[EXECUTION FINAL]
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
BY AND AMONG
FEDDERS NORTH AMERICA, INC.
COLUMBIA SPECIALTIES, INC.
XXXXXXX QUIET KOOL CORPORATION
TRION, INC.
ENVIRCO CORPORATION
FEDDERS XXXXXX COMPANY, INC.
FEDDERS ADDISON COMPANY, INC.
FEDDERS ISLANDAIRE, INC.
ISLAND METAL FABRICATING, INC.
AS BORROWERS
AND
FEDDERS CORPORATION
FEDDERS INTERNATIONAL, INC.
FEDDERS INVESTMENT CORPORATION
FEDDERS, INC.
ROTOREX COMPANY, INC.
HERRMIDIFIER COMPANY, INC.
AS GUARANTORS
THE LENDERS AND ISSUING BANK FROM TIME TO TIME PARTY HERETO
WACHOVIA BANK, NATIONAL ASSOCIATION
AS ADMINISTRATIVE AGENT
WACHOVIA CAPITAL MARKETS, LLC
AS SOLE LEAD ARRANGER, MANAGER AND BOOKRUNNER
AND
THE CIT GROUP BUSINESS CREDIT, INC.
AS DOCUMENTATION AGENT
DATED: JANUARY 31, 2006
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS.................................................. 1
SECTION 2. CREDIT FACILITIES............................................ 32
2.1 Loans........................................................ 32
2.2 Letters of Credit............................................ 33
2.3 Term Loans................................................... 36
2.4 Commitments.................................................. 37
SECTION 3. INTEREST AND FEES............................................ 37
3.1 Interest..................................................... 37
3.2 Fees......................................................... 39
3.3 Changes in Laws and Increased Costs of Loans................. 39
SECTION 4. CONDITIONS PRECEDENT......................................... 41
4.1 Conditions Precedent to Initial Loans and Letters of Credit.. 41
4.2 Conditions Precedent to All Loans and Letters of Credit...... 43
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST.................... 43
5.1 Grant of Security Interest................................... 43
5.2 Perfection of Security Interests............................. 45
SECTION 6. COLLECTION AND ADMINISTRATION................................ 48
6.1 Borrowers' Loan Accounts..................................... 48
6.2 Statements................................................... 49
6.3 Collection of Accounts....................................... 49
6.4 Payments..................................................... 50
6.5 Taxes........................................................ 51
6.6 Authorization to Make Loans.................................. 53
6.7 Use of Proceeds.............................................. 53
6.8 Appointment of Administrative Borrower as Agent for
Requesting Loans and Receipts of Loans and Statements........ 54
6.9 Pro Rata Treatment........................................... 54
6.10 Sharing of Payments, Etc..................................... 55
6.11 Settlement Procedures........................................ 56
6.12 Obligations Several; Independent Nature of Lenders' Rights... 58
6.13 Bank Products................................................ 58
(i)
SECTION 7. COLLATERAL REPORTING AND COVENANTS........................... 58
7.1 Collateral Reporting......................................... 58
7.2 Accounts Covenants........................................... 60
7.3 Inventory Covenants.......................................... 60
7.4 Equipment and Real Property Covenants........................ 62
7.5 Power of Attorney............................................ 62
7.6 Right to Cure................................................ 63
7.7 Access to Premises........................................... 63
SECTION 8. REPRESENTATIONS AND WARRANTIES............................... 64
8.1 Corporate Existence, Power and Authority..................... 64
8.2 Name; State of Organization; Chief Executive Office;
Collateral Locations......................................... 64
8.3 Financial Statements; No Material Adverse Change............. 65
8.4 Priority of Liens; Title to Properties....................... 65
8.5 Tax Returns.................................................. 66
8.6 Litigation................................................... 66
8.7 Compliance with Other Agreements and Applicable Laws......... 66
8.8 Environmental Compliance..................................... 66
8.9 Employee Benefits............................................ 67
8.10 Bank Accounts................................................ 68
8.11 Intellectual Property........................................ 68
8.12 Subsidiaries; Affiliates; Capitalization; Solvency........... 69
8.13 Labor Disputes............................................... 69
8.14 Restrictions on Subsidiaries................................. 69
8.15 Material Contracts........................................... 70
8.16 Payable Practices............................................ 70
8.17 Accuracy and Completeness of Information..................... 70
8.18 Survival of Warranties; Cumulative........................... 70
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS........................... 70
9.1 Maintenance of Existence..................................... 70
9.2 New Collateral Locations..................................... 71
9.3 Compliance with Laws, Regulations, Etc....................... 71
9.4 Payment of Taxes and Claims.................................. 72
9.5 Insurance.................................................... 72
9.6 Financial Statements and Other Information................... 72
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc...... 75
9.8 Encumbrances................................................. 77
9.9 Indebtedness................................................. 78
9.10 Loans, Investments, Etc...................................... 80
9.11 Dividends and Redemptions.................................... 82
9.12 Transactions with Affiliates................................. 82
9.13 Compliance with ERISA........................................ 83
9.14 End of Fiscal Years; Fiscal Quarters......................... 83
(ii)
9.15 Change in Business........................................... 83
9.16 Limitation of Restrictions Affecting Subsidiaries............ 84
9.17 Consolidated EBITDA.......................................... 84
9.18 [Intentionally Omitted]...................................... 84
9.19 License Agreements........................................... 84
9.20 Foreign Assets Control Regulations, Etc...................... 85
9.21 After Acquired Real Property................................. 86
9.22 Costs and Expenses........................................... 86
9.23 Further Assurances........................................... 87
9.24 Financial Consultant......................................... 87
9.25 Amendment with respect to Fedders Canada as Borrower......... 87
SECTION 10. EVENTS OF DEFAULT AND REMEDIES............................... 87
10.1 Events of Default............................................ 87
10.2 Remedies..................................................... 89
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
GOVERNING LAW................................................ 93
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver............................................ 93
11.2 Waiver of Notices............................................ 94
11.3 Amendments and Waivers....................................... 94
11.4 Waiver of Counterclaims...................................... 96
11.5 Indemnification.............................................. 96
SECTION 12. THE AGENT.................................................... 97
12.1 Appointment, Powers and Immunities........................... 97
12.2 Reliance by Agent............................................ 98
12.3 Events of Default............................................ 98
12.4 Wachovia in its Individual Capacity.......................... 98
12.5 Indemnification.............................................. 99
12.6 Non-Reliance on Agent and Other Lenders...................... 99
12.7 Failure to Act............................................... 99
12.8 Additional Loans............................................. 100
12.9 Concerning the Collateral and the Related
Financing Agreements......................................... 100
12.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders........................................ 100
12.11 Collateral Matters........................................... 101
12.12 Agency for Perfection........................................ 103
12.13 Successor Agent.............................................. 103
12.14 Other Agent Designations..................................... 103
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS............................. 103
13.1 Term......................................................... 103
13.2 Interpretative Provisions.................................... 105
13.3 Notices...................................................... 107
(iii)
13.4 Partial Invalidity........................................... 108
13.5 Confidentiality.............................................. 108
13.6 Successors................................................... 109
13.7 Assignments; Participations.................................. 109
13.8 Entire Agreement............................................. 111
13.9 USA Patriot Act.............................................. 112
13.10 Waiver of Consolidated Working Capital Default............... 112
13.11 Amendment and Restatement; No Extinguishment................. 112
13.12 Counterparts, Etc............................................ 113
(iv)
INDEX
TO
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment and Acceptance
Exhibit B Information Certificate
Exhibit C Form of Compliance Certificate
Exhibit 7.1(a)(vi) Form of Loan Availability Report
Schedule I Guarantors
Schedule 1.9 Applicable Percentages
Schedule 1.53 Existing Letters of Credit
Schedule 9.17 Minimum Consolidated EBITDA
Schedule 9.24 Projected Consolidated EBITDA
-i-
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Amended and Restated Loan and Security Agreement dated January 31,
2006 is entered into by and among Fedders North America, Inc., a Delaware
corporation ("FNA"), Xxxxxxx Quiet Kool Corporation, a Delaware corporation
("Xxxxxxx"), Columbia Specialties, Inc., a Delaware corporation ("Columbia"),
Trion, Inc., a Pennsylvania corporation ("Trion"), Envirco Corporation, a New
Mexico corporation ("Envirco"), Fedders Xxxxxx Company, Inc., a Texas
corporation ("Xxxxxx"), Fedders Addison Company, Inc., a Delaware corporation
("Addison"), Fedders Islandaire, Inc., a New York corporation ("Islandaire") and
Island Metal Fabricating, Inc., a New York corporation ("Island Metal"; and
together with FNA, Xxxxxxx, Columbia, Trion, Envirco, Xxxxxx, Xxxxxxx and
Islandaire, each individually a "Borrower" and collectively, "Borrowers", as
hereinafter further defined), Fedders Corporation, a Delaware corporation
("Parent" or "Fedders") and each of Parent's Subsidiaries identified on Schedule
I hereto as "Guarantors" (each individually a "Guarantor" and collectively,
"Guarantors" as hereinafter further defined), the parties hereto from time to
time as lenders, whether by execution of this Agreement or an Assignment and
Acceptance (each individually, a "Lender" and collectively, "Lenders" as
hereinafter further defined) and Wachovia Bank, National Association, a national
banking association ("Wachovia"), in its capacity as agent for Lenders (in such
capacity, "Agent" as hereinafter further defined).
WITNESSETH:
WHEREAS, Borrowers and Guarantors are parties to existing financing
arrangements with Wachovia as the lender, pursuant to the Existing Financing
Agreements (as hereinafter defined) pursuant to which Wachovia has made loans
and provided other financial accommodations to Borrowers; and
WHEREAS, Borrowers and Guarantors have requested that Wachovia, as Agent
and a Lender, enter into this Agreement and the other Financing Agreements (as
hereinafter defined) in order to amend and restate the terms and provisions of
the Existing Financing Agreements to the extent applicable to Borrowers and
Guarantors and to otherwise set forth the terms and conditions of the financing
arrangements among Agent, Wachovia, as Lender, the other Lenders that may be
from time to time party hereto, Borrowers and Guarantors; and
WHEREAS, each Lender is willing to agree (severally and not jointly) to
make loans and provide financial accommodations to Borrowers on a pro rata basis
according to its Commitment (as defined below) on the terms and conditions set
forth herein and Agent is willing to act as agent for Lenders on the terms and
conditions set forth herein and the other Financing Agreements;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean, as to each Borrower and Guarantor, all present
and future rights of such Borrower and Guarantor to payment of a monetary
obligation, whether or not earned by performance, which is not evidenced by
chattel paper or an instrument, (a) for property that has been or is to be sold,
leased, licensed, assigned, or otherwise disposed of, (b) for services rendered
or to be rendered, (c) for a secondary obligation incurred or to be incurred, or
(d) arising out of the use of a credit or charge card or information contained
on or for use with the card.
1.2 "Addison" shall mean Fedders Addison Company, Inc., a Delaware
corporation, and its successors and assigns permitted hereunder.
1.3 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan comprising part of the same borrowing
(including conversions, extensions and renewals), the rate per annum determined
by dividing (a) the London Interbank Offered Rate for such Interest Period by
(b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For
purposes hereof, "Reserve Percentage" shall mean for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of the Federal Reserve System (or any successor), as
such regulation may be amended from time to time or any successor regulation, as
the maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with respect
to Eurocurrency liabilities as that term is defined in Regulation D (or against
any other category of liabilities that includes deposits by reference to which
the interest rate of Eurodollar Loans is determined), whether or not any Lender
has any Eurocurrency liabilities subject to such reserve requirement at that
time. Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities
and as such shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available from time to
time to a Lender. The Adjusted Eurodollar Rate shall be adjusted automatically
on and as of the effective date of any change in the Reserve Percentage.
1.4 "Administrative Borrower" shall mean FNA, in its capacity as
Administrative Borrower on behalf of itself and the other Borrowers pursuant to
Section 6.8 hereof and it successors and assigns in such capacity.
1.5 "Affiliate" shall mean, with respect to a specified Person, any other
Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes (a) any Person which
beneficially owns or holds five (5%) percent or more of any class of Voting
Stock of such Person or other equity interests in such Person, (b) any Person of
which such Person beneficially owns or holds five (5%) percent or more of any
class of Voting Stock or in which such Person beneficially owns or holds five
(5%) percent or more of the equity interests and (c) any director or executive
officer of such Person. For the purposes of this definition, the term "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Stock, by agreement or otherwise.
1.6 "Agent" shall mean Wachovia Bank, National Association, in its capacity
as agent on behalf of Lenders pursuant to the terms hereof and any replacement
or successor agent hereunder.
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1.7 "Agent Payment Account" shall mean Account No. 5000000030279 of Agent
at Wachovia, or such other account of Agent as Agent may from time to time
designate to Administrative Borrower as the Agent Payment Account for purposes
of this Agreement and the other Financing Agreements.
1.8 "Applicable Margin" shall mean, as to the Interest Rate for Prime Rate
Loans and the Interest Rate for Eurodollar Rate Loans:
(a) for the period commencing on the date hereof through and including June
30, 2006, (i) two (2%) percent for Eurodollar Rate Loans and zero (0%) percent
for Prime Rate Loans, in each case other than for (A) the Rotorex Real Property
Term Loan and (B) the Trademark Term Loans (the Term Loans described in the
immediately preceding clauses (A) and (B) are sometimes collectively referred to
in this definition as "Tier II Loans" and all Loans other than Tier II Loans are
sometimes collectively referred to in this definition as "Tier I Loans"), and
(ii) in the case of Tier II Loans, two and one-half (2.50%) percent for
Eurodollar Loans and one-half of one (0.50%) percent for Prime Rate Loans; and
(b) at any time from and after July 1, 2006, the applicable percentage (on
a per annum basis) set forth below (i) if the Consolidated EBITDA for the first
six (6) months of Borrowers' 2006 fiscal year is at or within the amounts
indicated for such percentage based on Table Xx. 0 xxx xxxxx xxxxx, (xx) if the
Consolidated EBITDA for the first nine (9) months of Borrowers' 2006 fiscal year
is at or within the amounts indicated for such percentage based on Table No. 2
set forth below, and (iii) if the Consolidated EBITDA for the trailing twelve
(12) months as of December 31, 2006 and as of each fiscal quarter-end thereafter
is at or within the amounts indicated for such percentage based on Table No. 3
set forth below:
TABLE NO. 1
APPLICABLE
MARGIN FOR APPLICABLE APPLICABLE APPLICABLE
EURODOLLAR MARGIN FOR MARGIN FOR MARGIN FOR
RATE LOANS PRIME RATE EURODOLLAR RATE PRIME RATE
CONSOLIDATED EBITDA FOR SIX (6) MONTHS THAT ARE TIER I LOANS THAT ARE LOANS THAT ARE LOANS THAT ARE
ENDED 6/30/06 LOANS TIER I LOANS TIER II LOANS TIER II LOANS
-------------------------------------- --------------- -------------- --------------- --------------
Greater than $35,000,000 1.50% 0.00% 2.00% 0.50%
Equal to or less than $35,000,000 and
greater than $22,500,000 1.75% 0.00% 2.25% 0.50%
Equal to or less than $22,500,000 and
greater than $15,100,000 2.00% 0.00% 2.50% 0.50%
Equal to or less than $15,100,000 and
greater than $5,000,000 2.25% 0.25% 2.75% 0.75%
-3-
TABLE NO. 1
APPLICABLE
MARGIN FOR APPLICABLE APPLICABLE APPLICABLE
EURODOLLAR MARGIN FOR MARGIN FOR MARGIN FOR
RATE LOANS PRIME RATE EURODOLLAR RATE PRIME RATE
CONSOLIDATED EBITDA FOR SIX (6) MONTHS THAT ARE TIER I LOANS THAT ARE LOANS THAT ARE LOANS THAT ARE
ENDED 6/30/06 LOANS TIER I LOANS TIER II LOANS TIER II LOANS
-------------------------------------- --------------- -------------- --------------- --------------
Less than $5,000,000 2.50% 0.50% 3.00% 1.00%
TABLE NO. 2
APPLICABLE
MARGIN FOR APPLICABLE APPLICABLE APPLICABLE
EURODOLLAR MARGIN FOR MARGIN FOR MARGIN FOR
RATE LOANS PRIME RATE EURODOLLAR RATE PRIME RATE
CONSOLIDATED EBITDA FOR SIX (9) MONTHS THAT ARE TIER I LOANS THAT ARE LOANS THAT ARE LOANS THAT ARE
ENDED 9/30/06 LOANS TIER I LOANS TIER II LOANS TIER II LOANS
-------------------------------------- --------------- -------------- --------------- --------------
Greater than $65,000,000 1.50% 0.00% 2.00% 0.50%
Equal to or less than $65,000,000 and
greater than $45,000,000 1.75% 0.00% 2.25% 0.50%
Equal to or less than $45,000,000 and
greater than $29,500,000 2.00% 0.00% 2.50% 0.50%
Equal to or less than $29,500,000 and
greater than $9,000,000 2.25% 0.25% 2.75% 0.75%
Less than $9,000,000 2.50% 0.50% 3.00% 1.00%
TABLE NO. 3
APPLICABLE
MARGIN FOR APPLICABLE APPLICABLE APPLICABLE
EURODOLLAR MARGIN FOR MARGIN FOR MARGIN FOR
RATE LOANS PRIME RATE EURODOLLAR RATE PRIME RATE
CONSOLIDATED EBITDA FOR THAT ARE TIER I LOANS THAT ARE LOANS THAT ARE LOANS THAT ARE
TRAILING TWELVE (12) MONTHS LOANS TIER I LOANS TIER II LOANS TIER II LOANS
--------------------------- --------------- -------------- --------------- --------------
Greater than $75,000,000 1.50% 0.00% 2.00% 0.50%
Equal to or less than $75,000,000 and
greater than $50,000,000 1.75% 0.00% 2.25% 0.50%
-4-
TABLE NO. 3
APPLICABLE
MARGIN FOR APPLICABLE APPLICABLE APPLICABLE
EURODOLLAR MARGIN FOR MARGIN FOR MARGIN FOR
RATE LOANS PRIME RATE EURODOLLAR RATE PRIME RATE
CONSOLIDATED EBITDA FOR THAT ARE TIER I LOANS THAT ARE LOANS THAT ARE LOANS THAT ARE
TRAILING TWELVE (12) MONTHS LOANS TIER I LOANS TIER II LOANS TIER II LOANS
--------------------------- --------------- -------------- --------------- --------------
Equal to or less than $50,000,000 and
greater than $33,750,000 2.00% 0.00% 2.50% 0.50%
Equal to or less than $33,750,000 and
greater than $10,000,000 2.25% 0.25% 2.75% 0.75%
Less than $10,000,000 2.50% 0.50% 3.00% 1.00%
Notwithstanding anything to the contrary contained in this definition or
otherwise in this Agreement, (A) Consolidated EBITDA shall be determined for the
applicable period ending on the last day of each of Borrowers' fiscal quarters
based upon the SEC Form 10-Q or Form 10-K (as applicable) filed by Parent with
the SEC with respect to each such fiscal quarter, (B) the Applicable Margin
shall be calculated once each calendar quarter (commencing with the calendar
quarter commencing July 1, 2006), based on the Consolidated EBITDA for the
applicable period (as set forth in Table 1, Table 2 and Table 3) ending as of
the last day of the immediately preceding calendar quarter, and any adjustment
shall become effective on the first day of the first month immediately following
the date on which such SEC Form 10-Q or 10-K (as applicable) was filed by Parent
with respect to such applicable period, and shall remain in effect until
adjusted thereafter (if at all) in the next calendar quarter and (C) if Parent
at any time fails to timely file an SEC Form 10-Q or 10-K (as applicable), then
Consolidated EBITDA shall be calculated by Agent for the applicable period based
upon the internally prepared financial statements delivered by Borrowers to
Agent pursuant to Section 9.6(a).
1.9 "Applicable Percentages" shall mean the percentages set forth on
Schedule 1.9 hereto, which constitute the applicable advance rates that are
applied by Agent with respect to the various components of Eligible Accounts and
Eligible Inventory of each Borrower, as more particularly described in such
Schedule 1.9, for the purposes of calculation of the Borrowing Base.
1.10 "Assignment and Acceptance" shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender's interest hereunder in accordance with the provisions of Section 13.7
hereof.
1.11 "Bank Product Provider" shall mean any Lender, Affiliate of Lender or
other financial institution (in each case as to any such Lender, Affiliate or
other financial institution to the extent approved by Agent) that provides any
Bank Products to Borrowers or Guarantors.
1.12 "Bank Products" shall mean any one or more of the following types of
services or facilities provided to a Borrower by Agent, any Lender or any
Affiliate of any Lender or any other
-5-
financial institution acceptable to Agent: (a) credit cards or stored value
cards or (b) cash management or related services, including (i) the automated
clearinghouse transfer of funds for the account of a Borrower pursuant to
agreement or overdraft for any accounts of Borrowers maintained at Agent or any
Bank Product Provider that are subject to the control of Agent pursuant to any
Deposit Account Control Agreement to which Agent, such Affiliate of Agent,
Lender or Affiliate of Lender is a party, as applicable, and (ii) controlled
disbursement services and (c) Hedge Agreements if and to the extent permitted
hereunder. Any of the foregoing shall only be included in the definition of the
term "Bank Products" to the extent that the Lender, its Affiliate or the other
financial institution has been approved by Agent.
1.13 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.14 "Borrowers" shall mean, collectively, "Borrowers" as defined in the
introductory paragraph to this Agreement together with their respective
successors and assigns and any other Person that at any time after the date
hereof becomes a Borrower; each sometimes being referred to herein individually
as a "Borrower".
1.15 "Borrowing Base" shall mean, at any time, the amount equal to:
(a) the amount equal to: (i) the Applicable Percentages of the Eligible
Accounts of Borrowers, plus (ii) the Applicable Percentages of the Eligible
Accounts of Fedders Canada, plus (iii) the lesser of (A) the Inventory Loan
Limit or (B) the sum of: (1) the Applicable Percentages of the Value of the
Eligible Inventory of Borrowers consisting of finished goods, plus (2) the
Applicable Percentages of the Value of the Eligible Inventory of Borrowers
consisting of raw materials, plus (3) the Applicable Percentages of the Value of
FNA's Eligible Imported Inventory, plus (4) the Applicable Percentages of the
Value of FNA's CareCo Inventory, plus (5) the Rotorex Real Property
Availability, minus
(b) Reserves.
For purposes only of applying the Inventory Loan Limit, Agent may treat the then
undrawn amounts of outstanding Letters of Credit for the purpose of purchasing
Eligible Inventory as Revolving Loans to the extent Agent is in effect basing
the issuance of the Letter of Credit on the Value of the Eligible Inventory
being purchased with such Letter of Credit. In determining the actual amounts of
such Letter of Credit to be so treated for purposes of the sublimit, the
outstanding Revolving Loans and Reserves shall be attributed first to any
components of the lending formulas set forth above that are not subject to such
sublimit, before being attributed to the components of the lending formulas
subject to such sublimit. The amounts of Eligible Inventory of Borrowers shall,
at Agent's option, be determined based on the lesser of the amount of Inventory
set forth in the general ledger of Borrowers or the perpetual inventory record
maintained by Borrowers.
1.16 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of New York or the State of North Carolina, and a day on
which Agent is open for the transaction of business, except that if a
determination of a Business Day shall relate to any Eurodollar Rate Loans, the
term Business Day shall also exclude any day on which banks are closed for
dealings in dollar deposits in the London interbank market or other applicable
Eurodollar Rate market.
-6-
1.17 "Capital Leases" shall mean, as applied to any Person, any lease of
(or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
1.18 "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's capital stock or partnership, limited liability company or other
equity interests at any time outstanding, and any and all rights, warrants or
options exchangeable for or convertible into such capital stock or other
interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
1.19 "CareCo Inventory" shall mean FNA finished goods Inventory which has
been at any time delivered by FNA to Xxxxxxx'x CareCo division for warranty
repair services.
1.20 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of ninety (90) days or less issued or directly
and fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof; provided, that, the full faith and credit of the United
States of America is pledged in support thereof; (b) certificates of deposit or
bankers' acceptances with a maturity of ninety (90) days or less of any
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$1,000,000,000; (c) commercial paper (including variable rate demand notes) with
a maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of any Borrower or Guarantor) organized under the laws of any State of
the United States of America or the District of Columbia and rated at least A-1
by Standard & Poor's Ratings Service, a division of The XxXxxx-Xxxx Companies,
Inc. or at least P-1 by Xxxxx'x Investors Service, Inc.; (d) repurchase
obligations with a term of not more than thirty (30) days for underlying
securities of the types described in clause (a) above entered into with any
financial institution having combined capital and surplus and undivided profits
of not less than $1,000,000,000; (e) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States of America or issued by any
governmental agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing within ninety (90) days or less
from the date of acquisition; provided, that, the terms of such agreements
comply with the guidelines set forth in the Federal Financial Agreements of
Depository Institutions with Securities Dealers and Others, as adopted by the
Comptroller of the Currency on October 31, 1985; and (f) investments in money
market funds and mutual funds which invest substantially all of their assets in
securities of the types described in clauses (a) through (e) above.
1.21 "Change of Control" shall mean (a) the transfer (in one transaction or
a series of transactions) of all or substantially all of the assets of any
Borrower or Guarantor to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act), other than as permitted in Section 9.7 hereof;
(b) the liquidation or dissolution of any Borrower or Guarantor or the adoption
of a plan by the stockholders of any Borrower or Guarantor relating to the
dissolution or liquidation of such Borrower or Guarantor, other than as
permitted in Section 9.7 hereof; (c) the acquisition by any Person or group (as
such term is used in Section 13(d)(3) of the Exchange Act) of beneficial
ownership, directly or indirectly, of a majority of the voting power of the
total outstanding Voting Stock of Fedders; (d) during any period of two (2)
consecutive years, individuals who at the
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beginning of such period constituted the Board of Directors of any Borrower or
Guarantor (together with any new directors who have been appointed by any
Permitted Holder, or whose nomination for election by the stockholders of such
Borrower or Guarantor, as the case may be, was approved by a vote of at least
sixty-six and two-thirds (66 2/3%) percent 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 any Borrower or Guarantor
then still in office; (e) the failure of Fedders to own directly or indirectly
one hundred (100%) percent of the voting power of the total outstanding Voting
Stock of FNA, Fedders International, Inc. or Fedders Investment Corporation; or
(f) the failure of FNA to own directly or indirectly one hundred (100%) percent
of the voting power of the total outstanding Voting Stock of any other Borrower
or Guarantor.
1.22 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.23 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.24 "Collateral Access Agreement" shall mean an agreement in writing, in
form and substance satisfactory to Agent, from any lessor of premises to any
Borrower or Guarantor, or any other person to whom any Collateral is consigned
or who has custody, control or possession of any such Collateral or is otherwise
the owner or operator of any premises on which any of such Collateral is
located, in favor of Agent with respect to the Collateral at such premises or
otherwise in the custody, control or possession of such lessor, consignee or
other person.
1.25 "Columbia" shall mean Columbia Specialties, Inc., a Delaware
corporation, and its successors and assigns permitted hereunder.
1.26 "Commitment" shall mean, at any time, as to each Lender, the principal
amount set forth below such Lender's signature on the signatures pages hereto
designated as the Commitment or on Schedule 1 to the Assignment and Acceptance
Agreement pursuant to which such Lender became a Lender hereunder in accordance
with the provisions of Section 13.7 hereof, as the same may be adjusted from
time to time in accordance with the terms hereof; sometimes being collectively
referred to herein as "Commitments".
1.27 "Consigned Inventory Loan Sublimit" shall mean Revolving Loans and
Letters of Credit made by Agent and Lenders with respect to FNA's Eligible
Consigned Inventory in an aggregate amount not to exceed, at any time
outstanding, (a) $750,000 in the aggregate with respect to Eligible Consigned
Inventory held by any one consignee and (b) $5,000,000 in the aggregate with
respect to all Eligible Consigned Inventory.
1.28 "Consolidated EBITDA" shall mean, on a consolidated basis for Fedders
and its Subsidiaries, for any period, the Net Income (Loss) (as hereinafter
defined) of Fedders and its Subsidiaries on a consolidated basis for such
period, plus interest expense, income tax expense, amortization expense and
depreciation expense, in each case, of Fedders and its Subsidiaries on a
consolidated basis for such period determined in accordance with GAAP to the
extent included in the determination of such Net Income (Loss). For the purposes
of this definition, "Net Income (Loss)"
-8-
shall mean with respect to Fedders and its Subsidiaries on a consolidated basis
for any period, the aggregate net income (or loss) after taxes of Fedders and
its Subsidiaries on a consolidated basis for such period, determined in
accordance with GAAP, exclusive, however, of any net income (or loss)
attributable to any sales of assets outside of the ordinary course of business,
but expressly including any net income arising from any sale or other
disposition of the Rotorex Real Property in an aggregate amount which, when
included in the calculation of Consolidated EBITDA for the applicable period,
will result in an increase in Consolidated EBITDA for such applicable period by
an amount not to exceed $14,000,000.
1.29 "Covenant Trigger Event" shall mean, as of any date of determination,
(a) the Excess Availability on such date is less than $10,000,000 or, if there
are no Revolving Loans then outstanding, the Excess Availability on such date is
less than $7,500,000 and/or (b) an Event of Default has then occurred and is
continuing.
1.30 "Credit Facility" shall mean the Loans and Letters of Credit provided
to or for the benefit of any Borrower pursuant to Sections 2.1, 2.2 and 2.3
hereof.
1.31 "Customs Broker" shall mean the persons who have been at any time
retained by Borrowers to provide services to clear Imported Inventory through
United States Customs into the United States.
1.32 "Default" shall mean an act, condition or event which with notice or
passage of time or both would constitute an Event of Default.
1.33 "Defaulting Lender" shall have the meaning set forth in Section 6.11
hereof.
1.34 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent, the
Borrower or Guarantor with a deposit account at any bank and the bank at which
such deposit account is at any time maintained which provides that such bank
will comply with instructions originated by Agent directing disposition of the
funds in the deposit account without further consent by such Borrower or
Guarantor and has such other terms and conditions as Agent may require.
1.35 "Eligible Accounts" shall mean Accounts created by a Borrower and by
Fedders Canada that in each case satisfy the criteria set forth below as
determined by Agent. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and delivery of
goods by such Borrower or by Fedders Canada (as applicable) or rendition of
services by such Borrower or by Fedders Canada (as applicable) in the ordinary
course of its business which transactions are completed in accordance with the
terms and provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than ninety (90) days after the date
of the original invoice for them or more than sixty (60) days after the due date
therefor set forth in the original invoice for them;
(c) such Accounts comply with the terms and conditions contained in Section
7.2(b) of this Agreement;
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(d) such Accounts do not arise from sales on consignment, guaranteed sale,
sale and return [*] sale on approval, or other terms under which payment by the
account debtor may be conditional or contingent; except that, Accounts arising
from the sale of Eligible Consigned Inventory may be deemed Eligible Accounts in
Agent's sole discretion;
(e) the chief executive office of the account debtor with respect to such
Accounts is located in the United States of America or Canada (provided, that,
at any time promptly upon Agent's request, such Borrower shall execute and
deliver, or cause to be executed and delivered, such other agreements, documents
and instruments as may be required by Agent to perfect the security interests of
Agent in those Accounts of an account debtor with its chief executive office or
principal place of business in Canada in accordance with the applicable laws of
the Province of Canada in which such chief executive office or principal place
of business is located and take or cause to be taken such other and further
actions as Agent may request to enable Agent as secured party with respect
thereto to collect such Accounts under the applicable Federal or Provincial laws
of Canada) or, at Agent's option, if the chief executive office and principal
place of business of the account debtor with respect to such Accounts is located
other than in the United States of America or Canada, then if either: (i) the
account debtor has delivered to such Borrower or to Fedders Canada (as
applicable) an irrevocable letter of credit issued or confirmed by a bank
satisfactory to Agent and payable only in the United States of America and in
U.S. dollars, sufficient to cover such Account, in form and substance
satisfactory to Agent and if required by Agent, the original of such letter of
credit has been delivered to Agent or Agent's agent, and the issuer thereof and
such Borrower or Fedders Canada (as applicable) have each complied with the
terms of Section 5.2(f) hereof with respect to the assignment of the proceeds of
such letter of credit to Agent or naming Agent as transferee beneficiary
thereunder, as Agent may specify, or (ii) such Account is subject to credit
insurance payable to Agent issued by an insurer and on terms and in an amount
acceptable to Agent, or (iii) such Account is otherwise acceptable in all
respects to Agent (subject to such lending formula with respect thereto as Agent
may determine);
(f) such Accounts do not consist of progress xxxxxxxx (such that the
obligation of the account debtors with respect to such Accounts is conditioned
upon such Borrower's or Fedders Canada's (as applicable) satisfactory completion
of any further performance under the agreement giving rise thereto), xxxx and
hold invoices or retainage invoices, except as to xxxx and hold invoices, if
Agent shall have received an agreement in writing from the account debtor, in
form and substance satisfactory to Agent, confirming the unconditional
obligation of the account debtor to take the goods related thereto and pay such
invoice;
(g) the account debtor with respect to such Accounts has not asserted a
counterclaim, defense or dispute and is not owed or does not claim to be owed
any amounts that may give rise to any right of setoff or recoupment against such
Accounts (but the portion of the Accounts of such account debtor in excess of
the amount at any time and from time to time owed by such Borrower or Fedders
Canada (as applicable) to such account debtor or claimed owed by such account
debtor may be deemed Eligible Accounts);
* Confidential information has been omitted pursuant to a request to the
Securities and Exchange Commission for confidential treatment. The
information has been separately filed with the Commission.
