together with interest at the rate required to be paid by
the Agent upon the amount required to be repaid by it. Unless the Agent
receives notice from the Borrower prior to the date on which any
payment is due to the Lenders that the Borrower will not make such
payment in full as and when required, the Agent may assume that the
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Borrower 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 Borrower has 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.
(d) INDEMNIFICATION BY LENDERS. To the extent not reimbursed
by the Loan Parties and without limiting the obligations of the Loan
Parties hereunder, the Lenders agree to indemnify the Letter of Credit
Issuer ratably in accordance with their respective Pro Rata Shares, for
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including attorneys' fees)
or disbursements of any kind and nature whatsoever that may be imposed
on, incurred by or asserted against the Letter of Credit Issuer in any
way relating to or arising out of any Letter of Credit or the
transactions contemplated thereby or any action taken or omitted by the
Letter of Credit Issuer under any Letter of Credit or any Loan Document
in connection therewith; PROVIDED that no Lender shall be liable for
any of the foregoing to the extent it arises from the gross negligence
or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse the Letter
of Credit Issuer promptly upon demand for its Pro Rata Share of any
costs or expenses payable by any Loan Party to the Letter of Credit
Issuer, to the extent that the Letter of Credit Issuer is not promptly
reimbursed for such costs and expenses by the Loan Parties. The
agreement contained in this Section shall survive payment in full of
all other Obligations.
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
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 Revolving Loans, Agent Advances,
Non-Ratable Loans, Hedge Agreements, Bank Products and all interest, fees and
expenses hereunder constitute one Debt, secured pari passu by all of the
Collateral.
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12.18 FIELD AUDIT AND EXAMINATION REPORTS; DISCLAIMER BY LENDERS.
By signing this Agreement, each Lender:
(a) 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;
(b) expressly agrees and acknowledges that neither the Bank
nor the Agent (i) makes any representation or warranty as to the
accuracy of any Report, or (ii) shall be liable for any information
contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or the Bank 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;
(d) 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
(e) 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 Borrower, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a
loan or loans of the Borrower; 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 NOTICE OF BANK PRODUCTS.
Each Lender or its Affiliates (other than the Bank) providing Bank
Products to a Loan Party shall deliver to the Agent promptly following the end
of each calendar month, notice setting forth the aggregate amount of all
obligations of any Loan Party on account of such Bank Products (whether matured
or unmatured, absolute or contingent) as of the end of such month. The
obligations due with respect to Bank Products provided by any such Person who
fails to timely furnish the Agent with such notice, at the option of the Agent
shall not be included in the Bank Product Reserve.
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 DOCUMENTATION AGENT. The Lender identified on the facing page or
signature pages of this Agreement as the " Documentation Agent" shall not have
any obligation, liability, responsibility or duty under this Agreement other
than those applicable to all Lenders as such. Without limiting the foregoing,
the Lender so identified as the "Documentation Agent" shall not have or be
deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on the Lender so
identified as the "Documentation Agent" in deciding to enter into this Agreement
or in taking or not taking action hereunder.
ARTICLE 13
MISCELLANEOUS
13.1 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.
13.2 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.
13.3 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 OF
THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA LOCATED IN NEW
YORK COUNTY, NEW YORK, 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 13.8 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.
13.4 WAIVER OF JURY TRIAL.
EACH OF THE LOAN PARTIES, THE LENDERS AND THE AGENT EACH 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
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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.
13.5 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.
13.6 OTHER SECURITY AND GUARANTIES.
The Agent, may, without notice or demand and without affecting the Loan
Parties' obligations hereunder, 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.
13.7 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
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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 Collateral, including reasonable travel, lodging, and meals
for inspections of the 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, however, that unless an Event of
Default shall exist and be continuing, the Borrower shall not be obligated to
the Agent for any expenses set forth in this clause (f) for travel and visits to
Consolidated Members' facilities located in The People's Republic of China or
Mexico; 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, 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). The foregoing shall not be construed to limit any other provisions of
the Loan Documents regarding costs and expenses to be paid by the Loan Parties.
All of the foregoing costs and expenses shall be charged to the Loan Account as
Revolving Loans as described in Section 3.7.
13.8 NOTICES.
Except as otherwise 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, but not limited to, 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:
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If to the Agent or to the Bank:
Bank of America, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Business Credit-Account Executive
Telecopy No.: 404.607.6059
If to a Loan Party:
Applica Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇: ▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
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.
13.9 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.
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13.10 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.
13.11 INDEMNITY OF THE AGENT AND THE LENDERS BY THE BORROWER.
(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 resulting solely from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section
shall survive 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
Consolidated Member's operations, business or property. This indemnity
will apply whether the hazardous substance is on, under or about the
Consolidated Member's property or operations or property leased to a
Consolidated Member. The indemnity includes but is not limited to
Attorneys Costs. The indemnity extends to the Agent and the Lenders,
their parents, affiliates, subsidiaries and all of their directors,
officers, employees, agents, successors, attorneys and assigns.
"Hazardous substances" means any substance,
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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.
13.12 PRIOR CREDIT AGREEMENT SUPERSEDED.
On the Closing Date, this Agreement shall supercede the Original Credit
Agreement in its entirety, except as provided in this SECTION 13.12. On the
Closing Date, the rights and obligations of the parties evidenced by the
Original Credit Agreement shall be evidenced by this Agreement and the other
Loan Documents, the "Loans" as defined in the Original Credit Agreement shall be
converted to Loans as defined herein and the Letters of Credit issued by Bank,
any Lender or affiliate of a Lender for the account of a Loan Party prior to the
Closing Date shall be converted into Letters of Credit under this Agreement.
Without limiting the generality of the foregoing and to the extent necessary,
the Lenders and the Agent reserve all of their rights under the Original Credit
Agreement with respect to provisions which, by their express terms, survive the
termination of the Original Credit Agreement, and each of the Guarantors hereby
obligates itself again in respect of all present and future Obligations under,
INTER ALIA, the Original Credit Agreement, as amended and restated by this
Credit Agreement. All interest and fees and expenses, if any, owing or accruing
under or in respect of the Original Credit Agreement through the Closing Date
shall be calculated as of the Closing Date (pro rated in the case of any
fractional periods), and shall be paid on the Closing Date.
13.13 FINAL AGREEMENT.
This Agreement, together with the other Loan Documents, are intended by
the Loan Parties, the Agent and the Lenders to be the final, complete, and
exclusive expression of the agreement between 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.
13.14 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.
86
13.15 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.
13.16 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.
13.17 CONFIDENTIALITY.
The Agent and each Lender (each, a "Lending Party") agrees to keep
Confidential any information furnished or made available to it by the Borrower,
any Guarantor or any of their Affiliates (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.
87
(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 the 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
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 13.16; 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 Borrower
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 Borrower 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 13.17 shall survive the termination of this
Agreement.
88
13.18 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.
13.19 AGENCY OF THE BORROWER FOR EACH OTHER LOAN PARTY.
Each of the Loan Parties other than the Borrower irrevocably appoints
the Borrower 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, 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 under this Section 13.19, provided that nothing in this Section
13.19 shall limit the effectiveness of, or the right of the Agent and the
Lenders to rely upon, any notice (including without limitation a Notice of
Borrowing or a Notice of Continuation/Conversion), document, instrument,
certificate, acknowledgment, consent, direction, certification, or other action
delivered by the Borrower or other Loan Party pursuant to this Agreement.
13.20 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, the issuance of
any Letter of Credit or Credit Support, 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 Obligated Party or of any other fact that might
increase such Loan Party's risk with respect to such other Obligated
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;
89
(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 Obligated Party or to exhaust any rights and remedies which
the Agent or any Lender has or may have against any other Obligated
Party. Each Loan Party further waives any defense arising by reason of
any disability or other defense of any other Obligated 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 Obligated Party in
respect thereof.
(c) Each Loan Party hereby waives and agrees not to assert
against the Agent, any Lender, or the Letter of Credit Issuer: (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
Obligated Party; (ii) any defense, setoff, counterclaim, or claim of
any kind or nature available to any other Obligated Party against the
Agent, any Lender, the Bank, or the Letter of Credit Issuer, 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, any
Lender, the Bank, or the Letter of Credit Issuer 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
Obligated 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;
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 Consolidated Members 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, any Lender, the Bank, nor the
Letter of Credit Issuer has any responsibility to inform any Loan Party of the
financial condition of any other Obligated Party or of any other circumstances
which bear upon the risk of nonpayment or nonperformance of the Obligations.
90
13.21 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 Lender receives payment of any sum so
adjudged to be due hereunder in the Second Currency, the Lender 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 13.20 means the spot rate at which Agent
or any Lender, in accordance with normal practices, is able on the 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.
91
IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
"BORROWER"
APPLICA INCORPORATED, a Florida corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
"GUARANTORS"
APPLICA CONSUMER PRODUCTS, INC., a
Florida corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
APPLICA CANADA CORPORATION, a Nova
Scotia corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
WD DELAWARE, INC., a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
HP INTELLECTUAL CORP., a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
[Signature Page to Amended and Restated Credit Agreement]
92
WINDMERE HOLDINGS CORPORATION, a
Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
HP DELAWARE, INC., a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
HPG LLC, a Delaware limited liability company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
HP AMERICAS, INC., a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
APPLICA MEXICO HOLDINGS, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
[Signatures continued on following page]
[Signature Page to Amended and Restated Credit Agreement]
93
"AGENT"
Bank of America, N.A., as the Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
"LEAD ARRANGER"
BANC OF AMERICA SECURITIES LLC,
as Lead Arranger
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Principal
"DOCUMENTATION AGENT"
GENERAL ELECTRIC CAPITAL CORPORATION, as
Documentation Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Duly Authorized Signatory
[Signature Page to Amended and Restated Credit Agreement]
94
"LENDERS"
Bank of America, N.A., as a Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
[Signatures continued on following page]
95
CONGRESS FINANCIAL CORPORATION (FLORIDA),
as a Lender
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
[Signatures continued on following page]
96
LASALLE BUSINESS CREDIT LLC, successor by
merger to LaSalle Business Credit, Inc., as
agent for Standard Federal Bank National
Association, as a Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
[Signatures continued on following page]
97
GENERAL ELECTRIC CAPITAL CORPORATION, as
a Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Duly Authorized Signatory
[Signatures continued on following page]
98
HSBC BUSINESS CREDIT (USA), INC., as a Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
[Signatures continued on following page]
99
PNC BANK, NATIONAL ASSOCIATION, as a Lender
By: /s/ ▇▇▇ ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Vice President
100
ANNEX A
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have the
following respective meanings (unless otherwise defined therein), and all
section references in the following definitions shall refer to sections of the
Agreement:
"ACCOUNTS" means all of the Borrower's now owned or hereafter
acquired or arising accounts, as defined in the UCC, including 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).
"ACH TRANSACTIONS" means any cash management or related
services including the automatic clearing house transfer of funds by the Bank or
any Lender for the account of any Consolidated Member.
