Exhibit 10.1
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Second Amendment to Loan and Security Agreement, dated as of
June 30, 2004 (this "Amendment"), is entered into by and among Jacuzzi Brands,
Inc., a Delaware corporation ("Parent"), the other borrowers named on the
signature page hereto (together with Parent, each a "Borrower" and,
collectively, "Borrowers"), Fleet Capital Corporation, a Rhode Island
corporation, as administrative agent and collateral agent (in such capacity,
"Administrative Agent") under the Loan and Security Agreement referred to below,
Silver Point Finance, LLC, as agent for the Term Loan B Lenders (in such
capacity, "Term Loan B Agent") under the Loan and Security Agreement referred to
below, the Revolving Credit Lenders under the Loan and Security Agreement
referred to below and the Term Loan B Lenders under the Loan and Security
Agreement referred to below.
RECITALS
A. Borrowers, Administrative Agent, Term Loan B Agent, the Revolving
Credit Lenders and the Term Loan B Lenders are parties to that certain Loan and
Security Agreement, dated as of July 15, 2003 (as amended by the First Amendment
thereto, dated as of October 10, 2003 and as from time to time hereafter further
amended, restated, supplemented or otherwise modified and in effect, the "Loan
Agreement"), pursuant to which the Revolving Credit Lenders and the Term Loan B
Lenders have made and the Revolving Credit Lenders will hereafter continue to
make loans and advances and other extensions of credit to Borrowers.
B. Borrowers, Administrative Agent, Term Loan B Agent, the Revolving
Credit Lenders and the Term Loan B Lenders desire to amend the Loan Agreement as
and to the extent set forth herein and pursuant to, and subject to, the terms
and conditions set forth in this Amendment.
C. This Amendment shall constitute a Loan Document and these Recitals
shall be construed as part of this Amendment. Capitalized terms used herein
without definition are so used as defined in the Loan Agreement and Appendix A
thereto.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained and the Revolving Credit Lenders and Term Loan B
Lenders continuing to make Loans available under the terms of the Loan Agreement
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Amendments to Loan Agreement. The Loan Agreement is hereby amended as
follows:
1.1. Definitions.
(a) The definition of the term "Consolidated Excess Cash Flow" is
hereby deleted from Appendix A of the Loan Agreement.
(b) The definitions of the following terms in Appendix A of the
Loan Agreement are hereby amended in their entirety to read as follows:
"Base Rate Loan - (i) any Revolving Credit Loan or Swing Line Loan
which bears interest at a rate determined with reference to the Revolving
Credit Base Rate and (ii) all or any portion of the Term Loan B which
bears interest at a rate determined with reference to the Term Loan B Base
Rate."
"Interest Payment Date - (i) as to any Base Rate Loan, the first day
of each month, and (ii) as to any LIBOR Loan, the last day of each
Interest Period applicable to such LIBOR Loan; provided, however, that if
any Interest Period for a LIBOR Loan exceeds three months, the date that
falls three months after the beginning of such Interest Period and after
each Interest Payment Date thereafter is also an Interest Payment Date."
"LIBOR Loan - any Loan which bears interest at a rate determined
with reference to the LIBOR."
"LIBOR Option - the option granted pursuant to Section 3.1 of the
Agreement to have the interest on all or any portion of the principal
amount of any Loans based on the LIBOR."
"LIBOR Request - a notice in writing (or by telephone confirmed
electronically or by telecopy or other facsimile transmission on the same
day as the telephone request) from Borrower Representative to
Administrative Agent requesting that interest on a Revolving Credit Loan
or all or a portion of the Term Loan B be based on the LIBOR, specifying:
(i) the first day of the Interest Period (which shall be a Business Day);
(ii) the length of the Interest Period; (iii) whether the LIBOR Loan is a
new Loan, a conversion of a Base Rate Loan, or a continuation of a LIBOR
Loan, and (iv) the dollar amount of the LIBOR Loan, which shall be in an
amount not less than $1,000,000 or an integral multiple of $100,000 in
excess thereof."