-10-
(h) there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce the amount
payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and perfected
security interest of Agent and any goods giving rise thereto are not, and were
not at the time of the sale thereof, subject to any liens, except those
permitted in this Agreement and, if required by Agent, which shall be subject to
an intercreditor agreement in form and substance satisfactory to Agent between
the holder of such security interest or lien and Agent;
(j) neither the account debtor nor any officer or employee of the account
debtor with respect to such Accounts is an officer, employee, agent or other
Affiliate of any Borrower or Guarantor;
(k) the account debtors with respect to such Accounts are not any foreign
government, the United States of America, any State, political subdivision,
department, agency or instrumentality thereof, unless, if the account debtor is
the United States of America, any State, political subdivision, department,
agency or instrumentality thereof, upon Agent's request, the Federal Assignment
of Claims Act of 1940, as amended or any similar State or local law, if
applicable, has been complied with in a manner satisfactory to Agent;
(l) there are no proceedings or actions which are threatened or pending
against the account debtors with respect to such Accounts which might result in
any material adverse change in any such account debtor's financial condition
(including, without limitation, any bankruptcy, dissolution, liquidation,
reorganization or similar proceeding);
(m) (i) the aggregate amount of such Accounts owing by a single account
debtor [*] do not constitute more than fifteen (15%) percent of the aggregate
amount of all otherwise Eligible Accounts, (ii) such Accounts owing by [*](A) do
not constitute more than the greater of (1)$35,000,000 or (2) forty (40%)
percent of the aggregate amount of all otherwise Eligible Accounts during the
months of December of any year through and including the month of April of the
immediately following year and (B) do not constitute more than thirty (30%)
percent of all otherwise Eligible Accounts during the months of May through and
including November of any year, and (iii) such Accounts owing by [*] do not
constitute more than twenty (20%) percent of the aggregate amount of all
otherwise Eligible Accounts (but the portion of the Accounts not in excess of
the applicable percentages may be deemed Eligible Accounts);
(n) such Accounts are not owed by an account debtor who has Accounts unpaid
more than ninety (90) days after the original invoice date for them or unpaid
more than sixty (60) days after the due date therefor set forth in the original
invoice for them which constitute more than fifty (50%) percent of the total
Accounts of such account debtor;
* Confidential information has been omitted pursuant to a request to the
Securities and Exchange Commission for confidential treatment. The
information has been separately filed with the Commission.
-11-
(o) the account debtor is not located in a state requiring the filing of a
Notice of Business Activities Report or similar report in order to permit such
Borrower to seek judicial enforcement in such State of payment of such Account,
unless such Borrower has qualified to do business in such state or has filed a
Notice of Business Activities Report or equivalent report for the then current
year or such failure to file and inability to seek judicial enforcement is
capable of being remedied without any material delay or material cost;
(p) such Accounts are owed by account debtors whose total indebtedness to
such Borrower or Fedders Canada does not exceed the credit limit with respect to
such account debtors as determined by such Borrower or Fedders Canada from time
to time, to the extent such credit limit as to any account debtor is established
consistent with the current practices of such Borrower or Fedders Canada as of
the date hereof and such credit limit is acceptable to Agent (but the portion of
the Accounts not in excess of such credit limit may be deemed Eligible
Accounts);
(q) such Accounts are owing to Fedders Canada at any time from and after
April 1, 2006 and Agent shall have received Deposit Account Control Agreements
required by Section 6.2 with respect to all bank accounts of Fedders Canada into
which the proceeds of such accounts are at any time deposited; and
(r) such Accounts are owed by account debtors deemed creditworthy at all
times by Agent in good faith.
The criteria for Eligible Accounts set forth above may only be changed and any
new criteria for Eligible Accounts may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from a Borrower prior to the date hereof, in either case under clause (i) or
(ii) which adversely affects or could reasonably be expected to adversely affect
the Accounts in the good faith determination of Agent. Any Accounts that are not
Eligible Accounts shall nevertheless be part of the Collateral.
1.36 "Eligible Consigned Inventory" shall mean finished goods Inventory
that has been consigned by Borrowers to customers for sale by such customers
(each such customer, a "Consignee") in the ordinary course of each Consignee's
business ("Consigned Inventory") that in each case satisfy the criteria set
forth below as determined by Agent:
(a) The Consigned Inventory shall have been consigned by Borrowers to a
Consignee for sale to or by such Consignee in the ordinary course of its
business and is located at premises owned or operated by such Consignee;
(b) Agent shall have received a good standing certificate for such
Consignee issued by its jurisdiction of incorporation or formation not earlier
than thirty (30) days prior to the date on which such certificate is delivered
to Agent;
(c) Agent shall have received Uniform Commercial Code, judgment and tax
lien searches ("UCC Searches") with respect to the legal name of the Consignee
from its jurisdiction of incorporation or formation and, if different, from the
jurisdiction in which the consigned Inventory will be located, the results of
which UCC Searches shall be satisfactory to Agent;
-12-
(d) Agent shall have received a copy of a written consignment agreement
executed between the applicable Borrower and the Consignee, in form and
substance reasonably satisfactory to Agent;
(e) Agent shall have received evidence satisfactory to Agent that (i) the
Borrower that is the actual consignor under such Consignee's consignment
agreement delivered an authenticated notification of consignment to each secured
party that has a conflicting security interest in the Consigned Inventory
consigned to such Consignee, as reflected in the UCC Searches with respect to
such Consignee, and (ii) such notification was in fact delivered to each such
secured party prior to the date on which the Consigned Inventory was first
delivered by such Borrower to the Consignee and such notification otherwise
complies in all respects with the requirements of UCC Section 9-324(b), as
determined by Agent;
(f) The Consignee shall have executed and delivered to Borrowers an
agreement, in form and substance satisfactory to Agent, pursuant to which, among
other things, the Consignee shall have acknowledged that (i) the applicable
Borrower remains the owner of the Consigned Inventory at all times while it
remains in the Consignee's possession, (ii) Agent has a first priority security
interest in all Consigned Inventory from time to time consigned to it, (iii)
such Consignee waives any security interest or other interest that it has or may
claim in such Consigned Inventory and (iv) such Consignee agrees to follow
Agent's instructions as to the disposition of all Consigned Inventory at any
time in its possession;
(g) Agent shall have received a letter executed by the Consignee in favor
of the applicable Borrower and Agent authorizing filing of UCC financing
statements naming Consignee as debtor and the applicable Borrower as secured
party and indicating as the collateral the collateral description contained in
subsection (h) of this definition, which letter shall be executed by the
Consignee in favor of Agent and Fedders, in form and substance satisfactory to
Agent;
(h) Agent shall have received a copy of a UCC financing statement, as duly
and properly prepared and filed with the Secretary of State of the Consignee's
jurisdiction of incorporation or formation, naming the Consignee as "Debtor",
the particular Borrower that is Consignor under such Consignee's consignment
agreement as "Secured Party", and Agent as either "Assignee" or as "Additional
Secured Party" and containing the following collateral description in Section 4
of the UCC financing statement and otherwise in form and substance satisfactory
to Agent:
"All HVAC products and accessories manufactured and distributed
by Secured Party that are now or hereafter consigned by Secured Party
to Debtor and all proceeds arising therefrom, in whatever form
(including, without limitation, insurance proceeds).";
(i) Agent shall have received evidence satisfactory to Agent that such UCC
financing statement described in subsection (h) of this definition was duly
filed in the appropriate jurisdiction prior to the Consignee's receipt of the
Consigned Inventory;
(j) Consigned Inventory in the possession of not more than ten (10)
Consignees shall at any time be considered Eligible Consigned Inventory, which
Consignees shall be designated in a writing delivered by Administrative Borrower
to Agent on or about the date hereof and may be
-13-
revised no more frequently that on a monthly basis by written notice by
Administrative Borrower to Agent;
(k) Consigned Inventory consisting of air conditioning units and related
Inventory must be sold and invoiced to Consignees in possession thereof no later
than November 30 of the year in which such Consigned Inventory was consigned to
such Consignees and such invoices must reflect payment terms with a due date no
later than December 10 of that same year;
(l) Consigned Inventory consisting of heating units and related Inventory
shall have been sold and invoiced to Consignees in possession thereof no later
than May 31 immediately following the end of the then current heating season in
connection with which such Consigned Inventory was delivered to Consignees and
such invoices must reflect payment terms with a due date no later than June 10
of that same year; each of such Consignee shall be reasonably acceptable to
Agent; and
(m) All Consigned Inventory shall otherwise satisfy all criteria for
Eligible Inventory.
General criteria for Eligible Consigned Inventory may be established and revised
from time to time by Agent in Agent's exclusive judgment, exercised in good
faith. Any Consigned Inventory that is not accepted by Agent as Eligible
Consigned Inventory shall nevertheless remain part of the Collateral.
1.37 "Eligible Imported Inventory" shall mean Imported Inventory consisting
of finished goods that are in transit from a foreign country to a Customs Broker
or Port Processor in the United States, and Imported Inventory that has been
processed and cleared through United States Customs and is in transit to
premises of Borrowers in the United States that are either owned and controlled
by Borrowers or leased by Borrowers, which Imported Inventory shall be held for
resale in the ordinary course of the business of Borrowers and that is otherwise
acceptable to Agent as Eligible Inventory. In general, Eligible Imported
Inventory shall not include: (a) Imported Inventory that is not in transit to
the United States in the possession of a Freight Forwarder that has been
retained by Borrowers to ship such Imported Inventory from a location outside of
the United States to a Port Processor or Customs Broker in the United States,
(b) Imported Inventory that is in the possession of a Freight Forwarder that has
not executed and delivered to Agent a Collateral Access Agreement, (c) Imported
Inventory at premises of a Customs Broker or Port Processor that has not
executed and delivered to Agent a Collateral Access Agreement, (d) Imported
Inventory with respect to which, after written request delivered to Borrowers by
Agent, Agent either (i) has not received an original xxxx of lading covering
such Imported Inventory or (ii) has not been named as consignee on the xxxx of
lading covering such Imported Inventory, (e) Imported Inventory with respect to
which Agent has not received a copy of, or if requested by Agent in writing, the
original of, all bills of lading or other documents of title covering such
Imported Inventory, (f) Imported Inventory with respect to which Agent has not
received a copy of the certificate of marine cargo insurance, evidencing marine
cargo insurance coverage for such Imported Inventory, reasonably acceptable to
Agent, and naming Agent as an additional insured and loss payee, in form and
substance reasonably acceptable to Agent, (g) Imported Inventory that has been
in transit to Borrowers' premises for a period in excess of sixty (60) days, or
(h) Imported Inventory that does not satisfy Agent's general criteria for
Eligible Inventory.
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General criteria for Eligible Imported Inventory may be established and revised
from time to time by Agent in good faith based on an event, condition or other
circumstance arising after the date hereof, or existing on the date hereof to
the extent Agent has no written notice thereof from Borrowers, which adversely
affects or could reasonably be expected to adversely affect the Imported
Inventory in the good faith determination of Agent. Any Imported Inventory which
is not Eligible Imported Inventory shall nevertheless remain part of the
Collateral.
1.38 "Eligible Inventory" shall mean, as to each Borrower, Inventory of
such Borrower consisting of finished goods held for resale in the ordinary
course of the business of such Borrower and raw materials for such finished
goods, that in each case satisfy the criteria set forth below as determined by
Agent. In general, Eligible Inventory shall not include: (a) work-in-process;
(b) components which are neither part of raw materials nor finished goods; (c)
spare parts for equipment; (d) packaging and shipping materials; (e) supplies
used or consumed in such Borrower's business; (f) Inventory at premises other
than those owned or leased and controlled by any Borrower, other than Eligible
Imported Inventory; (g) Inventory subject to a security interest or lien in
favor of any Person other than Agent except those permitted in this Agreement
and, if required by Agent, which shall be subject to an intercreditor agreement
in form and substance satisfactory to Agent between the holder of such security
interest or lien and Agent; (h) xxxx and hold goods; (i) unserviceable, obsolete
or slow moving Inventory; (j) Inventory that is not subject to the first
priority, valid and perfected security interest of Agent; (k) returned, damaged
and/or defective Inventory; (l) Inventory purchased or sold on consignment,
except that, Inventory constituting Eligible Consigned Inventory may constitute
Eligible Inventory in Agent's sole discretion, and (m) Inventory located outside
the United States of America, other than Eligible Imported Inventory and Fedders
Canada Inventory. The criteria for Eligible Inventory set forth above may only
be changed and any new criteria for Eligible Inventory may only be established
by Agent in good faith based on either: (i) an event, condition or other
circumstance arising after the date hereof, or (ii) an event, condition or other
circumstance existing on the date hereof to the extent Agent has no written
notice thereof from a Borrower prior to the date hereof, in either case under
clause (i) or (ii) which adversely affects or could reasonably be expected to
adversely affect the Inventory in the good faith determination of Agent. Any
Inventory that is not Eligible Inventory shall nevertheless be part of the
Collateral.
1.39 "Eligible Transferee" shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any person
(whether a corporation, partnership, trust or otherwise) that is engaged in the
business of making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and is
administered or managed by a Lender or with respect to any Lender that is a fund
which invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor, and in each case is approved by Agent; and (d) any other commercial
bank, financial institution or "accredited investor" (as defined in Regulation D
under the Securities Act of 1933) approved by Agent, provided, that, (i) neither
any Borrower nor any Guarantor or any Affiliate of any Borrower or Guarantor
shall qualify as an Eligible Transferee and (ii) no Person to whom any
Indebtedness which is in any way subordinated in right of payment to any other
Indebtedness of any Borrower or Guarantor shall qualify as an Eligible
Transferee, except as Agent may otherwise specifically agree.
-15-
1.40 "Xxxxxxx" shall mean Xxxxxxx Quiet Kool Corporation, a Delaware
corporation, and its successors and assigns permitted hereunder.
1.41 "Envirco" shall mean Envirco Corporation, a New Mexico corporation,
and its successors and assigns permitted hereunder.
1.42 "Environmental Laws" shall mean all foreign, Federal, State and local
laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between any Borrower or
Guarantor and any Governmental Authority, (a) relating to pollution and the
protection, preservation or restoration of the environment (including air, water
vapor, surface water, ground water, drinking water, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource), or to human health or safety, (b) relating to the exposure to, or the
use, storage, recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production, release or
disposal, or threatened release, of Hazardous Materials, or (c) relating to all
laws with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials. The term "Environmental Laws"
includes (i) the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act,
the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act,
the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of
1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal
Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
1.43 "Equipment" shall mean, as to each Borrower and Guarantor, all of such
Borrower's and Guarantor's now owned and hereafter acquired equipment, wherever
located, including machinery, data processing and computer equipment (whether
owned or licensed and including embedded software), vehicles, tools, furniture,
fixtures, all attachments, accessions and property now or hereafter affixed
thereto or used in connection therewith, and substitutions and replacements
thereof, wherever located.
1.44 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, together with all rules, regulations and interpretations thereunder or
related thereto.
1.45 "ERISA Affiliate" shall mean any person required to be aggregated with
any Borrower, any Guarantor or any of its or their respective Subsidiaries under
Sections 414(b), 414(c), 414(m) or 414(o) of the Code.
1.46 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a
Pension Plan, other than events as to which the requirement of notice has been
waived in regulations by the Pension Benefit Guaranty Corporation; (b) the
adoption of any amendment to a Pension Plan that would require the provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c)
a complete or partial withdrawal by any Borrower, Guarantor or any ERISA
Affiliate from a Multiemployer Plan
-16-
or a cessation of operations which is treated as such a withdrawal or
notification that a Multiemployer Plan is in reorganization; (d) the filing of a
notice of intent to terminate, the treatment of a Pension Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the Pension Benefit Guaranty Corporation to terminate a Pension
Plan; (e) 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 Plan; (f) the imposition of any liability under
Title IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums
due but not delinquent under Section 4007 of ERISA, upon any Borrower, Guarantor
or any ERISA Affiliate in excess of $200,000 and (g) any other event or
condition with respect to a Plan including any Pension Plan subject to Title IV
of ERISA maintained, or contributed to, by any ERISA Affiliate that could
reasonably be expected to result in liability of any Borrower in excess of
$200,000.
1.47 "Xxxxxx" shall mean Fedders Xxxxxx Company, Inc., a Texas corporation,
and its successors and assigns permitted hereunder.
1.48 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.49 "Event of Default" shall mean the occurrence or existence of any event
or condition described in Section 10.1 hereof.
1.50 "Excess Availability" shall mean the aggregate amount, as determined
by Agent, calculated at any date, equal to: (a) the lesser of: (i) the Borrowing
Base and (ii) the Revolving Loan Limit (in each case under (i) or (ii) after
giving effect to any Reserves other than any Reserves in respect of Letter of
Credit Obligations), minus (b) the sum of: (i) the amount of all then
outstanding and unpaid Obligations of Borrowers (but not including for this
purpose Obligations of Borrowers arising pursuant to any guarantees in favor of
Agent and Lenders of the Obligations of the other Borrowers or the then
outstanding aggregate principal amount of the Term Loans or any outstanding
Letter of Credit Obligations), plus (ii) the amount of all Reserves then
established in respect of Letter of Credit Obligations, plus (iii) the aggregate
amount of all then outstanding and unpaid trade payables and other obligations
of Borrowers and Fedders Canada which are outstanding more than sixty (60) days
past due as of the end of the immediately preceding month or at Agent's option,
as of a more recent date based on such reports as Agent may from time to time
specify (other than trade payables or other obligations being contested or
disputed by Borrowers and Fedders Canada in good faith), plus (iv) without
duplication, the amount of checks issued by Borrowers and Fedders Canada to pay
trade payables and other obligations which are more than sixty (60) days past
due as of the end of the immediately preceding month or at Agent's option, as of
a more recent date based on such reports as Agent may from time to time specify
(other than trade payables or other obligations being contested or disputed by
Borrowers and Fedders Canada in good faith), but not yet sent.
1.51 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.52 "Existing Financing Agreements" shall mean Accounts Financing
Agreement [Security Agreement], dated December 23, 1992, by and among Wachovia
and FNA, Xxxxxxx, Trion, Envirco, Eubank, Addison, Islandaire and Island Metal,
and the Accounts Financing
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Agreement [Security Agreement], dated December 23, 1992, between Wachovia and
Columbia, as the Accounts Agreements were amended by Amendment No. 1 to
Financing Agreements, dated September 23, 1993, Amendment No. 2 to Financing
Agreements dated October 8, 1993, Amendment No. 3 to Financing Agreements, dated
December 23, 1994, Amendment No. 4 to Financing Agreements, dated as of February
1, 1997, Amendment No. 5 to Financing Agreements, dated as of August 18, 1997,
Amendment No. 6 to Financing Agreements, dated as of July 28, 1999, Amendment
No. 7 to Financing Agreements, dated July 28, 1999, Amendment No. 8 to Financing
Agreements, dated as of November 30, 1999, Amendment No. 9 to Financing
Agreements, dated as of July 25, 2000, Amendment No. 10 to Financing Agreements,
dated as of November 27, 2001, Amendment No. 11 to Financing Agreements, dated
as of March 15, 2002, Amendment No. 12 to Financing Agreements, dated as of
October 25, 2002, Amendment No. 13 to Financing Agreements, dated as of December
20, 2002, Amendment No. 14 to Financing Agreements, dated as of January 31,
2003, Amendment No. 15 to Financing Agreements, dated as of May 16, 2003,
Amendment No. 16 to Financing Agreements and Consent, dated as of February 26,
2004, Amendment No. 17 to Financing Agreements, dated as of December 17, 2004,
Amendment No. 18 to Financing Agreements, dated as of January 31, 2005,
Amendment No. 19 to Financing Agreements and Consent, dated as of February 23,
2005, Amendment No. 20 to Financing Agreements and Waiver, dated as of May 6,
2005, Amendment No. 21 to Financing Agreements and Waiver, dated as of August
23, 2005), Amendment No. 22 to Financing Agreements, dated as of September 12,
2005, Amendment No. 23 to Financing Agreements, dated as of October 20, 2005,
Amendment No. 24 to Financing Agreements and Waiver, dated December 22, 2005,
Amendment No. 25 to Financing Agreements and Waiver, dated December 22, 2005,
Amendment No. 26 to Financing Agreements and Waiver, dated January 17, 2006, the
Covenant Supplement to Accounts Financing Agreement [Security Agreement], dated
December 23, 1992, among Wachovia and the Borrowers and consented to by Fedders
Corporation, the Letter Agreement re: Inventory Loans, dated December 23, 1992,
among Wachovia, FNA and Xxxxxxx, the Letter Agreement re: Inventory Loans, dated
December 23, 1992, between Wachovia and Columbia, the Letter Agreement re:
Inventory Loans, dated as of July 25, 2000, between Wachovia and Trion, the
Letter Agreement re: Inventory Loans, dated as of July 25, 2000, between
Wachovia and Envirco, the Letter Agreement re: Inventory Loans, dated as of
March 15, 2002, between Wachovia and Xxxxxx, the Letter Agreement re: Inventory
Loans, dated as of December 17, 2004, between Wachovia and Addico, the Letter
Agreement re: Inventory Loans, dated as of February 23, 2005 between Wachovia
and Islandaire, the Letter Agreement re: Inventory Loans, dated as of February
23, 2005, between Wachovia and Island Metal, the Trade Financing Agreement
Supplement to Accounts Financing Agreement [Security Agreement], dated as of
December 23, 1992, executed by FNA in favor of Wachovia (all of the foregoing
Existing Financing Agreements are herein collectively referred to as the
"Existing Loan Agreements"), and together with all agreements, documents and
instruments at any time executed and/or delivered in connection therewith or
related thereto, including, without limitation, the guarantees of the
obligations of Borrowers to Wachovia from time to time executed prior to the
date hereof by Guarantors in favor of Wachovia.
1.53 "Existing Letters of Credit" shall mean, collectively, the letters of
credit issued, or caused to be issued, by Wachovia for the account of a Borrower
or Guarantor pursuant to the Existing Financing Agreements which remain
outstanding as of the date hereof and which are more particularly described on
Schedule 1.53 hereto, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
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1.54 "Existing Loan Agreements" shall have the meaning assigned to such
term in the definition of Existing Financing Agreements.
1.55 "Fedders" shall mean Fedders Corporation, a Delaware corporation, and
its successors and assigns permitted hereunder.
1.56 "Fedders Canada" shall mean Fedders, Inc., an Ontario corporation, and
its successors and assigns permitted hereunder.
1.57 "Fedders Canada Accounts Loan Limit" shall mean $5,000,000.
1.58 "Fedders Canada Inventory Loan Limit" shall mean $5,000,000.
1.59 "Fee Letter" shall mean the letter agreement, dated of even date
herewith, by and among Borrowers, Guarantors and Agent, setting forth certain
fees payable by Borrowers to Agent for the benefit of itself and Lenders, as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.60 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements, deposit account control agreements,
investment property control agreements, intercreditor agreements and all other
agreements, documents and instruments now or at any time hereafter executed
and/or delivered by any Borrower or Obligor in connection with this Agreement;
provided, that, in no event shall the term Financing Agreements be deemed to
include any Hedge Agreement.
1.61 "FNA" shall mean Fedders North America, Inc., a Delaware corporation,
and its successors and assigns permitted hereunder.
1.62 "Foreign Lender" shall mean any Lender that is organized under the
laws of a jurisdiction other than that in which a Borrower is resident for tax
purposes. For purposes of this definition, the United States of America, each
State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.
1.63 "Freight Forwarder" shall mean any maritime shipper at any time
retained by Borrowers, or by any Customs Broker retained by Borrowers, to ship
Imported Inventory by ocean vessel into the United States.
1.64 "Funding Bank" shall have the meaning given to such term in Section
3.3 hereof.
1.65 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Sections 9.17 and 9.18 hereof, GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent with those
used in the preparation of the most recent audited financial statements
delivered to Agent prior to the date hereof.
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1.66 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.67 "Guarantors" shall mean, collectively, the following (together with
their respective successors and assigns): (a) Fedders; (b) Fedders
International, Inc., a Delaware corporation; (c) Fedders Investment Corporation,
a Delaware corporation; (d) Fedders Canada; (e) Rotorex; (f) Herrmidifier
Company, Inc., a Delaware corporation; and (g) any other Person that at any time
after the date hereof becomes party to a guarantee in favor of Agent or any
Lender or otherwise liable on or with respect to the Obligations or who is the
owner of any property which is security for the Obligations (other than
Borrowers); each sometimes being referred to herein individually as a
"Guarantor".
1.68 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.69 "Hedge Agreement" shall mean an agreement between any Borrower or
Guarantor and Agent, any Lender, any Affiliate of any Lender or any other
financial institution acceptable to Agent (and in each case as to any such
Lender, Affiliate, or other financial institution only to the extent approved by
Agent) that is a rate swap agreement, basis swap, forward rate agreement,
commodity swap, interest rate option, forward foreign exchange agreement, spot
foreign exchange agreement, rate cap agreement rate, floor agreement, rate
collar agreement, currency swap agreement, cross-currency rate swap agreement,
currency option, any other similar agreement (including any option to enter into
any of the foregoing or a master agreement for any the foregoing together with
all supplements thereto) for the purpose of protecting against or managing
exposure to fluctuations in interest or exchange rates, currency valuations or
commodity prices; sometimes being collectively referred to herein as "Hedge
Agreements".
1.70 "Imported Inventory" shall mean all Inventory owned by Borrowers that
is at any time in transit from a foreign country to a Customs Broker, Port
Processor or other person located in the United States or in Canada or,
subsequent to completion of processing and clearance thereof through United
States Customs or Canadian Customs, that is in transit to premises either owned
and controlled by Borrowers or leased by Borrowers. For the avoidance of doubt,
Inventory that constituted Imported Inventory while in transit to a Customs
Broker or Port Processor located in the United States shall not constitute
Imported Inventory from and after the date on which it has been delivered to
premises owned and controlled or leased by Borrowers in the United States.
1.71 "Imported Inventory Loan Sublimit" shall mean Revolving Loans and
Letters of Credit made by Agent and Lenders with respect to Eligible Imported
Inventory in an aggregate
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amount not to exceed, at any time outstanding, the following amounts for each
month of each year while this Agreement remains in effect:
MAXIMUM OUTSTANDING LOANS WITH
MONTH RESPECT TO ELIGIBLE IMPORTED INVENTORY
----- --------------------------------------
January $20,000,000
February $20,000,000
March $15,000,000
April $10,000,000
May through and including October $ 5,000,000
November $10,000,000
December $15,000,000
1.72 "Indebtedness" shall mean, with respect to any Person, any liability,
whether or not contingent, (a) in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof) or evidenced by bonds, notes, debentures or similar
instruments; (b) representing the balance deferred and unpaid of the purchase
price of any property or services (other than an account payable to a trade
creditor (whether or not an Affiliate) incurred in the ordinary course of
business of such Person and payable in accordance with customary trade
practices); (c) all obligations as lessee under leases which have been, or
should be, in accordance with GAAP recorded as Capital Leases; (d) any
contractual obligation, contingent or otherwise, of such Person to pay or be
liable for the payment of any indebtedness described in this definition of
another Person, including, without limitation, any such indebtedness, directly
or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise
acquire such indebtedness, obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof, or to maintain solvency,
assets, level of income, or other financial condition; (e) all obligations with
respect to redeemable stock and redemption or repurchase obligations under any
Capital Stock or other equity securities issued by such Person; (f) all
reimbursement obligations and other liabilities of such Person with respect to
surety bonds (whether bid, performance or otherwise), letters of credit,
banker's acceptances, drafts or similar documents or instruments issued for such
Person's account; (g) all indebtedness of such Person in respect of indebtedness
of another Person for borrowed money or indebtedness of another Person otherwise
described in this definition which is secured by any consensual lien, security
interest, collateral assignment, conditional sale, mortgage, deed of trust, or
other encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person, all as of such time; (h) all obligations, liabilities and indebtedness
of such Person (marked to market) arising under swap agreements, cap agreements
and collar agreements and other agreements or arrangements designed to protect
such person against fluctuations in interest rates or currency or commodity
values; (i) all obligations owed by such Person under License Agreements with
respect to non-refundable, advance or minimum guarantee royalty payments; (j)
indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer to the extent such Person is liable therefor
as a result of such Person's ownership interest in such entity, except to the
extent that the terms of such indebtedness expressly provide that such Person is
not liable therefor or such
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Person has no liability therefor as a matter of law and (k) the principal and
interest portions of all rental obligations of such Person under any synthetic
lease or similar off-balance sheet financing where such transaction is
considered to be borrowed money for tax purposes but is classified as an
operating lease in accordance with GAAP.
1.73 "Information Certificate" shall mean, collectively, the Information
Certificates of Borrowers and Guarantors constituting Exhibit B hereto
containing material information with respect to Borrowers and Guarantors, their
respective businesses and assets provided by or on behalf of Borrowers and
Guarantors to Agent in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.
1.74 "Intellectual Property" shall mean, as to each Borrower and Guarantor,
such Borrower's and Guarantor's now owned and hereafter arising or acquired:
patents, patent rights, patent applications, copyrights, works which are the
subject matter of copyrights, copyright applications, copyright registrations,
trademarks, servicemarks, trade names, trade styles, trademark and service xxxx
applications, and licenses and rights to use any of the foregoing and all
applications, registrations and recordings relating to any of the foregoing as
may be filed in the United States Copyright Office, the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof, any political subdivision thereof or in any other country or
jurisdiction, together with all rights and privileges arising under applicable
law with respect to any Borrower's or Guarantor's use of any of the foregoing;
all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to xxx for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or servicemark, or the license of any trademark or
servicemark); customer and other lists in whatever form maintained; trade secret
rights, copyright rights, rights in works of authorship, domain names and domain
name registration; software and contract rights relating to computer software
programs, in whatever form created or maintained.
1.75 "Interest Period" shall mean for any Eurodollar Rate Loan, a period of
approximately one (1), two (2), or three (3) months duration as any Borrower (or
Administrative Borrower on behalf of such Borrower) may elect, the exact
duration to be determined in accordance with the customary practice in the
applicable Eurodollar Rate market; provided, that, such Borrower (or
Administrative Borrower on behalf of such Borrower) may not elect an Interest
Period which will end after the last day of the then-current term of this
Agreement.
1.76 "Interest Rate" shall mean,
(a) Subject to clause (b) of this definition below:
(i) as to Prime Rate Loans, a rate equal to the Applicable Margin plus
the Prime Rate,
(ii) as to Eurodollar Rate Loans, a rate equal to the Applicable
Margin plus the Adjusted Eurodollar Rate (in each case, based on the London
Interbank Offered Rate applicable for the Interest Period selected by a
Borrower, or by Administrative Borrower on behalf of such
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Borrower, as in effect two (2) Business Days prior to the commencement of the
Interest Period, whether such rate is higher or lower than any rate previously
quoted to any Borrower or Guarantor).
(b) Notwithstanding anything to the contrary contained in clause (a) of
this definition, the Interest Rate shall mean the rate of two (2%) percent per
annum in excess of the per annum rate otherwise in effect pursuant to clause (a)
of this definition, at Agent's option, without notice, (i) either (A) for the
period on and after the date of termination or non-renewal hereof until such
time as all Obligations are indefeasibly paid and satisfied in full in
immediately available funds, or (B) for the period from and after the date of
the occurrence of any Event of Default, and for so long as such Event of Default
is continuing as determined by Agent and (ii) on the Revolving Loans at any time
outstanding in excess of either the Borrowing Base or the Revolving Loan Limit
(whether or not such excess(es) arise or are made with or without Agent's or any
Lender's knowledge or consent and whether made before or after an Event of
Default). Without limiting the generality of the foregoing, if an Event of
Default has occurred and is continuing as a result of the failure by Parent, at
any time, to timely file with the SEC an SEC Form 10-Q or 10-K, as required by
the Exchange Act, then, notwithstanding anything to the contrary contained in
this definition or in the definition of Applicable Margin, then, until such time
as Parent has filed such SEC Form 10-Q or 10-K (as applicable) with the SEC, at
Required Lender's election, either (1) the Applicable Margin shall be equal to
the highest percentages set forth in the definition of Applicable Margin,
regardless of the amount of Consolidated EBITDA then reported by Borrowers for
the applicable period in Borrowers' internally prepared quarterly financial
statements most recently delivered to Agent or (2) the Interest Rate shall be
calculated by Agent pursuant to subsection (b) of this definition based upon
Consolidated EBITDA as set forth in Borrowers' internally prepared quarterly
financial statements most recently delivered to Agent pursuant to Section 9.6.
1.77 "Inventory" shall mean, as to each Borrower and Guarantor, all of such
Borrower's and Guarantor's now owned and hereafter existing or acquired goods,
wherever located, which (a) are leased by such Borrower or Guarantor as lessor;
(b) are held by such Borrower or Guarantor for sale or lease or to be furnished
under a contract of service; (c) are furnished by such Borrower or Guarantor
under a contract of service; or (d) consist of raw materials, work in process,
finished goods or materials used or consumed in its business.
1.78 "Inventory Loan Limit" shall mean $60,000,000.
1.79 "Investment Property Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent, any
Borrower or Guarantor (as the case may be) and any securities intermediary,
commodity intermediary or other person who has custody, control or possession of
any investment property of such Borrower or Guarantor acknowledging that such
securities intermediary, commodity intermediary or other person has custody,
control or possession of such investment property on behalf of Agent, that it
will comply with entitlement orders originated by Agent with respect to such
investment property, or other instructions of Agent, and has such other terms
and conditions as Agent may require.
1.80 "Islandaire" shall mean Fedders Islandaire, Inc., a New York
corporation, and its successors and assigns permitted hereunder.
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1.81 "Island Metal" shall mean Island Metal Fabricating, Inc., a New York
corporation, and its successors and assigns permitted hereunder.
1.82 "Issuing Bank" shall mean Wachovia or any Lender that is approved by
Agent that shall issue a Letter of Credit for the account of a Borrower and have
agreed in a manner satisfactory to Agent to be subject to the terms hereof as an
Issuing Bank.
1.83 "Lenders" shall mean the financial institutions who are signatories
hereto as Lenders and other persons made a party to this Agreement as a Lender
in accordance with Section 13.7 hereof, and their respective successors and
assigns; each sometimes being referred to herein individually as a "Lender".
1.84 "Letter of Credit Documents" shall mean, with respect to any Letter of
Credit, such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk or (b) any collateral
security for such obligations.
1.85 "Letter of Credit Limit" shall mean $9,000,000.
1.86 "Letter of Credit Obligations" shall mean, at any time, the sum of (a)
the aggregate undrawn amount of all Letters of Credit outstanding at such time,
plus (b) the aggregate amount of all drawings under Letters of Credit for which
Issuing Bank has not at such time been reimbursed, plus (c) without duplication,
the aggregate amount of all payments made by each Lender to Issuing Bank with
respect to such Lender's participation in Letters of Credit as provided in
Section 2.2 for which Borrowers have not at such time reimbursed the Lenders,
whether by way of a Revolving Loan or otherwise.