"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.
"ADJUSTED NET EARNINGS FROM OPERATIONS" means, with respect to
any relevant fiscal period of the Borrower, the Consolidated Member's net income
after provision for income taxes for such fiscal period, as determined in
accordance with GAAP and reported on the Financial Statements for such period,
excluding any and all of the following included in such net income: (a) gain or
loss arising from the sale of any capital assets; (b) gain arising from any
write-up in the book value of any asset; (c) earnings of any Person,
substantially all the assets of which have been acquired by a Consolidated
Member in any manner, to the extent realized by such other Person prior to the
date of acquisition; (d) earnings of any Person in which a Consolidated Member
has an ownership interest (other than a Subsidiary) unless (and only to the
extent) such earnings shall actually have been received by such Consolidated
Member in the form of cash distributions; (e) gains arising from any foreign
currency translations or in connection with Hedge Agreements to the extent not
included as a component of the Borrower's consolidated operating profit or
interest expense in the Financial Statements; (f) gain arising from the
acquisition of debt or equity securities of the Borrower or any other
Consolidated Member or from cancellation or forgiveness of Debt; and (g) gain
arising from extraordinary items, as determined in accordance with GAAP.
"ADMINISTRATION FEE" has the meaning specified in SECTION 2.7.
"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
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.
"AGENT" means the Bank, solely in its capacity as
administrative and collateral agent for the Lenders, and any successor
administrative and collateral agent.
"AGENT ADVANCES" has the meaning specified in SECTION 1.2(I).
"AGENT-RELATED PERSONS" means Agent, the Lead Arranger,
together with their respective 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.
"AGGREGATE REVOLVER OUTSTANDINGS" means, at any time, the sum
of (a) the unpaid balance of the Revolving Loans, (b) 100% of the aggregate
undrawn face amount of all Letters of Credit and Credit Support, and (c) the
aggregate amount of any unpaid reimbursement obligations in respect of Letters
of Credit and Credit Support.
"AGREEMENT" means the Credit Agreement to which this Annex A
is attached, as from time to time amended, modified or restated.
"AMOUNT DUE FROM FACTOR" means at any date of determination
thereof, an amount equal to the credit balance due to Applica Consumer Products
under the Factoring Agreement on such date as reflected on any applicable Factor
Status Report delivered to the Agent, LESS, without duplication, the Factor
Reserve, or, in the absence of the timely delivery to the Agent of a Factor
Status Report on any date, an amount determined by Agent in its sole and
reasonable discretion.
"ANNIVERSARY DATE" means each anniversary of the Closing Date.
"ANTI-TERRORISM LAWS" mean any laws relating to terrorism or
money laundering, including Executive Order No. 13224 and the USA Patriot Act.
"APPLICA CANADA" means Applica Canada Corporation, a Nova
Scotia corporation.
"APPLICA CANADA BLOCKED ACCOUNT AGREEMENT" means the Blocked
Account Agreements entered into between Applica Canada and Scotia Bank, as
amended.
"APPLICA CANADA FORMULA AMOUNT" means, at any date of
determination, that portion of the Borrowing Base comprised of Eligible Accounts
and Eligible Inventory owned by Applica Canada.
A-2
"APPLICA CANADA GUARANTY" means an agreement of Guaranty
executed by Applica Canada pursuant to which Applica Canada guarantees the
Obligations or any portion thereof.
"APPLICA CANADA SECURITY AGREEMENT" means the General Security
Agreement, dated on or about the Original Closing Date, executed and delivered
by Applica Canada in favor of Agent for the benefit of itself and the Lenders,
as at any time amended.
"APPLICA CANADA SUBLIMIT" means, as of any date of
determination, the lesser of (a) $54,000,000 or (b) 30% of the Borrowing Base on
any date of determination thereof.
"APPLICA CONSUMER PRODUCTS" means Applica Consumer Products,
Inc., a FLORIDA corporation, and its successors and assigns.
"APPLICA CONSUMER PRODUCTS FORMULA AMOUNT" means, at any date
of determination, that portion of the Borrowing Base comprised of Eligible
Accounts and Eligible Inventory owned by Applica Consumer Products.
"APPLICABLE MARGIN" means, as of the Closing Date,
(i) with respect to Base Rate Revolving Loans, .-0-%; and
(ii) with respect to LIBOR Revolving Loans, 2.25%.
The Applicable Margins shall be adjusted (up or down)
prospectively on a quarterly basis as determined by the Borrower's consolidated
financial performance, commencing April 1, 2005 based on the Borrower's audited
Financial Statements for the Fiscal Year ending December 31, 2004. Adjustments
in Applicable Margins shall be determined by reference to the following grids:
Fixed Charge Coverage Ratio: Level of
Ratio Is: Applicable Margins:
---------------------------- -------------------
=> 2.0 Level I
=> 1.75 but <2.00 Level II
=> 1.50, but < 1.75 Level III
=> 1.25, but < 1.50 Level IV
=> 1.10, but < 1.25 Level V
< 1.10 Level VI
A-3
APPLICABLE MARGINS
Level I Level II Level III Level IV Level V Level VI
------- -------- --------- -------- ------- --------
Base Rate Revolving Loans -0-% -0-% -0-% -0-% .25% .50%
LIBOR Revolving Loans 1.25% 1.50% 1.75% 2.00% 2.25% 2.50%
Notwithstanding the foregoing, if the Borrower has not maintained the Average
Monthly Excess Availability, then the Applicable Margin otherwise applicable
herein shall be increased by 25 basis points (.25%) as of the first day of the
next month which increase shall remain in force for the entire month.
All adjustments in the Applicable Margins after April 1, 2005 shall be
implemented quarterly on a prospective basis for each calendar month commencing
at least five (5) days after the date of delivery to the Agent of quarterly
unaudited and annual audited (as applicable) Financial Statements evidencing the
need for an adjustment. Concurrently with the delivery of those Financial
Statements, the Borrower shall deliver to the Agent and the Lenders a
certificate, signed by a Responsible Officer, setting forth in reasonable detail
the basis for the continuance of, or any change in, the Applicable Margins. For
the final quarter of any Fiscal Year of the Borrower, the Borrower shall provide
unaudited Financial Statements of the Borrower not later than 60 days after the
close of each Fiscal Year, subject only to year-end adjustments, for the purpose
of determining the Applicable Margin; PROVIDED, HOWEVER, that if, upon delivery
of the annual audited Financial Statements required to be submitted by the
Borrower to Agent pursuant to SECTION 5.2(A) of this Agreement, Loan Parties
have not met the criteria for a reduction or an increase of the Applicable
Margin, as the case may be, pursuant to the terms hereinabove for the final
fiscal quarter of the Fiscal Year of the Borrower then ended, then (a) such
Applicable Margin reduction or increase, as the case may be, shall be terminated
and, effective on the first day of the month following receipt by Agent of such
audited Financial Statements, the Applicable Margin shall be the Applicable
Margin that would have been in effect if such reduction or increase, as the case
may be, had not been implemented based upon the unaudited Financial Statements
for the final fiscal quarter of the Fiscal Year of the Borrower then ended, (b)
in the case of an increase in the Applicable Margin, the Borrower shall pay to
Agent, for the Pro Rata benefit of the Lenders, on the first day of the month
following receipt by Agent of such audited Financial Statements, an amount equal
to the difference between the amount of interest that would have been paid on
the principal amount of the Obligations using the Applicable Margin determined
based upon such audited Financial Statements and the amount of interest actually
paid during the period in which the reduction of the Applicable Margin was in
effect based upon the unaudited Financial Statements for the final fiscal
quarter of the Fiscal Year then ended, and (c) in the case of a decrease in the
Applicable Margin, the Agent shall credit to the Borrower, on the first day of
the month following receipt by Agent of such audited Financial Statements, an
amount equal to the difference between the amount of interest that would have
been paid on the principal amount of the Obligations using the Applicable Margin
determined based upon such audited Financial Statements and the amount of
interest actually paid during the period in which the increase of the Applicable
Margin was in effect based upon the unaudited
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Financial Statements for the final fiscal quarter of the Fiscal Year then ended.
Failure to timely deliver such Financial Statements shall, in addition to any
other remedy provided for in this Agreement, result in an increase in the
Applicable Margins to the highest level set forth in the foregoing grid, until
the first day of the first calendar month following the delivery of those
Financial Statements demonstrating that such an increase is not required. If a
Default or Event of Default has occurred and is continuing at the time any
reduction in the Applicable Margins is to be implemented, no reduction may occur
until the first day of the first calendar month following the date on which such
Default or Event of Default is waived or cured.
"APPLICABLE PERIOD" means, as of any date, the preceding four
(4) fiscal quarters.
"APPLICABLE UNUSED LINE FEE" means, in respect of any month,
the fee determined in accordance with the following grid:
Average Monthly Utilization Unused Line Fee
--------------------------- ---------------
Greater than or equal to 66.67% .250%
Greater than or equal to 33.33% .325%
But less than 66.67%
Less than 33.33% .375%
Where "Average Monthly Utilization" shall mean the percentage derived by
dividing the Average Credit Facility Outstandings for any applicable month by
the Maximum Revolver Amount.
"APPROVED RECEIVABLES PROGRAM" means any securitization,
factoring or receivables program of the Loan Parties as may be approved in
writing by the Required Lenders in their sole discretion and subject to such
intercreditor agreements, assignments or other agreements as the Agent may deem
appropriate or reasonably necessary.
"ARRANGEMENT FEE" has the meaning specified in SECTION 2.4.
"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.
"AVAILABILITY" means, at any time (a) the lesser of (i) the
Maximum Revolver Amount or (ii) the Borrowing Base, MINUS (b) the Availability
Reserve and Reserves other than those Reserves deducted in the calculation of
the Borrowing Base, MINUS (c) in each case, the Aggregate Revolver Outstandings.
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"AVAILABILITY RESERVE" means an amount equal to (i)
$20,000,000 from the Closing Date through December 31, 2004, (ii) $10,000,000
for so long as the Fixed Charge Coverage Ratio is greater than or equal to 1.0
to 1.0 but less than 2.0 to 1.0 from and after January 1, 2005, and (iii)
$20,000,000 for so long as the Fixed Charge Coverage Ratio is less than 1.0 to
1.0 from and after January 1, 2005. If at any time on or after January 1, 2005,
the Fixed Charge Coverage Ratio is greater than 2.0 to 1.0, the amount of the
Availability Reserve shall equal $0.
"AVERAGE CREDIT FACILITY OUTSTANDINGS" means for any period,
the average daily Aggregate Revolver Outstandings at the end of each day during
a month or during shorter periods if the foregoing is calculated for the first
month after the Closing Date or as of the Termination Date.
"AVERAGE MONTHLY EXCESS AVAILABILITY" means, for any calendar
month, (a) average Availability for such month of not less than $30,000,000 and
(b) Availability of not less than $20,000,000 on each day of such month. For
purposes of this definition, average Availability shall mean, for any calendar
month, an amount obtained by adding the aggregate of the actual amount of
Availability on each day during such month (as determined by Agent) and by
dividing such sum by the number of days in such month.