1.2. Interest on Term Loan B. Section 2.1.2 of the Loan Agreement is
hereby amended in its entirety to read as follows:
"2.1.2 Term Loan B.
(a) Interest shall accrue on all or a portion of the principal
amount of the Term Loan B that is a Base Rate Loan outstanding at the end
of each day at a fluctuating rate per annum equal to the Term Loan B Base
Rate plus three and one-quarter percent (3.25%). Such rate of interest
shall increase or decrease by an amount equal to any increase or decrease
in the Term Loan B Base Rate, effective as of the opening of business on
the day that any such change in the Term Loan B Base Rate occurs.
(b) If Borrower Representative exercises the LIBOR Option as
provided in Section 3.1 with respect to all or a portion of the Term Loan
B,
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interest shall accrue on that portion of the Term Loan B that is a LIBOR
Loan outstanding at the end of each day at a rate per annum equal to the
LIBOR applicable to such LIBOR Loan for the corresponding Interest Period
plus five percent (5.00%)."
1.3. Reimbursement of Expenses. The second sentence of Section 2.8 of the
Loan Agreement is hereby amended in its entirety to read as follows:
"All amounts chargeable to Borrowers under this Section 2.8 shall be
Obligations secured by all of the Collateral, shall be payable on demand
to Administrative Agent, Term Loan B Agent or such Lender, as the case may
be, and, unless earlier charged as a Revolving Credit Loan, shall bear
interest from the date 7 Business Days after such demand is made until
paid in full at the rate applicable to Base Rate Loans or, in the case of
amounts relating to the Term Loan B, the rate applicable to that portion
of the Term Loan B that is a Base Rate Loan, from time to time."
1.4. Reimbursement of Charges. Section 2.11 of the Loan Agreement is
hereby amended in its entirety to read as follows:
"2.11 Payment of Charges. All amounts chargeable to Borrowers under this
Agreement shall be Obligations secured by all of the Collateral, shall be,
unless specifically otherwise provided, payable on demand and shall bear
interest from the date demand was made or such amount is due, as
applicable, until paid in full at the rate applicable to Base Rate Loans
or, in the case of amounts relating to the Term Loan B, the rate
applicable to that portion of the Term Loan B that is a Base Rate Loan,
from time to time."
1.5. Conversion of Base Rate Loans. The first sentence of Section 3.1.8
of the Loan Agreement is hereby amended in its entirety to read as follows:
"Provided that as of both the date of the LIBOR Request and the first day
of the Interest Period, no Default or Event of Default exists or, if a
Default or Event of Default exists, neither Administrative Agent nor
Majority Revolving Credit Lenders (with respect to Revolving Credit Loans)
or Majority Term Loan B Lenders (with respect to the Term Loan B) have
elected to suspend the LIBOR Option during the continuance of such Default
or Event of Default, Borrower Representative may, on any Business Day,
convert any Base Rate Loan into a LIBOR Loan."
1.6. Continuation of LIBOR Loans. The first sentence of Section 3.1.9 of
the Loan Agreement is hereby amended in its entirety to read as follows:
"Provided that as of both the date of the LIBOR Request and the first day
of the Interest Period, no Default or Event of Default exists or, if a
Default or Event of Default exists, neither Administrative Agent nor
Majority Revolving Credit Lenders (with respect to Revolving Credit Loans)
or Majority Term Loan B Lenders (with respect to the Term Loan B) have
elected to suspend the LIBOR
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Option during the continuance of such Default or Event of Default,
Borrower Representative may, on any Business Day, continue any LIBOR Loans
into a subsequent Interest Period of the same or a different permitted
duration."
1.7. Inability to Make LIBOR Loans. Section 3.1.10 of the Loan Agreement
is hereby amended by deleting each reference to "Revolving Credit Lender" and
"Revolving Credit Lenders" therein and substituting in lieu thereof the terms
"Lender" and "Lenders", respectively.