1.87 "Letters of Credit" shall mean all letters of credit (whether
documentary or stand-by and whether for the purchase of inventory, equipment or
otherwise) issued by an Issuing Bank for the account of any Borrower pursuant to
this Agreement, and all amendments, renewals, extensions or replacements thereof
and including, but not limited to, the Existing Letters of Credit.
1.88 "License Agreements" shall have the meaning set forth in Section 8.11
hereof.
1.89 "Loans" shall mean, collectively, the Revolving Loans and the Term
Loans.
1.90 "London Interbank Offered Rate" shall mean, with respect to any
Eurodollar Rate Loan for the Interest Period applicable thereto, the rate of
interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in U.S. Dollars at approximately 11:00 A.M. (London
time) two (2) Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period; provided, that, if more than one rate
is specified on Telerate Page 3750, the applicable rate shall be the arithmetic
mean of all such rates. If, for any reason, such rate is not available, the term
"London Interbank Offered Rate" shall mean, with respect to any Eurodollar Loan
for the Interest Period applicable thereto, the rate of interest per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London
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interbank offered rate for deposits in Dollars at approximately 11:00 A.M.
(London time) two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates.
1.91 "Material Adverse Effect" shall mean a material adverse effect on (a)
the financial condition, business, performance or operations of Borrowers; (b)
the legality, validity or enforceability of this Agreement or any of the other
Financing Agreements; (c) the legality, validity, enforceability, perfection or
priority of the security interests and liens of Agent upon the Collateral; (d)
the Collateral or its value; (e) the ability of any Borrower to repay the
Obligations or of any Borrower to perform its obligations under this Agreement
or any of the other Financing Agreements as and when to be performed; or (f) the
ability of Agent or any Lender to enforce the Obligations or realize upon the
Collateral or otherwise with respect to the rights and remedies of Agent and
Lenders under this Agreement or any of the other Financing Agreements.
1.92 "Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements), written or oral, of any Borrower or
Guarantor involving monetary liability of or to any Person in an amount in
excess of $250,000 in any fiscal year and (b) any other contract or other
agreement (other than the Financing Agreements), whether written or oral, to
which any Borrower or Guarantor is a party as to which the breach,
nonperformance, cancellation or failure to renew by any party thereto would have
a Material Adverse Effect.
1.93 "Maximum Credit" shall mean the amount of $75,000,000 or such other
amount as may be established as the Maximum Credit subsequent to the date hereof
pursuant to Section 2.1(d) of this Agreement.
1.94 "Mortgages" shall mean, individually and collectively, each of the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, assigned, restated or replaced): (a) the
Mortgage, Future Advance, Assignment of Leases and Rents, Security Agreement and
Fixture Filing, dated December 1, 2004, by Addison in favor of Wachovia with
respect to the Real Property and related assets of such Borrower located in
Orlando, Florida, as assigned pursuant to Assignment of Mortgage, dated of even
date herewith, given by Wachovia to Agent, (b) the Indemnity Deed of Trust and
Security Agreement with Assignment of Rents and Fixture Filing, dated February
23, 2005, by Rotorex in favor of Wachovia with respect to the Real Property and
related assets of such Borrower located in Walkersville, Maryland, as assigned
pursuant to Assignment of Mortgage, dated of even date herewith, given by
Wachovia to Agent, and (c) any mortgage, deed of trust or deed to secure debt
executed and delivered after the date hereof by any Borrower or Guarantor with
respect to any other Real Property of such Borrower or Guarantor in favor of
Agent.
1.95 "Multiemployer Plan" shall mean 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,
Guarantor or any ERISA Affiliate or with respect to which any Borrower,
Guarantor or any ERISA Affiliate may incur any liability.
1.96 "Net Recovery Percentage" shall mean the fraction, expressed as a
percentage, (a) the numerator of which is the amount equal to the amount of the
recovery in respect of the Inventory at
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such time on a "net orderly liquidation value" basis as set forth in the most
recent acceptable appraisal of Inventory received by Agent in accordance with
Section 7.3, net of operating expenses, liquidation expenses and commissions,
and (b) the denominator of which is the applicable original cost of the
aggregate amount of the Inventory subject to such appraisal.
1.97 "NOLV" shall mean, as to Borrowers' Inventory at any time, the net
orderly liquidation value of such Inventory, as determined by the Agent based
upon the then most recent Inventory appraisal delivered to Agent pursuant to
Section 7.3 hereof.
1.98 "Obligations" shall mean (a) any and all Loans, Letter of Credit
Obligations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by any or all of Borrowers to Agent or any
Lender, including principal, interest, charges, fees, costs and expenses,
however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, arising under this Agreement or any of the other Financing
Agreements, whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal term of this Agreement or after the
commencement of any case with respect to such Borrower under the United States
Bankruptcy Code or any similar statute (including the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case, whether or not such amounts are allowed or allowable in whole or in part
in such case), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated, or
secured or unsecured and (b) for purposes only of Section 5.1 hereof and subject
to the priority in right of payment set forth in Section 6.4 hereof, all
obligations, liabilities and indebtedness of every kind, nature and description
owing by any or all of Borrowers or Guarantors to Agent, any Lender, or any Bank
Product Provider arising under or pursuant to any Bank Products, whether now
existing or hereafter arising, provided, that, (i) as to any such obligations,
liabilities and indebtedness arising under or pursuant to a Hedge Agreement, the
same shall only be included within the Obligations if upon Agent's request,
Agent shall have entered into an agreement, in form and substance satisfactory
to Agent, with the Bank Product Provider that is a counterparty to such Hedge
Agreement, as acknowledged and agreed to by Borrowers and Guarantors, providing
for the delivery to Agent by such counterparty of information with respect to
the amount of such obligations and providing for the other rights of Agent and
such Bank Product Provider in connection with such arrangements, (ii) any Bank
Product Provider, other than Wachovia and its Affiliates, shall have delivered
written notice to Agent that (A) such Bank Product Provider has entered into a
transaction to provide Bank Products to a Borrower and Guarantor and (B) the
obligations arising pursuant to such Bank Products provided to Borrowers and
Guarantors constitute Obligations entitled to the benefits of the security
interest of Agent granted hereunder, and Agent shall have accepted such notice
in writing and (iii) in no event shall any Bank Product Provider to whom such
obligations, liabilities or indebtedness are owing be deemed a Lender for
purposes hereof to the extent of and as to such obligations, liabilities or
indebtedness other than for purposes of Section 5.1 hereof and other than for
purposes of Sections 12.1, 12.2, 12.3(b), 12.6, 12.7, 12.9, 12.12 and 13.6
hereof and in no event shall such obligations be included in the Obligations to
the extent that the effect is that the value of the Collateral (as determined by
Agent) is less than the Obligations and Lenders would be found to be
undersecured in the event of the commencement of a case under the US Bankruptcy
Code against any Borrower and in no event shall the approval of any such person
be required in connection with the release or termination of any security
interest or lien of Agent..
1.99 "Other Taxes" shall have the meaning given to such term in Section 6.5
hereof.
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1.100 "Outstanding Addison Term Loan" shall have the meaning set forth in
Section 2.3(b).
1.101 "Parent" shall mean Fedders Corporation, a Delaware corporation, and
its successors and assigns permitted hereunder.
1.102 "Participant" shall mean any financial institution that acquires and
holds a participation in the interest of any Lender in any of the Loans and
Letters of Credit in conformity with the provisions of Section 13.7 of this
Agreement governing participations.
1.103 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.104 "Pension Plan" shall mean a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA which any Borrower or Guarantor sponsors,
maintains, or to which any Borrower, Guarantor or ERISA Affiliate makes, is
making, or is obligated to make contributions, other than a Multiemployer Plan.
1.105 "Plan" shall mean an employee benefit plan (as defined in Section
3(3) of ERISA) which any Borrower or Guarantor sponsors, maintains, or to which
it makes, is making, or is obligated to make contributions, or in the case of a
Multiemployer Plan has made contributions at any time during the immediately
preceding six (6) plan years or with respect to which any Borrower or Guarantor
may incur liability.
1.106 "Port Processor" shall mean any person at any time retained by
Borrowers to perform port of entry services to process Borrower's Imported
Inventory and supply facilities, labor and materials to Borrowers in connection
therewith.
1.107 "Post-Closing Trademark Appraisal" shall mean a written appraisal
report with respect to Borrowers' registered trademarks, addressed to Agent,
performed by an appraiser, and in form and substance, satisfactory to Agent.
1.108 "Post-Closing Trademark Term Loans" shall have the meaning set forth
in Section 2.3(a).
1.109 "Prime Rate" shall mean the rate from time to time publicly announced
by Wachovia, or its successors, as its prime rate, whether or not such announced
rate is the best rate available at such bank.
1.110 "Prime Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.111 "Pro Rata Share" shall mean as to any Lender, the fraction (expressed
as a percentage) the numerator of which is such Lender's Commitment and the
denominator of which is the aggregate amount of all of the Commitments of
Lenders, as adjusted from time to time in accordance with the provisions of
Section 13.7 hereof; provided, that, if the Commitments have been
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terminated, the numerator shall be the unpaid amount of such Lender's Loans and
its interest in the Letters of Credit and the denominator shall be the aggregate
amount of all unpaid Loans and Letters of Credit.
1.112 "Real Property" shall mean all now owned and hereafter acquired real
property of each Borrower and Guarantor, including leasehold interests, together
with all buildings, structures, and other improvements located thereon and all
licenses, easements and appurtenances relating thereto, wherever located,
including the real property and related assets more particularly described in
the Mortgages.
1.113 "Receivables" shall mean all of the following now owned or hereafter
arising or acquired property of each Borrower and Guarantor: (a) all Accounts;
(b) all interest, fees, late charges, penalties, collection fees and other
amounts due or to become due or otherwise payable in connection with any
Account; (c) all payment intangibles of such Borrower or Guarantor; (d) letters
of credit, indemnities, guarantees, security or other deposits and proceeds
thereof issued payable to any Borrower or Guarantor or otherwise in favor of or
delivered to any Borrower or Guarantor in connection with any Account; or (e)
all other accounts, contract rights, chattel paper, instruments, notes, general
intangibles and other forms of obligations owing to any Borrower or Guarantor,
whether from the sale and lease of goods or other property, licensing of any
property (including Intellectual Property or other general intangibles),
rendition of services or from loans or advances by any Borrower or Guarantor or
to or for the benefit of any third person (including loans or advances to any
Affiliates or Subsidiaries of any Borrower or Guarantor) or otherwise associated
with any Accounts, Inventory or general intangibles of any Borrower or Guarantor
(including, without limitation, choses in action, causes of action, tax refunds,
tax refund claims, any funds which may become payable to any Borrower or
Guarantor in connection with the termination of any Plan or other employee
benefit plan and any other amounts payable to any Borrower or Guarantor from any
Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, casualty or any similar types of insurance and any proceeds
thereof and proceeds of insurance covering the lives of employees on which any
Borrower or Guarantor is a beneficiary).
1.114 "Records" shall mean, as to each Borrower and Guarantor, all of such
Borrower's and Guarantor's present and future books of account of every kind or
nature, purchase and sale agreements, invoices, ledger cards, bills of lading
and other shipping evidence, statements, correspondence, memoranda, credit files
and other data relating to the Collateral or any account debtor, together with
the tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are stored
(including any rights of any Borrower or Guarantor with respect to the foregoing
maintained with or by any other person).
1.115 "Renewal Date" shall have the meaning set forth in Section 13.1
hereof.
1.116 "Register" shall have the meaning set forth in Section 13.7 hereof.
1.117 "Required Lenders" shall mean, at any time, those Lenders whose Pro
Rata Shares aggregate sixty-six and two-thirds (66 2/3%) percent or more of the
aggregate of the Commitments of all Lenders, or if the Commitments shall have
been terminated, Lenders to whom at least sixty-six and two-thirds (66 2/3%)
percent of the then outstanding Obligations are owing.
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1.118 "Reserves" shall mean as of any date of determination, such amounts
as Agent may from time to time establish and revise in good faith reducing the
amount of Loans and Letters of Credit that would otherwise be available to any
Borrower under the lending formula(s) provided for herein: (a) to reflect
events, conditions, contingencies or risks which, as determined by Agent in good
faith, adversely affect, or would have a reasonable likelihood of adversely
affecting, either (i) the Collateral or any other property which is security for
the Obligations or its value or (ii) the assets, business or prospects of any
Borrower or Obligor or (iii) the security interests and other rights of Agent or
any Lender in the Collateral (including the enforceability, perfection and
priority thereof) or (b) to reflect Agent's good faith belief that any
collateral report or financial information furnished by or on behalf of any
Borrower or Obligor to Agent is or may have been incomplete, inaccurate or
misleading in any material respect or (c) to reflect outstanding Letters of
Credit as provided in Section 2.2 hereof or (d) in respect of any state of facts
which Agent determines in good faith constitutes a Default or an Event of
Default. Without limiting the generality of the foregoing, Reserves may, at
Agent's option, be established to reflect: (i) dilution with respect to the
accounts of a Borrower (based on the ratio of the aggregate amount of non-cash
reductions in accounts for any period to the aggregate dollar amount of the
sales of such Borrower for such period), other than from chargebacks, exceeds or
is reasonably anticipated to exceed five (5%) percent, (ii) chargebacks with
respect to Accounts, (iii) returns, discounts, claims, credits and allowances of
any nature that are not paid pursuant to the reduction of Accounts, including,
without limitation, the amount of Inventory that Agent estimates in good faith
may be returned by Wal-Mart and/or by any other customer to whom Borrowers are
permitted to sell Inventory on a sale and return basis pursuant to this
Agreement, based on "sell-through" reports at any time delivered by Borrowers to
Agent pursuant to Section 7.3 and such other information as Agent shall
determine in its discretion, (iv) the sales, excise or similar taxes included in
the amount of any Accounts reported to Agent, (v) a change in the turnover, age
or mix of the categories of Inventory that adversely affects the aggregate value
of all Inventory, (vi) amounts due or to become due to owners and licensors of
trademarks and other Intellectual Property used by any Borrower, (vii) Agent's
good faith belief that any Eligible Imported Inventory with respect to which
Agent and Lenders have made Revolving Loans will remain in transit to Borrowers'
premises in excess of sixty (60) days, and (viii) obligations, liabilities or
indebtedness (contingent or otherwise) of Borrowers or Guarantors to Agent, any
Lender, any Affiliate of any Lender or any other financial institution
acceptable to Agent (and in each case as to any such Lender, Affiliate of any
Lender or other financial institution only to the extent approved by Agent)
arising under or in connection with any Bank Products or as such Affiliate or
Person may otherwise require in connection therewith to the extent that such
obligations, liabilities or indebtedness constitute Obligations as such term is
defined herein or otherwise receive the benefit of the security interest of
Agent in any Collateral. To the extent Agent may revise the lending formulas
used to determine the Borrowing Base or establish new criteria or revise
existing criteria for Eligible Accounts or Eligible Inventory so as to address
any circumstances, condition, event or contingency in a manner satisfactory to
Agent, Agent shall not establish a Reserve for the same purpose. The amount of
any Reserve established by Agent shall have a reasonable relationship to the
event, condition or other matter which is the basis for such reserve as
determined by Agent in good faith.
1.119 "Revolving Loan Limit" shall mean, at any time, the amount equal to
the Maximum Credit minus the then outstanding principal amount of the Term
Loans.
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1.120 "Revolving Loans" shall mean the loans now or hereafter made by or on
behalf of any Lender or by Agent for the account of any Lender on a revolving
basis pursuant to the Credit Facility (involving advances, repayments and
readvances) as set forth in Section 2.1 hereof.
1.121 "Rotorex" shall mean Rotorex Company, Inc., a Delaware corporation
and its successors and assigns permitted hereunder.
1.122 "Rotorex Real Property" shall mean the Real Property owned by Rotorex
known commonly as 0000 X Xxxxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxx.
1.123 "Rotorex Real Property Availability" shall mean $5,000,000 as of the
date hereof (the "Closing Rotorex Real Property Availability"), which Closing
Rotorex Real Property Availability shall be reduced by $100,000 on a monthly
basis, commencing on the earlier to occur of (a) the first day of the first
month immediately following the date on which the Rotorex Real Property Term
Loan has been paid in full and (b) January 1, 2007, and which reduction shall
thereafter continue on the first day of each successive month thereafter.
1.124 "Rotorex Real Property Term Loan" shall mean, collectively, the term
loans made by Lenders to Borrowers on the date hereof with respect to the
Rotorex Real Property pursuant to Section 2.3(a), in the aggregate principal
amount of $3,000,000.
1.125 "SEC" shall mean the United States Securities and Exchange
Commission.
1.126 "Secured Parties" shall mean, collectively, (a) Agent, (b) Lenders
and (c) any other Bank Product Provider, provided that, as to any Bank Product
Provider (other than Wachovia), only to the extent of the Obligations owing to
such Bank Product Provider. Such parties are sometimes referred to herein
individually as a "Secured Party"
1.127 "Senior Notes" shall mean the 9 7/8% Senior Notes due March 1, 2014,
issued by FNA pursuant to the Senior Notes Indenture in the aggregate principal
amount of $155,000,000, as the same now exists or may hereafter be (as permitted
hereunder) amended, modified, supplemented, extended, renewed, restated or
replaced.
1.128 "Senior Notes Guaranty" shall mean the "Guaranty" of the Senior Notes
by each of the Senior Notes Guarantors under the Senior Notes Indenture.
1.129 "Senior Notes Indenture" shall mean the Indenture, dated as of March
8, 2004, among FNA, Fedders and certain Subsidiaries of Fedders as "Guarantors"
thereunder and the Senior Notes Trustee, as in effect on the date hereof or as
may hereafter be (as permitted hereby) amended, modified, supplemented,
extended, renewed, restated or replaced.
1.130 "Senior Notes Trustee" shall mean U.S. Bank, National Association, as
trustee under the Senior Notes Indenture, and its successors and assigns, and
any replacement trustee permitted pursuant to the terms and conditions of the
Senior Notes Indenture.
1.131 "Solvent" shall mean, at any time with respect to any Person, that at
such time such Person (a) is able to pay its debts as they mature and has (and
has a reasonable basis to believe it will continue to have) sufficient capital
(and not unreasonably small capital) to carry on its business
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consistent with its practices as of the date hereof, and (b) the assets and
properties of such Person at a fair valuation (and including as assets for this
purpose at a fair valuation all rights of subrogation, contribution or
indemnification arising pursuant to any guarantees given by such Person) are
greater than the Indebtedness of such Person, and including subordinated and
contingent liabilities computed at the amount which, such person has a
reasonable basis to believe, represents an amount which can reasonably be
expected to become an actual or matured liability (and including as to
contingent liabilities arising pursuant to any guarantee the face amount of such
liability as reduced to reflect the probability of it becoming a matured
liability).
1.132 "Special Agent Advances" shall have the meaning set forth in Section
12.11 hereof.
1.133 "Subsidiary" or "subsidiary" shall mean, with respect to any Person,
any corporation, limited liability company, limited liability partnership or
other limited or general partnership, trust, association or other business
entity of which an aggregate of at least a majority of the outstanding Capital
Stock or other interests entitled to vote in the election of the board of
directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), managers, trustees
or other controlling persons, or an equivalent controlling interest therein, of
such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more subsidiaries of such Person.
1.134 "Term Loans" shall mean, collectively, (a) the Outstanding Addison
Term Loan, (b) the Trademark Term Loans and (c) the Rotorex Real Property Term
Loan; sometimes being referred to herein individually as a "Term Loan".
1.135 "Trademark Term Loans" shall mean, collectively, the term loans made
by or on behalf of Lenders to Borrowers pursuant to Section 2.3(a) based upon
certain registered trademarks owned by Borrowers.
1.136 "Trion" shall mean Trion, Inc., a Pennsylvania corporation, and its
successors and assigns permitted hereunder.
1.137 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of New York, and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of New York on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as Agent may otherwise determine).
1.138 "Unused Line Fee Base Amount" shall mean $50,000,000.
1.139 "Value" shall mean, as determined by Agent in good faith, with
respect to Inventory, the lower of (a) cost computed on a first-in first-out
basis in accordance with GAAP or (b) market value, provided, that, for purposes
of the calculation of the Borrowing Base, (i) the Value of the Inventory shall
not include: (A) the portion of the value of Inventory equal to the profit
earned by any Affiliate on the sale thereof to any Borrower or (B) write-ups or
write-downs in value with respect to currency exchange rates and (ii)
notwithstanding anything to the contrary contained herein, the cost of the
Inventory shall be computed in the same manner and consistent with the most
recent appraisal of the Inventory received and accepted by Agent prior to the
date hereof, if any.
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1.140 "Voting Stock" shall mean with respect to any Person, (a) one (1) or
more classes of Capital Stock of such Person having general voting powers to
elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
1.141 "Wachovia" shall mean Wachovia Bank, National Association, in its
individual capacity, and its successors and assigns.
1.142 "Wal-Mart" shall mean Wal-Mart Stores, Inc. and its successors and
assigns.
SECTION 2. CREDIT FACILITIES
2.1 Loans.
(a) Subject to and upon the terms and conditions contained herein, each
Lender severally (and not jointly) agrees to make its Pro Rata Share of
Revolving Loans to Borrowers from time to time in amounts requested by
Administrative Borrower on behalf of Borrowers up to the aggregate amount
outstanding for all Lenders at any time equal to the lesser of: (i) the
Borrowing Base at such time or (ii) the Revolving Loan Limit at such time.
(b) Except in Agent's discretion, with the consent of all Lenders, or as
otherwise provided herein, (i) the aggregate amount of the Loans and the Letter
of Credit Obligations outstanding at any time shall not exceed the Maximum
Credit, (ii) the aggregate principal amount of the Revolving Loans and Letter of
Credit Obligations outstanding at any time to Borrowers shall not exceed the
lesser of: (A) the Borrowing Base or (B) the Revolving Loan Limit, (iii) the
aggregate principal amount of the Revolving Loans and Letters of Credit
outstanding to Borrower based on Fedders Canada Eligible Accounts shall not
exceed the Fedders Canada Accounts Loan Limit, (iv) the aggregate principal
amount of the Revolving Loans and Letters of Credit outstanding at any time to
Borrowers based on Fedders Canada Eligible Inventory shall not exceed the
Fedders Canada Inventory Loan Limit, (v) the aggregate principal amount of the
Revolving Loans outstanding to Borrowers based on the Eligible Inventory of
Borrowers shall not exceed the Inventory Loan Limit, (vi) the aggregate
principal amount of the Revolving Loans and Letters of Credit outstanding to
Borrowers based on Eligible Imported Inventory shall not exceed the Imported
Inventory Loan Sublimit, and (vii) the aggregate principal amount of the
Revolving Loans and Letters of Credit outstanding to Borrowers based on Eligible
Consigned Inventory shall not exceed the Consigned Inventory Loan Sublimit.
(c) In the event that (i) the aggregate amount of the Loans and the Letter
of Credit Obligations outstanding at any time exceed the Maximum Credit, or (ii)
except as otherwise provided herein, the aggregate principal amount of the
Revolving Loans and Letter of Credit Obligations outstanding to Borrowers exceed
the Borrowing Base or the Revolving Loan Limit, or (iii) the aggregate principal
amount of the Revolving Loans and Letters of Credit outstanding to Borrowers
based on Fedders Canada Eligible Accounts exceeds the Fedders Canada Accounts
Loan Limit, or (iv) the aggregate principal amount of the Revolving Loans and
Letters of Credit
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outstanding to Borrowers based on Fedders Canada Eligible Inventory exceeds the
Fedders Canada Inventory Loan Limit, or (v) the aggregate principal amount of
Revolving Loans and Letter of Credit Obligations based on the Eligible Inventory
of Borrowers exceed the Inventory Loan Limit, or (vi) the aggregate principal
amount of Revolving Loans and Letters of Credit based on the Eligible Imported
Inventory of all Borrowers exceeds the Imported Inventory Loan Sublimit, or
(vii) the aggregate principal amount of the Revolving Loans and Letters of
Credit outstanding to Borrowers based on Eligible Consigned Inventory exceeds
the Consigned Inventory Loan Sublimit, such event shall not limit, waive or
otherwise affect any rights of Agent or Lenders in such circumstances or on any
future occasions and Borrowers shall, upon demand by Agent, which may be made at
any time or from time to time, immediately repay to Agent the entire amount of
any such excess(es) for which payment is demanded.
(d) Notwithstanding anything to the contrary contained herein:
(i) If on or before April 30, 2006, Wachovia shall not have entered
into an Assignment and Acceptance with at least one (1) additional Lender, in
accordance with Section 13.7, pursuant to which Wachovia shall have assigned a
portion of its Commitment in an aggregate amount equal to at least $25,000,000,
then, regardless of the reason underlying the foregoing (and without any
liability whatsoever of Wachovia to Borrowers and Guarantors on account
thereof), Agent shall have the right to deliver written notice thereof to
Administrative Borrower and the Maximum Credit shall be automatically reduced to
$50,000,000 effective as of June 30, 2006. Any such reduction of the Maximum
Credit shall be without penalty or premium; and
(ii) If the Maximum Credit shall have been reduced in accordance with
subsection (d)(i) immediately above, Agent and Lenders shall have the right to
thereafter increase the Maximum Credit to $75,000,000 and to assign additional
Commitments aggregating $25,000,000 to one or more then existing or new Lenders,
in accordance with Section 13.7, and Borrowers and Guarantors shall, promptly
upon Agent's request, duly authorize, execute and deliver with and in favor of
Agent and Lenders, an amendment to this Agreement, in form and substance
satisfactory to Agent, providing for such increase in the Maximum Credit and
other amendments to this Agreement related thereto as may be required by Agent
in connection therewith.
2.2 Letters of Credit.
(a) Subject to and upon the terms and conditions contained herein and in
the Letter of Credit Documents, at the request of a Borrower (or Administrative
Borrower on behalf of such Borrower), Agent agrees to cause Issuing Bank to
issue, and Issuing Bank agrees to issue, for the account of such Borrower one or
more Letters of Credit, for the ratable risk of each Lender according to its Pro
Rata Share, containing terms and conditions acceptable to Agent and Issuing
Bank.
(b) The Borrower requesting such Letter of Credit (or Administrative
Borrower on behalf of such Borrower) shall give Agent and Issuing Bank three (3)
Business Days' prior written notice of such Borrower's request for the issuance
of a Letter of Credit. Such notice shall be irrevocable and shall specify the
original face amount of the Letter of Credit requested, the effective date
(which date shall be a Business Day and in no event shall be a date less than
ten (10) days prior to the end of the then current term of this Agreement) of
issuance of such requested Letter of Credit, whether such
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Letter of Credit may be drawn in a single or in partial draws, the date on which
such requested Letter of Credit is to expire (which date shall be a Business Day
and shall not be more than one year from the date of issuance), the purpose for
which such Letter of Credit is to be issued, and the beneficiary of the
requested Letter of Credit. The Borrower requesting the Letter of Credit (or
Administrative Borrower on behalf of such Borrower) shall attach to such notice
the proposed terms of the Letter of Credit. The renewal or extension of any
Letter of Credit shall, for purposes hereof be treated in all respects the same
as the issuance of a new Letter of Credit hereunder.
(c) In addition to being subject to the satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the other terms and
conditions contained herein, no Letter of Credit shall be available unless each
of the following conditions precedent have been satisfied in a manner
satisfactory to Agent: (i) the Borrower requesting such Letter of Credit (or
Administrative Borrower on behalf of such Borrower) shall have delivered to
Issuing Bank at such times and in such manner as Issuing Bank may require, an
application, in form and substance satisfactory to Issuing Bank and Agent, for
the issuance of the Letter of Credit and such other Letter of Credit Documents
as may be required pursuant to the terms thereof, and the form and terms of the
proposed Letter of Credit shall be satisfactory to Agent and Issuing Bank, (ii)
as of the date of issuance, no order of any court, arbitrator or other
Governmental Authority shall purport by its terms to enjoin or restrain money
center banks generally from issuing letters of credit of the type and in the
amount of the proposed Letter of Credit, and no law, rule or regulation
applicable to money center banks generally and no request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over money center banks generally shall prohibit, or request that
Issuing Bank refrain from, the issuance of letters of credit generally or the
issuance of such Letter of Credit, (iii) after giving effect to the issuance of
such Letter of Credit, the Letter of Credit Obligations shall not exceed the
Letter of Credit Limit, and (iv) the Excess Availability prior to giving effect
to any Reserves with respect to such Letter of Credit, on the date of the
proposed issuance of any Letter of Credit shall be equal to or greater than: (A)
if the proposed Letter of Credit is for the purpose of purchasing Eligible
Inventory and the documents of title with respect thereto are consigned to
Issuing Bank, the sum of (1) the percentage equal to one hundred (100%) percent
minus the then Applicable Percentage with respect to the Eligible Inventory
which will be purchased pursuant to such Letter of Credit multiplied by the
Value of such Eligible Inventory, plus (2) freight, taxes, duty and other
amounts which Agent estimates must be paid in connection with such Inventory
upon arrival and for delivery to one of Borrowers' locations for Eligible
Inventory within the United States of America and (B) if the proposed Letter of
Credit is for any other purpose or the documents of title are not consigned to
Issuing Bank in connection with a Letter of Credit for the purpose of purchasing
Inventory, an amount equal to one hundred (100%) percent of the Letter of Credit
Obligations with respect thereto. Effective on the issuance of each Letter of
Credit, a Reserve shall be established in the applicable amount set forth in
Section 2.2(c)(iv)(A) or Section 2.2(c)(iv)(B).
(d) Except in Agent's discretion, with the consent of all Lenders, the
amount of all outstanding Letter of Credit Obligations shall not at any time
exceed the Letter of Credit Limit.
(e) Each Borrower shall reimburse immediately Issuing Bank for any draw
under any Letter of Credit issued for the account of such Borrower and pay
Issuing Bank the amount of all other charges and fees payable to Issuing Bank in
connection with any Letter of Credit issued for the account of such Borrower
immediately when due, irrespective of any claim, setoff, defense or other right
which such Borrower may have at any time against Issuing Bank or any other
Person. Each
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drawing under any Letter of Credit or other amount payable in connection
therewith when due shall constitute a request by the Borrower for whose account
such Letter of Credit was issued to Agent for a Prime Rate Loan in the amount of
such drawing or other amount then due, and shall be made by Agent on behalf of
Lenders as a Revolving Loan (or Special Agent Advance, as the case may be). The
date of such Loan shall be the date of the drawing, or as to other amounts, the
due date therefor. Any payments made by or on behalf of Agent or any Lender to
Issuing Bank and/or related parties in connection with any Letter of Credit
shall constitute additional Revolving Loans to such Borrower pursuant to this
Section 2 (or Special Agent Advances as the case may be).
(f) Borrowers and Guarantors shall indemnify and hold Agent and Lenders
harmless from and against any and all losses, claims, damages, liabilities,
costs and expenses which Agent or any Lender may suffer or incur in connection
with any Letter of Credit and any documents, drafts or acceptances relating
thereto, including any losses, claims, damages, liabilities, costs and expenses
due to any action taken by Issuing Bank or correspondent with respect to any
Letter of Credit, except for such losses, claims, damages, liabilities, costs or
expenses that are a direct result of the gross negligence or willful misconduct
of Agent or any Lender as determined pursuant to a final non-appealable order of
a court of competent jurisdiction. Each Borrower and Guarantor assumes all risks
with respect to the acts or omissions of the drawer under or beneficiary of any
Letter of Credit and for such purposes the drawer or beneficiary shall be deemed
such Borrower's agent. Each Borrower and Guarantor assumes all risks for, and
agrees to pay, all foreign, Federal, State and local taxes, duties and levies
relating to any goods subject to any Letter of Credit or any documents, drafts
or acceptances thereunder. Each Borrower and Guarantor hereby releases and holds
Agent and Lenders harmless from and against any acts, waivers, errors, delays or
omissions with respect to or relating to any Letter of Credit, except for the
gross negligence or willful misconduct of Agent or any Lender as determined
pursuant to a final, non-appealable order of a court of competent jurisdiction.
The provisions of this Section 2.2(f) shall survive the payment of Obligations
and the termination of this Agreement.
(g) In connection with Inventory purchased pursuant to any Letter of
Credit, Borrowers and Guarantors shall, at Agent's request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving
or holding cash, checks, Inventory, documents or instruments in which Agent
holds a security interest that, upon Agent's request, such items are to be
delivered to Agent and/or subject to Agent's order, and if they shall come into
such Borrower's or Guarantor's possession, to deliver them, upon Agent's
request, to Agent in their original form. Except as otherwise provided herein,
Agent shall not exercise such right to request such items so long as no Default
or Event of Default shall exist or have occurred and be continuing. Except as
Agent may otherwise specify, Borrowers and Guarantors shall designate Issuing
Bank as the consignee on all bills of lading and other negotiable and
non-negotiable documents.
(h) Each Borrower and Guarantor hereby irrevocably authorizes and directs
Issuing Bank to name such Borrower or Guarantor as the account party therein and
to deliver to Agent all instruments, documents and other writings and property
received by Issuing Bank pursuant to the Letter of Credit and to accept and rely
upon Agent's instructions and agreements with respect to all matters arising in
connection with the Letter of Credit or the Letter of Credit Documents with
respect thereto. Nothing contained herein shall be deemed or construed to grant
any Borrower or Guarantor any right or authority to pledge the credit of Agent
or any Lender in any manner. Borrowers and Guarantors shall be bound by any
reasonable interpretation made in good faith by Agent, or Issuing
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Bank under or in connection with any Letter of Credit Accommodation or any
documents, drafts or acceptances thereunder, notwithstanding that such
interpretation may be inconsistent with any instructions of any Borrower or
Guarantor.
(i) Immediately upon the issuance or amendment of any Letter of Credit,
each Lender shall be deemed to have irrevocably and unconditionally purchased
and received, without recourse or warranty, an undivided interest and
participation to the extent of such Lender's Pro Rata Share of the liability
with respect to such Letter of Credit and the obligations of Borrowers with
respect thereto (including all Letter of Credit Obligations with respect
thereto). Each Lender shall absolutely, unconditionally and irrevocably assume,
as primary obligor and not as surety, and be obligated to pay to Issuing Bank
therefor and discharge when due, its Pro Rata Share of all of such obligations
arising under such Letter of Credit. Without limiting the scope and nature of
each Lender's participation in any Letter of Credit, to the extent that Issuing
Bank has not been reimbursed or otherwise paid as required hereunder or under
any such Letter of Credit, each such Lender shall pay to Issuing Bank its Pro
Rata Share of such unreimbursed drawing or other amounts then due to Issuing
Bank in connection therewith.