"BANK" means Bank of America, N.A., a national banking
association, or any successor entity thereto.
"BANK PRODUCTS" means any one or more of the following types
of services or facilities extended to a Consolidated Member by the Bank, any
Lender, any affiliate of the Bank or a Lender, and, solely in the case of an
affiliate of the Bank or a Lender, in reliance on the Bank's or such Lender's
agreement to indemnify such affiliate in connection with: (i) credit cards; (ii)
ACH Transactions; (iii) cash management, including controlled disbursement
services; and (iv) Hedge Agreements.
"BANK PRODUCT RESERVES" means all reserves which the Agent
from time to time establishes in its reasonable discretion for the Bank Products
then provided or outstanding and, in the case of Bank Products provided by
Persons other than the Bank, of which the Agent shall have received timely
notice pursuant to SECTION 12. 19.
"BANKRUPTCY CODE" means Title 11 of the United States Code (11
▇.▇.▇.▇▇. 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 the Bank in Charlotte,
North Carolina as its "prime rate" (the "prime rate" being a rate set by the
Bank based upon various factors including the Bank'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 the Bank 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 LOANS" means, collectively, the Base Rate Revolving
Loans.
"BASE RATE REVOLVING LOAN" means a Revolving Loan during any
period in which it bears interest based on the Base Rate.
"BIA" means the Bankruptcy and Insolvency Act (Canada) and all
regulations thereunder.
"BLACK & ▇▇▇▇▇▇ LICENSE AGREEMENT" means the Trademark License
Agreement, dated June 26, 1998, The Black & ▇▇▇▇▇▇ Corporation and the Borrower,
as at any time amended, modified, extended or renewed.
"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.
"BORROWER" means Applica Incorporated, a Florida corporation,
and its successors and assigns.
"BORROWING" means a borrowing hereunder consisting of
Revolving Loans made on the same day by the Lenders to the Borrower or by Bank
(in the case of a Borrowing funded by Non-Ratable Loans) or by the Agent in the
case of a Borrowing consisting of an Agent Advance, or the issuance of Letters
of Credit or Credit Support hereunder.
"BORROWING BASE" means, at any time, an amount equal to:
(a) the sum of:
(i) 85% of the Net Amount of Non-Factored
Eligible Accounts;
PLUS
(ii) the lesser of:
(A) $15,000,000 or
(B) 85% of the Amount Due From Factor;
PLUS
(iii) the lesser of:
(A) $100,000,000, or
(B) the lesser of:
(I) 70% of the Cost Value of
Eligible Inventory, or
(II) 85% of the Net Orderly
Liquidation Value of
Eligible Inventory;
PLUS
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(iv) the Seasonal Inventory Formula Amount;
MINUS
(b) without duplication, the Reserves and the Factor Reserve.
Notwithstanding the foregoing, in no event shall the aggregate
amount of Revolving Loans outstanding at any date (a) as measured by Eligible
In-Transit Inventory exceed (i) $24,500,000 with respect to Eligible In-Transit
Inventory destined for a United States port of entry, or (ii) $3,500,000 with
respect to Eligible In-Transit Inventory destined for a Canadian port of entry,
or (b) as measured by Eligible Accounts and Eligible Inventory of Applica Canada
exceed the Applica Canada Sublimit.
For purposes of the calculation of the Borrowing Base, (a) the
value of Non-Factored Eligible Accounts and Eligible Inventory shall be
calculated based on Dollar Equivalents at any date of determination, and (b) the
value of Eligible Inventory consisting of In-Transit Inventory shall be net of
all duty, freight, taxes, costs, insurance and other charges and expenses which
customarily pertain to such In-Transit Inventory.
"BORROWING BASE CERTIFICATE" means a certificate by a
Responsible Officer of the Borrower, substantially in the form of EXHIBIT B (or
another form acceptable to the Agent) setting forth the calculation of the
Borrowing Base, including a calculation of each component thereof, all in such
detail as shall be reasonably satisfactory to the Agent. All calculations of the
Borrowing Base in connection with the preparation of any Borrowing Base
Certificate shall originally be made by the Borrower and certified to the Agent;
provided, that the Agent shall have the right to review and adjust, in the
exercise of its reasonable credit judgment, any such calculation (1) to reflect
its reasonable estimate of declines in value of any of the Collateral described
therein, and (2) to the extent that such calculation is not in accordance with
this Agreement.
"BUSINESS DAY" means (a) any day that is not a Saturday,
Sunday, or a day on which banks in Atlanta, Georgia or Charlotte, North Carolina
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
Rate 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.
"CAPITAL EXPENDITURES" means all payments due (whether or not
paid during any fiscal period) in respect of the cost of any fixed asset or
improvement, or replacement, substitution, or addition thereto, which has a
useful life of more than one year, including, without limitation, those costs
arising in connection with the direct or indirect acquisition of such asset
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by way of increased product or service charges or in connection with a Capital
Lease, and other items presented in accordance with the GAAP.
"CAPITAL LEASE" means any lease of property by a Consolidated
Member which, in accordance with GAAP, should be reflected as a capital lease on
the consolidated balance sheet of the Borrower.
"CAPITAL STOCK" means 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 any Person.
"CHANGE OF CONTROL" means if any Person or group of Persons
acting in concert, other than the owners of more than 10% of outstanding
securities of the Borrower as of Closing Date having voting rights in the
election of directors, shall own or control, directly or indirectly, more than
30% of the outstanding securities of the Borrower having voting rights in the
election of directors, in each case to be determined on a fully diluted basis
and taking into account any outstanding securities or contract rights
exercisable, exchangeable or convertible into equity interests.
"CHATTEL PAPER" shall have the meaning specified in the
Security Agreement.
"CLEARING BANK" means the Bank or any other banking
institution with whom a Payment Account has been established pursuant to a
Blocked Account Agreement.
"CLOSING DATE" means the date of this Agreement.
"CLOSING FEE" has the meaning specified in SECTION 2.4.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" has the meaning specified in the Security
Agreement.
"COLLATERAL ACCESS AGREEMENT" shall mean a Warehousemen's
Agreement or a Landlord Agreement, among Agent, a Loan Party and/or a Loan
Party's Affiliate and certain third parties named therein, as of the Closing
Date and from time to time thereafter, in each case substantially in the form
attached hereto as EXHIBIT G.
"COLLECTIONS FEE" has the meaning specified in SECTION 2.8.
"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 SCHEDULE 1.2 attached to the Agreement, as the same may be
increased pursuant to SECTION 1.3, 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, as such Commitment may be
adjusted from time to time in accordance with the provisions of SECTION 1.3 and
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 13.17.
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"CONSOLIDATED EBITDA" means, with respect to any fiscal period
of the Borrower, the Adjusted Net Earnings from Operations of the Borrower and
the other Consolidated Members, PLUS, to the extent deducted in the
determination of Adjusted Net Earnings from Operations for that fiscal period,
interest expenses, federal, state, local and foreign income taxes, depreciation,
amortization, non-cash charges (until paid) arising from the (i) Permitted
Mexico Facility Disposition and (ii) Permitted Officer Severance Payments, all
as determined in accordance with GAAP.
"CONSOLIDATED MEMBERS" means the Borrower and its Subsidiaries
and "CONSOLIDATED MEMBER" means any of the foregoing.
"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 Rate Loan.
"CORE BUSINESS" means, with respect to the Consolidated
Members, the business of manufacturing and distributing of household and outdoor
appliances, personal care products, pet 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 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 other
consultants incurred in effecting such a transaction, and other similar
transactions 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 Borrower
and, if requested by Agent, determined to be a reasonable valuation by the
independent public accountants referred to in Section 5.2 hereof, (B) the
capital stock of any Subsidiary shall be valued as determined by the Board of
Directors of the Borrower 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.
"COST VALUE" means, with reference to Eligible Inventory, the
applicable Loan Party's cost of such Eligible Inventory calculated on a
first-in, first-out basis determined in accordance with GAAP.
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"CREDIT RISK" means, with respect to any Factored Account, the
risk that such Account is not paid, in whole or in part, due to the Account
Debtor's financial inability to pay.
"CREDIT SUPPORT" has the meaning specified in SECTION 1.4(A).
CURRENT MATURITIES OF LONG TERM DEBT shall mean all payments
in respect of Long Term Debt (other than the Obligations) that are required to
be made within one year from the date of determination, whether or not the
obligation to make such payments would constitute a current liability of the
obligor under GAAP.
"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, 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; (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 (other than an
Approved Receivables Program) 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. In addition, the
imposition of the Default Rate shall result in an increase in the Letter of
Credit Fee by two percent (2%) per annum.
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"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).
"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 13.17.
"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) of such corporation,
other than distributions in such Person's Capital Stock of the same class; or
(b) the redemption or other acquisition by such corporation 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.
"DOL" means the United States Department of Labor or any
successor department or agency.
"DOLLAR" 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, with respect to any monetary amount
in a currency other than Dollars, at any time for the determination thereof, the
amount of Dollars obtained by converting such foreign currency involved in such
computation into Dollars at the spot rate for the purchase of Dollars with the
applicable foreign currency as quoted by Agent at approximately 11:00 a.m.
(Atlanta, Georgia time) on any date of determination thereof specified in this
Agreement or, if the day of determination thereof is not otherwise specified in
this Agreement, on the date two (2) Business Days prior to such determination.
"DOMESTIC SUBSIDIARIES" means the Subsidiaries of the Borrower
organized or incorporated under the laws of a state in the United States and
denominated as a "Domestic Subsidiary" in SCHEDULE 6.5.
