EXHIBIT 99.1
EXECUTION VERSION
CREDIT AGREEMENT
DATED AS OF AUGUST 26, 2005
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
AS THE LENDERS
AND
THE BANK OF NEW YORK
AS THE AGENT,
AND
SALTON, INC.
AS THE PARENT
AND
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
AS THE BORROWERS
And
EACH OF ITS OTHER SUBSIDIARIES THAT ARE SIGNATORIES HERETO
AS GUARANTORS
TABLE OF CONTENTS
PAGE
ARTICLE I LOANS...................................................................................... 2
1.1. Total Facility........................................................................... 2
1.2. Stated Maturity Date..................................................................... 2
1.3. Term Loan................................................................................ 2
1.4. Registered Notes......................................................................... 2
1.5. Execution and Authentication of Registered Notes......................................... 3
1.6. Mutilated, Lost, Stolen or Destroyed Registered Notes.................................... 3
1.7. Additional Notes......................................................................... 4
ARTICLE II INTEREST AND FEES......................................................................... 5
2.1. Interest................................................................................. 5
2.2. Intentionally Omitted.................................................................... 5
2.3. Maximum Interest Rate.................................................................... 5
ARTICLE III PAYMENTS AND PREPAYMENTS................................................................. 6
3.1. Repayment of Term Loan................................................................... 6
3.2. Termination of Facility.................................................................. 7
3.3. Fees..................................................................................... 7
3.4. Payments by the Borrowers................................................................ 7
3.5. Intentionally Deleted.................................................................... 8
3.6. Apportionment, Application and Reversal of Payments...................................... 8
3.7. Indemnity for Returned Payments.......................................................... 8
3.8. Agent's and Lenders' Books and Records; Monthly Statements............................... 9
ARTICLE IV TAXES..................................................................................... 9
4.1. Taxes.................................................................................... 9
ARTICLE V BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.......................................... 11
5.1. Books and Records........................................................................ 11
5.2. Financial Information.................................................................... 11
5.3. Additional Financial Information......................................................... 14
5.4. Notices to the Lenders................................................................... 15
5.5. Collateral Reporting..................................................................... 18
ARTICLE VI GENERAL WARRANTIES AND REPRESENTATIONS.................................................... 18
6.1. Authorization, Validity, and Enforceability of this Agreement and the Loan Documents..... 18
6.2. Validity and Priority of Security Interest............................................... 19
6.3. Organization and Qualification........................................................... 19
6.4. Corporate Name; Prior Transactions....................................................... 19
6.5. Subsidiaries and Affiliates.............................................................. 19
6.6. Financial Statements and Projections..................................................... 19
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TABLE OF CONTENTS
(continued)
PAGE
6.7. Capitalization........................................................................... 20
6.8. Solvency................................................................................. 20
6.9. Debt..................................................................................... 20
6.10. Distributions............................................................................ 20
6.11. Real Estate; Leases...................................................................... 20
6.12. Proprietary Rights....................................................................... 21
6.13. Trade Names.............................................................................. 21
6.14. Litigation............................................................................... 21
6.15. Labor Disputes........................................................................... 21
6.16. Environmental Laws....................................................................... 22
6.17. No Violation of Law...................................................................... 23
6.18. No Default............................................................................... 23
6.19. ERISA Compliance......................................................................... 23
6.20. Taxes.................................................................................... 24
6.21. Regulated Entities....................................................................... 24
6.22. Use of Proceeds; Margin Regulations...................................................... 24
6.23. Copyrights, Patents, Trademarks and Licenses, etc........................................ 24
6.24. No Material Adverse Change............................................................... 25
6.25. Full Disclosure.......................................................................... 25
6.26. Material Agreements...................................................................... 25
6.27. Intentionally Omitted.................................................................... 25
6.28. Governmental Authorization............................................................... 25
6.29. Tax Shelter Regulations.................................................................. 25
ARTICLE VII AFFIRMATIVE AND NEGATIVE COVENANTS....................................................... 26
7.1. Taxes and Other Obligations.............................................................. 26
7.2. Legal Existence and Good Standing; Name Changes.......................................... 26
7.3. Compliance with Law and Agreements; Maintenance of Licenses.............................. 26
7.4. Maintenance of Property; Inspection of Property.......................................... 27
7.5. Insurance................................................................................ 27
7.6. Insurance and Condemnation Proceeds...................................................... 27
7.7. Environmental Laws....................................................................... 28
7.8. Compliance with ERISA.................................................................... 28
7.9. Mergers, Consolidations or Sales......................................................... 29
7.10. Distributions; Capital Change; Restricted Investments.................................... 30
7.11. Intentionally Omitted.................................................................... 30
7.12. Guaranties............................................................................... 30
7.13. Debt..................................................................................... 30
7.14. Prepayment............................................................................... 31
7.15. Transactions with Affiliates............................................................. 31
7.16. Investment Banking and Finder's Fees..................................................... 32
7.17. Business Conducted....................................................................... 32
7.18. Liens.................................................................................... 32
7.19. Sale and Leaseback Transactions.......................................................... 32
7.20. No New Subsidiaries...................................................................... 32
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TABLE OF CONTENTS
(continued)
PAGE
7.21. Fiscal Year.............................................................................. 32
7.22. Use of Proceeds.......................................................................... 32
7.23. Financial Covenants...................................................................... 33
7.24. Intentionally Omitted.................................................................... 33
7.25. Further Assurances....................................................................... 33
7.26. Intentionally Omitted.................................................................... 33
7.27. Subsidiary Distributions................................................................. 33
7.28. Modification of Covenants................................................................ 33
ARTICLE VIII CONDITIONS OF CLOSING................................................................... 34
8.1. Required Deliveries on or before the Closing Date........................................ 34
ARTICLE IX DEFAULT; REMEDIES......................................................................... 35
9.1. Events of Default........................................................................ 35
9.2. Remedies................................................................................. 38
9.3. Waiver of Default or Event of Default under First Lien Credit Agreement.................. 39
ARTICLE X BINDING OBLIGATIONS........................................................................ 40
ARTICLE XI AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS.............................. 40
11.1. Amendments and Waivers................................................................... 40
11.2. Assignments; Participations.............................................................. 42
ARTICLE XII THE AGENT................................................................................ 45
12.1. Appointment and Authorization............................................................ 45
12.2. Delegation of Duties..................................................................... 46
12.3. Liability of Agent....................................................................... 46
12.4. Reliance by Agent........................................................................ 46
12.5. Notice of Default........................................................................ 47
12.6. Credit Decision.......................................................................... 47
12.7. Indemnification.......................................................................... 47
12.8. Agent in Individual Capacity............................................................. 48
12.9. Successor Agent.......................................................................... 48
12.10. Withholding Tax.......................................................................... 49
12.11. Collateral Matters....................................................................... 50
12.12. Restrictions on Actions by Lenders; Sharing of Payments.................................. 52
12.13. Agency for Perfection.................................................................... 52
12.14. Payments by Agent to Lenders............................................................. 53
12.15. Intentionally Omitted.................................................................... 53
12.16. Intentionally Omitted.................................................................... 53
12.17. Concerning the Collateral and the Related Loan Documents................................. 53
12.18. Intentionally Omitted.................................................................... 53
12.19. Relation Among Lenders................................................................... 53
12.20. Additional Agents........................................................................ 53
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE XIII MISCELLANEOUS........................................................................... 54
13.1. No Waivers; Cumulative Remedies.......................................................... 54
13.2. Severability............................................................................. 54
13.3. Governing Law; Choice of Forum; Service of Process....................................... 54
13.4. Waiver of Jury Trial..................................................................... 55
13.5. Survival of Representations and Warranties............................................... 56
13.6. Other Security and Guaranties............................................................ 56
13.7. Fees and Expenses........................................................................ 56
13.8. Notices.................................................................................. 57
13.9. Waiver of Notices........................................................................ 58
13.10. Binding Effect........................................................................... 59
13.11. Indemnity of the Agent, Agent-Related Persons and the Lenders by the Borrowers........... 59
13.12. Limitation of Liability.................................................................. 60
13.13. Final Agreement.......................................................................... 61
13.14. Counterparts............................................................................. 61
13.15. Captions................................................................................. 61
13.16. Right of Setoff.......................................................................... 61
13.17. Confidentiality.......................................................................... 61
13.18. Conflicts with Other Loan Documents...................................................... 63
13.19. The Administrative Borrower.............................................................. 63
ARTICLE XIV JOINT AND SEVERAL OBLIGATIONS............................................................ 63
14.1. All Obligations to Constitute Joint and Several Obligations.............................. 63
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ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A DEFINED TERMS
EXHIBIT A FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT B FORM OF NOTE
EXHIBIT C FORM OF JOINDER AND ACCEPTANCE AGREEMENT
SCHEDULE 1.1 - LENDERS' TERM LOANS
SCHEDULE 6.3 - ORGANIZATION AND QUALIFICATIONS
SCHEDULE 6.4 - CORPORATE NAME; PRIOR TRANSACTIONS
SCHEDULE 6.5 - SUBSIDIARIES AND AFFILIATES
SCHEDULE 6.7 - CAPITALIZATION
SCHEDULE 6.9 - DEBT
SCHEDULE 6.11 - REAL ESTATE; LEASES
SCHEDULE 6.12 - PROPRIETARY RIGHTS
SCHEDULE 6.13 - TRADE NAMES
SCHEDULE 6.14 - LITIGATION
SCHEDULE 6.15 - LABOR DISPUTES
SCHEDULE 6.16(a) - ENVIRONMENTAL LAWS AND COMPLIANCE
SCHEDULE 6.16(f) - ENVIRONMENTAL DISCLOSURE
SCHEDULE 6.26 - MATERIAL AGREEMENTS
SCHEDULE 6.28 - AUTHORIZATIONS
SCHEDULE 7.9 - DISPOSITION OF TOASTMASTER FACILITIES
SCHEDULE 7.16 - FEES/COMMISSIONS
SCHEDULE 9.1(k) - JUDGMENTS
SCHEDULE E-1 - LOCATIONS OF ELIGIBLE LANDED INVENTORY
SCHEDULE E-2 - PERMITTED LIENS
SCHEDULE E-3 - RESTRUCTURING CHARGES
SCHEDULE E-4 - IMPAIRMENT LOSSES
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CREDIT AGREEMENT
This Credit Agreement, dated as of August 26, 2005 (this "Agreement"),
among the financial institutions from time to time parties hereto (such
financial institutions, together with their respective successors and assigns,
are referred to hereinafter each individually as a "Lender" and collectively as
the "Lenders"), THE BANK OF NEW YORK, a New York corporation, with offices at
000 X. Xxx Xxxxxxx Xxxx., Xxxxx 0000, Xxxxxx, Xxxxx, 00000, as administrative
agent and collateral agent for the Lenders (the "Agent"), SALTON, INC., a
Delaware corporation, with offices at 0000 Xxxxx Xxxxx, Xxxx Xxxxxx, Xxxxxxxx
00000 (the "Parent"), each of the Parent's Subsidiaries identified on the
signature pages hereof as Borrowers and each of the Parent's other Subsidiaries
identified on the signature pages hereof as Guarantors.
W I T N E S S E T H:
WHEREAS, Parent issued those 10 3/4% Senior Subordinated Notes Due 2005
(the "2005 Senior Notes"), pursuant to that certain Indenture dated as of
December 16, 1998 in favor of Sun Trust Bank (as successor to Xxxxx Fargo Bank
Minnesota, N.A.), as Trustee, as amended, restated, supplemented or otherwise
modified from time to time;
WHEREAS, Parent issued those 12 1/4% Senior Subordinated Notes Due 2008
(the "2008 Senior Notes") pursuant to that certain Indenture, dated as of April
23, 2001 in favor of Sun Trust Bank (as successor to Xxxxx Fargo Bank Minnesota,
N.A.), as Trustee, as amended, restated, supplemented or otherwise modified from
time to time;
WHEREAS, Parent has offered (the "Exchange Offer") holders of the 2005
Senior Notes and of the 2008 Senior Notes to exchange such Senior Notes for a
portion of the Term Loans issued or to be issued pursuant to this Agreement,
shares of Common Stock of the Parent and shares of Series C Preferred Stock of
the Parent;
WHEREAS, simultaneous with the execution of this Agreement, the Parent has
closed the Exchange Offer (the "Exchange Offer Closing") and accepted the 2005
Senior Notes and the 2008 Senior Notes tendered by each of the Lenders in
exchange for a ratable portion of the Term Loan issued pursuant to this
Agreement as set forth beside each Lender's name under the applicable heading on
Schedule 1.1; and
WHEREAS, capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings ascribed thereto in Annex A which is
attached hereto and incorporated herein; the rules of construction contained
therein shall govern the interpretation of this Agreement, and all Annexes,
Exhibits and Schedules attached hereto are incorporated herein by reference;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which
is hereby acknowledged, the Lenders, the Agent, the Borrowers, and the
Guarantors hereby agree as follows.
ARTICLE I
LOANS
1.1. Total Facility. In connection with the Exchange Offer Closing, each
Lender in exchange for their 2005 Senior Notes and 2008 Senior Notes agree to
accept the Term Loans in the amount as set forth on Schedule 1.1 opposite such
Lender's name, constituting a total credit facility of up to $110 million (the
"Total Facility"). The Total Facility shall be composed of the Term Loans to the
Borrowers. Notwithstanding anything to the contrary contained in this Agreement,
the aggregate principal amount of Term Loans under this Agreement shall not
exceed $110 million.
1.2. Stated Maturity Date. Each of the Term Loans will mature on the
Stated Maturity Date.
1.3. Term Loan. Subject to the terms and conditions hereof and in reliance
upon the representations and warranties set forth herein, at the Closing Date,
each Lender agrees (severally, not jointly or jointly and severally) and has
made the term loans (collectively, the "Term Loans") to Borrowers in an amount
as set forth on Schedule 1.1 opposite such Lender's name, which Term Loan has
been funded pursuant to the tender and exchange of the Senior Notes. Subject to
Section 1.7 hereof, in the event that the aggregate principal amount of the Term
Loans hereunder upon the Exchange Offer Closing is less than $110 million, then
the Borrowers may add additional Lender parties hereto through the issuance of
additional Term Loans so long as the aggregate principal amount of Term Loans
under this Agreement does not exceed $110 million.
1.4. Registered Notes. Agent agrees to record each Term Loan on the
Register referred to in Section 11.2(g), provided that the Lenders and Loan
Parties consent to Agent relying on the certificate from Administrative Borrower
regarding the amount and owners of the initial Term Loans for purposes of
establishing the Register on the Closing Date. Each Term Loan recorded on the
Register may not be evidenced by promissory notes other than Registered Notes
(as defined below), provided, however, any Lender may elect not to receive and
hold a physical note in which case such Term Loan shall be evidenced by the
records of such Lender and the register maintained by the Agent. The accounts or
records maintained by the Agent and each Lender shall be conclusive absent
manifest error of the principal amount of the Term Loans made by the Lenders to
the Borrowers and the interest and payments thereon. Any failure to so record or
any error in doing so shall not, however, limit or otherwise affect the
obligation of the Borrowers hereunder to pay any amount owing with respect to
the Obligations. In the event of any conflict between the accounts and records
maintained by any Lender, Agent or Administrative Borrower and accounts and
records of the Agent in respect of such matters, the accounts and records of the
Agent shall control absent manifest error. Upon the registration of each Term
Loan, the Borrowers agree to execute and the Agent agrees
2
to authenticate and deliver to such Lender a note, in conformity with the terms
of this Agreement, in registered form to evidence such Registered Loan,
substantially in the form attached hereto as Exhibit B, and registered as
provided in Section 11.2(g) (a "Registered Note"), payable to the order of such
Lender and otherwise duly completed (provided that with respect to an Eligible
Assignee a note shall only be issued upon the request of such Eligible
Assignee). The Registered Notes shall have endorsed thereon the legends as set
forth on the form attached as Exhibit B, including language stating that such
Registered Note is subject to the terms and conditions of the Intercreditor
Agreement and the Security Agreement, or otherwise based upon the opinion of
counsel may have endorsed thereon such other legends or text, as may be
necessary or appropriate to conform to any applicable rules and regulations of
any governmental authority or any custom, usage or requirement of law with
respect thereto. Once recorded on the Register, each Term Loan may not be
removed from the Register so long as it or they remain outstanding, and a
Registered Note may not be exchanged for a note that is not a Registered Note.
1.5. Execution and Authentication of Registered Notes.
(a) The Registered Notes shall be executed on behalf of each
Borrower by the manual or facsimile signature of a duly authorized officer of
such Borrower. In case an officer whose signature or facsimile thereof appears
on any Registered Notes shall cease to be such officer before the delivery of
such Registered Notes, such signature or facsimile thereof shall nevertheless be
valid and sufficient for all purposes, the same as if such person had remained
in office until delivery. Any Registered Notes may be signed by such person as
at the actual time of the execution of such Registered Note shall be an
authorized officer to sign such Registered Notes although at the date of such
Registered Note such persons may not have been such officers.
(b) The Registered Notes shall have endorsed thereon a Certificate
of Authentication substantially in the form set forth in Exhibit B, which shall
be manually executed by the Agent. No Registered Note shall be entitled to any
security or benefit under this Agreement or shall be valid or obligatory for any
purpose unless and until such Certificate of Authentication shall have been duly
executed by the Agent. Such executed Certificate of Authentication upon any
Registered Note shall be conclusive evidence that such Registered Note has been
duly authenticated and delivered under this Agreement. The Certificate of
Authentication on any Registered Note shall be deemed to have been duly executed
if signed by any authorized officer or employee of the Agent, but it shall not
be necessary that the same officer or employee sign the Certificate of
Authentication on all of the Registered Notes that may be issued hereunder at
any one time.
1.6. Mutilated, Lost, Stolen or Destroyed Registered Notes. In the event
any Registered Note shall become mutilated, or be lost, stolen or destroyed, the
Borrowers shall execute and the Agent shall authenticate and deliver a new
Registered Note of like
3
date and tenor as the Registered Note mutilated, lost, stolen or destroyed;
provided that, in the case of any mutilated Registered Note, such mutilated
Registered Note shall first be surrendered to the Agent, and in the case of any
lost, stolen or destroyed Registered Note, there shall be first furnished to the
Parent and the Agent evidence of such loss, theft or destruction satisfactory to
the Parent and the Agent, together with indemnity satisfactory to them,
provided, however, in lieu of delivery of a replacement Registered Note, with
the acknowledgement and consent of such Lender, the Agent may treat such
Registered Note as replaced solely by notation thereof on the Register
maintained by the Agent. In the event any such Registered Note shall have
matured or have been selected for redemption, instead of issuing a substitute
Registered Note the Borrowers may pay or authorize the payment of the same
without surrender thereof. Upon the issuance of any substitute Registered Note,
the Parent and the Agent may require the payment of an amount by the Registered
Noteowner sufficient to reimburse the Parent and the Agent for any tax or other
governmental charge that may be imposed in relation thereto and any other
reasonable fees and expenses incurred in connection therewith.
1.7. Additional Notes. The Borrowers may add additional Lender parties or
issue additional Registered Notes under the terms of this Agreement provided
that each of the following conditions are satisfied:
(a) The aggregate principal amount of all Term Loans issued under
this Agreement does not exceed $110 million;
(b) The additional Registered Notes are issued either in exchange
for 2005 Senior Notes or 2008 Senior Notes or are issued in consideration of a
cash loan to the Borrowers equal to 100% of the principal amount of such
Registered Notes;
(c) The Lender receiving such new Registered Notes executes and
delivers to the Agent a Joinder and Acceptance Agreement in the form attached
hereto as Exhibit C (or an amendment or supplement to an existing Joinder and
Acceptance Agreement executed by the Lender);
(d) The Borrowers provide a certificate to the Agent that (i) all
conditions for the issuance of such Registered Notes have been met, (ii) no
Default or Event of Default has occurred and is continuing under this Agreement,
and (iii) that the issuance of the Registered Notes will not be in violation or
result in a Default or an Event of Default under this Agreement, the First Lien
Credit Agreement or the Intercreditor Agreement; and
(e) The Borrowers provide the Agent with an opinion of counsel
covering the requirements in subsection (d) above, and any additional
information reasonably requested by the Agent.
Upon satisfaction of each of the foregoing conditions and upon the written
request of the Borrowers to the Agent, the Agent shall enter such new or
additional Term Loan
4
on the Register as provided in Section 11.2(g) and if requested shall
authenticate a new Registered Note.
ARTICLE II
INTEREST AND FEES
2.1. Interest.
(a) Interest Rates. All outstanding Obligations shall bear interest
on the unpaid principal amount thereof (including, to the extent permitted by
law, on interest thereon not paid when due) from the date made until paid in
full in cash at a rate determined by reference to the LIBOR Rate plus the
Applicable Margin, but not to exceed the Maximum Rate. All interest charges
shall be computed on the basis of a year of three hundred sixty (360) days and
actual days elapsed (which results in more interest being paid than if computed
on the basis of a three hundred and sixty-five (365) day year). The Borrowers
shall pay to the Agent, for the ratable benefit of Lenders, interest
semiannually on all Term Loans in arrears on each January 15 and July 15,
commencing on January 15, 2006, through the Termination Date.
(b) Default Rate. If any Default or Event of Default occurs and is
continuing, then, while any such Default or Event of Default is continuing, all
of the Obligations shall bear interest at the Default Rate applicable thereto.
2.2. Intentionally Omitted.
2.3. Maximum Interest Rate. In no event shall any interest rate provided
for hereunder exceed the maximum rate legally chargeable by any Lender under
applicable law for such Lender with respect to loans of the type provided for
hereunder (the "Maximum Rate"). If, in any month, any interest rate, absent such
limitation, would have exceeded the Maximum Rate, then the interest rate for
that month shall be the Maximum Rate, and, if in future months, that interest
rate would otherwise be less than the Maximum Rate, then that interest rate
shall remain at the Maximum Rate until such time as the amount of interest paid
hereunder equals the amount of interest which would have been paid if the same
had not been limited by the Maximum Rate. In the event that, upon payment in
full of the Obligations, the total amount of interest paid or accrued under the
terms of this Agreement is less than the total amount of interest which would,
but for this Section 2.3, have been paid or accrued if the interest rate
otherwise set forth in this Agreement had at all times been in effect, then the
Borrowers shall, to the extent permitted by applicable law, pay the Agent, for
the account of the Lenders, an amount equal to the excess of (a) the lesser of
(i) the amount of interest which would have been charged if the Maximum Rate
had, at all times, been in effect or (ii) the amount of interest which would
have accrued had the interest rate otherwise set forth in this Agreement, at all
times, been in effect over (b) the amount of interest actually paid or accrued
under this Agreement. If a court of competent jurisdiction determines that the
Agent and/or any Lender has received interest and other charges hereunder in
excess of
5
the Maximum Rate, such excess shall be deemed received on account of, and shall
automatically be applied to reduce, the Obligations other than interest, in the
inverse order of maturity, and if there are no Obligations outstanding, the
Agent and/or such Lender shall refund to the Borrowers such excess.
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.1. Repayment of Term Loan.
(a) Intentionally Omitted.
(b) Term Loans. The Term Loans shall be due and payable in full,
together with all accrued and unpaid interest thereon, on the Stated Maturity
Date. The Term Loans may not be prepaid, except to the extent set forth in
clauses (c) and (d) below.
(c) Optional Prepayments. Solely to the extent permitted by the
First Lien Credit Agreement, Borrowers may prepay or optionally redeem all or
any part of the Term Loans on a ratable basis at any time prior to the Stated
Maturity Date at the respective redemption prices set forth below, plus accrued
interest thereon to the redemption date:
Redemption
Redemption Dates Prices
On or after August 26, 2005 but prior to August 26, 2006 102%
On or after August 26, 2006 but prior to August 26, 2007 101%
On or after August 26, 2007 100%
(d) Purchase of 2008 Senior Notes. Solely to the extent permitted by
the First Lien Credit Agreement, after the Exchange Offer Closing, Parent may
purchase 2008 Senior Notes not exchanged in the Exchange Offer through open
market purchases or otherwise, provided that (i) Borrowers have a minimum level
of Availability as defined and set forth under the First Lien Credit Agreement
of not less than $4,000,000 after giving effect to any such purchases and (ii)
the amount spent by the Borrowers to purchase the 2008 Senior Notes does not
exceed $11,000,000. Notwithstanding the foregoing, the Borrowers may spend more
than $11,000,000 in the aggregate in accordance with the following schedule to
purchase 2008 Senior Notes if the condition in Section 3.1(d)(i) above is met
and provided that concurrently or prior to such purchases, and solely to the
extent permitted by the First Lien Credit Agreement, Borrowers shall
6
have optionally prepaid or redeemed on a ratable basis a cumulative portion of
the Term Loans as follows:
Permitted Additional Amounts
Cumulative Percentage of that Borrowers May Spend To
Initial Term Loans Redeemed Purchase 2008 Senior Notes
--------------------------- -----------------------------
9% $ 2 million
18% $ 5 million
27% $ 9 million
36% $ 14 million
45% $ 20 million
54% $ 27 million
63% $ 35 million
72% $ 44 million
81% $ 54 million
90% $ 66 million
100% $ 78 million
In the event that as of the Closing Date the principal amount of the Term
Loans is less than $110 million, then the Cumulative Percentages and permitted
paydowns set forth above shall each be proportionately reduced to the percentage
or paydown amount determined by multiplying such percentages and paydowns by a
fraction (expressed as a percentage) the numerator of which is the principal
amount of the Term Loans as of the Closing Date and the denominator of which is
$110 million.