(j) The obligations of Borrowers to pay each Letter of Credit Obligations
and the obligations of Lenders to make payments to Agent for the account of
Issuing Bank with respect to Letters of Credit shall be absolute, unconditional
and irrevocable and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances, whatsoever, notwithstanding the
occurrence or continuance of any Default, Event of Default, the failure to
satisfy any other condition set forth in Section 4 or any other event or
circumstance. If such amount is not made available by a Lender when due, Agent
shall be entitled to recover such amount on demand from such Lender with
interest thereon, for each day from the date such amount was due until the date
such amount is paid to Agent at the interest rate then payable by any Borrower
in respect of Loans that are Prime Rate Loans. Any such reimbursement shall not
relieve or otherwise impair the obligation of Borrowers to reimburse Issuing
Bank under any Letter of Credit or make any other payment in connection
therewith.
2.3 Term Loans.
(a) Subject to and upon the terms and conditions contained herein, each
Lender severally (and not jointly) agrees to make term loans to Borrowers based
upon Borrowers' registered trademarks in an amount equal to its Pro Rata Share
of such term loans made to Borrowers as of the date hereof in the aggregate
original principal amount of $2,500,000 ("Closing Trademark Term Loans"). In
addition, if Agent receives a Post-Closing Trademark Appraisal on or before
March 6, 2006, and if fifty (50%) percent of the aggregate value of Borrowers'
registered trademarks, as reflected in such Post-Closing Trademark Appraisal
(the "Appraised Trademarks Value") exceeds $2,500,000, then subject to and on
the terms and conditions contained herein, each Lender severally (and not
jointly) agrees to make its Pro Rata Share of additional trademark term loans at
any time on or before March 6, 2006 ("Post-Closing Trademark Term Loans"). The
Post-Closing Trademark Term Loans shall be in an aggregate original principal
amount which, when added to and consolidated with the then outstanding Closing
Trademark Term Loans, shall not exceed an amount equal to the lesser of: (i)
$5,000,000, or (ii) fifty (50%) percent of the Appraised Trademark Value (such
lesser amount, the "Trademark Term Loans"). The Trademark Term Loans shall be
repaid by Borrowers to Agent, for the benefit of Lenders, in consecutive weekly
installments of $1,000,000
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each, commencing with the week which commences on Monday, March 6, 2006, and,
unless sooner demanded pursuant to the terms hereof, the entire unpaid principal
balance thereof shall be due and payable in full, without notice or demand, on
April 3, 2006. Notwithstanding anything to the contrary contained in this
Section 2.3(a), if the Post-Closing Trademark Appraisal reflects that the
Appraised Trademark Value is less than $5,000,000, then (A) Borrowers shall
promptly make a prepayment with respect to the Closing Trademark Term Loans in
an amount equal to the difference between (1) $2,500,000 and (2) fifty (50%)
percent of the Appraised Trademark Value and (B) the entire unpaid principal
balance of the Closing Trademark Term Loans shall be due and payable in full,
without notice or demand, on March 20, 2006.
(b) Borrowers hereby acknowledge and agree that (i) as of the date hereof,
the outstanding principal balance of the Addison Term Loan made by Wachovia to
Addison pursuant to, and as such term is defined in, the Existing Financing
Agreements is $2,187,500 ("Outstanding Addison Term Loan") and (ii) Borrowers
shall pay the Outstanding Addison Term Loan to Agent, for the benefit of
Lenders, in consecutive monthly installments of $26,041.67 each commencing on
March 1, 2006 and on the same day of each successive month thereafter, and
unless sooner demanded pursuant to the terms hereof, the entire unpaid principal
balance of the Outstanding Addison Term Loan shall be due and payable in full,
without notice or demand, upon the earlier to occur of (A) termination of this
Agreement or (B) the non-renewal hereof upon the occurrence of the Renewal Date.
The Outstanding Addison Term Loan shall constitute a Prime Rate Loan.
(c) Subject to and on the terms and conditions contained herein, each
Lender severally (and not jointly) agrees to make term loans to Borrowers based
upon the Rotorex Real Property (in an amount equal to its Pro Rata Share of such
term loans made to Borrowers as of the date hereof in the aggregate original
principal amount of $3,000,000 (collectively, the "Rotorex Real Property Term
Loan"). The Rotorex Real Property Term Loan shall be made in addition, and not
in limitation of, any Revolving Loans that may at any time be made by Agent and
Lenders to Borrowers based upon Rotorex Real Property Availability. The Rotorex
Real Property Term Loan shall be repaid by Borrowers to Agent, for the benefit
of Lenders, on a monthly basis, commencing on March 1, 2006 and on the first day
of each successive month thereafter, by an amount equal to (i) $200,000 for each
monthly installment due and payable on March 1, 2006 through and including
October 1, 2006, (ii) $100,000 for each monthly installment due and payable on
November 1, 2006 and on December 1, 2006, and (iii) if not sooner paid or
demanded pursuant to the terms hereof, shall be due and payable in full, without
notice or demand, on January 1, 2007.
2.4 Commitments. The aggregate amount of each Lender's Pro Rata Share of
the Loans and Letter of Credit Obligations shall not exceed the amount of such
Lender's Commitment, as the same may from time to time be amended in accordance
with the provisions hereof.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrowers shall pay to Agent, for the benefit of Lenders, interest on
the outstanding principal amount of the Loans at the Interest Rate. All interest
accruing hereunder on and after the date of any Event of Default or termination
hereof shall be payable on demand.
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(b) Administrative Borrower may from time to time request Eurodollar Rate
Loans or may request that Prime Rate Loans be converted to Eurodollar Rate Loans
or that any existing Eurodollar Rate Loans continue for an additional Interest
Period. Such request from Administrative Borrower shall specify the amount of
the Eurodollar Rate Loans or the amount of the Prime Rate Loans to be converted
to Eurodollar Rate Loans or the amount of the Eurodollar Rate Loans to be
continued (subject to the limits set forth below) and the Interest Period to be
applicable to such Eurodollar Rate Loans. Subject to the terms and conditions
contained herein, three (3) Business Days after receipt by Agent of such a
request from Administrative Borrower, such Eurodollar Rate Loans shall be made
or Prime Rate Loans shall be converted to Eurodollar Rate Loans or such
Eurodollar Rate Loans shall continue, as the case may be, provided, that, (i) no
Default or Event of Default shall exist or have occurred and be continuing, (ii)
no party hereto shall have sent any notice of termination of this Agreement,
(iii) Administrative Borrower shall have complied with such customary procedures
as are established by Agent and specified by Agent to Administrative Borrower
from time to time for requests by Borrowers for Eurodollar Rate Loans, (iv) no
more than six (6) Interest Periods may be in effect at any one time, (v) the
aggregate amount of the Eurodollar Rate Loans must be in an amount not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof, (vi) the
maximum amount of the Eurodollar Rate Loans in the aggregate at any time
requested by Borrowers shall not exceed the amount equal to (A) the lowest
aggregate principal amount of the Term Loans which it is anticipated will be
outstanding as of the last day of the applicable Interest Period plus (B) eighty
(80%) percent of the lowest principal amount of the Revolving Loans which it is
anticipated will be outstanding during the applicable Interest Period, in each
case as determined by Agent in good faith (but with no obligation of Agent or
Lenders to make such Loans), and (vii) Agent and each Lender shall have
determined that the Interest Period or Adjusted Eurodollar Rate is available to
Agent and such Lender and can be readily determined as of the date of the
request for such Eurodollar Rate Loan. Any request by Administrative Borrower on
behalf of a Borrower for Eurodollar Rate Loans or to convert Prime Rate Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be
irrevocable. Notwithstanding anything to the contrary contained herein, (A)
Agent and Lenders shall not be required to purchase United States Dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market to fund any Eurodollar Rate Loans, but the provisions hereof shall be
deemed to apply as if Agent and Lenders had purchased such deposits to fund the
Eurodollar Rate Loans and (B) the Outstanding Addison Term Loan shall at all
times constitute a Prime Rate Loan.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate
Loans upon the last day of the applicable Interest Period, unless Agent has
received and approved a request to continue such Eurodollar Rate Loan at least
three (3) Business Days prior to such last day in accordance with the terms
hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent
to Administrative Borrower, be subsequently converted to Prime Rate Loans in the
event that this Agreement shall terminate or not be renewed. Borrowers shall pay
to Agent, for the benefit of Lenders, upon demand by Agent (or Agent may, at its
option, charge any loan account of any Borrower) any amounts required to
compensate any Lender or Participant for any loss (including loss of anticipated
profits), cost or expense incurred by such person, as a result of the conversion
of Eurodollar Rate Loans to Prime Rate Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrowers to Agent, for the account of
Lenders, (i) monthly in arrears not later than the first day of each calendar
month with respect to all Revolving Loans which are Prime Rate Loans and (ii) on
the last day of each Interest Period in respect of each
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Eurodollar Rate Loan , provided, that, if Borrower has selected an Interest
Period of six months, then, in addition on the corresponding date of the third
month of such Interest Period, in each case, calculated on the basis of a three
hundred sixty (360) day year and actual days elapsed. The interest rate on
non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or
decrease by an amount equal to each increase or decrease in the Prime Rate
effective on the date of any change in such Prime Rate. In no event shall
charges constituting interest payable by Borrowers to Agent and Lenders exceed
the maximum amount or the rate permitted under any applicable law or regulation,
and if any such part or provision of this Agreement is in contravention of any
such law or regulation, such part or provision shall be deemed amended to
conform thereto.
3.2 Fees.
(a) Borrowers shall pay to Agent, for the account of Lenders, monthly an
unused line fee at a rate equal to one-half of one (0.50%) percent per annum
calculated upon the amount by which the Unused Line Fee Base Amount exceeds the
average daily principal balance of the outstanding Revolving Loans and Letters
of Credit during the immediately preceding month (or part thereof) while this
Agreement is in effect and for so long thereafter as any of the Obligations are
outstanding, which fee shall be payable on the first day of each month in
arrears.
(b) In the case of standby letters of credit, Borrowers shall pay to Agent,
for the account of Lenders, a fee at a rate equal to one (1%) percent per annum
and in the case of trade letters of credit, Borrowers shall pay to Agent, for
the account of Lenders, a fee at a rate equal to one (1%) percent per annum, in
each case on the average daily maximum amount available to be drawn under all of
such Letters of Credit for the immediately preceding month (or part thereof),
payable in arrears as of the first day of each succeeding month, computed for
each day from the date of issuance to the date of expiration; except that
Borrowers shall pay, at Agent's option, without notice, such fee at a rate two
(2%) percent greater than the otherwise applicable rate on such average daily
maximum amount for: (i) the period from and after the date of termination or
non-renewal hereof until Lenders have received full and final payment of all
Obligations (notwithstanding entry of a judgment against any Borrower or
Guarantor) and (ii) the period from and after the date of the occurrence of an
Event of Default for so long as such Event of Default is continuing as
determined by Agent. Such letter of credit fees shall be calculated on the basis
of a three hundred sixty (360) day year and actual days elapsed and the
obligation of Borrowers to pay such fee shall survive the termination or
non-renewal of this Agreement. In addition to the letter of credit fees provided
above, Borrowers shall pay to Issuing Bank for its own account (without sharing
with Lenders) the letter of credit fronting and negotiation fees agreed to by
Borrowers and Issuing Bank from time to time and the customary charges from time
to time of Issuing Bank with respect to the issuance, amendment, transfer,
administration, cancellation and conversion of, and drawings under, such Letters
of Credit.
(c) Borrowers shall pay to Agent the other fees and amounts set forth in
the Fee Letter in the amounts and at the times specified therein. To the extent
payment in full of the applicable fee is received by Agent from Borrowers on or
about the date hereof, Agent shall pay to each Lender its share of such fees in
accordance with the terms of the arrangements of Agent with such Lender.
3.3 Changes in Laws and Increased Costs of Loans.
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(a) If after the date hereof, either (i) any change in, or in the
interpretation of, any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to any Lender or
any banking or financial institution from whom any Lender borrows funds or
obtains credit (a "Funding Bank"), or (ii) a Funding Bank or any Lender complies
with any future guideline or request from any central bank or other Governmental
Authority or (iii) a Funding Bank, any Lender or Issuing Bank determines that
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof has or would
have the effect described below, or a Funding Bank, any Lender or Issuing Bank
complies with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, and in the case of any event set forth in this clause (iii), such
adoption, change or compliance has or would have the direct or indirect effect
of reducing the rate of return on any Lender's or Issuing Bank's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or Issuing Bank could have achieved but for such adoption, change or compliance
(taking into consideration the Funding Bank's or Lender's or Issuing Bank's
policies with respect to capital adequacy) by an amount deemed by such Lender or
Issuing Bank to be material, and the result of any of the foregoing events
described in clauses (i), (ii) or (iii) is or results in an increase in the cost
to any Lender or Issuing Bank of funding or maintaining the Loans, the Letters
of Credit or its Commitment, then Borrowers and Guarantors shall from time to
time upon demand by Agent pay to Agent additional amounts sufficient to
indemnify such Lender or Issuing Bank, as the case may be, against such
increased cost on an after-tax basis (after taking into account applicable
deductions and credits in respect of the amount indemnified). A certificate as
to the amount of such increased cost shall be submitted to Administrative
Borrower by Agent or the applicable Lender and shall be conclusive, absent
manifest error.
(b) If prior to the first day of any Interest Period, (i) Agent shall have
determined in good faith (which determination shall be conclusive and binding
upon Borrowers and Guarantors) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining the
Adjusted Eurodollar Rate for such Interest Period, (ii) Agent has received
notice from the Required Lenders that the Adjusted Eurodollar Rate determined or
to be determined for such Interest Period will not adequately and fairly reflect
the cost to Lenders of making or maintaining Eurodollar Rate Loans during such
Interest Period, or (iii) Dollar deposits in the principal amounts of the
Eurodollar Rate Loans to which such Interest Period is to be applicable are not
generally available in the London interbank market, Agent shall give telecopy or
telephonic notice thereof to Administrative Borrower as soon as practicable
thereafter, and will also give prompt written notice to Administrative Borrower
when such conditions no longer exist. If such notice is given (A) any Eurodollar
Rate Loans requested to be made on the first day of such Interest Period shall
be made as Prime Rate Loans, (B) any Loans that were to have been converted on
the first day of such Interest Period to or continued as Eurodollar Rate Loans
shall be converted to or continued as Prime Rate Loans and (C) each outstanding
Eurodollar Rate Loan shall be converted, on the last day of the then-current
Interest Period thereof, to Prime Rate Loans. Until such notice has been
withdrawn by Agent, no further Eurodollar Rate Loans shall be made or continued
as such, nor shall any Borrower (or Administrative Borrower on behalf of any
Borrower) have the right to convert Prime Rate Loans to Eurodollar Rate Loans.
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(c) Notwithstanding any other provision herein, if the adoption of or any
change in any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority or in
the interpretation or application thereof occurring after the date hereof shall
make it unlawful for Agent or any Lender to make or maintain Eurodollar Rate
Loans as contemplated by this Agreement, (i) Agent or such Lender shall promptly
give written notice of such circumstances to Administrative Borrower (which
notice shall be withdrawn whenever such circumstances no longer exist), (ii) the
commitment of such Lender hereunder to make Eurodollar Rate Loans, continue
Eurodollar Rate Loans as such and convert Prime Rate Loans to Eurodollar Rate
Loans shall forthwith be canceled and, until such time as it shall no longer be
unlawful for such Lender to make or maintain Eurodollar Rate Loans, such Lender
shall then have a commitment only to make a Prime Rate Loan when a Eurodollar
Rate Loan is requested and (iii) such Lender's Loans then outstanding as
Eurodollar Rate Loans, if any, shall be converted automatically to Prime Rate
Loans on the respective last days of the then current Interest Periods with
respect to such Loans or within such earlier period as required by law. If any
such conversion of a Eurodollar Rate Loan occurs on a day which is not the last
day of the then current Interest Period with respect thereto, Borrowers and
Guarantors shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 3.3(d) below.
(d) Borrowers and Guarantors shall indemnify Agent and each Lender and hold
Agent and each Lender harmless from any loss or expense which Agent or such
Lender may sustain or incur as a consequence of (i) default by any Borrower in
making a borrowing of, conversion into or extension of Eurodollar Rate Loans
after Administrative Borrower on behalf of such Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (ii)
default by any Borrower in making any prepayment of a Eurodollar Rate Loan after
Administrative Borrower has given a notice thereof on behalf of such Borrower in
accordance with the provisions of this Agreement, and (iii) the making of a
prepayment of Eurodollar Rate Loans on a day which is not the last day of an
Interest Period with respect thereto. With respect to Eurodollar Rate Loans,
such indemnification may include an amount equal to the excess, if any, of (A)
the amount of interest which would have accrued on the amount so prepaid, or not
so borrowed, converted or extended, for the period from the date of such
prepayment or of such failure to borrow, convert or extend to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or extend, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Rate Loans provided for herein over (B) the amount of interest (as determined by
such Agent or such Lender) which would have accrued to Agent or such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank Eurodollar market. This covenant shall survive
the termination or non-renewal of this Agreement and the payment of the
Obligations.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letters of Credit. The
obligation of Lenders to make the initial Loans or of Issuing Bank to issue the
initial Letters of Credit hereunder is subject to the satisfaction of, or waiver
of, immediately prior to or concurrently with the making of such Loan or the
issuance of such Letter of Credit of each of the following conditions precedent:
(a) all requisite corporate action and proceedings in connection with this
Agreement and the other Financing Agreements shall be satisfactory in form and
substance to Agent, and Agent
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shall have received all information and copies of all documents, including
records of requisite corporate action and proceedings which Agent may have
requested in connection therewith, such documents where requested by Agent or
its counsel to be certified by appropriate corporate officers or Governmental
Authority (and including a copy of the certificate of incorporation of each
Borrower and Guarantor certified by the Secretary of State (or equivalent
Governmental Authority) which shall set forth the same complete corporate name
of such Borrower or Guarantor as is set forth herein and such document as shall
set forth the organizational identification number of each Borrower or
Guarantor, if one is issued in its jurisdiction of incorporation);
(b) no material adverse change shall have occurred in the assets, business
or prospects of Borrowers since the date of Agent's latest field examination and
no change or event shall have occurred which would impair the ability of any
Borrower or Guarantor to perform its obligations hereunder or under any of the
other Financing Agreements to which it is a party or of Agent or any Lender to
enforce the Obligations or realize upon the Collateral;
(c) [Intentionally Omitted]
(d) Agent shall have received, in form and substance satisfactory to Agent,
Deposit Account Control Agreements by and among Agent, each Borrower and
Guarantor, as the case may be and each bank where such Borrower (or Guarantor)
has a deposit account, including, without limitation, among Agent, Fedders
Canada and each bank where proceeds of Fedders Canada Accounts are at any time
deposited, in each case, duly authorized, executed and delivered by such bank
and Borrower or Guarantor, as the case may be (or Agent shall be the bank's
customer with respect to such deposit account as Agent may specify);
(e) Agent shall have received such amendments to the Mortgages as Agent
shall require as a result of the amended and restated terms of the financing
arrangements between Lenders and Borrowers set forth in this Agreement;
(f) In connection with the assignments of the Mortgages by Wachovia to
Agent as of the date hereof and any amendments to the mortgages required by
subsection (e) above, Agent shall have received, in form and substance
satisfactory to Agent, a valid and effective endorsement to the existing title
insurance policy insuring the priority, amount and sufficiency of the Mortgages;
(g) Agent shall have received originals of the shares of the stock
certificates representing all of the issued and outstanding shares of the
Capital Stock of each Borrower and Guarantor (other than Fedders) and owned by
any Borrower or Guarantor, in each case together with stock powers duly executed
in blank with respect thereto, limited, however, to sixty-five (65%) percent of
such Capital Stock in the case of the Capital Stock of Fedders Canada;
(h) Agent shall have either (i) confirmed that it has in its possession
Collateral Access Agreements, satisfactory to Agent, with respect to each of
Borrowers' current leased Inventory locations and executed by each of Borrowers'
current Freight Forwarders, Port Processors and other Inventory bailees, or (ii)
received Collateral Access Agreements for each of such Inventory locations and
from each of such bailees for whom Agent did not already have such Collateral
Access Agreement in its possession;
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(i) Agent shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Agent, and certificates of insurance policies
and/or endorsements naming Agent as loss payee;
(j) Agent shall have received, in form and substance satisfactory to Agent,
such opinion letters of counsel to Borrowers and Guarantors with respect to the
Financing Agreements and such other matters as Agent may request; and
(k) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Agent,
in form and substance satisfactory to Agent.
4.2 Conditions Precedent to All Loans and Letters of Credit. The obligation
of Lenders to make the Loans, including the initial Loans, or of Issuing Bank to
issue any Letter of Credit, including the initial Letters of Credit, is subject
to the further satisfaction of, or waiver of, immediately prior to or
concurrently with the making of each such Loan or the issuance of such Letter of
Credit of each of the following conditions precedent:
(a) all representations and warranties contained herein and in the other
Financing Agreements shall be true and correct with the same effect as though
such representations and warranties had been made on and as of the date of the
making of each such Loan or providing each such Letter of Credit and after
giving effect thereto, except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date);
(b) no law, regulation, order, judgment or decree of any Governmental
Authority shall exist, and no action, suit, investigation, litigation or
proceeding shall be pending or threatened in any court or before any arbitrator
or Governmental Authority, which (i) purports to enjoin, prohibit, restrain or
otherwise affect (A) the making of the Loans or providing the Letters of Credit,
or (B) the consummation of the transactions contemplated pursuant to the terms
hereof or the other Financing Agreements or (ii) has or has a reasonable
likelihood of having a Material Adverse Effect;
(c) no Default or Event of Default shall exist or have occurred and be
continuing on and as of the date of the making of such Loan or providing each
such Letter of Credit and after giving effect thereto; and
(d) in the case of the Post-Closing Trademark Term Loans, Agent shall have
received the appraisal report with respect to Borrowers' registered trademarks
required pursuant to Section 2.3.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1 Grant of Security Interest. To secure payment and performance of all
Obligations, in addition to all security interests, liens and Mortgages
previously granted by Borrowers and Guarantors to Wachovia pursuant to the
Existing Financing Agreements ("Existing Liens"), which Existing Liens shall be
deemed granted in favor of Wachovia, as Agent for itself and for the benefit of
Secured Parties, each Borrower and Guarantor hereby grants to Agent, for itself
and the benefit of Secured Parties and Issuing Bank, a continuing security
interest in, a lien upon, and a right of set off against, and hereby assigns to
Agent, for itself and the benefit of Secured Parties, as security, all
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personal and real property and fixtures, and interests in property and fixtures,
of each Borrower and Guarantor, whether now owned or hereafter acquired or
existing, and wherever located (together with all other collateral security for
the Obligations at any time granted to or held or acquired by Agent or any
Secured Party, collectively, the "Collateral"), including:
(a) all Accounts;
(b) all general intangibles, including, without limitation, all
Intellectual Property;
(c) all goods, including, without limitation, Inventory and Equipment;
(d) all Real Property and fixtures;
(e) all chattel paper, including, without limitation, all tangible and
electronic chattel paper;
(f) all instruments, including, without limitation, all promissory notes;
(g) all documents;
(h) all deposit accounts;
(i) all letters of credit, banker's acceptances and similar instruments and
including all letter-of-credit rights;
(j) all supporting obligations and all present and future liens, security
interests, rights, remedies, title and interest in, to and in respect of
Receivables and other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
(k) all (i) investment property (including securities, whether certificated
or uncertificated, securities accounts, security entitlements, commodity
contracts or commodity accounts) and (ii) monies, credit balances, deposits and
other property of any Borrower or Guarantor now or hereafter held or received by
or in transit to Agent, any Lender or its Affiliates or at any other depository
or other institution from or for the account of any Borrower or Guarantor,
whether for safekeeping, pledge, custody, transmission, collection or otherwise;
(l) all commercial tort claims, including, without limitation, those
identified in the Information Certificate;
(m) to the extent not otherwise described above, all Receivables;
(n) all Records; and
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(o) all products and proceeds of the foregoing, in any form, including
insurance proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.
5.2 Perfection of Security Interests.
(a) Each Borrower and Guarantor irrevocably and unconditionally authorizes
Agent (or its agent) to file at any time and from time to time such financing
statements with respect to the Collateral naming Agent or its designee as the
secured party and such Borrower or Guarantor as debtor, as Agent may require,
and including any other information with respect to such Borrower or Guarantor
or otherwise required by part 5 of Article 9 of the Uniform Commercial Code of
such jurisdiction as Agent may determine, together with any amendment and
continuations with respect thereto, which authorization shall apply to all
financing statements filed on, prior to or after the date hereof. Each Borrower
and Guarantor hereby ratifies and approves all financing statements naming Agent
or its designee as secured party and such Borrower or Guarantor, as the case may
be, as debtor with respect to the Collateral (and any amendments with respect to
such financing statements) filed by or on behalf of Agent prior to the date
hereof and ratifies and confirms the authorization of Agent to file such
financing statements (and amendments, if any). Each Borrower and Guarantor
hereby authorizes Agent to adopt on behalf of such Borrower and Guarantor any
symbol required for authenticating any electronic filing. In the event that the
description of the collateral in any financing statement naming Agent or its
designee as the secured party and any Borrower or Guarantor as debtor includes
assets and properties of such Borrower or Guarantor that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by such Borrower or Guarantor to the extent of
the Collateral included in such description and it shall not render the
financing statement ineffective as to any of the Collateral or otherwise affect
the financing statement as it applies to any of the Collateral. In no event
shall any Borrower or Guarantor at any time file, or permit or cause to be
filed, any correction statement or termination statement with respect to any
financing statement (or amendment or continuation with respect thereto) naming
Agent or its designee as secured party and such Borrower or Guarantor as debtor.
(b) Each Borrower and Guarantor does not have any chattel paper (whether
tangible or electronic) or instruments as of the date hereof, except as set
forth in the Information Certificate. In the event that any Borrower or
Guarantor shall be entitled to or shall receive any chattel paper or instrument
after the date hereof, Borrowers and Guarantors shall promptly notify Agent
thereof in writing. Promptly upon the receipt thereof by or on behalf of any
Borrower or Guarantor (including by any agent or representative), such Borrower
or Guarantor shall deliver, or cause to be delivered to Agent, all tangible
chattel paper and instruments that such Borrower or Guarantor has or may at any
time acquire, accompanied by such instruments of transfer or assignment duly
executed in blank as Agent may from time to time specify, in each case except as
Agent may otherwise agree. At Agent's option, each Borrower and Guarantor shall,
or Agent may at any time on behalf of any Borrower or Guarantor, cause the
original of any such instrument or chattel paper to be conspicuously marked in a
form and manner acceptable to Agent with the following legend referring to
chattel paper or instruments as applicable: "This [chattel paper][instrument] is
subject to the security interest of Wachovia Bank, National Association and any
sale, transfer, assignment or encumbrance of this [chattel paper][instrument]
violates the rights of such secured party."
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(c) In the event that any Borrower or Guarantor shall at any time hold or
acquire an interest in any electronic chattel paper or any "transferable record"
(as such term is defined in Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction), such Borrower or
Guarantor shall promptly notify Agent thereof in writing. Promptly upon Agent's
request, such Borrower or Guarantor shall take, or cause to be taken, such
actions as Agent may request to give Agent control of such electronic chattel
paper under Section 9-105 of the UCC and control of such transferable record
under Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act or, as the case may be, Section 16 of the Uniform Electronic
Transactions Act, as in effect in such jurisdiction.
(d) Each Borrower and Guarantor does not have any deposit accounts as of
the date hereof, except as set forth in the Information Certificate. Borrowers
and Guarantors shall not, directly or indirectly, after the date hereof open,
establish or maintain any deposit account unless each of the following
conditions is satisfied: (i) Agent shall have received not less than five (5)
Business Days prior written notice of the intention of any Borrower or Guarantor
to open or establish such account which notice shall specify in reasonable
detail and specificity acceptable to Agent the name of the account, the owner of
the account, the name and address of the bank at which such account is to be
opened or established, the individual at such bank with whom such Borrower or
Guarantor is dealing and the purpose of the account, (ii) the bank where such
account is opened or maintained shall be acceptable to Agent, and (iii) on or
before the opening of such deposit account, such Borrower or Guarantor shall as
Agent may specify either (A) deliver to Agent a Deposit Account Control
Agreement with respect to such deposit account duly authorized, executed and
delivered by such Borrower or Guarantor and the bank at which such deposit
account is opened and maintained or (B) arrange for Agent to become the customer
of the bank with respect to the deposit account on terms and conditions
acceptable to Agent. At Agent's request, Borrowers and Guarantors shall cause
each bank at which deposit accounts exist as of the date hereof to execute and
deliver to Agent a Deposit Account Control Agreement with respect to such
deposit accounts. The terms of this subsection (d) shall not apply to deposit
accounts specifically and exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of any Borrower's or
Guarantor's salaried employees.
(e) No Borrower or Guarantor owns or holds, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the date
hereof, or have any investment account, securities account, commodity account or
other similar account with any bank or other financial institution or other
securities intermediary or commodity intermediary as of the date hereof, in each
case except as set forth in the Information Certificate.
(i) In the event that any Borrower or Guarantor shall be entitled to
or shall at any time after the date hereof hold or acquire any certificated
securities, such Borrower or Guarantor shall promptly endorse, assign and
deliver the same to Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as Agent may from time to time specify. If any
securities, now or hereafter acquired by any Borrower or Guarantor are
uncertificated and are issued to such Borrower or Guarantor or its nominee
directly by the issuer thereof, such Borrower or Guarantor shall immediately
notify Agent thereof and shall as Agent may specify, either (A) cause the issuer
to agree to comply with instructions from Agent as to such securities, without
further
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consent of any Borrower or Guarantor or such nominee, or (B) arrange for Agent
to become the registered owner of the securities.
(ii) Borrowers and Guarantors shall not, directly or indirectly, after
the date hereof open, establish or maintain any investment account, securities
account, commodity account or any other similar account (other than a deposit
account) with any securities intermediary or commodity intermediary unless each
of the following conditions is satisfied: (A) Agent shall have received not less
than five (5) Business Days prior written notice of the intention of such
Borrower or Guarantor to open or establish such account which notice shall
specify in reasonable detail and specificity acceptable to Agent the name of the
account, the owner of the account, the name and address of the securities
intermediary or commodity intermediary at which such account is to be opened or
established, the individual at such intermediary with whom such Borrower or
Guarantor is dealing and the purpose of the account, (B) the securities
intermediary or commodity intermediary (as the case may be) where such account
is opened or maintained shall be acceptable to Agent, and (C) on or before the
opening of such investment account, securities account or other similar account
with a securities intermediary or commodity intermediary, such Borrower or
Guarantor shall as Agent may specify either (1) execute and deliver, and cause
to be executed and delivered to Agent, an Investment Property Control Agreement
with respect thereto duly authorized, executed and delivered by such Borrower or
Guarantor and such securities intermediary or commodity intermediary or (2)
arrange for Agent to become the entitlement holder with respect to such
investment property on terms and conditions acceptable to Agent.
(iii) At Agent's request, Borrowers and Guarantors shall cause each
Person at which Borrowers and Guarantors maintain a money market account or
other investment account as of the date hereof to execute and deliver to Agent
an Investment Property Control Agreement.
(f) Borrowers and Guarantors are not the beneficiary or otherwise entitled
to any right to payment under any letter of credit, banker's acceptance or
similar instrument as of the date hereof, except as set forth in the Information
Certificate. In the event that any Borrower or Guarantor shall be entitled to or
shall receive any right to payment under any letter of credit, banker's
acceptance or any similar instrument, whether as beneficiary thereof or
otherwise after the date hereof, such Borrower or Guarantor shall promptly
notify Agent thereof in writing. Such Borrower or Guarantor shall immediately,
upon Agent's request, either (i) deliver, or cause to be delivered to Agent,
with respect to any such letter of credit, banker's acceptance or similar
instrument, the written agreement of the issuer and any other nominated person
obligated to make any payment in respect thereof (including any confirming or
negotiating bank), in form and substance satisfactory to Agent, consenting to
the assignment of the proceeds of the letter of credit to Agent by such Borrower
or Guarantor and agreeing to make all payments thereon directly to Agent or as
Agent may otherwise direct or (ii) cause Agent to become, at Borrowers' expense,
the transferee beneficiary of the letter of credit, banker's acceptance or
similar instrument (as the case may be).
(g) Borrowers and Guarantors do not have any commercial tort claims as of
the date hereof, except as set forth in the Information Certificate. In the
event that any Borrower or Guarantor shall at any time after the date hereof
have any commercial tort claims, such Borrower or Guarantor shall promptly
notify Agent thereof in writing, which notice shall (i) set forth in reasonable
detail the basis for and nature of such commercial tort claim and (ii) include
the express grant by such Borrower or Guarantor to Agent of a security interest
in such commercial tort claim
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(and the proceeds thereof). In the event that such notice does not include such
grant of a security interest, the sending thereof by such Borrower or Guarantor
to Agent shall be deemed to constitute such grant to Agent. Upon the sending of
such notice, any commercial tort claim described therein shall constitute part
of the Collateral and shall be deemed included therein. Without limiting the
authorization of Agent provided in Section 5.2(a) hereof or otherwise arising by
the execution by such Borrower or Guarantor of this Agreement or any of the
other Financing Agreements, Agent is hereby irrevocably authorized from time to
time and at any time to file such financing statements naming Agent or its
designee as secured party and such Borrower or Guarantor as debtor, or any
amendments to any financing statements, covering any such commercial tort claim
as Collateral. In addition, each Borrower and Guarantor shall promptly upon
Agent's request, execute and deliver, or cause to be executed and delivered, to
Agent such other agreements, documents and instruments as Agent may require in
connection with such commercial tort claim.
(h) Borrowers and Guarantors do not have any goods, documents of title or
other Collateral in the custody, control or possession of a third party as of
the date hereof, except as set forth in the Information Certificate and except
for goods located in the United States in transit to a location of a Borrower or
Guarantor permitted herein in the ordinary course of business of such Borrower
or Guarantor in the possession of the carrier transporting such goods. In the
event that any goods, documents of title or other Collateral are at any time
after the date hereof in the custody, control or possession of any other person
not referred to in the Information Certificate or such carriers, Borrowers and
Guarantors shall promptly notify Agent thereof in writing. Promptly upon Agent's
request, Borrowers and Guarantors shall deliver to Agent a Collateral Access
Agreement duly authorized, executed and delivered by such person and the
Borrower or Guarantor that is the owner of such Collateral.