"ELIGIBLE ACCOUNTS" means the Accounts of a Loan Party which
the Agent in the exercise of its reasonable commercial discretion determines to
be Eligible Accounts. Without limiting the discretion of the Agent to establish
additional criteria of ineligibility, Eligible Accounts shall not include any
Account:
(a) with respect to which more than 120 days have elapsed
since the date of the original invoice therefor or which is more than 60 days
past due, whichever is sooner;
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(b) with respect to which any of the representations,
warranties, covenants, and agreements contained in the Security Agreement are
incorrect or have been breached;
(c) with respect to which Account (or any other Account due
from such Account Debtor), in whole or in part, a check, promissory note, draft,
trade acceptance or other instrument for the payment of money has been received,
presented for payment and returned uncollected by reason of insufficient funds;
(d) which represents a progress billing (as hereinafter
defined) or as to which the applicable Loan Party has materially extended the
time for payment without the consent of the Agent; for the purposes hereof,
"progress billing" means any invoice for goods sold or leased or services
rendered under a contract or agreement pursuant to which the Account Debtor's
obligation to pay such invoice is conditioned upon the applicable Loan Party's
completion of any further performance under the contract or agreement;
(e) with respect to which any one or more of the following
events has occurred to the Account Debtor on such Account: the filing by or
against the Account Debtor of a petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as a bankrupt, winding-up, or
other relief under the bankruptcy, insolvency, or similar laws of the United
States or Canada, any state, province or territory thereof, or any foreign
jurisdiction, now or hereafter in effect; the making of any general assignment
by the Account Debtor for the benefit of creditors; the appointment of a
receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of or taking
possession by a "custodian," as defined in the Federal Bankruptcy Code; the
institution by or against the Account Debtor of any other type of insolvency
proceeding (under the bankruptcy laws of the United States or otherwise) or of
any formal or informal proceeding for the dissolution or liquidation of,
settlement of claims against, or winding up of affairs of, the Account Debtor;
the nonpayment generally by the Account Debtor of its debts as they become due;
or the cessation of the business of the Account Debtor as a going concern;
provided, however, that none of the foregoing exclusions from Eligible Accounts
shall include any Account to the extent there is any post-petition receivable
that has the status of an administrative claim and is entitled to be paid in the
ordinary course;
(f) if 50% or more of the aggregate Dollar amount of
outstanding Accounts owed at such time by the Account Debtor thereon is
classified as ineligible under CLAUSE (A) above;
(g) owed by an Account Debtor which: (i) does not maintain its
chief executive office in the United States of America, Canada or the
Commonwealth of Puerto Rico (and, with respect to Accounts owed by an Account
Debtor located in the Commonwealth of Puerto Rico, no more than $1,000,000 in
aggregate face amount of such Accounts shall be deemed Eligible Accounts at any
time); or (ii) is not organized under the laws of the United States of America,
Canada, the Commonwealth of Puerto Rico any state or province thereof; or (iii)
is the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof; except
to the extent that such Account is secured or payable by a letter of credit
satisfactory to the Agent in its discretion;
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(h) owed by an Account Debtor which is an Affiliate or
employee of a Loan Party;
(i) except as provided in CLAUSE (K) below, with respect to
which either the perfection, enforceability, or validity of the Agent's Liens in
such Account, or the Agent's right or ability to obtain direct payment to the
Agent of the proceeds of such Account, is governed by any federal, state, or
local statutory requirements other than those of the UCC;
(j) owed by an Account Debtor to which the applicable Loan
Party or any of its Subsidiaries, is indebted in any way, or which is subject to
any right of setoff or recoupment by the Account Debtor, unless the Account
Debtor has entered into an agreement acceptable to the Agent to waive setoff
rights; or if the Account Debtor thereon has disputed liability or made any
claim with respect to any other Account due from such Account Debtor; but in
each such case only to the extent of such indebtedness, setoff, recoupment,
dispute, or claim;
(k) owed by the government of the United States of America or
Canada, or any department, agency, public corporation, or other instrumentality
thereof, unless in the case of the United States of America, the Federal
Assignment of Claims Act of 1940, as amended (31 U.S.C. ss. 3727 ET SEQ.), and
any other steps necessary to perfect the Agent's Liens therein, have been
complied with to the Agent's satisfaction with respect to such Account;
(l) owed by any state, province, municipality, or other
political subdivision of the United States of America or Canada, or any
department, agency, public corporation, or other instrumentality thereof and as
to which the Agent determines that its Lien therein is not or cannot be
perfected;
(m) which represents a sale on a ▇▇▇▇-and-hold, guaranteed
sale, sale and return, sale on approval, consignment, or other repurchase or
return basis;
(n) which is evidenced by a promissory note or other
instrument or by chattel paper;
(o) if the Agent believes, in the exercise of its reasonable
judgment, that the prospect of collection of such Account is impaired or that
the Account may not be paid by reason of the Account Debtor's financial
inability to pay;
(p) with respect to which the Account Debtor is located in any
state requiring the filing of a Notice of Business Activities Report or similar
report in order to permit the applicable Loan Party to seek judicial enforcement
in such State of payment of such Account, unless such Loan Party has qualified
to do business in such state or has filed a Notice of Business Activities Report
or equivalent report for the then current year;
(q) which arises out of a sale not made in the ordinary course
of the applicable Loan Party's business;
(r) with respect to which the goods giving rise to such
Account have not been shipped and delivered to and accepted by the Account
Debtor or the services giving rise to such Account have not been performed by
the applicable Loan Party, and, if applicable, accepted by the Account Debtor,
or the Account Debtor revokes its acceptance of such goods or services;
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(s) (i) owed by an Account Debtor (other than Wal-Mart) which
is obligated to the applicable Loan Party respecting Accounts the aggregate
unpaid balance of which exceeds 30% of the aggregate unpaid balance of all
Accounts owed to such Loan Party, at such time by all of such Loan Party's
Account Debtors, but only to the extent of such excess; or (ii) owed by Wal-Mart
to any Loan Party respecting Accounts the aggregate unpaid balance of which
exceeds 40% of the aggregate unpaid balance of all Accounts owed to all Loan
Parties at such time, but only to the extent of such excess;
(t) which is not subject to a first priority and perfected
security interest in favor of the Agent for the benefit of the Lenders.
If any Account at any time ceases to be an Eligible Account,
then such Account shall promptly be excluded from the calculation of Eligible
Accounts until reinstated by the Agent as an Eligible Account in the exercise of
its reasonable credit judgment. Notwithstanding the foregoing, none of the
Accounts described in clauses (a) through (o) above shall be excluded from
Eligible Accounts if the payments of such Accounts are (i) guarantied by any
third party, (ii) covered by insurance policies or (iii) secured or payable by a
letter of credit, in each case as is satisfactory to Agent in its sole
discretion.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank, commercial
finance company, financial institution or other asset based lender, having total
assets in excess of $1,000,000,000; (b) any Lender listed on the signature page
of this Agreement; (c) any Affiliate of any Lender; and (d) if an Event of
Default has occurred and is continuing, any Person reasonably acceptable to the
Agent.
"ELIGIBLE INVENTORY" means Inventory of a Loan Party which the
Agent, in its reasonable discretion, determines to be Eligible Inventory.
Without limiting the discretion of the Agent to establish additional criteria of
ineligibility, Eligible Inventory shall not include any Inventory:
(a) that is not owned by a Loan Party;
(b) that is not subject to the Agent's Liens, which are
perfected as to such Inventory, or that are subject to any other Lien whatsoever
(other than the Liens described in CLAUSE (D) of the definition of Permitted
Liens provided that such Permitted Liens (i) are junior in priority to the
Agent's Liens or subject to Reserves and (ii) do not impair directly or
indirectly the ability of the Agent to realize on or obtain the full benefit of
the Collateral);
(c) that does not consist of finished goods;
(d) that consists of work-in-process, chemicals, samples,
prototypes, supplies, or packing and shipping materials;
(e) that is not in good condition, is unmerchantable, or does
not meet all standards imposed by any Governmental Authority having regulatory
authority over such goods, their use or sale;
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(f) that is not currently either usable or salable, at prices
approximating at least cost, in the normal course of such Loan Party's business,
or that is slow moving or stale;
(g) that is obsolete or returned (to the extent the aggregate
Cost Value of returned Inventory exceeds $5,000,000 and such returned Inventory
otherwise satisfies the criteria applicable to Eligible Inventory) or
repossessed or used goods taken in trade;
(h) that is located outside the United States of America or
Canada or that is in-transit from vendors or suppliers except to extent such
Inventory constitutes In-Transit Inventory;
(i) that is located in a public warehouse or in possession of
a bailee or in a facility leased by the applicable Loan Party, if the
warehouseman, or the bailee, or the lessor has not delivered to the Agent, if
requested by the Agent, a subordination agreement in form and substance
satisfactory to the Agent or if a Reserve for rents or storage charges has not
been established for Inventory at that location;
(j) that contains or bears any Proprietary Rights licensed to
such Loan Party by any Person (including, without limitation, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇),
if the Agent is not satisfied that it may sell or otherwise dispose of such
Inventory in accordance with the terms of the Security Agreement and Section 9.2
without infringing the rights of the licensor of such Proprietary Rights or
violating any contract with such licensor (and without payment of any royalties
other than any royalties due with respect to the sale or disposition of such
Inventory pursuant to the existing license agreement), and, as to which such
Loan Party has not delivered to the Agent a consent or sublicense agreement from
such licensor in form and substance acceptable to the Agent if requested;
(k) that is not reflected in the details of a current
perpetual inventory report; or
(l) that is Inventory placed on consignment.
If any Inventory at any time ceases to be Eligible Inventory,
such Inventory shall promptly be excluded from the calculation of Eligible
Inventory until reinstated by Agent in the exercise of its reasonable credit
judgment as Eligible Inventory.
"ELIGIBLE IN-TRANSIT INVENTORY" means In-Transit Inventory
that constitutes Eligible Inventory hereunder.
"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 or
local laws, statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case relating to environmental, health, safety and land use matters.
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"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.
"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).
"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.
"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.
"FACTOR" means a bank or financial institution reasonably
acceptable to the Agent that factors Accounts of a Loan Party from time to time.
"FACTOR ASSIGNMENT AGREEMENT" means an agreement acceptable to
Agent in its sole and reasonable discretion regarding the assignment of
factoring credit balances and the priority of the Liens of the Factor and the
Agent in the factored accounts and related property and proceeds.
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"FACTOR RISK ACCOUNT" means an Account, or any portion
thereof, submitted by a Loan Party to a Factor under a Factoring Agreement with
respect to which a Factor bears the Credit Risk on such date and which is not
otherwise scheduled on Factor's books as in a dispute or a deduction.
"FACTOR RESERVE" means the amount which at any time may be
charged to a Loan Party under a Factoring Agreement or withheld from sums
otherwise due to a Loan Party under a Factoring Agreement, including, without
limitation, (i) interest, (ii) fees, (iii) commissions, (iv) ledger debt, (v)
deductions, (vi) charge backs, (vii) reserves taken by a Factor, (viii)
deductions for credit loss sharing, (ix) any customer deductions, (x) any Factor
Risk Accounts which are not paid in full because of a dispute (real or alleged),
(xi) any Account with respect to which a Loan Party has breached any of the
warranties or representations set forth a Factoring Agreement, (xii) any early
payment anticipation deducted by a customer on any Account, (xiii) any Account
with respect to which a Factor does not have the Credit Risk which is not paid
in full when due for any reason, and (xiv) payments received by a Factor on
client risk accounts receivable which such Factor is required at any time or for
any reason to turnover or return (including, without limitation, payments made
by a Factor in connection with preference claims asserted in a bankruptcy or
other insolvency proceeding), which amount is determined based upon statements
provided by such Factor or, in the absence of such current statements, as
determined by the Agent in its reasonable discretion.
"FACTOR STATUS REPORT" means status or similar reports or
accountings issued by Factor from time to time under a Factoring Agreement and
setting forth the status of the Factor Risk Accounts and any other Account
factored under the Factoring Agreement.
"FACTORING AGREEMENT" means a factoring agreement acceptable
to Agent entered into between a Factor and a Loan Party.
"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
the Bank 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.
