EXHIBIT 10.12
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REVOLVING CREDIT AGREEMENT dated as of
January 31, 2003,
among
WKI HOLDING COMPANY, INC.,
The Lenders Party Hereto
and
JPMORGAN CHASE BANK,
as Administrative Agent
and Collateral Agent
X.X. XXXXXX SECURITIES INC.,
as Arranger
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TABLE OF CONTENTS
PAGE
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ARTICLE I Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.01. Defined Terms. . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.02. Classification of Loans and Borrowings . . . . . . . . 24
SECTION 1.03. Terms Generally. . . . . . . . . . . . . . . . . . . . 25
SECTION 1.04. Accounting Terms; GAAP . . . . . . . . . . . . . . . . 25
ARTICLE II The Credits . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.01. Commitments. . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.02. Loans and Borrowings . . . . . . . . . . . . . . . . . 25
SECTION 2.03. Requests for Borrowings. . . . . . . . . . . . . . . . 26
SECTION 2.04. Letters of Credit. . . . . . . . . . . . . . . . . . . 27
SECTION 2.05. Funding of Borrowings. . . . . . . . . . . . . . . . . 31
SECTION 2.06. Interest Elections. . . . . . . . . . . . . . . . . . .31
SECTION 2.07. Termination and Reduction of Commitments. . . . . . . .32
SECTION 2.08. Repayment of Loans; Evidence of Debt. . . . . . . . . .33
SECTION 2.09. Prepayment of Loans. . . . . . . . . . . . . . . . . . 33
SECTION 2.10. Fees. . . . . . . . . . . . . . . . . . . . . . . . . .34
SECTION 2.11. Interest. . . . . . . . . . . . . . . . . . . . . . . .35
SECTION 2.12. Alternate Rate of Interest. . . . . . . . . . . . . . .36
SECTION 2.13. Increased Costs . . . . . . . . . . . . . . . . . . . .36
SECTION 2.14. Break Funding Payments. . . . . . . . . . . . . . . . .38
SECTION 2.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . .38
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 2.17. Mitigation Obligations; Replacement of Lenders. . . . .40
ARTICLE III Representations And Warranties . . . . . . . . . . . . . . . . .41
SECTION 3.01. Organization; Powers . . . . . . . . . . . . . . . . . 41
SECTION 3.02. Authorization; Enforceability . . . . . . . . . . . . .41
SECTION 3.03. Governmental Approvals; No Conflicts . . . . . . . . . 42
SECTION 3.04. Financial Condition; No Material Adverse Change . . . .42
SECTION 3.05. Properties . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 3.06. Litigation and Environmental Matters . . . . . . . . . 43
SECTION 3.07. Compliance with Laws and Agreements . . . . . . . . . .43
SECTION 3.08. Investment and Holding Company Status . . . . . . . . .44
SECTION 3.09. Taxes . . . . . . . . . . . . . . . . . . . . . . . . .44
SECTION 3.10. ERISA . . . . . . . . . . . . . . . . . . . . . . . . .44
SECTION 3.11. Disclosure . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 3.12. Subsidiaries . . . . . . . . . . . . . . . . . . . . . 44
SECTION 3.13. Insurance . . . . . . . . . . . . . . . . . . . . . . .44
SECTION 3.14. Labor Matters . . . . . . . . . . . . . . . . . . . . .45
SECTION 3.15. Solvency . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 3.16. Security Documents . . . . . . . . . . . . . . . . . . 45
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TABLE OF CONTENTS
(continued)
PAGE
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SECTION 3.17. Use of Proceeds . . . . . . . . . . . . . . . . . . . .46
ARTICLE IV Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . .46
SECTION 4.01. Effective Date. . . . . . . . . . . . . . . . . . . . .46
SECTION 4.02. Each Credit Event . . . . . . . . . . . . . . . . . . .50
ARTICLE V Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . .51
SECTION 5.01. Financial Statements and Other Information . . . . . . 51
SECTION 5.02. Notices of Material Events . . . . . . . . . . . . . . 53
SECTION 5.03. Information Regarding Collateral . . . . . . . . . . . 54
SECTION 5.04. Existence; Conduct of Business . . . . . . . . . . . . 54
SECTION 5.05. Payment of Obligations. . . . . . . . . . . . . . . . .54
SECTION 5.06. Maintenance of Properties. . . . . . . . . . . . . . . 55
SECTION 5.07. Insurance. . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 5.08. Casualty and Condemnation. . . . . . . . . . . . . . . 55
SECTION 5.09. Books and Records; Inspection and Audit Rights. . . . .55
SECTION 5.10. Compliance with Laws. . . . . . . . . . . . . . . . . .56
SECTION 5.11. Use of Proceeds and Letters of Credit. . . . . . . . . 56
SECTION 5.12. Additional Subsidiaries. . . . . . . . . . . . . . . . 56
SECTION 5.13. Further Assurances. . . . . . . . . . . . . . . . . . .56
SECTION 5.14. Interest Rate Protection. . . . . . . . . . . . . . . .57
SECTION 5.15. Environmental Laws. . . . . . . . . . . . . . . . . . .57
SECTION 5.16. Earnings of Foreign Subsidiaries. . . . . . . . . . . .57
ARTICLE VI Negative Covenants. . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 6.01. Indebtedness; Certain Equity Securities. . . . . . . . 57
SECTION 6.02. Liens. . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 6.03. Fundamental Changes. . . . . . . . . . . . . . . . . . 60
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. . . . . . . . . . . . . . . . . . . . . .60
SECTION 6.05. Asset Sales. . . . . . . . . . . . . . . . . . . . . . 61
SECTION 6.06. Sale and Leaseback Transactions. . . . . . . . . . . . 62
SECTION 6.07. Swap Agreements. . . . . . . . . . . . . . . . . . . . 62
SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness .62
SECTION 6.09. Transactions with Affiliates . . . . . . . . . . . . . 63
SECTION 6.10. Restrictive Agreements . . . . . . . . . . . . . . . . 64
SECTION 6.11. Amendment of Material Documents. . . . . . . . . . . . 64
SECTION 6.12. Retail Stores . . . . . . . . . . . . . . . . . . . . .64
SECTION 6.13. Capital Expenditures . . . . . . . . . . . . . . . . . 64
SECTION 6.14. Leverage Ratio . . . . . . . . . . . . . . . . . . . . 64
SECTION 6.15. Fixed Charge Coverage Ratio . . . . . . . . . . . . . .65
SECTION 6.16. Minimum Consolidated EBITDA . . . . . . . . . . . . . .66
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TABLE OF CONTENTS
(continued)
PAGE
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SECTION 6.17. Maximum Inventory . . . . . . . . . . . . . . . . . . .66
ARTICLE VII Events Of Default . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE VIII The Administrative Agent And The Collateral Agent . . . . . . . 70
ARTICLE IX Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . .72
SECTION 9.02. Waivers; Amendments . . . . . . . . . . . . . . . . . .73
SECTION 9.03. Expenses; Indemnity; Damage Waiver . . . . . . . . . . 74
SECTION 9.04. Successors and Assigns . . . . . . . . . . . . . . . . 75
SECTION 9.05. Survival . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 9.06. Counterparts; Integration; Effectiveness . . . . . . . 78
SECTION 9.07. Severability . . . . . . . . . . . . . . . . . . . . . 78
SECTION 9.08. Right of Setoff . . . . . . . . . . . . . . . . . . . .78
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
Process . . . . . . . . . . . . . . . . . . . . . . . .78
SECTION 9.10. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . 79
SECTION 9.11. Headings . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 9.12. Confidentiality . . . . . . . . . . . . . . . . . . . .80
SECTION 9.13. Interest Rate Limitation . . . . . . . . . . . . . . . 80
SECTION 9.14. Intercreditor Agreement . . . . . . . . . . . . . . . .80
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SCHEDULES:
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Schedule 1.01(a) -- Existing Letters of Credit
Schedule 2.01 -- Commitments
Schedule 3.05 -- Real Property
Schedule 3.06 -- Disclosed Matters
Schedule 3.10 -- ERISA Matters
Schedule 3.12 -- Subsidiaries
Schedule 3.13 -- Insurance
Schedule 4.01(bb) -- Material Adverse Changes
Schedule 5.15 -- Compliance with Environmental Laws
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.03 -- Subsidiaries to be Dissolved
Schedule 6.04(c) -- Existing Investments
Schedule 6.05(d) -- Asset Sales
Schedule 6.09 -- Transactions with Affiliates
Schedule 6.10 -- Existing Restrictions
EXHIBITS:
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Exhibit A -- Form of Assignment and Acceptance
Exhibit B-1 -- Form of Opinion of Xxxxx Day
Exhibit B-2 -- Form of Opinion of Local Counsel to the Borrower
Exhibit C -- Form of Borrowing Base Certificate
Exhibit D -- Form of Collateral Agreement
Exhibit E -- Form of Intercreditor Agreement
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CREDIT AGREEMENT dated as of January 31, 2003, among WKI
HOLDING COMPANY, INC., the LENDERS party hereto, and JPMORGAN
CHASE BANK, as Administrative Agent and Collateral Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
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following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
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whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Account" means any present or future right to payment for goods sold
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or leased or for services rendered, whether now existing or hereinafter arising
and whether or not earned by performance.
"Account Debtor" shall mean, with respect to any Account, the obligor
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with respect to such Account.
"Adjusted Eligible Finished Goods" means, on any date, (a) Eligible
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Finished Goods minus (b) Inventory Reserves.
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"Adjusted Eligible Raw Materials" means, on any date, (a) Eligible Raw
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Materials minus (b) Inventory Reserves.
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"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
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for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means JPMorgan Chase Bank, in its capacity as
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administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire
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in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person
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that directly, or indirectly through one or more intermediaries, Controls, is
Controlled by or is under common Control with the Person specified, provided
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that no Person shall be deemed an "Affiliate" solely as a result of
participation in the Stockholders' Agreement.
"Alternate Base Rate" means, for any day, a rate per annum equal to
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the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any Lender, the
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percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
"Applicable Rate" means, for any day with respect to any ABR Loan or
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Eurodollar Loan, the applicable rate per annum set forth below under the caption
"ABR Spread" or "Eurodollar Spread", as the case may be, based upon the Leverage
Ratio as of the most recent determination date, provided that until the date of
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delivery to the Administrative Agent of the consolidated financial statements
pursuant to Section 5.01(a) for the fiscal year ended December 31, 2002, the
"Applicable Rate" shall be the applicable rate per annum set forth below in
Category 1:
Leverage Ratio: ABR Eurodollar
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Category 1 Spread Spread
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Greater than or equal to 3.50 1.75% 2.75%
Category 2
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Less than 3.50 1.50% 2.50%
For purposes of the foregoing, (a) the Leverage Ratio shall be
determined as of the end of each fiscal quarter of the Borrower's fiscal year
based upon the Borrower's consolidated financial statements delivered pursuant
to Section 5.01(a) or (b) and (b) each change in the Applicable Rate resulting
from a change in the Leverage Ratio shall be effective during the period
commencing on and including the date of delivery to the Administrative Agent of
such consolidated financial statements indicating such change and ending on the
date immediately preceding the effective date of the next such change, provided
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that the Leverage Ratio shall be deemed to be in Category 1 (i) at any time that
an Event of Default has occurred and is continuing or (ii) at the option of the
Administrative Agent or at the request of the Required Lenders, if the Borrower
fails to deliver the consolidated financial statements required to be delivered
by it pursuant to Section 5.01(a) or (b) during the period from the expiration
of the time for delivery thereof until such consolidated financial statements
are delivered.
"Approved Fund" means (a) a CLO and (b) with respect to any Lender
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that is a fund that invests in bank loans and similar commercial extensions of
credit in the ordinary course of business, any other fund that invests in bank
loans and similar commercial extensions of credit in the ordinary course of
business and is managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
2
"Assignment and Acceptance" means an assignment and acceptance entered
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into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"Available Amount" means on any date, the lesser of (a) the Borrowing
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Base then in effect and (b) the aggregate Commitments.
"Bankruptcy Code" means Chapter 11 of the United States Bankruptcy
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Code.
"Board" means the Board of Governors of the Federal Reserve System of
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the United States of America.
"Xxxxxx Credit Agreement" means the Amended and Restated Credit
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Agreement dated as of April 12, 2001, as amended from time to time, between WKI
Holding Company, Inc. and Xxxxxx, Inc. and all documents relating thereto.
"Borrower" means WKI Holding Company, Inc., a Delaware corporation.
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"Borrowing" means Loans of the same Type made, converted or continued
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on the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.
"Borrowing Base" means, at any time (subject to adjustment as provided
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in Section 5.09 (b)), an amount equal to the sum of (a) 85% of Eligible Accounts
Receivable, net of Dilution Reserve, (b) 25% of Adjusted Eligible Raw Materials
and (c) 50% of Adjusted Eligible Finished Goods, provided that the amounts
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derived from clauses (b) and (c) shall at no time exceed the lesser of (i) 85%
of the most recent appraised value of inventory and (ii) during the first three
fiscal quarters of any fiscal year, 125%, and at all other times, 100%, of the
amount derived from clause (a) above. The Borrowing Base at any time shall be
determined by reference to the most recent Borrowing Base Certificate delivered
to the Administrative Agent, absent any error in such Borrowing Base
Certificate. The Borrowing Base shall be subject to reserves established from
time to time by the Administrative Agent with any changes in such reserves to be
effective ten days after delivery of notice thereof to the Borrower.
"Borrowing Base Certificate" means a certificate in the form of
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Exhibit C or any other form approved by the Administrative Agent, together with
(a) all attachments contemplated thereby and (b) such other documentation as the
Administrative Agent shall reasonably request.
"Borrowing Request" means a request by the Borrower for a Borrowing in
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accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
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day on which commercial banks in New York City are authorized or required by law
to remain closed, provided that, when used in connection with a Eurodollar Loan,
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the term "Business Day" shall also exclude any day on which banks are not open
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for dealings in dollar deposits in the London interbank market.
3
"Capital Expenditures" means, for any period, (a) the additions to
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property, plant and equipment and other capital expenditures of the Borrower and
the consolidated Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of the Borrower for such period prepared in accordance
with GAAP (excluding up to $10,000,000 of Capital Expenditures during any fiscal
year to the extent such Capital Expenditures (i) are made to restore, repair or
replace property, plant or equipment that has been damaged (ii) are made with
insurance proceeds related to such damaged property, plant or equipment and
(iii) are made within 120 days after receipt of such insurance proceeds) and (b)
Capital Lease Obligations incurred by the Borrower and the consolidated
Subsidiaries during such period.
"Capital Lease Obligations" of any Person means the obligations of
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such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" means (a) the acquisition of ownership, directly
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or indirectly, beneficially or of record, by any Person or "group" within the
meaning of the Exchange Act and the rules of the SEC thereunder as in effect on
the date hereof (other than (x) any employee benefit plan of the Borrower or the
Subsidiaries or (y) one or more Permitted Holders) of Equity Interests
representing more than 35% of either the aggregate ordinary voting power or the
aggregate equity value represented by the issued and outstanding Equity
Interests in the Borrower; (b) occupation of a majority of the seats (other than
vacant seats) on the board of directors of the Borrower by Persons who were
neither (i) nominated by the board of directors of the Borrower nor (ii)
appointed by directors so nominated; or (c) the occurrence of a change of
control (or similar event) under the New Senior Subordinated Notes Documents or
the New Term Loan Credit Agreement.
"Change in Law" means (a) the adoption of any applicable law
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(statutory or common), treaty, rule, ordinance, judgment, decree, order,
regulation or determination of an arbitrator after the date hereof, (b) any
change in any applicable law (statutory or common), treaty, rule, ordinance,
judgment, decree, order, regulation or determination of an arbitrator or in the
interpretation or application thereof by any arbitrator or Governmental
Authority after the date hereof or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.13(b), by any lending office of such Lender
or by such Lender's or the Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
arbitrator or Governmental Authority made or issued after the date hereof.
"CLO" means any entity (whether a corporation, partnership, trust or
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otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an Affiliate of such
Lender.
"Code" means the Internal Revenue Code of 1986, as amended from time
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to time.
4
"Collateral" means any and all "Collateral", as defined in any
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applicable Security Document.
"Collateral Agent" means JPMorgan Chase Bank, in its capacity as
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collateral agent for the Lenders hereunder.
"Collateral Agreement" means the Guarantee and Collateral Agreement
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among the Borrower, the Subsidiary Loan Parties and the Collateral Agent,
substantially in the form of Exhibit D.
"Collateral and Guarantee Requirement" means the requirement that:
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(a) the Collateral Agent shall have received from each Loan Party
either (i) a counterpart of the Collateral Agreement duly executed and
delivered on behalf of such Loan Party or (ii) in the case of any Person
that becomes a Loan Party after the Effective Date, a supplement to the
Collateral Agreement, in the form specified therein, duly executed and
delivered on behalf of such Loan Party;
(b) all outstanding Equity Interests of each Subsidiary owned by
or on behalf of any Loan Party shall have been pledged pursuant to the
Collateral Agreement (except that the Loan Parties shall not be required to
pledge (i) more than 65% of the outstanding voting Equity Interests of any
Foreign Subsidiary and (ii) Equity Interests to the extent that a pledge of
such Equity Interests or the delivery of stock certificates for such Equity
Interests (x) is prohibited by law or (y) in the case of Equity Interests
of any Subsidiary in existence on the Effective Date that is not
wholly-owned (directly or indirectly), is prohibited by the organizational
documents of such Subsidiary or stockholder or similar agreement applicable
to such Subsidiary, in each case as in effect on the Effective Date (in
each case, as confirmed by a certificate of a Financial Officer or the
Chief Legal Officer of the Borrower in form and substance reasonably
satisfactory to the Collateral Agent)), and the Collateral Agent shall have
received certificates or other instruments representing all such Equity
Interests (subject to clause (ii) above), together with stock powers or
other instruments of transfer with respect thereto endorsed in blank;
(c) all Indebtedness of the Borrower and each Subsidiary that is
owing to any Loan Party shall be evidenced by a promissory note and shall
have been pledged pursuant to the Collateral Agreement and the Collateral
Agent shall have received all such promissory notes, together with
instruments of transfer with respect thereto endorsed in blank;
(d) all documents and instruments, including Uniform Commercial
Code financing statements, required by law or reasonably requested by the
Collateral Agent to be filed, registered or recorded to create the Liens
intended to be created by the Collateral Agreement and perfect such Liens
to the extent required by, and with the priority required by, the
Collateral Agreement, shall have been filed, registered or recorded or
delivered to the Collateral Agent for filing, registration or recording;
(e) the Collateral Agent shall have received (i) counterparts of a
Mortgage with respect to each Mortgaged Property duly executed and
delivered by the record
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owner of such Mortgaged Property, (ii) a policy or policies of title
insurance issued by a nationally recognized title insurance company
insuring the Lien of each such Mortgage as a valid first Lien on the
Mortgaged Property described therein, free of any other Liens except as
expressly permitted by Section 6.02, together with such endorsements,
coinsurance and reinsurance as the Collateral Agent or the Required Lenders
may reasonably request, and (iii) legal opinions and other documents as the
Administrative Agent or the Required Lenders may reasonably request with
respect to any such Mortgage or Mortgaged Property; and
(f) each Loan Party shall have obtained all consents and approvals
required to be obtained by it in connection with the execution and delivery
of all Security Documents to which it is a party, the performance of its
obligations thereunder and the granting by it of the Liens thereunder.