(i) Borrowers and Guarantors shall take any other actions reasonably
requested by Agent from time to time to cause the attachment, perfection and
first priority of, and the ability of Agent to enforce, the security interest of
Agent in any and all of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
amendments relating thereto under the UCC or other applicable law, to the
extent, if any, that any Borrower's or Guarantor's signature thereon is required
therefor, (ii) causing Agent's name to be noted as secured party on any
certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of Agent to enforce, the
security interest of Agent in such Collateral, (iii) complying with any
provision of any statute, regulation or treaty of the United States as to any
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of Agent to enforce, the security interest
of Agent in such Collateral, (iv) obtaining the consents and approvals of any
Governmental Authority or third party, including, without limitation, any
consent of any licensor, lessor or other person obligated on Collateral, and
taking all actions required by any earlier versions of the UCC or by other law,
as applicable in any relevant jurisdiction.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letters of
Credit and other Obligations and the Collateral, (b) all payments made by or on
behalf of any Borrower or Guarantor and (c) all other appropriate debits and
credits as provided in this Agreement, including fees, charges, costs, expenses
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and interest. All entries in the loan account(s) shall be made in accordance
with Agent's customary practices as in effect from time to time.
6.2 Statements. Agent shall render to Administrative Borrower each month a
statement setting forth the balance in the Borrowers' loan account(s) maintained
by Agent for Borrowers pursuant to the provisions of this Agreement, including
principal, interest, fees, costs and expenses. Each such statement shall be
subject to subsequent adjustment by Agent but shall, absent manifest errors or
omissions, be considered correct and deemed accepted by Borrowers and Guarantors
and conclusively binding upon Borrowers and Guarantors as an account stated
except to the extent that Agent receives a written notice from Administrative
Borrower of any specific exceptions of Administrative Borrower thereto within
thirty (30) days after the date such statement has been received by
Administrative Borrower. Until such time as Agent shall have rendered to
Administrative Borrower a written statement as provided above, the balance in
any Borrower's loan account(s) shall be presumptive evidence of the amounts due
and owing to Agent and Lenders by Borrowers and Guarantors.
6.3 Collection of Accounts.
(a) (i) Borrowers and Fedders Canada shall establish and maintain, at their
expense, blocked accounts or lockboxes and related blocked accounts (in either
case, "Blocked Accounts"), as Agent may specify, with such banks as are
acceptable to Agent into which Borrowers and Fedders Canada shall promptly
deposit and direct their respective account debtors to directly remit all
payments on Receivables and all payments constituting proceeds of Inventory or
other Collateral in the identical form in which such payments are made, whether
by cash, check or other manner. Borrowers and Fedders Canada shall deliver, or
cause to be delivered to Agent a Deposit Account Control Agreement duly
authorized, executed and delivered by each bank where a Blocked Account is
maintained as provided in Section 5.2 hereof or at any time and from time to
time Agent may become the bank's customer with respect to any of the Blocked
Accounts and promptly upon Agent's request, Borrowers shall execute and deliver
such agreements and documents as Agent may require in connection therewith. Each
Borrower and Guarantor agrees that all payments made to such Blocked Accounts or
other funds received and collected by Agent or any Lender, whether in respect of
the Receivables, as proceeds of Inventory or other Collateral or otherwise shall
be treated as payments to Agent and Lenders in respect of the Obligations and
therefore shall constitute the property of Agent and Lenders to the extent of
the then outstanding Obligations.
(ii) Notwithstanding anything to the contrary contained in Section
6.3(a)(i) or otherwise in this Agreement, the Deposit Account Control Agreements
with respect to Fedders Canada's Receivables shall provide by their terms, among
other things, that (A) all proceeds of Fedders Canada's Receivables denominated
in United States dollars at any time on deposit in Fedders Canada's Blocked
Accounts shall be remitted directly to the Agent Payment Account no less
frequently than weekly and (B) all proceeds of Fedders Canada's Receivables
denominated in Canadian dollars at any time on deposit in Fedders Canada's
Blocked Accounts shall be remitted directly to the Agent Payment Account at all
times following Agent's delivery of written notice to the applicable depository
banks to the effect that Agent has elected to exercise control over such bank
accounts and all proceeds at any time on deposit in such bank accounts (a
"Control Notice"). Notwithstanding anything to the contrary contained herein,
Agent shall have the right to deliver a
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Control Notice to any such depository bank, and to rescind such Control Notice,
in each case at any time and from time to time in Agent's sole and absolute
discretion.
(b) For purposes of calculating the amount of the Loans available to each
Borrower, such payments will be applied (conditional upon final collection) to
the Obligations on the Business Day of receipt by Agent of immediately available
funds in the Agent Payment Account provided such payments and notice thereof are
received in accordance with Agent's usual and customary practices as in effect
from time to time and within sufficient time to credit such Borrowers' loan
account on such day, and if not, then on the next Business Day. For the purposes
of calculating interest on the Obligations, such payments or other funds
received will be applied (conditional upon final collection) to the Obligations
one (1) Business Day following the date of receipt of immediately available
funds by Agent in the Agent Payment Account provided such payments or other
funds and notice thereof are received in accordance with Agent's usual and
customary practices as in effect from time to time and within sufficient time to
credit such Borrowers' loan account on such day, and if not, then on the next
Business Day.
(c) Each Borrower and Guarantor and their respective employees, agents and
Subsidiaries shall, acting as trustee for Agent, receive, as the property of
Agent, any monies, checks, notes, drafts or any other payment relating to and/or
proceeds of Accounts or other Collateral which come into their possession or
under their control and immediately upon receipt thereof, shall deposit or cause
the same to be deposited in the Blocked Accounts, or remit the same or cause the
same to be remitted, in kind, to Agent. In no event shall the same be commingled
with any Borrower's or Guarantor's own funds. Borrowers agree to reimburse Agent
on demand for any amounts owed or paid to any bank or other financial
institution at which a Blocked Account or any other deposit account or
investment account is established or any other bank, financial institution or
other person involved in the transfer of funds to or from the Blocked Accounts
arising out of Agent's payments to or indemnification of such bank, financial
institution or other person. The obligations of Borrowers to reimburse Agent for
such amounts pursuant to this Section 6.3 shall survive the termination of this
Agreement.
6.4 Payments.
(a) All Obligations shall be payable to the Agent Payment Account as
provided in Section 6.3 or such other place as Agent may designate from time to
time. Agent shall apply payments received or collected from any Borrower or
Guarantor or for the account of any Borrower or Guarantor (including the
monetary proceeds of collections or of realization upon any Collateral) as
follows: first, to pay any fees, indemnities or expense reimbursements then due
to Agent and Lenders from any Borrower or Guarantor; second, to pay interest due
in respect of any Loans (and including any Special Agent Advances); third, to
pay principal in respect of Special Agent Advances; fourth, to pay principal in
respect of the Loans and to pay or prepay Obligations arising under or pursuant
to any Hedge Agreements of a Borrower or Guarantor with a Bank Product Provider
(up to the amount of any then effective Reserve established in respect of such
Obligations), on a pro rata basis; fifth, to pay or prepay any other Obligations
then due, in such order and manner as Agent determines or, if any Default or
Event of Default shall have occurred and is continuing or this Agreement has
been terminated by Agent or Borrowers in accordance with Section 13.1, to be
held as cash collateral in connection with any Letters of Credit or other
contingent Obligations (but not including for this purpose any Obligations
arising under or pursuant to any Bank Products) and
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sixth, to pay or prepay any Obligations arising under or pursuant to any Bank
Products (other than to the extent provided for above) on a pro rata basis.
Notwithstanding anything to the contrary contained in this Agreement, (i) unless
so directed by Agent, or unless a Default or an Event of Default shall exist or
have occurred and be continuing, Agent shall not apply any payments which it
receives to any Eurodollar Rate Loans, except (A) on the expiration date of the
Interest Period applicable to any such Eurodollar Rate Loans or (B) in the event
that there are no outstanding Prime Rate Loans, (ii) to the extent any Borrower
uses any proceeds of the Loans or Letters of Credit to acquire rights in or the
use of any Collateral or to repay any Indebtedness used to acquire rights in or
the use of any Collateral, payments in respect of the Obligations shall be
deemed applied first to the Obligations arising from Loans and Letters of Credit
that were not used for such purposes and second to the Obligations arising from
Loans and Letters of Credit the proceeds of which were used to acquire rights in
or the use of any Collateral in the chronological order in which such Borrower
acquired such rights in or the use of such Collateral, and (iii) if on any date
of determination, (A) no Default or Event of Default shall have occurred and be
continuing and this Agreement shall not have been terminated by Agent or
Borrowers in accordance with Section 13.1, and (B) there are no Revolving Loans
outstanding and no principal payments are then due and owing with respect to any
of the Term Loans, then Agent shall remit to Administrative Borrower the
payments received or collected from any Borrower or Guarantor or for the account
of any Borrower or Guarantor, for use by Borrowers in a manner consistent with
the use of proceeds of Loans permitted hereunder.
(b) At Agent's option, all principal, interest, fees, costs, expenses and
other charges provided for in this Agreement or the other Financing Agreements
may be charged directly to the loan account(s) of any Borrower maintained by
Agent. If after receipt of any payment of, or proceeds of Collateral applied to
the payment of, any of the Obligations, Agent, any Lender or Issuing Bank is
required to surrender or return such payment or proceeds to any Person for any
reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement shall continue in
full force and effect as if such payment or proceeds had not been received by
Agent or such Lender. Borrowers and Guarantors shall be liable to pay to Agent,
and do hereby indemnify and hold Agent and Lenders harmless for the amount of
any payments or proceeds surrendered or returned. This Section 6.4(b) shall
remain effective notwithstanding any contrary action which may be taken by Agent
or any Lender in reliance upon such payment or proceeds. This Section 6.4 shall
survive the payment of the Obligations and the termination of this Agreement.
6.5 Taxes.
(a) Any and all payments by or on account of any of the Obligations shall
be made free and clear of and without deduction or withholding for or on account
of, any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees,
deductions, charges, withholdings, liabilities, restrictions or conditions of
any kind, excluding (i) in the case of each Lender, Issuing Bank and Agent (A)
taxes measured by its net income, and franchise taxes imposed on it, by the
jurisdiction (or any political subdivision thereof) under the laws of which such
Lender, Issuing Bank or Agent (as the case may be) is organized and (B) any
United States withholding taxes payable with respect to payments under the
Financing Agreements under laws (including any statute, treaty or regulation) in
effect on the date hereof (or, in the case of an Eligible Transferee, the date
of the Assignment and Acceptance) applicable to such Lender, Issuing Bank or
Agent, as the case may be, but not excluding any United States withholding taxes
payable as a result of any change in such laws occurring after the date
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hereof (or the date of such Assignment and Acceptance) and (ii) in the case of
each Lender, taxes measured by its net income, and franchise taxes imposed on it
as a result of a present or former connection between such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any taxing
authority thereof or therein (all such non-excluded taxes, levies, imposts,
fees, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes").
(b) If any Taxes shall be required by law to be deducted from or in respect
of any sum payable in respect of the Obligations to any Lender, Issuing Bank or
Agent (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 6.5), such Lender, Issuing Bank or Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the relevant Borrower or Guarantor shall make
such deductions, (iii) the relevant Borrower or Guarantor shall pay the full
amount deducted to the relevant taxing authority or other authority in
accordance with applicable law and (iv) the relevant Borrower or Guarantor shall
deliver to Agent evidence of such payment.
(c) In addition, each Borrower and Guarantor agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies of the United States or any political subdivision thereof or
any applicable foreign jurisdiction, and all liabilities with respect thereto,
in each case arising from any payment made hereunder or under any of the other
Financing Agreements or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any of the other Financing
Agreements (collectively, "Other Taxes").
(d) Each Borrower and Guarantor shall indemnify each Lender, Issuing Bank
and Agent for the full amount of Taxes and Other Taxes (including any Taxes and
Other Taxes imposed by any jurisdiction on amounts payable under this Section
6.5) paid by such Lender, Issuing Bank or Agent (as the case may be) and any
liability (including for penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within thirty (30) days
from the date such Lender, Issuing Bank or Agent (as the case may be) makes
written demand therefor. A certificate as to the amount of such payment or
liability delivered to Administrative Borrower by a Lender, Issuing Bank (with a
copy to Agent) or by Agent on its own behalf or on behalf of a Lender or Issuing
Bank, shall be conclusive absent manifest error.
(e) As soon as practicable after any payment of Taxes or Other Taxes by any
Borrower or Guarantor, such Borrower or Guarantor shall furnish to Agent, at its
address referred to herein, the original or a certified copy of a receipt
evidencing payment thereof.
(f) Without prejudice to the survival of any other agreements of any
Borrower or Guarantor hereunder or under any of the other Financing Agreements,
the agreements and obligations of such Borrower or Guarantor contained in this
Section 6.5 shall survive the termination of this Agreement and the payment in
full of the Obligations.
(g) Any Foreign Lender that is entitled to an exemption from or reduction
of withholding tax under the law of the jurisdiction in which the applicable
Borrower is resident for tax purposes, or any treaty to which such jurisdiction
is a party, with respect to payments hereunder or under any of the other
Financing Agreements shall deliver to Administrative Borrower (with a copy to
Agent), at
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the time or times prescribed by applicable law or reasonably requested by
Administrative Borrower or Agent (in such number of copies as is reasonably
requested by the recipient), whichever of the following is applicable (but only
if such Foreign Lender is legally entitled to do so): (i) duly completed copies
of Internal Revenue Service Form W-8BEN claiming exemption from, or a reduction
to, withholding tax under an income tax treaty, or any successor form, (ii) duly
completed copies of Internal Revenue Service Form W-8ECI claiming exemption from
withholding because the income is effectively connection with a U.S. trade or
business or any successor form, (iii) in the case of a Foreign Lender claiming
the benefits of the exemption for portfolio interest under Sections 871(h) or
881(c) of the Code, (A) a certificate of the Lender to the effect that such
Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, a
"10 percent shareholder" of a Borrower within the meaning of Section
881(c)(3)(B) of the Code or a "controlled foreign corporation" described and
Section 881(c)(3)(C) of the Code and (B) duly completed copies of Internal
Revenue Service Form W-8BEN claiming exemption from withholding under the
portfolio interest exemption or any successor form or (iv) any other applicable
form, certificate or document prescribed by applicable law as a basis for
claiming exemption from or a reduction in United States withholding tax duly
completed together with such supplementary documentation as may be prescribed by
applicable law to permit a Borrower to determine the withholding or deduction
required to be made. Unless Administrative Borrower and Agent have received
forms or other documents satisfactory to them indicating that payments hereunder
or under any of the other Financing Agreements to or for a Foreign Lender are
not subject to United States withholding tax or are subject to such tax at a
rate reduced by an applicable tax treaty, Borrowers or Agent shall withhold
amounts required to be withheld by applicable requirements of law from such
payments at the applicable statutory rate.
(h) Any Lender claiming any additional amounts payable pursuant to this
Section 6.5 shall use its reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
applicable lending office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that would be payable
or may thereafter accrue and would not, in the sole determination of such
Lender, be otherwise disadvantageous to such Lender.
6.6 Authorization to Make Loans. Agent and Lenders are authorized to make
the Loans based upon written instructions received from anyone purporting to be
an officer of Administrative Borrower or any Borrower or other authorized person
or, at the discretion of Agent, if such Loans are necessary to satisfy any
Obligations. All requests for Loans or Letters of Credit hereunder shall specify
the date on which the requested advance is to be made (which day shall be a
Business Day) and the amount of the requested Loan. Requests received after
11:00 a.m. New York time on any day shall be deemed to have been made as of the
opening of business on the immediately following Business Day. All Loans and
Letters of Credit under this Agreement shall be conclusively presumed to have
been made to, and at the request of and for the benefit of, any Borrower or
Guarantor when deposited to the credit of any Borrower or Guarantor or otherwise
disbursed or established in accordance with the instructions of any Borrower or
Guarantor or in accordance with the terms and conditions of this Agreement.
6.7 Use of Proceeds. Borrowers shall use the initial proceeds of the Loans
and Letters of Credit hereunder only for costs, expenses and fees in connection
with the preparation, negotiation, execution and delivery of this Agreement and
the other Financing Agreements. All other Loans
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made or Letters of Credit provided to or for the benefit of any Borrower
pursuant to the provisions hereof shall be used by such Borrower only for
general operating, working capital and other proper corporate purposes of such
Borrower not otherwise prohibited by the terms hereof. None of the proceeds will
be used, directly or indirectly, for the purpose of purchasing or carrying any
margin security or for the purposes of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Loans to be considered a "purpose
credit" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, as amended.
6.8 Appointment of Administrative Borrower as Agent for Requesting Loans
and Receipts of Loans and Statements.
(a) Each Borrower hereby irrevocably appoints and constitutes
Administrative Borrower as its agent and attorney-in-fact to request and receive
Loans and Letters of Credit pursuant to this Agreement and the other Financing
Agreements from Agent or any Lender in the name or on behalf of such Borrower.
Agent and Lenders may disburse the Loans to such bank account of Administrative
Borrower or a Borrower or otherwise make such Loans to a Borrower and provide
such Letters of Credit to a Borrower as Administrative Borrower may designate or
direct, without notice to any other Borrower or Guarantor. Notwithstanding
anything to the contrary contained herein, Agent may at any time and from time
to time require that Loans to or for the account of any Borrower be disbursed
directly to an operating account of such Borrower.
(b) Administrative Borrower hereby accepts the appointment by Borrowers to
act as the agent and attorney-in-fact of Borrowers pursuant to this Section 6.8.
Administrative Borrower shall ensure that the disbursement of any Loans to each
Borrower requested by or paid to or for the account of a Borrower, or the
issuance of any Letter of Credit for a Borrower hereunder, shall be paid to or
for the account of such Borrower.
(c) Each Borrower and other Guarantor hereby irrevocably appoints and
constitutes Administrative Borrower as its agent to receive statements on
account and all other notices from Agent and Lenders with respect to the
Obligations or otherwise under or in connection with this Agreement and the
other Financing Agreements.
(d) Any notice, election, representation, warranty, agreement or
undertaking by or on behalf of any other Borrower or any Guarantor by
Administrative Borrower shall be deemed for all purposes to have been made by
such Borrower or Guarantor, as the case may be, and shall be binding upon and
enforceable against such Borrower or Guarantor to the same extent as if made
directly by such Borrower or Guarantor.
(e) No purported termination of the appointment of Administrative Borrower
as agent as aforesaid shall be effective, except after ten (10) days' prior
written notice to Agent.
6.9 Pro Rata Treatment. Except to the extent otherwise provided in this
Agreement or as otherwise agreed by Lenders: (a) the making and conversion of
Loans shall be made among the Lenders based on their respective Pro Rata Shares
as to the Loans and (b) each payment on account of any Obligations to or for the
account of one or more Lenders in respect of any Obligations due on
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a particular day shall be allocated among the Lenders entitled to such payments
based on their respective Pro Rata Shares and shall be distributed accordingly.
6.10 Sharing of Payments, Etc.
(a) Each Borrower and Guarantor agrees that, in addition to (and without
limitation of) any right of setoff, banker's lien or counterclaim Agent or any
Lender may otherwise have, each Lender shall be entitled, at its option (but
subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of such Borrower or
Guarantor at any of its offices, in dollars or in any other currency, against
any principal of or interest on any Loans owed to such Lender or any other
amount payable to such Lender hereunder, that is not paid when due (regardless
of whether such balances are then due to such Borrower or Guarantor), in which
case it shall promptly notify Administrative Borrower and Agent thereof;
provided, that, such Lender's failure to give such notice shall not affect the
validity thereof.
(b) If any Lender (including Agent) shall obtain from any Borrower or
Guarantor payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loans or more than its share of
such other amounts then due hereunder or thereunder by any Borrower or Guarantor
to such Lender than the percentage thereof received by any other Lender, it
shall promptly pay to Agent, for the benefit of Lenders, the amount of such
excess and simultaneously purchase from such other Lenders a participation in
the Loans or such other amounts, respectively, owing to such other Lenders (or
such interest due thereon, as the case may be) in such amounts, and make such
other adjustments from time to time as shall be equitable, to the end that all
Lenders shall share the benefit of such excess payment (net of any expenses that
may be incurred by such Lender in obtaining or preserving such excess payment)
in accordance with their respective Pro Rata Shares or as otherwise agreed by
Lenders. To such end all Lenders shall make appropriate adjustments among
themselves (by the resale of participation sold or otherwise) if such payment is
rescinded or must otherwise be restored.
(c) Each Borrower and Guarantor agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any right
of setoff, banker's lien, counterclaims or similar rights or shall affect the
right of any Lender to exercise, and retain the benefits of exercising, any such
right with respect to any other Indebtedness or obligation of any Borrower or
Guarantor. If, under any applicable bankruptcy, insolvency or other similar law,
any Lender receives a secured claim in lieu of a setoff to which this Section
applies, such Lender shall, to the extent practicable, assign such rights to
Agent for the benefit of Lenders and, in any event, exercise its rights in
respect of such secured claim in a manner consistent with the rights of Lenders
entitled under this Section to share in the benefits of any recovery on such
secured claim.
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6.11 Settlement Procedures.
(a) In order to administer the Credit Facility in an efficient manner and
to minimize the transfer of funds between Agent and Lenders, Agent may, at its
option, subject to the terms of this Section, make available, on behalf of
Lenders, the full amount of the Loans requested or charged to any Borrower's
loan account(s) or otherwise to be advanced by Lenders pursuant to the terms
hereof, without requirement of prior notice to Lenders of the proposed Loans.
(b) With respect to all Loans made by Agent on behalf of Lenders as
provided in this Section, the amount of each Lender's Pro Rata Share of the
outstanding Loans shall be computed weekly, and shall be adjusted upward or
downward on the basis of the amount of the outstanding Loans as of 5:00 p.m. New
York time on the Business Day immediately preceding the date of each settlement
computation; provided, that, Agent retains the absolute right at any time or
from time to time to make the above described adjustments at intervals more
frequent than weekly, but in no event more than twice in any week. Agent shall
deliver to each of the Lenders after the end of each week, or at such lesser
period or periods as Agent shall determine, a summary statement of the amount of
outstanding Loans for such period (such week or lesser period or periods being
hereinafter referred to as a "Settlement Period"). If the summary statement is
sent by Agent and received by a Lender prior to 12:00 p.m. New York time, then
such Lender shall make the settlement transfer described in this Section by no
later than 3:00 p.m. New York time on the same Business Day and if received by a
Lender after 12:00 p.m. New York time, then such Lender shall make the
settlement transfer by not later than 3:00 p.m. New York time on the next
Business Day following the date of receipt. If, as of the end of any Settlement
Period, the amount of a Lender's Pro Rata Share of the outstanding Loans is more
than such Lender's Pro Rata Share of the outstanding Loans as of the end of the
previous Settlement Period, then such Lender shall forthwith (but in no event
later than the time set forth in the preceding sentence) transfer to Agent by
wire transfer in immediately available funds the amount of the increase.
Alternatively, if the amount of a Lender's Pro Rata Share of the outstanding
Loans in any Settlement Period is less than the amount of such Lender's Pro Rata
Share of the outstanding Loans for the previous Settlement Period, Agent shall
forthwith transfer to such Lender by wire transfer in immediately available
funds the amount of the decrease. The obligation of each of the Lenders to
transfer such funds and effect such settlement shall be irrevocable and
unconditional and without recourse to or warranty by Agent. Agent and each
Lender agrees to xxxx its books and records at the end of each Settlement Period
to show at all times the dollar amount of its Pro Rata Share of the outstanding
Loans and Letters of Credit. Each Lender shall only be entitled to receive
interest on its Pro Rata Share of the Loans to the extent such Loans have been
funded by such Lender. Because the Agent on behalf of Lenders may be advancing
and/or may be repaid Loans prior to the time when Lenders will actually advance
and/or be repaid such Loans, interest with respect to Loans shall be allocated
by Agent in accordance with the amount of Loans actually advanced by and repaid
to each Lender and the Agent and shall accrue from and including the date such
Loans are so advanced to but excluding the date such Loans are either repaid by
Borrowers or actually settled with the applicable Lender as described in this
Section.
(c) To the extent that Agent has made any such amounts available and the
settlement described above shall not yet have occurred, upon repayment of any
Loans by a Borrower, Agent may apply such amounts repaid directly to any amounts
made available by Agent pursuant to this Section. In lieu of weekly or more
frequent settlements, Agent may, at its option, at any time require each Lender
to provide Agent with immediately available funds representing its Pro Rata
Share of
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each Loan, prior to Agent's disbursement of such Loan to Borrower. In such
event, all Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their Pro Rata Shares. No Lender shall be
responsible for any default by any other Lender in the other Lender's obligation
to make a Loan requested hereunder nor shall the Commitment of any Lender be
increased or decreased as a result of the default by any other Lender in the
other Lender's obligation to make a Loan hereunder.
(d) If Agent is not funding a particular Loan to a Borrower (or
Administrative Borrower for the benefit of such Borrower) pursuant to Sections
6.11(a) and 6.11(b) above on any day, but is requiring each Lender to provide
Agent with immediately available funds on the date of such Loan as provided in
Section 6.11(c) above, Agent may assume that each Lender will make available to
Agent such Lender's Pro Rata Share of the Loan requested or otherwise made on
such day and Agent may, in its discretion, but shall not be obligated to, cause
a corresponding amount to be made available to or for the benefit of such
Borrower on such day. If Agent makes such corresponding amount available to a
Borrower and such corresponding amount is not in fact made available to Agent by
such Lender, Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon for each day from the
date such payment was due until the date such amount is paid to Agent at the
Federal Funds Rate for each day during such period (as published by the Federal
Reserve Bank of New York or at Agent's option based on the arithmetic mean
determined by Agent of the rates for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York City time) on that day by each of
the three leading brokers of Federal funds transactions in New York City
selected by Agent) and if such amounts are not paid within three (3) days of
Agent's demand, at the highest Interest Rate provided for in Section 3.1 hereof
applicable to Prime Rate Loans. During the period in which such Lender has not
paid such corresponding amount to Agent, notwithstanding anything to the
contrary contained in this Agreement or any of the other Financing Agreements,
the amount so advanced by Agent to or for the benefit of any Borrower shall, for
all purposes hereof, be a Loan made by Agent for its own account. Upon any such
failure by a Lender to pay Agent, Agent shall promptly thereafter notify
Administrative Borrower of such failure and Borrowers shall pay such
corresponding amount to Agent for its own account within five (5) Business Days
of Administrative Borrower's receipt of such notice. A Lender who fails to pay
Agent its Pro Rata Share of any Loans made available by the Agent on such
Lender's behalf, or any Lender who fails to pay any other amount owing by it to
Agent, is a "Defaulting Lender". Agent shall not be obligated to transfer to a
Defaulting Lender any payments received by Agent for the Defaulting Lender's
benefit, nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder (including any principal, interest or fees). Amounts payable
to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may
hold and, in its discretion, relend to a Borrower the amount of all such
payments received or retained by it for the account of such Defaulting Lender.
For purposes of voting or consenting to matters with respect to this Agreement
and the other Financing Agreements and determining Pro Rata Shares, such
Defaulting Lender shall be deemed not to be a "Lender" and such Lender's
Commitment shall be deemed to be zero (0). This Section shall remain effective
with respect to a Defaulting Lender until such default is cured. The operation
of this Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, or relieve or excuse the performance by any Borrower
or Guarantor of their duties and obligations hereunder.
(e) Nothing in this Section or elsewhere in this Agreement or the other
Financing Agreements shall be deemed to require Agent to advance funds on behalf
of any Lender or to relieve
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any Lender from its obligation to fulfill its Commitment hereunder or to
prejudice any rights that any Borrower may have against any Lender as a result
of any default by any Lender hereunder in fulfilling its Commitment.
6.12 Obligations Several; Independent Nature of Lenders' Rights. The
obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the Lenders to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 12.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
6.13 Bank Products. Borrowers and Guarantors, or any of their Subsidiaries,
may (but no such Person is required to) request that the Bank Product Providers
provide or arrange for such Person to obtain Bank Products from Bank Product
Providers, and each Bank Product Provider may, in its sole discretion, provide
or arrange for such Person to obtain the requested Bank Products. Borrowers and
Guarantors or any of their Subsidiaries that obtains Bank Products shall
indemnify and hold Agent, each Lender and their respective Affiliates harmless
from any and all obligations now or hereafter owing to any other Person by any
Bank Product Provider in connection with any Bank Products other than for gross
negligence or willful misconduct on the part of any such indemnified Person.
This Section 6.13 shall survive the payment of the Obligations and the
termination of this Agreement. Borrower and its Subsidiaries acknowledge and
agree that the obtaining of Bank Products from Bank Product Providers (a) is in
the sole discretion of such Bank Product Provider, and (b) is subject to all
rules and regulations of such Bank Product Provider.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting.
(a) Borrowers shall provide Agent with the following documents in a form
satisfactory to Agent:
(i) on a regular basis as required by Agent, schedules of sales made,
credits issued and cash received;
(ii) as soon as possible after the end of each month (but in any event
within ten (10) Business Days after the end thereof), on a monthly basis or more
frequently as Agent may request, (A) perpetual Inventory Reports, (B) Inventory
Reports by location and category (and including (1) ownership of Inventory
designated by Borrower and (2) the amounts of Inventory and the value thereof at
any leased locations and at premises of warehouses, processors or other third
parties), including a report of Borrowers' Inventory prepared on a roll-forward
basis for the immediately preceding month, reflecting Borrowers' Inventory as of
the last day of such month, together with a schedule of Inventory purchased by
each Borrower and sold and shipped during such month, (C) agings of accounts
receivable (together with a roll-forward of Accounts from the previous month,
detailing all sales and collection activity for such preceding month) and (D)
agings
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of accounts payable (and including, upon Agent's request, information indicating
the amounts owing to owners and lessors of leased premises, warehouses,
processors and other third parties from time to time in possession of any
Collateral);
(iii) upon Agent's request, (A) copies of customer statements,
purchase orders, sales invoices, credit memos, remittance advices and reports,
and copies of deposit slips and bank statements, (B) copies of shipping and
delivery documents, and (C) copies of purchase orders, invoices and delivery
documents for Inventory and Equipment acquired by any Borrower or Guarantor;
(iv) with respect to Imported Inventory, Borrowers shall deliver to
Agent (A) on a weekly basis, or more frequently as Agent may request, a report
of all Imported Inventory of FNA substantially in the form of the reporting of
Imported Inventory currently delivered to Agent, which reporting shall include,
without limitation, the cargo receipt numbers, item numbers, invoice numbers,
container numbers, quantity and value and location thereof (including, as to
location, whether such Imported Inventory is at sea with a Freight Forwarder, at
port with a Customs Broker or Port Processor, or in the possession of a domestic
U.S. trucking or railroad company (promptly after Borrowers' receipt of a
written report from a Customs Broker that any Imported Inventory has been
delivered to a domestic U.S. trucking or railroad company) and identifying the
Freight Forwarder, Port Processor, Customs Broker in possession of such Imported
Inventory), (B) upon Agent's request, copies of purchase orders, shipping and
delivery documents for Imported Inventory and a list of identification numbers
for such Imported Inventory, and (C) such other reports as to Imported Inventory
as Agent shall reasonably request from time to time;
(v) with respect to Consigned Inventory, (A) on or before the tenth
(10th) day after the end of each month, a report as to the Value of Consigned
Inventory in the possession of any consignee (regardless of whether Agent and/or
Wachovia have made Revolving Loans with respect to such Consigned Inventory)
with respect to whom Uniform Commercial Code searches reflect the filing of a
competing security interest in such Consignee's Inventory in favor of another
secured party ("Inventory Lienholder"), which Value shall be reported as of the
date that the Borrowers delivered notice to such Inventory Lienholder of the
existence of Borrowers' consignment arrangements with the applicable Consignee,
in accordance with Uniform Commercial Code Section 9-324(b), and the Value of
the Consigned Inventory remaining in the possession of such Consignee as of the
date of the report and (B) on or about June 1 and December 1 of each year a
report as to the Value of seasonal Consigned Inventory then in the possession of
each consignee, indicating whether such seasonal Consigned Inventory remains
unsold and, if sold to the consignee, the terms of such sale;
(vi) on a monthly basis or, if a Default or Event of Default shall
have occurred and is continuing, more frequently upon Agent's request, a current
thirteen (13) week Loan Availability Report completed by Administrative Borrower
substantially in the form of Exhibit 7.1(a)(vi) hereto; and
(vii) such other reports as to the Collateral as Agent shall request
from time to time.
(b) If any Borrower's or Guarantor's records or reports of the Collateral
are prepared or maintained by an accounting service, contractor, shipper or
other agent, such Borrower and
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Guarantor hereby irrevocably authorizes such service, contractor, shipper or
agent to deliver such records, reports, and related documents to Agent and to
follow Agent's instructions with respect to further services at any time that an
Event of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Borrowers shall notify Agent promptly of: (i) any material delay in any
Borrower's performance of any of its material obligations to any account debtor
or the assertion of any material claims, offsets, defenses or counterclaims by
any account debtor, or any material disputes with account debtors, or any
settlement, adjustment or compromise thereof, (ii) all material adverse
information known to any Borrower or Guarantor relating to the financial
condition of any account debtor and (iii) any event or circumstance which, to
the best of any Borrower's or Guarantor's knowledge, would cause Agent to
consider any then existing Accounts as no longer constituting Eligible Accounts.
No credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor without Agent's consent, except
in the ordinary course of a Borrower's or Guarantor's business in accordance
with practices and policies previously disclosed in writing to Agent and except
as set forth in the schedules delivered to Agent pursuant to Section 7.1(a)
above. So long as no Event of Default exists or has occurred and is continuing,
Borrowers and Guarantors shall settle, adjust or compromise any claim, offset,
counterclaim or dispute with any account debtor. At any time that an Event of
Default exists or has occurred and is continuing, Agent shall, at its option,
have the exclusive right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with account debtors or grant any credits, discounts or
allowances.