(e) Mandatory Prepayment. Upon a Change of Control, the Borrowers
shall be required to prepay the Term Loans in full. The principal amount to be
paid on such required prepayment shall be based on the Redemption Price schedule
set forth in Section 3.1(c) applicable to Optional Prepayments.
3.2. Termination of Facility. The Borrowers may terminate this Agreement
upon at least ten (10) Business Days' notice to the Agent and the Lenders, upon
(a) the payment in full of the outstanding Term Loans, together with accrued
interest thereon, and (b) the payment in full in cash of all reimbursable
expenses and other Obligations.
3.3. Fees. Borrowers shall pay to Agent, for its own account, fees in the
amounts and at the times specified in the Agent Fee Letter. Such fees shall be
fully earned when paid and shall not be refundable for any reason whatsoever.
3.4. Payments by the Borrowers.
(a) All payments to be made by the Borrowers shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all
7
payments by the Borrowers shall be made to the Agent for the account of the
Lenders, at the account designated by the Agent and shall be made in Dollars and
in immediately available funds, no later than 2:00 p.m. (New York, New York
time) on the date specified herein. Any payment received by the Agent after such
time shall be deemed (for purposes of calculating interest only) to have been
received on the following Business Day and any applicable interest shall
continue to accrue. All payments made by Agent to any Lender shall be by wire
transfer to accounts designated by each of the Lenders in writing to Agent. In
the event any Lender fails to provide the Agent with valid wire instructions,
then the Agent may hold such payments for the account of such Lender but without
interest until such Lender provides such instructions.
(b) Subject to the provisions set forth in the definition of
"Interest Period", whenever any payment is due on a day other than a Business
Day, such payment shall be due on the following Business Day, and such extension
of time shall in such case be included in the computation of interest or fees,
as the case may be.
3.5. Intentionally Deleted.
3.6. Apportionment, Application and Reversal of Payments. Principal and
interest payments shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Loans held by each Lender and to which such
payments relate) and payments of the fees shall, as applicable, be apportioned
ratably among the Lenders, except for fees and other Obligations payable solely
to the Agent and except as provided in Section 11.1(b). All payments made
hereunder, and all proceeds of Accounts or other Collateral received hereunder,
shall be applied subject to the provisions of this Agreement and the
Intercreditor Agreement and remitted to Agent. After an Event of Default,
notwithstanding any other provision in the Loan Documents, but subject to the
Intercreditor Agreement, all payments and proceeds shall be applied in the
following order: first, to pay any fees, indemnities or expense reimbursements
and any other Obligations then due to any Agent or any other Agent-Related
Person from any Loan Party; second, to pay, ratably, any fees or expense
reimbursements then due to the Lenders from the Borrowers; third, to pay,
ratably, interest then due on the Term Loans; fourth, to pay or prepay principal
of the Term Loans; fifth, to the payment of any other Obligation due to the
Agent or any Lender by the Borrowers; and sixth, subject to the Intercreditor
Agreement, upon request by the Borrowers, to the Borrowers. The Agent shall have
the continuing and exclusive right to apply and reverse and reapply any and all
such proceeds and payments to any portion of the Obligations in accordance with
this Agreement.
3.7. Indemnity for Returned Payments. If after receipt of any payment
which is applied to the payment of all or any part of the Obligations, the Agent
or any Lender is for any reason compelled to surrender such payment or proceeds
to any Person because such payment or application of proceeds is invalidated,
declared fraudulent, set aside, determined to be void or voidable as a
preference, impermissible setoff, or a diversion of
8
trust funds, or for any other reason, then the Obligations or part thereof
intended to be satisfied shall be revived and continued and this Agreement shall
continue in full force as if such payment or proceeds had not been received by
the Agent or such Lender and the Borrowers shall be liable to pay to the Agent
and the Lenders, and each Borrower hereby does indemnify the Agent and the
Lenders and hold the Agent and the Lenders harmless for, the amount of such
payment or proceeds surrendered. The provisions of this Section 3.7 shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Agent or any Lender in reliance upon such payment or application of
proceeds, and any such contrary action so taken shall be without prejudice to
the Agent's and the Lenders' rights under this Agreement and shall be deemed to
have been conditioned upon such payment or application of proceeds having become
final and irrevocable. The provisions of this Section 3.7 shall survive the
termination of this Agreement and the payment of the Obligations.
3.8. Agent's and Lenders' Books and Records; Monthly Statements. The Agent
shall record the principal amount of the Loans owing to each Lender from time to
time on its books and on the register maintained by the Agent. In addition, each
Lender may note the date and amount of each payment or prepayment of principal
of such Lender's Loans in its books and records. Failure by the Agent or any
Lender to make such notation shall not affect the obligations of the Borrowers
with respect to the Loans. The Borrowers agree that the Agent's and each
Lender's books and records showing the Obligations and the transactions pursuant
to this Agreement and the other Loan Documents shall be admissible in any action
or proceeding arising therefrom, and shall constitute rebuttably presumptive
proof thereof, irrespective of whether any Obligation is also evidenced by a
Note or other instrument. The Agent will provide to the Administrative Borrower
within thirty (30) days after the last day of each calendar month a monthly
statement of Loans and payments pursuant to this Agreement. Such statement shall
be deemed correct, accurate, and binding on the Borrowers and an account stated
(except for reversals and reapplications of payments made as provided in Section
3.6 and corrections of errors discovered by or acknowledged and agreed to by the
Agent), unless the Administrative Borrower, on behalf of the Borrowers, notifies
the Agent in writing to the contrary within thirty (30) days after such
statement is rendered in accordance with Section 13.8. In the event a timely
written notice of objections is given by the Administrative Borrower, only the
items to which exception is expressly made will be considered to be disputed by
the Borrowers.
ARTICLE IV
TAXES
4.1. Taxes.
(a) Any and all payments by the Borrowers to each Lender or the
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for, any Taxes excluding net
income taxes and
9
franchise taxes (imposed in lieu of net income taxes) imposed on the Agent or
any Lender as a result of a present or former connection between the Agent or
such Lender and the jurisdiction of the Governmental Authority imposing such tax
or any political subdivision or taxing authority thereof or therein (other than
any such connection arising solely from the Agent's or such Lender's having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document) ("Excluded Taxes"). In
addition, the Borrowers shall pay all Other Taxes.
(b) Each Borrower agrees to indemnify and hold harmless each Lender
and the Agent for the full amount of Taxes or Other Taxes (including any Taxes
or Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by any Lender or the Agent and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within thirty (30)
days after the date such Lender or the Agent makes written demand therefor.
(c) If the Borrowers shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) such
Lender or the Agent, as the case may be, receives an amount equal to the sum it
would have received had no such deductions or withholdings been made;
(ii) the Borrowers shall make such deductions and
withholdings;
(iii) the Borrowers shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance with
applicable law or, if being contested in good faith, set up reserves determined
by the Agent in its commercially reasonable discretion to be adequate for such
Taxes or Other Taxes; and
(iv) the Borrowers shall also pay to each Lender or the Agent
for the account of such Lender, at the time interest is paid, all additional
amounts which the respective Lender specifies as necessary to preserve the
after-tax yield such Lender would have received if such Taxes or Other Taxes had
not been imposed.
(d) At the Agent's request, within thirty (30) days after the date
of any payment by any Borrower of Taxes or Other Taxes, such Borrower shall
furnish the Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to the Agent.
10
(e) If the Borrowers are required to pay additional amounts to any
Lender or the Agent pursuant to subsection (c) of this Section, then such Lender
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its lending office so as to eliminate any such
additional payment by the Borrowers which may thereafter accrue, if such change
in the judgment of such Lender is not otherwise disadvantageous to such Lender.
ARTICLE V
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
5.1. Books and Records. The Borrower Parties shall maintain, at all times,
correct and complete books, records and accounts in which complete, correct and
timely entries are made of its transactions and such books, records and accounts
on a consolidated basis shall be prepared in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 5.2(a). The Parent on a consolidated basis shall, by means
of appropriate entries, reflect in such accounts and in all Financial Statements
proper liabilities and reserves for all taxes and proper provision for
depreciation and amortization of property and bad debts, all in accordance with
GAAP. Each Borrower Party shall maintain at all times books and records
pertaining to the Collateral in such detail, form and scope as the Agent or any
Lender shall reasonably require, including, but not limited to, records of (a)
all payments received and all credits and extensions granted with respect to the
Accounts; (b) the return, rejection, repossession, stoppage in transit, loss,
damage, or destruction of any Inventory; and (c) all other dealings affecting
the Collateral.
5.2. Financial Information. The Borrower Parties shall promptly furnish to
each Lender the financial information set forth below. Such documents and
financial information may be delivered by electronic posting on a digital
workspace provided by IntraLinks, Inc. or another digital workspace provider
reasonably acceptable to the Agent and to which the Lenders have access;
provided, however, if the Borrower Parties determine such digital posting is or
has become impractical, then the Borrower Parties may deliver such information
via any means described in Section 13.8, including via electronic mail at the
e-mail address set forth therein. The Agent shall have no duty to maintain
copies of any such documents or notices. The Administrative Borrower shall
furnish the following to each Lender:
(a) Annual Financial Statements. As soon as available, but in any
event not later than ninety (90) days after the close of each Fiscal Year,
consolidated audited balance sheets as of the date thereof and for the Fiscal
Year then ended, and consolidated audited statements of earnings, cash flows and
stockholders' equity for the Parent for such Fiscal Year, including a footnote
containing supplemental consolidating financial information for (a) the Borrower
Parties on a consolidated basis and (b) for the Subsidiaries of Parent other
than domestic Subsidiaries (collectively, the "Foreign Subsidiaries") on a
consolidated basis. Such supplemental consolidating financial
11
information will include balance sheets, statements of earnings and statements
of cash flows.
(b) General. The audited statements set forth above in Section
5.2(a) shall be examined in accordance with generally accepted auditing
standards by and, in the case of such statements performed on a consolidated
basis, accompanied by a report thereon unqualified with respect to going
concerns by independent certified public accountants selected by the audit
committee of the board of directors of the Parent and reasonably satisfactory to
the Agent. The Borrower Parties hereby authorize the Agent (as directed by the
Lenders) to communicate directly with their certified public accountants and, by
this provision, authorizes those accountants to disclose to the Agent any and
all financial statements and other supporting financial documents and schedules
relating to the Borrower Parties and to discuss directly with the Agent the
finances and affairs of the Borrower Parties; provided, that together with each
of the audited Financial Statements delivered pursuant to Section 5.2(a), the
Administrative Borrower shall furnish a certificate of the independent certified
public accountants that examined such statements to the effect that they have
reviewed and are familiar with this Agreement and that, in examining such
Financial Statements, they did not become aware of any fact or condition which
then constituted a Default or Event of Default with respect to the financial
covenants set forth in Section 7.23 hereof, except for those Defaults or Event
of Defaults, if any, described in reasonable detail in such certificate.
(c) Quarterly Financial Statements. As soon as available, but in any
event not later than forty-five (45) days after the close of first, second and
third Fiscal Quarters of each Fiscal Year, consolidated unaudited balance sheets
as of the date thereof, and consolidated unaudited statements of earnings, cash
flows and stockholders' equity for the Parent for such Fiscal Quarter, including
a footnote containing supplemental consolidating financial information for (a)
the Borrower Parties on a consolidated basis and (b) for Foreign Subsidiaries on
a consolidated basis. Such supplemental consolidating financial information will
include balance sheets, statements of earnings and statements of cash flows. The
consolidated unaudited statements referred to in the first sentence of this
Section 5.2(c), shall fully present in all material respects the consolidated
financial position and consolidated results of operations of the Parent as at
the date thereof and for the Fiscal Quarter then ended, and, in each case, in
comparable form, figures for the corresponding period in the prior Fiscal Year
and prepared in accordance with GAAP applied consistently with the audited
Financial Statements required to be delivered pursuant to Section 5.2(a) (except
as disclosed therein). The Parent shall certify by a certificate signed by its
senior financial officer thereof that all such consolidated unaudited statements
referred to in the first sentence of this Section 5.2(c) have been prepared in
accordance with GAAP and present fairly in all material respects the Parent's
consolidated financial position as at the dates thereof and its consolidated
results of operations for the periods then ended, subject to recurring year-end
adjustments and required quarterly footnotes.
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(d) With each of the annual audited Financial Statements delivered
pursuant to Section 5.2, a certificate of the senior financial officer of the
Parent setting forth in reasonable detail the calculations required to establish
that the Borrower Parties were in compliance with the covenants set forth in
Section 7.23 during the period covered in such Financial Statements and as at
the end thereof. Within forty-five (45) days after the end of each Fiscal
Quarter (after making all quarter end adjustments), a certificate of the senior
financial officer of the Parent setting forth in reasonable detail (i) the
amount of all Capital Expenditures incurred by the Borrower Parties for the
Fiscal Year to date and (ii) the calculations required to establish that the
Borrower Parties were in compliance with the covenants set forth in Section 7.23
during the period covered in such Financial Statements and as at the end
thereof. Within forty-five (45) days after the end of each Fiscal Quarter, a
certificate of the chief financial officer of the Parent stating that, except as
explained in reasonable detail in such certificate, to the knowledge of such
senior financial officer, (A) all of the representations and warranties of the
Borrower Parties contained in this Agreement and the other Loan Documents are
correct and complete in all material respects as at the date of such certificate
as if made at such time, except for those that speak as of a particular date,
(B) the Borrower Parties are, at the date of such certificate, in compliance
with all of their respective covenants and agreements in this Agreement and the
other Loan Documents, (C) no Default or Event of Default then exists or existed
during the period covered by the Financial Statements for such month, and (D)
the Management's Discussion and Analysis contained in the Form 10-Q for such
Fiscal Quarter filed with the SEC complies in all material respects with the
requirements of the SEC for that disclosure and does not contain any untrue
statement of material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they
were made, not misleading in any material respect. If such certificate discloses
that a representation or warranty is not correct or complete in all material
respects, or that a covenant has not been complied with, or that a Default or
Event of Default existed or exists, such certificate shall set forth what action
the Borrower Parties have taken or propose to take with respect thereto.
(e) Promptly, and in any event within five (5) Business Days after
filing with the PBGC and the IRS, a copy of each annual report or other filing
filed with respect to each Plan of any Borrower Party.
(f) Promptly, and in any event within five (5) Business Days after
the filing thereof, copies of all periodic reports, if any, or other documents
filed by the Parent or any of its Subsidiaries with the SEC under the Exchange
Act, and all reports, notices, or statements sent or received by the Parent or
any of its Subsidiaries to or from the holders of any equity interests of the
Parent (other than routine non-material correspondence sent by shareholders of
the Parent to the Parent and filings with the SEC by any shareholder of the
Parent pursuant to Section 13(d) or 16(a) of the Exchange Act) or any such
Subsidiary or of any Debt of the Parent or any of its Subsidiaries registered
under the Securities Act of 1933, as in effect from time to time, or to or from
the trustee under any indenture under which the same is issued.
13
(g) As soon as available, but in any event not later than fifteen
(15) days after any Borrower Party's receipt thereof, a copy of all management
reports and management letters prepared for such Borrower Party by any
independent certified public accountants of the Borrower Parties; provided, that
the Borrower Parties shall have no liability hereunder for any failure to
deliver such management reports and management letters to the extent such
failure results solely from the refusal of such accountants to authorize the
Borrower Parties to comply with such obligation.
(h) Promptly, and in any event within two (2) Business Days after
filing with the SEC, copies of any and all proxy statements, financial
statements, and reports which the Parent makes available to its shareholders.
(i) Such additional information as the Agent and/or any Lender may
from time to time reasonably request regarding the financial and business
affairs of the Parent or any Subsidiary (including, without limitation, a copy
of each tax return filed by any Borrower Party), subject to confidentiality
obligations in favor of any Borrower Party, including but not limited to any new
confidentiality agreement that may be reached with respect to such information.
(j) As soon as available, but in any event not later than forty-five
(45) days after the close of each Fiscal Quarter, a report, in form and
substance satisfactory to the Agent, setting forth the reasonably estimated
amount of cash in the Foreign Subsidiaries that is available to be repatriated
to a Borrower Party without the incurrence of tax liability or other penalties
by such Borrower Party as of the close of such Fiscal Quarter, but only to the
extent not otherwise prohibited by any applicable financing arrangement.
5.3. Additional Financial Information. In addition to the financial
information provided pursuant to Section 5.2 above, the Administrative Borrower
will furnish to the Agent the additional information referenced in this Section,
which may be delivered in the same manner as the financial information delivered
pursuant to Section 5.2, but only to the Agent and not to any of the Lenders,
except as described herein. The Agent will not provide copies of the information
delivered pursuant to this Section 5.3 to any Lender unless and until (a) such
Lender submits a written request for such information to the Agent, and (b) such
Lender executes and delivers a confidentiality agreement with the Company and
the Agent, in form and substance acceptable to the Company. The additional
information includes:
(a) Consolidated Monthly Financial Statements. As soon as available,
but in any event not later than thirty (30) days after the end of each month
occurring during each Fiscal Year (other than the first, third, sixth, ninth and
twelfth such month and as to such months, as soon as available) unaudited
consolidated balance sheets of the Parent as at the end of such month, and
unaudited consolidated income statements and statements of cash flows for the
Parent for such month and for the period from the beginning of the Fiscal Year
to the end of such month, fairly presenting in all material
14
respects the consolidated financial position and consolidated results of
operations of the Parent as at the date thereof and for such periods, and
prepared in accordance with GAAP applied consistently with the audited Financial
Statements required to be delivered pursuant to Section 5.2(a) (except as
disclosed therein). The Parent shall certify by a certificate signed by its
senior financial officer thereof that all such statements have been prepared in
accordance with GAAP and present fairly in all material respects the Parent's
consolidated financial position as at the dates thereof and its consolidated
results of operations for the periods then ended, subject to normal year-end
adjustments and the absence of footnotes; and
(b) Financial Projections. As soon as available, but in any event
not later than forty-five (45) days after the end of each Fiscal Year, annual
forecasts (to include forecasted consolidated and consolidating balance sheets,
income statements and cash flow statements) for the Parent as at the end of and
for each fiscal month of such Fiscal Year.
5.4. Notices to the Lenders. The Administrative Borrower shall notify the
Agent and the Lenders in writing of the following matters at the following
times:
(a) Immediately after becoming aware of any Default or Event of
Default;
(b) Immediately after becoming aware of the assertion by the holder
of any capital stock of any Borrower Party or the holder of any Debt of the
Parent or any Subsidiary in an amount outstanding in excess of $1,000,000 or
with respect to any licensing agreement that a default exists with respect
thereto or that the Parent or such Subsidiary is not in compliance with the
terms thereof, or the commencement by such holder of any enforcement action
because of such asserted default or non-compliance;
(c) Immediately after becoming aware of any event or circumstance
which would have a Material Adverse Effect;
(d) Immediately after any settlement offer is made by the Parent or
any Subsidiary in an amount that would, if consummated, result in an Event of
Default hereunder;
(e) Immediately after becoming aware of any pending action, suit, or
proceeding, by any Person, or any pending or threatened investigation by a
Governmental Authority, which could reasonably be expected to have a Material
Adverse Effect or which involves the same matters that are the subject of class
action litigation or matters related thereto;
(f) Immediately after becoming aware of any pending strike, work
stoppage, unfair labor practice claim, or other labor dispute affecting the
Parent or any of
15
its Subsidiaries in a manner which could reasonably be expected to have a
Material Adverse Effect;
(g) Immediately after becoming aware of any violation of any law,
statute, regulation, or ordinance of a Governmental Authority affecting the
Parent or any Subsidiary which could reasonably be expected to have a Material
Adverse Effect;
(h) Immediately after receipt of any notice of any violation by the
Parent or any of its Subsidiaries of any Environmental Law which could
reasonably be expected to have a Material Adverse Effect or that any
Governmental Authority has asserted in writing that the Parent or any Subsidiary
is not in compliance with any Environmental Law or is investigating the Parent's
or such Subsidiary's compliance therewith;
(i) Immediately after receipt of any written notice that the Parent
or any of its Subsidiaries is or may be liable to any Person as a result of the
Release or threatened Release of any Contaminant or that the Parent or any
Subsidiary is subject to investigation by any Governmental Authority evaluating
whether any remedial action is needed to respond to the Release or threatened
Release of any Contaminant which, in either case, is reasonably likely to give
rise to liability that is not covered by insurance in excess of $1,000,000;
(j) Immediately after receipt of any written notice of the
imposition of any Environmental Lien against any property to the extent the
liability with respect thereto that is not covered by insurance and is in excess
of $1,000,000;
(k) Any change in the Parent's or any Subsidiary's name as it
appears in the state of its incorporation or other organization, state of
incorporation or organization, type of entity, organizational identification
number, or, with respect to any Borrower Party, locations of Collateral, or form
of organization, trade names under which such Person will sell Inventory or
create Accounts, or to which instruments in payment of Accounts may be made
payable, in each case at least thirty (30) days prior thereto;
(l) Within ten (10) Business Days after any Borrower Party or any
ERISA Affiliate knows, that an ERISA Event or a prohibited transaction (as
defined in Sections 406 of ERISA and 4975 of the Code) has occurred, and, when
known, any action taken or threatened by the IRS, the DOL or the PBGC with
respect thereto;
(m) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within three (3)
Business Days after the filing thereof with the PBGC, the DOL or the IRS, as
applicable, copies of the following: (i) each annual report (form 5500 series),
including Schedule B thereto, filed with the PBGC, the DOL or the IRS with
respect to each Plan, (ii) a copy of each funding waiver request filed with the
PBGC, the DOL or the IRS with respect to any Plan and all communications
received by any Borrower Party or any ERISA Affiliate from the PBGC,
16
the DOL or the IRS with respect to such request, and (iii) a copy of each other
filing or notice filed with the PBGC, the DOL or the IRS, with respect to each
Plan by either a Borrower Party or any ERISA Affiliate;
(n) Within three (3) Business Days after receipt thereof by any
Borrower Party or any ERISA Affiliate, copies of the following: (i) any notices
of the PBGC's intention to terminate a Plan or to have a trustee appointed to
administer such Plan; (ii) any favorable or unfavorable determination letter
from the IRS regarding the qualification of a Plan under Section 401(a) of the
Code; or (iii) any notice from a Multi-employer Plan regarding the imposition of
withdrawal liability;
(o) Within three (3) Business Days after the occurrence thereof: (i)
any changes in the benefits of any existing Plan which increase any Borrower
Party's annual costs with respect thereto by an amount in excess of $1,000,000,
or the establishment of any new Plan or the commencement of contributions to any
Plan to which any Borrower Party or any ERISA Affiliate was not previously
contributing; or (ii) any failure by any Borrower Party or any ERISA Affiliate
to make a required installment or any other required payment under Section 412
of the Code on or before the due date for such installment or payment; or
(p) Within three (3) Business Days after any Borrower Party or any
ERISA Affiliate knows or has reason to know that any of the following events has
or will occur: (i) a Multi-employer Plan has been or will be terminated; (ii)
the administrator or plan sponsor of a Multi-employer Plan intends to terminate
a Multi-employer Plan; or (iii) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multi-employer Plan.
(q) Within forty-five (45) days of the end of each Fiscal Quarter,
updated or supplemented as of the last day of such Fiscal Quarter, Schedule 6.7,
Schedule 6.9, Schedule 6.11, Schedule 6.12, Schedule 6.13, Schedule 6.14,
Schedule 6.15, Schedule 6.16(a), Schedule 6.16(f), or Schedule 6.26, or any of
the foregoing in each case as may be required to render correct the
representations and warranties contained in the applicable sections to which
such schedules relate as of the last day of such Fiscal Quarter without giving
effect to any references therein to the "Closing Date" in each case,
appropriately marked to show the changes made therein; provided that no such
supplement to any such Schedule or representation shall be deemed a waiver of
any Default or Event of Default resulting from the matters disclosed therein,
except as consented to by the Required Lenders in writing.
(r) Promptly after any Borrower Party has notified the Agent of any
intention by such Borrower Party to treat the Loans and related transactions as
being a "reportable transaction" (within the meaning of Treasury Regulation
Section 1.6011-4), a duly completed copy of IRS Form 8886 or any successor form.
17
Each notice given under this Section shall describe the subject matter
thereof in reasonable detail, and shall set forth the action that the Parent,
any Subsidiary or any ERISA Affiliate, as applicable, has taken or proposes to
take with respect thereto.