"Commitment" means, with respect to each Lender, the commitment, if
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any, of such Lender to make Loans and to acquire participations in Letters of
Credit hereunder, expressed as an amount representing the maximum aggregate
amount of such Lender's Exposure hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section 2.07 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04. The initial amount of each Lender's Commitment is set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
shall have assumed its Commitment, as applicable. The initial aggregate amount
of the Lenders' Commitments is $75,000,000.
"Consolidated Cash Interest Expense" means, for any period, (a) the
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sum of (i) the interest expense (including imputed interest expense in respect
of Capital Lease Obligations but excluding non-cash amounts attributable to
amortization of financing costs paid in a previous period and, to the extent
included in consolidated interest expense for such period, non-cash amounts
attributable to amortization of debt discounts or accrued interest payable in
kind for such period) of the Borrower and the Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, (ii) any interest
accrued during such period in respect of Indebtedness of the Borrower or any
Subsidiary that is required to be capitalized rather than included in
consolidated interest expense for such period in accordance with GAAP (excluding
non-cash amounts attributable to amortization of financing costs paid in a
previous period and, to the extent included in consolidated interest expense for
such period, non-cash amounts attributable to amortization of debt discounts or
accrued interest payable in kind for such period) and (iii) any cash payments
made during such period in respect of amortization of debt discounts or accrued
interest payable in kind that were amortized or accrued in a previous period,
minus (b) interest income of the Borrower and the Subsidiaries for such period,
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determined on a consolidated basis in accordance with GAAP, provided that for
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purposes of Section 6.15, Consolidated Cash Interest Expense for the
four-quarter period ending on (x) March 31, 2003, shall be deemed to be
Consolidated Cash Interest Expense for the fiscal quarter ending March 31, 2003,
multiplied by four, (y) June 30, 2003, shall be deemed to be Consolidated Cash
Interest Expense for the two-fiscal-quarter period ending on June 30, 2003,
multiplied by two and (z) September 30, 2003, shall be deemed to be Consolidated
Cash Interest Expense for the three-fiscal-quarter period ending on September
30, 2003, multiplied by 4/3.
6
"Consolidated EBITDA" means, for any period, Consolidated Net Income
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for such period plus (a) without duplication and to the extent deducted in
determining such Consolidated Net Income, the sum of (i) consolidated interest
expense for such period, (ii) consolidated income tax expense for such period,
(iii) all amounts attributable to depreciation and amortization for such period
and (iv) any non-cash, non-recurring charges for such period and any other
non-cash charges properly classified as "extraordinary" under GAAP, and minus
(b) without duplication and to the extent included in determining such
Consolidated Net Income, any extraordinary gains for such period, all determined
on a consolidated basis in accordance with GAAP.
"Consolidated Fixed Charges" means, for any period, the sum of (a)
--------------------------
Consolidated Cash Interest Expense for such period, (b) the aggregate amount of
scheduled principal payments made during such period in respect of Long-Term
Indebtedness of the Borrower and the Subsidiaries (other than (i) payments made
by the Borrower or any Subsidiary to the Borrower or a Subsidiary and (ii)
payments made pursuant to this Agreement without a corresponding reduction in
the Commitments), (c) the aggregate amount of Taxes paid in cash by the Borrower
and the Subsidiaries during such period and (d) the aggregate amount of cash
payments made during such period in respect of financing fees or similar costs,
provided that for purposes of Section 6.15, Consolidated Fixed Charges for the
--------
four-quarter period ending on (x) March 31, 2003, shall be deemed to be
Consolidated Fixed Charges for the fiscal quarter ending on March 31, 2003,
multiplied by four, (y) June 30, 2003, shall be deemed to be Consolidated Fixed
Charges for the two-fiscal-quarter period ending on June 30, 2003, multiplied by
two and (z) September 30, 2003, shall be deemed to be Consolidated Fixed Charges
for the three-fiscal-quarter period ending on September 30, 2003, multiplied by
4/3.
"Consolidated Net Income" means, for any period, the net income or
-----------------------
loss of the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, provided that there shall be
--------
excluded (a) the income of any Person (other than the Borrower) in which any
other Person (other than the Borrower or any Subsidiary or any director holding
qualifying shares in compliance with applicable law) owns an Equity Interest,
except to the extent of the amount of dividends or other distributions actually
paid to the Borrower or any of the Subsidiaries during such period, and (b) the
income or loss of any Person accrued prior to the date it becomes a Subsidiary
or is merged into or consolidated with the Borrower or any Subsidiary or the
date that such Person's assets are acquired by the Borrower or any Subsidiary.
"Control" means the possession, directly or indirectly, of the power
-------
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
----------- ----------
"Court" means the United States Bankruptcy Court for the Northern
-----
District of Illinois, Eastern Division.
"Default" means any event or condition which constitutes an Event of
-------
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
7
"Dilution Percentage" means the quotient, expressed as a percentage,
-------------------
of (a) the rolling twelve-month average of the total non-cash credits to
accounts receivable in a month divided by (b) the gross xxxxxxxx in the same
month, calculated in a manner satisfactory to the Administrative Agent.
"Dilution Reserve" means an amount equal to the product of (a) the
----------------
Dilution Percentage multiplied by (b) the amount that would constitute Eligible
Accounts Receivable prior to the implementation of the Dilution Reserve.
"DIP Credit Agreement" means the Revolving Credit and Guarantee
--------------------
Agreement dated as of May 31, 2002, as amended from time to time, among WKI
Holdings Company, Inc., the subsidiaries party thereto, JPMorgan Chase Bank, as
administrative agent and the lenders party thereto and all documents related
thereto.
"Disclosed Matters" means the actions, suits and proceedings and the
-----------------
environmental matters disclosed in Schedule 3.06.
"Disclosure Statement" means the Disclosure Statement pursuant to
--------------------
Section 1125 of the Bankruptcy Code for the Emergence Plan.
"dollars" or "$" refers to lawful money of the United States of
------- -
America.
"Effective Date" means the date on which the conditions specified in
--------------
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Eligible Accounts Receivable" means, on any date, the gross
----------------------------
outstanding balance on such date, determined in accordance with GAAP and stated
on a basis consistent with the historical practices of the Borrower or the
applicable Subsidiary Loan Party as of the date hereof, of Accounts of the
Borrower and the Subsidiary Loan Parties less, without duplication, the
aggregate amount of (a) all accrued rebates, (b) all trade discounts, (c) all
finance charges, late fees and other fees that are unearned, (d) all reserves
for service fees and such other fees or commissions or similar amounts that the
Borrower or the Subsidiary Loan Parties have agreed to pay, (e) all cash
received in respect of Accounts but not yet applied by the Borrower or the
Subsidiary Loan Parties to reduce the amount of the Accounts and (f) any Account
deemed ineligible for inclusion pursuant to any of clauses (i) through (xix)
below or otherwise deemed by the Administrative Agent in its reasonable
discretion to be ineligible for inclusion. Without limiting the foregoing, to
qualify as an Eligible Account Receivable, an Account shall indicate as sole
payee and as sole remittance party the Borrower or a Subsidiary Loan Party.
Standards of eligibility may be fixed from time to time by the Administrative
Agent in the exercise of its reasonable judgment, with any changes in such
standards to be effective ten days after delivery of notice thereof to the
Borrower. No Account shall be an Eligible Account Receivable if:
(i) the Borrower and/or one or more Subsidiary Loan Parties do not
have sole lawful and absolute title to such Account;
(ii) the Account arises out of a sale made by the Borrower or a
Subsidiary Loan Party to an employee, officer, agent, director,
stockholder, or Affiliate of the Borrower or a Subsidiary Loan Party;
8
(iii) the Account Debtor (x) is a creditor, (y) has or has
asserted a right of set-off against the Borrower or a Subsidiary Loan Party
(unless such Account Debtor has entered into a written agreement reasonably
acceptable to the Administrative Agent to waive such set-off rights) or (z)
has disputed its liability (whether by chargeback or otherwise) or made any
asserted or unasserted claim with respect to the Account or any other
Account of the Borrower or the Subsidiary Loan Party which has not been
resolved, in each case, to the extent of the amount owed by such Borrower
or Subsidiary Loan Party to the Account Debtor, the amount of such actual
or asserted right of set-off, or the amount of such dispute or claim, as
the case may be;
(iv) the Account Debtor is insolvent or the subject of any
bankruptcy case or insolvency proceeding of any kind (other than
postpetition accounts payable of an Account Debtor that is a
debtor-in-possession under the Bankruptcy Code (provided that Kmart
--------
Corporation shall be subject to clause (xvi) of this definition) and
reasonably acceptable to the Administrative Agent);
(v) the Account is not payable in dollars or the Account Debtor is
either not incorporated under the laws of the United States of America, any
state thereof or the District of Columbia or is located outside or has its
principal place of business or substantially all of its assets outside the
United States;
(vi) the sale to the Account Debtor is a xxxx and hold sale
agreement, guaranteed sale, sale-and-return, ship-and-return, sale on
approval, extended terms or consignment or on any other similar basis or
made pursuant to any other agreement providing for repurchase or return of
any merchandise which has been claimed to be defective or otherwise
unsatisfactory;
(vii) the goods giving rise to such Account have not been shipped
and title has not been transferred to the Account Debtor, or the Account
represents a progress-billing or otherwise does not represent a completed
sale; for 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 Borrower's or the applicable Subsidiary Loan Party's completion of
any further performance under the contract or agreement;
(viii) the Account does not comply in all material respects with
the requirements of all applicable laws and regulations, whether Federal,
state or local, including the Federal Consumer Credit Protection Act of
1968, the Federal Truth in Lending Act of 1968 and Regulation Z of the
Board;
(ix) the Account is subject to any adverse security deposit,
retainage or other similar advance made by or for the benefit of the
Account Debtor, in each case to the extent thereof;
(x) the Account is unpaid more than 60 days from the original due
date;
(xi) the Account was not paid in full, and the Borrower or the
Subsidiary Loan Party created a new receivable for the unpaid portion of
the Account without
9
the agreement of the customer, including chargebacks, debit memos and other
adjustments for unauthorized deductions;
(xii) the Account balance with an Account Debtor that is over 60
days from the original due date represents greater than 50% of all Accounts
of such Account Debtor, in which case no Account of such Account Debtor
shall be included within Eligible Accounts Receivable;
(xiii) the Account (A) is not subject to a valid and perfected
first priority Lien in favor of the Collateral Agent for the benefit of the
Secured Parties, subject to no other Liens other than the Liens (if any)
permitted by Section 6.02 or (B) does not otherwise conform in all material
respects to the representations and warranties contained in the Collateral
Agreement relating to Accounts;
(xiv) as to all or any part of such Account, a check, promissory
note, draft, trade acceptance or other Instrument for the payment of money
has been received, presented for payment and returned uncollected for any
reason;
(xv) the Account has been written off the books of the Borrower or
the Subsidiary Loan Party or has been otherwise designated as
uncollectible;
(xvi) inclusion of such Account as an Eligible Account Receivable
would cause the aggregate amount of the Eligible Accounts Receivable with
respect to the particular Account Debtor and its Affiliates to exceed (A)
10% of the total Eligible Accounts Receivable for Accounts which are not
rated Investment Grade, or (B) 20% of the total Eligible Accounts
Receivable for Accounts which are rated Investment Grade, provided that (x)
--------
the foregoing limitation shall not apply to the Account Debtor Wal-Mart
Stores, Inc. if the long-term senior unsecured debt of Wal-Mart Stores,
Inc. is rated Investment Grade or (y) with respect to Account Debtor Kmart
Corporation, the amount of the Eligible Accounts Receivable of Kmart
Corporation shall not exceed 13% (or such greater percentage not to exceed
16% that the Administrative Agent shall determine in its sole discretion)
of the total Eligible Accounts Receivable;
(xvii) the Account is a non-trade Account, or relates to payments
for interest;
(xviii) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless the Borrower or the
Subsidiary Loan Party, duly assigns its rights to payment of such Account
to the Collateral Agent pursuant to the Assignment of Claims Act of 1940,
as amended, which assignment and related documents and filings shall be in
form and substance reasonably satisfactory to the Collateral Agent; or
(xix) such Account is an account receivable generated by the
"Continuity" business of the Borrower.
In determining the aggregate amount of Accounts from the same Account
Debtor that are unpaid more than 60 days from the due date pursuant to clause
(x) above, there shall be
10
excluded the amount of any net credit balances relating to Accounts with invoice
dates more than 60 days from the due date.
"Eligible Finished Goods" means, on any date, all Eligible Inventory
-----------------------
that qualifies as "Finished Goods" on such date (determined in good faith by the
Borrower or the applicable Subsidiary Loan Party, as shown on the Borrower's or
such Subsidiary Loan Party's perpetual inventory records in accordance with its
current and historical accounting practices).
"Eligible Inventory" means, on any date, the Inventory Value of the
------------------
Borrower and the Subsidiary Loan Parties at the time of such determination other
than any Inventory that is not eligible for inclusion pursuant to any of clauses
(a) through (l) below, minus any reserve otherwise deemed by the Administrative
Agent in its reasonable discretion. Without limiting the foregoing, to qualify
as "Eligible Inventory" no person other than the Borrower or the Subsidiary Loan
Parties shall have any direct or indirect ownership, interest or title to such
Inventory and no person other than the Borrower or the Subsidiary Loan Parties
shall be indicated on any purchase order or invoice with respect to such
Inventory as having or purporting to have an interest therein. Unless approved
in writing by the Administrative Agent, no Inventory shall be deemed Eligible
Inventory if:
(a) the Borrower or the Subsidiary Loan Party does not have sole
and good, valid and unencumbered title thereto;
(b) the Inventory is not located in the United States;
(c) the Inventory (i) is not located on property owned by the
Borrower or a Subsidiary Loan Party, (ii) is located in a third party warehouse
or on property leased by the Borrower or a Subsidiary Loan Party (including
retail stores) unless the Borrower or such Subsidiary Loan Party has obtained a
landlord or bailee waiver in form and substance acceptable to the Administrative
Agent (provided that despite any failure to obtain such a waiver, Inventory
located in a warehouse leased by the Borrower or a Subsidiary Loan Party shall
nonetheless be deemed Eligible Inventory during the period ending 30 days after
the date of this Agreement) and, in the case of retail stores, the
Administrative Agent in its sole discretion so permits after its evaluation of
the Borrowing Base pursuant to the last sentence of Section 5.09(b) or (iii) is
located at a closed facility owned by the Borrower or a Subsidiary Loan Party;
(d) the Inventory is operating supplies, packaging or shipping
materials, cartons, repair parts, labels or miscellaneous spare parts;
(e) the Inventory is silicone mixed with ingredients, or sourced
and wire accessories, or fabricated and plastic accessories or customized
product;
(f) the Inventory is not subject to a valid and perfected first
priority Lien in favor of the Collateral Agent for the benefit of the Secured
Parties;
(g) unless such Inventory qualifies as "Eligible Raw Materials",
the Inventory is classified as work in process by the Borrower or a Subsidiary
Loan Party or requires further manufacturing or processing;
11
(h) the Inventory is consigned or at a customer location but still
accounted for in the Borrower's or the Subsidiary Loan Party's perpetual
inventory balance;
(i) the Inventory is being processed offsite at a third party
location or outside processor, or is in-transit to or from the said third party
location or outside processor, unless subject to a processor waiver or other
similar waiver in form and substance acceptable to the Administrative Agent;
(j) the Inventory is identified as overstock, excess or obsolete
by the Borrower or a Subsidiary Loan Party;
(k) the Inventory is used as a sample or prototype, displays or
display items, not first quality or non-saleable or it has been returned by a
customer; or
(l) the Inventory is identified as a warranty item or designated
return to vendor or the Borrower or a Subsidiary Loan Party.
"Eligible Raw Materials" means, on any date, Eligible Inventory that
----------------------
qualifies as Raw Materials on such date (as determined in good faith by the
Borrower or the applicable Subsidiary Loan Party, as shown on the Borrower's or
such Subsidiary Loan Party's perpetual inventory records in accordance with its
current and historical accounting practices).
"Emergence Plan" means the Second Amended Joint Plan of Reorganization
--------------
of World Kitchen, Inc., WKI Holding Company, Inc. and its Subsidiary Debtors
dated November 15, 2002, as modified on December 23, 2002, and confirmed on
December 23, 2002 .
"Environmental Laws" means all laws, rules, regulations, codes,
------------------
ordinances, statutes, permits, licenses, authorizations, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by or with any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the presence,
management or Release of any Hazardous Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
-----------------------
(including any liability for damages, costs of investigation or environmental
remediation, costs of enforcement proceedings, fines, penalties or indemnities),
of the Borrower or any Subsidiary directly or indirectly resulting from or based
upon (a) compliance with or violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the actual or
alleged presence or Release of any Hazardous Materials into the environment or
(e) any contract, agreement or other consensual arrangement pursuant to which
liability is assumed or imposed with respect to any of the foregoing.
"Equity Interests" means shares of capital stock, partnership
----------------
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
12
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
-----------
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers
----------
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article
----------------
VII.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
from time to time.