(b) With respect to each Account: (i) the amounts shown on any invoice
delivered to Agent or schedule thereof delivered to Agent shall be true and
complete, (ii) no payments shall be made thereon except payments immediately
delivered to Agent pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor except as reported to Agent in accordance with
this Agreement and except for credits, discounts, allowances or extensions made
or given in the ordinary course of each Borrower's business in accordance with
practices and policies previously disclosed to Agent, (iv) there shall be no
setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Agent in accordance with the
terms of this Agreement, and (v) none of the transactions giving rise thereto
will violate any applicable foreign, Federal, State or local laws or
regulations, all documentation relating thereto will be legally sufficient under
such laws and regulations and all such documentation will be legally enforceable
in accordance with its terms.
(c) Agent shall have the right at any time or times, in Agent's name or in
the name of a nominee of Agent, to verify the validity, amount or any other
matter relating to any Receivables or other Collateral, by mail, telephone,
facsimile transmission or otherwise.
7.3 Inventory Covenants. With respect to the Inventory: (a) each Borrower
and Guarantor shall at all times maintain inventory records reasonably
satisfactory to Agent, keeping correct and accurate records itemizing and
describing the kind, type, quality and quantity of Inventory, such Borrower's or
Guarantor's cost therefor and daily withdrawals therefrom and additions thereto;
(b) Borrowers and Guarantors shall conduct a physical count of the Inventory at
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least once each year but at any time or times as Agent may request on or after
an Event of Default, and promptly following such physical inventory shall supply
Agent with a report in the form and with such specificity as may be reasonably
satisfactory to Agent concerning such physical count; (c) Borrowers and
Guarantors shall not remove any Inventory from the locations set forth or
permitted herein, without the prior written consent of Agent, except for sales
of Inventory in the ordinary course of its business and except to move Inventory
directly from one location set forth or permitted herein to another such
location and except for Inventory shipped from the manufacturer thereof to such
Borrower or Guarantor which is in transit to the locations set forth or
permitted herein; (d) upon Agent's request, Borrowers shall, at their expense,
no more than two (2) times in any twelve (12) month period, but at any time or
times as Agent may request on or after an Event of Default, deliver or cause to
be delivered to Agent written appraisals as to the Inventory in form, scope and
methodology acceptable to Agent and by an appraiser acceptable to Agent,
addressed to Agent and Lenders and upon which Agent and Lenders are expressly
permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and
maintain the Inventory with all reasonable care and caution and in accordance
with applicable standards of any insurance and in conformity with applicable
laws (including the requirements of the Federal Fair Labor Standards Act of
1938, as amended and all rules, regulations and orders related thereto); (f)
none of the Inventory or other Collateral constitutes farm products or the
proceeds thereof; (g) each Borrower and Guarantor assumes all responsibility and
liability arising from or relating to the production, use, sale or other
disposition of the Inventory; (h) Borrowers and Guarantors shall not sell
Inventory to any customer on approval, or any other basis which entitles the
customer to return or may obligate any Borrower or Guarantor to repurchase such
Inventory [*] (i) Borrowers and Guarantors shall keep the Inventory in good and
marketable condition; and (j) Borrowers and Guarantors shall not, without prior
written notice to Agent or the specific identification of such Inventory in a
report with respect thereto provided by Administrative Borrower to Agent
pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on
consignment or approval.
In addition to, and not in limitation of, the foregoing, with respect to
Imported Inventory, Borrowers shall cause all bills of lading and other
documents of title evidencing, covering or otherwise relating to Imported
Inventory in transit to the premises of Borrowers or the premises of a Customs
Broker or a Port Processor in the United States to name FNA as consignee, and
Borrowers shall promptly deliver to Agent, upon Agent's request, a copy of each
xxxx of lading or other document of title issued to FNA covering Imported
Inventory purchased by FNA and delivered to a Freight Forwarder for shipment to
FNA during the immediately preceding week; provided, however, that following
Agent's written request delivered to Borrowers, Borrowers shall cause the issuer
of each such xxxx of lading or other document of title to promptly deliver
directly to Agent the original of each such xxxx of lading or other document of
title, which shall be released by Agent only upon Agent's receipt of evidence,
satisfactory to Agent, that the Imported Inventory covered thereby has been
delivered into the possession of a Port Processor or Customs Broker from whom
Agent has received a duly executed Collateral Access Agreement. In addition, at
such time as Agent may direct, Borrower shall cause Agent or such financial
institution or other person as Agent may specify to be named as consignee in all
such bills of lading and other documents of title. Borrower shall cause all
bills of lading or other documents of title evidencing FNA's Imported Inventory
to be issued in the form of negotiable documents, as such term is defined in the
Uniform Commercial Code.
* Confidential information has been omitted pursuant to a request to the
Securities and Exchange Commission for confidential treatment. The
information has been separately filed with the Commission.
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Without limiting the generality of Section 7.3(h), Borrowers shall provide to
Agent copies of all proposed agreements with any customers pursuant to which
Borrowers would sell Inventory to such customers on a sale and return basis;
provided that, Borrowers' compliance with the foregoing shall in no manner be
deemed or constitute Agent's or Required Lenders' consent to Borrowers' sale of
inventory to any customers on a sale and return basis.
7.4 Equipment and Real Property Covenants. With respect to the Equipment
and Real Property: (a) upon Agent's request, Borrowers and Guarantors shall, at
their expense, no more than one (1) time in any twelve (12) month period, but at
any time or times as Agent may request on or after an Event of Default, deliver
or cause to be delivered to Agent written appraisals as to the Equipment and/or
the Real Property in form, scope and methodology acceptable to Agent and by an
appraiser acceptable to Agent, addressed to Agent and upon which Agent is
expressly permitted to rely; (b) Borrowers and Guarantors shall keep the
Equipment in good order, repair, running and marketable condition (ordinary wear
and tear excepted); (c) Borrowers and Guarantors shall use the Equipment and
Real Property with all reasonable care and caution and in accordance with
applicable standards of any insurance and in conformity with all applicable
laws; (d) the Equipment is and shall be used in the business of Borrowers and
Guarantors and not for personal, family, household or farming use; (e) Borrowers
and Guarantors shall not remove any Equipment from the locations set forth or
permitted herein, except (i) to the extent necessary to have any Equipment
repaired or maintained in the ordinary course of its business or to move
Equipment directly from one location set forth or permitted herein to another
such location, (ii) for the movement of motor vehicles used by or for the
benefit of such Borrower or Guarantor in the ordinary course of business and
(iii) the sale or other disposition of Equipment permitted by Section
9.7(b)(ii); (f) the Equipment is now and shall remain personal property and
Borrowers and Guarantors shall not permit any of the Equipment to be or become a
part of or affixed to real property; and (g) each Borrower and Guarantor assumes
all responsibility and liability arising from the use of the Equipment and Real
Property.
7.5 Power of Attorney. Each Borrower and Guarantor hereby irrevocably
designates and appoints Agent (and all persons designated by Agent) as such
Borrower's and Guarantor's true and lawful attorney-in-fact, and authorizes
Agent, in such Borrower's, Guarantor's or Agent's name, to: (a) at any time an
Event of Default exists or has occurred and is continuing (i) demand payment on
Receivables or other Collateral, (ii) enforce payment of Receivables by legal
proceedings or otherwise, (iii) exercise all of such Borrower's or Guarantor's
rights and remedies to collect any Receivable or other Collateral, (iv) sell or
assign any Receivable upon such terms, for such amount and at such time or times
as the Agent deems advisable, (v) settle, adjust, compromise, extend or renew an
Account, (vi) discharge and release any Receivable, (vii) prepare, file and sign
such Borrower's or Guarantor's name on any proof of claim in bankruptcy or other
similar document against an account debtor or other obligor in respect of any
Receivables or other Collateral, (viii) notify the post office authorities to
change the address for delivery of remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral to an address
designated by Agent, and open and dispose of all mail addressed to such Borrower
or Guarantor and handle and store all mail relating to the Collateral; and (ix)
do all acts and things which are necessary, in Agent's determination, to fulfill
such Borrower's or Guarantor's obligations under this Agreement and the other
Financing Agreements and (b) at any time to (i) take control in any manner of
any item of payment in respect of Receivables or constituting Collateral or
otherwise received in
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or for deposit in the Blocked Accounts or otherwise received by Agent or any
Lender, (ii) have access to any lockbox or postal box into which remittances
from account debtors or other obligors in respect of Receivables or other
proceeds of Collateral are sent or received, (iii) endorse such Borrower's or
Guarantor's name upon any items of payment in respect of Receivables or
constituting Collateral or otherwise received by Agent and any Lender and
deposit the same in Agent's account for application to the Obligations, (iv)
endorse such Borrower's or Guarantor's name upon any chattel paper, document,
instrument, invoice, or similar document or agreement relating to any Receivable
or any goods pertaining thereto or any other Collateral, including any warehouse
or other receipts, or bills of lading and other negotiable or non-negotiable
documents, (v) clear Inventory the purchase of which was financed with a Letter
of Credit through U.S. Customs or foreign export control authorities in such
Borrower's or Guarantor's name, Agent's name or the name of Agent's designee,
and to sign and deliver to customs officials powers of attorney in such
Borrower's or Guarantor's name for such purpose, and to complete in such
Borrower's or Guarantor's or Agent's name, any order, sale or transaction,
obtain the necessary documents in connection therewith and collect the proceeds
thereof, (vi) with respect to Imported Inventory, (A) endorse and negotiate in
favor of Wachovia on behalf and in the name of, and as attorney-in-fact for,
Borrower any xxxx of lading or other document of title with respect to Imported
Inventory naming Borrower as consignee, (B) prepare, complete and execute any
documents on behalf of Borrowers in order to cause any of Borrowers' Imported
Inventory that is in transit to a Customs Broker or Port Processor to clear
United Stated Customs and (C) enable Wachovia to take possession thereof, and
(vii) sign such Borrower's or Guarantor's name on any verification of
Receivables and notices thereof to account debtors or any secondary obligors or
other obligors in respect thereof. Each Borrower and Guarantor hereby releases
Agent and Lenders and their respective officers, employees and designees from
any liabilities arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result of
Agent's or any Lender's own gross negligence or willful misconduct as determined
pursuant to a final non-appealable order of a court of competent jurisdiction.
7.6 Right to Cure. Agent may, at its option, upon notice to Administrative
Borrower, (a) cure any default by any Borrower or Guarantor under any material
agreement with a third party that affects the Collateral, its value or the
ability of Agent to collect, sell or otherwise dispose of the Collateral or the
rights and remedies of Agent or any Lender therein or the ability of any
Borrower or Guarantor to perform its obligations hereunder or under any of the
other Financing Agreements, (b) pay or bond on appeal any judgment entered
against any Borrower or Guarantor, (c) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and (d) pay any amount, incur any expense or perform any act
which, in Agent's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Agent and Lenders with
respect thereto. Agent may add any amounts so expended to the Obligations and
charge any Borrower's account therefor, such amounts to be repayable by
Borrowers on demand. Agent and Lenders shall be under no obligation to effect
such cure, payment or bonding and shall not, by doing so, be deemed to have
assumed any obligation or liability of any Borrower or Guarantor. Any payment
made or other action taken by Agent or any Lender under this Section shall be
without prejudice to any right to assert an Event of Default hereunder and to
proceed accordingly.
7.7 Access to Premises. From time to time as requested by Agent, at the
cost and expense of Borrowers, (a) Agent or its designee shall have complete
access to all of each Borrower's
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and Guarantor's premises during normal business hours and after notice to
Administrative Borrower, or at any time and without notice to Administrative
Borrower if an Event of Default exists or has occurred and is continuing, for
the purposes of inspecting, verifying and auditing the Collateral and all of
each Borrower's and Guarantor's books and records, including the Records, and
(b) each Borrower and Guarantor shall promptly furnish to Agent such copies of
such books and records or extracts therefrom as Agent may request, and Agent or
any Lender or Agent's designee may use during normal business hours such of any
Borrower's and Guarantor's personnel, equipment, supplies and premises as may be
reasonably necessary for the foregoing and if an Event of Default exists or has
occurred and is continuing for the collection of Receivables and realization of
other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Borrower and Guarantor hereby represents and warrants to Agent,
Lenders and Issuing Bank the following (which shall survive the execution and
delivery of this Agreement):
8.1 Corporate Existence, Power and Authority. Each Borrower and Guarantor
is a corporation duly organized and in good standing under the laws of its
jurisdiction of organization and is duly qualified as a foreign corporation and
in good standing in all states or other jurisdictions where the nature and
extent of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the failure to
so qualify would not have a Material Adverse Effect. The execution, delivery and
performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder (a) are all within each
Borrower's and Guarantor's corporate powers, (b) have been duly authorized, (c)
are not in contravention of law or the terms of any Borrower's or Guarantor's
certificate of incorporation, by laws, or other organizational documentation, or
any indenture, agreement or undertaking to which any Borrower or Guarantor is a
party or by which any Borrower or Guarantor or its property are bound and (d)
will not result in the creation or imposition of, or require or give rise to any
obligation to grant, any lien, security interest, charge or other encumbrance
upon any property of any Borrower or Guarantor, except in favor of Agent. This
Agreement and the other Financing Agreements to which any Borrower or Guarantor
is a party constitute legal, valid and binding obligations of such Borrower and
Guarantor enforceable in accordance with their respective terms.
8.2 Name; State of Organization; Chief Executive Office; Collateral
Locations.
(a) The exact legal name of each Borrower and Guarantor is as set forth on
the signature page of this Agreement and in the Information Certificate. No
Borrower or Guarantor has, during the five years prior to the date of this
Agreement, 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 or assets out of the
ordinary course of business, except as set forth in the Information Certificate.
(b) Each Borrower and Guarantor is an organization of the type and
organized in the jurisdiction set forth in the Information Certificate. The
Information Certificate accurately sets forth the organizational identification
number of each Borrower and Guarantor or accurately states that such Borrower or
Guarantor has none and accurately sets forth the federal employer identification
number of each Borrower and Guarantor.
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(c) The chief executive office and mailing address of each Borrower and
Guarantor and each Borrower's and Guarantor's Records concerning Accounts are
located only at the address identified as such in Schedule 8.2 to the
Information Certificate and its only other places of business and the only other
locations of Collateral, if any, are the addresses set forth in Schedule 8.2 to
the Information Certificate, subject to the rights of any Borrower or Guarantor
to establish new locations in accordance with Section 9.2 below. The Information
Certificate correctly identifies any of such locations which are not owned by a
Borrower or Guarantor and sets forth the owners and/or operators thereof.
8.3 Financial Statements; No Material Adverse Change. All financial
statements relating to any Borrower or Guarantor which have been or may
hereafter be delivered by any Borrower or Guarantor to Agent and Lenders have
been prepared in accordance with GAAP (except as to any interim financial
statements, to the extent such statements are subject to normal year-end
adjustments and do not include any notes) and fairly present in all material
respects the financial condition and the results of operation of such Borrower
and Guarantor as at the dates and for the periods set forth therein. Except as
disclosed in any interim financial statements furnished by Borrowers and
Guarantors to Agent prior to the date of this Agreement, there has been no act,
condition or event which has had or is reasonably likely to have a Material
Adverse Effect since the date of the most recent audited financial statements of
any Borrower or Guarantor furnished by any Borrower or Guarantor to Agent prior
to the date of this Agreement. The projections for the fiscal year ending
December 31, 2006 that have been delivered to Agent or any projections hereafter
delivered to Agent have been prepared in light of the past operations of the
businesses of Borrowers and Guarantors and are based upon estimates and
assumptions stated therein, all of which Borrowers and Guarantors have
determined to be reasonable and fair in light of the then current conditions and
current facts and reflect the good faith and reasonable estimates of Borrowers
and Guarantors of the future financial performance of Parent and its
Subsidiaries and of the other information projected therein for the periods set
forth therein. For purposes of this Section 8.3, the occurrence of the
following, both individually and collectively, and any negative financial impact
on Borrowers and Guarantors in Borrowers' 2005 fiscal year related thereto,
shall not be deemed to constitute a Material Adverse Effect: (a) the
consolidation of Borrowers' previously existing Longview, Texas factory into
Borrowers' Orlando, Florida factory operation and the sale or other disposition
of Equipment located at such Texas facility; (b) the consolidation of Borrowers'
Albuquerque, New Mexico facility into Borrowers' Sanford, North Carolina
facility; (c) the consolidation of operations of Fedders' Chinese Subsidiaries
into one location; and (d) the closure and sale of Real Property and Equipment
at Borrowers' Columbia, Tennessee and Vienna, Georgia facilities; except that,
nothing contained herein shall be deemed or constitute Agent's or Required
Lender's consent to or approval of any sale or disposition of any of Borrowers'
and/or Guarantors' assets that may occur in connection with the foregoing
8.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Agent under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 8.4 to
the Information Certificate and the other liens permitted under Section 9.8
hereof. Each Borrower and Guarantor has good and marketable fee simple title to
or valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of its other properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
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kind, except those granted to Agent and such others as are specifically listed
on Schedule 8.4 to the Information Certificate or permitted under Section 9.8
hereof.
8.5 Tax Returns. Each Borrower and Guarantor has filed, or caused to be
filed, in a timely manner all tax returns, reports and declarations which are
required to be filed by it. All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Each Borrower
and Guarantor has paid or caused to be paid all taxes due and payable or claimed
due and payable in any assessment received by it, except taxes the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to such Borrower or Guarantor and with respect to which
adequate reserves have been set aside on its books. Adequate provision has been
made for the payment of all accrued and unpaid Federal, State, county, local,
foreign and other taxes whether or not yet due and payable and whether or not
disputed.
8.6 Litigation. Except as set forth on Schedule 8.6 to the Information
Certificate, (a) there is no investigation by any Governmental Authority
pending, or to the best of any Borrower's or Guarantor's knowledge threatened,
against or affecting any Borrower or Guarantor, its or their assets or business
and (b) there is no action, suit, proceeding or claim by any Person pending, or
to the best of any Borrower's or Guarantor's knowledge threatened, against any
Borrower or Guarantor or its or their assets or goodwill, or against or
affecting any transactions contemplated by this Agreement, in each case, which
if adversely determined against such Borrower or Guarantor has or could
reasonably be expected to have a Material Adverse Effect.
8.7 Compliance with Other Agreements and Applicable Laws.
(a) Borrowers and Guarantors are not in default in any respect under, or in
violation in any respect of the terms of, any material agreement, contract,
instrument, lease or other commitment to which it is a party or by which it or
any of its assets are bound, except for any such default or violation which has
not resulted in, and could not reasonably be expected to result in, a Material
Adverse Effect. Borrowers and Guarantors are in compliance with the requirements
of all applicable laws, rules, regulations and orders of any Governmental
Authority relating to their respective businesses, including, without
limitation, those set forth in or promulgated pursuant to the Occupational
Safety and Health Act of 1970, as amended, the Fair Labor Standards Act of 1938,
as amended, ERISA, the Code, as amended, and the rules and regulations
thereunder, and all Environmental Laws.
(b) Borrowers and Guarantors have obtained all material permits, licenses,
approvals, consents, certificates, orders or authorizations of any Governmental
Authority required for the lawful conduct of its business (the "Permits"). All
of the Permits are valid and subsisting and in full force and effect. There are
no actions, claims or proceedings pending or to the best of any Borrower's or
Guarantor's knowledge, threatened that seek the revocation, cancellation,
suspension or modification of any of the Permits.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 to the Information Certificate,
Borrowers, Guarantors and any Subsidiary of any Borrower or Guarantor have not
generated, used, stored, treated, transported, manufactured, handled, produced
or disposed of any Hazardous Materials, on or
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off its premises (whether or not owned by it) in any manner which at any time
violates in any material respect any applicable Environmental Law or Permit, and
the operations of Borrowers, Guarantors and any Subsidiary of any Borrower or
Guarantor comply in all material respects with all Environmental Laws and all
Permits.
(b) Except as set forth on Schedule 8.8 to the Information Certificate,
there has been no investigation by any Governmental Authority or any proceeding,
complaint, order, directive, claim, citation or notice by any Governmental
Authority or any other person nor is any pending or to the best of any
Borrower's or Guarantor's knowledge threatened, with respect to any non
compliance with or violation of the requirements of any Environmental Law by any
Borrower or Guarantor and any Subsidiary of any Borrower or Guarantor or the
release, spill or discharge, threatened or actual, of any Hazardous Material or
the generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter, which adversely affects or could reasonably be expected
to adversely affect in any material respect any Borrower or Guarantor or its or
their business, operations or assets or any properties at which such Borrower or
Guarantor has transported, stored or disposed of any Hazardous Materials.
(c) Except as set forth on Schedule 8.8 to the Information Certificate,
Borrowers, Guarantors and their Subsidiaries have no material liability
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials.
(d) Borrowers, Guarantors and their Subsidiaries have all Permits required
to be obtained or filed in connection with the operations of Borrowers and
Guarantors under any Environmental Law and all of such licenses, certificates,
approvals or similar authorizations and other Permits are valid and in full
force and effect.
8.9 Employee Benefits.
(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other 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 Internal Revenue Service and to the best of any
Borrower's or Guarantor's knowledge, nothing has occurred which would cause the
loss of such qualification. Each Borrower and its ERISA Affiliates have 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 best of any Borrower's or Guarantor's
knowledge, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) based on the latest valuation of each Pension Plan and on the actuarial
methods and assumptions employed for
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such valuation (determined in accordance with the assumptions used for funding
such Pension Plan pursuant to Section 412 of the Code), the aggregate current
value of accumulated benefit liabilities of such Pension Plan under Section
4001(a)(16) of ERISA does not exceed the aggregate current value of the assets
of such Pension Plan; (iii) each Borrower and Guarantor, and their ERISA
Affiliates, have not incurred and do not reasonably expect to incur, any
liability under Title IV of ERISA with respect to any Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) each Borrower and
Guarantor, and their ERISA Affiliates, have not incurred and do not reasonably
expect to incur, any liability (and no event has occurred which, with the giving
of notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) each
Borrower and Guarantor, and their ERISA Affiliates, have not engaged in a
transaction that would be subject to Section 4069 or 4212(c) of ERISA.
8.10 Bank Accounts. All of the deposit accounts, investment accounts or
other accounts in the name of or used by any Borrower or Guarantor maintained at
any bank or other financial institution are set forth on Schedule 8.10 to the
Information Certificate, subject to the right of each Borrower and Guarantor to
establish new accounts in accordance with Section 5.2 hereof.
8.11 Intellectual Property. Each Borrower and Guarantor owns or licenses or
otherwise has the right to use all Intellectual Property necessary for the
operation of its business as presently conducted or proposed to be conducted. As
of the date hereof, Borrowers and Guarantors do not have any Intellectual
Property registered, or subject to pending applications, in the United States
Patent and Trademark Office or any similar office or agency in the United
States, any State thereof, any political subdivision thereof or in any other
country, other than those described in Schedule 8.11 to the Information
Certificate and has not granted any licenses with respect thereto other than as
set forth in Schedule 8.11 to the Information Certificate. No event has occurred
which permits or would permit after notice or passage of time or both, the
revocation, suspension or termination of such rights. To the best of any
Borrower's and Guarantor's knowledge, no slogan or other advertising device,
product, process, method, substance or other Intellectual Property or goods
bearing or using any Intellectual Property presently contemplated to be sold by
or employed by any Borrower or Guarantor infringes any patent, trademark,
servicemark, tradename, copyright, license or other Intellectual Property owned
by any other Person presently and no claim or litigation is pending or
threatened against or affecting any Borrower or Guarantor contesting its right
to sell or use any such Intellectual Property. Schedule 8.11 to the Information
Certificate sets forth all of the agreements or other arrangements of each
Borrower and Guarantor pursuant to which such Borrower or Guarantor has a
license or other right to use any trademarks, logos, designs, representations or
other Intellectual Property owned by another person as in effect on the date
hereof and the dates of the expiration of such agreements or other arrangements
of such Borrower or Guarantor as in effect on the date hereof (collectively,
together with such agreements or other arrangements as may be entered into by
any Borrower or Guarantor after the date hereof, collectively, the "License
Agreements" and individually, a "License Agreement"). No trademark, servicemark,
copyright or other Intellectual Property at any time used by any Borrower or
Guarantor which is owned by another person, or owned by such Borrower or
Guarantor subject to any security interest, lien, collateral assignment, pledge
or other encumbrance in favor of any person other than Agent, is affixed to any
Eligible Inventory, except (a) to the extent permitted under the terms of the
license agreements listed on Schedule 8.11 to the Information Certificate and
(b) to the extent the sale of Inventory to which such
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Intellectual Property is affixed is permitted to be sold by such Borrower or
Guarantor under applicable law (including the United States Copyright Act of
1976).
8.12 Subsidiaries; Affiliates; Capitalization; Solvency.
(a) Each Borrower and Guarantor does not have any direct or indirect
Subsidiaries or Affiliates and is not engaged in any joint venture or
partnership except as set forth in Schedule 8.12 to the Information Certificate.
(b) Each Borrower and Guarantor is the record and beneficial owner of all
of the issued and outstanding shares of its Capital Stock of each of the
Subsidiaries listed on Schedule 8.12 to the Information Certificate as being
owned by such Borrower or Guarantor and there are no proxies, irrevocable or
otherwise, with respect to such shares and no equity securities of any of the
Subsidiaries are or may become required to be issued by reason of any options,
warrants, rights to subscribe to, calls or commitments of any kind or nature and
there are no contracts, commitments, understandings or arrangements by which any
Subsidiary is or may become bound to issue additional shares of its Capital
Stock or securities convertible into or exchangeable for such shares.
(c) The issued and outstanding shares of Capital Stock of each Borrower and
Guarantor are directly and beneficially owned and held by the persons indicated
in the Information Certificate, and in each case all of such shares have been
duly authorized and are fully paid and non-assessable, free and clear of all
claims, liens, pledges and encumbrances of any kind, except as disclosed in
writing to Agent prior to the date hereof.
(d) Each Borrower and Guarantor is Solvent and will continue to be Solvent
after the creation of the Obligations, the security interests of Agent and the
other transactions contemplated hereunder.
8.13 Labor Disputes.
(a) Set forth on Schedule 8.13 to the Information Certificate is a list
(including dates of termination) of all collective bargaining or similar
agreements between or applicable to each Borrower and Guarantor and any union,
labor organization or other bargaining agent in respect of the employees of any
Borrower or Guarantor on the date hereof.
(b) There is (i) no significant unfair labor practice complaint pending
against any Borrower or Guarantor or, to the best of any Borrower's or
Guarantor's knowledge, threatened against it, before the National Labor
Relations Board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is
pending on the date hereof against any Borrower or Guarantor or, to best of any
Borrower's or Guarantor's knowledge, threatened against it, and (ii) no
significant strike, labor dispute, slowdown or stoppage is pending against any
Borrower or Guarantor or, to the best of any Borrower's or Guarantor's
knowledge, threatened against any Borrower or Guarantor.
8.14 Restrictions on Subsidiaries. Except for restrictions contained in
this Agreement or any other agreement with respect to Indebtedness of any
Borrower or Guarantor permitted hereunder as in effect on the date hereof, there
are no contractual or consensual restrictions on any Borrower or Guarantor or
any of its Subsidiaries which prohibit or otherwise restrict (a) the transfer of
cash or
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other assets (i) between any Borrower or Guarantor and any of its or their
Subsidiaries or (ii) between any Subsidiaries of any Borrower or Guarantor or
(b) the ability of any Borrower or Guarantor or any of its or their Subsidiaries
to incur Indebtedness or grant security interests to Agent or any Lender in the
Collateral.
8.15 Material Contracts. Schedule 8.15 to the Information Certificate sets
forth all Material Contracts to which any Borrower or Guarantor is a party or is
bound as of the date hereof. Borrowers and Guarantors have delivered true,
correct and complete copies of such Material Contracts to Agent on or before the
date hereof. Borrowers and Guarantors are not in breach or in default in any
material respect of or under any Material Contract and have not received any
notice of the intention of any other party thereto to terminate any Material
Contract.
8.16 Payable Practices. Each Borrower and Guarantor have not made any
material change in the historical accounts payable practices from those in
effect immediately prior to the date hereof.
8.17 Accuracy and Completeness of Information. All information furnished by
or on behalf of any Borrower or Guarantor in writing to Agent or any Lender in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including all information on the
Information Certificate is true and correct in all material respects on the date
as of which such information is dated or certified and does not omit any
material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be expected
to have a Material Adverse Affect, which has not been fully and accurately
disclosed to Agent in writing prior to the date hereof.
8.18 Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be deemed to have
been made again to Agent and Lenders on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Agent and Lenders regardless of any investigation made or
information possessed by Agent or any Lender. The representations and warranties
set forth herein shall be cumulative and in addition to any other
representations or warranties which any Borrower or Guarantor shall now or
hereafter give, or cause to be given, to Agent or any Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence.
(a) Each Borrower and Guarantor shall at all times preserve, renew and keep
in full force and effect its corporate existence and rights and franchises with
respect thereto and maintain in full force and effect all licenses, trademarks,
tradenames, approvals, authorizations, leases, contracts and Permits necessary
to carry on the business as presently or proposed to be conducted, except as to
any Guarantor other than Parent as permitted in Section 9.7 hereto.
(b) No Borrower or Guarantor shall change its name unless each of the
following conditions is satisfied: (i) Agent shall have received not less than
thirty (30) days prior written notice from Administrative Borrower of such
proposed change in its corporate name, which notice shall accurately set forth
the new name; and (ii) Agent shall have received a copy of the amendment to the
Certificate of Incorporation of such Borrower or Guarantor providing for the
name change certified
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by the Secretary of State of the jurisdiction of incorporation or organization
of such Borrower or Guarantor as soon as it is available.
(c) No Borrower or Guarantor shall change its chief executive office or its
mailing address or organizational identification number (or if it does not have
one, shall not acquire one) unless Agent shall have received not less than
thirty (30) days' prior written notice from Administrative Borrower of such
proposed change, which notice shall set forth such information with respect
thereto as Agent may require and Agent shall have received such agreements as
Agent may reasonably require in connection therewith. No Borrower or Guarantor
shall change its type of organization, jurisdiction of organization or other
legal structure.
9.2 New Collateral Locations. Each Borrower and Guarantor may only open any
new location within the continental United States provided such Borrower or
Guarantor (a) gives Agent thirty (30) days prior written notice of the intended
opening of any such new location and (b) executes and delivers, or causes to be
executed and delivered, to Agent such agreements, documents, and instruments as
Agent may deem reasonably necessary or desirable to protect its interests in the
Collateral at such location.
9.3 Compliance with Laws, Regulations, Etc.
(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to,
at all times, comply in all material respects with all laws, rules, regulations,
licenses, approvals, orders and other Permits applicable to it and duly observe
all requirements of any foreign, Federal, State or local Governmental Authority.
(b) Borrowers and Guarantors shall give written notice to Agent immediately
upon any Borrower's or Guarantor's receipt of any notice of, or any Borrower's
or Guarantor's otherwise obtaining knowledge of, (i) the occurrence of any event
involving the release, spill or discharge, threatened or actual, of any
Hazardous Material or (ii) any investigation, proceeding, complaint, order,
directive, claims, citation or notice with respect to: (A) any non-compliance
with or violation of any Environmental Law by any Borrower or Guarantor or (B)
the release, spill or discharge, threatened or actual, of any Hazardous Material
other than in the ordinary course of business and other than as permitted under
any applicable Environmental Law. Copies of all environmental surveys, audits,
assessments, feasibility studies and results of remedial investigations shall be
promptly furnished, or caused to be furnished, by such Borrower or Guarantor to
Agent. Each Borrower and Guarantor shall take prompt action to respond to any
material non-compliance with any of the Environmental Laws and shall regularly
report to Agent on such response.
(c) Without limiting the generality of the foregoing, whenever Agent
reasonably determines that there is non-compliance, or any condition which
requires any action by or on behalf of any Borrower or Guarantor in order to
avoid any non compliance, with any Environmental Law, Borrowers shall, at
Agent's request and Borrowers' expense: (i) cause an independent environmental
engineer reasonably acceptable to Agent to conduct such tests of the site where
non-compliance or alleged non compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Agent a report as
to such non-compliance setting forth the results of such tests, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof and (ii) provide to Agent a supplemental report of such
engineer
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whenever the scope of such non-compliance, or such Borrower's or Guarantor's
response thereto or the estimated costs thereof, shall change in any material
respect.
(d) Each Borrower and Guarantor shall indemnify and hold harmless Agent and
Lenders and their respective directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all losses,
claims, damages, liabilities, costs, and expenses (including reasonable
attorneys' fees and expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material, including the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of any Borrower or
Guarantor and the preparation and implementation of any closure, remedial or
other required plans. All representations, warranties, covenants and
indemnifications in this Section 9.3 shall survive the payment of the
Obligations and the termination of this Agreement.
9.4 Payment of Taxes and Claims. Each Borrower and Guarantor shall, and
shall cause any Subsidiary to, duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes the validity of which are being contested in good faith
by appropriate proceedings diligently pursued and available to such Borrower,
Guarantor or Subsidiary, as the case may be, and with respect to which adequate
reserves have been set aside on its books to the extent required by GAAP.
9.5 Insurance. Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, at all times, maintain with financially sound and reputable
insurers insurance with respect to the Collateral against loss or damage and all
other insurance of the kinds and in the amounts customarily insured against or
carried by corporations of established reputation engaged in the same or similar
businesses and similarly situated. Said policies of insurance shall be
reasonably satisfactory to Agent as to form, amount and insurer. Borrowers and
Guarantors shall furnish certificates, policies or endorsements to Agent as
Agent shall reasonably require as proof of such insurance, and, if any Borrower
or Guarantor fails to do so, Agent is authorized, but not required, to obtain
such insurance at the expense of Borrowers. All policies shall provide for at
least thirty (30) days prior written notice to Agent of any cancellation or
reduction of coverage and that Agent may act as attorney for each Borrower and
Guarantor in obtaining, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance. Borrowers and Guarantors shall cause Agent to be named as a loss
payee and an additional insured (but without any liability for any premiums)
under such insurance policies and Borrowers and Guarantors shall obtain
non-contributory lender's loss payable endorsements to all insurance policies in
form and substance satisfactory to Agent. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Agent as its interests may appear and further specify that Agent and Lenders
shall be paid regardless of any act or omission by any Borrower, Guarantor or
any of its or their Affiliates. Without limiting any other rights of Agent or
Lenders, any insurance proceeds received by Agent at any time may be applied to
payment of the Obligations, whether or not then due, in any order and in such
manner as Agent may determine. Upon application of such proceeds to the
Revolving Loans, Revolving Loans may be available subject and pursuant to the
terms hereof to be used for the costs of repair or replacement of the Collateral
lost or damages resulting in the payment of such insurance proceeds.