5.5. Collateral Reporting. The Parent shall provide the Agent with all of
the following documents or reports that it provides to the First Lien Agent: (i)
a statement of the balance of each intercompany account (including the
Intercompany Account); (ii) such other reports as to the Collateral of each
Borrower Party; and (iii) with the delivery of each of the foregoing, a
certificate of the Parent executed by an officer thereof certifying as to the
accuracy and completeness of the foregoing. If any of the Borrower Parties'
records or reports of the Collateral are prepared by an accounting service or
other agent, each Borrower Party hereby authorizes such service or agent to
deliver such records, reports, and related documents to the Agent, for
distribution to the Lenders.
ARTICLE VI
GENERAL WARRANTIES AND REPRESENTATIONS
In order to induce the Agent and the Lenders to enter into this Agreement,
each Borrower Party makes the following representations and warranties to the
Agent and the Lenders which shall be true, correct, and complete, in all
material respects, as of the date hereof, and shall be true, correct, and
complete, in all material respects, as of the Closing Date and such
representations and warranties shall survive the execution and delivery of this
Agreement:
6.1. Authorization, Validity, and Enforceability of this Agreement and the
Loan Documents. Each Borrower Party has the power and authority to execute,
deliver and perform this Agreement and the other Loan Documents to which it is a
party and to grant to the Agent Liens upon and security interests in the
Collateral with respect to which it has rights, title or ownership and each
Borrower has the authority to incur the Obligations. Each Borrower Party has
taken all necessary action (including obtaining approval of its stockholders if
necessary) to authorize its execution, delivery, and performance of this
Agreement and the other Loan Documents to which it is a party. This Agreement
and the other Loan Documents to which it is a party have been duly executed and
delivered by each Borrower Party, and constitute the legal, valid and binding
obligations of such Borrower Party, enforceable against it in accordance with
their respective terms except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law). Each
Borrower Party's execution, delivery, and performance of this Agreement and the
other Loan Documents to which it is a party do not and will not conflict with,
or constitute a violation or breach of, or result in the imposition of any Lien
(other than the Liens created by this Agreement and the other Loan Documents)
upon the property of the Parent or any of its Subsidiaries, by reason of the
terms of (a) any contract, mortgage, lease, agreement, indenture, or instrument
to
18
which the Parent or such Subsidiary is a party or which is binding upon it, (b)
any Requirement of Law applicable to the Parent or any of its Subsidiaries, or
(c) the certificate or articles of incorporation or by-laws or the limited
liability company operating agreement or limited partnership agreement of such
Borrower Party.
6.2. Validity and Priority of Security Interest. The provisions of this
Agreement and the other Loan Documents create legal and valid Liens on all the
Collateral in favor of the Agent, for the ratable benefit of the Agent and the
Lenders, and such Liens constitute perfected and continuing Liens on all the
Collateral, having priority over all other Liens on the Collateral, except for
those Liens identified in clauses (c), (d), (e), (f), (h), (i) and (j) of the
definition of Permitted Liens securing all the Obligations, and enforceable
against the Borrower Parties and all third parties.
6.3. Organization and Qualification. Each Borrower Party (a) is duly
organized or incorporated and validly existing in good standing under the laws
of the state of its organization or incorporation, (b) is qualified to do
business and is in good standing in the jurisdictions set forth on Schedule 6.3,
which are the only jurisdictions in which qualification is necessary in order
for it to own or lease its property and conduct its business, except where the
failure to so qualify would have a Material Adverse Effect and (c) has all
requisite power and authority to conduct its business and to own its property.
6.4. Corporate Name; Prior Transactions. Except as set forth on Schedule
6.4, to the Parent's Knowledge, none of the Borrower Parties has, during the
past five (5) years, been known by or used any other corporate or fictitious
name, or been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property
outside of the ordinary course of business.
6.5. Subsidiaries and Affiliates. Schedule 6.5 is a correct and complete
list of the name and relationship to the Parent of each and all of the
Subsidiaries and other Affiliates. Each Subsidiary is (a) duly incorporated or
organized and validly existing in good standing under the laws of its state of
incorporation or organization set forth on Schedule 6.5, and (b) qualified to do
business and in good standing in each jurisdiction, in which the failure to so
qualify or be in good standing could reasonably be expected to have a Material
Adverse Effect and (c) has all requisite power and authority to conduct its
business and own its property. The aggregate value of the assets or net worth of
Toastmaster V.I., Inc., a Virgin Islands corporation, does not exceed
$10,000.00.
6.6. Financial Statements and Projections.
(a) The Administrative Borrower has delivered to the Agent and the
Lenders the audited consolidated balance sheet and related consolidated
statements of income, retained earnings, cash flows, and changes in stockholders
equity for the Parent and its Subsidiaries as of July 3, 2004, and for the
Fiscal Year then ended, accompanied by the report thereon of the Parent's
independent certified public accountants, Deloitte & Touche. The Administrative
Borrower has also delivered to the Agent and the Lenders
19
the unaudited consolidated balance sheet and related unaudited consolidated
statements of income and cash flows for the Parent and its Subsidiaries as of
April 2, 2005. All such financial statements have been prepared in accordance
with GAAP and present accurately and fairly in all material respects the
financial position of the Parent and its consolidated Subsidiaries as at the
dates thereof and their results of operations for the periods then ended.
(b) The Latest Projections when submitted to the Agent as required
herein represent the Borrower Parties' good faith estimate of the future
consolidated financial performance of the Parent and its Subsidiaries, as
applicable, for the periods set forth therein. The Latest Projections have been
prepared on the basis of the assumptions set forth therein, which the Borrower
Parties believe are fair and reasonable in light of current and reasonably
foreseeable business conditions at the time submitted to the Agent.
(c) The Fiscal Year of the Parent ends each year on the Saturday
closest to June 30.
6.7. Capitalization. Schedule 6.7 sets forth, as of the Closing Date, a
complete and accurate description of the authorized capital stock of each
Borrower Party and each of its directly-owned Subsidiaries, by class, and a
description of the number of shares of each class that are issued and
outstanding and the par value thereof. All such shares of capital stock are
validly issued, fully-paid and non-assessable.
6.8. Solvency. The Parent and the Subsidiaries are Solvent on a
consolidated basis prior to and after giving effect to the Borrowings to be made
on the Closing Date.
6.9. Debt. After giving effect to the making of the Term Loan to be made
on the Closing Date, the Borrower Parties have no Debt, except (a) Debt
permitted under Section 7.13, and (b) Debt as of the Closing Date described on
Schedule 6.9.
6.10. Distributions. Except as permitted by Section 7.10, since June 28,
2003, no Distribution has been declared, paid, or made upon or in respect of any
capital stock or other securities of the Parent or any Subsidiary.
6.11. Real Estate; Leases. Schedule 6.11 sets forth, as of the Closing
Date, a correct and complete list of all Real Estate owned by any Borrower
Party, all leases and subleases of real property held by any Borrower Party as
lessee or sublessee, including all locations where any Borrower Party conduct
any manufacturing operations or distribution business, and all leases and
subleases of real property held by any of any Borrower Party as lessor, or
sublessor in excess of $200,000. Each of such leases and subleases is valid and
enforceable in accordance with its terms and is in full force and effect, no
default by any of any Borrower Party under any such lease or sublease exists
and, to the Parent's Knowledge, no default by any other party under any such
lease or sublease exists. Each Borrower Party has good and marketable title in
fee simple to the Real Estate identified
20
on Schedule 6.11 as owned by the Borrower Party, or valid leasehold interests in
all Real Estate designated therein as "leased" by any of any Borrower Party and
each Borrower Party has good, indefeasible, and merchantable title to all of its
other property reflected on the Financial Statements delivered to the Agent and
the Lenders referenced in Section 6.6 above, except as disposed of in the
ordinary course of business since the date thereof, free of all Liens except
Permitted Liens.
6.12. Proprietary Rights. Schedule 6.12 sets forth a correct and complete
list as of the Closing Date of all of any Borrower Party's Proprietary Rights;
provided that with respect to Proprietary Rights such Schedule sets forth a
correct and complete list of all of any Borrower Party's trademarks then in use
by such Borrower Party. None of such Proprietary Rights is subject to any
licensing agreement or similar arrangement except as set forth on Schedule 6.12.
To the Parent's Knowledge (including, at the time of any launch of any new
product, after review of a patent search with respect to the Proprietary Rights
related to such product or an opinion of counsel with respect thereto and
determination by any Borrower Party that there is no infringement or conflict),
none of the Proprietary Rights infringes on or conflicts with any other Person's
property, and, to the Parent's Knowledge and except as otherwise disclosed in
writing to the Agent, no other Person's property infringes on or conflicts with
the Proprietary Rights, in each case, to the extent any such infringement,
individually or in the aggregate, could reasonably be expected to result in any
loss or damage to any Borrower Party in excess of $1,000,000. The Proprietary
Rights described on Schedule 6.12 constitute all of the property of such type
necessary to the current and anticipated future conduct of each of the Borrower
Parties' business. No claim or litigation regarding any of the foregoing is
pending or, to the Parent's Knowledge, threatened, and no patent, invention,
device or application for the same is pending or, to the Parent's Knowledge,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
6.13. Trade Names. All trade names or styles as of the Closing Date under
which the Borrower Parties sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable, are listed on Schedule
6.13.
6.14. Litigation. Except as set forth on Schedule 6.14 as of the Closing
Date, there is no pending, or to the Parent's Knowledge threatened, action,
suit, proceeding, or counterclaim by any Person, or to the Parent's Knowledge,
investigation by any Governmental Authority, or any basis for any of the
foregoing, which could reasonably be expected to have a Material Adverse Effect.
6.15. Labor Disputes. Except as set forth on Schedule 6.15, as of the
Closing Date (a) there is no collective bargaining agreement or other labor
contract covering employees of any of the Borrower Parties, (b) no such
collective bargaining agreement or other labor contract is scheduled to expire
during the term of this Agreement, (c) to the Parent's Knowledge no union or
other labor organization is seeking to organize, or to be recognized as, a
collective bargaining unit of employees of any of the Borrower Parties or
21
for any similar purpose, and (d) there is no pending or (to the Parent's
Knowledge) threatened, strike, work stoppage, material unfair labor practice
claim, or other material labor dispute against or affecting the Parent or its
Subsidiaries or their employees.
6.16. Environmental Laws. Except as otherwise disclosed in writing to the
Agent or except to the extent the failure of any of the following, individually
or in the aggregate, to be correct could reasonably be expected to result in any
uninsured claim, loss or damage to any Borrower Party in excess of $1,000,000:
(a) Except as disclosed on Schedule 6.16(a), each of the Parent and
each Subsidiary is and has been in compliance with, in all material respects,
all Environmental Laws and neither the Parent nor any Subsidiary, nor any of its
presently owned real property or presently conducted operations, nor its
previously owned real property or prior operations, is subject to any
Environmental Claim from any Governmental Authority or private Person respecting
(i) compliance with any Environmental Law or (ii) any potential liabilities and
costs or actions arising from a Release or threatened Release of a Contaminant.
(b) Each of the Parent and each Subsidiary has obtained all permits
necessary for its current operations under Environmental Laws, and all such
permits are in good standing and each of the Parent and each Subsidiary is in
compliance with all material terms and conditions of such permits.
(c) Neither the Parent nor any Subsidiary, nor, to the Parent's
Knowledge (after appropriate due diligence), any of its predecessors in
interest, has in violation of applicable law stored, treated or disposed of any
Contaminants on any property owned by the Parent or any Subsidiary.
(d) Neither the Parent nor any Subsidiary has received any summons,
complaint, order or similar written notice or an Environmental Claim indicating
that it is not currently in compliance with or that any Governmental Authority
is investigating its compliance with, any Environmental Laws or that it is or
may be liable to any other Person as a result of a Release or threatened Release
of a Contaminant.
(e) To the Parent's Knowledge, none of the present or past
operations of the Parent and its Subsidiaries is the subject of any
investigation by any Governmental Authority evaluating whether any remedial
action is needed to respond to a Release or threatened Release of a Contaminant.
(f) Except as described on Schedule 6.16(f), there is not now, nor
to the Parent's Knowledge has there ever been, on or in the Real Estate:
(1) any underground storage tanks or surface impoundments,
(2) any asbestos-containing material, or
22
(3) any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electrical transformers or other equipment.
(g) Neither the Parent nor any Subsidiary has filed, or has had the
duty to file, any notice under any requirement of Environmental Law reporting a
spill or accidental and unpermitted Release or discharge of a Contaminant into
the environment.
(h) Neither the Parent nor any Subsidiary has for the past five (5)
years entered into any negotiations or settlement agreements with any Person
(including any prior owner of its Real Property) imposing obligations or
liabilities on the Parent or any Subsidiary with respect to any Environmental
Claim in response to a Release of a Contaminant.
(i) None of the products manufactured, distributed or sold by the
Parent or any Subsidiary contain asbestos containing material.
(j) No Environmental Lien has attached to the Real Estate.
6.17. No Violation of Law. Neither the Parent nor any Subsidiary is in
violation in any material respect of any material law, statute, regulation,
ordinance, judgment, order, or decree applicable to it which could reasonably be
expected to result in a Material Adverse Effect.
6.18. No Default. Neither the Parent nor any Subsidiary is in default in
any material respect with respect to any material note, indenture, loan
agreement, mortgage, lease, deed, or other agreement to which the Parent or such
Subsidiary is a party or by which it is bound.
6.19. ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other applicable federal or state
law. Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and to the Parent's
Knowledge, nothing has occurred which would cause the loss of such
qualification. Each of the Parent, each Subsidiary and each ERISA Affiliate has
made all required contributions to any Plan subject to Section 412 of the Code,
and no application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect to any
Plan.
(b) There are no pending or, to the Parent's Knowledge, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan which has resulted or could reasonably be expected to result
in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary
23
responsibility rules with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) none of
the Parent, any Subsidiary or any ERISA Affiliate has incurred, or reasonably
expects to incur, any material liability under Title IV of ERISA with respect to
any Pension Plan (other than premiums due and not delinquent under Section 4007
of ERISA); (iv) none of the Parent, any Subsidiary or any ERISA Affiliate has
incurred, or reasonably expects to incur, any material liability (and no event
has occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multi-employer Plan; and (v) none of the Parent, any Subsidiary or any ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.
6.20. Taxes. The Parent and the Subsidiaries have filed all federal and
other tax returns and reports required to be filed, and have paid all federal
and other taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due and
payable unless (i) such unpaid taxes and assessments would constitute a
Permitted Lien, or (ii) such taxes are being contested in good faith and
reserves adequate in the commercially reasonable determination of the Agent have
been provided by such Person.
6.21. Regulated Entities. No Borrower Party, any Person controlling a
Borrower Party, or any other Subsidiary, is an "Investment Company" within the
meaning of the Investment Company Act of 1940. No Borrower Party or any other
Subsidiary is subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code or law, or any other federal or state statute or regulation
limiting its ability to incur indebtedness.
6.22. Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for working capital and other lawful corporate purposes. None
of the Parent or any Subsidiary is engaged in the business of purchasing or
selling Margin Stock or extending credit for the purpose of purchasing or
carrying Margin Stock.
6.23. Copyrights, Patents, Trademarks and Licenses, etc. Each Borrower
owns or is licensed or otherwise has the right to use all of the patents,
trademarks, service marks, trade names, copyrights, contractual franchises,
licenses, rights of way, authorizations and other rights that are reasonably
necessary for the operation of its businesses, without conflict with the rights
of any other Person. To the Parent's Knowledge, no slogan or other advertising
device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by the Borrower Parties infringes
upon any rights held by any other Person. No claim or litigation regarding any
of the foregoing is pending or (to the Parent's Knowledge)
24
threatened, and no patent, invention, device, application, principle or any
statute, law, rule, regulation, standard or code is pending or, to the Parent's
Knowledge, proposed, which, in either case, could reasonably be expected to have
a Material Adverse Effect.
6.24. No Material Adverse Change. No Material Adverse Effect has occurred
since the latest date of the Financial Statements delivered to the Lenders,
except as otherwise disclosed in the Parent's filings with the Securities and
Exchange Commission under the Exchange Act.
6.25. Full Disclosure. None of the representations or warranties made by
any Borrower Party in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of any
Borrower Party in connection with the Loan Documents contains any untrue
statement of a material fact or omits any material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
6.26. Material Agreements. Schedule 6.26 hereto sets forth as of the
Closing Date all agreements and contracts material to the Borrower Parties which
would be deemed a material contract as provided in Regulation S-K promulgated by
the SEC under the Securities Act of 1933.
6.27. Intentionally Omitted.
6.28. Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, any
Borrower Party of any Loan Document, except approvals, consents, exemptions,
authorizations, other actions, notices or filings described in Schedule 6.28,
which approvals, consents, exemptions, authorizations, other actions, notices or
filings have been made or obtained and are in full force and effect.
6.29. Tax Shelter Regulations. The Borrowers do not intend to treat the
Loans as being a "reportable transaction" (within the meaning of Treasury
Regulation Section 1.6011-4). In the event the Borrowers determine to take any
action inconsistent with such intention, each will promptly notify the Agent
thereof. If the Borrowers so notify the Agent, the Borrowers acknowledge that
one or more of the Lenders may treat its Loans as part of a transaction that is
subject to Treasury Regulation Section 301.6112-1, and such Lender or Lenders,
as applicable, will maintain the lists and other records required by such
Treasury Regulation.
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ARTICLE VII
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Borrower Party covenants to the Agent and each Lender that so long as
any of the Obligations remain outstanding or this Agreement is in effect:
7.1. Taxes and Other Obligations. Each Borrower Party shall cause each of
its Subsidiaries to (a) file when due (after taking into account any applicable
exemptions) all tax returns and other reports which it is required to file; (b)
pay, or provide for the payment, when due, of all taxes, fees, assessments and
other governmental charges against it or upon its property, income and
franchises, make all required withholding and other tax deposits, and establish
adequate reserves for the payment of all such items, and provide to the Agent
and the Lenders, upon request, satisfactory evidence of its timely compliance
with the foregoing; and (c) pay when due all Debt owed by it and all claims of
materialmen, mechanics, carriers, warehousemen, landlords, processors and other
like Persons, and all other indebtedness owed by it and perform and discharge in
a timely manner all other obligations undertaken by it; provided, however, so
long as the Administrative Borrower has notified the Agent in writing, no
Borrower Party or Subsidiary need pay any tax, fee, assessment, or governmental
charge (i) it is contesting in good faith by appropriate proceedings diligently
pursued, (ii) as to which such Borrower Party has established proper reserves as
required under GAAP, and (iii) the nonpayment of which does not result in the
imposition of a Lien (other than a Permitted Lien).
7.2. Legal Existence and Good Standing; Name Changes.
(a) Each of the Parent and each Subsidiary shall (i) maintain its
legal existence, except as permitted by Section 7.9, and (ii) maintain its
qualification and good standing in all jurisdictions in which the failure to
maintain such existence and qualification or good standing could reasonably be
expected to have a Material Adverse Effect.
(b) No Borrower Party shall change its name, Federal Employment
Identification Number, organizational identification number, corporate structure
or identity, or add any new fictitious name or reincorporate or reorganize
itself under the laws of any jurisdiction other than the jurisdiction in which
it is incorporated or organized as of the date hereof.
7.3. Compliance with Law and Agreements; Maintenance of Licenses. The
Parent shall and shall cause each Subsidiary to comply in all material respects
with all material Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair Labor Standards
Act and all Environmental Laws). The Parent shall and shall cause each of its
Subsidiaries to obtain and maintain all material licenses, permits, franchises,
and governmental authorizations necessary to own its property and to conduct its
business as conducted on the Closing Date. No
26
Borrower Party shall modify, amend or alter (a) its certificate or articles of
incorporation, or its limited liability company operating agreement or limited
partnership agreement, as applicable, other than in a manner which does not
adversely affect the rights of the Lenders or the Agent, or (b) licensing
agreements, other than in a manner which does not adversely affect the rights of
the Lenders or the Agent with respect to the Inventory or (c) the Kmart
Receivable Purchasing Agreement.
7.4. Maintenance of Property; Inspection of Property. Each Borrower Party
shall maintain all of its property necessary and useful in the conduct of its
business, in good operating condition and repair, ordinary wear and tear
excepted.
7.5. Insurance.
(a) Each Borrower Party shall maintain, with financially sound and
reputable insurers having a rating of at least A- or better by Best Rating
Guide, insurance against loss or damage by fire with extended coverage; theft,
burglary, pilferage and loss in transit; products liability and third party
property damage; larceny, embezzlement or other criminal liability; business
interruption; public liability and third party property damage; and such other
hazards or of such other types as is customary for Persons engaged in the same
or similar business, as the Agent, in its reasonable discretion, or acting at
the direction of the Required Lenders, shall specify, in amounts, and under
policies reasonably acceptable to the Agent and the Required Lenders.
(b) The Borrower Parties shall cause the Agent, for the ratable
benefit of the Agent and the Lenders, to be named as secured party or mortgagee
and sole loss payee or additional insured, in a manner acceptable to the Agent.
Each policy of insurance shall contain a clause or endorsement requiring the
insurer to give not less than thirty (30) days' prior written notice to the
Agent in the event of cancellation of the policy for any reason whatsoever and a
clause or endorsement stating that the interest of the Agent shall not be
impaired or invalidated by any act or neglect of the Parent or any of its
Subsidiaries or the owner of any Real Estate for purposes more hazardous than
are permitted by such policy. All premiums for such insurance shall be paid by
the Borrower Parties when due, and certificates of insurance and, if requested
by the Agent or any Lender, photocopies of the policies, shall be delivered to
the Agent, in each case in sufficient quantity for distribution by the Agent to
each of the Lenders. If the Borrower Parties fail to procure such insurance or
to pay the premiums therefor when due, the Agent may, and at the direction of
the Majority Lenders shall, obtain such insurance and Borrower shall promptly
reimburse the Agent for any charges incurred in connection therewith.
7.6. Insurance and Condemnation Proceeds. The Borrower Parties shall
promptly notify the Agent and the Lenders of any loss, damage, or destruction to
the Collateral whether or not covered by insurance. The Agent is hereby
authorized to collect all insurance and condemnation proceeds in respect of
Collateral directly and to apply or remit them as follows:
27
(i) With respect to insurance and condemnation proceeds
relating to Collateral other than Fixed Assets, after deducting from such
proceeds the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall apply such proceeds, ratably, to
the reduction of the Obligations in the order provided for in Section 3.6.
(ii) With respect to insurance and condemnation proceeds
relating to Collateral consisting of Fixed Assets, the Agent shall permit or
require the Borrowers to use such proceeds, or any part thereof, to replace,
repair, restore or rebuild the relevant Fixed Assets in a diligent and
expeditious manner with materials and workmanship of substantially the same
quality as existed before the loss, damage or destruction so long as (1) no
Default or Event of Default has occurred and is continuing, (2) the aggregate
proceeds do not exceed $1,000,000 and (3) the Borrower first (i) provides the
Agent and the Required Lenders with plans and specifications for any such repair
or restoration which shall be reasonably satisfactory to the Agent and the
Required Lenders and (ii) demonstrates to the reasonable satisfaction of the
Agent and the Required Lenders that the funds available to it will be sufficient
to complete such project in the manner provided therein. In all other
circumstances, the Agent shall apply such insurance and condemnation proceeds,
ratably, to the reduction of the Obligations in the order provided for in
Section 3.6.
7.7. Environmental Laws.
(a) The Parent shall, and shall cause each of its Subsidiaries to,
conduct its business in compliance in all material respects with all material
Environmental Laws applicable to it, including those relating to the generation,
handling, use, storage, and disposal of any Contaminant. The Parent shall, and
shall cause each of its Subsidiaries to, take prompt and appropriate action to
respond to any material non-compliance with Environmental Laws and shall
regularly report to the Agent on such response.
(b) Without limiting the generality of the foregoing, the Borrower
Parties shall submit to the Agent and the Lenders annually, commencing on the
first anniversary Date and on each Anniversary Date thereafter, an update of the
status of each environmental compliance or liability issue. The Agent or any
Lender may obtain copies of technical reports prepared by the Parent and its
Subsidiaries and their communications with any Governmental Authority to
determine whether the appropriate Borrower Parties are proceeding reasonably to
correct, cure or contest in good faith any alleged non-compliance or
environmental liability.