"Excluded Inventory" has the meaning assigned to such term in the
------------------
Collateral Agreement.
"Excluded Taxes" means, with respect to the Administrative Agent, any
--------------
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction described in clause (a) above and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 2.17(b)), any withholding tax that (i) is in effect and would
apply to amounts payable to such Foreign Lender at the time such Foreign Lender
becomes a party to this Agreement (or designates a new lending office), except
to the extent that such Foreign Lender (or its assignor, if any) was entitled,
at the time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to
13
any withholding tax pursuant to Section 2.15(a), or (ii) is attributable to such
Foreign Lender's failure to comply with Section 2.15(e).
"Exposure" means, with respect to any Lender at any time, the sum of
--------
the outstanding principal amount of such Lender's Loans and its LC Exposure at
such time.
"Federal Funds Effective Rate" means, for any day, the weighted
----------------------------
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
-----------------
accounting officer, treasurer or controller of the Borrower.
"Financing Transactions" means (a) the execution, delivery and
----------------------
performance by each Loan Party of the Loan Documents to which it is to be a
party, the borrowing of Loans, the use of the proceeds thereof and the issuance
of Letters of Credit hereunder, (b) the execution, delivery and performance by
each Loan Party of the New Senior Subordinated Notes Documents to which it is to
be a party, the issuance of the New Senior Subordinated Notes and the use of the
proceeds thereof and (c) the execution, delivery and performance by each Loan
party of the New Term Loan Credit Agreement and all documents related thereto to
which it is a party, the borrowing of the loans thereunder and the use of
proceeds thereof.
"Finished Goods" means goods that require no additional processing or
--------------
manufacturing that will be sold by the Borrower or a Subsidiary Loan Party in
the ordinary course of business.
"Foreign Lender" means any Lender that is organized under the laws of
--------------
a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is organized under the
------------------
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
----
States of America.
"Governmental Authority" means the government of the United States of
----------------------
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
14
"Guarantee" of or by any Person (the "guarantor") means any
--------- ---------
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
---------------
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation, provided that the term Guarantee shall not include
--------
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Materials" means all (a) explosive, radioactive, hazardous
-------------------
or toxic materials, substances, wastes or other pollutants, including petroleum
or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and (b) other
substances, materials, chemicals or wastes that in relevant form or
concentration are limited, prohibited or regulated pursuant to any Environmental
Law.
"Indebtedness" of any Person means, without duplication, (a) all
------------
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind paid or deemed paid to such Person, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, (c)
all obligations of such Person upon which interest charges are customarily paid,
(d) all obligations of such Person under conditional sale or other title
retention agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of property
or services (excluding current accounts payable incurred in the ordinary course
of business), (f) all Indebtedness of others secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the Indebtedness secured thereby has been assumed, (g) all Guarantees by
such Person of Indebtedness of others, (h) all Capital Lease Obligations of such
Person, (i) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty and (j)
all obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
-----------------
"Intercreditor Agreement" means the Intercreditor Agreement dated the
-----------------------
Effective Date among the Collateral Agent, the Loan Parties, the collateral
agent under the New Term Loan Credit Agreement and the trustee for the New
Senior Subordinated Notes, substantially in the form of Exhibit E.
15
"Interest Election Request" means a request by the Borrower to convert
-------------------------
or continue a Borrowing in accordance with Section 2.06.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
---------------------
last Business Day of each March, June, September and December and (b) with
respect to any Eurodollar Loan, the last Business Day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
---------------
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect, provided that (a) if any Interest Period
--------
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter shall
be the effective date of the most recent conversion or continuation of such
Borrowing.
"Inventory" means all Raw Materials and Finished Goods held by the
---------
Borrower or a Subsidiary Loan Party in the normal course of business.
"Inventory Reserves" means reserves against Inventory equal to the sum
------------------
of the following:
(m) a reserve for shrink, or discrepancies that arise pertaining
to inventory quantities on hand between the Borrower's or the Subsidiary Loan
Party's perpetual accounting system, and physical counts of the inventory that
will be equal to the greater of 2% or the results of the physical inventory
counts taken over the past 12 months with the variance expressed as a percentage
of sales;
(n) a reserve determined by the Administrative Agent for Inventory
that is discontinued or slow-moving;
(o) a reserve for Inventory that is recognized as damaged, off
quality, or not to customer specifications by the Borrower or a Subsidiary Loan
Party;
(p) a revaluation reserve whereby capitalized favorable variances
shall be deducted from Eligible Inventory and unfavorable variances shall not be
added to Eligible Inventory;
(q) a lower of cost or market reserve for any differences between
the Borrower's or the Subsidiary Loan Party's actual cost to produce versus its
selling price to third parties, determined on a product line basis; and
16
(r) any other reserve as deemed appropriate by the Administrative
Agent, from time to time in its reasonable discretion.
"Inventory Value" means, on any date, with respect to any Inventory of
---------------
the Borrower and the Subsidiary Loan Parties, the standard cost of such
Inventory carried on the perpetual records of the Borrower or such Subsidiary
Loan Party stated on a basis consistent with its current and historical
accounting practices, in dollars, determined in accordance with the standard
cost method of accounting less (i) any markup on Inventory from an Affiliate and
(ii) to the event variances under the standard cost method (a) are capitalized,
favorable variances shall be deducted from Eligible Inventory, and unfavorable
variances shall not be added to Eligible Inventory, and (b) are expensed, a
reserve shall be determined as appropriate in order to adjust the standard cost
of Eligible Inventory to approximate actual cost.
"Investment Grade" means a rating of BBB or better by Standards and
----------------
Poor's Rating Group, a rating of Ba3 or better by Xxxxx'x Investors Services,
Inc. or a comparable rating by a third-party rating agency reasonably acceptable
to the Administrative Agent.
"Issuing Bank" means JPMorgan Chase Bank, in its capacity as the
------------
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.04(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to
---------------
a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
-----------
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Lender at any time shall
be its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Schedule 2.01 and any other
-------
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"Letter of Credit" means any letter of credit issued pursuant to this
----------------
Agreement and any letter of credit existing on the date hereof and set forth on
Schedule 1.01(a).
"Leverage Ratio" means, on any date, the ratio of (a) Total
--------------
Indebtedness as of such date to (b) Consolidated EBITDA for the period of four
consecutive fiscal quarters of the Borrower ended on such date (or, if such date
is not the last day of a fiscal quarter, ended on the last day of the fiscal
quarter of the Borrower most recently ended prior to such date).
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
---------
Interest Period, the rate appearing on Page 3750 of the Dow Xxxxx Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as
17
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not available at such time for any reason, then the "LIBO Rate"
---------
with respect to such Eurodollar Borrowing for such Interest Period shall be the
rate at which dollar deposits of $5,000,000 and for a maturity comparable to
such Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
----
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means this Agreement, the Collateral Agreement, the
--------------
Intercreditor Agreement, the other Security Documents and the documentation
relating to any Letter of Credit issued hereunder.
"Loan Parties" means the Borrower and the Subsidiary Loan Parties.
------------
"Loans" means the loans made by the Lenders to the Borrower pursuant
-----
to this Agreement.
"Lockbox Agreement" has the meaning assigned to such term in the
-----------------
Collateral Agreement.
"Long-Term Indebtedness" means any Indebtedness that, in accordance
----------------------
with GAAP, constitutes (or, when incurred, constituted) a long-term liability.
"Margin Stock" means "margin stock" as such term is defined in
------------
Regulation U of the Board.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, operations, properties, assets, condition (financial or otherwise),
liabilities (including contingent liabilities) or prospects of the Borrower and
the Subsidiaries, taken as a whole, (b) the ability of the Loan Parties, taken
as a whole, to perform any of their obligations under any Loan Document or (c)
the rights of or benefits available to the Lenders under any Loan Document.
"Material Indebtedness" means Indebtedness (other than the Loans and
---------------------
Letters of Credit), or obligations in respect of one or more Swap Agreements, of
any one or more of the Borrower and the Subsidiaries in an aggregate principal
amount exceeding $5,000,000. For purposes of determining Material Indebtedness,
the "principal amount" of the obligations of the Borrower or any Subsidiary in
----------------
respect of any Swap Agreement at any time shall be the maximum aggregate amount
18
(giving effect to any netting agreements) that the Borrower or such Subsidiary
would be required to pay if such Swap Agreement were terminated at such time.
"Maximum Rate" has the meaning assigned to such term in Section 9.13.
------------
"Moody's" means Xxxxx'x Investors Service, Inc.
-------
"Mortgage" means a mortgage, deed of trust, assignment of leases and
--------
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations. Each Mortgage shall be
reasonably satisfactory in form and substance to the Collateral Agent.
"Mortgaged Property" means, initially, each parcel of real property
------------------
and the improvements thereto owned by a Loan Party and identified as a
"Mortgaged Property" on Schedule 3.05, and includes each other parcel of real
property and improvements thereto with respect to which a Mortgage is granted
pursuant to Section 5.12 or 5.13.
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any event (a) the cash proceeds
------------
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid by the Borrower and the
Subsidiaries to third parties (other than Affiliates) in connection with such
event, (ii) in the case of a sale, transfer or other disposition of an asset
(including pursuant to a sale and leaseback transaction or a casualty or a
condemnation or similar proceeding), the amount of all payments required to be
made by the Borrower and the Subsidiaries as a result of such event to repay
Indebtedness (other than Loans) secured by such asset or otherwise subject to
mandatory prepayment as a result of such event, and (iii) the amount of all
taxes paid (or reasonably estimated to be payable) by the Borrower and the
Subsidiaries, and the amount of any reserves established by the Borrower and the
Subsidiaries to fund contingent liabilities reasonably estimated to be payable,
in each case during the year that such event occurred or the next succeeding
year and that are directly attributable to such event (as determined reasonably
and in good faith by a Financial Officer of the Borrower).
"New Senior Subordinated Notes" means the Senior Subordinated Notes
-----------------------------
Due 2010 to be issued by the Borrower on the Effective Date in the aggregate
principal amount of $123,150,000 and the Indebtedness represented thereby.
"New Senior Subordinated Notes Documents" means the indenture under
---------------------------------------
which the New Senior Subordinated Notes are issued and all other agreements,
instruments and other documents evidencing or governing the New Senior
Subordinated Notes or providing for any Guarantee or other right or support in
respect thereof.
19
"New Term Loan Credit Agreement" means the Credit Agreement dated the
------------------------------
date hereof, as amended from time to time, among WKI Holding Company, Inc.,
JPMorgan Chase Bank, as Administrative Agent and the lenders party thereto and
all documents related thereto.
"Obligations" has the meaning assigned to such term in the Collateral
-----------
Agreement.
"Old Credit Agreement" means the Amended and Restated Credit Agreement
--------------------
dated as of April 12, 2001, as amended from time to time, among WKI Holding
Company, Inc., JPMorgan Chase Bank, Citibank, N.A., Bankers Trust Company and
the lenders party thereto and all documents related thereto.
"Old Subsidiaries" means the subsidiaries of Old WKI that, prior to
----------------
the Reorganization, are debtors-in-possession under the Bankruptcy Code.
"Old WKI" means WKI Holding Company, Inc., a Delaware corporation
-------
that, prior to the Reorganization, was a debtor-in-possession under the
Bankruptcy Code.
"Order" means the order or orders of the Court confirming the
-----
Emergence Plan and approving the Reorganization, the Financing Transactions and
all related documentation contemplated thereby.
"Other Taxes" means any and all present or future recording, stamp,
-----------
documentary, excise, transfer, sales, property or similar taxes, charges or
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
----
defined in ERISA and any successor entity performing similar functions.
"Perfection Certificate" means a certificate in substantially the form
----------------------
of Exhibit II to the Collateral Agreement or any other form approved by the
Collateral Agent.
"Permitted Encumbrances" means:
----------------------
(g) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 5.05;
(h) carriers', warehousemen's, landlords', mechanics',
materialmen's, repairmen's and other like Liens imposed by law, arising in
the ordinary course of business and securing obligations that are not
overdue by more than 30 days or are being contested in compliance with
Section 5.05;
(i) pledges and deposits made in the ordinary course of business
(x) in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations and (y) to utility companies;
20
(j) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(k) judgment liens in respect of judgments that do not constitute
an Event of Default under clause (k) of Article VII; and
(l) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrower or any Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
-------- ----------------------
securing Indebtedness.
"Permitted Holders" means the Class 6 Creditors (as defined in the
-----------------
Disclosure Statement) that are parties to the Stockholders' Agreement.
"Permitted Investments" means:
---------------------
(m) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(n) investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from S&P or from Moody's;
(o) investments in certificates of deposit, banker's acceptances
and time deposits maturing within 180 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any State
thereof having a combined capital, surplus and undivided profits of not
less than $250,000,000; and
(p) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and entered
into with a financial institution satisfying the criteria described in
clause (c) above.
"Person" means any natural person, corporation, limited liability
------
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
----
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were
21
terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Prime Rate" means the rate of interest per annum publicly announced
----------
from time to time by JPMorgan Chase Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Raw Materials" means materials used or consumed in the manufacturing
-------------
of goods to be sold by the Borrower or a Subsidiary Loan Party in the ordinary
course of business, including but not limited to slit coiled steel, silicone,
sand, chemicals and additives.
"Register" has the meaning assigned to such term in Section 9.04.
--------
"Related Parties" means, with respect to any specified Person, such
---------------
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Release" means any actual or threatened release, spill, emission,
-------
leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal,
leaching or migration into the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata) or within any building,
structure, facility or fixture.
"Reorganization" has the meaning assigned to such term in the
--------------
Emergence Plan.
"Required Lenders" means, at any time, Lenders having Exposures and
----------------
unused Commitments representing more than 50% of the sum of the total Exposures
and unused Commitments at such time.
"Restricted Payment" means any dividend or other distribution (whether
------------------
in cash, securities or other property) with respect to any Equity Interests in
the Borrower or any Subsidiary, or any payment (whether in cash, securities or
other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancelation or termination of
any Equity Interests in the Borrower or any Subsidiary or any performance unit,
stock appreciation right, phantom stock right or other right the price or value
of which is linked to the price or value of any Equity Interests in the Borrower
or any Subsidiary or any option, warrant or other right to acquire any such
Equity Interests in the Borrower or any Subsidiary.
"Revolving Availability Period" means the period from and including
-----------------------------
the Effective Date to but excluding the earlier of the Revolving Maturity Date
and the date of termination of the Commitments.
"Revolving Maturity Date" means September 30, 2007.
-----------------------
"SEC" means the Securities and Exchange Commission, or any
---
Governmental Authority succeeding to any of its principal functions.
22
"S&P" means Standard & Poor's.
---
"Security Documents" means the Collateral Agreement, the Mortgages,
------------------
the Lockbox Agreement and each other security agreement or other instrument or
document executed and delivered pursuant to Section 5.12 or 5.13 to secure any
of the Obligations.
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
----------------------
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
"Stockholders' Agreement" means the Stockholders' and Registration
-----------------------
Rights Agreement filed as an exhibit to the Emergence Plan and deemed to become
effective as of the effective date of the Emergence Plan among the Borrower and
each Person receiving new common stock pursuant to the Emergence Plan.
"subsidiary" means, with respect to any Person (the "parent") at any
---------- ------
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower after giving effect
----------
to the Reorganization.
"Subsidiary Loan Party" means any Subsidiary that is not a Foreign
---------------------
Subsidiary.
"Swap Agreement" means any agreement with respect to any swap,
--------------
forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions, provided that
--------
no phantom stock or similar plan providing for payments only on account of
services provided by current or
23
former directors, officers, employees or consultants of the Borrower or the
Subsidiaries shall be a Swap Agreement.
"Taxes" means any and all present or future taxes, levies, imposts,
-----
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Total Indebtedness" means, as of any date, the sum of (a) the
------------------
aggregate principal amount of Indebtedness of the Borrower and the Subsidiaries
outstanding as of such date, in the amount that would be reflected on a balance
sheet prepared as of such date on a consolidated basis in accordance with GAAP,
plus (b) the aggregate principal amount of Indebtedness of the Borrower and the
Subsidiaries outstanding as of such date that is not required to be reflected on
a balance sheet in accordance with GAAP, determined on a consolidated basis,
provided that, for purposes of clause (b) above, the term "Indebtedness" shall
-------- ------------
not include contingent obligations of the Borrower or any Subsidiary as an
account party in respect of any letter of credit or letter of guaranty unless
such letter of credit or letter of guaranty supports an obligation that
constitutes Indebtedness.
"Transactions" means the Reorganization and the Financing
------------
Transactions.
"Type", when used in reference to any Loan or Borrowing, refers to
----
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
--------------------
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes
---------------------------------------
of this Agreement, Loans may be classified and referred to by Type (e.g., a
----
"Eurodollar Loan"). Borrowings also may be classified and referred to by Type
(e.g., a "Eurodollar Borrowing").
----
SECTION 1.03. Terms Generally. The definitions of terms herein shall
----------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The word
"will" shall be construed to have the same meaning and effect as the word
"shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same
24
meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
-----------------------
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time, provided
--------
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions set
------------
forth herein, each Lender agrees to make Loans to the Borrower from time to time
during the Revolving Availability Period in an aggregate principal amount that
will not result in (i) such Lender's Exposure exceeding such Lender's Commitment
or (ii) the total Exposures exceeding the Available Amount. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Loans.
SECTION 2.02. Loans and Borrowings. Each Loan shall be made as
---------------------
part of a Borrowing consisting of Loans of the same Type made by the Lenders
ratably in accordance with their respective Commitments. The failure of any
Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder, provided that the Commitments of the
--------
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.
(b) Subject to Section 2.12, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request in
accordance herewith, provided that all Borrowings made on the Effective Date
--------
must be made as ABR Borrowings. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan, provided that any exercise of such option shall not
--------
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $2,500,000. At the time that each ABR
Borrowing is made, such Borrowing shall be in an aggregate amount that is an
integral multiple of $500,000 and not less than $1,000,000, provided that an ABR
--------
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments or that is required to finance the
25
reimbursement of an LC Disbursement as contemplated by Section 2.04(e).
Borrowings of more than one Type may be outstanding at the same time, provided
--------
that there shall not at any time be more than a total of 15 Eurodollar
Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Revolving Maturity Date.