9.6 Financial Statements and Other Information.
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(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to,
keep proper books and records in which true and complete entries shall be made
of all dealings or transactions of or in relation to the Collateral and the
business of such Borrower, Guarantor and its Subsidiaries in accordance with
GAAP. Borrowers and Guarantors shall promptly furnish to Agent and Lenders all
such financial and other information as Agent shall reasonably request relating
to the Collateral and the assets, business and operations of Borrowers and
Guarantors, and Borrower shall notify the auditors and accountants of Borrowers
and Guarantors that Agent is authorized to obtain such information directly from
them. Without limiting the foregoing, Borrowers shall furnish or cause to be
furnished to Agent, the following:
(i) within thirty (30) days after the end of each fiscal month,
monthly unaudited consolidated financial statements and unaudited consolidating
financial statements (including in each case balance sheets, statements of
income and loss and statements of cash flow), all in reasonable detail, fairly
presenting in all material respects the financial position and the results of
the operations of Parent and its Subsidiaries as of the end of and through such
fiscal month, certified to be correct by the chief financial officer of Parent,
subject to normal year-end adjustments and accompanied by a compliance
certificate substantially in the form of Exhibit C hereto, along with a schedule
in form reasonably satisfactory to Agent of the calculations used in
determining, as of the end of such month, whether Borrowers and Guarantors were
in compliance with the covenant set forth in Section 9.17 of this Agreement for
such month;
(ii) within forty-five (45) days after the end of each fiscal quarter,
quarterly unaudited consolidated financial statements (including in each case
balance sheets, statements of income and loss and statements of cash flow), all
in reasonable detail, fairly presenting in all material respects the financial
position and the results of the operations of Parent and its Subsidiaries as of
the end of and through such fiscal quarter, certified to be correct by the chief
financial officer of Parent, subject to normal year-end adjustments and
accompanied by a compliance certificate substantially in the form of Exhibit C
hereto, along with a schedule in form reasonably satisfactory to Agent of the
calculations used in determining, as of the end of such quarter, whether
Borrowers and Guarantors were in compliance with the covenants set forth in
Section 9.17 of this Agreement for such quarter;
(iii) within sixty (60) days after the end of each fiscal year,
internally prepared unaudited consolidated financial statements and unaudited
consolidating financial statements of Parent and its Subsidiaries (including in
each case balance sheets, statements of income and loss and statements of cash
flow), all in reasonable detail, fairly presenting in all material respects the
financial position and the results of the operations of Parent and its
Subsidiaries as of the end of and for such fiscal year, subject to normal
year-end adjustments and accompanied by a compliance certificate substantially
in the form of Exhibit C hereto, along with a schedule in form reasonably
satisfactory to Agent of the calculations used in determining, as of the end of
such fiscal year, whether Borrowers and Guarantors were in compliance with the
covenant set forth in Section 9.17 of this Agreement for such fiscal year;
(iv) within ninety (90) days after the end of each fiscal year,
audited consolidated financial statements and unaudited consolidating financial
statements of Parent and its Subsidiaries (including in each case balance
sheets, statements of income and loss, statements of cash flow and statements of
shareholders' equity), and the accompanying notes thereto, all in reasonable
detail,
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fairly presenting in all material respects the financial position and the
results of the operations of Parent and its Subsidiaries as of the end of and
for such fiscal year, together with the unqualified opinion of independent
certified public accountants with respect to the audited consolidated financial
statements, which accountants shall be an independent accounting firm selected
by Administrative Borrower and acceptable to Agent, that such audited
consolidated financial statements have been prepared in accordance with GAAP,
and present fairly in all material respects the results of operations and
financial condition of Parent and its Subsidiaries as of the end of and for the
fiscal year then ended; and
(v) at such time as available, but in no event later than thirty (30)
days after the end of each fiscal year (commencing with the fiscal year of
Borrowers ending December 31, 2006), projected consolidated financial statements
(including in each case, forecasted balance sheets and statements of income and
loss and statements of cash flow) of Parent and its Subsidiaries for the next
fiscal year, all in reasonable detail, and in a format consistent with the
projections delivered by Borrowers to Agent prior to the date hereof, together
with such supporting information as Agent may reasonably request. Such projected
financial statements shall be prepared on a monthly basis for the next
succeeding year. Such projections shall represent the reasonable best estimate
by Borrowers and Guarantors of the future financial performance of Parent and
its Subsidiaries for the periods set forth therein and shall have been prepared
on the basis of the assumptions set forth therein which Borrowers and Guarantors
believe are fair and reasonable as of the date of preparation in light of
current and reasonably foreseeable business conditions (it being understood that
actual results may differ from those set forth in such projected financial
statements). Each year Parent shall provide to Agent a semi-annual update with
respect to such projections or at any time a Default or Event of Default exists
or has occurred and is continuing, more frequently as Agent may require.
(b) Borrowers and Guarantors shall promptly notify Agent in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than $150,000 or which if
adversely determined would result in any material adverse change in any
Borrower's or Guarantor's business, properties, assets, goodwill or condition,
financial or otherwise, (ii) any Material Contract being terminated or amended
or any new Material Contract entered into (in which event Borrowers and
Guarantors shall provide Agent with a copy of such Material Contract), (iii) any
order, judgment or decree in excess of $150,000 shall have been entered against
any Borrower or Guarantor any of its or their properties or assets, (iv) any
notification of a material violation of laws or regulations received by any
Borrower or Guarantor, (v) any ERISA Event, and (vi) the occurrence of any
Default or Event of Default.
(c) Promptly after the sending or filing thereof, Borrowers shall send to
Agent copies of (i) all reports which Parent or any of its Subsidiaries sends to
its security holders generally, (ii) all reports and registration statements
which Parent or any of its Subsidiaries files with the SEC, any national or
foreign securities exchange or the National Association of Securities Dealers,
Inc., and such other reports as Agent may hereafter specifically identify to
Administrative Borrower that Agent will require be provided to Agent, (iii) all
press releases and (iv) all other statements concerning material changes or
developments in the business of a Borrower or Guarantor made available by any
Borrower or Guarantor to the public. In addition to, and not in limitation of
the foregoing, Parent shall deliver prompt notice to Agent of each filing and of
each failure to timely file each 10-Q Report and 10-K Report which Parent is
required to file with the SEC pursuant to the Exchange Act.
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(d) Borrowers and Guarantors shall furnish or cause to be furnished to
Agent such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrowers and Guarantors, as Agent may, from time
to time, reasonably request. Agent is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrowers and Guarantors to any court or other Governmental Authority or to any
Lender or Participant or prospective Lender or Participant or any Affiliate of
any Lender or Participant. Each Borrower and Guarantor hereby irrevocably
authorizes and directs all accountants or auditors to deliver to Agent, at
Borrowers' expense, copies of the financial statements of any Borrower and
Guarantor and any reports or management letters prepared by such accountants or
auditors on behalf of any Borrower or Guarantor and to disclose to Agent and
Lenders such information as they may have regarding the business of any Borrower
and Guarantor. Any documents, schedules, invoices or other papers delivered to
Agent or any Lender may be destroyed or otherwise disposed of by Agent or such
Lender one (1) year after the same are delivered to Agent or such Lender, except
as otherwise designated by Administrative Borrower to Agent or such Lender in
writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each Borrower
and Guarantor shall not, and shall not permit any Subsidiary to, directly or
indirectly:
(a) merge into or with or consolidate with any other Person or permit any
other Person to merge into or with or consolidate with it except that any
wholly-owned Subsidiary of Parent (other than any Borrower) may merge with and
into or consolidate with any other wholly-owned Subsidiary of Parent (other than
any Borrower), provided, that, each of the following conditions is satisfied as
determined by Agent in good faith: (i) Agent shall have received not less than
ten (10) Business Days' prior written notice of the intention of such
Subsidiaries to so merge or consolidate, which notice shall set forth in
reasonable detail satisfactory to Agent, the persons that are merging or
consolidating, which person will be the surviving entity, the locations of the
assets of the persons that are merging or consolidating, and the material
agreements and documents relating to such merger or consolidation, (ii) Agent
shall have received such other information with respect to such merger or
consolidation as Agent may reasonably request, (iii) as of the effective date of
the merger or consolidation and after giving effect thereto, no Default or Event
of Default shall exist or have occurred, (iv) Agent shall have received, true,
correct and complete copies of all agreements, documents and instruments
relating to such merger or consolidation, including, but not limited to, the
certificate or certificates of merger to be filed with each appropriate
Secretary of State (with a copy as filed promptly after such filing), (v) the
surviving corporation shall expressly confirm, ratify and assume the Obligations
and the Financing Agreements to which it is a party in writing, in form and
substance satisfactory to Agent, and Borrowers and Guarantors shall execute and
deliver such other agreements, documents and instruments as Agent may request in
connection therewith;
(b) sell, issue, assign, lease, license, transfer, abandon or otherwise
dispose of any Capital Stock or Indebtedness to any other Person or any of its
assets to any other Person, except for:
(i) sales of Inventory in the ordinary course of business;
(ii) the sale or other disposition of Equipment (including worn-out or
obsolete Equipment or Equipment no longer used or useful in the business of any
Borrower or Guarantor) so long as such sales or other dispositions do not
involve Equipment having an aggregate fair market
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value in excess of $500,000 for all such Equipment disposed of in any fiscal
year of Borrowers or as Agent may otherwise agree, and all proceeds thereof
shall be remitted directly to Agent for application to the Loans in accordance
with this Agreement;
(iii) the issuance and sale by any Borrower or Guarantor of Capital
Stock of such Borrower or Guarantor after the date hereof; provided, that, (A)
Agent shall have received not less than ten (10) Business Days' prior written
notice of such issuance and sale by such Borrower or Guarantor, which notice
shall specify the parties to whom such shares are to be sold, the terms of such
sale, the total amount which it is anticipated will be realized from the
issuance and sale of such stock and the net cash proceeds which it is
anticipated will be received by such Borrower or Guarantor from such sale, (B)
such Borrower or Guarantor shall not be required to pay any cash dividends or
repurchase or redeem such Capital Stock or make any other payments in respect
thereof, except as otherwise permitted in Section 9.11 hereof, (C) the terms of
such Capital Stock, and the terms and conditions of the purchase and sale
thereof, shall not include any terms that include any limitation on the right of
any Borrower to request or receive Loans or Letters of Credit or the right of
any Borrower and Guarantor to amend or modify any of the terms and conditions of
this Agreement or any of the other Financing Agreements or otherwise in any way
relate to or affect the arrangements of Borrowers and Guarantors with Agent and
Lenders or are more restrictive or burdensome to any Borrower or Guarantor than
the terms of any Capital Stock in effect on the date hereof, (D) except as Agent
may otherwise agree in writing, all of the proceeds of the sale and issuance of
such Capital Stock shall be paid to Agent for application to the Obligations in
such order and manner as Agent may determine or at Agent's option, to be held as
cash collateral for the Obligations and (E) as of the date of such issuance and
sale and after giving effect thereto, no Change of Control or other Default or
Event of Default shall exist or have occurred; and
(iv) the issuance of Capital Stock of any Borrower or Guarantor
consisting of common stock pursuant to an employee stock option or grant or
similar equity plan or 401(k) plans of such Borrower or Guarantor for the
benefit of its employees, directors and consultants, provided, that, in no event
shall such Borrower or Guarantor be required to issue, or shall such Borrower or
Guarantor issue, Capital Stock pursuant to such stock plans or 401(k) plans
which would result in a Change of Control or other Event of Default;
(c) wind up, liquidate or dissolve, except that any Guarantor (other than
Parent) may wind up, liquidate and dissolve, provided, that, each of the
following conditions is satisfied, (i) the winding up, liquidation and
dissolution of such Guarantor shall not violate any law or any order or decree
of any court or other Governmental Authority in any material respect and shall
not conflict with or result in the breach of, or constitute a default under, the
Senior Notes Indenture or any other indenture, or any mortgage, deed of trust,
or any other agreement or instrument to which any Borrower or Guarantor is a
party or may be bound, (ii) such winding up, liquidation or dissolution shall be
done in accordance with the requirements of all applicable laws and regulations,
(iii) effective upon such winding up, liquidation or dissolution, all of the
assets and properties of such Guarantor shall be duly and validly transferred
and assigned to another Guarantor, free and clear of any liens, restrictions or
encumbrances other than the security interest and liens of Agent (and Agent
shall have received such evidence thereof as Agent may require) and Agent shall
have received such deeds, assignments or other agreements as Agent may request
to evidence and confirm the transfer of such assets of such Guarantor to a
Guarantor, (iv) Agent shall have received all documents and agreements that any
Borrower or Guarantor has filed with any Governmental Authority or as are
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otherwise required to effectuate such winding up, liquidation or dissolution,
(v) no Borrower or Guarantor shall assume any Indebtedness, obligations or
liabilities as a result of such winding up, liquidation or dissolution, or
otherwise become liable in respect of any obligations or liabilities of the
entity that is winding up, liquidating or dissolving, unless such Indebtedness
is otherwise expressly permitted hereunder, (vi) Agent shall have received not
less than ten (10) Business Days prior written notice of the intention of such
Guarantor to wind up, liquidate or dissolve, and (vii) as of the date of such
winding up, liquidation or dissolution and after giving effect thereto, no
Default or Event of Default shall exist or have occurred; or
(d) agree to do any of the foregoing.
Without limiting the generality of the provisions of Section 9.7(b), a Borrower
which is the owner of any particular Inventory, as reported to Agent in an
Inventory report delivered to Agent pursuant to Section 7.1(a), shall not sell
or otherwise transfer title to such Inventory to another Borrower.
9.8 Encumbrances. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, create, incur, assume or suffer to exist any security
interest, mortgage, pledge, lien, charge or other encumbrance of any nature
whatsoever on any of its assets or properties, including the Collateral, or file
or permit the filing of, or permit to remain in effect, any financing statement
or other similar notice of any security interest or lien with respect to any
such assets or properties, except:
(a) the security interests and liens of Agent for itself and the benefit of
Secured Parties;
(b) liens securing the payment of taxes, assessments or other governmental
charges or levies either not yet overdue or the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Borrower, or Guarantor or Subsidiary, as the case may be and
with respect to which adequate reserves have been set aside on its books;
(c) non-consensual statutory liens (other than liens securing the payment
of taxes) arising in the ordinary course of such Borrower's, Guarantor's or
Subsidiary's business to the extent: (i) such liens secure Indebtedness which is
not overdue or (ii) such liens secure Indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to such Borrower,
Guarantor or such Subsidiary, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books;
(d) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property which do not interfere in any
material respect with the use of such Real Property or ordinary conduct of the
business of such Borrower, Guarantor or such Subsidiary as presently conducted
thereon or materially impair the value of the Real Property which may be subject
thereto;
(e) purchase money security interests in Equipment (including Capital
Leases) and purchase money mortgages on Real Property to secure Indebtedness
permitted under Section 9.9(b) hereof;
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(f) pledges and deposits of cash by any Borrower or Guarantor after the
date hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of such Borrower or Guarantor as of the
date hereof;
(g) pledges and deposits of cash by any Borrower or Guarantor after the
date hereof to secure the performance of tenders, bids, leases, trade contracts
(other than for the repayment of Indebtedness), statutory obligations and other
similar obligations in each case in the ordinary course of business consistent
with the current practices of such Borrower or Guarantor as of the date hereof;
provided, that, in connection with any performance bonds issued by a surety or
other person, the issuer of such bond shall have waived in writing any rights in
or to, or other interest in, any of the Collateral in an agreement, in form and
substance satisfactory to Agent;
(h) liens arising from (i) operating leases and the precautionary UCC
financing statement filings in respect thereof and (ii) equipment or other
materials which are not owned by any Borrower or Guarantor located on the
premises of such Borrower or Guarantor (but not in connection with, or as part
of, the financing thereof) from time to time in the ordinary course of business
and consistent with current practices of such Borrower or Guarantor and the
precautionary UCC financing statement filings in respect thereof;
(i) judgments and other similar liens arising in connection with court
proceedings that do not constitute an Event of Default, provided, that, (i) such
liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefor, (iii) a stay of
enforcement of any such liens is in effect and (iv) Agent may establish a
Reserve with respect thereto; and
(j) the security interests and liens set forth on Schedule 8.4 to the
Information Certificate.
9.9 Indebtedness. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any Indebtedness, or guarantee,
assume, endorse, or otherwise become responsible for (directly or indirectly),
the Indebtedness, performance, obligations or dividends of any other Person,
except:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) arising after
the date hereof to the extent secured by purchase money security interests in
Equipment (including Capital Leases) and purchase money mortgages on Real
Property not to exceed $2,500,000 in the aggregate at any time outstanding so
long as such security interests and mortgages do not apply to any property of
such Borrower, Guarantor or Subsidiary other than the Equipment or Real Property
so acquired, and the Indebtedness secured thereby does not exceed the cost of
the Equipment or Real Property so acquired, as the case may be;
(c) guarantees by any Borrower or Guarantor of the Obligations of the other
Borrowers or Guarantors in favor of Agent for the benefit of Lenders;
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(d) the Indebtedness of any Borrower or Guarantor to any other Borrower or
Guarantor arising after the date hereof pursuant to loans by any Borrower or
Guarantor permitted under Section 9.10(g) hereof;
(e) unsecured Indebtedness of any Borrower or Guarantor arising after the
date hereof to any third person (but not to any other Borrower or Guarantor),
provided, that, each of the following conditions is satisfied as determined by
Agent: (i) such Indebtedness shall be on terms and conditions acceptable to
Agent and shall be subject and subordinate in right of payment to the right of
Agent and Lenders to receive the prior indefeasible payment and satisfaction in
full payment of all of the Obligations pursuant to the terms of an intercreditor
agreement between Agent and such third party, in form and substance satisfactory
to Agent, (ii) Agent shall have received not less than ten (10) days prior
written notice of the intention of such Borrower or Guarantor to incur such
Indebtedness, which notice shall set forth in reasonable detail satisfactory to
Agent the amount of such Indebtedness, the person or persons to whom such
Indebtedness will be owed, the interest rate, the schedule of repayments and
maturity date with respect thereto and such other information as Agent may
request with respect thereto, (iii) Agent shall have received true, correct and
complete copies of all agreements, documents and instruments evidencing or
otherwise related to such Indebtedness, (iv) except as Agent may otherwise agree
in writing, all of the proceeds of the loans or other accommodations giving rise
to such Indebtedness shall be paid to Agent for application to the Obligations
in such order and manner as Agent may determine or at Agent's option, to be held
as cash collateral for the Obligations, (v) in no event shall the aggregate
principal amount of such Indebtedness incurred during the term of this Agreement
which consists of unsecured guarantees by Fedders of obligations owing by its
Subsidiaries to Inventory vendors of such Subsidiaries ("Fedders Guarantees")
exceed $20,000,000 and in no event shall the aggregate principal amount of any
such Indebtedness, other than Fedders Guarantees, incurred during the term of
this Agreement exceed $1,000,000, (vi) as of the date of incurring such
Indebtedness and after giving effect thereto, no Default or Event of Default
shall exist or have occurred, (vii) such Borrower and Guarantor shall not,
directly or indirectly, (A) amend, modify, alter or change the terms of such
Indebtedness or any agreement, document or instrument related thereto, except,
that, such Borrower or Guarantor may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof so as to extend the maturity
thereof, or defer the timing of any payments in respect thereof, or to forgive
or cancel any portion of such Indebtedness (other than pursuant to payments
thereof), or to reduce the interest rate or any fees in connection therewith, or
(B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness
(except pursuant to regularly scheduled payments permitted herein), or set aside
or otherwise deposit or invest any sums for such purpose, and (viii) Borrowers
and Guarantors shall furnish to Agent all notices or demands in connection with
such Indebtedness either received by any Borrower or Guarantor or on its behalf
promptly after the receipt thereof, or sent by any Borrower or Guarantor or on
its behalf concurrently with the sending thereof, as the case may be;
(f) the Indebtedness under the Senior Notes, the Senior Notes Guaranty and
the Senior Notes Indenture and any other Indebtedness set forth on Schedule 9.9
to the Information Certificate; provided, that, (i) Borrowers and Guarantors may
only make regularly scheduled payments of principal and interest in respect of
such Indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to such Indebtedness as in effect on the date hereof,
(ii) Borrowers and Guarantors shall not, directly or indirectly, (A) amend,
modify, alter or change the terms of such Indebtedness or any agreement,
document or instrument related thereto as in effect on the date hereof, except,
that, Borrowers and Guarantors may, after prior written notice to Agent,
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amend, modify, alter or change the terms thereof so as to extend the maturity
thereof, or defer the timing of any payments in respect thereof, or to forgive
or cancel any portion of such Indebtedness (other than pursuant to payments
thereof), or to reduce the interest rate or any fees in connection therewith, or
(B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness, or
set aside or otherwise deposit or invest any sums for such purpose, and (iii)
Borrowers and Guarantors shall furnish to Agent all notices or demands in
connection with such Indebtedness either received by any Borrower or Guarantor
or on its behalf, promptly after the receipt thereof, or sent by any Borrower or
Guarantor or on its behalf, concurrently with the sending thereof, as the case
may be; and
(g) Indebtedness of any Borrower or Guarantor entered into in the ordinary
course of business pursuant to a Hedge Agreement; provided, that, (i) such
arrangements are with a Bank Product Provider, (ii) such arrangements are not
for speculative purposes, and (iii) such Indebtedness shall be unsecured, except
to the extent such Indebtedness constitutes part of the Obligations arising
under or pursuant to Hedge Agreements with a Bank Product Provider that are
secured under the terms hereof;
9.10 Loans, Investments, Etc. Each Borrower and Guarantor shall not, and
shall not permit any Subsidiary to, directly or indirectly, make any loans or
advance money or property to any person, or invest in (by capital contribution,
dividend or otherwise) or purchase or repurchase the Capital Stock or
Indebtedness or all or a substantial part of the assets or property of any
person, or form or acquire any Subsidiaries, or agree to do any of the
foregoing, except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that, the terms and
conditions of Section 5.2 hereof shall have been satisfied with respect to the
deposit account, investment account or other account in which such cash or Cash
Equivalents are held;
(c) the existing equity investments of each Borrower and Guarantor as of
the date hereof in its Subsidiaries, provided, that, no Borrower or Guarantor
shall have any further obligations or liabilities to make any capital
contributions or other additional investments or other payments to or in or for
the benefit of any of such Subsidiaries;
(d) loans and advances by any Borrower or Guarantor to employees of such
Borrower or Guarantor not to exceed the principal amount of $250,000 in the
aggregate in any of Borrowers' fiscal quarters and $1,000,000 in the aggregate
at any time outstanding for: (i) reasonably and necessary work-related travel or
other ordinary business expenses to be incurred by such employee in connection
with their work for such Borrower or Guarantor and (ii) reasonable and necessary
relocation expenses of such employees (including home mortgage financing for
relocated employees);
(e) stock or obligations issued to any Borrower or Guarantor by any Person
(or the representative of such Person) in respect of Indebtedness of such Person
owing to such Borrower or Guarantor in connection with the insolvency,
bankruptcy, receivership or reorganization of such Person or a composition or
readjustment of the debts of such Person; provided, that, the original of
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any such stock or instrument evidencing such obligations shall be promptly
delivered to Agent, upon Agent's request, together with such stock power,
assignment or endorsement by such Borrower or Guarantor as Agent may request;
(f) obligations of account debtors to any Borrower or Guarantor arising
from Accounts which are past due evidenced by a promissory note made by such
account debtor payable to such Borrower or Guarantor; provided, that, promptly
upon the receipt of the original of any such promissory note by such Borrower or
Guarantor, such promissory note shall be endorsed to the order of Agent by such
Borrower or Guarantor and promptly delivered to Agent as so endorsed;
(g) loans by a Borrower or Guarantor to another Borrower or Guarantor after
the date hereof, provided, that:
(i) as to all of such loans, (A) within thirty (30) days after the end
of each fiscal month, Borrowers shall provide to Agent a report in form and
substance satisfactory to Agent of the outstanding amount of such loans as of
the last day of the immediately preceding month and indicating any loans made
and payments received during the immediately preceding month, (B) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is promptly delivered to Agent upon its request to hold as part
of the Collateral, with such endorsement and/or assignment by the payee of such
note or other instrument as Agent may require, (C) as of the date of any such
loan and after giving effect thereto, the Borrower or Guarantor making such loan
shall be Solvent, (D) as of the date of any such loan and after giving effect
thereto, no Default or Event of Default shall exist or have occurred and be
continuing; and (E) the aggregate principal amount of any such loans made by
Borrower and/or Guarantors to all Borrowers and Guarantors, collectively, from
and after the date hereof shall at no time exceed $1,000,000 at any time
outstanding;
(ii) as to loans by a Guarantor to a Borrower, (A) the Indebtedness
arising pursuant to such loan shall be subject to, and subordinate in right of
payment to, the right of Agent and Lenders to receive the prior final payment
and satisfaction in full of all of the Obligations on terms and conditions
acceptable to Agent, (B) promptly upon Agent's request, Agent shall have
received a subordination agreement, in form and substance satisfactory to Agent,
providing for the terms of the subordination in right of payment of such
Indebtedness of such Borrower to the prior final payment and satisfaction in
full of all of the Obligations, duly authorized, executed and delivered by such
Guarantor and such Borrower, (C) such Borrower shall not, directly or indirectly
make, or be required to make, any payments in respect of such Indebtedness prior
to the end of the then current term of this Agreement; and (D) the aggregate
principal amount of any such loans made by a Guarantor to a Borrower from and
after the date hereof shall be subject to the limitation set forth in subsection
(g)(i)(E) immediately above; and
(h) the loans and advances set forth on Schedule 9.10 to the Information
Certificate; provided, that, as to such loans and advances, Borrowers and
Guarantors shall not, directly or indirectly, amend, modify, alter or change the
terms of such loans and advances or any agreement, document or instrument
related thereto and Borrowers and Guarantors shall furnish to Agent all notices
or demands in connection with such loans and advances either received by any
Borrower or Guarantor or on its behalf, promptly after the receipt thereof, or
sent by any Borrower or Guarantor or on its behalf, concurrently with the
sending thereof, as the case may be.
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9.11 Dividends and Redemptions. Each Borrower and Guarantor shall not,
directly or indirectly, declare or pay any dividends on account of any shares of
class of any Capital Stock of such Borrower or Guarantor now or hereafter
outstanding, or set aside or otherwise deposit or invest any sums for such
purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of
any class of Capital Stock (or set aside or otherwise deposit or invest any sums
for such purpose) for any consideration or apply or set apart any sum, or make
any other distribution (by reduction of capital or otherwise) in respect of any
such shares or agree to do any of the foregoing, except that:
(a) any Borrower or Guarantor may declare and pay such dividends or redeem,
retire, defease, purchase or otherwise acquire any shares of any class of
Capital Stock for consideration in the form of shares of common stock (so long
as after giving effect thereto no Change of Control or other Default or Event of
Default shall exist or occur);
(b) Borrowers and Guarantors may pay dividends to the extent permitted in
Section 9.12 below;
(c) any Subsidiary of a Borrower or Guarantor may pay dividends to a
Borrower;
(d) Borrowers and Guarantors may repurchase Capital Stock consisting of
common stock held by employees pursuant to any employee stock ownership plan
thereof upon the termination, retirement or death of any such employee in
accordance with the provisions of such plan, provided, that, as to any such
repurchase, each of the following conditions is satisfied: (i) as of the date of
the payment for such repurchase and after giving effect thereto, no Default or
Event of Default shall exist or have occurred and be continuing, (ii) such
repurchase shall be paid with funds legally available therefor, (iii) such
repurchase shall not violate any law or regulation or the terms of any
indenture, agreement or undertaking to which such Borrower or Guarantor is a
party or by which such Borrower or Guarantor or its or their property are bound,
and (iv) the aggregate amount of all payments for such repurchases in any
calendar year shall not exceed $100,000.
9.12 Transactions with Affiliates. Each Borrower and Guarantor shall not,
directly or indirectly:
(a) purchase, acquire or lease any property from, or sell, transfer or
lease any property to, or purchase any services for, any officer, director or
other Affiliate of such Borrower or Guarantor, except in the ordinary course of
and pursuant to the reasonable requirements of such Borrower's or Guarantor's
business (as the case may be) and upon fair and reasonable terms no less
favorable to such Borrower or Guarantor than such Borrower or Guarantor would
obtain in a comparable arm's length transaction with an unaffiliated person; or
(b) make any payments (whether by dividend, loan or otherwise) of
management, consulting or other fees for management or similar services, or of
any Indebtedness owing to any officer, employee, shareholder, director or any
other Affiliate of such Borrower or Guarantor, except: (i) reasonable
compensation to officers, employees and directors for services rendered to such
Borrower or Guarantor in the ordinary course of business; and (ii) payments by
any such Borrower or Guarantor to Parent for actual and necessary reasonable
out-of-pocket legal and accounting, insurance, marketing, payroll and similar
types of services paid for by Parent on behalf of such Borrower or Guarantor, in
the ordinary course of their respective businesses or as the same
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may be directly attributable to such Borrower or Guarantor and for the payment
of taxes by or on behalf of Parent, provided, that, the aggregate amount of all
such payments in any fiscal year shall not exceed $250,000; (iii) the direct
Subsidiaries of FNA may each pay dividends to FNA and Columbia may pay dividends
to Xxxxxxx to the extent Xxxxxxx dividends same to FNA; (iv) in addition to, and
not in limitation of, the payments to Fedders permitted by subsection (b)(ii)
immediately above, Borrowers may make or pay loans, advances and dividends to
Fedders in an aggregate amount not to exceed $5,000,000 in any of Borrowers'
fiscal quarters and $18,000,000 in any of Borrowers' fiscal years, and (v)
Fedders may pay quarterly cash dividends on its then outstanding common stock,
Class B stock and Series A Cumulative Preferred Stock in an aggregate amount,
for all such classes of stock, not to exceed $2,500,000 for each fiscal quarter
of Borrowers; provided, however, that, in the case of any proposed cash
dividends in any one fiscal quarter which, after giving effect to the payment
thereof, would result in cash dividends having been paid in such fiscal quarter
in an aggregate amount in excess of $1,750,000 (such excess amount, the
"Incremental Quarterly Dividends"), Borrowers must have Excess Availability of
at least $3,000,000 for each of the fifteen (15) Business Days immediately
preceding the date such Incremental Quarterly Dividends shall be paid and must
have Excess Availability of at least $3,000,000 after giving effect to the
payment of such Incremental Quarterly Dividends, except that, such Excess
Availability requirement shall not apply if, on the proposed date of payment of
such Incremental Quarterly Dividends, there are no outstanding Revolving Loans.
9.13 Compliance with ERISA. Each Borrower and Guarantor 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 and State law; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; (c) not terminate any
Pension Plan so as to incur any material liability to the Pension Benefit
Guaranty Corporation; (d) not allow or suffer to exist any prohibited
transaction involving any Plan or any trust created thereunder which would
subject such Borrower, Guarantor or such ERISA Affiliate to a material tax or
other liability on prohibited transactions imposed under Section 4975 of the
Code or ERISA; (e) make all required contributions to any Plan which it is
obligated to pay under Section 302 of ERISA, Section 412 of the Code or the
terms of such Plan; (f) not allow or suffer to exist any accumulated funding
deficiency, whether or not waived, with respect to any such Pension Plan; (g)
not engage in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA; or (h) not allow or suffer to exist any occurrence of a reportable event
or any other event or condition which presents a material risk of termination by
the Pension Benefit Guaranty Corporation of any Plan that is a single employer
plan, which termination could result in any material liability to the Pension
Benefit Guaranty Corporation.
9.14 End of Fiscal Years; Fiscal Quarters. Each Borrower and Guarantor
shall, for financial reporting purposes, cause its, and each of its
Subsidiaries' (a) fiscal years to end on December 31 of each year and (b) fiscal
quarters to end on March 31, June 30, September 30 and December 31 of each year.
9.15 Change in Business. Each Borrower and Guarantor shall not engage in
any business other than the business of such Borrower or Guarantor on the date
hereof and any business reasonably related, ancillary or complimentary to the
business in which such Borrower or Guarantor is engaged on the date hereof.
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9.16 Limitation of Restrictions Affecting Subsidiaries. Except as provided
for in the Senior Notes Indenture (as in effect on the date hereof) and the
Senior Notes (as in effect on the date hereof), each Borrower and Guarantor
shall not, directly, or indirectly, create or otherwise cause or suffer to exist
any encumbrance or restriction which prohibits or limits the ability of any
Subsidiary of such Borrower or Guarantor to (a) pay dividends or make other
distributions or pay any Indebtedness owed to such Borrower or Guarantor or any
Subsidiary of such Borrower or Guarantor; (b) make loans or advances to such
Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor, (c)
transfer any of its properties or assets to such Borrower or Guarantor or any
Subsidiary of such Borrower or Guarantor; or (d) create, incur, assume or suffer
to exist any lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired, other than encumbrances and restrictions arising
under (i) applicable law, (ii) this Agreement, (iii) customary provisions
restricting subletting or assignment of any lease governing a leasehold interest
of such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor,
(iv) customary restrictions on dispositions of real property interests found in
reciprocal easement agreements of such Borrower or Guarantor or any Subsidiary
of such Borrower or Guarantor, (v) any agreement relating to permitted
Indebtedness incurred by a Subsidiary of such Borrower or Guarantor prior to the
date on which such Subsidiary was acquired by such Borrower or such Guarantor
and outstanding on such acquisition date, and (vi) the extension or continuation
of contractual obligations in existence on the date hereof; provided, that, any
such encumbrances or restrictions contained in such extension or continuation
are no less favorable to Agent and Lenders than those encumbrances and
restrictions under or pursuant to the contractual obligations so extended or
continued.
9.17 Consolidated EBITDA. At all times that a Covenant Trigger Event has
occurred and is continuing, Parent and its Subsidiaries shall have, and shall
maintain, Consolidated EBITDA (as calculated based upon the SEC Form 10-Q and
10-K Reports filed by Parent with the SEC) of not less than the amounts for the
respective periods set forth on Schedule 9.17 hereto. Notwithstanding the
foregoing, if Parent fails to timely file any SEC Form 10-Q or 10-K, then, for
purposes of this Section 9.17, Agent shall calculate Consolidated EBITDA with
respect to the affected applicable period(s) based upon the internally prepared
financial statements delivered by Borrowers to Agent pursuant to Section 9.6(a).