7.8. Compliance with ERISA. Each Borrower Party shall, and shall cause
each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
federal or state law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; (c) make all required
contributions to any Plan subject to Section 412 of the
28
Code; (d) not engage in a prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan; and (e) not engage in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
7.9. Mergers, Consolidations or Sales. No Loan Party shall enter into any
transaction of merger, reorganization, or consolidation, or transfer, sell,
assign, lease, or otherwise dispose of all or any part of its property, or wind
up, liquidate or dissolve, or agree to do any of the foregoing, except:
(a) (i) sales of Inventory in the ordinary course of its business,
and (ii) sales of excess Inventory not in the ordinary course of its business as
permitted by the First Lien Credit Agreement;
(b) (i) sales or other dispositions of Equipment of the Parent or
the Subsidiaries in the ordinary course of business that are obsolete or no
longer useable on a commercially reasonable basis by any such Person in its
business, and (ii) so long as no Default or Event of Default has occurred and is
continuing, the sale of Equipment by a Borrower to another Borrower and the sale
of Equipment by a Guarantor to another Borrower Party. All proceeds of a sale or
disposition under clause (i) or (ii) above, after payment of reasonable selling
costs, shall be deposited in a Payment Account. All Equipment purchased with
such proceeds shall be free and clear of all Liens, except the Agent's Liens;
(c) the merger of a Borrower into another Borrower so long as (i) no
Default or Event of Default has occurred and is continuing or would be caused
thereby, (ii) the Borrower Parties provide the Agent with ten (10) days prior
written notice of such merger, (iii) in the event of a merger involving the
Parent, the Parent shall be the surviving Person, and (iv) contemporaneously
with such merger, the Borrower Parties deliver to the Agent all documents
reasonably requested by the Agent to continue the Agent's Liens on the
Collateral, in each case, in form and substance satisfactory to the Agent,
including, without limitation, such pledge agreements, new stock certificates
and stock powers, financing statements or other documents as shall be reasonably
requested by the Agent;
(d) the merger of a Guarantor into another Guarantor so long as (i)
no Default or Event of Default has occurred and is continuing or would be caused
thereby, (ii) the Borrower Parties provide the Agent with ten (10) days prior
written notice of such merger, and (iii) contemporaneously with such merger, the
Borrower Parties deliver to the Agent all documents reasonably requested by the
Agent to continue the Agent's Liens on the Collateral, in each case, in form and
substance satisfactory to the Agent, including, without limitation, such pledge
agreements, new stock certificates and stock powers, financing statements or
other documents as shall be reasonably requested by the Agent; and
29
(e) the merger of a Guarantor into a Borrower so long as (i) no
Default or Event of Default has occurred and is continuing or would be caused
thereby, (ii) the applicable Borrower shall be the surviving Person, (iii) the
Borrower Parties provide the Agent with ten (10) days prior written notice of
such merger, and (iv) contemporaneously with such merger, the Borrower Parties
deliver to the Agent all documents reasonably requested by the Agent to continue
the Agent's Liens on the Collateral, in each case, in form and substance
satisfactory to the Agent, including, without limitation, such pledge
agreements, new stock certificates and stock powers, financing statements or
other documents as shall be reasonably requested by the Agent;
(f) Permitted Acquisitions;
(g) disposition of other assets having a fair market value not to
exceed $2,000,000 during any Fiscal Year or $7,000,000 in the aggregate during
the term of this Agreement;
(h) disposition of Real Estate acquired in connection with the
acquisition of Toastmaster Inc. set forth on Schedule 7.9 and any of the
personal property (except Inventory) located thereon; and
(i) disposition of Proprietary Rights to a Subsidiary of any
Borrower Party; provided, that prior to the consummation of any such
disposition, the Agent shall be satisfied in its sole discretion of the
continued second lien priority and validity of the Agent's Lien in all such
Proprietary Rights.
7.10. Distributions; Capital Change; Restricted Investments. Except for
(1) Permitted Transactions, (2) Permitted Acquisitions and (3) so long as the
holders of any such preferred Stock do not have any redemption rights on or
prior to the date ninety one (91) days following the Termination Date, the
issuance of preferred Stock, no Borrower Party shall (a) directly or indirectly
declare or make, or incur any liability to make, any Distribution, except
Distributions to a Borrower by its Subsidiaries, (b) make any change in its
capital structure which could have a Material Adverse Effect or (c) make any
Restricted Investment.
7.11. Intentionally Omitted.
7.12. Guaranties. No Loan Party shall make, issue, or become liable on any
Guaranty, except (a) Guaranties of the Obligations in favor of the Agent or the
First Lien Agent, (b) Guaranties by the Parent of Debt permitted by Section
7.13, trade payables and real estate operating leases and (c) Guaranties of Debt
by Guarantors permitted by Section 7.13(e) or Section 7.13(k).
7.13. Debt. No Loan Party shall incur or maintain any Debt, other than:
(a) the Obligations; (b) Debt described on Schedule 6.9; (c) Capital Leases of
Equipment and purchase money secured Debt incurred to purchase Equipment (or any
renewals or
30
refinancing of such Debt on terms not materially less favorable to the Loan
Parties) provided that (i) Liens securing the same attach only to the applicable
Equipment acquired by the incurrence of such Debt, and (ii) the aggregate amount
of such Debt (including Capital Leases) outstanding does not exceed $3,000,000
at any time; (d) Debt evidencing a refunding, renewal or extension of the Debt
described on Schedule 6.9 (other than the First Lien Obligations); provided that
(i) the principal amount thereof is not increased, (ii) the Liens, if any,
securing such refunded, renewed or extended Debt do not attach to any assets in
addition to those assets, if any, securing the Debt to be refunded, renewed or
extended, (iii) no Person that is not an obligor or guarantor of such Debt as of
the Closing Date shall become an obligor or guarantor thereof, and (iv) the
terms of such refunding, renewal or extension are not materially less favorable
to the Loan Parties, the Agent or the Lenders than the original Debt; (e) the
Senior Notes and any refinancings, refundings, renewals or extensions thereof;
provided that any such refinancing, refundings, renewals or extensions do not
increase the aggregate principal amount outstanding thereunder by more than
$25,000,000 and do not shorten the maturity of any principal amount thereof, (f)
the Intercompany Account so long as such Debt is subject to the Subordination
Agreement and provided that (i) no Borrower Party shall make any Investment in a
Foreign Subsidiary and (ii) no Foreign Subsidiary shall make any Investment in
another Foreign Subsidiary, (g) Debt in respect of swap agreements entered into
for non-speculative purposes related to hedging interest rates, currency values
and commodities; (h) Debt arising by reason of Guaranties by the Loan Parties
permitted by Section 7.12(b); (i) Debt assumed or acquired in connection with
any Permitted Acquisition which Debt is outstanding on the date of such
Permitted Acquisition and does not, individually or in the aggregate with
respect to one or more Permitted Acquisitions, exceed $1,000,000; (j) Seller
Subordinated Debt; and (k) the First Lien Obligations. Notwithstanding anything
to the contrary contained herein, the Parent shall not, directly or indirectly,
enter into any amendment or modification of the documents evidencing the Debt
permitted under clauses (f), (g) or (h) above that is in any manner adverse to
the Parent, any Subsidiary, the Agent or any Lender.
7.14. Prepayment. Notwithstanding anything to the contrary contained
herein, no Borrower Party shall prepay any Debt, except (a) the First Lien
Obligations in accordance with the First Lien Loan Documents, (b) in connection
with a refinancing permitted under Section 7.13(e) above including the
application of any proceeds received as a result of an equity infusion to prepay
the Debt described in Section 7.13(e), (c) the principal amount of the 2005
Senior Notes, or (d) the 2008 Senior Notes solely to the extent permitted
pursuant to Section 3.1(d); provided however, the prepayments permitted under
subsections (c) and (d) may be made only to the extent such prepayments would
not cause a default under the First Lien Credit Agreement.
7.15. Transactions with Affiliates. Except as set forth below and except
for mergers permitted under Section 7.9 and the Intercompany Account permitted
pursuant to Section 7.13, no Loan Party shall sell, transfer, distribute, or pay
any money or property, including, but not limited to, any fees or expenses of
any nature (including, but not
31
limited to, any fees or expenses for management services), to any Affiliate, or
lend or advance money or property to any Affiliate, or invest in (by capital
contribution or otherwise) or purchase or repurchase any stock or indebtedness,
or any property, of any Affiliate, or become liable on any Guaranty of the
indebtedness, dividends, or other obligations of any Affiliate. Notwithstanding
the foregoing, while no Event of Default has occurred and is continuing, the
Borrower Parties may engage in transactions with Affiliates in the ordinary
course of business consistent with past practices, in amounts and upon terms
fully disclosed to the Agent and the Lenders, and no less favorable to the
Borrower Parties than would be obtained in a comparable arm's-length transaction
with a third party who is not an Affiliate; provided, that in any event all such
transactions shall be reflected and itemized on the Intercompany Account.
7.16. Investment Banking and Finder's Fees. Except as set forth on
Schedule 7.16, no Borrower Party shall pay or agree to pay, or reimburse any
other party with respect to, any investment banking or similar or related fee,
underwriter's fee, finder's fee, or broker's fee to any Person in connection
with this Agreement. Each Borrower Party shall defend and indemnify the Agent
and the Lenders against and hold them harmless from all claims of any Person
that the Parent or any Subsidiary is obligated to pay for any such fees, and all
costs and expenses (including attorneys' fees) incurred by the Agent and/or any
Lender in connection therewith.
7.17. Business Conducted. No Borrower shall or shall permit any of its
Subsidiaries to engage, directly or indirectly, in any line of business other
than the businesses in which such Person is engaged on the Closing Date or which
are reasonably related thereto, including without limitation the design,
marketing and distribution of any products covered by the International
Housewares Association.
7.18. Liens. No Loan Party shall create, incur, assume, or permit to exist
any Lien on any property, including without limitation to the Real Estate, now
owned or hereafter acquired by any of them, except Permitted Liens.
7.19. Sale and Leaseback Transactions. No Loan Party shall, directly or
indirectly, enter into any arrangement or arrangements, with any Person
providing for the Parent or such Subsidiary to lease or rent property that the
Parent or such Subsidiary has sold or will sell or otherwise transfer to such
Person.
7.20. No New Subsidiaries. No Loan Party shall, directly or indirectly,
organize, create, acquire or permit to exist any Subsidiary.
7.21. Fiscal Year. No Borrower Party shall change its Fiscal Year without
the prior written consent of the Agent.
7.22. Use of Proceeds. No Borrower shall, nor shall it suffer or permit
any Subsidiary to, use any portion of the Loan proceeds, directly or indirectly,
(a) for any purpose inconsistent with the purposes, terms and conditions hereof
or other than for
32
lawful and permitted purposes, (b) to purchase or carry Margin Stock, (c) to
repay or otherwise refinance indebtedness of the Borrowers or others incurred to
purchase or carry Margin Stock, (d) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (e) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act.
7.23. Financial Covenants. The financial covenants entitled "Minimum
EBITDA", "Capital Expenditures", "Fixed Charge Coverage Ratio" and "Foreign
Leverage Ratio" as set forth in Sections 7.22, 7.23, 7.24 and 7.25,
respectively, of the First Lien Credit Agreement, are hereby incorporated in
their entirety into this Agreement.
7.24. Intentionally Omitted.
7.25. Further Assurances. The Borrower Parties shall execute and deliver,
or cause to be executed and delivered, to the Agent and/or the Lenders such
documents and agreements, and shall take or cause to be taken such actions, as
the Agent or any Lender may, from time to time, reasonably request to carry out
the terms and conditions of this Agreement and the other Loan Documents.
7.26. Intentionally Omitted.
7.27. Subsidiary Distributions. Upon (a) any issuance of Debt or shares of
Stock by any Subsidiary or (b) any sale or other disposition of assets by any
Subsidiary which would, in either case, require a prepayment pursuant to Section
3.1(c) of the First Lien Credit Agreement, such Subsidiary shall cause an amount
equal to the amount that is required to be used to make the prepayments required
pursuant to Section 3.1(c) of the First Lien Credit Agreement (such amount, the
"Required Amount") to be distributed to its immediate parent entity and such
immediate parent entity shall cause such Required Amount to be distributed to
its immediate parent entity and such distributions shall continue until such
Required Amount is ultimately distributed to Parent for use by Parent to make
the prepayments required pursuant to Section 3.1(c) of the First Lien Credit
Agreement.
7.28. Modification of Covenants. The Lenders and the Agent acknowledge and
agree that the covenants set forth in this Article VII substantially duplicate
the covenants set forth in the First Lien Credit Agreement, and to the extent
the First Lien Lenders amend or modify the covenants under the First Lien
Agreement, the parallel covenants hereunder shall be deemed amended or modified
to the extent so amended or modified, without further consent or agreement of
the Agent or the Lenders; provided, however, this Section 7.28 shall not apply
to a violation of Section 7.14 or any increase in the First Lien Maximum Amount.
Notice of any such amendment or modification shall be provided to the Agent by
the Company and shall be confirmed in writing by the First Lien Agent and First
Lien Co-Agent. Upon the request of the Company, the First Lien Agent or the
First Lien Co-Agent, the Agent shall execute a written acknowledgment of
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such notice and, if requested, an amendment or modification to this Agreement
prepared by or on behalf of the Company approved by the First Lien Agent and
First Lien Co-Agent to give effect herein to the parallel covenant provisions in
the First Lien Credit Agreement.
ARTICLE VIII
CONDITIONS OF CLOSING
8.1. Required Deliveries on or before the Closing Date. On or before the
Closing Date which shall occur on or before September 1, 2005, the Agent shall
receive the following:
(a) the Intercreditor Agreement, duly executed, and in full force
and effect;
(b) a certificate from the Secretary of each Borrower Party (i)
attesting to the resolutions of such Borrower Party's board of directors
authorizing its execution, delivery, and performance of all Loan Documents
required to be executed and delivered by such Borrower Party on the Closing
Date, and authorizing specific officers of such Borrower Party to execute the
same and (ii) certifying the names and true signatures of the officers of such
Borrower Party authorized to sign such Loan Documents;
(c) copies of each Borrower Party's governing documents, as amended,
modified, or supplemented to the Closing Date, certified by the Secretary of
each Borrower Party;
(d) a certificate of status with respect to each Borrower Party,
dated within ten (10) days of the Closing Date, such certificate to be issued by
the appropriate officer of the jurisdiction of organization of the Borrower
Party, which certificate shall indicate that such Borrower Party is in good
standing in such jurisdiction;
(e) certificates of status with respect to each Borrower Party, each
dated within thirty (30) days of the Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Borrower Party) in which its failure to be
duly qualified or licensed would constitute a Material Adverse Effect, which
certificates shall indicate that such Borrower Party is in good standing in such
jurisdictions;
(f) an opinion of counsel for the Borrower Parties;
(g) Joinder and Acceptance Agreements in the form attached hereto as
Exhibit C shall have been executed and delivered by Lenders that executed
Support Agreements in connection with the Exchange Offer;
34
(h) the Administrative Borrower shall file financing statements
naming Agent, for the benefit of Lenders, as secured creditor, in order to
perfect a second priority security interest in all Collateral, and the
Administrative Borrower shall request searches reflecting the filing of all such
financing statements (such searches to be delivered to the Agent promptly after
the Closing);
(i) the Third Amendment to the First Lien Credit Agreement shall
have been executed;
(j) Each Borrower Party shall have received all licenses, approvals
or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by such Borrower Party of this
Agreement or any other Loan Document or with the consummation of the
transactions contemplated hereby and thereby; and
(k) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded.
The execution and delivery to Agent at the Closing of the Joinder and
Acceptance Agreement attached hereto as Exhibit C by Majority Lenders shall
constitute approval and acceptance of the forms of each of the documents
delivered as required pursuant to this Article VIII and the direction to Agent
to accept each such document.
ARTICLE IX
DEFAULT; REMEDIES
9.1. Events of Default. It shall constitute an event of default ("Event of
Default") if any one or more of the following shall occur for any reason:
(a) any failure by the Borrowers to pay the principal of or interest
or premium on any of the Obligations or any fee or other amount owing hereunder
when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by any
Borrower Party in this Agreement or in any of the other Loan Documents, any
Financial Statement, or any certificate furnished by any Borrower Party at any
time to the Agent or any Lender shall prove to be untrue in any material respect
as of the date on which made, deemed made, or furnished;
(c) (i) any default shall occur in the observance or performance of
any of the covenants and agreements contained in Sections 7.2(a), 7.5, 7.8
through 7.22, (ii) any default shall occur in the observance or performance of
any of the covenants and agreements contained in Sections 5.2, 5.3 or 5.4 and
such default shall continue for five (5) days or more; or (iii) any default
shall occur in the observance or performance of any
35
of the other covenants or agreements contained in any other Section of this
Agreement or any other Loan Document, or any other agreement entered into at any
time to which any Borrower Party and the Agent or any Lender are party and such
default shall continue for fifteen (15) days or more;
(d) any default shall occur with respect to any Debt (other than the
Obligations) of any Borrower Party in an outstanding principal amount which
exceeds $1,000,000, or under any agreement or instrument under or pursuant to
which any such Debt may have been issued, created, assumed, or guaranteed by any
Borrower Party and such default shall continue for more than the period of
grace, if any, therein specified, if the effect thereof (with or without the
giving of notice or further lapse of time or both) is to accelerate, or to
permit the holders of any such Debt to accelerate, the maturity of any such
Debt; or any such Debt shall be declared due and payable or be required to be
prepaid (other than by a regularly scheduled required prepayment) prior to the
stated maturity thereof;
(e) the Parent or any of its Subsidiaries shall (i) file a voluntary
petition in bankruptcy or file a voluntary petition or an answer or otherwise
commence any action or proceeding seeking reorganization, arrangement or
readjustment of its debts or for any other relief under the Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency act or law, state or
federal, now or hereafter existing, or consent to, approve of, or acquiesce in,
any such petition, action or proceeding; (ii) apply for or acquiesce in the
appointment of a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for it or for all or any part of its
property; (iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;
(f) an involuntary petition shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of the Parent or any of its
Subsidiaries or for any other relief under the federal Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency act or law, state or
federal, now or hereafter existing and such petition or proceeding shall not be
dismissed within thirty (30) days after the filing or commencement thereof or an
order of relief shall be entered with respect thereto;
(g) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for the Parent or any of its Subsidiaries or
for all or any part of its property shall be appointed or a warrant of
attachment, execution or similar process shall be issued against any part of the
property of the Parent or any of its Subsidiaries;
(h) any Borrower Party shall file a certificate of dissolution under
applicable state law or shall be liquidated, dissolved or wound-up or shall
commence, or the Parent or any of its Subsidiaries shall have commenced against
it, any action or proceeding for dissolution, winding-up or liquidation, and
such action or proceeding shall
36
not be dismissed within thirty (30) days after the filing or commencement
thereof or an order of relief shall be entered with respect thereto;
(i) all or any material part of the property (including Inventory)
of the Parent or any of its Subsidiaries shall be nationalized, expropriated or
condemned, recalled, seized or otherwise appropriated, or custody or control of
such property or of the Parent or such Subsidiary shall be assumed by any
Governmental Authority or any court of competent jurisdiction at the instance of
any Governmental Authority, except where contested in good faith by proper
proceedings diligently pursued where a stay of enforcement is in effect;
(j) any Loan Document shall be terminated, revoked or declared void
or invalid or unenforceable or challenged by any Borrower Party or any other
obligor;
(k) Except as set forth on Schedule 9.1(k), one or more judgments,
orders, decrees (including, without limitation, out of court settlements) or
arbitration or mediation awards is entered against or paid by any Borrower Party
involving in the aggregate liability (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage) as to
any single or related or unrelated series of transactions, incidents or
conditions, of $1,000,000 or more the same shall remain unsatisfied, unvacated
and unstayed pending appeal for a period of thirty (30) days after the entry
thereof;
(l) any loss, theft, damage or destruction of any item or items of
Collateral or other property of any Borrower Party occurs which could reasonably
be expected to cause a Material Adverse Effect and is not adequately covered by
insurance;
(m) there is filed against the Parent or any of its Subsidiaries any
action, suit or proceeding under any federal or state racketeering statute
(including the Racketeer Influenced and Corrupt Organization Act of 1970), which
action, suit or proceeding (i) is not dismissed within one hundred twenty (120)
days, or (ii) could reasonably be expected to result in the confiscation or
forfeiture of any material portion of the Collateral;
(n) any Loan Document ceases to be in full force and effect or any
Lien with respect to any material portion of the Collateral intended to be
secured thereby ceases to be, or is not, valid, perfected and prior to all other
Liens (other than Permitted Liens) or is terminated, revoked or declared void;
(o) (i) an ERISA Event shall occur with respect to a Pension Plan or
Multi-employer Plan which has resulted or could reasonably be expected to result
in liability of any Borrower Party under Title IV of ERISA to the Pension Plan,
Multi-employer Plan or the PBGC in an aggregate amount, together with the amount
of any liability under clauses (ii) and (iii) of this Section 9.1(o), in excess
of $1,000,000; (ii) the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time,
37
together with the amount of any liability under clauses (i) and (iii) of this
Section 9.1(o) exceeds $1,000,000; or (iii) any Borrower Party or any ERISA
Affiliate shall fail to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multi-employer Plan in an aggregate amount,
together with the amount of any liability under clauses (i) and (ii) of this
Section 9.1(o), in excess of $1,000,000;
(p) there occurs any default or event of default under the Senior
Notes, or the Kmart Receivable Purchasing Agreement;
(q) there occurs a Change of Control; or
(r) there occurs an event having a Material Adverse Effect.
9.2. Remedies.
(a) Subject to the Intercreditor Agreement, if an Event of Default
exists, the Agent shall, at the direction of the Required Lenders, at any time
or times without notice to or demand on the Borrower Parties, declare any or all
Obligations to be immediately due and payable; provided, however, that upon the
occurrence of any Event of Default described in Sections 9.1(e), 9.1(f), 9.1(g),
or 9.1(h), all Obligations shall automatically become immediately due and
payable without notice or demand of any kind; and (C) pursue its other rights
and remedies under the Loan Documents and applicable law.
(b) If an Event of Default has occurred and is continuing: (i) the
Agent shall have for the benefit of the Lenders, in addition to all other rights
of the Agent and the Lenders, the rights and remedies of a secured party under
the Loan Documents and the UCC; (ii) the Agent may, at any time, take possession
of the Collateral and keep it on the Borrower Parties' premises, at no cost to
the Agent or any Lender, or remove any part of it to such other place or places
as the Agent may desire, or the Borrower Parties shall, upon the Agent's demand,
at the Borrowers' cost, assemble the Collateral and make it available to the
Agent at a place reasonably convenient to the Agent; and (iii) the Agent may
sell and deliver any Collateral at public or private sales, for cash, upon
credit or otherwise, at such prices and upon such terms as the Agent deems
advisable, in its sole discretion, and may, if the Agent deems it reasonable,
postpone or adjourn any sale of the Collateral by an announcement at the time
and place of sale or of such postponed or adjourned sale without giving a new
notice of sale. Without in any way requiring notice to be given in the following
manner, the Borrower Parties agree (on their behalf and on behalf of their
Subsidiaries) that any notice by the Agent of sale, disposition or other
intended action hereunder or in connection herewith, whether required by the UCC
or otherwise, shall constitute reasonable notice to the Parent and the
Subsidiaries if such notice is mailed by registered or certified mail, return
receipt requested, postage prepaid, or is delivered personally against receipt,
at least ten (10) calendar days prior to such action to the Administrative
Borrower's address specified in
38
or pursuant to Section 13.8. If any Collateral is sold on terms other than
payment in full at the time of sale, no credit shall be given against the
Obligations until the Agent or the Lenders receive cash payment, and if the
buyer defaults in payment, the Agent may resell the Collateral without further
notice to the Parent and the Subsidiaries. In the event the Agent seeks to take
possession of all or any portion of the Collateral by judicial process, the
Borrower Parties (on their behalf and on behalf of their Subsidiaries)
irrevocably waive: (A) the posting of any bond, surety or security with respect
thereto which might otherwise be required; (B) any demand for possession prior
to the commencement of any suit or action to recover the Collateral; and (C) any
requirement that the Agent retain possession and not dispose of any Collateral
until after trial or final judgment. The Borrower Parties agree (on their behalf
and on behalf of their Subsidiaries) that the Agent has no obligation to
preserve rights to the Collateral or marshal any Collateral for the benefit of
any Person. The Agent is hereby granted a license or other right to use, without
charge, the Parent's and the Subsidiaries' labels, patents, copyrights, names,
trade secrets, trade names, trademarks, and advertising matter, or any similar
property, in completing production of, advertising or selling any Collateral,
and the Parent's and the Subsidiaries' rights under all licenses and all
franchise agreements shall inure to the Agent's benefit for such purpose. The
proceeds of sale shall be applied first to all expenses of sale, including
attorneys' fees, and then to the Obligations. The Agent will return any excess
to the Parent and the Subsidiaries and the Parent and the Subsidiaries shall
remain liable for any deficiency.
(c) If an Event of Default has occurred and is continuing, the
Borrower Parties hereby waive to the extent permitted by law (on their behalf
and on behalf of the Subsidiaries) all rights to notice and hearing prior to the
exercise by the Agent of the Agent's rights to repossess the Collateral without
judicial process or to replevy, attach or levy upon the Collateral without
notice or hearing.
9.3. Waiver of Default or Event of Default under First Lien Credit
Agreement. The Lenders and the Agent acknowledge and agree that to the extent a
default or event of a default has occurred under the First Lien Credit Agreement
and such default or event of default is waived by the First Lien Lenders, such
waiver will be concurrently deemed a waiver of any corresponding default or
Event of Default under this Agreement, without any further consent or agreement
of the Agent or the Lenders; provided, however, that no such waiver shall be
effective with respect to any payment default hereunder, with respect to a
waiver of Section 7.14 hereof or with respect to a waiver which would result in
an increase in the First Lien Maximum Amount. Notice of any such waiver shall be
provided to the Agent by the Company confirmed in writing by the First Lien
Agent and First Lien Co-Agent and upon the request of the Company, the First
Lien Agent or the First Lien Co-Agent, the Agent shall execute a written
acknowledgment of the giving of notice of waiver (and each Lender hereby
consents to Agent executing such acknowledgement). In the event that the Agent
declares a default hereunder and declares any or all Obligations to be
immediately due and payable or otherwise pursues any remedies under Section 9.2,
and the corresponding default or event of default under the
39
First Lien Credit Agreement is subsequently waived by the First Lien Lenders,
the default previously declared hereunder shall be deemed waived and the
Obligations that were declared to be immediately due and payable hereunder shall
be de-accelerated and shall no longer be immediately due and payable; provided,
however, that no such waiver shall be effective with respect to any payment
default hereunder, with respect to a waiver of Section 7.14 hereof or with
respect to a waiver which would result in an increase in the First Lien Maximum
Amount.