SECTION 2.03. Requests for Borrowings. To request a Borrowing, the
------------------------
Borrower shall notify the Administrative Agent of such request by telephone (a)
in the case of a Eurodollar Borrowing, not later than 12:00 noon, New York City
time, three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on
the date of the proposed Borrowing, provided that any such notice of an ABR
--------
Borrowing to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.04(e) shall be given not later than 11:00 a.m., New York City time, on
the date of the proposed Borrowing. Each such telephonic Borrowing Request
shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:
(i) the aggregate amount of such Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by
the definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.05.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Letters of Credit. General. Subject to the terms
------------------ --------
and conditions set forth herein, the Borrower may request the issuance of
Letters of Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
after the Effective Date and before the date that is five business days prior to
the Revolving Maturity Date. In the event of any inconsistency between the
terms and conditions of this Agreement and the terms and conditions of any form
of letter of
26
credit application or other agreement submitted by the Borrower to, or entered
into by the Borrower with, the Issuing Bank relating to any Letter of Credit,
the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
----------------------------------------------------------
Conditions. To request the issuance of a Letter of Credit (or the amendment,
-----------
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication or by
telephonic notice so long as promptly followed by hand delivery or telecopy or
electronic communication, in each case if arrangements for doing so have been
approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent
(reasonably in advance of the requested date of issuance, amendment, renewal or
extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall be
a Business Day), the date on which such Letter of Credit is to expire (which
shall comply with paragraph (c) of this Section), the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Issuing Bank, the Borrower also shall submit a
letter of credit application on the Issuing Bank's standard form in connection
with any request for a Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to represent and
warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the LC Exposure shall not exceed $25,000,000 and (ii) the total
Exposures shall not exceed the Available Amount.
(c) Expiration Date. Each Letter of Credit shall expire at or
----------------
prior to the close of business on the earlier of (i) the date one year after the
date of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an
---------------
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires from the Issuing
Bank, a participation in such Letter of Credit equal to such Lender's Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender
hereby absolutely and unconditionally agrees to pay to the Administrative Agent,
for the account of the Issuing Bank, such Lender's Applicable Percentage of each
LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on
the date due as provided in paragraph (e) of this Section, or of any
reimbursement payment required to be refunded to the Borrower for any reason.
Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
27
(e) Reimbursement. If the Issuing Bank shall make any LC
--------------
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such
LC Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, New York City time, on the date that
such LC Disbursement is made, if the Borrower shall have received notice of such
LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if
such notice has not been received by the Borrower prior to such time on such
date, then not later than 12:00 noon, New York City time, on (i) the Business
Day that the Borrower receives such notice, if such notice is received prior to
10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt, provided that
--------
the Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.03 that such payment be financed with an
ABR Borrowing in an equivalent amount and, to the extent so financed, the
Borrower's obligation to make such payment shall be discharged and replaced by
the resulting ABR Borrowing. If the Borrower fails to make such payment when
due, the Administrative Agent shall notify each Lender of the applicable LC
Disbursement, the payment then due from the Borrower in respect thereof and such
Lender's Applicable Percentage thereof. Promptly following receipt of such
notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as
provided in Section 2.05 with respect to Loans made by such Lender (and Section
2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders),
------- --------
and the Administrative Agent shall promptly pay to the Issuing Bank the amounts
so received by it from the Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Lenders have made payments pursuant to this
paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing
Bank as their interests may appear. Any payment made by a Lender pursuant to
this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than
the funding of ABR Loans as contemplated above) shall not constitute a Loan and
shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse
---------------------
LC Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit, any application for the issuance of a Letter of Credit or this
Agreement, or any term or provision therein, (ii) any draft or other document
presented under a Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement therein being untrue or inaccurate in any
respect, (iii) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the terms of
such Letter of Credit, or (iv) any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for the
provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. None
of the Administrative Agent, the Lenders, the Issuing Bank, or any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other
28
communication under or relating to any Letter of Credit (including any document
required to make a drawing thereunder), any error in interpretation of technical
terms or any consequence arising from causes beyond the control of the Issuing
Bank, provided that the foregoing shall not be construed to excuse the Issuing
--------
Bank from liability to the Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by the Borrower to the extent permitted by applicable law) suffered by the
Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or wilful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented that appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
------------------------
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder, provided that any failure to give or
--------
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Lenders with respect to any such LC
Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
-----------------
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Loans, provided that,
--------
if the Borrower fails to reimburse such LC Disbursement when due or finance such
LC Disbursement with an ABR Borrowing pursuant to paragraph (e) of this Section,
then Section 2.11(c) shall apply. Interest accrued pursuant to this paragraph
shall be for the account of the Issuing Bank, except that interest accrued on
and after the date of payment by any Lender pursuant to paragraph (e) of this
Section to reimburse the Issuing Bank shall be for the account of such Lender to
the extent of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be
--------------------------------
replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The
Administrative Agent shall notify the Lenders of any such replacement of the
Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.10(b). From and after the effective date of
any such replacement, (i) the successor Issuing Bank shall have all the rights
and obligations of the Issuing Bank under this Agreement with respect to Letters
of Credit to be issued thereafter and (ii) references herein to the term
"Issuing Bank" shall be deemed to refer to such successor or to any previous
Issuing
29
Bank, or to such successor and all previous Issuing Banks, as the context shall
require. After the replacement of an Issuing Bank hereunder, the replaced
Issuing Bank shall remain a party hereto and shall continue to have all the
rights and obligations of an Issuing Bank under this Agreement with respect to
Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit.
(j) Cash Collateralization. If the Commitments have been
-----------------------
terminated or the maturity of the Loans has been accelerated, on the Business
Day that the Borrower receives notice of such acceleration or termination from
the Administrative Agent or the Required Lenders, the Borrower shall deposit in
an account with the Administrative Agent, in the name of the Administrative
Agent and for the benefit of the Lenders, an amount in cash equal to 105% of the
LC Exposure as of such date plus any accrued and unpaid interest thereon,
provided that the obligation to deposit such cash collateral shall become
--------
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower described in clause (h) or (i) of
Article VII. The Borrower also shall deposit cash collateral pursuant to this
paragraph as and to the extent required by Section 2.09(b), and any such cash
collateral so deposited and held by the Administrative Agent hereunder shall
constitute part of the Borrowing Base for purposes of determining compliance
with Section 2.09(b). Each such deposit shall be held by the Administrative
Agent as collateral for the payment and performance of the obligations of the
Borrower under this Agreement. The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
account. Other than any interest earned on the investment of such deposits,
which investments shall be made at the option and sole discretion of the
Administrative Agent and at the Borrower's risk and expense, such deposits shall
not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account deposited pursuant to the
first sentence of this clause (j) or pursuant to Section 2.09(b) shall be
applied by the Administrative Agent to reimburse the Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Lenders with LC Exposure
representing greater than 50% of the total LC Exposure), be applied to satisfy
other obligations of the Borrower under this Agreement. If the maturity of the
Loans has been accelerated, moneys in such account deposited pursuant to Section
2.09(c) shall be applied to satisfy the obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured or waived. If
the Borrower is required to provide an amount of cash collateral hereunder
pursuant to Section 2.09(b) or elects to provide cash collateral pursuant to
Section 2.09(c), such amount (to the extent not applied as aforesaid) shall be
returned to the Borrower as and to the extent that, after giving effect to such
return, the Borrower would remain in compliance with Section 2.09(b) or (c) and
no Event of Default shall have occurred and be continuing.
SECTION 2.05. Funding of Borrowings. Each Lender shall make each
----------------------
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 3:00 p.m., New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative
30
Agent will make such Loans available to the Borrower by promptly crediting the
amounts so received, in like funds, to an account of the Borrower maintained
with the Administrative Agent in New York City and designated by the Borrower in
the applicable Borrowing Request, provided that ABR Loans made to finance the
--------
reimbursement of an LC Disbursement as provided in Section 2.04(e) shall be
remitted by the Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice
from a Lender prior to the proposed date of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.
SECTION 2.06. Interest Elections. Each Borrowing initially shall
-------------------
be of the Type specified in the applicable Borrowing Request and, in the case of
a Eurodollar Borrowing, shall have an initial Interest Period as specified in
such Borrowing Request (or in Section 2.03 if no Interest Period is specified in
such Borrowing Request). Thereafter, the Borrower may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of
a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower
shall notify the Administrative Agent of such election by telephone by the time
that a Borrowing Request would be required under Section 2.03 if the Borrower
were requesting a Borrowing of the Type resulting from such election to be made
on the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02 and paragraph
(f) of this Section:
(ii) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be
31
specified pursuant to clauses (iii) and (iv) below shall be specified for
each resulting Borrowing);
(iii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iv) whether the resulting Borrowing is to be an ABR Borrowing or
a Eurodollar Borrowing; and
(v) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request,
the Administrative Agent shall advise each Lender of the details thereof and of
such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the
request of the Required Lenders, so notifies the Borrower, then, so long as an
Event of Default is continuing (i) no outstanding Borrowing may be converted to
or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
SECTION 2.07. Termination and Reduction of Commitments. Unless
-----------------------------------------
previously terminated, the Commitments shall terminate on the Revolving Maturity
Date.
(b) The Borrower may at any time terminate, or from time to time
reduce, the Commitments, provided that (i) each reduction of the Commitments
--------
shall be in an amount that is an integral multiple of $1,000,000 and not less
than $5,000,000 and (ii) the Borrower shall not terminate or reduce the
Commitments if, after giving effect to any concurrent prepayment of the Loans in
accordance with Section 2.09, the total Exposures would exceed the total
Commitments.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable, provided that a notice
--------
of termination of the Commitments delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of
32
other credit facilities, in which case such notice may be revoked by the
Borrower (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction
of the Commitments shall be permanent. Each reduction of the Commitments shall
be made ratably among the Lenders in accordance with their respective
Commitments.
SECTION 2.08. Repayment of Loans; Evidence of Debt. The Borrower
-------------------------------------
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Loan of such
Lender on the Revolving Maturity Date.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Type thereof and
the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
----- -----
existence and amounts of the obligations recorded therein, provided that the
--------
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.09. Prepayment of Loans. The Borrower shall have the
--------------------
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to the requirements of this Section.
(b) In the event and on such occasion that the total Exposures
exceeds the Available Amount, the Borrower shall prepay Borrowings (or, if no
such Borrowings are outstanding, deposit cash collateral in an account with the
Administrative Agent pursuant to Section 2.04(j)) in an aggregate amount equal
to such excess.
33
(c) The Borrower shall (i) repay or prepay outstanding Loans and
(ii) refrain from making additional Borrowings or requesting the issuance of
additional Letters of Credit to the extent necessary in order that there shall
be (a) a period of 15 consecutive days in fiscal year 2004 of the Borrower and
(b) a period of 30 consecutive days in each fiscal year thereafter, during which
the total Exposures (excluding the LC Exposure) is equal to zero, provided that
--------
the Borrower may elect at the commencement of any such period to deposit cash
collateral in an account with the Administrative Agent (pursuant to Section
2.04(j)) in an amount equal to $4,000,000, in which case the total Exposures
(excluding the LC Exposure) shall be reduced to not more than $4,000,000.
(d) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
paragraph (e) of this Section.
(e) The Borrower shall notify the Administrative Agent by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 12:00 noon, New York City
time, three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Borrowing, not later than 12:00 noon, New York City time,
one Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date, the principal amount of each
Borrowing or portion thereof to be prepaid and, in the case of a mandatory
prepayment, a reasonably detailed calculation of the amount of such prepayment,
provided that, if a notice of optional prepayment is given in connection with a
--------
conditional notice of termination of the Commitments as contemplated by Section
2.07, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.07. Promptly following
receipt of any such notice, the Administrative Agent shall advise the Lenders of
the contents thereof. Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the
same Type as provided in Section 2.02, except as necessary to apply fully the
required amount of a mandatory prepayment. Each prepayment of a Borrowing shall
be applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section 2.11.
SECTION 2.10. Fees. for the account of each Lender a commitment
-----
fee, which shall accrue at the rate of 0.50% on the average daily unused amount
of the Commitment of such Lender during the period from and including the
Effective Date to but excluding the date on which such Commitment terminates.
Accrued commitment fees shall be payable in arrears on the last Business Day of
March, June, September and December of each year and on the date on which the
Commitments terminate, commencing on the first such date to occur after the date
hereof. All commitment fees shall be computed on the basis of a year of 360
days and shall be payable for the actual number of days elapsed (including the
first day but excluding the last day).
(b) The Borrower agrees to pay (i) to the Administrative Agent for
the account of each Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
Rate as interest on Eurodollar Loans on the average daily amount of such
Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed
LC Disbursements) during the period from and including the Effective Date to but
34
excluding the later of the date on which such Lender's Commitment terminates and
the date on which such Lender ceases to have any LC Exposure, and (ii) to the
Issuing Bank a fronting fee, which shall accrue at the rate of 0.25% per annum
on the average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date of
termination of the Commitments and the date on which there ceases to be any LC
Exposure, as well as the Issuing Bank's standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. Participation fees and fronting fees accrued through
and including the last day of March, June, September and December of each year
shall be payable on the third Business Day following such last day, commencing
on the first such date to occur after the Effective Date, provided that all such
--------
fees shall be payable on the date on which the Commitments terminate and any
such fees accruing after the date on which the Commitments terminate shall be
payable on demand. Any other fees payable to the Issuing Bank pursuant to this
paragraph shall be payable within ten Business Days after demand. All
participation fees and fronting fees shall be computed on the basis of a year of
360 days and shall be payable for the actual number of days elapsed (including
the first day but excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent, for
its own account, fees (including collateral monitoring fees) payable in the
amounts and at the times separately agreed upon in writing between the Borrower
and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.
SECTION 2.11. Interest. The Loans composing each ABR Borrowing
---------
shall bear interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans composing each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest
on any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan and upon termination of the
Commitments, provided that (i) interest accrued pursuant to paragraph (c) of
--------
this Section shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan (other than a prepayment of an ABR Loan prior to the end
of the Revolving Availability Period), accrued interest on the principal amount
repaid or
35
prepaid shall be payable on the date of such repayment or prepayment and (iii)
in the event of any conversion of any Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be payable
on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
in each case shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The applicable Alternate Base Rate
or Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.12. Alternate Rate of Interest. If prior to the
---------------------------
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall
be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the Adjusted LIBO Rate for such Interest Period;
or
(b) the Administrative Agent is advised by the Required Lenders
that the Adjusted LIBO Rate for such Interest Period will not adequately
and fairly reflect the cost to such Lenders of making or maintaining their
Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.13. Increased Costs. If any Change in Law shall:
----------------
(ii) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
(iii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or Eurodollar
Loans made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will
36
pay to such Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Bank, as the
case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change
in Law regarding capital requirements has or would have the effect of reducing
the rate of return on such Lender's or the Issuing Bank's capital or on the
capital of such Lender's or the Issuing Bank's holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in Letters
of Credit held by, such Lender, or the Letters of Credit issued by the Issuing
Bank, to a level below that which such Lender or the Issuing Bank or such
Lender's or the Issuing Bank's holding company could have achieved but for such
Change in Law (taking into consideration such Lender's or the Issuing Bank's
policies and the policies of such Lender's or the Issuing Bank's holding company
with respect to capital adequacy), then from time to time the Borrower will pay
to such Lender or the Issuing Bank, as the case may be, such additional amount
or amounts as will compensate such Lender or the Issuing Bank or such Lender's
or the Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth
the amount or amounts necessary to compensate such Lender or the Issuing Bank or
its holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within ten Business
Days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank
to demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation, provided
--------
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender or the Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided, further, that, if the Change
-------- -------
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
SECTION 2.14. Break Funding Payments. In the event of (a) the
-----------------------
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.09(e) and is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.17, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest that would have accrued on the principal amount
37
of such Loan had such event not occurred, at the Adjusted LIBO Rate that would
have been applicable to such Loan, for the period from the date of such event to
the last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest that would
accrue on such principal amount for such period at the interest rate that such
Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.
SECTION 2.15. Taxes. Any and all payments by or on account of
------
any obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes, provided that if the Borrower shall be required to deduct any
--------
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent, Lender or Issuing Bank (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each
Lender and the Issuing Bank, within 10 days after written demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or
with respect to any payment by or on account of any obligation of the Borrower
hereunder or under any other Loan Document (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability
delivered to the Borrower by a Lender or the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes
or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty
38
to which such jurisdiction is a party, with respect to payments under this
Agreement shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or reasonably
requested by the Borrower as will permit such payments to be made without
withholding or at a reduced rate, provided that such Foreign Lender has received
--------
written notice from the Borrower advising it of the availability of such
exemption or reduction and supplying all applicable documentation.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of
--------------------------------------------------
Set-offs. The Borrower shall make each payment required to be made by it
---------
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.13,
2.14 or 2.15, or otherwise) not later than the time expressly required hereunder
or under such other Loan Document for such payment (or, if no such time is
expressly required, not later than 12:00 noon, New York City time), on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, except payments to be made directly to the Issuing Bank as
expressly provided herein and except that payments pursuant to Sections 2.13,
2.14, 2.15 and 9.03 shall be made directly to the Persons entitled thereto and
payments pursuant to other Loan Documents shall be made to the Persons specified
therein. The Administrative Agent shall distribute any such payments received
by it for the account of any other Person to the appropriate Person promptly
following receipt thereof. If any payment under any Loan Document shall be due
on a day that is not a Business Day, the date for payment shall be extended to
the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments under each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disbursements, interest and fees then due hereunder, such funds
shall be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, towards
payment of principal and unreimbursed LC Disbursements then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal and unreimbursed LC Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans or participations in LC Disbursements resulting in
such Lender receiving payment of a greater proportion of the aggregate amount of
its Loans and participations in LC Disbursements and accrued interest thereon
than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the
Loans and participations in LC Disbursements of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and participations in LC
39
Disbursements, provided that (i) if any such participations are purchased and
--------
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrower pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC Disbursements to any
assignee or participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.