1.8. Payments; Principal; Term Loan B. Section 3.2.1(b) of the Loan
Agreement is hereby amended in its entirety to read as follows:
"(b) Term Loan. Subject to the provisions of Section 3.4 hereof,
the outstanding unpaid principal amount and all accrued and unpaid
interest under the Term Loan B shall be due and payable on the earliest of
(i) July 15, 2009, (ii) subject to the provisions of subsection 10.2.3,
the acceleration of the Term Loan B after an Event of Default and (iii)
unless Borrowers shall have entered into a replacement or extension
revolving credit facility that is projected to provide for unused
borrowing base availability thereunder of not less than $20,000,000 at all
times, the termination of the Revolving Credit Facility."
1.9. Prepayment of/Failure to Borrow LIBOR Loans. Section 3.2.5 of the
Loan Agreement is hereby amended as follows:
(a) Section 3.2.5 of the Loan Agreement (other than the last
sentence thereof) is hereby amended by deleting each reference to the terms
"Revolving Credit Lender" and "Revolving Credit Lenders" therein and
substituting in lieu thereof the terms "Lender" and "Lenders", respectively.
(b) The last sentence of Section 3.2.5 of the Loan Agreement is
hereby amended in its entirety to read as follows:
"If by reason of an Event of Default, Administrative Agent or Majority
Revolving Credit Lenders elect to declare the Obligations to be
immediately due and payable or Administrative Agent exercises enforcement
rights and remedies against Borrowers at the direction of Term Loan B
Agent pursuant to Section 10.2.3, then any yield maintenance fee that
would be payable with respect to a LIBOR Loan shall become due and payable
in the same manner as though Borrowers had exercised such right of
prepayment on the date that the Obligations are declared immediately due
and payable."
1.10. Mandatory and Optional Prepayments; Consolidated Excess Cash Flow
Recapture. Section 3.3.2 of the Loan Agreement is hereby amended in its entirety
to read as follows:
"3.3.2 Intentionally Omitted."
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1.11. Basis for Determining Interest Rate Inadequate. Section 3.9 of the
Loan Agreement is hereby amended by deleting each reference to the term
"Revolving Credit Lender" therein and substituting in lieu thereof the term
"Lender".
1.12. Exhibit 8.3. Exhibit 8.3 of the Loan Agreement is hereby amended by
deleting such Exhibit in its entirety and substituting in lieu thereof new
Exhibit 8.3, which is attached hereto as Annex I.
2. Representations and Warranties.
2.1. The execution, delivery and performance of this Amendment have been
or will be duly authorized by all necessary corporate or other relevant action
and do not and will not (i) contravene the charter, articles or certificate of
incorporation, memorandum of association, partnership agreement, certificate of
formation, by-laws, limited liability agreement, operating agreement or other
organizational documents (as the case may be) of any Borrower or any of its
Subsidiaries; (ii) violate, or cause any Borrower or any of its Subsidiaries to
be in default under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to any Borrower or any of its Subsidiaries, the violation of which
could reasonably be expected to have a Material Adverse Effect; (iii) result in
a breach of or constitute a default under any indenture or loan or credit
agreement, including, without limitation, the New Senior Secured Notes
Indenture, or any other agreement, lease or instrument to which any Borrower or
any of its Subsidiaries is a party or by which it or its Properties may be bound
or affected, the breach of or default under which could reasonably be expected
to have a Material Adverse Effect; or (iv) result in, or require, the creation
or imposition of any Lien (other than Permitted Liens) upon or with respect to
any of the Properties now owned or hereafter acquired by any Borrower or any of
its Subsidiaries.
2.2. This Amendment is a legal, valid and binding obligation of each
Borrower and each of its Subsidiaries party hereto, enforceable against it in
accordance with its respective terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other laws
affecting creditors' rights generally, and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
3. Conditions to Effectiveness. The effectiveness of this Amendment is
expressly conditioned upon the satisfaction of each of the following conditions
precedent in a manner acceptable to Administrative Agent:
3.1. Administrative Agent's receipt of counterparts of this Amendment,
duly executed by Borrowers, Agents and Lenders, and duly acknowledged by each of
the Guarantors.
3.2. After giving effect to this Amendment, no Default or Event of
Default shall have occurred and be continuing or would result from the
effectiveness of this Amendment or the consummation of any of the transactions
contemplated hereby.