ARTICLE X
BINDING OBLIGATIONS
All Obligations (including all unpaid principal, accrued and unpaid
interest and any early termination or prepayment fees or penalties) shall be
immediately due and payable in full on the Stated Maturity Date. Until all
Obligations are indefeasibly paid and performed in full in cash, the Borrower
Parties shall remain bound by the terms of this Agreement and shall not be
relieved of any of their respective Obligations hereunder or under any other
Loan Document and the Agent and the Lenders shall retain all their rights and
remedies hereunder (including the Agent's Liens in and all rights and remedies
with respect to all then existing and after-acquired or after-arising
Collateral).
ARTICLE XI
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
11.1. Amendments and Waivers.
(a) No amendment or waiver of any provision of this Agreement or any
other Loan Document, and no consent with respect to any departure by the
Borrower Parties therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by the Agent at the written
request of the Required Lenders) and the Borrower Parties party thereto and then
any such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no such
waiver, amendment, or consent shall, unless in writing and signed by all the
Lenders and the Borrower Parties party thereto and acknowledged by the Agent, do
any of the following:
(i) increase or extend the Commitment of any Lender (it being
understood and agreed that a waiver of any Default or Event of Default or a
modification of any of the defined terms contained herein (other than those
defined terms specifically addressed in this Section 11.1) shall not constitute
a change in the terms of any Commitment of any Lender);
(ii) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document;
40
(iii) reduce the principal of, or the rate of interest
specified herein on any Loan, or any fees or other amounts payable hereunder or
under any other Loan Document;
(iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Lenders
or any of them to take any action hereunder;
(v) amend this Section or any provision of this Agreement
providing for consent or other action by all Lenders;
(vi) release any Guaranties of the Obligations or release
Collateral other than as permitted by Section 12.11;
(vii) change the definitions of "Agent", "Majority Lenders" or
"Required Lenders"; or
(viii) increase the Term Loan Amount;
provided, however, that no amendment, waiver or consent shall, unless in writing
and signed by the Agent, affect the rights or duties of the Agent under this
Agreement or any other Loan Document and, provided further, that Schedule 1.1
hereto (Lenders' Term Loans) may be amended from time to time by Agent alone to
reflect assignments of Commitments in accordance herewith.
(b) If any fees are paid to the Lenders as consideration for
amendments, waivers or consents with respect to this Agreement, at Agent's
election, such fees may be paid only to those Lenders that agree to such
amendments, waivers or consents within the time specified for submission
thereof.
(c) If, in connection with any proposed amendment, waiver or consent
(a "Proposed Change"):
(i) requiring the consent of all Lenders, the consent of
Required Lenders is obtained, but the consent of other Lenders is not obtained
(any such Lender whose consent is not obtained as described in this clause (i)
and in clause (ii) below being referred to as a "Non-Consenting Lender"), or
(ii) requiring the consent of Required Lenders, the consent of
Majority Lenders is obtained,
then, so long as the Agent is not a Non-Consenting Lender, at the Borrowers'
request, the Agent or an Eligible Assignee shall have the right (but not the
obligation) with the Agent's approval, to purchase from the Non-Consenting
Lenders, and the Non-Consenting Lenders agree that they shall sell, all the
Non-Consenting Lenders'
41
Commitments for an amount equal to the principal balances thereof and all
accrued interest and fees with respect thereto through the date of sale pursuant
to an Assignment and Acceptance, without premium or discount.
11.2. Assignments; Participations.
(a) Any Lender may assign and delegate to one or more Eligible
Assignees (each an "Assignee") all, or any ratable part of all, of the Loans,
the Commitments and the other rights and obligations of such Lender hereunder,
in a minimum amount of $5,000,000; provided, however, that the Borrower Parties
and the Agent may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the
Administrative Borrower and the Agent by such Lender and the Assignee; (ii) such
Lender and its Assignee shall have delivered to the Administrative Borrower and
the Agent an Assignment and Acceptance in the form of Exhibit A ("Assignment and
Acceptance"), which, upon the receipt thereof, the Agent shall acknowledge;
(iii) the Assignee executes and delivers to the First Lien Agent and First Lien
Co-Agent a written acknowledgment in which the Assignee acknowledges its
agreement to be bound by the terms of the Intercreditor Agreement; (iv) the
assignor Lender or Assignee has paid to the Agent a processing fee in the amount
of $3,500; and (v) such Lender or the Assignee delivers the Registered Note, if
any, evidencing such assigned Loan to the Agent for re-registration and (at the
Assignee's option) reissuance of a replacement Registered Note; provided,
however, that no such processing fee as required by (iv) above shall be due in
connection with any assignment by a Lender to an Affiliate of such Lender or a
Related Fund (provided that the Lender provides a certificate to Agent
evidencing that such Assignee qualifies as a Related Fund).
(b) From and after the date that the Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance and payment of
the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations have been assigned
to it pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under the Loan Documents and the Intercreditor
Agreement, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents and the Intercreditor
Agreement have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such
42
Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any other Loan Document or the Intercreditor Agreement
furnished pursuant hereto or the attachment, perfection, or priority of any Lien
granted by the Parent and any Subsidiary to the Agent or any Lender in the
Collateral; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the Parent
and the Subsidiaries or the performance or observance by the Parent and the
Subsidiaries, as applicable, of any of their obligations under this Agreement,
any other Loan Document or the Intercreditor Agreement furnished pursuant
hereto; (iii) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such Assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms hereof, together with such powers,
including the discretionary rights and incidental power, as are reasonably
incidental thereto; and (vi) such Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) Immediately upon satisfaction of the requirements of Section
11.2(a), this Agreement shall be deemed to be amended to the extent, but only to
the extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of any Borrower Party (a
"Participant") participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Borrower Parties and the Agent shall continue to
deal solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement, the other Loan
Documents and the Intercreditor Agreement, and (iv) no Lender shall transfer or
grant any participating interest under which the Participant has rights to
approve any amendment to, or any consent or waiver with respect to, this
Agreement, any other Loan Document or the Intercreditor Agreement except the
matters set forth in Section 11.1(a)
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(i), (ii) and (iii), and all amounts payable by the Borrowers hereunder shall be
determined as if such Lender had not sold such participation; except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
and subject to the same limitation as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender that is a member bank of the Federal Reserve System may at any time
create a security interest in, or pledge, all or any portion of its rights under
and interest in this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Board or United States
Treasury Regulation 31 C.F.R. Section 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
(g) Agent shall maintain, or cause to be maintained, a register (the
"Register") on which it enters the name of a Lender as the registered owner of
each Term Loan held by such Lender. Other than in connection with an assignment
by a Lender of all or any portion of its Term Loan to an Affiliate of such
Lender or a Related Fund of such Lender (i) a Registered Loan (and the
Registered Note, if any, evidencing the same) may be assigned or sold in whole
or in part only by registration of such assignment or sale on the Register (and
each Registered Note shall expressly so provide) and the execution and delivery
of an Assignment and Consent and (ii) any assignment or sale of all or part of
such Registered Loan (and the Registered Note, if any, evidencing the same) may
be effected only by registration of such assignment or sale on the Register,
together with the surrender of the Registered Note, if any, evidencing the same
duly endorsed by (or accompanied by a written instrument of assignment or sale
duly executed by) the holder of such Registered Note, whereupon, at the request
of the designated assignee(s) or transferee(s), and upon the request of the
Assignee one or more new Registered Notes in the same aggregate principal amount
shall be issued to the designated assignee(s) or transferee(s). Prior to the
registration of assignment or sale of any Registered Loan (and the Registered
Note, if any evidencing the same), Agent shall treat the Person in whose name
such Loan (and the Registered Note, if any, evidencing the same) is registered
as the owner thereof for the purpose of receiving all payments thereon and for
all other purposes, notwithstanding notice to the contrary. In the case of any
assignment by a Lender of all or any portion of its Term Loan to an Affiliate of
such Lender or a Related Fund of such Lender, and which assignment is not
recorded in the Register, the assigning Lender, on behalf of Agent and
Administrative Borrower, shall maintain a comparable register.
(h) In the event that a Lender sells participations in the
Registered Loan, such Lender, on behalf of Agent and Administrative Borrower,
shall maintain a register on which it enters the name of all participants in the
Registered Loans held by it
44
(the "Participant Register"). A Registered Loan (and the Registered Note, if
any, evidencing the same) may be participated in whole or in part only by
registration of such participation on the Participant Register (and each
Registered Note shall expressly so provide). Any participation of such
Registered Loan (and the Registered Note, if any, evidencing the same) may be
effected only by the registration of such participation on the Participant
Register.
ARTICLE XII
THE AGENT
12.1. Appointment and Authorization. Each Lender hereby designates and
appoints the Agent as its agent under this Agreement and the other Loan
Documents and each Lender hereby irrevocably authorizes the Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to them by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto, including
without limitation, the execution of any Loan Document on behalf of Lenders. The
Agent agrees to act as such on the express conditions contained in this Article
XII. The provisions of this Article XII are solely for the benefit of the Agent
and the Lenders and, no Borrower Party shall have any rights as a third party
beneficiary of any of the provisions contained herein. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Agent have or be deemed to have
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law, and Agent shall not be subject to any fiduciary
duties to any Lender regardless of whether a Default or Event of Default exists.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Agent shall have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking or refraining
from taking any actions which the Agent is expressly entitled to take or assert
under this Agreement and the other Loan Documents, including the exercise of
remedies pursuant to Section 9.2, and any action so taken or not taken shall be
deemed consented to by the Lenders. Notwithstanding any other provision of this
Agreement or any Loan Document, Agent shall not be obligated to take any action
that, in its opinion or the opinion of its counsel, may expose Agent to
liability or that is contrary to any Loan Document or applicable law or would
result in Agent incurring any unreimbursed expense in connection with the
administration or enforcement of the Loan Documents.
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12.2. Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct
as determined by a court of competent jurisdiction by final and nonappealable
judgment. The exculpatory provisions of this Agreement shall apply to any such
sub-agent and to any Agent-Related Person of Agent and any such sub-agent, and
shall apply to their respective activities in connection with the credit
facilities provided for herein as well as activities of Agent.
12.3. Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct
as determined by a court of competent jurisdiction by final and nonappealable
judgment), or (ii) be responsible in any manner to any of the Lenders for, or
have any duty to ascertain or inquire into, any recital, statement,
representation or warranty made by any Borrower Party, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in connection with
the Exchange Offer Transaction, or in any certificate, report, statement or
other document referred to or provided for in, or received by the Agent under or
in connection with, this Agreement or any other Loan Document or the Exchange
Offer Transaction, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document or any aspect of the
Exchange Offer Transaction, or for any failure of any Borrower Party or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Parent or any of
the Parent's Subsidiaries or Affiliates.
12.4. Reliance by Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing (including any electronic messages,
internet or intranet website posting or other distribution), resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation (written or oral) believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons, and upon advice and statements of legal counsel
(including counsel to the Borrower Parties), independent accountants and other
experts selected by the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Required Lenders
as it deems appropriate and, if it so requests, it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be
46
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Required
Lenders (or all Lenders if so required by Section 11.1) and such request and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Lenders. Furthermore, Agent may consult with legal counsel (who may be counsel
for the Borrowers), independent accountants and other experts selected by it (at
the expense of Borrowers), 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.
12.5. Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, unless the Agent
shall have received written notice from a Lender or the Borrowers referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 9.2, subject to this Article XII.
12.6. Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of
Borrower Parties and their Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower Parties and their Affiliates, and all applicable
bank regulatory laws relating to the transactions contemplated hereby, and made
its own decision to enter into this Agreement and to extend credit to the
Borrowers. Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower
Parties. Except for notices, reports and other documents expressly herein
required to be furnished to the Lenders by the Agent, the Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of Borrower Parties which may come into
the possession of any of the Agent-Related Persons.
12.7. Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Lenders shall indemnify upon demand the Agent-Related
Persons
47
(to the extent not reimbursed by or on behalf of the Borrowers and without
limiting the obligation of the Borrowers to do so), in accordance with their Pro
Rata Shares, from and against any and all Indemnified Liabilities as such term
is defined in Section 13.11; provided, however, that no Lender shall be liable
for the payment to the Agent-Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct as determined by a court of competent jurisdiction by final and
nonappealable judgment. Without limitation of the foregoing, each Lender shall
reimburse each Agent-Related Person upon demand for its Pro Rata Share of any
costs or out of pocket expenses (including Attorney Costs) incurred by such
Person in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that such Agent-Related
Person is not timely reimbursed for such expenses by or on behalf of the
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.
12.8. Agent in Individual Capacity. The Agent and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Parent and its
Subsidiaries and Affiliates as though the Agent were not the Agent hereunder and
without notice to or consent of the Lenders. The Agent or its respective
Affiliates may receive information regarding the Borrowers, their Affiliates and
Account Debtors (including information that may be subject to confidentiality
obligations in favor of the Borrowers or such Affiliates) and acknowledge that
the Agent shall be under no obligation to provide such information to them. With
respect to its Loans, if any, the Agent shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though it
were not the Agent and the terms "Lender" and "Lenders" include the Agent in its
individual capacity.
12.9. Successor Agent. Agent may at any time give notice of its
resignation to the Lenders and Borrowers. Upon receipt of any such notice of
resignation, the Required Lenders shall have the right, in consultation with the
Borrowers, to appoint a successor, or an Affiliate of any such Lender. If no
such successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Agent gives
notice of its resignation, then the retiring Agent may on behalf of the Lenders,
appoint a successor Agent meeting the qualifications set forth above provided
that if Agent shall notify the Borrowers and the Lenders that no qualifying
Person has accepted such appointment, then such resignation shall nonetheless
become effective in accordance with such notice and (1) the retiring Agent shall
be discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any collateral security held by Agent on
behalf of the Lenders under any of the Loan Documents, the retiring Agent shall
continue to hold such collateral security until such
48
time as a successor Agent is appointed) and (2) all payments, communications and
determinations provided to be made by, to or through the Agent shall instead be
made by or to each Lender directly, until such time as the Required Lenders
appoint a successor Agent as provided for above in this paragraph. Upon the
acceptance of a successor's appointment as Agent hereunder, such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring (or retired) Agent, and the retiring Agent shall be
discharged from all of its duties and obligations hereunder or under the other
Loan Documents (if not already discharged therefrom as provided above in this
paragraph). The fees payable by the Borrower to a successor Agent shall be the
same as those payable to its predecessor unless otherwise agreed between the
Borrowers and such successor. After the retiring Agent's resignation hereunder
and under the other Loan Documents, the provisions of this Article and Section
13.7 and Section 13.11 shall continue in effect for the benefit of such retiring
Agent, its sub agents and all Agent Related Persons in respect of any actions
taken or omitted to be taken by any of them while the retiring Agent was acting
as Agent.
12.10. Withholding Tax.
(a) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Lender claims exemption from, or a
reduction of, U. S. withholding tax under Sections 1441 or 1442 of the Code,
such Lender agrees with and in favor of the Agent, to deliver to the Agent:
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States of America tax treaty, properly
completed IRS Forms W-8BEN and W-8ECI before the payment of any interest in the
first calendar year and before the payment of any interest in each third
succeeding calendar year during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States of America withholding tax because it is
effectively connected with a United States of America trade or business of such
Lender, two properly original completed and executed copies of IRS Form W-8ECI
before the payment of any interest is due in the first taxable year of such
Lender and in each succeeding taxable year of such Lender during which interest
may be paid under this Agreement, and IRS Form W-9; and
(iii) such other original executed form or forms as may be
required under the Code or other laws of the United States of America as a
condition to exemption from, or reduction of, United States of America
withholding tax. Such Lender agrees to promptly notify the Agent of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States of America tax treaty by providing
original IRS Form FW-
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8BEN and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations owing to such Lender, such Lender
agrees to notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Borrowers to such Lender. To the extent
of such percentage amount, the Agent will treat such Lender's IRS Form W-8BEN as
no longer valid.
(c) If any Lender claiming exemption from United States of America
withholding tax by filing IRS Form W-8ECI with the Agent sells, assigns, grants
a participation in, or otherwise transfers all or part of the Obligations owing
to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States of America or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax ineffective,
or for any other reason) such Lender shall indemnify the Agent fully for all
amounts paid, directly or indirectly, by the Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section, together
with all costs and expenses (including Attorney Costs). The obligation of the
Lenders under this subsection shall survive the payment of all Obligations and
the resignation or replacement of the Agent.
12.11. Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Agent's Liens upon any
Collateral, (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrowers of all Loans; (ii) constituting property being
sold or disposed of if the Borrowers certify to the Agent that the sale or
disposition is made in compliance with Section 7.9 (and the Agent may rely
conclusively on any such certificate, without further inquiry); (iii)
constituting property in which the Borrower Parties owned no interest at the
time the Lien was granted or at any time thereafter; or (iv) constituting
property leased to the Borrower Parties under a lease which has expired or been
terminated in a transaction permitted under this Agreement. Except as provided
above, the Agent will not release any of the
50
Agent's Liens without the prior written authorization of all Lenders; provided
that the Agent may, in its discretion, release the Agent's Liens on Collateral
valued in the aggregate not in excess of $500,000 during each Fiscal Year
without the prior written authorization of the Lenders and the Agent may release
the Agent's Liens on Collateral valued in the aggregate not in excess of
$1,000,000 during each Fiscal Year with the prior written authorization of
Required Lenders. Upon request by the Agent or the Borrowers at any time, the
Required Lenders (or all Lenders if so required by Section 11.1) will confirm in
writing the Agent's authority to release any Agent's Liens upon particular types
or items of Collateral pursuant to this Section 12.11.
(b) Upon receipt by the Agent of any authorization required pursuant
to Section 12.11(a) from the Lenders of the Agent's authority to release any
Agent's Liens upon particular types or items of Collateral, and upon at least
five (5) Business Days' prior written request by the Borrowers, the Agent shall
(and is hereby irrevocably authorized by the Lenders to) execute such documents
as may be necessary to evidence the release of the Agent's Liens upon such
Collateral; provided, however, that (i) the Agent shall not be required to
execute any such document on terms which, in the Agent's opinion, would expose
the Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
the Borrower Parties in respect of) all interests retained by any Borrower
Party, including the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by the Borrower Parties
or is cared for, protected or insured or has been encumbered, or that the
Agent's Liens have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the Agent pursuant to any of the Loan Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Agent may act in any manner it may deem
appropriate in its sole discretion given the Agent's own interest in the
Collateral in its capacity as one of the Lenders and that the Agent shall have
no other duty or liability whatsoever to any Lender as to any of the foregoing.
(d) The Agent acknowledges that the face of each Note evidencing the
Obligations shall include the legends set forth on the form of Note attached as
Exhibit C including the legend thereon indicating that the Note and this
Agreement are subject to the terms and provisions of the Intercreditor
Agreement. Upon the acceptance of a Note pursuant to the terms of the Exchange
Offer, the Lender accepting such Note shall be deemed to have accepted the terms
and provisions of this Agreement, the Intercreditor Agreement and any other
agreement executed in connection herewith or therewith.
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(e) The Agent, the Lenders and the Loan Parties acknowledge and
agree that this Agreement is subject to the terms and provisions of the
Intercreditor Agreement. Notwithstanding anything to the contrary in this
Agreement, this Agreement, the rights of the Agent and the Lenders hereunder and
the enforcement of the Agent's and the Lenders' remedies hereunder, are subject
to the terms and provisions of the Intercreditor Agreement and to the extent of
any inconsistency between the terms of this Agreement and the terms of the
Intercreditor Agreement, the terms of the Intercreditor Agreement shall govern
and control, and shall be deemed to supersede the applicable inconsistent
provisions of this Agreement.
12.12. Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Required Lenders, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of all Lenders, set-off against the
Obligations, any amounts owing by such Lender to the Borrowers or any accounts
of the Borrower Parties now or hereafter maintained with such Lender. Each of
the Lenders further agrees that it shall not, unless specifically requested to
do so by the Agent, take or cause to be taken any other action to enforce its
rights under this Agreement or against the Borrower Parties, including the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations of the Borrowers to such Lender arising under,
or relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from the Agent pursuant to the
terms of this Agreement, or (ii) payments from the Agent in excess of such
Lender's ratable portion of all such distributions by the Agent, such Lender
shall promptly (A) turn the same over to the Agent, in kind, and with such
endorsements as may be required to negotiate the same to the Agent, or in same
day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (B) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
12.13. Agency for Perfection. Each Lender hereby appoints each other
Lender as agent for the purpose of perfecting the Lenders' security interest in
assets which, in
52
accordance with Article 9 of the UCC can be perfected only by possession as of
the Closing Date. Should any Lender (other than the Agent) obtain possession of
any such Collateral, such Lender shall notify the Agent thereof, and, promptly
upon the Agent's request therefor shall deliver such Collateral to the Agent or
in accordance with the Agent's instructions.
12.14. Payments by Agent to Lenders. All payments to be made by the Agent
to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, on the applicable Assignment and Acceptance),
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent, provided if any Lender shall fail to
provide such wire instructions to Agent, Agent may hold any payments due to such
Lender for the account of such Lender without interest until Agent receives such
instructions. Concurrently with each such payment, the Agent shall identify
whether such payment (or any portion thereof) represents principal, premium or
interest on the Term Loan. Unless Agent shall first have received any payments
due from Borrowers, Agent shall not be responsible to make any corresponding
payment to Lenders.
12.15. Intentionally Omitted.
12.16. Intentionally Omitted.
12.17. Concerning the Collateral and the Related Loan Documents. Each
Lender authorizes and directs the Agent to enter into the other Loan Documents
and the Intercreditor Agreement, for the ratable benefit and obligation of the
Agent and the Lenders. Each Lender agrees that any action taken by the Agent,
the Majority Lenders or Required Lenders, as applicable, in accordance with the
terms of this Agreement, the other Loan Documents or the Intercreditor
Agreement, and the exercise by the Agent, the Majority Lenders, or the Required
Lenders, as applicable, of their respective powers set forth therein or herein,
together with such other powers that are reasonably incidental thereto, shall be
binding upon all of the Lenders. The Lenders acknowledge that the Term Loan and
all interest, fees and expenses hereunder constitute one Debt, secured pari
passu by all of the Collateral.
12.18. Intentionally Omitted.
12.19. Relation Among Lenders. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
12.20. Additional Agents. None of the Lenders or other entities identified
on the facing page of or elsewhere in this Agreement as a "Book Manager",
"Arranger", "Syndication Agent" or "Documentation Agent" shall, in such
capacities, have any right,
53
power, obligation, liability, responsibility or duty under this Agreement or any
other Loan Document other than those applicable to all Lenders as such. Without
limiting the foregoing, none of the Lenders so identified shall have or be
deemed to have any fiduciary relationship with any other Lender. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders or
other Persons so identified in deciding to enter into this Agreement or any
other Loan Document or in taking or not taking action hereunder or thereunder.
ARTICLE XIII
MISCELLANEOUS
13.1. No Waivers; Cumulative Remedies. No failure by the Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
present or future supplement thereto, or in any other agreement between or among
the Borrower Parties and the Agent and/or any Lender, or delay by the Agent or
any Lender in exercising the same, will operate as a waiver thereof. No waiver
by the Agent or any Lender will be effective unless it is in writing, and then
only to the extent specifically stated. No waiver by the Agent or the Lenders on
any occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by the Borrower Parties of any
provision of this Agreement. The Agent and the Lenders may proceed directly to
collect the Obligations without any prior recourse to the Collateral. The
Agent's and each Lender's rights under this Agreement will be cumulative and not
exclusive of any other right or remedy which the Agent or any Lender may have.
13.2. Severability. The illegality or unenforceability of any provision of
this Agreement or any Loan Document or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this Agreement or any instrument or agreement
required hereunder.
13.3. Governing Law; Choice of Forum; Service of Process.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION
ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE
OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF NEW
YORK; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR
OF THE UNITED STATES LOCATED IN NEW YORK CITY, NEW YORK; AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF EACH BORROWER PARTY, THE
54
AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF EACH BORROWER PARTY, THE
AGENT EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER PARTIES OR THEIR
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM
NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY
FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY
APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE
TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.
(c) EACH BORROWER PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE ADMINISTRATIVE
BORROWER AT ITS ADDRESS SET FORTH IN SECTION 13.8 AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED
IN THE U.S. MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE
RIGHT OF AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER
PERMITTED BY LAW.