"FEE LETTER" means the letter from Agent to the Borrower,
dated November 17, 2004, setting forth certain fees and other charges payable by
the Loan Parties in connection with the provision and syndication of the credit
facilities contemplated under this Agreement.
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"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 YEAR" means, with respect to the Loan Parties, their
fiscal year for financial accounting purposes. The Fiscal Year of the Loan
Parties is a calendar year.
"FIXED ASSETS" means the Equipment and Real Estate of the Loan
Parties.
"FIXED CHARGE COVERAGE RATIO" shall mean, on a Consolidated
basis for the Borrower and the other Consolidated Members, the ratio of (i)
Consolidated EBITDA as of the last day of any month for the twelve month period
then ending, MINUS, Unfinanced Capital Expenditures incurred in such period,
Taxes actually paid in such period, Permitted Senior Subordinated Debt
Prepayments in such period (except for Net Proceeds from permitted Asset
Dispositions used for said prepayments in such period), and cash Distributions
made or accrued in such period, to (ii) the sum of Interest Expense and Current
Maturities of Long Term Debt paid or payable during such period, in each case on
a Consolidated basis.
"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, 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 Subsidiary of the Borrower
other than the Domestic Subsidiaries, which shall include Applica Canada and
such other Foreign Subsidiaries as are designated in SCHEDULE 6.5.
FUNDED DEBT of the Borrower or a Consolidated Member 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
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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.
"GENERAL INTANGIBLES" shall have the meaning specified in the
Security Agreement.
"GOODS" shall have the meaning specified in the Security
Agreement.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state, province, 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 government, 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 and any other Subsidiary of
the Borrower that has executed and delivered to the Agent an agreement of
Guaranty in respect 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.
"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.
"INTERCOMPANY ACCOUNTS" has the meaning specified in Section
5.2(l).
"INSTRUMENTS" shall have the meaning specified in the Security
Agreement.
"INTEREST EXPENSE" shall mean, for any period, interest
expense (including capitalized interest) in respect of Indebtedness of Borrower
and the other Consolidated Members as determined in accordance with GAAP.
"INTEREST PERIOD" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Continuation/Conversion
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the date one, two, three or six
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months thereafter as selected by the
Borrower in its Notice of Borrowing, in the form attached hereto as EXHIBIT D,
or Notice of Continuation/Conversion, in the form attached hereto as EXHIBIT E,
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 Rate 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.
"IN-TRANSIT INVENTORY" means Inventory of a Loan Party (i)
consisting of finished goods that is in transit to a Loan Party; (ii) with
respect to which Agent has received from the vendor of such Inventory and each
of the Loan Parties a duly executed letter agreement in substantially the form
of EXHIBIT H and such vendor and the Loan Parties are in compliance with the
terms and provisions of such letter agreement, as Agent may determine in its
sole discretion; (iii) the In-Transit Perfection Documents with respect thereto
have been presented to and are in the possession of Agent or its authorized
bailees; and (iv) such Inventory it is fully insured by marine cargo or other
insurance on terms in an amount and subject to deductibles satisfactory to Agent
and with respect to which Agent has been named additional insured and loss
payee.
"IN-TRANSIT PERFECTION DOCUMENTS" mean all filings, agreements
or other documents requested by Agent to perfect (or continue the perfection of)
a first priority Lien in favor of Agent (except for possessory liens upon such
goods in the possession of a freight carrier or shipping company securing only
the freight charges for the transportation of such goods to a Loan Party) upon
Inventory in-transit to a Loan Party, including delivery to the Agent or a
bailee of the Agent of all original Documents issued with respect to such
Inventory (which shall in each instance be negotiable (as defined in the UCC))
and such other agreements as may be requested by Agent with each common carrier,
shipper, customs agent, freight forwarder or other Person, in form and substance
reasonably satisfactory to Agent.
"INVENTORY" shall have the meaning specified in the Security
Agreement.
"INVESTMENT PROPERTY" shall have 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.
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"LATEST PROJECTIONS" means: (a) on the Closing Date and
thereafter until the Agent receives new projections pursuant to SECTION 5.2(E),
the projections of the Borrower's balance sheets, income statements and cash
flows, for the period commencing on September 1, 2004 and ending on December 31,
2005 and delivered to Agent prior to the Closing Date; and (b) thereafter, the
projections most recently received by Agent pursuant to SECTION 5.2(F).
"LENDER" and "LENDERS" have the meanings specified in the
introductory paragraph hereof and shall include Agent to the extent of any Agent
Advance outstanding and the Bank to the extent of any Non-Ratable Loan
outstanding; PROVIDED that no such Agent Advance or Non-Ratable Loan shall be
taken into account in determining any Lender's Pro Rata Share.
"LENDING PARTY" has the meaning specified in SECTION 13.17.
"LETTER OF CREDIT" has the meaning specified in SECTION
1.4(A).
"LETTER OF CREDIT FEE" has the meaning specified in SECTION
2.6.
"LETTER OF CREDIT ISSUER" means the Bank, any Affiliate of the
Bank, a Lender or any other financial institution that issues any Letter of
Credit pursuant to this Agreement.
"LETTER-OF-CREDIT RIGHTS" shall have the meaning specified in
the Security Agreement.
"LETTER OF CREDIT SUBFACILITY" means $10,000,000.
"LIBOR INTEREST PAYMENT DATE" means, with respect to a LIBOR
Rate 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
LIBOR Rate Loans, 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 Revolving 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
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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 Rate Loan comprising part of such Borrowing would be offered by
the Bank'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 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 Rate Loan shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.
"LIBOR RATE LOANS" means, the LIBOR Revolving Loans.
"LIBOR REVOLVING LOAN" means a Revolving Loan during any
period in which it bears interest based on the LIBOR Rate.
"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, hypothec, charge, claim, 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 Borrower, which
account shall be maintained by the Agent.
"LOAN DOCUMENTS" means this Agreement, the Security Agreement,
Subsidiary Guaranties, the Applica Canada Guaranty, the Applica Canada Security
Agreement, the Pledge Agreement, the Fee Letter 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 of the Borrower, the Guarantors and
Applica Canada, and "LOAN PARTIES" means any two or more of the foregoing.
"LOANS" means, collectively, all loans and advances provided
for in ARTICLE 1.
"LONG TERM DEBT" shall mean at any date all Funded Debt which
matures (or the maturity of which may at the option of the Borrower or any
Consolidated Member be extended such that it matures) more than one year after
such date.
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"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 Consolidated Members
taken as a whole, or the Collateral; (b) a material impairment of the ability of
any Obligated 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 Obligated 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.
"MAXIMUM REVOLVER AMOUNT" means $175,000,000.
"MEASUREMENT DATE" means the last day of the month immediately
preceding any month in which Borrower does not maintain the Average Monthly
Excess Availability for such month, PROVIDED, that at any time after a
Measurement Date has been invoked and Borrower has maintained thereafter for 2
consecutive calendar months the Average Monthly Excess Availability and no
Default or Event of Default then exists, there shall be no further Measurement
Date only for so long as the conditions for the imposition of additional
Measurement Dates have not been met.
"MEXICO FACILITY" means the manufacturing facility and related
real Property, plant and equipment owned by Applica Manufacturing S. de ▇.▇. de
C.V. located in Queretaro, Mexico.
"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 the Borrower
or any ERISA Affiliate.
"NET AMOUNT OF ELIGIBLE ACCOUNTS" means, at any time, the
gross Dollar Equivalent amount of Eligible Accounts less, unless already
included as a Reserve, sales, excise or similar taxes, returns, discounts,
claims, credits, allowances accrued rebates, offsets, deductions, counterclaims,
disputes and other defenses of any nature at any time issued, owing, granted,
outstanding, available or claimed.
"NET INVENTORY PROCEEDS" means, with regard to any sale or
disposition of Inventory, the gross cash proceeds received from such sale or
disposition, net of the reasonable costs of such sale (including attorneys fees,
charges and commissions), and all transfer, sales and other taxes paid or
payable as a result of such sale.
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"NET ORDERLY LIQUIDATION VALUE" shall mean at any date of
determination the Net Inventory Proceeds expected to be realized at an orderly,
negotiated sale of applicable items of Inventory located in the United States or
Canada as determined by a "desktop" professional opinion of Ozer Valuation
Services or other appraisal company of similar qualifications and standing
acceptable to the Agent, with each such opinion assuming that such sale is held
within a reasonable period of time after the date of the opinion.
"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.
"NET WORTH" means with respect to any Person, such Person's
total shareholder's equity (including capital stock, additional paid-in capital
and retained earnings, after deducting treasury stock) which would appear as
such on a balance sheet of such Person prepared in accordance with GAAP.
"NON-FACTORED ELIGIBLE ACCOUNT" means an Account which arises
in the ordinary course of Borrower's business from the sale of Inventory, which
is due from an Account Debtor none of whose Accounts has been assigned to Factor
under the Factoring Agreement, and which in all other respects constitutes an
Eligible Account.
"NON-RATABLE LOAN" and "NON-RATABLE LOANS" have the meanings
specified in SECTION 1.2(H).
"NOTICE OF BORROWING" has the meaning specified in SECTION
1.2(B).
"NOTICE OF CONTINUATION/CONVERSION" has the meaning specified
in SECTION 2.2(B).
"OBLIGATED PARTIES" means (i) the Loan Parties and (ii) any
other Consolidated Member that executes and delivers to the Agent any Foreign
Security Document, and "OBLIGATED PARTY" means any of the foregoing.
"OBLIGATIONS" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Borrower 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 or not evidenced by any note, or other instrument or document, 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, and including all principal, interest, charges, expenses, fees,
attorneys' fees, filing fees and any other sums chargeable to the Borrower or
other Loan Party hereunder or under any of the other Loan Documents.
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"Obligations" includes, without limitation, (a) all debts, liabilities, and
obligations now or hereafter arising from or in connection with the Letters of
Credit and Credit Support and (b) all debts, liabilities and obligations now or
hereafter arising from or in connection with Bank Products provided by Bank or
of which the Agent shall have received timely notice pursuant to SECTION 12.19.
"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 legally authorized incorporated or unincorporated entity,
the articles of incorporation, certificate of incorporation, articles of
organization or certificate of limited partnership of such entity.
"ORIGINAL CLOSING DATE" means December 28, 2001.
"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.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"PENDING REVOLVING LOANS" means, at any time, the aggregate
principal amount of all Revolving Loans requested in any Notice of Borrowing
received by the Agent which have not yet been advanced.