(d) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrower will not make such payment, the Administrative Agent
may assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or
the Issuing Bank, as the case may be, the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders or the
Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be
made by it pursuant to Section 2.04(d) or (e), 2.05(b), 2.16(d) or 9.03(c), then
the Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders. If
-----------------------------------------------
any Lender requests compensation under Section 2.13, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
reasonable judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as the
case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
40
(b) If any Lender requests compensation under Section 2.13, or if
the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment), provided that (i) the Borrower
--------
shall have received the prior written consent of the Administrative Agent and
the Issuing Bank, which consent shall not unreasonably be withheld, (ii) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in LC Disbursements, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under Section
2.13 or payments required to be made pursuant to Section 2.15, such assignment
will result in a material reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to
apply.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrower and the
---------------------
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions
------------------------------
entered into and to be entered into by each Loan Party are within such Loan
Party's corporate powers and have been duly authorized by all necessary action.
This Agreement has been duly executed and delivered by the Borrower and
constitutes, and each other Loan Document to which any Loan Party is to be a
party, when executed and delivered by such Loan Party, will constitute, a legal,
valid and binding obligation of the Borrower or such Loan Party (as the case may
be), enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
-------------------------------------
(a) do not require any consent or approval of, registration or filing with, or
any other action by or before, any Governmental Authority, except such as have
been obtained or made and are in full force and effect and except filings
necessary to perfect Liens created under the Loan Documents,
41
(b) will not violate any applicable law or regulation or the charter, by-laws or
other organizational documents of the Borrower or any of Subsidiaries or any
order of any Governmental Authority, (c) will not violate or result in a default
under, or result in the termination, cancelation or acceleration of any
obligation or a loss of a material benefit under, any indenture, agreement or
other instrument binding upon the Borrower or any of the Subsidiaries or any of
their assets, or give rise to a right thereunder to require any payment to be
made by the Borrower or any of the Subsidiaries, and (d) will not result in the
creation or imposition of any Lien on any asset of the Borrower or any of the
Subsidiaries, except (x) Liens created under the Loan Documents and (y) Liens
permitted by Section 6.02. The Orders (i) are in full force and effect and (ii)
are not subject to any stay, reversal, modification or vacatur, in whole or in
part.
SECTION 3.04. Financial Condition; No Material Adverse Change.
------------------------------------------------
The Borrower has heretofore furnished to the Lenders its consolidated balance
sheet and statements of income, stockholders' equity and cash flows (i) as of
and for the fiscal years ended December 31, 1999, December 31, 2000, and
December 31, 2001, reported on by Deloitte & Touche LLP, independent public
accountants, (ii) as of and for the fiscal quarters ended March 31, 2002, June
30, 2002, and September 30, 2002, and (iii) as of and for each fiscal month
after the most recent fiscal period described in clause (ii) above and ending at
least 45 days prior to the Effective Date, in each case certified by its chief
financial officer. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Borrower and the consolidated Subsidiaries as of such dates and for such periods
in accordance with GAAP, subject to year-end audit adjustments and the absence
of footnotes in the case of the statements referred to in clauses (ii) and (iii)
above.
(b) The Borrower has heretofore furnished to the Lenders its pro
forma consolidated balance sheet as of the Effective Date, prepared giving
effect to the Transactions. Such pro forma consolidated balance sheet (i) has
been prepared in good faith based on reasonable assumptions, (ii) is based on
the best information available to the Borrower after due inquiry, (iii)
accurately reflects all adjustments necessary to give effect to the Transactions
and (iv) presents fairly, in all material respects, the pro forma financial
position of the Borrower and the consolidated Subsidiaries as of the Effective
Date.
(c) Except as disclosed in the financial statements referred to
above or the notes thereto or in the Disclosure Statement and except for the
Disclosed Matters, after giving effect to the Transactions, none of the Borrower
or the Subsidiaries has, as of the Effective Date, any material contingent
liabilities, unusual long-term commitments or unrealized losses.
(d) Since December 31, 2001, there has been no material adverse
change in the business, operations, properties, assets, condition (financial or
otherwise) liabilities (including contingent liabilities) or prospects of the
Borrower and the Subsidiaries, taken as a whole, other than any material adverse
change disclosed (i) in the Emergence Plan or the Disclosure Statement or (ii)
on Schedule 4.01(bb).
SECTION 3.05. Properties. Each of the Borrower and the
-----------
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business (including its Mortgaged
Properties), except for minor defects in title that do not
42
interfere with its ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes.
(b) Each of the Borrower and the Subsidiaries owns, or is licensed
to use, all trademarks, trade names, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Borrower and the
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
(c) Schedule 3.05 sets forth the address of each real property
that is owned or leased by the Borrower or any of the Subsidiaries as of the
Effective Date after giving effect to the Transactions.
(d) As of the Effective Date, none of the Borrower or the
Subsidiaries has received notice of, or has knowledge of, any pending or
contemplated condemnation proceeding affecting any Mortgaged Property or any
sale or disposition thereof in lieu of condemnation. Neither any Mortgaged
Property nor any interest therein is subject to any right of first refusal,
option or other contractual right to purchase any such Mortgaged Property or
interest therein.
SECTION 3.06. Litigation and Environmental Matters. There are no
-------------------------------------
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of the Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve any of the Loan Documents or the Transactions.
(b) Except for the Disclosed Matters and except with respect to
any other matters that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect, none of the Borrower or the
Subsidiaries (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received any request for information pursuant to any Environmental Law or
notice of any claim with respect to any Environmental Liability or (iv) knows of
any basis for any Environmental Liability.
(c) Since the Effective Date, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the
------------------------------------
Borrower and the Subsidiaries is in compliance with all material laws,
regulations and orders of any arbitrator or Governmental Authority applicable to
it or its property and all indentures, agreements and other instruments binding
upon it or its property. No Default has occurred and is continuing.
SECTION 3.08. Investment and Holding Company Status. None of the
--------------------------------------
Borrower or the Subsidiary Loan Parties is (a) an "investment company" as
defined in, or subject
43
to regulation under, the Investment Company Act of 1940 or (b) a "holding
company" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of the Borrower and the Subsidiaries has
------
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) any Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.10. ERISA. Except as set forth on Schedule 3.10, no ERISA
------
Event has occurred or is reasonably expected to occur that, when taken together
with all other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and the Subsidiaries in an aggregate amount
exceeding (i) $3,000,000 in any year or (ii) $5,000,000 in all periods. The
present value of all accumulated benefit obligations under each Plan (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $35,000,000 the fair market value
of the assets of such Plan, and the present value of all accumulated benefit
obligations of all underfunded Plans (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $35,000,000 the fair market value of the assets of all such underfunded
Plans.
SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders
-----------
(or disclosed in a filing with the Court prior to the date hereof) all
agreements, instruments and corporate or other restrictions to which the
Borrower or any of the Subsidiaries is subject, and all matters known to any of
them, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. Neither the Disclosure Statement nor the
reports, financial statements, certificates or other information furnished,
taken as a whole, by or on behalf of any Loan Party to the Administrative Agent
or any Lender in connection with the negotiation of this Agreement or any other
Loan Document or delivered hereunder or thereunder (as modified or supplemented
by other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
provided that, with respect to projected financial information the Borrower
--------
represents only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time.
SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth the name of,
-------------
and the ownership interest of the Borrower in, each Subsidiary and identifies
each Subsidiary that is a Subsidiary Loan Party, in each case as of the
Effective Date.
SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of
----------
all insurance maintained by or on behalf of the Borrower and the Subsidiaries as
of the Effective Date. As of the Effective Date, all premiums in respect of
such insurance have been paid. The Borrower believes that the insurance
maintained by or on behalf of the Borrower and the Subsidiaries is adequate.
44
SECTION 3.14. Labor Matters. As of the Effective Date, there are no
--------------
strikes, lockouts or slowdowns against the Borrower or any Subsidiary pending
or, to the knowledge of the Borrower, threatened. The hours worked by and
payments made to employees of the Borrower and the Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Federal,
state, local or foreign law dealing with such matters. All payments due from
the Borrower or any Subsidiary, or for which any claim may be made against the
Borrower or any Subsidiary, on account of wages and employee health and welfare
insurance and other benefits, have been paid or accrued as a liability on the
books of the Borrower or such Subsidiary. The consummation of the Transactions
will not give rise to any right of termination or right of renegotiation on the
part of any union under any collective bargaining agreement to which the
Borrower or any Subsidiary is bound.
SECTION 3.15. Solvency. On the Effective Date and at all times
---------
thereafter, (a) the fair value of the assets of (i) the Borrower, (ii) World
Kitchen, Inc. and (iii) the Loan Parties, on a consolidated basis, at a fair
valuation, will exceed its or their debts and liabilities, subordinated,
contingent or otherwise; (b) the present fair saleable value of the property of
(i) the Borrower, (ii) World Kitchen, Inc. and (iii) the Loan Parties, on a
consolidated basis, will be greater than the amount that it or they will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) (i) the Borrower, (ii) World Kitchen, Inc. and
(iii) the Loan Parties, on a consolidated basis, will be able to pay its or
their debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and (d) (i) the Borrower,
(ii) World Kitchen, Inc. and (iii) the Loan Parties, on a consolidated basis,
will not have unreasonably small capital with which to conduct the business in
which it or they are engaged as such business is now conducted and is proposed
to be conducted following the Effective Date.
SECTION 3.16. Security Documents. The Collateral Agreement is
-------------------
effective to create, for the ratable benefit of the holders of the Obligations,
a legal, valid and enforceable security interest in the Collateral (as defined
in the Collateral Agreement) and, when such Collateral is delivered to the
Collateral Agent and for so long as the Collateral Agent remains in possession
of such Collateral or when financing statements in appropriate form are filed in
the offices specified in the Perfection Certificate, as applicable, the security
interest created by the Collateral Agreement shall constitute a perfected first
priority security interest in all right, title and interest of the pledgor
thereunder in such Collateral, in each case prior and superior in right to any
other Person, other than with respect to the rights of Persons pursuant to Liens
permitted by Section 6.02.
(b) The Mortgages are effective to create, subject to the
exceptions listed in each title insurance policy covering such Mortgage, for the
ratable benefit of the holders of the Obligations, a legal, valid and
enforceable Lien on all the applicable mortgagor's right, title and interest in
and to the Mortgaged Properties thereunder, and when the Mortgages are filed in
the offices specified in the Perfection Certificate, the Lien created by each
Mortgage shall constitute a perfected Lien on all right, title and interest of
the applicable mortgagor in such Mortgaged Properties, in each case prior and
superior in right to any other Person, other than with respect to the rights of
Persons pursuant to Liens permitted by Section 6.02.
45
SECTION 3.17. Use of Proceeds. The proceeds of the Loans are to be
----------------
used solely for the purposes set forth in and permitted by Section 5.11. None
of the Borrower or the Subsidiaries is generally engaged in the business of
purchasing or selling Margin Stock or extending credit for the purpose of
purchasing or carrying Margin Stock.
ARTICLE IV
CONDITIONS
SECTION 4.01. Effective Date. The obligations of the Lenders to make
---------------
Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart
of this Agreement.
(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent, the Collateral
Agent and the Lenders and dated the Effective Date) of (i) Xxxxx Day,
counsel for the Borrower, substantially in the form of Exhibit B-1, and
(ii) local counsel in each jurisdiction where a Mortgaged Property is
located (if requested by the Administrative Agent), substantially in the
form of Exhibit B-2, and, in the case of each such opinion required by this
paragraph, covering such other matters relating to the Loan Parties, the
Loan Documents or the Transactions as the Administrative Agent or the
Required Lenders shall reasonably request. The Borrower hereby requests
such counsel to deliver such opinions.
(c) The Administrative Agent shall have received such documents
and certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of each
Loan Party, the authorization of the Transactions and any other legal
matters relating to the Loan Parties, the Loan Documents or the
Transactions, all in form and substance satisfactory to the Administrative
Agent and its counsel.
(d) The Administrative Agent shall have received a certificate,
dated the Effective Date and signed by the Chief Executive Officer or Chief
Financial Officer of the Borrower (or an executive officer of the Borrower
performing a similar function), confirming compliance with the conditions
set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent and the Lenders shall have received
all fees and other amounts due and payable on or prior to the Effective
Date, including, to the extent invoiced, reimbursement or payment of all
reasonable out-of-pocket expenses (including
46
fees, charges and disbursements of counsel) required to be reimbursed or
paid by any Loan Party hereunder or under any other Loan Document.
(f) The Collateral and Guarantee Requirement shall have been
satisfied and the Collateral Agent shall have received (i) a completed
Perfection Certificate dated the Effective Date and signed by a Financial
Officer or chief legal officer of the Borrower, together with all
attachments contemplated thereby, including the results of a search of the
Uniform Commercial Code (or equivalent) filings made with respect to the
Loan Parties in the jurisdictions contemplated by the Perfection
Certificate and copies of the financing statements (or similar documents)
disclosed by such search and evidence reasonably satisfactory to the
Collateral Agent that the Liens indicated by such financing statements (or
similar documents) are permitted by Section 6.02 or have been released,
(ii) evidence that the lockbox and concentration account arrangements
contemplated by the Collateral Agreement remain in effect, (iii) a copy of
the Intercreditor Agreement duly executed and delivered by each party
thereto and (iv) if requested by the Collateral Agent, satisfactory legal
opinions, title insurance policies and other documents reasonably requested
by the Administrative Agent with respect to the Mortgaged Property,
provided that clause (b) of the definition of Collateral and Guarantee
--------
Requirement need not be satisfied on the Effective Date with respect to the
Subsidiaries named in Sections 5.13(d) and (e).
(g) The Collateral Agent shall have received evidence that the
insurance required by Section 5.07 and the Security Documents is in effect.
(h) The Lenders shall be reasonably satisfied as to the amount and
nature of any contingent liabilities (including but not limited to
environmental and employee health and safety exposures) to which the
Borrower and the Subsidiaries may be subject after giving effect to the
Reorganization (including but not limited to contingent liabilities arising
out of events or conditions prior to the commencement by Old WKI and the
Old Subsidiaries of their Chapter 11 case) and with the plans of the
Borrower with respect thereto, and, if requested by the Administrative
Agent, the Borrower shall have delivered any environmental assessments
(including Phase I reports) conducted by or for the Borrower prior to the
date hereof with respect to the real properties of the Borrower and the
Subsidiaries.
(i) The Administrative Agent shall have received from the Borrower
(a) audited consolidated balance sheets and related statements of
operations, stockholders' equity and cash flows for the Borrower as of and
for the fiscal years ended December 31, 1999, December 31, 2000, and
December 31, 2001, and (b) unaudited consolidated balance sheets and
related statements of operations, stockholders' equity and cash flows for
the Borrower for (i) the fiscal quarters ended March 31, 2002, June 30,
2002, and September 30, 2002, and (ii) each fiscal month after the most
recent fiscal period for which financial statements were received by the
Lenders as described above and ended at least 45 days prior to the
Effective Date, in each case prepared in accordance with GAAP and, in the
case of the financial statements delivered pursuant to clause (b), which
financial statements shall not be materially inconsistent with the
financial statements or forecasts previously delivered to the Lenders. In
addition, the Lenders shall have
47
received a pro forma consolidated balance sheet for the Borrower as of the
Effective Date after giving effect to the Transactions, which shall not be
materially inconsistent with the forecasts previously provided to the
Lenders.
(j) Simultaneously with or prior to the Effective Date (i) the New
Senior Subordinated Notes shall have been issued in an aggregate principal
amount of not more than $123,150,000 and (ii) not more than $240,050,000
shall be outstanding under the New Term Loan Credit Agreement. The
Administrative Agent shall have received copies of the New Senior
Subordinated Notes Documents and the New Term Loan Credit Agreement,
certified by a Financial Officer as complete and correct.
(k) The Court shall have entered the Order, which shall be
satisfactory in form and substance to the Lenders and (i) each of the
Orders shall be in full force and effect, (ii) none of the Orders shall be
subject to any stay and there shall not have been entered by the Court any
reversal, modification or vacatur, in whole or in part, of the Orders,
(iii) all the conditions set forth in the Emergence Plan to confirmation of
the Emergence Plan, to the effective date of the Emergence Plan shall have
been satisfied or waived in accordance with the Emergence Plan, (iv) all
other requisite Governmental Authorities and third parties shall have
approved or consented to the Transactions and the other transactions
contemplated hereby or thereby to the extent required or deemed advisable
by the Administrative Agent and its counsel (and such approvals shall be in
full force and effect and all appeal periods with respect thereto shall
have expired) and (v) the Transactions shall be consummated in accordance
with the terms thereof as described in the Disclosure Statement.
(l) Simultaneously with or prior to the Effective Date, Old WKI
and the Old Subsidiaries shall have emerged from the Chapter 11 proceedings
and "substantial consummation" of the Emergence Plan (within the meaning of
Section 11.01(2) of the Bankruptcy Code) shall have occurred (without
giving effect to any waivers, amendments or other modifications to the
Emergence Plan not approved by the Lenders).
(m) There shall be no action, actual or threatened, before any
arbitrator or Governmental Authority that (i) has a reasonable likelihood
of restraining, preventing or imposing burdensome conditions on the
Reorganization, the Financing Transactions or the other transactions
contemplated thereby or (ii) could reasonably be expected to result in a
Material Adverse Effect.
(n) The Lenders shall be reasonably satisfied with the structure,
terms and provisions of the Emergence Plan and the Reorganization,
including, without limitation, all financial, accounting and tax aspects of
the Emergence Plan and the Reorganization.
(o) The Lenders shall be reasonably satisfied with the
capitalization, structure and equity ownership of the Borrower and the
Subsidiaries as set forth in the Emergence Plan and any amendments,
modifications and changes thereto.
(p) The Administrative Agent shall be reasonably satisfied in all
respects with the results of its due diligence investigation of the
Borrower and the Subsidiaries.
48
(q) Substantially simultaneously with or prior to the Effective
Date (i) the principal of and interest on all loans outstanding under, and
all other amounts due with respect to (x) the Old Credit Agreement, (y) the
Xxxxxx Credit Agreement and (z) the DIP Credit Agreement shall have been
canceled and shall be of no further force and effect, (ii) all commitments
to lend under (x) the Old Credit Agreement, (y) the Xxxxxx Credit Agreement
and (z) the DIP Credit Agreement shall have been permanently terminated,
(iii) all obligations under or relating to the Old Credit Agreement, the
Xxxxxx Credit Agreement, the DIP Credit Agreement, all other pre-petition
claims and all liens and security interests relating to all of the
foregoing (including all adequate protection obligations related thereto)
shall have been satisfied and (iv) the Administrative Agent shall have
received satisfactory evidence of such cancelation, termination and
discharge.