13.4. Waiver of Jury Trial. THE BORROWER PARTIES, THE LENDERS AND THE
AGENT EACH IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. THE BORROWER PARTIES, THE LENDERS AND THE AGENT EACH AGREE THAT
ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
55
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
13.5. Survival of Representations and Warranties. All of the Borrower
Parties' representations and warranties contained in this Agreement shall
survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Agent or the Lenders or their
respective agents.
13.6. Other Security and Guaranties. The Agent, may, without notice or
demand and without affecting the Borrower Parties' obligations hereunder, from
time to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce or release such collateral or any part thereof; and (b) accept and hold
any endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
13.7. Fees and Expenses. The Borrowers agree to pay to the Agent, for its
benefit, on demand, all costs and expenses that the Agent or any Agent-Related
Person pays or incurs in connection with the negotiation, preparation,
syndication, delivery, consummation, administration, enforcement, and
termination of this Agreement or any of the other Loan Documents, including: (a)
Attorney Costs; (b) costs and expenses (including attorneys' and paralegals'
fees and disbursements) for any amendment, supplement, waiver, consent, or
subsequent closing in connection with the Loan Documents and the transactions
contemplated thereby; (c) costs and expenses of lien and title searches and
title insurance; (d) taxes, fees and other charges for recording any mortgages,
filing financing statements and continuations, and other actions to perfect,
protect, and continue the Agent's Liens (including costs and expenses paid or
incurred by the Agent or any Agent-Related Person in connection with the
consummation of this Agreement); (e) sums paid or incurred to pay any amount or
take any action required of the Borrower Parties under the Loan Documents that
the Borrower Parties fail to pay or take; and (f) costs and expenses of
forwarding loan proceeds, collecting checks and other items of payment, and
establishing and maintaining Payment Accounts and lock boxes, and costs and
expenses of preserving and protecting the Collateral. In addition, the Borrowers
agree to pay costs and expenses incurred by the Agent and any other
Agent-Related Person (including Attorneys' Costs) to the Agent or such
Agent-Related Persons, for their respective benefit, on demand, and then to the
other Lenders for their benefit, on demand, and all reasonable fees, expenses
and disbursements incurred by such other Lenders, in each case, paid or incurred
to obtain payment of the Obligations, enforce the Agent's Liens, sell or
otherwise realize upon the Collateral, and otherwise enforce the
56
provisions of the Loan Documents, or to defend any claims made or threatened
against the Agent, any Agent-Related Person or any Lender arising out of the
transactions contemplated hereby (including preparations for and consultations
concerning any such matters). The foregoing shall not be construed to limit any
other provisions of the Loan Documents regarding costs and expenses to be paid
by the Borrowers. All of the foregoing costs and expenses shall be charged to,
and promptly reimbursed by, the Borrowers.
13.8. Notices. Except as otherwise provided herein, all notices, demands
and requests that any party is required or elects to give to any other shall be
in writing, or by a telecommunications device capable of creating a written
record, and any such notice shall become effective (a) upon personal delivery
thereof, including, but not limited to, delivery by overnight mail and courier
service, (b) four (4) days after it shall have been mailed by United States
mail, first class, certified or registered, with postage prepaid, or (c) in the
case of notice by such a telecommunications device, when properly transmitted
and confirmed, in each case addressed to the party to be notified as follows:
If to the Agent:
The Bank of New York
000 X. Xxx Xxxxxxx Xxxx.
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Administrative Agent Services
Telecopy No.: (000) 000-0000
with copies to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxx
Telecopy No.: (000) 000-0000
If to the Borrower Parties, or any of them:
Salton, Inc.
0000 Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
Email: xxxxxxx@xxxxxxxxx.xxx
57
with copies to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
Email: xxxxxxxxxxx@xxxxxxxxxxxx.xxx
If to a Lender, to such Lender at such address as shall be set forth on
its signature page hereof,
in each case above, or to such other address as each party may designate for
itself by like notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to the
persons designated above to receive copies shall not adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
Notices and other communications to the Lenders hereunder may be delivered or
furnished by electronic communication (including e-mail and Internet or intranet
websites) pursuant to procedures approved by Agent, provided that the foregoing
shall not apply to notices to any Lender pursuant to Article III if such Lender
has notified Agent that it is incapable of receiving notices under such Article
by electronic communication. Agent or the Borrowers may, in their discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or communications.
Unless Agent otherwise prescribes, (i) notices and other communications sent to
an e-mail address shall be deemed received upon the sender's receipt of an
acknowledgment from the intended recipient (such as by the "return receipt
requested" function, as available, return e-mail or other written
acknowledgment), provided that if such notice or other communication is not sent
during the normal business hours of the recipient, such notice or communication
shall be deemed to have been sent at the opening of business on the next
business day for the recipient, and (ii) notices or communications posted to an
Internet or intranet website shall be deemed received upon the deemed receipt by
the intended recipient at its e-mail address as described in the foregoing
clause (i) of notification that such notice or communication is available and
identifying the website address therefore.
13.9. Waiver of Notices. Unless otherwise expressly provided herein, the
Borrower Parties waive presentment, and notice of demand or dishonor and protest
as to any instrument, notice of intent to accelerate the Obligations and notice
of acceleration of the Obligations, as well as any and all other notices to
which it might otherwise be entitled. No notice to or demand on the Borrower
Parties which the Agent or any Lender
58
may elect to give shall entitle the Borrower Parties, or any of them, to any or
further notice or demand in the same, similar or other circumstances.
13.10. Binding Effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective representatives, successors, and
assigns of the parties hereto; provided, however, that no interest herein may be
assigned by the Borrower Parties without prior written consent of the Agent and
each Lender. The rights and benefits of the Agent and the Lenders hereunder
shall, if such Persons so agree, inure to any party acquiring any interest in
the Obligations or any part thereof.
13.11. Indemnity of the Agent, Agent-Related Persons and the Lenders by
the Borrowers.
(a) Each Borrower agrees to defend, indemnify and hold the
Agent-Related Persons, and each Lender and each of their respective officers,
directors, employees, counsel, representatives, agents and attorneys in fact
(each, an "Indemnified Person") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including Attorney Costs) of any
kind or nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent or replacement of any Lender) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby or referred to herein, expressly including, without
limitation, the Exchange Offer, the Exchange Offer Closing, all filing and
information provided in connection with respect thereto, and all actions taken
or omitted with respect to such Exchange Offer or Exchange Offer Closing
(collectively, the "Exchange Offer Transaction"), or any action taken or omitted
by any such Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including any
Insolvency Proceeding or appellate proceeding) related to or arising out of this
Agreement, the Exchange Offer Transaction, any other Loan Document or the Loans
or the use of the proceeds thereof, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the "Indemnified Liabilities");
provided that such indemnity shall not, as to any Indemnified Person, be
available (other than any Indemnified Liabilities related to any part of the
Exchange Offer Transaction) 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 willful misconduct of such Indemnified Person. The agreements in
this Section shall survive payment of all other Obligations.
(b) Each Borrower agrees to indemnify, defend and hold harmless the
Agent, any Agent-Related Person and the Lenders from any loss or liability
directly or indirectly arising out of the use, generation, manufacture,
production, storage, release, threatened release, discharge, disposal or
presence of a hazardous substance relating to
59
the Borrowers' operations, business or property. This indemnity will apply
whether the hazardous substance is on, under or about the Borrower's property or
operations or property leased to the Borrowers. The indemnity includes but is
not limited to Attorneys Costs. The indemnity extends to the Agent, each
Agent-Related Person, and the Lenders, and each of their parents, affiliates,
subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys and assigns. "Hazardous substances" means any substance,
material or waste that is or becomes designated or regulated as "toxic,"
"hazardous," "pollutant," or "contaminant" or a similar designation or
regulation under any federal, state or local law (whether under common law,
statute, regulation or otherwise) or judicial or administrative interpretation
of such, including petroleum or natural gas. This indemnity will survive
repayment of all other Obligations.
(c) It is understood that the handling of the Collateral of the
Borrowers in a combined fashion, as more fully set forth herein, is done solely
as an accommodation to the Borrowers in order to utilize the collective
borrowing powers of the Borrowers in the most efficient and economical manner
and at their request, and that neither the Agent nor any Agent-Related Person
nor any Lender shall incur liability to any Borrower as a result hereof. Each
Borrower expects to derive benefit, directly or indirectly, from the handling of
the Collateral in a combined fashion since the successful operation of each
Borrower is dependent on the continued successful performance of the integrated
group. To induce the Agent and the Lenders to do so, and in consideration
thereof, each Borrower hereby jointly and severally agrees to indemnify and hold
harmless the Agent, each Agent-Related Person and the Lenders against any and
all liability, expense, loss or claim of damage or injury, made against the
Agent, any Agent-Related Person or the Lenders by any Borrower or by any third
party whosoever, arising from or incurred by reason of (i) the handling of the
Collateral of the Borrowers as herein provided, (ii) any Agent-Related Person's
or any Lender's relying on any instructions of the Administrative Borrower, or
(iii) any other action taken by the Agent, any Agent-Related Person or any
Lender hereunder or under the other Loan Documents.
13.12. Limitation of Liability. NO CLAIM MAY BE MADE BY EACH OF ANY
BORROWER PARTY, ANY LENDER OR OTHER PERSON AGAINST THE AGENT, ANY AGENT-RELATED
PERSON, ANY LENDER, OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL,
REPRESENTATIVES, AGENTS OR ATTORNEYS-IN-FACT OF ANY OF THEM FOR ANY SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH
OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
EXCHANGE OFFER, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
AND EACH BORROWER PARTY AND EACH LENDER HEREBY WAIVES, RELEASES AND AGREES NOT
TO XXX UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR
NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
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13.13. Final Agreement. This Agreement and the other Loan Documents are
intended by the Borrower Parties, the Agent and the Lenders to be the final,
complete, and exclusive expression of the agreement between them. This Agreement
supersedes any and all prior oral or written agreements relating to the subject
matter hereof. No modification, rescission, waiver, release, or amendment of any
provision of this Agreement or any other Loan Document shall be made, except by
a written agreement signed by the Borrower Parties party thereto and a duly
authorized officer of each of the Agent and the requisite Lenders.
13.14. Counterparts. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender, and each Borrower Party in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement; signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so that
all signature pages are physically attached to the same document.
13.15. Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
13.16. Right of Setoff. In addition to any rights and remedies of the
Agent or Lenders provided by law, if an Event of Default exists or the Loans
have been accelerated, Agent and each Lender is authorized at any time and from
time to time, without prior notice to the Borrowers, any such notice being
waived by the Borrowers to the fullest extent permitted by law, to set-off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held by, and other indebtedness at any time owing by, such
Agent, Lender or any Affiliate of such Agent or Lender to or for the credit or
the account of the Borrowers against any and all Obligations owing to such Agent
or Lender, now or hereafter existing, irrespective of whether or not the Agent
or such Lender shall have made demand under this Agreement or any Loan Document
and although such Obligations may be contingent or unmatured. Each Lender agrees
promptly to notify the Borrowers and the Agent after any such set-off and
application made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application.
NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF,
BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY
BORROWER HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS
CONSENT OF THE LENDERS.
13.17. Confidentiality.
(a) The Borrower Parties hereby consent that the Agent and each
Lender may issue and disseminate to the public general information describing
the credit accommodation entered into pursuant to this Agreement, including the
name and address
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of the Borrower Parties and a general description of the Borrower Parties'
businesses and may use the Borrower Parties' name in advertising and other
promotional material.
(b) Each Lender severally agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by the Borrowers Parties
and provided to the Agent or such Lender by or on behalf of the Borrower
Parties, under this Agreement or any other Loan Document, except to the extent
that such information (i) was or becomes generally available to the public other
than as a result of disclosure by the Agent or such Lender, or (ii) was or
becomes available on a nonconfidential basis from a source other than the
Borrower Parties, provided that such source is not bound by a confidentiality
agreement with the Borrower Parties known to the Agent or such Lender; provided,
however, that the Agent and any Lender may disclose such information (1) at the
request or pursuant to any requirement of any Governmental Authority to which
the Agent or such Lender is subject or in connection with an examination of the
Agent or such Lender by any such Governmental Authority; (2) pursuant to
subpoena or other court process; (3) when required to do so in accordance with
the provisions of any applicable Requirement of Law; (4) to the extent
reasonably required in connection with any litigation or proceeding (including,
but not limited to, any bankruptcy proceeding) to which the Agent, any Lender or
their respective Affiliates may be party; (5) to the extent reasonably required
in connection with the exercise of any remedy or the enforcement of any action
hereunder or under any other Loan Document; (6) to the Agent's or such Lender's
independent auditors, accountants, attorneys and other professional advisors;
(7) to any prospective Participant or Assignee under any Assignment and
Acceptance, actual or potential, provided that such prospective Participant or
Assignee agrees to keep such information confidential to the same extent
required of the Agent and the Lenders hereunder; (8) as expressly permitted
under the terms of any other document or agreement regarding confidentiality to
which the Borrower Parties are party or is deemed party with the Agent or such
Lender; (9) to its Affiliates and its Affiliates' partners, directors, officers,
employees, agents, advisors and other representatives; and (10) for the purpose
of defending itself, reducing its liability, or protecting or exercising any of
its claims, rights, remedies or interests under or in connection with any Loan
Document.
(c) Each Lender acknowledges that, under certain circumstances the
United States securities laws may prohibit a Person who has received material,
non-public information from an issuer from purchasing or selling securities of
such issuer or from communicating such information to any other Person under
circumstances in which it is reasonably foreseeable that such other Person is
likely to purchase or sell such securities. Each Lender further acknowledges
that certain confidential information could be considered material non-public
information and agrees that it will not, and it will use reasonable efforts to
ensure that its employees will not, trade in the securities of the Parent on the
basis of such information or communicate such information to any other Person
under circumstances in which it is reasonably foreseeable that such other Person
is likely to purchase or sell such securities.
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(d) This Section 13.17 shall survive the termination of this
Agreement.
13.18. Conflicts with Other Loan Documents. Unless otherwise expressly
provided in this Agreement (or in another Loan Document by specific reference to
the applicable provision contained in this Agreement), if any provision
contained in this Agreement conflicts with any provision of any other Loan
Document, the provision contained in this Agreement shall govern and control.
13.19. The Administrative Borrower. Each Borrower hereby irrevocably
appoints Salton, Inc. as the borrowing agent and attorney-in-fact for all
Borrowers (the "Administrative Borrower"), which appointment shall remain in
full force and effect unless and until the Agent shall have received prior
written notice signed by each Borrower that such appointment has been revoked
and that another Borrower has been appointed the Administrative Borrower. Each
Borrower hereby irrevocably appoints and authorizes the Administrative Borrower
(i) to provide the Agent with all notices and instructions under this Agreement
and (ii) to take such action as the Administrative Borrower deems appropriate on
its behalf to exercise such other powers as are reasonably incidental thereto to
carry out the purposes of this Agreement.
ARTICLE XIV
JOINT AND SEVERAL OBLIGATIONS
14.1. All Obligations to Constitute Joint and Several Obligations.
(a) All Obligations shall constitute joint and several obligations
of the Borrowers and shall be secured by the Agent's Lien upon all of the
Collateral, and by all other security interests and Liens heretofore, now or at
any time hereafter granted by each Borrower to the Agent and the Lenders, to the
extent provided in the Loan Documents under which such Lien arises. Each
Borrower expressly represents and acknowledges that it is part of a common
enterprise with the other Borrowers and that any financial accommodations by the
Agent and the Lenders to any other Borrower hereunder and under the other Loan
Documents are and will be of direct and indirect interest, benefit and advantage
to all Borrowers. Each Borrower acknowledges that any notice or request given by
the Administrative Borrower (including the Administrative Borrower) to the Agent
or any Lender shall bind all Borrowers, and that any notice given by the Agent,
or any Lender to any Borrower shall be effective with respect to all Borrowers.
Each Borrower acknowledges and agrees that each Borrower shall be liable, on a
joint and several basis, for all of the Loans and other Obligations, regardless
of which Borrower actually may have received the proceeds of any of the Loans or
other extensions of credit or the amount of such Loans received or the manner in
which the Agent or any of the Lenders accounts among the Borrowers for such
Loans or other extensions of credit on its books and records, and further
acknowledges and agrees that Loans to any Borrower inure to the mutual benefit
of all of the Borrowers and that the Agent and the Lenders are relying on the
joint and several liability of the Borrowers in extending the Loans and other
financial accommodations hereunder. Each Borrower shall be entitled to
63
subrogation and contribution rights from and against the other Borrowers to the
extent any Borrower is required to pay to the Lenders any amount in excess of
the Loans advanced directly to, or other Obligations incurred directly by, such
Borrower or as otherwise available under Applicable Law; provided, however, that
such subrogation and contribution rights are and shall be subject to the terms
and conditions of this Section 14.1.
(b) It is the intent of the Borrowers, the Agent and the Lenders and
any other Person holding any of the Obligations that each Borrower's maximum
obligations hereunder (such Borrower's "Maximum Borrower Liability") in any case
or proceeding referred to below (but only in such a case or proceeding) shall
not be in excess of:
(i) in a case or proceeding commenced by or against such
Borrower under the Bankruptcy Code on or within one (1) year from the date on
which any of the Obligations of such Borrower are incurred, the maximum amount
that would not otherwise cause the Obligations of such Borrower hereunder (or
any other Obligations of such Borrower to the Agent, the Lenders and any other
Person holding any of the Obligations) to be avoidable or unenforceable against
such Borrower under (A) Section 548 of the Bankruptcy Code or (B) any state
fraudulent transfer or fraudulent conveyance act or statute applied in such case
or proceeding by virtue of Section 544 of the Bankruptcy Code; or
(ii) in a case or proceeding commenced by or against such
Borrower under the Bankruptcy Code subsequent to one (1) year from the date on
which any of the Obligations of such Borrower are incurred, the maximum amount
that would not otherwise cause the Obligations of such Borrower hereunder (or
any other Obligations of such Borrower to the Agent, the Lenders and any other
Person holding any of the Obligations) to be avoidable or unenforceable against
such Borrower under any state fraudulent transfer or fraudulent conveyance act
or statute applied in any such case or proceeding by virtue of Section 544 of
the Bankruptcy Code; or
(iii) in a case or proceeding commenced by or against such
Borrower under any law, statute or regulation other than the Bankruptcy Code
relating to dissolution, liquidation, conservatorship, bankruptcy, moratorium,
readjustment of debt, compromise, rearrangement, receivership, insolvency,
reorganization or similar debtor relief from time to time in effect affecting
the rights of creditors generally (collectively, "Other Debtor Relief Law"), the
maximum amount that would not otherwise cause the Obligations of such Borrower
hereunder (or any other Obligations of such Borrower to the Agent and the
Lenders and any other Person holding any of the Obligations) to be avoidable or
unenforceable against such Borrower under such Other Debtor Relief Law,
including, without limitation, any state fraudulent transfer or fraudulent
conveyance act or statute applied in any such case or proceeding. (The
substantive state or federal laws under which the possible avoidance or
unenforceability of the Obligations of any Borrower hereunder (or any other
Obligations of such Borrower to the Agent, the
64
Lenders and any other Person holding any of the Obligations) shall be determined
in any such case or proceeding shall hereinafter be referred to as the
"Avoidance Provisions").
Notwithstanding the foregoing, no provision of this Section 14.1(b) shall
limit any Borrower's liability for loans advanced directly or indirectly to it
under this Agreement.
(c) To the extent set forth in Section 14.1(b) hereof, but only to
the extent that the Obligations of any Borrower hereunder, or the transfers made
by such Borrower under any Loan Document, would otherwise be subject to
avoidance under any Avoidance Provisions if such Borrower is not deemed to have
received valuable consideration, fair value, fair consideration or reasonably
equivalent value for such transfers or obligations, or if such transfers or
obligations of any Borrower hereunder would render such Borrower insolvent, or
leave such Borrower with an unreasonably small capital or unreasonably small
assets to conduct its business, or cause such Borrower to have incurred debts
(or to have intended to have incurred debts) beyond its ability to pay such
debts as they mature, in each case as of the time any of the obligations of such
Borrower are deemed to have been incurred and transfers made under such
Avoidance Provisions, then the obligations of such Borrower hereunder shall be
reduced to that amount which, after giving effect thereto, would not cause the
Obligations of such Borrower hereunder (or any other Obligations of such
Borrower to the Agent, the Lenders or any other Person holding any of the
Obligations), as so reduced, to be subject to avoidance under such Avoidance
Provisions. This Section 14.1(c) is intended solely to preserve the rights
hereunder of the Agent, the Lenders and any other Person holding any of the
Obligations to the maximum extent that would not cause the obligations of the
Borrowers hereunder to be subject to avoidance under any Avoidance Provisions,
and none of the Borrowers nor any other Person shall have any right, defense,
offset, or claim under this Section 14.1(c) as against the Agent, the Lenders or
any other Person holding any of the Obligations that would not otherwise be
available to such Person under the Avoidance Provisions.
(d) Each Borrower agrees that the Obligations may at any time and
from time to time exceed the Maximum Borrower Liability of such Borrower, and
may exceed the aggregate Maximum Borrower Liability of all Borrowers hereunder,
without impairing this Agreement or any provision contained herein or affecting
the rights and remedies of the Lenders or the Agent hereunder.
(e) In the event any Borrower (a "Funding Borrower") shall make any
payment or payments under this Agreement or shall suffer any loss as a result of
any realization upon any collateral granted by it to secure its obligations
hereunder, each other Borrower (each, a "Contributing Borrower") shall
contribute to such Funding Borrower an amount equal to such payment or payments
made, or losses suffered, by such Funding Borrower determined as of the date on
which such payment or loss was made multiplied by the ratio of (i) the Maximum
Borrower Liability of such Contributing Borrower (without giving effect to any
right to receive any contribution or other
65
obligation to make any contribution hereunder), to (ii) the aggregate Maximum
Borrower Liability of all Borrowers (including the Funding Borrowers) hereunder
(without giving effect to any right to receive, or obligation to make, any
contribution hereunder). Nothing in this Section 14.1(e) shall affect any
Borrower's joint and several liability to the Agent and the Lenders for the
entire amount of its Obligations. Each Borrower covenants and agrees that its
right to receive any contribution hereunder from a Contributing Borrower shall
be subordinate and junior in right of payment to all obligations of the
Borrowers to the Agent and the Lenders hereunder.
(f) No Borrower will exercise any rights that it may acquire by way
of subrogation hereunder or under any other Loan Document or at law by any
payment made hereunder or otherwise, nor shall any Borrower seek or be entitled
to seek any contribution or reimbursement from any other Borrower in respect of
payments made by such Borrower hereunder or under any other Loan Document, until
all amounts owing to the Agent and the Lenders on account of the Obligations are
paid in full in cash and the Commitments are terminated. If any amounts shall be
paid to any Borrower on account of such subrogation or contribution rights at
any time when all of the Obligations shall not have been paid in full, such
amount shall be held by such Borrower in trust for the Agent and the Lenders,
segregated from other funds of such Borrower, and shall, forthwith upon receipt
by such Borrower, be turned over to the Agent in the exact form received by such
Borrower (duly endorsed by such Borrower to the Agent, if required), to be
applied against the Obligations, whether matured or unmatured, as provided for
herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
66
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
BORROWERS:
SALTON, INC., a Delaware corporation
By: _______________________________________
Title: Executive Vice President
TOASTMASTER INC., a Missouri corporation
By: _______________________________________
Title: Executive Vice President
SALTON TOASTMASTER LOGISTICS
LLC, a Delaware limited liability company
By: _______________________________________
Title: Executive Vice President
GUARANTORS:
HOME CREATIONS DIRECT, LTD.,
a Delaware corporation
By: _______________________________________
Title: Executive Vice President
SONEX INTERNATIONAL CORPORATION, a Delaware
corporation
By: _______________________________________
Title: Executive Vice President
ICEBOX, LLC, an Illinois limited liability
company
By: _______________________________________
Title: Executive Vice President
FAMILY PRODUCTS INC., a Delaware corporation
By: _______________________________________
Title: Executive Vice President
SALTON HOLDINGS, INC., a Delaware
corporation
By: _______________________________________
Title: Executive Vice President
Signature Page - Credit Agreement
S-1
AGENT :
THE BANK OF NEW YORK,
as Agent
By: _____________________________
Title: Vice President
Signature Page - Credit Agreement
S-2
ANNEX A
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have the following
respective meanings (unless otherwise defined therein), and all section
references in the following definitions shall refer to sections of the
Agreement:
"Account Debtor" means each Person obligated in any way on or in
connection with an Account, Chattel Paper or General Intangibles (including a
payment intangible).
"Accounts" means all of each Borrower's now owned or hereafter acquired or
arising accounts, as defined in the UCC, including any rights to payment for the
sale or lease of goods or rendition of services, whether or not they have been
earned by performance and all health care receivables.
"Administrative Borrower" has the meaning specified in Section 13.19.
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person or which owns, directly or indirectly, five percent (5%) or more of
the outstanding equity interest of such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agent" means The Bank of New York, solely in its capacity as agent for
the Lenders, and any successor agent.