"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 interest 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
$2,500,000,
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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 an Responsible Officer stating that no Default or
Event of Default exists before or after giving effect to such Acquisition and
demonstrating that Borrower shall have a Fixed Charge Coverage Ratio of not less
than 1.1 to 1.0 and after giving effect to such Acquisition on a pro forma
basis, (iv) appropriate phase I environmental reports in respect of any real
property of the Target shall have been delivered to the Agent not less than ten
(10) days prior to the consummation of such Acquisition and such reports shall
be acceptable to the Agent in its sole discretion; (v) after giving effect to
the consummation of such Acquisition (including any Loans made hereunder to
finance such Acquisition), Availability is greater than $30,000,000 for each of
the 60 days immediately preceding the date of the consummation of such
Acquisition, PLUS the cash Cost of Acquisition; PROVIDED, that no assets of the
Target shall be included in the calculation of Availability for purposes of this
CLAUSE (V), or for purposes of SECTION 7.27 or otherwise until the Agent has
completed a satisfactory field examination with respect to the Target and its
assets, and PROVIDED, FURTHER, that with respect to any Acquisition occurring
during any Seasonal Inventory Period, any additional Availability derived by
Borrower based on the Seasonal Inventory Advance Amount shall be deemed to equal
$0 for purposes of calculating Availability pursuant to this CLAUSE (V) during
such Seasonal Inventory Period; (vi) after giving effect to the consummation of
such Acquisition (including any Loans made hereunder to finance such
acquisition) the Aggregate Revolver Outstandings shall not exceed the amount of
the Maximum Revolver Amount minus $10,000,000; (vii) if the Target will become a
Domestic Subsidiary of a Loan Party in connection with such Acquisition, the
Loan Parties shall cause the Target to become a Guarantor 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, all
pursuant to documentation in form and substance acceptable to the Agent in its
discretion; and (viii) if the Target will become a Foreign Subsidiary of a Loan
Party in connection with such Acquisition, the Loan Parties shall cause the
parent Loan Party to pledge to Agent, for the benefit of the Lenders, 65% of the
Capital Stock of the Target.
"PERMITTED LIENS" means:
(a) Liens for Taxes, fees, assessments or other charges of a
Governmental Authority which are not (i) delinquent or (ii) statutory Liens for
taxes, fees, assessments or other charges in an amount not to exceed $500,000;
PROVIDED that the payment of such taxes which are due and payable is being
contested in good faith and by appropriate proceedings diligently pursued and as
to which adequate financial reserves have been established on the applicable
Loan Party's books and records and a stay of enforcement of any such Lien is in
effect;
(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,
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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 Environmental Liens) or
other similar 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 demand when
due, such claims or demands do not exceed $200,000 in the aggregate;
(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 do not in the aggregate materially
detract from the value of the Real Estate or materially interfere with its use
in the ordinary conduct of the applicable Loan Party's business;
(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; and
(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(a), (c), (k) hereof;
(i) Liens on Accounts subject to any Approved Receivables
Program; and
(j) 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.
"PERMITTED MEXICO FACILITY DISPOSITION" means a Loan Party's
sale of the Mexico Facility if (a) at the time of such sale no Default or Event
of Default has occurred and is continuing, (b) the transaction is structured as
a fee simple sale, a sale and leaseback, or a significant reduction in
operations at the Mexico Facility, (c) the buyer is a Person who is not an
Affiliate of a Consolidated Member, (d) upon the consummation of such sale the
Consolidated Member who is the seller shall receive not less than the lesser of
(i) $8,000,000 in Net Proceeds or (ii) cash sufficient to cover all cash
severance and other wind-down costs of the Mexico Facility.
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"PERMITTED OFFICER SEVERANCE PAYMENTS" means severance
payments to senior officers of the Loan Parties incurred in the 2004 Fiscal Year
of Borrower which do not exceed $9,000,000 in the aggregate during the term of
this Agreement.
"PERMITTED SENIOR SUBORDINATED DEBT PREPAYMENTS" means a
prepayment of principal in respect of Senior Subordinated Debt (i) of which
Agent shall have been given not less than 5 Business Days' prior written notice,
(ii) no Event of Default has occurred or is continuing after giving effect to
any such prepayment, (iii) for 60 consecutive days prior to the effective date
of such prepayment, Availability is not less than $30,000,000 at any time, PLUS
the amount of anticipated prepayment, PROVIDED, that with respect to any
prepayment occurring during any Seasonal Inventory Period, any additional
Availability derived by Borrower based on the Seasonal Inventory Advance Amount
shall be deemed to equal $0 for purposes of calculating Availability pursuant to
this CLAUSE (III) during such Seasonal Inventory Period; and (iv) immediately
prior to and after giving effect to such prepayment the Fixed Charge Coverage
Ratio is not less than 1.1 to 1.0. Notwithstanding the foregoing, (x) no
proceeds from the Permitted Mexico Facility Disposition may be used to prepay
Senior Subordinated Debt until all severance and other wind-down costs of the
Mexico Facility shall have been paid and funded in full, and (y) the Net
Proceeds from other Asset Dispositions, to the extent such dispositions are
expressly permitted by the Agreement or otherwise consented to by Agent in
writing, may be used to prepay Senior Subordinated Debt if and only if each of
the conditions set forth in clauses (i) through (iv) are satisfied.
"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 the
Borrower or any other Loan Party sponsors or maintains or to which the Borrower
or any other Loan Party makes, is making, or is obligated to make contributions
and includes any Pension Plan.
"PLEDGE AGREEMENT" means the Stock Pledge Agreement, dated on
or about the Original Closing Date, executed by the Borrower and certain of the
Domestic Subsidiaries in favor of Agent, with respect of all of the Capital
Stock of the Domestic Subsidiaries referenced therein and 65% of the Capital
Stock of the Direct Foreign Subsidiaries, as at any time amended.
"PPSA" means, collectively, the Personal Property Security
Acts of the Provinces of Ontario and Nova Scotia, and all regulations
thereunder, as amended from time to time, and any successor legislation.
"PROPOSED CHANGE" has the meaning specified in SECTION
11.1(C).
"PROPRIETARY RIGHTS" shall have the meaning specified in the
Security Agreement.
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"PRO RATA SHARE" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts 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 (exclusive indebtedness in respect of Bank Products) owed to such
Lender and the denominator of which is the aggregate amount of the Obligations
(exclusive indebtedness in respect of Bank Products) owed to the Lenders, in
each case giving effect to a Lender's participation in Non-Ratable Loans and
Agent Advances.
"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 7.29.
"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(b) 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.
"REPRESENTATIVES" has the meaning specified in SECTION 13.16.
"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.
"RESERVES" means reserves that limit, without duplication, the
availability of credit hereunder, consisting of the Availability Reserve, and
other reserves against Availability, Eligible Accounts or Eligible Inventory,
established by Agent from time to time in Agent's reasonable credit judgment.
Without limiting the generality of the foregoing or in duplication thereof, the
following reserves shall be deemed to be a reasonable exercise of Agent's credit
judgment: (a) Bank Product Reserves, (b) a reserve for accrued, unpaid interest
on the Obligations, (c) reserves for rent at leased locations subject to
statutory or contractual landlord liens, (d) Inventory shrinkage consistent with
the Borrower's standard accounting practices, (e) customs charges, (f) dilution,
and (g) warehousemen's or bailees' charges.
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"RESPONSIBLE OFFICER" means, with respect to any Loan Party,
the chief executive officer, the president, the senior treasury officer, the
chief financial officer, the 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, 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 so long as the acquisition costs thereof constitute Capital Expenditures
permitted hereunder; (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
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
▇▇▇▇▇'▇ 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) investments
consisting of loans and advances between any Loan Party and another Loan Party
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 Borrower has
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) the Senior Subordinated Debt; and (n)
shares of mutual funds, the shares of which mutual funds are at all times rated
"AAA" by Standard & Poor's; (o) cash or other cash equivalents owned by the
Borrower and in the possession or control of the Agent or an Affiliate of Agent
invested in short terms vehicles such as repurchase agreements, overnight bank
deposits, bankers' acceptances or other investments as may be mutually
acceptable to the Borrower and the Agent; and (q) 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, expressed
to mature not later than 180 days following the date of issuance thereof and
rated in an investment grade rating category by Standard & Poor's and Moody's;
PROVIDED, HOWEVER, that with respect to clauses (d) - (h) and clauses (n) - (q),
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.
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"REVOLVING LOANS" has the meaning specified in SECTION 1.2 and
includes each Agent Advance and Non-Ratable Loan.
"SEASONAL INVENTORY ADVANCE CONDITION" shall mean, in respect
of the 2005 Seasonal Inventory Period, Consolidated EBITDA of not less than
$23,000,000 for the 12 month period ending July 31, 2005, and in respect of the
Seasonal Inventory Period in any subsequent year, a Fixed Charge Coverage Ratio
for the 12 month period ending July 31 during any such year of not less than 1.0
to 1.0.
"SEASONAL INVENTORY ADVANCES" means Revolving Loans made from
time to time in respect of and measured by the Seasonal Inventory Formula
Amount.
"SEASONAL INVENTORY FORMULA AMOUNT" means, if the Seasonal
Inventory Advance Condition is satisfied, during any Seasonal Inventory Period
the least of:
(a) $7,500,000, or (b) 5% of the Cost Value of Eligible
Inventory, or (c) 10% of the Net Orderly Liquidation Value of
Eligible Inventory;
PROVIDED, that if each of the Special Seasonal Inventory
Advance Conditions are satisfied, then notwithstanding the
foregoing, during the Seasonal Inventory Period the lesser of:
(x) $10,000,000, or (y) 5% of the Cost Value of Eligible
Inventory, or (z) 10% of the Net Orderly Liquidation Value of
Eligible Inventory;
"SEASONAL INVENTORY PERIOD" shall mean during any year the
period commencing September 1 of such year and ending November 15 of such year.
"SECURITY AGREEMENT" means the Security Agreement dated as of
the Original Closing Date among the Loan Parties and Agent for the benefit of
the Agent and the Lenders, as at any time amended.
"SENIOR SUBORDINATED DEBT" means the Debt evidenced by the
Senior Subordinated Debt Offering Documents at any time.
"SENIOR SUBORDINATED DEBT OFFERING DOCUMENTS" means: (i) the
10% Senior Subordinated Notes due 2008, executed by Windmere-Durable Holdings,
Inc., now known as Applica Incorporated, dated July 27, 1998, in the principal
amount of $130,000,000; (ii) the 10% Senior Subordinated Notes due 2008
Supplemental Indenture, dated as of July 27, 1998, by and among the Borrower,
certain Affiliates listed on the signature pages thereof and State Street Bank
and Trust Company; and (iii) all other agreements, instruments or documents
executed or delivered by Borrowers in connection with the foregoing, as any of
the foregoing may be at any time amended or modified.
"SETTLEMENT" AND "SETTLEMENT DATE" have the meanings specified
in SECTION 12.15(A)(II).
"SOFTWARE" shall have the meaning specified in the Security
Agreement..
A-32
"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 probable 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
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.
"SPECIAL SEASONAL INVENTORY ADVANCE CONDITIONS" shall mean
with respect to the 2005 Seasonal Inventory Period (a) Borrower shall have
achieved Consolidated EBITDA of $30,000,000 or more for the 12 month period
ending July 31, 2005 and (b) Borrower's Fixed Charge Coverage Ratio is less than
1.0 to 1.0 for the 12 month period ending July 31, 2005 and for all years
thereafter Borrower shall have achieved a Fixed Charge Coverage Ratio of not
less than 1.1 to 1.0 for the 12 month period ending July 31 in any applicable
year.