4. Reference to and Effect Upon the Loan Agreement and other Loan Documents.
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4.1. The Loan Agreement, the Notes and each other Loan Document shall
remain in full force and effect and each is hereby ratified and confirmed by
Borrowers and each other Loan Party. Without limiting the foregoing, the Liens
granted pursuant to the Security Documents shall continue in full force and
effect and the guaranties of the Guarantors shall continue in full force and
effect.
4.2. The execution, delivery and effect of this Amendment shall be
limited precisely as written and shall not be deemed to (a) be a consent to any
waiver of any term or condition of, or to any amendment or modification of, any
term or condition (except as specifically set forth herein) of the Loan
Agreement or any other Loan Document or (b) prejudice any right, power or remedy
which the Administrative Agent or any Lender now has or may have in the future
under or in connection with the Loan Agreement, the Notes or any other Loan
Document.
4.3. Each reference in the Loan Agreement to "this Agreement",
"hereunder", "hereof", "herein" or any other word or words of similar import
shall mean and be a reference to the Loan Agreement as amended hereby, and each
reference in any other Loan Document to the Loan Agreement or any word or words
of similar import shall be and mean a reference to the Loan Agreement as amended
hereby.
5. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but all
such counterparts shall constitute one and the same instrument. A counterpart
signature page delivered by fax transmission shall be as effective as delivery
of an originally executed counterpart.
6. Costs and Expenses. As provided in Section 2.8 of the Loan Agreement,
Borrowers shall pay the fees, costs and expenses incurred by Administrative
Agent and Term Loan B Agent in connection with the preparation, execution and
delivery of this Amendment (including, without limitation, reasonable attorneys'
fees).
7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF NEW YORK.
8. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, this Amendment has been duly executed as of the
date first written above.
BORROWERS:
JACUZZI BRANDS, INC.
BATHCRAFT, INC.
ELJER PLUMBINGWARE, INC.
GATSBY SPAS, INC.
JACUZZI, INC.
JUSI HOLDINGS, INC.
REDMONT, INC.
REXAIR, INC.
SUNDANCE SPAS, INC.
XXXX PEX, INC.
USI AMERICAN HOLDINGS, INC.
USI GLOBAL CORP.
ZURCO, INC.
XXXX INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
SECOND AMENDMENT TO JACUZZI BRANDS LOAN AGREEMENT
Each of the undersigned Guarantors hereby acknowledges the foregoing
Second Amendment to Loan and Security Agreement and ratifies and confirms that
each of the Loan Documents to which it is a party shall remain in full force and
effect.
GUARANTORS:
Asteria Company (f/k/a Elite Bath Company)
Xxxxxx Brothers Inc.
Xxxxxxxx Manufacturing Corp. (f/k/a Farberware
Inc.)
Carlsbad Corp. (f/k/a Odyssey Sports, Inc.)
Compax Corp.
Eljer Industries, Inc.
Environmental Energy Company
Xxxx Concrete Products, Inc.
HL Capital Corp.
Jacuzzi Whirlpool Bath, Inc.
KLI, Inc. (f/k/a Xxxxxx Ladders, Inc.)
Krikles Canada U.S.A., Inc. (f/k/a Selkirk Canada
U.S.A., Inc.)
Krikles Europe U.S.A., Inc. (f/k/a Selkirk Europe
U.S.A., Inc.)
Krikles, Inc. (f/k/a Selkirk, Inc.)
Lokelani Development Corporation
Luxor Industries Inc.
Maili Kai Land Development Corporation
Mobilite, Inc.
Xxxxxx Universal Holdings Inc.
Outdoor Products LLC
PH Property Development Company
PLC Realty Inc. (f/k/a Prescolite Lite Controls, Inc.)
Rexair Holdings, Inc.
Sanitary - Dash Manufacturing Co., Inc.
SH 1 Inc.
Strategic Capital Management, Inc.
Strategic Membership Company
Streamwood Corporation (f/k/a Quantum
Performance Films, Inc.)