(r) The Administrative Agent shall have received reasonably
satisfactory evidence that all liens in respect of allowed secured tax
claims have been terminated and all amounts owed in respect of such claims
have been repaid or otherwise provided for pursuant to the Emergence Plan
in a manner satisfactory to the Administrative Agent.
(s) After giving effect to the Reorganization and the other
Transactions, the Borrower and the Subsidiaries shall have outstanding no
Indebtedness or preferred stock other than the Indebtedness permitted by
Sections 6.01(a)(i), (ii), (iii) and (iv). The amounts, terms and
conditions of all such Indebtedness (including but not limited to terms and
conditions relating to the interest rate, fees, amortization, maturity,
prepayment requirements, mandatory call or redemption features, sinking
funds, security, subordination (if any), covenants, events of default and
remedies) shall be satisfactory in all respects to the Lenders.
(t) The Lenders shall have received a certificate, dated the
Effective Date and signed by a Financial Officer of the Borrower,
confirming that the Consolidated EBITDA of the Borrower for the
twelve-month period ended on November 30, 2002, is not less than
$56,080,000.
(u) The Lenders shall have received (i) a detailed business plan
of the Borrower and the Subsidiaries for the 2003 fiscal year and (ii)
financial projections for the Borrower and the Subsidiaries for each fiscal
year from 2003 through 2007 prepared in accordance with GAAP and in good
faith by the Borrower upon assumptions believed to be reasonable at the
time made and on the Effective Date, in each case in form and substance
reasonably satisfactory to the Administrative Agent.
(v) The Administrative Agent shall be reasonably satisfied that
the Borrower and the Subsidiaries have retained access to all intellectual
property material to their businesses pursuant to agreements reasonably
satisfactory to the Administrative Agent.
(w) There shall be no litigation, arbitration or administrative
proceeding or consent decree that could reasonably be expected, after
giving effect to the Transactions and the other transactions contemplated
thereby, to have a Material Adverse Effect or have a material adverse
effect on the ability of the parties to consummate the Transactions and the
other transactions contemplated thereby.
49
(x) The Lenders shall be reasonably satisfied in all respects with
the tax position and the contingent tax liabilities of, and with any tax
sharing agreements among, the Borrower and the Subsidiaries after giving
effect to the Transactions and the other transactions contemplated thereby,
and with the plans of the Borrower with respect thereto.
(y) The Administrative Agent shall be reasonably satisfied in all
respects with the senior management of the Borrower and the Subsidiaries
after giving effect to the Reorganization, the arrangements for the
retention of such senior management and the contracts and other
compensatory arrangements of the Borrower and the Subsidiaries with such
senior management.
(z) The consummation of the Transactions and the other
transactions contemplated thereby shall not (i) violate any applicable law,
statute, consent decree, rule or regulation, (ii) conflict with, or result
in a default or event of default under, any material agreement of the
Borrower or any Subsidiary or (iii) give rise to a right to require any
payment to be made by the Borrower or any Subsidiary or result in the
creation of any Lien (other than Permitted Liens) under any agreement
evidencing any indebtedness of the Borrower or any Subsidiary.
(aa) The Administrative Agent shall have received a completed
Borrowing Base Certificate dated the Effective Date and signed by a
Financial Officer of the Borrower, and such Borrowing Base Certificate
shall demonstrate the calculation of the Borrowing Base as of the close of
business of the last day of the second week preceding the Effective Date.
(bb) There shall not have occurred a material adverse change in
the business, operations, properties, assets, condition (financial or
otherwise), liabilities (including contingent liabilities) or prospects of
the Borrower and the Subsidiaries, taken as a whole, since December 31,
2001, other than any material adverse change disclosed (i) in the Emergence
Plan or the Disclosure Schedule or (ii) on Schedule 4.01(bb).
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) not later than 5:00 p.m., New York City time, on
January 31, 2003 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to
------------------
make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue,
amend, renew or extend any Letter of Credit, is subject to receipt of the
request therefor in accordance herewith and to the satisfaction of the following
conditions:
(a) The representations and warranties of each Loan Party set
forth in the Loan Documents shall be true and correct on and as of the date
of such Borrowing or the
50
date of issuance, amendment, renewal or extension of such Letter of Credit,
as applicable, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties shall be true and correct as to such earlier date).
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be continuing.
For purposes of the foregoing, the term "Borrowing" shall not include the
continuation or conversion of Loans in which the aggregate amount of such
Loans is not being increased.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, the Borrower covenants and
agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The
-------------------------------------------
Borrower will furnish to the Administrative Agent and each Lender:
(a) within 90 days (or such shorter period as the SEC shall
specify for the filing of Annual Reports on Form 10-K) after the end of
each fiscal year of the Borrower, (i) its audited consolidated balance
sheet and related statements of operations, stockholders' equity and cash
flows as of the end of and for such year in comparative form the figures
for the previous fiscal year, all reported on by an independent public
accountant of recognized national standing (without a "going concern" or
like qualification or exception and without any qualification or exception
as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Borrower and the consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, provided that if the Borrower's annual report filed on Form 10-K
--------
with the SEC contains the information and report required in this
paragraph, delivery of such Form 10-K to the Administrative Agent and each
Lender shall be sufficient for purposes of satisfying the requirements of
this clause and (ii) unaudited consolidating balance sheets and related
statements of operations, stockholders' equity and cashflows for each
Subsidiary as of the end of and for such year;
(b) within 45 days (or such shorter period as the SEC shall
specify for the filing of Quarterly Reports on Form 10-Q) after the end of
each of the first three fiscal quarters of each fiscal year of the
Borrower, (i) its consolidated balance sheet and related
51
statements of operation, stockholders' equity and cash flows as of the end
of such fiscal quarter and the results of operations during such fiscal
quarter and the then elapsed portion of the fiscal year, (ii) a balance
sheet and related statements of operations, stockholders' equity and cash
flows for (x) its Foreign Subsidiaries, taken as a whole and (y) all other
Subsidiaries, taken as a whole as of the end of such fiscal quarter and the
results of operations during such fiscal quarter and the then elapsed
portion of the fiscal year, and (iii) a certificate of a Financial Officer
describing all material intercompany loans, advances and other amounts
eliminated in the preparation of the financial statements described in
clause (i), setting forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case of the balance
sheet, as of the end of) the previous fiscal year, and, in the case of the
financial statements described above, certified by one of its Financial
Officers as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and the consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes, provided that if the Borrower's quarterly report filed on Form
--------
10-Q with the SEC contains the information required in this paragraph,
delivery of such Form 10-Q to the Administrative Agent and each Lender
shall be sufficient for purposes of satisfying the requirements of this
clause;
(c) within 30 days after the end of each of the first two fiscal
months of each fiscal quarter of the Borrower, its consolidated balance
sheet and related statements of operations, stockholders' equity and cash
flows as of the end of and for such fiscal month and the then elapsed
portion of the fiscal year, all certified by one of its Financial Officers
as presenting in all material respects the financial condition and results
of operations of the Borrower and the consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(d) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Sections 6.13, 6.14,
6.15, 6.16 and 6.17 and (iii) stating whether any change in GAAP or in the
application thereof has occurred since the date of the Borrower's audited
financial statements referred to in Section 3.04 and, if any such change
has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;
(e) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during
the course of their examination of such financial statements of any Default
(which certificate may be limited to the extent required by accounting
rules or guidelines);
(f) promptly following the end of the first full week after the
Effective Date and every second week thereafter (but in no event later than
the last Business Day of the
52
following week), a completed Borrowing Base Certificate calculating and
certifying the Borrowing Base as of the last day of the prior week, signed
on behalf of the Borrower by a Financial Officer, provided that at such
--------
time and for so long as the Leverage Ratio is less than or equal to 3.00 to
1.00, the Borrower shall deliver such Borrowing Base Certificate promptly
following the end of each calendar month (but in no event later than the
last Business Day of the first full week of the following month);
(g) not later than 45 days following the commencement of each
fiscal year of the Borrower, a detailed consolidated budget for such fiscal
year (including a projected consolidated balance sheet and related
statements of projected operations and cash flow as of the end of and for
such fiscal year and setting forth the assumptions used for purposes of
preparing such budget) and, promptly when available, any significant
revisions of such budget, in each case prepared in good faith based upon
assumptions believed to be reasonable at the time made and at the time such
information is delivered to the Administrative Agent;
(h) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials filed
by the Borrower or any Subsidiary with the SEC or with any national
securities exchange, or distributed by the Borrower to its shareholders
generally, as the case may be; and
(i) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Borrower or any Subsidiary, or compliance with the terms
of any Loan Document, as the Administrative Agent or any Lender may
reasonably request.
SECTION 5.02. Notices of Material Events. The Borrower will furnish
---------------------------
to the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or affecting
the Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and the Subsidiaries in an aggregate
amount exceeding $1,000,000; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be in writing and shall be
accompanied by a statement of a Financial Officer or other executive officer of
the Borrower setting forth the details of the event or development requiring
such notice and any action taken or proposed to be taken by or on behalf of the
Borrower with respect thereto.
53
SECTION 5.03. Information Regarding Collateral. The Borrower
---------------------------------
will furnish to the Collateral Agent prompt written notice of any change (i) in
any Loan Party's corporate name, (ii) in the jurisdiction of incorporation or
organization of any Loan Party, (iii) in any office in which any Loan Party
maintains books or records relating to Collateral owned by it, (iv) in any Loan
Party's identity or corporate structure or (v) in any Loan Party's taxpayer
identification number or organizational identification number. The Borrower
agrees not to effect or permit any change referred to in the preceding sentence
unless all filings have been made under the Uniform Commercial Code or otherwise
that are required in order for the Collateral Agent to continue at all times
following such change to have a valid, legal and perfected first priority
security interest in all the Collateral. The Borrower also agrees promptly to
notify the Collateral Agent if any material portion of the Collateral is damaged
or destroyed.
(b) Each year, at the time of delivery of annual financial
statements with respect to the preceding fiscal year pursuant to clause (a) of
Section 5.01, the Borrower shall deliver to the Collateral Agent a certificate
of a Financial Officer and the chief legal officer of the Borrower (i) setting
forth the information required pursuant to Section 2 of the Perfection
Certificate or confirming that there has been no change in such information
since the date of the Perfection Certificate delivered on the Effective Date or
the date of the most recent certificate delivered pursuant to this Section and
(ii) certifying that all Uniform Commercial Code financing statements (including
fixture filings, as applicable) or other appropriate filings, recordings or
registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to clause (i) above to the extent necessary to protect and
perfect the security interests under the Collateral Agreement for a period of
not less than 18 months after the date of such certificate (except as noted
therein with respect to any continuation statements to be filed within such
period).
SECTION 5.04. Existence; Conduct of Business. The Borrower will, and
-------------------------------
will cause each of the Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence, good standing under the laws of the jurisdiction of its organization
and the rights, licenses, permits, privileges, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its business, provided
--------
that the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03.
SECTION 5.05. Payment of Obligations. The Borrower will, and will
-----------------------
cause each of the Subsidiaries to, pay its Indebtedness and other obligations,
including Tax liabilities, before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has
set aside on its books adequate reserves with respect thereto in accordance with
GAAP, (c) such contest effectively suspends collection of the contested
obligation and the enforcement of any Lien securing such obligation and (d) the
failure to make payment pending such contest could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
54
SECTION 5.06. Maintenance of Properties. The Borrower will, and will
--------------------------
cause each of the Subsidiaries to, keep and maintain all property material to
the conduct of its business in good working order and condition, ordinary wear
and tear excepted.
SECTION 5.07. Insurance. The Borrower will, and will cause each of
----------
the Subsidiaries to, maintain, with financially sound and reputable insurance
companies (a) insurance in such amounts (with no greater risk retention) and
against such risks as are customarily maintained by companies of established
repute engaged in the same or similar businesses operating in the same or
similar locations and (b) all insurance required to be maintained pursuant to
the Security Documents. The Borrower will furnish to the Lenders, upon request
of the Collateral Agent, information in reasonable detail as to the insurance so
maintained.
SECTION 5.08. Casualty and Condemnation. (a) The Borrower (a) will
--------------------------
furnish to the Collateral Agent and the Lenders prompt written notice of any
casualty or other insured damage to any material portion of any Collateral or
the commencement of any action or proceeding for the taking of any material
portion of any Collateral or any part thereof or interest therein under power of
eminent domain or by condemnation or similar proceeding and (b) will ensure that
the Net Proceeds of any such event (whether in the form of insurance proceeds,
condemnation awards or otherwise) are collected and applied in accordance with
the applicable provisions of the Security Documents.
SECTION 5.09. Books and Records; Inspection and Audit Rights.
-----------------------------------------------
The Borrower will, and will cause each of the Subsidiaries to, keep proper books
of record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of the Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested.
(b) The Borrower will, and will cause each of the Subsidiaries to,
permit any representatives designated by the Administrative Agent (including any
consultants, accountants, lawyers and appraisers retained by the Administrative
Agent) to conduct evaluations and appraisals of the Borrower's computation of
the Borrowing Base and the assets included in the Borrowing Base, all at such
reasonable times, with reasonable notice and as often as reasonably requested.
The Borrower shall pay the reasonable fees and expenses of any representatives
retained by the Administrative Agent or employees of the Administrative Agent to
conduct any such evaluation or appraisal, provided that unless an Event of
--------
Default has occurred and is continuing, the Borrower shall not be required to
pay such fees and expenses for evaluations and appraisals more frequently than
two times each fiscal year. The Borrower also agrees to modify or adjust the
computation of the Borrowing Base (which may include maintaining additional
reserves or modifying the eligibility criteria for the components of the
Borrowing Base) to the extent required by the Administrative Agent as a result
of any such evaluation or appraisal, subject to any Lender vote required by
Section 9.02. In furtherance of and not in limitation of the foregoing, it is
understood and agreed that the Administrative Agent and its representatives will
conduct an evaluation and appraisal of the Borrowing Base and the assets
included in the
55
Borrowing Base within 90 days of the date of this Agreement and, upon completion
of such evaluation, the Administrative Agent may modify or adjust the
computation of the Borrowing Base as provided in the preceding sentence, subject
to any Lender vote required by Section 9.02.
SECTION 5.10. Compliance with Laws. The Borrower will, and will
---------------------
cause each of the Subsidiaries to, comply with all material laws, rules,
regulations and orders of any arbitrator or Governmental Authority applicable to
it or its property.
SECTION 5.11. Use of Proceeds and Letters of Credit. The proceeds of
--------------------------------------
the Loans will be used only for working capital and other general corporate
purposes. No part of the proceeds of any Loan will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Board, including Regulations T, U and X. Letters of Credit will be
issued only to support obligations of the Borrower or any Subsidiary incurred in
the ordinary course of business for general corporate purposes.
SECTION 5.12. Additional Subsidiaries. If any additional Subsidiary
------------------------
is formed or acquired after the Effective Date, the Borrower will, within ten
Business Days after such Subsidiary is formed or acquired, notify the Collateral
Agent and the Lenders thereof and cause the Collateral and Guarantee Requirement
to be satisfied with respect to such Subsidiary (if it is a Subsidiary Loan
Party) and with respect to any Equity Interest in or Indebtedness of such
Subsidiary owned by or on behalf of any Loan Party (subject to the limitations
set forth in clause (b) of the definition of the term "Collateral and Guarantee
Requirement").
SECTION 5.13. Further Assurances. The Borrower will, and will
-------------------
cause each Subsidiary Loan Party to, execute any and all further documents,
financing statements, agreements and instruments, and take all such further
actions (including the filing and recording of financing statements, fixture
filings, mortgages, deeds of trust and other documents), that may be required
under any applicable law, or that the Collateral Agent or the Required Lenders
may reasonably request, to cause the Collateral and Guarantee Requirement to be
and remain satisfied, all at the expense of the Loan Parties. The Borrower also
agrees to provide to the Collateral Agent, from time to time upon request,
evidence reasonably satisfactory to the Collateral Agent as to the perfection
and priority of the Liens created or intended to be created by the Security
Documents.
(b) If any material assets (including any real property or
improvements thereto or any interest therein) are acquired by the Borrower or
any Subsidiary Loan Party after the Effective Date (other than assets
constituting Collateral under the Collateral Agreement that become subject to
the Lien of the Collateral Agreement upon acquisition thereof), the Borrower
will notify the Collateral Agent and the Lenders thereof, and, if requested by
the Collateral Agent or the Required Lenders, the Borrower will cause such
assets to be subjected to a Lien securing the Obligations and will take, and
cause the Subsidiary Loan Parties to take, such actions as shall be necessary or
reasonably requested by the Collateral Agent to grant and perfect such Liens,
including actions described in paragraph (a) of this Section, all at the expense
of the Loan Parties.
(c) The Borrower will, and will cause each Subsidiary to, maintain
its current cash management system including, without limitation, its system of
deposit accounts,
56
concentration accounts and similar accounts, unless any change to such system
has been previously approved in writing by the Administrative Agent. In
furtherance of and without limiting the foregoing, the Borrower will continue to
consolidate its cash in a concentration account with the Administrative Agent.
(d) Not later than 30 days following the Effective Date, the
Borrower shall cause clause (b) of the definition of Collateral and Guarantee
Requirement to be satisfied with respect to the Equity Interests in (i) World
Kitchen Mexico, X.xx X.X. de CV and (ii) WKM, X.xx X.X., de CV and (iii) World
Kitchen Canada (EHI).
(e) In the event that WKI do Brasil Ltda. has not been liquidated
or dissolved by December 31, 2003, the Borrower shall cause clause (b) of the
definition of Collateral and Guarantee Requirement to be satisfied with respect
to such Subsidiary by such date.
SECTION 5.14. Interest Rate Protection. As promptly as practicable,
-------------------------
and in any event within 180 days after the Effective Date, the Borrower will
enter into, and thereafter for a period of not less than five years will
maintain in effect, one or more interest rate protection agreements on such
terms and with such parties as shall be reasonably satisfactory to the
Administrative Agent, the effect of which shall be to fix or limit the interest
cost to the Borrower with respect to a percentage of the outstanding Long-Term
Indebtedness of the Borrower to be reasonably satisfactory to the Administrative
Agent.