"Agent Fee Letter" means that confidential fee letter dated July 26, 2005,
executed by Parent and The Bank of New York.
"Agent's Liens" means the Liens in the Collateral granted to the Agent,
for the benefit of the Lenders and the Agent pursuant to this Agreement and the
other Loan Documents.
"Agent-Related Persons" means the Agent, together with its Affiliates, and
the officers, directors, employees, counsel, representatives, agents and
attorneys-in-fact of the Agent and such Affiliates.
"Agreement" means the Credit Agreement to which this Annex A is attached,
as from time to time amended, restated, supplemented or otherwise modified.
"Anniversary Date" means each anniversary of the Closing Date.
1
"Applicable Margin" means seven percent (7.00%).
"Assignee" has the meaning specified in Section 11.2(a).
"Assignment and Acceptance" has the meaning specified in Section 11.2(a).
"Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other counsel engaged by the Agent, and the
reasonably allocated costs and expenses of internal legal services of the Agent.
"Availability" means Availability as such term is defined in the First
Lien Credit Agreement, as such is amended, modified, supplemented or restated
from time to time in accordance with the terms thereof and hereof.
"Avoidance Provisions" has the meaning specified in Section 14.1(b)(iii).
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.), as in effect from time to time.
"Blocked Account Agreement" means any agreement among a Borrower, the
First Lien Agent and a Clearing Bank, concerning the collection of payments
which represent the proceeds of Accounts or of any other Collateral.
"Borrower Parties" means the Parent, the Borrowers and the Guarantors, and
"Borrower Party" shall mean any one of the foregoing Borrower Parties.
"Borrowers" means the Parent, Toastmaster, Inc. and Salton Toastmaster
Logistics LLC and "Borrower" shall mean any one of the foregoing Borrowers.
"Borrowing" means a borrowing hereunder consisting of the Term Loan made
on the Closing Date by the Lenders to the Borrowers.
"Business Day" means (a) any day that is not a Saturday, Sunday, or a day
on which banks in New York, New York are required or permitted to be closed, and
(b) with respect to all notices, determinations, fundings and payments in
connection with the Term Loans, any day that is a Business Day pursuant to
clause (a) above and that is also a day on which trading in Dollars is carried
on by and between banks in the London interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not paid during
any fiscal period) in respect of the cost of any Fixed Asset or improvement, or
replacement,
2
substitution, or addition thereto, which has a useful life of more than one
year, including, without limitation, those costs arising in connection with the
direct or indirect acquisition of such asset by way of increased product or
service charges or in connection with a Capital Lease.
"Capital Lease" means any lease of property by the Parent or a Subsidiary
which, in accordance with GAAP, should be reflected as a capital lease on the
consolidated balance sheet of the Parent.
"Change of Control" shall mean (i) directly or indirectly a sale,
transfer, or other conveyance of all or substantially all of the assets of the
Parent in one transaction or a series of transactions, (ii) any "person" or
"group" (as such terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange Act, whether or not applicable), other than the shareholders of the
Parent as of the Original Closing Date (as such term is defined in the First
Lien Credit Agreement) (or any Person or group of Persons that, as of the
Agreement Date, are Affiliates of such shareholders), is or becomes the
"beneficial owner" (as that term is used in Rules 13d-3 and 13d-5 under the
Exchange Act, whether or not applicable, except that a Person shall be deemed to
have "beneficial ownership" of all shares that any such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than thirty-five percent (35%) of the
aggregate number of votes of all classes of capital stock of the Parent that
ordinarily have voting power for the election of directors of the Parent, (iii)
during any period of twenty-four (24) consecutive months, individuals who at the
beginning of such period constituted the board of directors of the Parent,
together with any new directors whose election by such board or whose nomination
for election by the shareholders of the Parent was approved by a vote of a
majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority of the
board of directors of the Parent then in office or (iv) the Parent shall cease
to own, directly or indirectly, 100% of the Stock of any Subsidiary, except as
otherwise permitted by Section 7.9.
"Chattel Paper" means all of the Parent's and each Subsidiary's now owned
or hereafter acquired chattel paper, as defined in the UCC, including electronic
chattel paper and tangible chattel paper.
"Clearing Bank" means any banking institution with whom a Payment Account
has been established pursuant to a Blocked Account Agreement.
"Closing Date" means the date of this Agreement.
"Closing Fees" has the meaning specified in Section 2.4.
"Code" means the Internal Revenue Code of 1986, as in effect from time to
time.
3
"Collateral" means all of each Borrower Party's Accounts, Inventory,
Chattel Paper, Documents, Investment Property, Deposit Accounts, Equipment and
General Intangibles, and all other assets of any Person from time to time
subject to the Agent's Liens securing payment or performance of the Obligations,
but excluding up to thirty-five percent (35%) of the equity interests of any
Borrower Party in any Foreign Subsidiary.
"Collections" means all cash, checks, notes, instruments, and other items
of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).
"Commitment" means, with respect to each Lender, the principal amount of
the Term Loan held by such Lender, and, with respect to all Lenders, the
aggregate principal amount of the Term Loan, in each case as such Dollar amounts
are set forth beside such Lender's name under the applicable heading on Schedule
1.1 or on the register maintained by the Agent or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 11.2, as such Commitment
may be adjusted from time to time in accordance with the provisions of Section
11.2, and "Commitments" means, collectively, the aggregate amount of the
Commitments of all of the Lenders, as such obligations may be reduced from time
to time pursuant to the terms hereof.
"Consolidated Adjusted Net Earnings from Operations" means, with respect
to any fiscal period of the Parent, the Parent's net income on a consolidated
basis after provision for income taxes for such fiscal period, as determined in
accordance with GAAP and reported on the Financial Statements for such period,
excluding any and all of the following included in such net income: (a) gain or
loss arising from the sale of any capital assets; (b) gain arising from any
write up in the book value of any asset or loss arising from any write down in
the book value of any asset other than an asset the value of which is included
in the calculation of the Borrowing Base (as such term is defined in the First
Lien Credit Agreement), (c) earnings or losses of any Person, substantially all
the assets or Stock of which have been acquired by the Parent or any of its
Subsidiaries in any manner, to the extent realized by such other Person prior to
the date of acquisition; (d) earnings or losses of any Person in which the
Parent or any of its Subsidiaries has a minority ownership interest unless (and
only to the extent) such earnings or losses shall actually have been received by
the Parent or any of its Subsidiaries in the form of cash distributions; (e)
earnings or losses of any Person to which assets of the Parent or any of its
Subsidiaries shall have been sold, transferred or disposed of, or into which the
Parent or any of its Subsidiaries shall have been merged, or which has been a
party with the Parent or any of its Subsidiaries to any consolidation or other
form of reorganization, prior to the date of such transaction; (f) gain arising
from the acquisition of debt or equity securities of the Parent or any of its
Subsidiaries or from cancellation or forgiveness of Consolidated Debt; (g) gain
and non-cash loss arising from extraordinary items or from any other
non-recurring transaction, as determined in accordance with GAAP; and (h) all
restructuring charges incurred through October 31, 2004 as described on Schedule
E-3.
4
"Consolidated Debt" means, without duplication, all indebtedness for
borrowed money or the deferred purchase price of property, to any Person, of any
kind or nature, now or hereafter owing, arising, due or payable, howsoever
evidenced, created, incurred, acquired or owing, whether primary, secondary,
direct, contingent, fixed or otherwise, excluding trade payables, but including
(a) all Obligations; (b) all obligations or liabilities created or arising under
any Capital Lease or conditional sale or other title retention agreement with
respect to property used or acquired by any Borrower Party, even if the rights
and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property; provided, however, that all such obligations and
liabilities which are limited in recourse to such property shall be included in
Debt only to the extent of the book value of such property as would be shown on
a balance sheet of the Borrower Parties prepared in accordance with GAAP; (c)
all obligations and liabilities under Guaranties, (d) the present value
(discounted at the Base Rate) of lease payments due under synthetic leases, and
(e) earn-outs or other contingent payments incurred in connection with any
acquisition to the extent such earn-outs or payments are not reflected as
expenses on the income statements of such Person; provided, further, however,
that in no event shall the term Consolidated Debt include the capital stock
surplus, retained earnings, minority interests in the common stock of
Subsidiaries, lease obligations (other than pursuant to (b) or (d) above),
reserves for deferred income taxes and investment credits, or other deferred
credits or reserves.
"Consolidated EBITDA" means, with respect to any fiscal period of the
Parent, Consolidated Adjusted Net Earnings from Operations, plus, to the extent
deducted in the determination of Consolidated Adjusted Net Earnings from
Operations for that fiscal period, interest expenses, Federal, state, local and
foreign income taxes, depreciation and amortization (including, without
limitation, amortization of restricted stock, stock appreciation rights and
similar equity instruments), and impairment losses incurred in connection with a
restructuring of the U.S. operations in an aggregate amount not to exceed the
applicable amount set forth in Schedule E-4 for each applicable period.
"Consolidated Fixed Charge Coverage Ratio" means, as of any date of
determination, with respect to any fiscal period of the Parent, on a
consolidated basis, the ratio of (a) the sum of (i) Consolidated EBITDA minus
(ii) Capital Expenditures (excluding Capital Expenditures funded with
Consolidated Debt other than Revolving Loans (as such term is defined in the
First Lien Credit Agreement), but including, without duplication, principal
payments with respect to such Consolidated Debt) to (b) Consolidated Fixed
Charges.
"Consolidated Fixed Charges" means, with respect to any fiscal period of
the Parent on a consolidated basis, without duplication, cash interest expense,
principal payments of Consolidated Debt (excluding any historical or future cash
payments made with respect to the refinancing of principal of Consolidated
Debt), all Distributions paid, all cash Investments, all Specified Transactions,
and Federal, state, local and foreign income taxes paid in cash.
5
"Contaminant" means any material defined as waste, pollutant, hazardous
substance, toxic substance, hazardous waste or special waste under Environmental
Laws, including without limitation, petroleum or petroleum-derived substance or
waste, asbestos in any form or condition, polychlorinated biphenyls ("PCBs"), or
any constituent of any such substance or waste.
"Contributing Borrower" has the meaning specified in Section 14.1(e).
"Copyright Security Agreement" means Copyright Security Agreement,
executed and delivered by the Borrowers to the Agent, for the benefit of the
Agent and the Lenders, to evidence and perfect the Agent's security interest in
the Borrowers' present and future copyrights and related licenses and rights.
"Debt" means, without duplication, all indebtedness for borrowed money or
the deferred purchase price of property, to any Person, of any kind or nature,
now or hereafter owing, arising, due or payable, howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, excluding trade payables, but including (a) all Obligations;
(b) all obligations or liabilities created or arising under any Capital Lease or
conditional sale or other title retention agreement with respect to property
used or acquired by any Borrower Party, even if the rights and remedies of the
lessor, seller or lender thereunder are limited to repossession of such
property; provided, however, that all such obligations and liabilities which are
limited in recourse to such property shall be included in Debt only to the
extent of the book value of such property as would be shown on a balance sheet
of the Borrower Parties prepared in accordance with GAAP; (c) all obligations
and liabilities under Guaranties;(d) the present value (discounted at the Base
Rate) of lease payments due under synthetic leases, and (e) earn-outs or other
contingent payments incurred in connection with any acquisition to the extent
such earn-outs or payments are not reflected as expenses on the income
statements of such Person; provided, further, however, that in no event shall
the term Debt include the capital stock surplus, retained earnings, minority
interests in the common stock of Subsidiaries, lease obligations (other than
pursuant to (b) or (d) above), reserves for deferred income taxes and investment
credits, or other deferred credits or reserves.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured, waived, or otherwise
remedied during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at all times
equal to the sum of (a) the LIBOR Rate plus (b) ten percent (10%) per annum.
Each Default Rate shall be adjusted simultaneously with any change in the
applicable Interest Rate.
"Deposit Accounts" means all "deposit accounts" as such term is defined in
the UCC, now or hereafter held in the name of any Borrower Party, including,
without
6
limitation, any checking or other demand deposit account, time, savings,
passbook or similar account maintained with a bank.
"Distribution" means, in respect of any corporation: (a) the payment or
making of any dividend or other distribution of property in respect of capital
stock (excluding any options or warrants for, or other rights with respect to,
such stock) of such corporation, other than distributions in capital stock (or
any options or warrants for such stock) of the same class; or (b) the redemption
or other acquisition by such corporation of any capital stock (or any options or
warrants for such stock) of such corporation.
"Documents" means all "documents" as such term is defined in the UCC,
including bills of lading, warehouse receipts or other documents of title, now
owned or hereafter acquired by any Borrower Party.
"DOL" means the United States Department of Labor or any successor
department or agency.
"Dollar" and "$" means dollars in the lawful currency of the United
States. Unless otherwise specified, all payments under this Agreement shall be
made in Dollars.
"EBITDA" means, with respect to any fiscal period of the Borrowers, US
Adjusted Net Earnings from Operations, plus, to the extent deducted in the
determination of US Adjusted Net Earnings from Operations for that fiscal
period, interest expenses, Federal, state, local and foreign income taxes,
depreciation and amortization (including, without limitation, amortization of
restricted stock, stock appreciation rights and similar equity instruments), and
impairment losses incurred in connection with a restructuring of the U.S.
operations in an aggregate amount not to exceed the applicable amount set forth
in Schedule E-4 for each applicable period.
"Eligible Assignee" means (a) a qualified institutional buyer (as defined
by Rule 144A promulgated under the Securities Act of 1933, as amended);
provided, however, a natural person cannot be an Eligible Assignee; (b) any
Lender listed on the register of the Term Loans maintained by the Agent; (c) any
Affiliate of any Lender; and (d) a Related Fund.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for a Release.
"Environmental Laws" means all federal, state or local, or foreign
Governmental Authority, laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative orders, directed duties,
licenses, authorizations and permits of, and agreements with, any Governmental
Authority, in each case relating to environmental, health, safety and land use
matters.
7
"Environmental Lien" means a Lien in favor of any Governmental Authority
for (a) any liability under Environmental Laws, or (b) damages arising from, or
costs incurred by such Governmental Authority in response to, a Release or
threatened Release of a Contaminant into the environment.
"Equipment" means all of any Borrower Party's now owned and hereafter
acquired machinery, equipment, furniture, furnishings, fixtures, and other
tangible personal property (other than consumer goods, farm products or
Inventory), including embedded software, motor vehicles with respect to which a
certificate of title has been issued, aircraft, dies, tools, jigs, molds and
office equipment, as well as all of such types of property leased by any
Borrower Party and all of any Borrower Party's rights and interests with respect
thereto under such leases (including, without limitation, options to purchase);
together with all present and future additions and accessions thereto,
replacements therefor, component and auxiliary parts and supplies used or to be
used in connection therewith, and all substitutes for any of the foregoing, and
all manuals, drawings, instructions, warranties and rights with respect thereto;
wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder, as in effect from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with any Borrower Party within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan,
(b) a withdrawal by any Borrower Party or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA, (c) a complete or partial withdrawal by the any Borrower Party or any
ERISA Affiliate from a Multi-employer Plan or notification that a Multi-employer
Plan is in reorganization, (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multi-employer Plan, (e) the occurrence of an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multi-employer Plan, or (f) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon any Borrower Party or any ERISA Affiliate.
"Event of Default" has the meaning specified in Section 9.1.
8
"Exchange Act" means the Securities Exchange Act of 1934, and regulations
promulgated thereunder, as in effect from time to time.
"Exchange Offer" has the meaning specified in the Recitals to this
Agreement.
"Exchange Offer Closing" has the meaning specified in the Recitals to this
Agreement.
"Exchange Offer Transaction" has the meaning specified in Section
13.11(a). "Excluded Taxes" has the meaning specified in Section 4.1(a).
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to the Bank on such
day on such transactions as determined by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Financial Statements" means, according to the context in which it is
used, the financial statements referred to in Sections 5.2 and 6.6 or any other
financial statements required to be given to the Lenders pursuant to this
Agreement.
"First Lien Agent" means WFF, in its capacity as administrative agent and
collateral agent for the agents and lenders party to the First Lien Credit
Agreement, together with its successors and assigns thereto in such capacities.
"First Lien Co-Agent" means Silver Point, in its capacity as the co-agent,
syndication agent, and documentation agent for the lenders party to the First
Lien Credit Agreement, together with its successors and assigns thereto in such
capacities.
"First Lien Credit Agreement" means that certain Amended and Restated
Credit Agreement, dated as of May 9, 2003 and amended and restated as of June
15, 2004, as amended by that certain Resignation and Appointment Agreement dated
August 30, 2004, and as further amended by that certain First Amendment to
Amended and Restated Credit Agreement dated August 30, 2004, as further amended
by that certain Second Amendment to Amended and Restated Credit Agreement dated
May 11, 2005, as further amended by that certain Third Amendment to Amended and
Restated Credit Agreement
9
dated July 8, 2005, and as further amended, by and among the Parent, Borrowers,
the First Lien Agent, the First Lien Co-Agent, and the lenders from time to time
party thereto, as such is amended, modified, supplemented or restated from time
to time in accordance with the terms thereof and hereof.
"First Lien Lenders" means the Lenders from time to time that are parties
to the First Lien Credit Agreement as Lender.
"First Lien Loan Documents" means the Loan Documents as such term is
defined in the First Lien Credit Agreement, as such is amended, modified,
supplemented or restated from time to time in accordance with the terms thereof
and hereof.
"First Lien Loans" means the Loans as such term is defined in the First
Lien Credit Agreement, as such is amended, modified, supplemented or restated
from time to time in accordance with the terms thereof and hereof.
"First Lien Maximum Amount" means the Maximum Amount as such term is
defined in the First Lien Credit Agreement, as such is amended, modified,
supplemented or restated from time to time in accordance with the terms thereof
and hereof.
"First Lien Obligations" means the Obligations as such term is defined in
the First Lien Credit Agreement, as such is amended, modified, supplemented or
restated from time to time in accordance with the terms thereof and hereof.
"First Lien Required Lenders" means the Required Lenders as such term is
defined in the First Lien Credit Agreement, as such is amended, modified,
supplemented or restated from time to time in accordance with the terms thereof
and hereof.
"First Lien Term Loan" means the Term Loan as such term is defined in the
First Lien Credit Agreement, as such is amended, modified, supplemented or
restated from time to time in accordance with the terms thereof and hereof.
"Fiscal Month" means any fiscal month of any Fiscal Year.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the Parent's fiscal year for financial accounting
purposes which ends each year on the Saturday closest to June 30. The current
Fiscal Year of the Parent will end on July 2, 2005.
"Fixed Assets" means the Equipment and Real Estate of the Borrowers.
"Foreign Adjusted Net Earnings from Operations" means, with respect to any
fiscal period of the Foreign Subsidiaries, the Foreign Subsidiaries' net income
on a consolidated basis after provision for income taxes for such fiscal period,
as determined
10
in accordance with GAAP and reported on the Financial Statements for such
period, excluding any and all of the following included in such net income: (a)
gain or loss arising from the sale of any capital assets; (b) gain arising from
any write up in the book value of any asset or loss arising from any write down
in the book value of any asset other than an asset the value of which is
included in the calculation of the Borrowing Base (as such term is defined in
the First Lien Credit Agreement); (c) earnings or losses of any Person,
substantially all the assets or Stock of which have been acquired by the Foreign
Subsidiaries in any manner, to the extent realized by such other Person prior to
the date of acquisition; (d) earnings or losses of any Person in which any
Foreign Subsidiary has a minority ownership interest unless (and only to the
extent) such earnings or losses shall actually have been received by such
Foreign Subsidiary in the form of cash distributions; (e) earnings or losses of
any Person to which assets of any Foreign Subsidiary shall have been sold,
transferred or disposed of, or into which any Foreign Subsidiary shall have been
merged, or which has been a party with any Foreign Subsidiary to any
consolidation or other form of reorganization, prior to the date of such
transaction; (f) gain arising from the acquisition of debt or equity securities
of any Foreign Subsidiary or from cancellation or forgiveness of Debt; (g) gain
and non-cash losses arising from extraordinary items or from any other
non-recurring transaction, as determined in accordance with GAAP; and (h) all
restructuring charges incurred by the Foreign Subsidiaries through October 31,
2004 as described on Schedule E-3.
"Foreign EBITDA" means, with respect to any fiscal period of the Foreign
Subsidiaries, Foreign Adjusted Net Earnings from Operations, plus, to the extent
deducted in the determination of Foreign Adjusted Net Earnings from Operations
for that fiscal period, interest expenses, Federal, state, local and foreign
income taxes, depreciation and amortization (including, without limitation,
amortization of restricted stock, stock appreciation rights and similar equity
instruments).
"Foreign Leverage Ratio" means a ratio determined as of the relevant
calculation date by dividing Foreign Net Debt as of the last day of the
applicable period by Foreign EBITDA for such period.
"Foreign Net Debt" means, with respect to the Foreign Subsidiaries,
without duplication, (I) all indebtedness for borrowed money or the deferred
purchase price of property, to any Person, of any kind or nature, now or
hereafter owing, arising, due or payable, howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, excluding trade payables, but including (a) all Obligations
of the Foreign Subsidiaries; (b) all obligations or liabilities created or
arising under any Capital Lease or conditional sale or other title retention
agreement with respect to property used or acquired by any Foreign Subsidiary,
even if the rights and remedies of the lessor, seller or lender thereunder are
limited to repossession of such property; provided, however, that all such
obligations and liabilities which are limited in recourse to such property shall
be included in Foreign Net Debt only to the extent of the book value of such
property as would be shown on a balance sheet of the Foreign
11
Subsidiaries prepared in accordance with GAAP; (c) all obligations and
liabilities of the Foreign Subsidiaries under Guaranties; (d) the present value
(discounted at the Base Rate) of lease payments of the Foreign Subsidiaries due
under synthetic leases, and (e) earn-outs or other contingent payments incurred
by the Foreign Subsidiaries in connection with any acquisition to the extent
such earn-outs or payments are not reflected as expenses on the income
statements of such Person; provided, further, however, that in no event shall
the term Foreign Net Debt include the capital stock surplus, retained earnings,
minority interests in the common stock of Subsidiaries, lease obligations (other
than pursuant to (b) or (d) above), reserves for deferred income taxes and
investment credits, or other deferred credits or reserves, minus (II) cash held
by the Foreign Subsidiaries.
"Foreign Pledge Agreements" means, collectively those certain pledge
agreements among the Borrower Parties, or any of them, and the Agent for the
benefit of the Agent and the other Lenders pursuant to which one or more
Borrower Parties may pledge up to and including sixty-five percent (65%) of the
equity interests of directly-owned Foreign Subsidiaries.
"Foreign Subsidiaries" has the meaning specified in Section 5.2(a).
"Funded Debt" shall mean, for any date, total outstanding Obligations of
Borrowers as of the date of determination.
"Funding Borrower" has the meaning specified in Section 14.1(e).
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles and practices set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
United States accounting profession), which are applicable to the circumstances
as of the Closing Date.
"General Intangibles" means all of the Parent's and each Subsidiary's now
owned or hereafter acquired general intangibles, choses in action and causes of
action and all other intangible personal property of the Parent and each
Subsidiary of every kind and nature (other than Accounts), including, without
limitation, all contract rights, payment intangibles, Proprietary Rights,
corporate or other business records, inventions, designs, blueprints, plans,
specifications, patents, patent applications, trademarks, service marks, trade
names, trade secrets, goodwill, copyrights, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, any funds which may
become due to the Parent or any Subsidiary in connection with the termination of
any Plan or other employee benefit plan or any rights thereto and any other
amounts payable to the Parent or any Subsidiary from any Plan or other employee
benefit plan, rights and claims against
12
carriers and shippers, rights to indemnification, business interruption
insurance and proceeds thereof, property, casualty or any similar type of
insurance and any proceeds thereof, proceeds of insurance covering the lives of
key employees on which the Parent or any Subsidiary is beneficiary, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged equity interests or Investment Property
and any letter of credit, guarantee, claim, security interest or other security
held by or granted to the Parent or any Subsidiary.
"Good-Faith Protest" means the right of a Borrower Party to protest any
Lien described in clause (d) of the definition of Permitted Liens, provided that
(a) a reserve acceptable to the Agent in its commercially reasonable discretion
with respect to such obligation is established, (b) any such protest is
instituted promptly and prosecuted diligently by such Borrower Party in good
faith, and (c) the Agent is satisfied that, while any such protest is pending,
there will be no impairment of the enforceability, validity, or priority of any
of the Agent's Liens.
"Goods" means all "goods" as defined in the UCC, now owned or hereafter
acquired by any Borrower Party, wherever located, including embedded Software to
the extent included in "goods" as defined in the UCC.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantors" means the Parent and those Subsidiaries signatory to the
Subsidiary Guaranty from time to time.
"Guaranty" means, with respect to any Person, all obligations of such
Person which in any manner directly or indirectly guarantee or assure, or in
effect guarantee or assure, the payment or performance of any indebtedness,
dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition;
or (c) to lease property or to purchase any debt or equity securities or other
property or services.
"Indemnified Liabilities" has the meaning specified in Section 13.11.
"Indemnified Person" has the meaning specified in Section 13.11.
13
"Indentures" has the meaning specified in the definition of Senior Notes.