TA Liquidation Corp. (f/k/a Xxxxx Xxxxxx Golf
Company)
Trimfoot Co.
TT Liquidation Corp.
UGE Liquidation Inc. (f/k/a W.K. 25, Inc.)
USI Atlantic Corp.
USI Capital, Inc.
USI Funding, Inc.
SECOND AMENDMENT TO JACUZZI BRANDS LOAN AGREEMENT
USI Properties, Inc.
USI Realty Corp.
Xxxx (Cayman Islands), Inc.
Xxxx Constructors, Inc. (f/k/a Advanco
Constructors, Inc.)
Xxxx XXX Services, Inc. (f/k/a National Energy
Production Corporation)
Zurnacq of California, Inc.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
JBI HOLDINGS LIMITED
By: /s/ Xxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Director
By: /s/ Xxxxxxx X. Park
-----------------------------------------
Name: Xxxxxxx X. Park
Title: Director
SECOND AMENDMENT TO JACUZZI BRANDS LOAN AGREEMENT
FLEET CAPITAL CORPORATION, as
Administrative Agent and as a Revolving
Credit Lender
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
SECOND AMENDMENT TO JACUZZI BRANDS LOAN AGREEMENT
SILVER POINT FINANCE, LLC, as Term Loan
B Agent
By: /s/ Xxxxxx X. Xxxxxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title:
SECOND AMENDMENT TO JACUZZI BRANDS LOAN AGREEMENT
TRS THEBE LLC, as a Term Loan B Lender
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Vice President
SECOND AMENDMENT TO JACUZZI BRANDS LOAN AGREEMENT
XXXXXXX CAPITAL LTD., as a Term
Loan B Lender
By: Citadel Limited Partnership, Portfolio Manager
By: GLB Partners, L.P., its General Partner
By: Citadel Investment Group, L.L.C,
its General Partner
By: /s/ Xxxx Xxxxxx
----------------------------------------------
Name: Xxxx Xxxxxx
Title: General Counsel
SECOND AMENDMENT TO JACUZZI BRANDS LOAN AGREEMENT
CYPRESS POINT TRADING LLC, as a Term
Loan B Lender
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Name: Xxxxx X. Xxxxx
Title: Assistant Vice President
SECOND AMENDMENT TO JACUZZI BRANDS LOAN AGREEMENT
CREDIT SUISSE FIRST BOSTON, acting
through its Cayman Islands Branch, as a
Revolving Credit Lender
By: /s/ Xxxxxxx Xx
--------------------------------
Name: Xxxxxxx Xx
Title: Director
By: /s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
Title: Associate
SECOND AMENDMENT TO JACUZZI BRANDS LOAN AGREEMENT
BANK ONE, NA, as a Revolving Credit Lender
By: /s/ Xxxxx Xxxxxx
--------------------------------
Name: Xxxxx Xxxxxx
Title: Associate Director
SECOND AMENDMENT TO JACUZZI BRANDS LOAN AGREEMENT
UBS AG, STAMFORD BRANCH, as a Revolving
Credit Lender
By: /s/ Xxxxxxxx X'Xxxxx
--------------------------------
Name: Xxxxxxxx X'Xxxxx
Title: Director
By: /s/ Xxxxx Xxxx
--------------------------------
Name: Xxxxx Xxxx
Title: Associate Director
SECOND AMENDMENT TO JACUZZI BRANDS LOAN AGREEMENT
HSBC BUSINESS CREDIT (USA), INC., as a
Revolving Credit Lender
By: /s/ Xxx Byeno
--------------------------------
Name: Xxx Byeno
Title: Vice President
SECOND AMENDMENT TO JACUZZI BRANDS LOAN AGREEMENT
LASALLE BUSINESS CREDIT, LLC., as a
Revolving Credit Lender
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President
SECOND AMENDMENT TO JACUZZI BRANDS LOAN AGREEMENT
THE CIT GROUP/BUSINESS CREDIT, INC., as
a Revolving Credit Lender
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Name: Xxxxxx Xxxxxx
Title: AVP
SECOND AMENDMENT TO JACUZZI BRANDS LOAN AGREEMENT
XXXXXXX BUSINESS CREDIT
CORPORATION, as a Revolving Credit Lender
By: /s/ Xxxx Xxxxxx
--------------------------------
Name: Xxxx Xxxxxx
Title: Asst. Vice President
SECOND AMENDMENT TO JACUZZI BRANDS LOAN AGREEMENT
ANNEX 1
EXHIBIT 8.3
FINANCIAL COVENANTS
DEFINITIONS
CONSOLIDATED EBITDA - for any period, the sum, without duplication,
of the amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) provisions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense, (vi) all unusual expenses
and all other non-capitalized restructuring expenses (including costs and
expenses attributable to employee severance obligations and facility