SECTION 5.15. Environmental Laws. Except as disclosed on Schedule
-------------------
5.15, the Borrower will, and will cause each Subsidiary to, conduct its
operations and keep and maintain its property in compliance with all
Environmental Laws, except to the extent that the aggregate of all such
instances of noncompliance could not result in any costs, expenses or liability
in excess of $1,000,000 (excluding the amounts set forth on Section 5.15 with
respect to the items listed on such Schedule).
SECTION 5.16. Earnings of Foreign Subsidiaries. The Borrower will
---------------------------------
use its commercially reasonable efforts to cause each Subsidiary that is a
Foreign Subsidiary to repatriate to the Borrower the excess cash, if any,
generated by such Foreign Subsidiary on a regular basis.
ARTICLE VI
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrower covenants and agrees with the Lenders
that:
SECTION 6.01. Indebtedness; Certain Equity Securities. The
----------------------------------------
Borrower will not, and will not permit any Subsidiary to, create, incur, assume
or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
57
(ii) Indebtedness created under the New Term Loan Credit Agreement;
(iii) the New Senior Subordinated Notes;
(iv) Indebtedness existing on the date hereof and set forth in
Schedule 6.01, but not any extensions, renewals or replacements of any such
Indebtedness;
(v) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary, provided that
--------
Indebtedness of the Borrower or any Subsidiary Loan Party to any Subsidiary
that is not a Loan Party shall be subject to the limitation set forth in
Section 6.04(d);
(vi) Guarantees by the Borrower of Indebtedness of any Subsidiary
and by any Subsidiary of Indebtedness of the Borrower or any other
Subsidiary, provided that Guarantees by the Borrower or any Subsidiary Loan
--------
Party of Indebtedness of any Subsidiary that is not a Loan Party shall be
subject to Section 6.04(d);
(vii) Indebtedness of the Borrower or any Subsidiary incurred to
finance the acquisition, construction or improvement of any fixed or
capital assets, including Capital Lease Obligations and any Indebtedness
assumed in connection with the acquisition of any such assets or secured by
a Lien on any such assets prior to the acquisition thereof, and extensions,
renewals and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof or result in an earlier maturity date
or decreased weighted average life thereof, provided that (A) such
--------
Indebtedness is incurred prior to or within 90 days after such acquisition
or the completion of such construction or improvement, (B) the aggregate
principal amount of Indebtedness permitted by this clause (vii) shall not
exceed $25,000,000 at any time outstanding and (C) the aggregate principal
amount of Indebtedness permitted by this clause (vii) incurred during any
fiscal year of the Borrower shall not exceed $10,000,000;
(viii) Indebtedness incurred in connection with interest rate
protection agreements required by Section 5.14;
(ix) Indebtedness in an aggregate principal amount not exceeding
$3,000,000 at any time outstanding incurred in connection with insurance
premium financings;
(x) Indebtedness of the Borrower or any Subsidiary represented by
surety or performance bonds or banker's acceptances in an aggregate amount
not to exceed $5,000,000 at any time outstanding; and
(xi) other unsecured Indebtedness in an aggregate principal amount
not exceeding $10,000,000 at any time outstanding, provided that the
--------
aggregate principal amount of such Indebtedness of Subsidiaries permitted
pursuant to this clause (xi) that are not Loan Parties shall not exceed
$2,500,000 at any time outstanding.
(b) The Borrower will not, and will not permit any Subsidiary to,
issue any preferred stock or other preferred Equity Interests.
58
SECTION 6.02. Liens. The Borrower will not, and will not permit any
------
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(a) Liens created under the Loan Documents;
(b) Permitted Encumbrances;
(c) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02,
provided that (i) such Lien shall not apply to any other property or asset
--------
of the Borrower or any Subsidiary and (ii) such Lien shall secure only
those obligations that it secures on the date hereof;
(d) any Lien existing on any property, asset or shares of capital
stock prior to the acquisition thereof by the Borrower or any Subsidiary or
existing on any property or asset of any Person that becomes a Subsidiary
after the date hereof prior to the time such Person becomes a Subsidiary,
provided that (i) such Lien is not created in contemplation of or in
--------
connection with such acquisition or such Person becoming a Subsidiary, as
the case may be, (ii) such Lien shall not apply to any other property or
assets of the Borrower or any Subsidiary and (iii) such Lien shall secure
only those obligations that it secures on the date of such acquisition or
the date such Person becomes a Subsidiary, as the case may be;
(e) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary, provided that (i) such security
--------
interests secure Indebtedness permitted by clause (vii) of Section 6.01(a),
(ii) such security interests and the Indebtedness secured thereby are
incurred prior to or within 90 days after such acquisition or the
completion of such construction or improvement, (iii) the Indebtedness
secured thereby does not exceed 90% of the cost of acquiring, constructing
or improving such fixed or capital assets and (iv) such security interests
shall not apply to any other property or assets of the Borrower or any
Subsidiary;
(f) Liens created under the New Term Loan Credit Agreement and the
New Senior Subordinated Notes Documents, provided that the Intercreditor
--------
Agreement has been executed by the parties thereto and delivered to the
Administrative Agent;
(g) Liens securing Indebtedness incurred in connection with
insurance premium financings permitted by clause (ix) of Section 6.01,
provided that the aggregate value of the assets secured in connection with
--------
any insurance premium financing does not exceed the amount of the premiums
for such insurance premium financing; and
(h) Liens on the Excluded Inventory.
SECTION 6.03. Fundamental Changes. The Borrower will not, and
--------------------
will not permit any Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
liquidate or dissolve, except that, if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be
59
continuing (i) any Subsidiary may merge into the Borrower in a transaction in
which the Borrower is the surviving corporation, (ii) any Subsidiary may merge
into any other Subsidiary in a transaction in which the surviving entity is a
Subsidiary (and, if any party to such merger is a Subsidiary Loan Party, the
surviving entity is a Subsidiary Loan Party), (iii) any Subsidiary (other than a
Subsidiary Loan Party) may liquidate or dissolve if the Borrower determines in
good faith that such liquidation or dissolution is in the best interests of the
Borrower and is not materially adverse to the Lenders and (iv) the Subsidiaries
listed on Schedule 6.03 may be liquidated or dissolved prior to December 31,
2003, provided that any such merger involving a Person that is not a
--------
wholly-owned Subsidiary immediately prior to such merger shall not be permitted
unless also permitted by Section 6.04.
(b) The Borrower will not, and will not permit any Subsidiary to,
engage to any material extent in any business other than businesses engaged in
by the Borrower and the Subsidiaries on the Effective Date or any related,
ancillary or complementary businesses.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
--------------------------------------------
Acquisitions. The Borrower will not, and will not permit any Subsidiary to,
------------
purchase, hold or acquire (including pursuant to any merger or consolidation
with any Person that was not a wholly-owned Subsidiary prior to such merger or
consolidation) any Equity Interests in or evidences of indebtedness or other
securities (including any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist any loans or advances to, Guarantee any
obligations of, or make or permit to exist any investment or any other interest
in, any other Person, or purchase or otherwise acquire (in one transaction or a
series of transactions) any assets of any other Person constituting a business
unit, except:
(a) pursuant to the Reorganization;
(b) Permitted Investments;
(c) investments existing on the date hereof and set forth on
Schedule 6.04(c);
(d) investments after the Effective Date by the Borrower and the
Subsidiaries in Equity Interests in their respective Subsidiaries, provided
--------
that (i) any such Equity Interests held by a Loan Party shall be pledged
pursuant to the Collateral Agreement (subject to the limitations set forth
in clause (b) of the definition of the term "Collateral and Guarantee
Requirement") and (ii) the aggregate amount of such investments by Loan
Parties in, and loans and advances by Loan Parties to, and Guarantees by
Loan Parties of Indebtedness of, Subsidiaries that are not Loan Parties,
pursuant to clauses (e) and (f) below, shall not exceed (x) $2,000,000
during fiscal year 2003 and (y) $4,000,000 during any fiscal year
thereafter;
(e) loans or advances made by the Borrower to any Subsidiary and
made by any Subsidiary to the Borrower or any other Subsidiary (other than
trade credits that constitute current accounts payable incurred in the
ordinary course of business), provided that (i) any such loans and advances
--------
made by a Loan Party shall be evidenced by a promissory note pledged
pursuant to the Collateral Agreement and (ii) the aggregate amount of such
loans and advances made after the Effective Date by Loan Parties to
60
Subsidiaries that are not Loan Parties shall be subject to the limitation
set forth in clause (d) above;
(f) Guarantees constituting Indebtedness permitted by Section
6.01, provided that the aggregate principal amount of Indebtedness of
--------
Subsidiaries that are not Loan Parties that is Guaranteed after the
Effective Date by any Loan Party shall be subject to the limitation set
forth in clause (d) above;
(g) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
and
(h) payroll, travel and similar advances to employees of the
Borrower or any Subsidiary not to exceed $250,000 at any time outstanding.
SECTION 6.05. Asset Sales. The Borrower will not, and will not
------------
permit any Subsidiary to, sell, transfer, lease or otherwise dispose of any
asset, including any Equity Interest owned by it, nor will the Borrower permit
any Subsidiary to issue any additional Equity Interest in such Subsidiary,
except:
(a) sales of inventory, used or surplus equipment and Permitted
Investments in the ordinary course of business;
(b) sales, transfers and other dispositions to the Borrower or a
Subsidiary, provided that any such sales, transfers or dispositions
--------
involving a Subsidiary that is not a Loan Party shall be made in compliance
with Section 6.09;
(c) sales, transfers and other dispositions that constitute
Restricted Payments permitted by Section 6.08;
(d) sales, transfers and other dispositions set forth on Schedule
6.05(d), provided that such sales, transfers or dispositions are
--------
consummated no later than December 31, 2003;
(e) sales, transfers and other dispositions of assets (other than
Equity Interests in a Subsidiary) that are not permitted by clause (a)
through (d) of this Section, provided that the fair market value of all
--------
assets sold, transferred or otherwise disposed of in reliance on this
clause (e) does not exceed (i) $2,000,000 in any fiscal year and (ii)
$8,000,000 in the aggregate; and
(f) sales, transfers and other dispositions of assets (other than
Equity Interests in a Subsidiary) that are not permitted by any other
clause of this Section, provided that (i) the aggregate fair market value
--------
of all assets sold, transferred or otherwise disposed of in reliance upon
this clause (f) shall not exceed $25,000,000 in the aggregate and (ii) the
Borrower shall prepay the Loans in accordance with Section 2.09 and
permanently reduce the Commitments in accordance with Section 2.07, in each
case in an amount equal to the sum of (x) 75% of the Net Proceeds from any
sale, transfer or other disposition permitted by this clause (f) minus (y)
-----
the amount of such Net Proceeds used
61
to prepay loans outstanding under the New Term Loan Credit Agreement (it
being agreed that if the Borrower shall deliver to the Administrative Agent
a certificate of a Financial Officer to the effect that the Borrower and
the Subsidiaries intend to apply such Net Proceeds (or the portion thereof
specified in such certificate) within 120 days after receipt of such Net
Proceeds to acquire real property, equipment, other tangible assets,
patents or trademarks to be used in the business of the Borrower and the
Subsidiaries, and certifying that no Default has occurred and is
continuing, then no prepayment of Loans or permanent reduction of the
Commitments required by this clause (ii) in respect of the amount specified
in such certificate shall be required except to the extent such Net
Proceeds (or the portion thereof specified on such certificate) have not
been so applied by the end of such 120 day period, at which time a
prepayment of loans and permanent reduction of the Commitments shall be
required in an amount equal to such Net Proceeds that have not been so
applied).
provided, further, that all sales, transfers, leases and other dispositions
-------- -------
permitted by this Section 6.05 (other than those permitted by clause (b) above)
shall be made for fair value and solely for cash consideration.
SECTION 6.06. Sale and Leaseback Transactions. The Borrower will
--------------------------------
not, and will not permit any Subsidiary to, enter into any arrangement, directly
or indirectly, whereby it shall sell or transfer any property, real or personal,
used or useful in its business, whether now owned or hereinafter acquired, and
thereafter rent or lease such property or other property that it intends to use
for substantially the same purpose or purposes as the property sold or
transferred.
SECTION 6.07. Swap Agreements. The Borrower will not, and will not
----------------
permit any Subsidiary to, enter into any Swap Agreement, other than (a) Swap
Agreements required by Section 5.14 and (b) Swap Agreements entered into in the
ordinary course of business to hedge or mitigate risks to which the Borrower or
any Subsidiary is exposed in the conduct of its business or the management of
its liabilities.
SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness.
------------------------------------------------------
The Borrower will not, and will not permit any Subsidiary to, declare or make,
or agree to pay or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, except (i) the Borrower
may declare and pay dividends with respect to its capital stock payable solely
in additional shares of its common stock, (ii) Subsidiaries may declare and pay
dividends ratably with respect to their capital stock and (iii) the Borrower may
make Restricted Payments, not exceeding $2,500,000 during any fiscal year,
pursuant to and in accordance with stock option plans or other benefit plans for
management or employees of the Borrower and the Subsidiaries as in effect on the
date of this Agreement without giving effect to any amendments thereto.
(b) The Borrower will not, and will not permit any Subsidiary to,
make or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash, securities or other property) of or in respect of
principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancelation or termination of any Indebtedness, except:
62
(ii) payment of Indebtedness created under the Loan Documents;
(iii) payment of regularly scheduled interest and principal
payments as and when due in respect of any Indebtedness permitted by
Section 6.01, other than payments in respect of the New Senior Subordinated
Notes prohibited by the subordination provisions thereof;
(iv) refinancings of Indebtedness to the extent permitted by
Section 6.01;
(v) payment of secured Indebtedness that becomes due as a result
of the voluntary sale or transfer of the property or assets securing such
Indebtedness; and
(vi) prepayment of Indebtedness under the New Term Loan Credit
Agreement.
SECTION 6.09. Transactions with Affiliates. The Borrower will not,
-----------------------------
and will not permit any Subsidiary to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) transactions in the ordinary course of business that are
at prices and on terms and conditions not materially less favorable to the
Borrower or such Subsidiary than could be obtained on an arm's-length basis from
unrelated third parties, (b) sales of Inventory by (i) the Borrower or a
Subsidiary Loan Party to (ii) a Subsidiary that is not a Loan Party in the
ordinary course of business that are at prices and on terms and conditions not
materially less favorable to the Borrower or such Subsidiary Loan Party than
could be obtained on an arms' length basis from unrelated third parties, (c)
transactions between or among the Borrower and the Subsidiaries not involving
any other Affiliate, provided that any transaction between or among (x) a Loan
--------
Party, and (y) a Subsidiary that is not a Loan Party shall be on terms and
conditions not materially less favorable to the Loan Party than could be
obtained in an arms' length basis from unrelated third parties, (d) any
Restricted Payment permitted by Section 6.08, (e) advances to employees of the
Borrower or any Subsidiary permitted by Section 6.04(h) and (f) any transaction
listed on Schedule 6.09.
SECTION 6.10. Restrictive Agreements. The Borrower will not, and
-----------------------
will not permit any Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Borrower or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay loans or advances
to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the
Borrower or any other Subsidiary, provided that (i) the foregoing shall not
--------
apply to restrictions and conditions imposed (w) by law, (x) by any Loan
Document, (y) by the New Term Loan Credit Agreement or (z) by the New Senior
Subordinated Notes Documents, (ii) the foregoing shall not apply to restrictions
and conditions existing on the date hereof identified on Schedule 6.10 (but
shall apply to any extension or renewal of, or any amendment or modification
expanding the scope of, any such restriction or condition), (iii) the foregoing
shall not apply to customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary pending such sale, provided such
restrictions and conditions apply only to the Subsidiary that is to be sold and
such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not
apply to restrictions or conditions imposed by
63
any agreement relating to secured Indebtedness permitted by Section 6.01 if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness and (v) clause (a) of the foregoing shall not apply to customary
provisions in leases and other contracts restricting the assignment thereof.
SECTION 6.11. Amendment of Material Documents. The Borrower will
--------------------------------
not, and will not permit any Subsidiary to, amend, modify or waive any of its
rights under (a) the New Senior Subordinated Notes Documents, (b) the New Term
Loan Credit Agreement, (c) its certificate of incorporation, by-laws or other
organizational documents, (d) documents evidencing any Material Indebtedness or
(e) any material agreement, contract, instrument or document (including any
joint venture agreement) to the extent such amendment, modification or waiver
would reasonably be expected to be adverse to the Lenders.
SECTION 6.12. Retail Stores. The Borrower will not, and will not
--------------
permit any Subsidiary to, open any new retail store.