"STATED TERMINATION DATE" means November 17, 2009.
"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.
"SUBSIDIARY GUARANTY" means an agreement of Guaranty executed
by any Subsidiary of the Borrower pursuant to which such Subsidiary guarantees
the Obligations or any portion thereof.
"SUPPORTING OBLIGATIONS" shall have the meaning specified in
the Security Agreement.
"TANGIBLE NET WORTH" shall mean, as applied to any Person, the
Net Worth of such Person at the time in question, after deducting therefrom the
amount of all intangible items reflected therein, including all unamortized debt
discount and expense, unamortized research and development expense, unamortized
deferred charges, goodwill, patents, trademarks,
A-33
service marks, trade names, copyrights, unamortized excess cost of investment in
Subsidiaries over equity at dates of acquisition, and all similar items which
should properly be treated as intangibles in accordance with GAAP.
"TAXES" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, including any present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies which arise from any payment
made hereunder of from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or any other Loan Documents, but excluding, in
the case of each Lender and the Agent, such taxes (including income taxes or
franchise taxes) as are imposed on or measured by the Agent's or each Lender's
net income in any the jurisdiction (whether federal, state or local and
including any political subdivision thereof) under the laws of which such Lender
or the Agent, as the case may be, is organized or maintains a lending office.
"TERMINATION DATE" means the earliest to occur of (i) the
Stated Termination Date, (ii) the date the Total Facility is terminated either
by the Borrower pursuant to SECTION 3.2 or 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 the Borrower(s) or any Subsidiary from a Plan during a plan year; or (b) the
filing of a notice of intent to terminate in whole or in part a Plan or the
treatment of a 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 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 Plan.
"TOTAL FACILITY" has the meaning specified in SECTION 1.1.
"UCC" has the meaning specified in the Security Agreement.
"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.
"UNUSED LETTER OF CREDIT SUBFACILITY" means an amount equal to
$10,000,000 MINUS the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit PLUS, without duplication, (b) the aggregate unpaid
reimbursement obligations with respect to all Letters of Credit.
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"UNUSED LINE FEE" has the meaning specified in SECTION 2.5.
"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.
"WAL-MART" means Wal-Mart Stores, Inc. or any affiliate of
Wal-Mart Stores, Inc.
"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.
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.
INTERPRETIVE PROVISIONS. (a) The meanings of defined terms
are equally applicable to the singular and plural forms of the defined terms.
(b) 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.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) 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."
(iv) The word "or" is not exclusive.
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including the Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications 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.
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(e) 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.
(f) 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.
(g) For purposes of Section 9.1, a breach of a financial
covenant contained in Sections 7.26-7.28 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.
(h) The Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agent, the
Borrower 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.
(i) As used in this Agreement, and the other Loan Documents,
"knowledge" of the Borrower shall mean the actual knowledge (after due inquiry)
of any Responsible Officer.
A-36
EXHIBIT A
[RESERVED]
A-1
EXHIBIT B
BORROWING BASE CERTIFICATE
B-1
EXHIBIT C
FINANCIAL STATEMENTS
C-1
EXHIBIT D
NOTICE OF BORROWING
Date ____________ , 200_
To: Bank of America, N.A. as Agent for the Lenders who are parties to the
Amended and Restated Credit Agreement dated as of November 17, 2004 (as
extended, renewed, amended or restated from time to time, the "CREDIT
AGREEMENT"), among Applica Incorporated, Applica Consumer Products,
Inc., and _______________________, certain Lenders which are
signatories thereto and Bank of America, N.A., as Agent
Ladies and Gentlemen:
The undersigned, Applica Incorporated (the "BORROWER"), refers
to the Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably of the Borrowing specified
below:
1. The Business Day of the proposed Borrowing is ______
______________________ , 200_.
2. The aggregate amount of the proposed Borrowing is
$________________________.
3. The Borrowing is to be comprised of $ of Base Rate
and $ of LIBOR Rate Loans.
4. The duration of the Interest Period for the LIBOR
Rate 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;
(b) No Default or Event of Default has occurred and is
continuing, or would result from such proposed Borrowing; and
(c) The proposed Borrowing will not cause the aggregate
principal amount of all outstanding Revolving Loans [PLUS the aggregate amount
available for drawing under all outstanding Letters of Credit], to exceed the
Borrowing Base or the combined Commitments of the Lenders.
[APPLICA INCORPORATED]
By:
-------------------------------------
Title:
----------------------------------
2
EXHIBIT E
NOTICE OF CONTINUATION/CONVERSION
To: Bank of America, N.A. as Agent for the Lenders to the Amended and
Restated Credit Agreement dated as of November , 2004 (as extended,
renewed, amended or restated from time to time, the "CREDIT AGREEMENT")
among Applica Incorporated, Applica Consumer Products, Inc., and
_______________________, certain Lenders which are signatories thereto
and Bank of America, N.A., as Agent
Ladies and Gentlemen:
The undersigned, Applica Incorporated (the "BORROWER"), refers
to the Credit 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:
1. The Continuation/Conversion Date is __________, 200_.
2. The aggregate amount of the Loans to be [converted]
[continued] is $ .
3. The Loans are to be [converted into] [continued as]
[LIBOR Rate] [Base Rate] Loans.
4. The duration of the Interest Period for the LIBOR
Rate 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;
(b) No Default or Event of Default has occurred and is
continuing, or would result from such proposed [conversion] [continuation]; and
(c) The proposed conversion-continuation will not cause the
aggregate principal amount of all outstanding Revolving Loans [PLUS the
aggregate amount available for drawing under all outstanding Letters of Credit]
to exceed the Borrowing Base or the combined Commitments of the Lenders.
APPLICA INCORPORATED
By:
-------------------------------------
Title:
----------------------------------
2
EXHIBIT F
[FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "ASSIGNMENT AND
ACCEPTANCE") dated as of ____________________, 200_ is made between
______________________________ (the "ASSIGNOR") and __________________________
(the "ASSIGNEE").
RECITALS
WHEREAS, the Assignor is party to that certain Amended and
Restated Credit Agreement dated as of November17 2004 (as amended, amended and
restated, modified, supplemented or renewed, the "CREDIT AGREEMENT") among
Applica Incorporated, a Florida corporation (the "BORROWER"), certain of its
subsidiaries, the several financial institutions from time to time party thereto
(including the Assignor, the "LENDERS"), and Bank of America, N. A., as agent
for the Lenders (the "AGENT"). Any terms defined in the Credit Agreement and not
defined in this Assignment and Acceptance are used herein as defined in the
Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor
has committed to making Loans (the "COMMITTED LOANS") to the Borrower in an
aggregate amount not to exceed $__________ (the "COMMITMENT");
WHEREAS, the Assignor has made Committed Loans in the
aggregate principal amount of $__________ to the Borrower
WHEREAS, [the Assignor has acquired a participation in its pro
rata share of the Lenders' liabilities under Letters of Credit in an aggregate
principal amount of $____________ (the "L/C OBLIGATIONS")] [no Letters of Credit
are outstanding under the Credit Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part
of the] [all] rights and obligations of the Assignor under the Credit Agreement
in respect of its Commitment, together with a corresponding portion of each of
its outstanding Committed Loans and L/C Obligations, 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:
1. ASSIGNMENT AND ACCEPTANCE.
(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 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
$__________.
2. 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.
3. 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.
2
4. 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 Borrower, 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.
5. 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;
[(ii) the consent of the 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 Borrower and the Agent for
acknowledgment by the Agent, a Notice of Assignment in the form attached hereto
as SCHEDULE 1.
6. [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.]
3
7. WITHHOLDING TAX.
The Assignee (a) represents and warrants to the Lender, the
Agent and the Borrower 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 Borrower prior to the time that the Agent or the Borrower is
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.
8. 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 Borrower, or the performance or observance by the Borrower
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
4
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.]
9. 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 Borrower or the Agent, which may be required in
connection with the assignment and assumption contemplated hereby.
10. MISCELLANEOUS.
(a) 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.
(b) All payments made hereunder shall be made without any
set-off or counterclaim.
(c) 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.
(d) 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.
(e) 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
5
waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding.
(f) 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).
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:
--------------------------------
6
SCHEDULE 1.1
to
ASSIGNMENT AND ACCEPTANCE
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_______________, 200_
Bank of America, N.A
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:______________________
Applica Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Re: Applica Incorporated, ET AL.
Ladies and Gentlemen:
We refer to the Amended and Restated Credit Agreement dated as
of November 17, 2004 (as amended, amended and restated, modified, supplemented
or renewed from time to time the "CREDIT AGREEMENT") among Applica Incorporated,
Applica Consumer Products, Inc., and _______________________ (the "LOAN
PARTIES"), the Lenders referred to therein and Bank of America, N. A., as agent
for the Lenders (the "AGENT"). Terms defined in the Credit Agreement are used
herein as therein defined.
1. We hereby give you notice of, and request the consent of
the Agent to, the assignment by __________________ (the "ASSIGNOR") to
_______________ (the "ASSIGNEE") of _____% of the right, title and interest of
the Assignor in and to the Credit Agreement (including the right, title and
interest of the Assignor in and to the Commitments of the Assignor, all
outstanding Loans made by the Assignor and the Assignor's participation in the
Letters of Credit pursuant to the Assignment and Acceptance Agreement attached
hereto (the "ASSIGNMENT AND ACCEPTANCE"). We understand and agree that the
Assignor's Commitment, as of , 200 , is $ ___________, the aggregate amount of
its outstanding Loans is $_____________, and its participation in L/C
Obligations is $_____________.
2. The Assignee agrees that, upon receiving the consent of the
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.
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.
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:
-------------------------------------
2
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
Bank of America, N. A.
as Agent
By:
--------------------------------------
Title:
-----------------------------------
3
EXHIBIT G
COLLATERAL ACCESS AGREEMENT
LANDLORD AGREEMENT
THIS AGREEMENT, dated as of , 20___, by
___________________________________ (hereinafter "Landlord"), in favor of BANK
OF AMERICA, N.A., a national banking association, as collateral and
administrative agent (together with its successors in such capacity, "Agent")
for itself and other various financial institutions (collectively, "Lenders" and
individually, a "Lender").
RECITALS:
Landlord is the landlord under a certain lease (as at any time amended,
the "Lease") dated ________________, between Landlord and _________________, a
________ corporation ("Company"), covering certain business premises located at
(the "Leased Premises").
Agent and Lenders have been requested to extend loans and other
accommodations to Company and certain affiliates of Company (collectively, the
"Borrowers"), and, as a condition to extending such loans and other financial
accommodations, Agent and Lenders have required, among other things, that
Borrowers grant to Agent, for the benefit of itself as Agent and the ratable
benefit of Lenders, a security interest in, among other things, all inventory,
machinery, equipment, furniture and fixtures of Borrowers, whether now owned or
hereafter acquired and all substitutions and replacements thereof
("Collateral"), a portion of which Collateral is or may be located from time to
time on or about or affixed to the Leased Premises.
NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid to Landlord and
in order to induce Agent and Lenders to extend financial accommodations to or
for the benefit of Borrowers in Agent's and Lenders' sole discretion, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Landlord hereby agrees with Agent as follows:
1. Landlord consents to Agent's security interest in all of the
Collateral. Agent's security interests in the Collateral shall be superior, if
applicable, to any interest which the Landlord may at any time have therein. For
so long as Agent has a security interest in any of the Collateral, Landlord will
not assert against any of the Collateral any statutory, common law, contractual
or possessory lien, including, without limitation, any right of levy or
distraint for rent, all of which Landlord hereby subordinates in favor of Agent.
2. Landlord agrees that none of the Collateral shall be deemed a
fixture or a part of the Leased Premises, but shall at all times be considered
personal property, and Landlord disclaims any interest in the Collateral as
fixtures.
3. Landlord agrees that Agent and Lenders may enter upon the Leased
Premises at any time or times, during normal business hours upon prior notice,
to inspect or remove any of the Collateral therefrom, without charge. Agent and
Lenders shall repair any physical damage directly caused to the Leased Premises
by such removal. Landlord will not hinder Agent's actions in enforcing its liens
and remedies with respect to the Collateral. Landlord agrees that Agent and
Lenders upon prior notice may conduct public or private foreclosure sales of
Collateral at the Leased Premises and that interested parties will be permitted
access to the Leased Premises during normal business hours for the purpose of
inspecting the Collateral prior to any such sale.
4. Landlord will notify Agent at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other address as Agent shall hereafter
specify in writing, in the event that Company defaults in its obligations under
the Lease, and Landlord shall allow Agent, at Agent's option, without
obligation, a period of fifteen (15) days from Agent's receipt of such notice in
which to cure or cause Company to cure any defaults. Landlord will permit the
Collateral to remain on the Leased Premises for a period of up to ninety (90)
days following receipt by Agent of written notice from Landlord that Landlord
has terminated the Lease and directing removal of the Collateral, subject,
however, to the payment to Landlord by Agent of the regular installments of rent
due under the Lease for the period of time during which Agent shall elect to use
or occupy the Leased Premises or elect to keep the Collateral thereon without
abandoning same, which rent shall be pro-rated on a per diem basis determined on
a 30-day month. Neither Agent nor any Lender shall be deemed to have assumed nor
shall it be liable for any unperformed or unpaid obligations of Company under
the Lease, other than for the payment of rent described in the preceding
sentence.
5. This Agreement shall remain in full force and effect until all
obligations of Borrowers to Agent and Lenders have been paid and satisfied in
full and Agent and Lenders have terminated their financing agreements with
Borrowers.
6. The provisions of this Agreement may not be modified or terminated
orally, and shall be binding upon the successors, assigns and representatives of
the Landlord, and upon any successor owner or transferee of the Leased Premises,
and shall inure to the benefit of the Agent and Lenders and their successors and
assigns. Landlord hereby waives notice of acceptance of this Agreement by Agent.
7. The laws of the State of New York shall govern the validity,
interpretation and enforcement of this Agreement.
2
IN WITNESS WHEREOF, Landlord has executed this Agreement on the date
first above written.
------------------------------
("Landlord")
By:
-------------------------------------
Title:
----------------------------------
3
WAREHOUSE NOTIFICATION AND
ACKNOWLEDGMENT OF SECURITY INTEREST
__________________, 20__
------------------------------
------------------------------
----------------, ---- -------
Attention: ____________
Gentlemen:
Please be advised that we have entered or are about to enter into
financing arrangements with Bank of America, N.A., as agent (in such capacity,
together with its successors and assigns, "Agent"), acting for and on behalf of
the financial institutions party from time to time to the Credit Agreement (as
hereinafter defined) as lenders (collectively, together with their respective
successors and assigns, "Lenders"), pursuant to which we have granted or will
grant to Agent a security interest in, among other collateral, all of our
existing and future inventory, including, without limitation, all goods which
may at any time now or hereafter be located on or in real property or buildings
owned, leased or otherwise in your possession or control, and/or delivered to
you for distribution or storage, whether pursuant to any agreement or otherwise.
Fur purposes of this agreement, the term "Credit Agreement" means the Credit
Agreement by and among Agent, Lenders, us and certain of our affiliates, as the
same may be amended, modified, supplemented, extended, renewed, restated or
replaced.
By your signature below, you acknowledge receipt of the above notice of
Agent's security interest and agree to follow all instructions that Agent may
from time to time hereafter give to you with respect to all of our goods which
are at any time located on or in real property or buildings owned, leased or
otherwise under your control and/or delivered by us to you for distribution or
storage. For the present, Agent consents to you continuing to release goods
pursuant to the instructions given you by us, or any of our authorized agents,
but this consent may be terminated or changed at any time by notice to you from
Agent. Upon being so notified by Agent, you are to abide solely by Agent's
instructions with respect to any of such goods and you are not to release any of
the goods to us or to anyone else except according to written instructions which
may be given to you from time to time by Agent.
You agree and acknowledge that you do not have and in no event will you
assert, as against Agent or any Lender, any lien, right of distraint or levy,
right of offset, claim, deduction, counterclaim, security or other interest in
any of our goods now or hereafter located on any of your premises, including any
of the foregoing which might otherwise arise or exist in your favor pursuant to
any agreement, common law, statute (including the U.S. Bankruptcy Code or any
state insolvency law) or otherwise if and to the extent you have been paid by
us, Agent or Lenders for storage, handling and other services pursuant to the
terms of your warehouse services contract with us. You certify that you do not
know of any security interest or other claim with respect to such goods, other
than the security interest which is the subject of this agreement. You agree and
acknowledge that no negotiable or non-negotiable warehouse
4
receipts, documents of title or similar instruments have been or will be issued
by you with respect to any of our goods, except for non-negotiable receipts
naming Agent or us as consignee. You shall not take any action purporting to
encumber or transfer any interest in such goods.
You further agree to allow Agent, any Lender and their respective
agents to enter upon your premises during business hours for the purpose of
examining, removing, taking possession of or otherwise dealing with any of our
goods at any time in your possession or copies of any records related thereto.
Agent and Lenders are relying upon this acknowledgement in connection
with their financing arrangements with us. This agreement may not be changed or
terminated orally or by course of conduct. Any change to the terms of this
agreement must be in writing and signed by Agent. This agreement shall be
binding upon you and your successors and assigns and shall be enforceable by and
inure to the benefit of Agent, Lender and their respective successors and
assigns.
This agreement constitutes our acknowledgment that Agent or any Lender
may assert any of the rights set forth or referred to herein, without objection
by us. We also agree to reimburse you for all reasonable costs and expenses
incurred by you as a direct result of compliance with the instructions of Agent
as to the disposition of any goods.
Please acknowledge your agreement to the foregoing by signing in the
space provided below.
Very truly yours,
Applica Incorporated
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ACKNOWLEDGED AND AGREED:
-------------------------------
By:
---------------------------
Name:
--------------------------
Title:
------------------------
Date:
-------------------------
5
EXHIBIT H
VENDOR LETTER
_______________, 20___
-------------------------------
-------------------------------
-----------------, ---- -------
Attention: ____________
Gentlemen:
Please be advised that we have entered or are about to enter into
financing arrangements with Bank of America, N.A., as agent (in such capacity,
together with its successors and assigns, "Agent"), acting for and on behalf of
the financial institutions party from time to time to the Credit Agreement (as
hereinafter defined) as lenders (collectively, together with their respective
successors and assigns, "Lenders"), pursuant to which we have granted or will
grant to Agent a security interest in, among other collateral, all of our
existing and future inventory, including, without limitation, all goods which
may at any time now or hereafter be located on or in real property or buildings
owned, leased or otherwise in your possession or control, and/or delivered to
you for distribution or storage, whether pursuant to any agreement or otherwise.
Fur purposes of this agreement, the term "Credit Agreement" means the Credit
Agreement by and among Agent, Lenders, us and certain of our affiliates, as the
same may be amended, modified, supplemented, extended, renewed, restated or
replaced.
By your signature below, you acknowledge receipt of the above notice of
Agent's security interest and agree to follow all instructions that Agent may
from time to time hereafter give to you with respect to all of our goods which
are at any time located on or in real property or buildings owned, leased or
otherwise under your control and/or delivered by us to you for distribution or
storage. For the present, Agent consents to you continuing to release goods
pursuant to the instructions given you by us, or any of our authorized agents,
but this consent may be terminated or changed at any time by notice to you from
Agent. Upon being so notified by Agent, you are to abide solely by Agent's
instructions with respect to any of such goods and you are not to release any of
the goods to us or to anyone else except according to written instructions which
may be given to you from time to time by Agent.
You agree and acknowledge that you do not have and in no event will you
assert, as against Agent or any Lender, any lien, right of distraint or levy,
right of offset, claim, deduction, counterclaim, security or other interest in
any of our goods now or hereafter located on any of your premises, including any
of the foregoing which might otherwise arise or exist in your favor pursuant to
any agreement, common law, statute (including the U.S. Bankruptcy Code or any
state insolvency law) or otherwise if and to the extent you have been paid by
us, Agent or Lenders for storage, handling and other services pursuant to the
terms of your warehouse services contract with us. You certify that you do not
know of any security interest or other claim with respect to such goods, other
than the security interest which is the subject of this
6
agreement. You agree and acknowledge that no negotiable or non-negotiable
warehouse receipts, documents of title or similar instruments have been or will
be issued by you with respect to any of our goods, except for non-negotiable
receipts naming Agent or us as consignee. You shall not take any action
purporting to encumber or transfer any interest in such goods.
You further agree to allow Agent, any Lender and their respective
agents to enter upon your premises during business hours for the purpose of
examining, removing, taking possession of or otherwise dealing with any of our
goods at any time in your possession or copies of any records related thereto.
Agent and Lenders are relying upon this acknowledgement in connection
with their financing arrangements with us. This agreement may not be changed or
terminated orally or by course of conduct. Any change to the terms of this
agreement must be in writing and signed by Agent. This agreement shall be
binding upon you and your successors and assigns and shall be enforceable by and
inure to the benefit of Agent, Lender and their respective successors and
assigns.
This agreement constitutes our acknowledgment that Agent or any Lender
may assert any of the rights set forth or referred to herein, without objection
by us. We also agree to reimburse you for all reasonable costs and expenses
incurred by you as a direct result of compliance with the instructions of Agent
as to the disposition of any goods.
Please acknowledge your agreement to the foregoing by signing in the
space provided below.
Very truly yours,
Applica Incorporated
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ACKNOWLEDGED AND AGREED:
-------------------------------
By:
---------------------------
Name:
--------------------------
Title:
------------------------
Date:
-------------------------
7