consolidation costs) for such period to the extent not disallowed by
Administrative Agent and Term Loan B Agent in their sole discretion, and (vii)
other non-cash items (other than any such non-cash item to the extent that it
represents an accrual of or reserve for cash expenditures in any future period),
less other non-cash items added in the calculation of Consolidated Net Income
(other than any such non-cash item to the extent that it will result in the
receipt of cash payments in any future period), all of the foregoing as
determined on a Consolidated basis for Parent and its Subsidiaries in conformity
with GAAP; provided, that (a) in the event any Loan Party makes an acquisition
of any Person or any division or any business unit permitted hereunder or
consented to by the Lenders holding the requisite amount of Obligations set
forth in Section 11.10 during such period, if Parent provides Administrative
Agent and Lenders financial statements with respect to the business so acquired
(which financial statements shall have been audited by one of the "Big 4"
accounting firms or another nationally recognized accounting firm reasonably
satisfactory to Administrative Agent or financial statements otherwise
satisfactory to Administrative Agent) reasonably satisfactory to Majority
Lenders, Consolidated EBITDA for such period shall be calculated on a pro forma
basis, taking into account the elimination of non-recurring expenses, based on
the results of such acquired Person or acquired assets as if such acquisition
had occurred on the first day of such period, and (b) in the event any Loan
Party makes a disposition permitted under subsection 8.2.9 (or any other
disposition of any Person or any division or any business unit permitted
hereunder or consented to by the Lenders holding the requisite amount of
Obligations set forth in Section 11.10) during such period, Consolidated EBITDA
for such period shall be calculated on a pro forma basis, based on the results
of such disposed Person or disposed assets as if such disposition had occurred
on the first day of such period. The foregoing notwithstanding, Consolidated
EBITDA for: (i) the fiscal quarter ended December 31, 2002 shall be deemed to
equal to $21,720,000; and (ii) for the fiscal quarter ended March 31, 2003 shall
be deemed to equal to $30,922,000.
CONSOLIDATED FIXED CHARGE COVERAGE RATIO - for any period, the ratio
of (i) Consolidated EBITDA, for such period minus (x) the sum of (a) any
positive provision for income taxes (excluding deferred tax charges) included in
the determination of net earnings (or loss) for such period plus (b)
non-financed Capital Expenditures during such period, plus (c) non-financed
Permitted Investments plus (d) cash payments made within the applicable period
for non-capitalized restructuring expenses, including costs and expenses
attributed to employee severance obligations and facility consolidation costs,
but specifically excluding cash restructuring payments made on or before
September 30, 2003 which were accrued or committed
Exhibit 8.3 - Page 1
to be paid on or before the Closing Date as set forth on Schedule I to this
Exhibit 8.3, plus (y) without double counting under clause (vi) of the
definition of Consolidated EBITDA, in the fiscal years ended on or about
September 30, 2004 and September 30, 2005, respectively, Eljer restructuring
expenses not to exceed $2,500,000 in any fiscal quarter during either such
fiscal year (which amount if and to the extent not so included in such a fiscal
quarter may be carried forward to any other fiscal quarter in such fiscal year),
not to exceed $10,000,000 in the aggregate for each of such fiscal years and not
to exceed $20,000,000 in the aggregate for both of such fiscal years combined,
to (ii) Consolidated Fixed Charges for such period, all as determined for the
Parent and its Subsidiaries in accordance with GAAP.