SECTION 6.13. Capital Expenditures. The Borrower will not permit the
---------------------
aggregate amount of Capital Expenditures in respect of any annual period set
forth below to exceed the amount set forth in the table below opposite such
annual period (the "Permitted Amount"):
Annual Period Amount
------------------------------------ -----------
January 1, 2003 to December 31, 2003 $28,000,000
January 1, 2004 to December 31, 2004 $28,000,000
January 1, 2005 to December 31, 2005 $28,000,000
January 1, 2006 to December 31, 2006 $28,000,000
January 1, 2007 to December 31, 2007 $28,000,000
SECTION 6.14. Leverage Ratio. The Borrower will not permit the
---------------
Leverage Ratio as of any date during any period set forth below to exceed the
ratio set forth opposite such period:
Period Ratio
------------------------------------ -------
January 31, 2003 to March 31, 2003 6.8:1.0
April 1, 2003 to June 30, 2003 6.8:1.0
July 1, 2003 to September 30, 2003 6.8:1.0
October 1, 2003 to December 31, 2003 6.8:1.0
January 1, 2004 to March 31, 2004 6.8:1.0
April 1, 2004 to June 30, 2004 6.4:1.0
July 1, 2004 to September 30, 2004 6.4:1.0
October 1, 2004 to December 31, 2004 6.4:1.0
64
Period Ratio
------------------------------------ -------
January 1, 2005 to March 31, 2005 6.4:1.0
April 1, 2005 to June 30, 2005 6.0:1.0
July 1, 2005 to September 30, 2005 6.0:1.0
October 1, 2005 to December 31, 2005 6.0:1.0
January 1, 2006 to March 31, 2006 6.0:1.0
April 1, 2006 to June 30, 2006 5.6:1.0
July 1, 2006 to September 30, 2006 5.6:1.0
October 1, 2006 to December 31, 2006 5.6:1.0
January 1, 2007 to March 31, 2007 5.6:1.0
April 1, 2007 to June 30, 2007 5.2:1.0
July 1, 2007 to September 30, 2007 5.2:1.0
SECTION 6.15. Fixed Charge Coverage Ratio. The Borrower will not
----------------------------
permit the ratio of (a) Consolidated EBITDA to (b) Consolidated Fixed Charges,
in each case for any date during any period of four consecutive fiscal quarters
ending on any date set forth below, to be less than the ratio set forth below
opposite such period:
Period Ratio
------------------ -------
March 31, 2003 1.3:1.0
June 30, 2003 1.3:1.0
September 30, 2003 1.3:1.0
December 31, 2003 1.3:1.0
March 31, 2004 1.3:1.0
June 30, 2004 1.5:1.0
September 30, 2004 1.5:1.0
December 31, 2004 1.5:1.0
March 31, 2005 1.5:1.0
June 30, 2005 1.5:1.0
September 30, 2005 1.5:1.0
December 31, 2005 1.5:1.0
March 31, 2006 1.5:1.0
65
Period Ratio
------------------ -------
June 30, 2006 1.5:1.0
September 30, 2006 1.5:1.0
December 31, 2006 1.5:1.0
March 31, 2007 1.5:1.0
June 30, 2007 1.5:1.0
September 30, 2007 1.5:1.0
SECTION 6.16. Minimum Consolidated EBITDA. The Borrower will not
----------------------------
permit Consolidated EBITDA for any period of four consecutive fiscal quarters
ending on any date set forth below to be less than the amount set forth below
opposite such date:
Date Amount
------------------ -----------
March 31, 2003 $67,200,000
June 30, 2003 $68,400,000
September 30, 2003 $73,500,000
December 31, 2003 $71,300,000
March 31, 2004 $71,800,000
June 30, 2004 $72,400,000
September 30, 2004 $74,300,000
December 31, 2004 $77,000,000
March 31, 2005 $77,500,000
June 30, 2005 $78,000,000
September 30, 2005 $79,700,000
December 31, 2005 $82,100,000
March 31, 2006 $82,500,000
June 30, 2006 $82,900,000
September 30, 2006 $84,400,000
December 31, 2006 $86,500,000
March 31, 2007 $87,000,000
June 30, 2007 $87,400,000
September 30, 2007 $88,900,000
SECTION 6.17. Maximum Inventory. The Borrower will not permit the
------------------
aggregate value of all Inventory owned by the Borrower and the Subsidiaries and
located at the retail stores operated by the Borrower and the Subsidiaries on
any date set forth below to exceed the amount set forth opposite such date:
66
Date Amount
------------------ -----------
June 30, 2003 $17,000,000
September 30, 2003 $16,000,000
December 31, 2003 $15,000,000
March 31, 2004 $14,000,000
June 30, 2004 $14,000,000
September 30, 2004 $16,000,000
December 31, 2004 $14,000,000
March 31, 2005 $14,000,000
June 30, 2005 $14,000,000
September 30, 2005 $16,000,000
December 31, 2005 $14,000,000
March 31, 2006 $14,000,000
June 30, 2006 $14,000,000
September 30, 2006 $16,000,000
December 31, 2006 $14,000,000
March 31, 2007 $14,000,000
June 30, 2007 $14,000,000
September 30, 2007 $16,000,000
ARTICLE VII
EVENTS OF DEFAULT
If any of the following events ("Events of Default") shall occur:
-----------------
(a) the Borrower shall fail to pay any principal of any Loan or
any reimbursement obligation in respect of any LC Disbursement when and as
the same shall become due and payable, whether at the due date thereof or
at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan
or any fee or any other amount (other than an amount referred to in clause
(a) of this Article) payable under this Agreement or any other Loan
Document, when and as the same shall become due and payable, and such
failure shall continue unremedied for a period of five days;
(c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any Subsidiary in or in connection with any Loan
Document or any amendment or modification thereof or waiver thereunder, or
in any report, certificate,
67
financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof
or waiver thereunder, shall prove to have been incorrect when made or
deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement (i) contained in (A) Sections 2.09(c), 5.02, 5.04
(with respect to the existence of the Borrower), 5.11 or 5.13(c), (d) or
(e), (B) in Article VI, (C) in Sections 4.05(i) or 4.06 of the Collateral
Agreement or (D) in the Lockbox Agreement or (ii) contained in Section
5.01(f) and, in the case of this clause (ii), such default shall continue
unremedied for a period of five days;
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 20 days after notice thereof from
the Administrative Agent to the Borrower (which notice will be given at the
request of any Lender);
(f) the Borrower or any Subsidiary shall fail to make any
scheduled payment (whether of principal or interest and regardless of
amount) in respect of any Material Indebtedness, when and as the same shall
become due and payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become
due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity, provided that this clause (g)
--------
shall not apply to secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets securing such
Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Borrower or any Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any
Subsidiary or for a substantial part of its assets, and, in any such case,
such proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be
entered;
(i) the Borrower or any Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or
other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this Article, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any
Subsidiary or for a substantial part
68
of its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) the Borrower or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become
due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $5,000,000 shall be rendered against the Borrower, any
Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of the Borrower or any
Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the
Borrower and the Subsidiaries in an aggregate amount exceeding (i)
$3,000,000 in any year or (ii) $5,000,000 for all periods;
(m) (i) any Lien purported to be created under any Security
Document shall cease to be, or shall be asserted by any Loan Party not to
be, a valid and perfected Lien on any Collateral, with the priority
required by the applicable Security Document, except (A) as a result of the
sale or other disposition of the applicable Collateral in a transaction
permitted under the Loan Documents or (B) as a result of the Collateral
Agent's failure to maintain possession of any stock certificates,
promissory notes or other instruments delivered to it under the Collateral
Agreement or (ii) any Guarantee purported to be created under any Security
Document shall cease to be, or shall be asserted by any Loan Party not to
be, a valid and enforceable obligation of the applicable Loan Party;
(n) a Change in Control shall occur; or
(o) any Order shall be stayed, reversed, modified or vacated in
whole or in part;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower; and
in case of any event with respect to the Borrower described in clause (h) or (i)
of this Article, the Commitments shall automatically terminate and the principal
of the Loans then outstanding,
69
together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth in the Loan Documents. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 9.02), and (c) except as
expressly set forth in the Loan Documents, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Borrower or any Subsidiary that is communicated
to or obtained by the bank serving as Administrative Agent or any of its
Affiliates in any capacity. The Administrative Agent shall not be liable for
any action taken or not taken by it with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02) or in the absence
of its own gross negligence or wilful misconduct. The Administrative Agent
shall not be deemed to have knowledge of any Default unless and until written
notice thereof is given to the Administrative Agent by the Borrower or a Lender,
and the Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with any Loan Document, (ii) the contents of any certificate,
report or other document delivered thereunder or in connection therewith, (iii)
the performance or observance of any of the covenants, agreements or other terms
or conditions set forth in any Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Article IV or elsewhere in any Loan Document, other than to confirm receipt of
items expressly required to be delivered to the Administrative Agent.
70
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor the
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Bank and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or related agreement or any document furnished hereunder
or thereunder.
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The provisions of this Article applicable to the Administrative Agent
shall also be applicable to the Collateral Agent, mutatis mutandis.
------- --------
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. Except in the case of notices and other
--------
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at WKI Holding Company, Inc., 00000
Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, XX 00000, Attention of General Counsel
(Telecopy No. (000) 000-0000);
(b) if to the Administrative Agent, to JPMorgan Chase Bank, Loan
and Agency Services Group, One Chase Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention of Xxxxxxxx Xxxxxxxx (Telecopy No. (212)
552-7500), with a copy to JPMorgan Chase Bank, 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention of Xxxxxxx Xxxxxxxx (Telecopy No. (212)
270-0453);
(c) if to the Issuing Bank, to it at JPMorgan Chase Bank, 000
Xxxxxxxxxx Xxxxxxxxx, Xxxxxx Xxxx, Xxx Xxxxxx 00000, Attention of Xxxxxxx
Xxxx (Telecopy No. (000) 000-0000); and
(d) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. No failure or delay by the
--------------------
Administrative Agent, the Issuing Bank, the Collateral Agent or any Lender in
exercising any right or power hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Issuing Bank, the Collateral Agent and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of any Loan Document or consent to any departure by any Loan
Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan
or issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, the
72
Collateral Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered
into by the Administrative Agent and the Loan Party or Loan Parties that are
parties thereto, in each case with the consent of the Required Lenders, provided
--------
that no such agreement shall (i) increase the Commitment of any Lender without
the written consent of such Lender, (ii) reduce the principal amount of any Loan
or LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the final maturity of any Loan, or the required date of
reimbursement of any LC Disbursement, or any date for the payment of any
interest or fees payable hereunder, or reduce the amount of, waive or excuse any
such scheduled payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby, (iv)
change Section 2.16(b) or (c) in a manner that would alter the pro rata sharing
of payments required thereby, without the written consent of each Lender, (v)
change any of the provisions of this Section or the percentage set forth in the
definition of the term "Required Lenders" or any other provision of any Loan
Document specifying the number or percentage of Lenders required to waive, amend
or modify any rights thereunder or make any determination or grant any consent
thereunder, without the written consent of each Lender, (vi) release any
Subsidiary Loan Party from its Guarantee under the Collateral Agreement (except
as expressly provided in the Collateral Agreement), or limit its liability in
respect of such Guarantee, without the written consent of each Lender, (vii)
release all or substantially all of the Collateral from the Liens of the
Security Documents, without the written consent of each Lender, (viii) amend the
definitions of any of the terms "Borrowing Base", "Dilution Percentage" or
"Dilution Reserve" or any of the terms therein (other than any change to the
definitions of Borrowing Base, Dilution Percentage or Dilution Reserve that is
more restrictive to the Borrower), without the written consent of Lenders having
Exposures and unused Commitments representing at least 75% of the total
Exposures and unused Commitments at such time, (ix) amend or waive Sections
6.13, 6.14, 6.15, 6.16 or 6.17 without the written consent of Lenders having
Exposures and unused Commitments representing at least 75% of the total
Exposures and unused Commitments at such time or (x) increase the aggregate
amount of the Commitments above $90,000,000 without the written consent of
Lenders having Exposures and unused Commitments representing at least 75% of the
total Exposures and unused Commitments at such time; provided, further that (A)
-----------------
no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent, the Issuing Bank or the Collateral Agent without
the prior written consent of the Administrative Agent, the Issuing Bank or the
Collateral Agent, as the case may be. Notwithstanding the foregoing, any
provision of this Agreement may be amended by an agreement in writing entered
into by the Borrower, the Required Lenders and the Administrative Agent (and, if
its rights or obligations are affected thereby, the Issuing Bank) if (i) by the
terms of such agreement the Commitment of each Lender not consenting to the
amendment provided for therein shall terminate upon the effectiveness of such
amendment and (ii) at the time such amendment becomes effective, each Lender not
consenting thereto receives payment in full of the principal of and interest
accrued on each Loan made by it and all other amounts owing to it or accrued for
its account under this Agreement.
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SECTION 9.03. Expenses; Indemnity; Damage Waiver. The Borrower
-----------------------------------
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Collateral Agent and their respective Affiliates,
including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent and the Collateral Agent, in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of the Loan Documents or any amendments, modifications or waivers
of the provisions thereof (whether or not the transactions contemplated hereby
or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by the Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder and
(iii) all out-of-pocket expenses incurred by the Administrative Agent, the
Collateral Agent, the Issuing Bank or any Lender, including the fees, charges
and disbursements of any counsel for the Administrative Agent, the Issuing Bank
or any Lender, in connection with the enforcement or protection of its rights in
connection with the Loan Documents, including its rights under this Section, or
in connection with the Loans made or Letters of Credit issued hereunder,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.
(b) The Borrower shall indemnify the Administrative Agent, the
Collateral Agent, the Issuing Bank and each Lender, and each Related Party of
any of the foregoing Persons (each such Person being called an "Indemnitee")
----------
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of any Loan Document or any other agreement or instrument
contemplated hereby, the performance by the parties to the Loan Documents of
their respective obligations thereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit
or the use of the proceeds therefrom (including any refusal by the Issuing Bank
to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or Release of
Hazardous Materials on or from any Mortgaged Property or any other property
currently or formerly owned or operated by the Borrower or any of the
Subsidiaries, or any Environmental Liability related in any way to the Borrower
or any of the Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto, provided that such indemnity shall not, as to any Indemnitee, be
--------
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Administrative Agent, the Collateral Agent, or
the Issuing Bank under paragraph (a) or (b) of this Section, each Lender
severally agrees to pay to the Administrative Agent, the Collateral Agent, or
the Issuing Bank, as the case may be, such Lender's pro rata share (determined
as of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided that the unreimbursed expense or
--------
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent, the Collateral
Agent, or the Issuing Bank in its capacity as
74
such. For purposes hereof, a Lender's "pro rata share" shall be determined based
upon its share of the sum of the total Exposures and unused Commitments at the
time.
(d) To the extent permitted by applicable law, the Borrower shall
not assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement or any agreement or instrument contemplated hereby,
the Transactions, any Loan or Letter of Credit or the use of the proceeds
thereof.
(e) All amounts due under this Section shall be payable promptly
after written demand therefor.
SECTION 9.04. Successors and Assigns. The provisions of this
-----------------------
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit) and, to the extent expressly contemplated
hereby, the Related Parties of each of the Administrative Agent, the Collateral
Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it), provided that
--------
(i) except in the case of an assignment to a Lender, an Affiliate of a Lender or
an Approved Fund, each of the Borrower, the Administrative Agent and the Issuing
Bank must give their prior written consent to such assignment (which consent
shall not be unreasonably withheld), (ii) except in the case of an assignment to
a Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender's Commitment or Loans, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 unless each of the Borrower and the Administrative Agent otherwise
consent, (iii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Agreement, (iv) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500, (v) the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire and (vi) in the case of an assignment to a CLO, the assigning
Lender shall retain the sole right to approve any amendment, modification or
waiver of any provision of this Agreement, provided, in the case of this clause
--------
(vi), that the Assignment and Acceptance between such Lender and such CLO may
provide that such Lender shall not, without the consent of such CLO, agree to
any amendment, modification or waiver described in the first proviso to Section
9.02(b) that
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affects such CLO; provided, further, that any consent of the Borrower otherwise
-------- -------
required under this paragraph shall not be required if a Default has occurred
and is continuing. Subject to acceptance and recording thereof pursuant to
paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.13, 2.14, 2.15 and 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent
of the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
--------
the Register shall be conclusive, and the Borrower, the Administrative Agent,
the Issuing Bank and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall
be available for inspection by the Borrower and the Issuing Bank at any
reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
-----------
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it), provided that (i) such Lender's
--------
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent, the Issuing
Bank and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce the Loan Documents and to approve any amendment, modification or waiver
of any provision of the Loan
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Documents, provided that such agreement or instrument may provide that such
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Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 9.02(b) that
affects such Participant. Subject to paragraph (f) of this Section, the Borrower
agrees that each Participant shall be entitled to the benefits of Sections 2.13,
2.14 and 2.15 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 9.08 as though it were a Lender, provided such Participant agrees to be
--------
subject to Section 2.16(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.15 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.15 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.15(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest, provided that no such pledge
--------
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations
---------
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the Issuing
Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.13, 2.14, 2.15 and 9.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
-----------------------------------------
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Documents and any separate letter agreements with respect to fees
payable to the Administrative Agent constitute the entire contract among the
77
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and the
Collateral Agent and when the Administrative Agent shall have received
counterparts hereof that, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to
-------------
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
----------------
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
--------------------------------------------------
Process. This Agreement shall be construed in accordance with and governed
--------
by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to any Loan Document, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such New York State court or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
or any other Loan Document against the Borrower or its properties in the courts
of any jurisdiction.
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(c) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 9.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
---------------------
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table
---------
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent,
----------------
the Issuing Bank, the Collateral Agent, and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (g) with the consent of
the Borrower or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent, the Issuing Bank, the Collateral Agent or
any Lender on a nonconfidential basis from a source other than the Borrower.
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For the purposes of this Section, "Information" means all information received
-----------
from the Borrower relating to the Borrower or its business, other than any such
information that is available to the Administrative Agent, the Issuing Bank or
any Lender on a nonconfidential basis prior to disclosure by the Borrower,
provided that, in the case of information received from the Borrower after the
--------
date hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything
-------------------------
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts that are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
-------
maximum lawful rate (the "Maximum Rate") that may be contracted for, charged,
------------
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.14. Intercreditor Agreement. Each Lender hereby appoints
------------------------
JPMorgan Chase Bank to act as Collateral Agent under this Agreement, the
Intercreditor Agreement and the Security Documents, and authorizes the
Collateral Agent to execute the Intercreditor Agreement in the name of and for
the benefit of the Lenders. Each Lender further expressly accepts and agrees to
the terms and provisions of the Intercreditor Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
WKI HOLDING COMPANY, INC.,
by
/s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President & CEO
JPMORGAN CHASE BANK,
individually and as
Administrative Agent,
Collateral Agent and
Issuing Bank,
by
/s/ Xxxxxxx Xxxxxxxx
------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Managing Director
SIGNATURE PAGE TO
REVOLVING CREDIT AGREEMENT,
DATED AS OF January 31, 2003
Name of Institution FOOTHILL CAPITAL CORPORATION
----------------------------
by
/s/ Xxxxxx Xxx
-----------------------------------
Name: Xxxxxx Xxx
Title: Assistant Vice President
SIGNATURE PAGE TO
REVOLVING CREDIT AGREEMENT,
DATED AS OF January 31, 2003
Name of Institution CFIC, INC. OF DELAWARE
----------------------
by
/s/ J. Xxxxxx Xxxxx
-----------------------------------
Name: J. Xxxxxx Xxxxx
Title: Duly Authorized Signatory