"Insolvency Proceeding" means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code or under any other state or
federal bankruptcy or insolvency law, assignment for the benefit of creditors,
formal or informal moratoria, composition, extension generally with creditors or
proceedings seeking reorganization, arrangement or other similar relief.
"Instruments" means all "instruments" as such term is defined in the UCC,
now owned or hereafter acquired by any Borrower Party.
"Intercompany Account" means the net aggregate month-end sum of the
following accounts: (a) "Notes Receivable-Salton CV"; plus (b) "Interest
Receivable- Salton CV" minus (c) "Interco Payable-Salton Hong Kong"; minus (d)
Other Payables -Salton UK; plus (e) Interco receivable-Toastmaster de Mexico
plus (f) all other accounts receivable maintained by Borrowers with Foreign
Subsidiaries minus (g) all other accounts payable maintained by Borrowers with
Foreign Subsidiaries.
"Intercreditor Agreement" means that certain Intercreditor Agreement dated
as of August 26, 2005, among the First Lien Co-Agent, the First Lien Agent and
the Agent, as amended, modified, supplemented or restated from time to time.
"Interest Period" means, as to the Term Loans, (a) the period commencing
on the Funding Date, and ending on January 14, 2006, and (b) thereafter,
successive six month periods through the Stated Maturity Date, each beginning on
January 15 and July 15, respectively. The last Interest Period shall begin on
January 15, 2008 and end on the Stated Maturity Date.
"Interest Rate" means each or any of the interest rates, including the
Default Rate, set forth in Section 2.1.
"Inventory" means all of any Borrower Party's right, title and interest
with respect to "inventory," as such term is defined in the UCC, wherever
located, and in any event including now owned and hereafter acquired inventory,
goods and merchandise, wherever located, to be furnished under any contract of
service or held for sale or lease, all returned goods, raw materials,
work-in-process, finished goods (including embedded Software), other materials
and supplies of any kind, nature or description which are used or consumed in
any Borrower Party's business or used in connection with the packing, shipping,
advertising, selling or finishing of such goods, merchandise, and all documents
of title or other Documents representing them.
"Investment" means, as to any Borrower Party, any acquisition of property
by such Borrower Party in exchange for cash or other property, whether in the
form of an acquisition of stock, debt, or other indebtedness or obligation, or
the purchase or acquisition of any other property, or a loan, advance, capital
contribution, or subscription.
14
"Investment Property" means all of any Borrower Party's right, title and
interest in and to any and all: (a) securities, whether certificated or
uncertificated; (b) securities entitlements; (c) securities accounts; (d)
commodity contracts; or (e) commodity accounts.
"IRS" means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.
"Knowledge" means, with respect to the Parent or the Administrative
Borrower, as applicable, the best knowledge of the senior executive officers of
the Parent or the Administrative Borrower, as applicable.
"Latest Projections" means the projections most recently received by the
Agent pursuant to Section 5.3(b).
"Lender" and "Lenders" have the meanings specified in the introductory
paragraph hereof.
"LIBOR Rate" means, the six month London Interbank Offered Rate, as
published in the Wall Street Journal (or, if such rate is no longer published in
the Wall Street Journal, in a comparable industry source selected by the Agent)
on the first day of each Interest Period; provided, however, if the first day of
any Interest Period is not a Business Day, then it shall be based on such rate
published on the Business Day immediately preceding such date. In the event that
the LIBOR Rate ceases to be published by the Wall Street Journal or any other
industry publication, the Federal Funds Rate as defined herein shall be
substituted as the applicable rate and all references herein to "LIBOR Rate"
shall mean and refer to the Federal Funds Rate.
"Lien" means: (a) any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, charge, claim, or lien arising from a mortgage, deed of
trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes; (b) to the extent not included
under the preceding clause (a), any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or other title
exception or encumbrance affecting property; and (c) any contingent or other
agreement to provide any of the foregoing.
"Loan Documents" means this Agreement, the Intercreditor Agreement, the
Patent and Trademark Security Agreement, the Copyright Security Agreement,
Security Agreement, the Subsidiary Guaranty, the Pledge Agreement, the Foreign
Pledge Agreements, the Agent Fee letter, and any other agreements, instruments,
and documents heretofore, now or hereafter evidencing, securing, guaranteeing or
otherwise relating to the Obligations, the Collateral, or any other aspect of
the transactions contemplated by
15
this Agreement, in each case as amended, restated, supplemented or otherwise
modified from time to time.
"Loan Parties" means, collectively, the Borrower Parties and the Foreign
Subsidiaries (other than Amalgamated Appliance Holding Limited).
"Loans" means, collectively, all loans and advances provided for in
Article I.
"Majority Lenders" means at any date of determination Lenders whose Pro
Rata Shares aggregate more than fifty percent (50%).
"Margin Stock" means "margin stock" as such term is defined in Regulation
T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Borrower Parties on a consolidated
basis or of the Collateral (b) a material impairment of the ability of the
Borrower Parties, taken as a whole, to perform under any Loan Document or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against any Borrower Party of any Loan Document to which it is a
party.
"Maximum Borrower Liability" has the meaning specified in Section 14.1(b).
"Maximum Rate" has the meaning specified in Section 2.3.
"Multi-employer Plan" means a "multi-employer plan" as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately preceding six (6) years contributed to by any Borrower Party or any
ERISA Affiliate.
"Net Cash Proceeds" means (a) with respect to the sale or issuance by any
Person or any of its Subsidiaries of any shares of its Stock, the aggregate
amount of cash received (directly or indirectly) from time to time (whether as
initial consideration or through the payment or disposition of deferred
consideration) by or on behalf of such Person or such Subsidiary in connection
therewith, after deducting therefrom only (i) reasonable costs and expenses
related thereto incurred by such Person or such Subsidiary in connection
therewith (including, without limitation, legal, accounting and investment
banking fees, and underwriting discounts and commissions), (ii) transfer taxes
paid by such Person or such Subsidiary in connection therewith and (iii) net
income taxes to be paid in connection therewith (after taking into account any
tax credits or deductions and any tax sharing arrangements), and (b) with
respect to any sale or disposition by any Person or any Subsidiary thereof of
property or assets, the amount of Collections received (directly or indirectly)
from time to time (whether as initial consideration or through the payment of
deferred consideration) by or on behalf of such Person or such Subsidiary, in
16
connection therewith after deducting therefrom only (i) the amount of any Debt
secured by any Permitted Lien on any asset (other than (A) Debt owing to Agent
or any Lender under this Agreement or the other Loan Documents and (B) Debt
assumed by the purchaser of such asset) which is required to be, and is, repaid
in connection with such disposition, (ii) reasonable expenses related thereto
incurred by such Person or such Subsidiary in connection therewith, and (iii)
taxes paid or payable to any taxing authorities by such Person or such
Subsidiary in connection therewith, in each case to the extent, but only to the
extent, that the amounts so deducted are, at the time of receipt of such cash,
actually paid or payable to a Person that is not an Affiliate and are properly
attributable to such transaction; in the case of each of clauses (a) and (b), to
the extent, but only to the extent, that the amounts so deducted are (x)
actually paid to a Person that, except in the case of reasonable out-of-pocket
expenses, is not an Affiliate of such Person or any of its Subsidiaries and (y)
properly attributable to such transaction or to the asset that is the subject
thereof, as the case may be.
"Non-Consenting Lender" has the meaning specified in Section 11.1(c).
"Obligations" means all present and future loans, advances, liabilities,
obligations, covenants, duties, and debts owing by the Loan Parties to the
Agent, any other Agent-Related Person and/or any Lender, arising under or
pursuant to this Agreement or any of the other Loan Documents, whether or not
evidenced by any note, or other instrument or document, whether arising from an
extension of credit, acceptance, loan, guaranty, indemnification or otherwise,
whether direct or indirect, absolute or contingent, due or to become due,
primary or secondary, as principal or guarantor, and including all principal,
interest, charges, expenses, fees, attorneys' fees, filing fees and any other
sums chargeable to any Borrower hereunder or under any of the other Loan
Documents.
"originating Lender" has the meaning specified in Section 11.2(e).
"Other Debtor Relief Law" has the meaning specified in Section
14.1(b)(iii).
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Loan Documents.
"Parent" has the meaning specified in the preamble of this Agreement.
"Participant" means any Person who shall have been granted the right by
any Lender to participate in the financing provided by such Lender under this
Agreement, and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender.
"Participant Register" has the meaning specified in Section 11.2(h).
17
"Patent and Trademark Security Agreement" means any Patent Security
Agreement and the Trademark Security Agreement executed and delivered by certain
of the Borrower Parties to the Agent to evidence and perfect the Agent's
security interest in such Borrower Parties' present and future patents,
trademarks, and related licenses and rights, for the benefit of the Agent and
the Lenders.
"Payment Account" means each bank account, including, without limitation,
each lockbox account to which the proceeds of Accounts and other Collateral are
deposited or credited, and which is maintained in the name of a Borrower Party
or, at any time after Agent has taken full dominion over the Payment Accounts,
on terms acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any Governmental
Authority succeeding to the functions thereof.
"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which the Parent or any Subsidiary sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multi-employer Plan has made contributions at
any time during the immediately preceding five (5) plan years.
"Permitted Acquisition" means any acquisition by any Borrower Party of all
or substantially all of the assets or Stock of a Person so long as (a) no
Default or Event of Default exists or would be caused thereby and (b) the
Administrative Borrower delivers evidence to the Agent that Availability (x) for
each of the thirty (30) days most recently ending was not (and after giving
effect to such transaction would not have been) and (y) for each of the thirty
(30) days immediately succeeding such transaction on a pro forma basis (after
giving effect to such transaction) would not be (i) less than (1) $40,000,000
for any day from and after January 1 though June 30 of any year and (2)
$30,000,000 for any day from and after July 1 through December 31 of any year,
Permitted Acquisitions which do not exceed $5,000,000 with respect to any
individual acquisition and (ii) less than (1) $55,000,000 for any day from and
after January 1 though June 30 of any year and (2) $40,000,000 for any day from
and after July 1 through December 31 of any year, Permitted Acquisitions which
exceed $5,000,000 with respect to any individual acquisition; and "Permitted
Acquisitions" means each Permitted Acquisition.
"Permitted Liens" means:
(a) (i) Liens for Taxes not delinquent or (ii) statutory Liens for
Taxes in an amount not to exceed $500,000 (or such greater amount as shall be
covered by a bond); provided that the payment of such taxes which are due and
payable is being contested in good faith and by appropriate proceedings
diligently pursued and as to which adequate financial reserves have been
established on the Parent's and the Subsidiaries' books and records and a stay
of enforcement of any such Lien is in effect;
18
(b) the Agent's Liens;
(c) Liens held by the First Lien Agent or the First Lien Co-Agent,
as agents for the lenders party to the First Lien Credit Agreement, to secure
the First Lien Obligations;
(d) Liens incurred or deposits made in the ordinary course of
business in connection with, or to secure payment of, obligations under worker's
compensation, unemployment insurance, social security and other similar laws, or
to secure the performance of bids, tenders or contracts (other than for the
repayment of Debt) or to secure indemnity, performance or other similar bonds
for the performance of bids, tenders or contracts (other than for the repayment
of Debt) or to secure statutory obligations (other than liens arising under
ERISA or Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds;
(e) Liens securing the claims or demands of materialmen, mechanics,
carriers, repairmen, warehousemen, landlords and other like Persons, so long as
(i) such Liens are subject to a Good-Faith Protest or (ii) with respect to such
Liens arising from the nonpayment of such claims or demand when due, such claims
or demands do not exceed $200,000 in the aggregate (or such greater amount as
shall be covered by a bond);
(f) Liens constituting encumbrances in the nature of reservations,
exceptions, encroachments, easements, rights of way, covenants running with the
land, and other similar title exceptions or encumbrances affecting any Real
Estate; provided that they do not in the aggregate materially detract from the
value of the Real Estate or materially interfere with its use in the ordinary
conduct of any Borrower Party's business;
(g) Liens arising from judgments and attachments in connection with
court proceedings provided that the attachment or enforcement of such Liens
would not result in an Event of Default hereunder and such Liens are being
contested in good faith by appropriate proceedings, adequate reserves have been
set aside and no material Property is subject to a material risk of loss or
forfeiture and the claims in respect of such Liens are fully covered by
insurance (subject to ordinary and customary deductibles) and a stay of
execution pending appeal or proceeding for review is in effect;
(h) Liens securing Capital Leases and purchase money Debt permitted
in Section 7.13;
(i) any Liens on Property of a Person acquired in any Permitted
Acquisition otherwise permitted hereunder; provided that such Liens (i) attach
to assets valued individually or in the aggregate not in excess of $1,000,000
and (b) are existing on the date of such Permitted Acquisition and do not relate
to any other then-existing or after-acquired assets of a Borrower Party
following such Permitted Acquisition; and
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(j) Liens, if any, in effect as of the Closing Date and described in
Schedule E-2.
"Permitted Transaction" means (1) the redemption or other acquisition by
Parent of all or a portion of the Senior Notes, solely in connection with the
Exchange Offer, (2) acquisition by Parent of 2005 Senior Notes solely to the
extent permitted by the First Lien Credit Agreement, (3) the purchase,
prepayment or redemption of the 2005 Senior Notes and/or the 2008 Senior Notes
(and the Term Loan to the extent required by the Credit Agreement to purchase
2008 Senior Notes) solely to the extent permitted by the First Lien Credit
Agreement, and (4) any one or more of the following transactions of a Borrower
Party, on the condition that the Administrative Borrower delivers evidence to
the Agent that no Default or Event of Default then exists and that the
Availability (x) for each of the thirty (30) days most recently ending was not
(and after giving effect to such transaction would not have been) and (y) for
each of the thirty (30) days immediately succeeding such transaction on a pro
forma basis (after giving effect to such transaction) would not be less than (a)
$55,000,000 for any day from and after January 1 through June 30 of any year and
(b) $40,000,000 for any day from and after July 1 through December 31 of any
year,
(i) dividends on capital stock of Parent not to exceed
$3,000,000 in the aggregate during any Fiscal Year;
(ii) the redemption or other acquisitions by Parent of any of
its bonds or capital stock (or any options or warrants for such stock);
and "Permitted Transactions" means each Permitted Transaction.
"Person" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which a Borrower Party sponsors or maintains or to which a Borrower Party
makes, is making, or is obligated to make contributions and includes any Pension
Plan.
"Pledge Agreement" means the Pledge Agreement of even date herewith among
certain of the Borrower Parties party thereto and the Agent for the benefit of
the Agent and the other Lenders.
"Prepayment Triggering Event" has the meaning specified in Section 3.1(c).
"Proprietary Rights" means all of any Borrower Party's now owned and
hereafter arising or acquired: licenses, franchises, permits, patents, patent
rights, copyrights, works which are the subject matter of copyrights,
trademarks, service marks, trade names, trade styles, patent applications,
copyright applications, trademark and service xxxx
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applications, and all licenses and rights related to any of the foregoing,
including those patents, trademarks, service marks, trade names and copyrights
set forth on Schedule 6.12 hereto, and all other rights under any of the
foregoing, all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to xxx for past,
present and future infringement of any of the foregoing.
"Pro Rata Share" means, with respect to a Lender, a fraction (expressed as
a percentage), the numerator of which is the amount of such Lender's Commitment
and the denominator of which is the sum of the amounts of all of the Lenders'
Commitments, or if no Commitments are outstanding, a fraction (expressed as a
percentage), the numerator of which is the amount of Obligations owed to such
Lender and the denominator of which is the aggregate amount of the Obligations
owed to the Lenders.
"Proposed Change" has the meaning specified in Section 11.1(c).
"Real Estate" means all of any Borrower Party's now or hereafter owned or
leased estates in real property, including, without limitation, all fees,
leaseholds and future interests, together with all of such Borrower Party's now
or hereafter owned or leased interests in the improvements thereon, the fixtures
attached thereto and the easements appurtenant thereto.
"Register" has the meaning specified in Section 11.2(g).
"Registered Loan" means any loan recorded on the Register pursuant to
Section 11.2(g).
"Registered Note" has the meaning specified in Section 1.4.
"Related Fund" means any fund or account managed by any Lender or an
Affiliate of any Lender or by the investment manager of any such fund or
account.
"Release" means a release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant
into the indoor or outdoor environment or into or out of any Real Estate or
other property, including the movement of Contaminants through or in the air,
soil, surface water, groundwater or Real Estate or other property.
"Report" has the meaning specified in Section 12.18(a).
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder, other than any such event for which the
thirty (30) day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Required Amount" has the meaning specified in Section 7.31.
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"Required Lenders" means, at any time, (a) the Agent and (b) Lenders whose
Pro Rata Shares aggregate more than sixty-six and two-thirds percent (66-2/3%).
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Responsible Officer" means the corporate comptroller, vice president of
finance, chief financial officer or the president of the Administrative
Borrower, any other officer having substantially the same authority and
responsibility.
"Restricted Investment" means, as to any Borrower Party, any Investment,
except the following: (a) acquisitions of Equipment and intellectual property to
be used in the business of such Borrower Party so long as the acquisition costs
thereof constitute, or are deemed to constitute, Capital Expenditures permitted
hereunder; (b) acquisitions of Inventory in the ordinary course of business of
such Borrower Party; (c) acquisitions of current assets acquired in the ordinary
course of business of the Parent; (d) direct obligations of the United States of
America, or any agency thereof, or obligations guaranteed by the United States
of America, provided that such obligations mature within one year from the date
of acquisition thereof; (e) acquisitions of certificates of deposit maturing
within one year from the date of acquisition, bankers' acceptances, Eurodollar
bank deposits, or overnight bank deposits, in each case issued by, created by,
or with a bank or trust company organized under the laws of the United States of
America or any state thereof having capital and surplus aggregating at least
$1,000,000,000; (f) acquisitions of commercial paper given a rating of "A2" or
better by Standard & Poor's Corporation or "P2" or better by Xxxxx'x Investors
Service, Inc. and maturing not more than ninety (90) days from the date of
creation thereof; and (g) Permitted Acquisitions.
"SEC" means the United States Securities and Exchange Commission and any
successor thereto.
"Security Agreement" means the Security Agreement of even date herewith
among the Borrower Parties and the Agent for the benefit of the Agent and other
Lenders.
"Seller Subordinated Debt" means Debt of the Borrower Parties incurred in
connection with any Permitted Acquisition and initially owing to the seller in
such Permitted Acquisition; provided, that (a) such Debt shall be subordinated,
pursuant to subordination provisions acceptable to the Agent in its sole
discretion and such provisions shall be no less favorable to the Lenders than
the subordination provisions of any existing subordinated debt, to the
obligations of the Borrowers under this Agreement and the other Loan Documents,
(b) such Debt shall mature no less than one hundred eighty (180) days after the
Termination Date and shall have covenants no more restrictive than those set
forth herein and (c) after giving effect to the incurrence of such Debt, no
Default or Event of Default shall be in existence.
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"Senior Notes" means, collectively, those (a) 10 -3/4% Senior Subordinated
Notes Due 2005, issued by the Parent, pursuant to that certain Indenture, dated
as of December 16, 1998 in favor of Xxxxx Fargo Bank Minnesota, N.A., as Trustee
(the "December 16, 1998 Indenture") and (b) 12 -1/4% Senior Subordinated Notes
Due 2008, issued by the Parent, pursuant to that certain Indenture, dated as of
April 23, 2001 in favor of Xxxxx Fargo Bank Minnesota, N.A., as Trustee (the
"April 23, 2001 Indenture" and together with the December 16, 1998 Indenture,
the "Indentures"), as amended, restated, supplemented or otherwise modified from
time to time.
"Silver Point" means Silver Point Finance, LLC, a Delaware limited
liability company.
"Software" means all "software" as such term is defined in the UCC, now
owned or hereafter acquired by any Borrower Party, other than software embedded
in any category of Goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.
"Solvent" means, when used with respect to any Person, that at the time of
determination:
(a) the assets of such Person, at a fair valuation, are in excess of
the total amount of its debts (including contingent liabilities); and
(b) the present fair saleable value of its assets is greater than
its probable liability on its existing debts as such debts become absolute and
matured; and
(c) it is then able and expects to be able to pay its debts
(including contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Specified Transaction" means any one or more of the following
transactions of a Borrower Party, (a) dividends on capital stock of Parent and
(b) the redemption or other acquisitions by Parent of any of its bonds or
capital stock (or any options or warrants for such stock); and "Specified
Transactions" means each Specified Transaction.
"Stated Maturity Date" means March 31, 2008.
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"Stock" means all shares, options, warrants, interests, participations, or
other equivalents (regardless of how designated) of or in a Person, whether
voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Exchange Act).
"Subsidiary" of a Person means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than fifty percent (50%) of the voting stock or other equity interests (in the
case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Parent, including, without
limitation, each Borrower.
"Subsidiary Guaranty" means the Subsidiary Guaranty dated as of the date
hereof, executed and delivered by the Guarantors for the benefit of the Agent
and the Lenders to guarantee the Obligations of the Borrowers under this
Agreement.
"Supporting Obligations" means all "supporting obligations" as such term
is defined in the UCC, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments,
or Investment Property.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by the Agent's or
each Lender's net income in any the jurisdiction (whether federal, state or
local and including any political subdivision thereof) under the laws of which
such Lender or the Agent, as the case may be, is organized or maintains a
lending office.
"Term Loan" has the meaning specified in Section 1.3.
"Term Loan Amount" means the aggregate amount of the Term Loans set forth
on Schedule 1.1 from time to time, but in no event to exceed $110,000,000.
"Termination Date" means the earliest to occur of (i) the Stated Maturity
Date, (ii) the date the Total Facility is terminated by the Borrowers pursuant
to Section 3.2 and (iii) the date this Agreement is otherwise terminated for any
reason whatsoever pursuant to the terms of this Agreement.
"Total Facility" has the meaning specified in Section 1.1.
"2005 Senior Notes" has the meaning set forth in the Recitals to this
Agreement.
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"2008 Senior Notes" has the meaning set forth in the Recitals to this
Agreement.
"UCC" means the Uniform Commercial Code, as in effect from time to time,
of the State of New York or of any other state the laws of which are required as
a result thereof to be applied in connection with the issue of perfection of
security interests; provided, that to the extent that the UCC is used to define
any term herein or in any other documents and such term is defined differently
in different Articles or Divisions of the UCC, the definition of such term
contained in Article or Division 9 shall govern.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"US Adjusted Net Earnings from Operations" means, with respect to any
fiscal period of the Borrowers, the Borrowers' net income on a consolidated
basis after provision for income taxes for such fiscal period, as determined in
accordance with GAAP and reported on the Financial Statements for such period,
excluding any and all of the following included in such net income: (a) gain or
loss arising from the sale of any capital assets; (b) gain arising from any
write up in the book value of any asset or loss arising from any write down in
the book value of any asset other than an asset the value of which is included
in the calculation of the Borrowing Base (as such term is defined in the First
Lien Credit Agreement); (c) earnings or losses of any Person, substantially all
the assets or Stock of which have been acquired by the Borrowers in any manner,
to the extent realized by such other Person prior to the date of acquisition;
(d) earnings or losses of any Person in which any Borrower has a minority
ownership interest unless (and only to the extent) such earnings or losses shall
actually have been received by such Borrower in the form of cash distributions;
(e) earnings or losses of any Person to which assets of any Borrower shall have
been sold, transferred or disposed of, or into which any Borrower shall have
been merged, or which has been a party with any Borrower to any consolidation or
other form of reorganization, prior to the date of such transaction; (f) gain
arising from the acquisition of debt or equity securities of any Borrower or
from cancellation or forgiveness of Debt; (g) gain and non-cash losses arising
from extraordinary items or from any other non-recurring transaction, as
determined in accordance with GAAP; and (h) all restructuring charges incurred
by the Borrowers through October 31, 2004 as described on Schedule E-3.
"WFF" means Xxxxx Fargo Foothill, Inc., a California corporation.
Accounting Terms. Any accounting term used in the Agreement shall have,
unless otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations in the Agreement shall be
computed, unless otherwise specifically provided therein, in accordance with
GAAP as consistently applied and using the same method for inventory valuation
as used in the preparation of the Financial Statements.
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Interpretive Provisions. (a) The meanings of defined terms are equally
applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words
refer to the Agreement as a whole and not to any particular provision of the
Agreement; and Subsection, Section, Schedule and Exhibit references are to the
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(i) The term "including" is not limiting and means "including
without limitation."
(ii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including," the
words "to" and "until" each mean "to but excluding" and the word "through" means
"to and including."
(iii) The word "or" is not exclusive.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including the Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of the Agreement and other Loan
Documents are for convenience of reference only and shall not affect the
interpretation of the Agreement.
(f) The Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) For purposes of Section 9.1, a breach of the financial covenants
referenced in Section 7.23 shall be deemed to have occurred as of any date of
determination thereof by the Majority Lenders or as of the last day of any
specified measuring period, regardless of when the Financial Statements
reflecting such breach are delivered to the Agent.
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(h) The Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Lenders,
the Borrower Parties and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the Agent merely
because of the Agent's or Lenders' involvement in their preparation.
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