CONSOLIDATED FIXED CHARGES - with respect to any period, the sum of:
(i) scheduled principal payments required to be made during such period in
respect to Indebtedness for Money Borrowed (including the principal portion of
Capitalized Lease Obligations) plus (ii) scheduled reductions of the Trademark
Advance Limit under the Revolving Credit Facility plus (iii) Consolidated
Interest Expense for such period, all determined for Parent and its Subsidiaries
on a Consolidated basis and in accordance with GAAP.
CONSOLIDATED LEVERAGE RATIO, as at any date, the ratio of (a)
Consolidated Total Debt as at such date to (b) Consolidated EBITDA for the
consecutive four fiscal quarters ending on the last day of the most recently
ended fiscal quarter.
CONSOLIDATED INTEREST EXPENSE - for any period, (i) total interest
expense of Parent and its Subsidiaries on a Consolidated basis with respect to
all outstanding Indebtedness of Parent and its Subsidiaries, including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and net costs
under interest rate agreements, but excluding amortization of capitalized
financing costs related to the transactions which closed on the Closing Date
minus (ii) total interest income.
CONSOLIDATED NET INCOME, for any period, the net income (or loss) of
Parent and its Subsidiaries on a Consolidated basis for such period taken as a
single accounting period determined in conformity with GAAP; provided that there
shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of Parent) in which any other Person (other than Parent or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Parent or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Parent or is merged
into or consolidated with Parent or any of its Subsidiaries or that Person's
assets are acquired by Parent or any of its Subsidiaries, (iii) the income of
any Subsidiary of Parent to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, (v) any LIFO
reserves to the extent such LIFO reserves decrease or increase net income, and
(vi) (to the extent not included in clauses (i) through (v) above) any net
extraordinary gains or net extraordinary losses.
CONSOLIDATED TOTAL DEBT - means as at any date of determination, the
aggregate stated balance sheet amount (which shall include the face amount of
undrawn Letters of Credit)
Exhibit 8.3 - Page 2
of all Money Borrowed of Parent and its Subsidiaries on the last day of the most
recently ended fiscal quarter, determined on a Consolidated basis in accordance
with GAAP.
Exhibit 8.3 - Page 3
COVENANTS
CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Borrowers shall not permit
the Consolidated Fixed Charge Coverage Ratio as of any date set forth below to
be less than the amount opposite such date:*
PERIOD RATIO
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For the Quarter ended September 30, 2003 1.00 to 1.0
For the Two Quarters ended December 31, 2003 1.00 to 1.0
For the Three Quarters ended March 31, 2004 1.00 to 1.0
For the Four Quarters ended June 30, 2004 and September 30, 2004 1.05 to 1.0
For the Four Quarters ended December 31, 2004 and March 31, 2005 1.10 to 1.0
For the Four Quarters ended June 30, 2005 and each September 30,
December 31, March 31, and June 30 thereafter 1.15 to 1.0
--------
* To be tested at the end of each fiscal quarter of Parent and its
Subsidiaries during which Availability at any time during such fiscal quarter
is less than $20,000,000 and as of the end of the fiscal quarter ending
immediately prior to such fiscal quarter.
Exhibit 8.3 - Page 4
SCHEDULE I TO EXHIBIT 8.3
CASH RESTRUCTURING PAYMENTS TO BE EXCLUDED FROM CONSOLIDATED
FIXED CHARGE COVERAGE RATIO
Jacuzzi Inc closure & corporate restructuring:
Severance 3,427,387
Xxx Jacuzzi SERP 900,000
Relocation costs for Company personnel 550,000
Retained search and relocation costs for new positions 350,000
Abandoned lease 198,873
Name change and other costs 707,773
----------
Jacuzzi Inc restructure accrual 6,134,033
B&P corporate office closure 71,398
Dallas lease 7,433,546
----------
Balance accrued as of June 2003 13,638,977
----------
Additional amounts committed - not accrued
Severance 632,352
Name change and other costs 342,227
----------
974,579
----------
Total committed 14,613,556
==========
Exhibit 8.3 - Page 5