9.18 [Intentionally Omitted]
9.19 License Agreements.
(a) Each Borrower and Guarantor shall (i) promptly and faithfully observe
and perform all of the material terms, covenants, conditions and provisions of
the material License Agreements to which it is a party to be observed and
performed by it, at the times set forth therein, if any, (ii) not do, permit,
suffer or refrain from doing anything that could reasonably be expected to
result in a default under or breach of any of the terms of any material License
Agreement, (iii) not cancel, surrender, modify, amend, waive or release any
material License Agreement in any material respect or any term, provision or
right of the licensee thereunder in any material respect, or consent to or
permit to occur any of the foregoing; except, that, subject to Section 9.19(b)
below, such Borrower or Guarantor may cancel, surrender or release any material
License Agreement in the ordinary course of the business of such Borrower or
Guarantor; provided, that, such Borrower or Guarantor (as the case may be) shall
give Agent not less than thirty (30) days prior written notice of its intention
to so cancel, surrender and release any such material License Agreement, (iv)
give Agent
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prompt written notice of any material License Agreement entered into by such
Borrower or Guarantor after the date hereof, together with a true, correct and
complete copy thereof and such other information with respect thereto as Agent
may request, (v) give Agent prompt written notice of any material breach of any
obligation, or any default, by any party under any material License Agreement,
and deliver to Agent (promptly upon the receipt thereof by such Borrower or
Guarantor in the case of a notice to such Borrower or Guarantor and concurrently
with the sending thereof in the case of a notice from such Borrower or
Guarantor) a copy of each notice of default and every other notice and other
communication received or delivered by such Borrower or Guarantor in connection
with any material License Agreement which relates to the right of such Borrower
or Guarantor to continue to use the property subject to such License Agreement,
and (vi) furnish to Agent, promptly upon the request of Agent, such information
and evidence as Agent may reasonably require from time to time concerning the
observance, performance and compliance by such Borrower or Guarantor or the
other party or parties thereto with the material terms, covenants or provisions
of any material License Agreement.
(b) Each Borrower and Guarantor will either exercise any option to renew or
extend the term of each material License Agreement to which it is a party in
such manner as will cause the term of such material License Agreement to be
effectively renewed or extended for the period provided by such option and give
prompt written notice thereof to Agent or give Agent prior written notice that
such Borrower or Guarantor does not intend to renew or extend the term of any
such material License Agreement or that the term thereof shall otherwise be
expiring, not less than thirty (30) days prior to the date of any such
non-renewal or expiration. In the event of the failure of such Borrower or
Guarantor to extend or renew any material License Agreement to which it is a
party, Agent shall have, and is hereby granted, the irrevocable right and
authority, at its option, to renew or extend the term of such material License
Agreement, whether in its own name and behalf, or in the name and behalf of a
designee or nominee of Agent or in the name and behalf of such Borrower or
Guarantor, as Agent shall determine at any time that an Event of Default shall
exist or have occurred and be continuing. Agent may, but shall not be required
to, perform any or all of such obligations of such Borrower or Guarantor under
any of the License Agreements, including, but not limited to, the payment of any
or all sums due from such Borrower or Guarantor thereunder. Any sums so paid by
Agent shall constitute part of the Obligations.
9.20 Foreign Assets Control Regulations, Etc. None of the requesting or
borrowing of the Loans or the requesting or issuance, extension or renewal of
any Letter of Credit or the use of the proceeds of any thereof will violate the
Trading With the Enemy Act (50 USC Section 1 et seq., as amended) (the "Trading
With the Enemy Act") or any of the foreign assets control regulations of the
United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended)
(the "Foreign Assets Control Regulations") or any enabling legislation or
executive order relating thereto (including, but not limited to (a) Executive
order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)) (the "Executive Order") and (b) the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (Public Law 107-56). None of Borrowers or any of their
Subsidiaries or other Affiliates is or will become a "blocked person" as
described in the Executive Order, the Trading with the Enemy Act or the Foreign
Assets Control Regulations or engages or will engage in any dealings or
transactions, or be otherwise associated, with any such "blocked person".
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9.21 After Acquired Real Property. If any Borrower or Guarantor hereafter
acquires any Real Property, fixtures or any other property that is of the kind
or nature described in the Mortgages and such Real Property, fixtures or other
property is adjacent to, contiguous with or necessary or related to or used in
connection with any Real Property then subject to a Mortgage, or if such Real
Property is not adjacent to, contiguous with or related to or used in connection
with such Real Property, then if such Real Property, fixtures or other property
at any location (or series of adjacent, contiguous or related locations, and
regardless of the number of parcels) has a fair market value in an amount equal
to or greater than $250,000 (or if a Default or Event of Default exists, then
regardless of the fair market value of such assets), without limiting any other
rights of Agent or any Lender, or duties or obligations of any Borrower or
Guarantor, promptly upon Agent's request, such Borrower or Guarantor shall
execute and deliver to Agent a mortgage, deed of trust or deed to secure debt,
as Agent may determine, in form and substance substantially similar to the
Mortgages and as to any provisions relating to specific state laws satisfactory
to Agent and in form appropriate for recording in the real estate records of the
jurisdiction in which such Real Property or other property is located granting
to Agent a first and only lien and mortgage on and security interest in such
Real Property, fixtures or other property (except as such Borrower or Guarantor
would otherwise be permitted to incur hereunder or under the Mortgages or as
otherwise consented to in writing by Agent) and such other agreements, documents
and instruments as Agent may require in connection therewith.
9.22 Costs and Expenses. Borrowers and Guarantors shall pay to Agent on
demand all costs, expenses, filing fees and taxes paid or payable in connection
with the preparation, negotiation, execution, delivery, recording, syndication,
administration, collection, liquidation, enforcement and defense of the
Obligations, Agent's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) costs and expenses and fees for insurance premiums, environmental audits,
title insurance premiums, surveys, assessments, engineering reports and
inspections, appraisal fees and search fees, background checks, costs and
expenses of remitting loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the Blocked Accounts, together with
Agent's customary charges and fees with respect thereto; (c) charges, fees or
expenses charged by any Issuing Bank in connection with any Letter of Credit;
(d) costs and expenses of preserving and protecting the Collateral; (e) costs
and expenses paid or incurred in connection with obtaining payment of the
Obligations, enforcing the security interests and liens of Agent, selling or
otherwise realizing upon the Collateral, and otherwise enforcing the provisions
of this Agreement and the other Financing Agreements or defending any claims
made or threatened against Agent or any Lender arising out of the transactions
contemplated hereby and thereby (including preparations for and consultations
concerning any such matters); (f) all out-of-pocket expenses and costs
heretofore and from time to time hereafter incurred by Agent during the course
of periodic field examinations of the Collateral and such Borrower's or
Guarantor's operations, plus a per diem charge at Agent's then standard rate for
Agent's examiners in the field and office (which rate as of the date hereof is
$850 per person per day); and (g) the fees and disbursements of counsel
(including legal assistants) to Agent in connection with any of the foregoing.
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9.23 Further Assurances. At the request of Agent at any time and from time
to time, Borrowers and Guarantors shall, at their expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Financing
Agreements. Agent may at any time and from time to time request a certificate
from an officer of any Borrower or Guarantor representing that all conditions
precedent to the making of Loans and providing Letters of Credit contained
herein are satisfied. In the event of such request by Agent, Agent and Lenders
may, at Agent's option, cease to make any further Loans or provide any further
Letters of Credit until Agent has received such certificate and, in addition,
Agent has determined that such conditions are satisfied.
9.24 Financial Consultant. Borrowers and Guarantors acknowledge and agree
that Agent's and Lenders' willingness to enter into this Agreement and to make
the Loans to Borrowers contemplated hereunder is expressly predicated on
Borrowers' and Guarantors' agreement that, if Consolidated EBITDA for Parent and
its Subsidiaries (as calculated based upon the SEC Form 10-Q and 10-K Reports
filed by Parent with the SEC) is less than seventy-five (75%) percent of the
amount of "Projected Consolidated EBITDA" for any period set forth on Schedule
9.24 hereto, then Borrowers and Guarantors shall retain, as soon as practicable
following Agent's request therefor, RAS Management or another financial
consultant reasonably acceptable to Agent ("Financial Consultant") to advise
Borrowers and Guarantors, pursuant to a retention agreement to be entered into
with the Financial Consultant, in form and substance reasonably satisfactory to
Agent and the scope of which engagement shall be reasonably satisfactory to
Agent. Notwithstanding the foregoing, if Parent fails to timely file any SEC
Form 10-Q or 10-K, then, for purposes of this Section 9.24, Agent shall
calculate Consolidated EBITDA with respect to the affected applicable period(s)
based upon the internally prepared financial statements delivered by Borrowers
to Agent pursuant to Section 9.6(a).
9.25 Amendment with respect to Fedders Canada as Borrower. Upon Agent's
request, Borrowers and Guarantors shall duly authorize, execute and deliver with
and in favor of Agent and Lenders an amendment to this Agreement, in form and
substance satisfactory to Agent, pursuant to which Fedders Canada shall become a
Borrower hereunder and Wachovia Capital Finance Corporation (Canada) shall
provide Revolving Loans directly to Fedders Canada substantially on the same
terms and conditions as Revolving Loans and Letters of credit are provided by
Agent and Lenders to Borrowers as of the date hereof; provided, however, that,
from and after the execution of such amendment, the aggregate principal amount
of Revolving Loans outstanding to Fedders Canada as a Borrower shall at no time
exceed $10,000,000 or such lesser amount, and subject to the Fedders Canada
Accounts Loan Sublimit, the Fedders Canada Inventory Loan Sublimit, and such
other loan sublimits, as Agent and Lenders shall determine in their sole
discretion, reasonably exercised, at the time such amendment to this Agreement
is executed by the parties hereto.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
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(a) (i) any Borrower fails to pay any of the Obligations when due, or (ii)
any Borrower or Guarantor fails to perform any of the covenants contained in
Sections 9.3, 9.4 and 9.13 of this Agreement and such failure shall continue for
fifteen (15) days; provided, that, such fifteen (15) day period shall not apply
in the case of: (A) any failure to observe any such covenant which is not
capable of being cured at all or within such fifteen (15) day period or which
has been the subject of a prior failure within a six (6) month period or (B) an
intentional breach by any Borrower or Guarantor of any such covenant, or (iii)
any Borrower or Guarantor fails to perform any of the covenants contained in
Sections 9.14, 9.15 and 9.16 of this Agreement and such failure shall continue
for ten (10) days; provided, that, such ten (10) day period shall not apply in
the case of: (A) any failure to observe any such covenant which is not capable
of being cured at all or within such ten (10) day period or which has been the
subject of a prior failure within a six (6) month period or (B) an intentional
breach by any Borrower or Guarantor of any such covenant or (iv) any Borrower or
Guarantor fails to perform any of the terms, covenants, conditions or provisions
contained in this Agreement or any of the other Financing Agreements other than
those described in Sections 10.1(a)(i) and 10.1(a)(ii) above;
(b) any representation, warranty or statement of fact made by any Borrower
or Guarantor to Agent in this Agreement, the other Financing Agreements or any
other written agreement, schedule, confirmatory assignment or otherwise shall
when made or deemed made be false or misleading in any material respect;
(c) any Guarantor revokes or terminates or purports to revoke or terminate
or fails to perform any of the terms, covenants, conditions or provisions of any
guarantee, endorsement or other agreement of such party in favor of Agent or any
Lender;
(d) any judgment for the payment of money is rendered against any Borrower
or Guarantor in excess of $250,000 in any one case or in excess of $250,000 in
the aggregate (to the extent not covered by insurance where the insurer has
assumed responsibility in writing for such judgment) and shall remain
undischarged or unvacated for a period in excess of thirty (30) days or
execution shall at any time not be effectively stayed, or any judgment other
than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against any Borrower or Guarantor or any of the Collateral
having a value in excess of $250,000;
(e) any Guarantor (being a natural person or a general partner of an
Guarantor which is a partnership) dies or any Borrower or Guarantor, which is a
partnership, limited liability company, limited liability partnership or a
corporation, dissolves or suspends or discontinues doing business;
(f) any Borrower or Guarantor makes an assignment for the benefit of
creditors, makes or sends notice of a bulk transfer or calls a meeting of its
creditors or principal creditors in connection with a moratorium or adjustment
of the Indebtedness due to them;
(g) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against any Borrower or Guarantor or all or any part of its properties and
such petition or application is not dismissed within thirty (30) days after the
date of its filing or any Borrower or Guarantor shall file any answer admitting
or not contesting such petition or application
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or indicates its consent to, acquiescence in or approval of, any such action or
proceeding or the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at a law or equity) is
filed by any Borrower or Guarantor or for all or any part of its property;
(i) any default in respect of any Indebtedness of any Borrower or Guarantor
(other than Indebtedness owing to Agent and Lenders hereunder), in any case in
an amount in excess of $250,000, which default continues for more than the
applicable cure period, if any, with respect thereto or any default by any
Borrower or Guarantor under any Material Contract, which default continues for
more than the applicable cure period, if any, with respect thereto and/or is not
waived in writing by the other parties thereto;
(j) any material provision hereof or of any of the other Financing
Agreements shall for any reason cease to be valid, binding and enforceable with
respect to any party hereto or thereto (other than Agent) in accordance with its
terms, or any such party shall challenge the enforceability hereof or thereof,
or shall assert in writing, or take any action or fail to take any action based
on the assertion that any provision hereof or of any of the other Financing
Agreements has ceased to be or is otherwise not valid, binding or enforceable in
accordance with its terms, or any security interest provided for herein or in
any of the other Financing Agreements shall cease to be a valid and perfected
first priority security interest in any of the Collateral purported to be
subject thereto (except as otherwise permitted herein or therein);
(k) an ERISA Event shall occur which results in or could reasonably be
expected to result in liability of any Borrower in an aggregate amount in excess
of $150,000;
(l) any Change of Control;
(m) the indictment by any Governmental Authority, or as Agent may
reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of any Borrower or Guarantor of which any Borrower,
Guarantor or Agent receives notice, in either case, as to which there is a
reasonable possibility of an adverse determination, in the good faith
determination of Agent, under any criminal statute, or commencement or
threatened commencement of criminal or civil proceedings against such Borrower
or Guarantor, pursuant to which statute or proceedings the penalties or remedies
sought or available include forfeiture of (i) any of the Collateral having a
value in excess of $150,000 or (ii) any other property of any Borrower or
Guarantor which is necessary or material to the conduct of its business;
(n) there shall be a material adverse change in the business, assets or
prospects of any Borrower or Guarantor after the date hereof; or
(o) there shall be an event of default under any of the other Financing
Agreements.
10.2 Remedies.
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(a) At any time an Event of Default exists or has occurred and is
continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the UCC and other applicable
law, all of which rights and remedies may be exercised without notice to or
consent by any Borrower or Guarantor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Agent's discretion, alternatively, successively,
or concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by any Borrower or Guarantor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof, Agent may, and at the direction of the Required Lenders shall, at any
time or times, proceed directly against any Borrower or Guarantor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the generality of the foregoing, at any time an Event
of Default exists or has occurred and is continuing, Agent may, at its option
and shall upon the direction of the Required Lenders, (i) upon notice to
Administrative Borrower, accelerate the payment of all Obligations and demand
immediate payment thereof to Agent for itself and the benefit of Lenders
(provided, that, upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h), all Obligations shall automatically become
immediately due and payable), and (ii) terminate the Commitments whereupon the
obligation of each Lender to make any Loan and Issuing Bank to issue any Letter
of Credit shall immediately terminate (provided, that, upon the occurrence of
any Event of Default described in Sections 10.1(g) and 10.1(h), the Commitments
and any other obligation of the Agent or a Lender hereunder shall automatically
terminate).
(c) Without limiting the foregoing, at any time an Event of Default exists
or has occurred and is continuing, Agent may, in its discretion (i) with or
without judicial process or the aid or assistance of others, enter upon any
premises on or in which any of the Collateral may be located and take possession
of the Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (ii) require any Borrower or Guarantor, at Borrowers'
expense, to assemble and make available to Agent any part or all of the
Collateral at any place and time designated by Agent, (iii) collect, foreclose,
receive, appropriate, setoff and realize upon any and all Collateral, (iv)
remove any or all of the Collateral from any premises on or in which the same
may be located for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose, (v) sell, lease, transfer, assign,
deliver or otherwise dispose of any and all Collateral (including entering into
contracts with respect thereto, public or private sales at any exchange,
broker's board, at any office of Agent or elsewhere) at such prices or terms as
Agent may deem reasonable, for cash, upon credit or for future delivery, with
the Agent having the right to purchase the whole or any part of the Collateral
at any such public sale, all of the foregoing being free from any right or
equity of redemption of any Borrower or Guarantor, which right or equity of
redemption is hereby expressly waived and released by Borrowers and Guarantors
and/or (vi) terminate this Agreement. If any of the Collateral is sold or leased
by Agent upon credit terms or for future delivery, the Obligations shall not be
reduced as a result thereof until payment therefor is finally collected by
Agent. If notice of disposition of Collateral is required by law, ten (10) days
prior notice by Agent to Administrative Borrower designating the time and place
of any public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable notice
thereof and Borrowers and Guarantors waive any other notice. In the event Agent
institutes an
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action to recover any Collateral or seeks recovery of any Collateral by way of
prejudgment remedy, each Borrower and Guarantor waives the posting of any bond
which might otherwise be required. At any time an Event of Default exists or has
occurred and is continuing, upon Agent's request, Borrowers will either, as
Agent shall specify, furnish cash collateral to Issuing Bank to be used to
secure and fund the reimbursement obligations to Issuing Bank in connection with
any Letter of Credit Obligations or furnish cash collateral to Agent for the
Letter of Credit Obligations. Such cash collateral shall be in the amount equal
to one hundred ten (110%) percent of the amount of the Letter of Credit
Obligations plus the amount of any fees and expenses payable in connection
therewith through the end of the latest expiration date of the Letters of Credit
giving rise to such Letter of Credit Obligations.
(d) At any time or times that an Event of Default exists or has occurred
and is continuing, Agent may, in its discretion, enforce the rights of any
Borrower or Guarantor against any account debtor, secondary obligor or other
obligor in respect of any of the Accounts or other Receivables. Without limiting
the generality of the foregoing, Agent may, in its discretion, at such time or
times (i) notify any or all account debtors, secondary obligors or other
obligors in respect thereof that the Receivables have been assigned to Agent and
that Agent has a security interest therein and Agent may direct any or all
account debtors, secondary obligors and other obligors to make payment of
Receivables directly to Agent, (ii) extend the time of payment of, compromise,
settle or adjust for cash, credit, return of merchandise or otherwise, and upon
any terms or conditions, any and all Receivables or other obligations included
in the Collateral and thereby discharge or release the account debtor or any
secondary obligors or other obligors in respect thereof without affecting any of
the Obligations, (iii) demand, collect or enforce payment of any Receivables or
such other obligations, but without any duty to do so, and Agent and Lenders
shall not be liable for any failure to collect or enforce the payment thereof
nor for the negligence of its agents or attorneys with respect thereto and (iv)
take whatever other action Agent may deem necessary or desirable for the
protection of its interests and the interests of Lenders. At any time that an
Event of Default exists or has occurred and is continuing, at Agent's request,
all invoices and statements sent to any account debtor shall state that the
Accounts and such other obligations have been assigned to Agent and are payable
directly and only to Agent and Borrowers and Guarantors shall deliver to Agent
such originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may require. In the
event any account debtor returns Inventory when an Event of Default exists or
has occurred and is continuing, Borrowers shall, upon Agent's request, hold the
returned Inventory in trust for Agent, segregate all returned Inventory from all
of its other property, dispose of the returned Inventory solely according to
Agent's instructions, and not issue any credits, discounts or allowances with
respect thereto without Agent's prior written consent.
(e) To the extent that applicable law imposes duties on Agent or any Lender
to exercise remedies in a commercially reasonable manner (which duties cannot be
waived under such law), each Borrower and Guarantor acknowledges and agrees that
it is not commercially unreasonable for Agent or any Lender (i) to fail to incur
expenses reasonably deemed significant by Agent or any Lender to prepare
Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for disposition, (ii) to
fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain consents of any
Governmental Authority or other third party for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against account debtors, secondary obligors or other persons obligated
on Collateral or to remove
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liens or encumbrances on or any adverse claims against Collateral, (iv) to
exercise collection remedies against account debtors and other persons obligated
on Collateral directly or through the use of collection agencies and other
collection specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (vi) to contact other persons, whether or not in the
same business as any Borrower or Guarantor, for expressions of interest in
acquiring all or any portion of the Collateral, (vii) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether or
not the collateral is of a specialized nature, (viii) to dispose of Collateral
by utilizing Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets, (ix) to dispose of assets in
wholesale rather than retail markets, (x) to disclaim disposition warranties,
(xi) to purchase insurance or credit enhancements to insure Agent or Lenders
against risks of loss, collection or disposition of Collateral or to provide to
Agent or Lenders a guaranteed return from the collection or disposition of
Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain the
services of other brokers, investment bankers, consultants and other
professionals to assist Agent in the collection or disposition of any of the
Collateral. Each Borrower and Guarantor acknowledges that the purpose of this
Section is to provide non-exhaustive indications of what actions or omissions by
Agent or any Lender would not be commercially unreasonable in the exercise by
Agent or any Lender of remedies against the Collateral and that other actions or
omissions by Agent or any Lender shall not be deemed commercially unreasonable
solely on account of not being indicated in this Section. Without limitation of
the foregoing, nothing contained in this Section shall be construed to grant any
rights to any Borrower or Guarantor or to impose any duties on Agent or Lenders
that would not have been granted or imposed by this Agreement or by applicable
law in the absence of this Section.
(f) For the purpose of enabling Agent to exercise the rights and remedies
hereunder, each Borrower and Guarantor hereby grants to Agent, to the extent
assignable, an irrevocable, non-exclusive license (exercisable at any time an
Event of Default shall exist or have occurred and for so long as the same is
continuing) without payment of royalty or other compensation to any Borrower or
Guarantor, to use, assign, license or sublicense any of the trademarks,
service-marks, trade names, business names, trade styles, designs, logos and
other source of business identifiers and other Intellectual Property and general
intangibles now owned or hereafter acquired by any Borrower or Guarantor,
wherever the same maybe located, including in such license reasonable access to
all media in which any of the licensed items may be recorded or stored and to
all computer programs used for the compilation or printout thereof.
(g) At any time an Event of Default exists or has occurred and is
continuing, Agent may apply the cash proceeds of Collateral actually received by
Agent from any sale, lease, foreclosure or other disposition of the Collateral
to payment of the Obligations, in whole or in part and in accordance with the
terms hereof, whether or not then due or may hold such proceeds as cash
collateral for the Obligations. Borrowers and Guarantors shall remain liable to
Agent and Lenders for the payment of any deficiency with interest at the highest
rate provided for herein and all costs and expenses of collection or
enforcement, including attorneys' fees and expenses.
(h) Without limiting the foregoing, upon the occurrence of a Default or an
Event of Default, (i) Agent and Lenders may, at Agent's option, and upon the
occurrence of an Event of Default at the direction of the Required Lenders,
Agent and Lenders shall, without notice, (A) cease making Loans or arranging for
Letters of Credit or reduce the lending formulas or amounts of Loans
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and Letters of Credit available to Borrowers and/or (B) terminate any provision
of this Agreement providing for any future Loans to be made by Agent and Lenders
or Letters of Credit to be issued by Issuing Bank and (ii) Agent may, at its
option, establish such Reserves as Agent determines, without limitation or
restriction, notwithstanding anything to the contrary contained herein.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this Agreement and the
other Financing Agreements (except as otherwise provided therein) and any
dispute arising out of the relationship between the parties hereto, whether in
contract, tort, equity or otherwise, shall be governed by the internal laws of
the State of New York but excluding any principles of conflicts of law or other
rule of law that would cause the application of the law of any jurisdiction
other than the laws of the State of New York.
(b) Borrowers, Guarantors, Agent, Lenders and Issuing Bank irrevocably
consent and submit to the non-exclusive jurisdiction of the Supreme Court of the
State of New York in the County of New York and the United States District Court
for the Southern District of New York, whichever Agent may elect, and waive any
objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the dealings
of the parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such matters shall be
heard only in the courts described above (except that Agent and Lenders shall
have the right to bring any action or proceeding against any Borrower or
Guarantor or its or their property in the courts of any other jurisdiction which
Agent deems necessary or appropriate in order to realize on the Collateral or to
otherwise enforce its rights against any Borrower or Guarantor or its or their
property).
(c) Each Borrower and Guarantor hereby waives personal service of any and
all process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth
herein 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, or, at Agent's option,
by service upon any Borrower or Guarantor (or Administrative Borrower on behalf
of such Borrower or Guarantor) in any other manner provided under the rules of
any such courts. Within thirty (30) days after such service, such Borrower or
Guarantor shall appear in answer to such process, failing which such Borrower or
Guarantor shall be deemed in default and judgment may be entered by Agent
against such Borrower or Guarantor for the amount of the claim and other relief
requested.
(d) BORROWERS, GUARANTORS, AGENT, LENDERS AND ISSUING BANK EACH HEREBY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR
IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO IN RESPECT OF THIS
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AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED
HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS, GUARANTORS, AGENT,
LENDERS AND ISSUING BANK EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY
AND THAT ANY BORROWER, ANY GUARANTOR, AGENT, ANY LENDER OR ISSUING BANK MAY FILE
AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
(e) Agent, Lenders and Issuing Bank shall not have any liability to any
Borrower or Guarantor (whether in tort, contract, equity or otherwise) for
losses suffered by such Borrower or Guarantor in connection with, arising out
of, or in any way related to the transactions or relationships contemplated by
this Agreement, or any act, omission or event occurring in connection herewith,
unless it is determined by a final and non-appealable judgment or court order
binding on Agent, such Lender and Issuing Bank, that the losses were the result
of acts or omissions constituting gross negligence or willful misconduct. In any
such litigation, Agent, Lenders and Issuing Bank shall be entitled to the
benefit of the rebuttable presumption that it acted in good faith and with the
exercise of ordinary care in the performance by it of the terms of this
Agreement. Each Borrower and Guarantor: (i) certifies that neither Agent, any
Lender, Issuing Bank nor any representative, agent or attorney acting for or on
behalf of Agent, any Lender or Issuing Bank has represented, expressly or
otherwise, that Agent, Lenders and Issuing Bank would not, in the event of
litigation, seek to enforce any of the waivers provided for in this Agreement or
any of the other Financing Agreements and (ii) acknowledges that in entering
into this Agreement and the other Financing Agreements, Agent, Lenders and
Issuing Bank are relying upon, among other things, the waivers and
certifications set forth in this Section 11.1 and elsewhere herein and therein.
11.2 Waiver of Notices. Each Borrower and Guarantor hereby expressly waives
demand, presentment, protest and notice of protest and notice of dishonor with
respect to any and all instruments and chattel paper, included in or evidencing
any of the Obligations or the Collateral, and any and all other demands and
notices of any kind or nature whatsoever with respect to the Obligations, the
Collateral and this Agreement, except such as are expressly provided for herein.
No notice to or demand on any Borrower or Guarantor which Agent or any Lender
may elect to give shall entitle such Borrower or Guarantor to any other or
further notice or demand in the same, similar or other circumstances.
11.3 Amendments and Waivers.
(a) Neither this Agreement nor any other Financing Agreement nor any terms
hereof or thereof may be amended, waived, discharged or terminated unless such
amendment, waiver, discharge or termination is in writing signed by Agent and
the Required Lenders or at Agent's option, by Agent with the authorization or
consent of the Required Lenders, and as to amendments to any of the Financing
Agreements (other than with respect to any provision of Section 12 hereof), by
any Borrower and such amendment, waiver, discharger or termination shall be
effective and binding as to all Lenders and Issuing Bank only in the specific
instance and for the specific purpose for which given; except, that, no such
amendment, waiver, discharge or termination shall:
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(i) reduce the interest rate or any fees or extend the time of payment
of principal, interest or any fees or reduce the principal amount of any Loan or
Letters of Credit, in each case without the consent of each Lender directly
affected thereby,
(ii) increase the Commitment of any Lender over the amount thereof
then in effect or provided hereunder, in each case without the consent of the
Lender directly affected thereby,
(iii) release any Collateral (except as expressly required hereunder
or under any of the other Financing Agreements or applicable law and except as
permitted under Section 12.11(b) hereof), without the consent of Agent and all
of Lenders,
(iv) reduce any percentage specified in the definition of Required
Lenders, without the consent of Agent and all of Lenders,
(v) consent to the assignment or transfer by any Borrower or Guarantor
of any of their rights and obligations under this Agreement, without the consent
of Agent and all of Lenders,
(vi) amend, modify or waive any terms of this Section 11.3 hereof,
without the consent of Agent and all of Lenders,
(vii) increase the advance rates constituting part of the Borrowing
Base or increase the Inventory Loan Limit, the Revolving Loan Limit or the
Letter of Credit Limit, without the consent of Agent and all of Lenders, or
(viii) amend, modify or waive the second sentence of Section 6.4(a)
hereof, without the consent of Agent and all of Lenders.
(b) Agent, Lenders and Issuing Bank shall not, by any act, delay, omission
or otherwise be deemed to have expressly or impliedly waived any of its or their
rights, powers and/or remedies unless such waiver shall be in writing and signed
as provided herein. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Agent, any Lender or Issuing Bank of
any right, power and/or remedy on any one occasion shall not be construed as a
bar to or waiver of any such right, power and/or remedy which Agent, any Lender
or Issuing Bank would otherwise have on any future occasion, whether similar in
kind or otherwise.
(c) Notwithstanding anything to the contrary contained in Section 11.3(a)
above, in connection with any amendment, waiver, discharge or termination, in
the event that any Lender whose consent thereto is required shall fail to
consent or fail to consent in a timely manner (such Lender being referred to
herein as a "Non-Consenting Lender"), but the consent of any other Lenders to
such amendment, waiver, discharge or termination that is required are obtained,
if any, then Wachovia shall have the right, but not the obligation, at any time
thereafter, and upon the exercise by Wachovia of such right, such Non-Consenting
Lender shall have the obligation, to sell, assign and transfer to Wachovia or
such Eligible Transferee as Wachovia may specify, the Commitment of such
Non-Consenting Lender and all rights and interests of such Non-Consenting Lender
pursuant thereto. Wachovia shall provide the Non-Consenting Lender with prior
written notice of its intent to exercise its right under this Section, which
notice shall specify the date on which such purchase and sale shall occur. Such
purchase and sale shall be pursuant to the terms of an Assignment and Acceptance
(whether or not executed by the Non-Consenting Lender), except
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that on the date of such purchase and sale, Wachovia, or such Eligible
Transferee specified by Wachovia, shall pay to the Non-Consenting Lender (except
as Wachovia and such Non-Consenting Lender may otherwise agree) the amount equal
to: (i) the principal balance of the Loans held by the Non-Consenting Lender
outstanding as of the close of business on the business day immediately
preceding the effective date of such purchase and sale, plus (ii) amounts
accrued and unpaid in respect of interest and fees payable to the Non-Consenting
Lender to the effective date of the purchase (but in no event shall the
Non-Consenting Lender be deemed entitled to any early termination fee), minus
(iii) the amount of the closing fee received by the Non-Consenting Lender
pursuant to the terms hereof or of any of the other Financing Agreements
multiplied by the fraction, the numerator of which is the number of months
remaining in the then current term of the Credit Facility and the denominator of
which is the number of months in the then current term thereof. Such purchase
and sale shall be effective on the date of the payment of such amount to the
Non-Consenting Lender and the Commitment of the Non-Consenting Lender shall
terminate on such date.
(d) The consent of Agent shall be required for any amendment, waiver or
consent affecting the rights or duties of Agent hereunder or under any of the
other Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section and the exercise by Agent of any of its rights
hereunder with respect to Reserves or Eligible Accounts or Eligible Inventory
shall not be deemed an amendment to the advance rates provided for in this
Section 11.3. The consent of Issuing Bank shall be required for any amendment,
waiver or consent affecting the rights or duties of Issuing Bank hereunder or
under any of the other Financing Agreements, in addition to the consent of the
Lenders otherwise required by this Section, provided, that, the consent of
Issuing Bank shall not be required for any other amendments, waivers or
consents. Notwithstanding anything to the contrary contained in Section 11.3(a)
above, (i) in the event that Agent shall agree that any items otherwise required
to be delivered to Agent as a condition of the initial Loans and Letters of
Credit hereunder may be delivered after the date hereof, Agent may, in its
discretion, agree to extend the date for delivery of such items or take such
other action as Agent may deem appropriate as a result of the failure to receive
such items as Agent may determine or may waive any Event of Default as a result
of the failure to receive such items, in each case without the consent of any
Lender and (ii) Agent may consent to any change in the type of organization,
jurisdiction of organization or other legal structure of any Borrower, Guarantor
or any of their Subsidiaries and amend the terms hereof or of any of the other
Financing Agreements as may be necessary or desirable to reflect any such
change, in each case without the approval of any Lender.
(e) The consent of Agent and any Lender, any Affiliate of any Lender or any
other financial institution acceptable to Agent, as the case may be, that is
providing Bank Products and has outstanding any such Bank Products at such time
that are secured hereunder shall be required for any amendment to the priority
of payment of Obligations arising under or pursuant to any Hedge Agreements of a
Borrower or Guarantor or other Bank Products as set forth in Section 6.4(a)
hereof.
11.4 Waiver of Counterclaims. Each Borrower and Guarantor waives all rights
to interpose any claims, deductions, setoffs or counterclaims of any nature
(other then compulsory counterclaims) in any action or proceeding with respect
to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.
11.5 Indemnification. Each Borrower and Guarantor shall, jointly and
severally, indemnify and hold Agent, each Lender and Issuing Bank, and their
respective officers, directors,
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agents, employees, advisors and counsel and their respective Affiliates (each
such person being an "Indemnitee"), harmless from and against any and all
losses, claims, damages, liabilities, costs or expenses (including attorneys'
fees and expenses) imposed on, incurred by or asserted against any of them in
connection with any litigation, investigation, claim or proceeding commenced or
threatened related to the negotiation, preparation, execution, delivery,
enforcement, performance or administration of this Agreement, any other
Financing Agreements, or any undertaking or proceeding related to any of the
transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including amounts paid in settlement, court costs,
and the fees and expenses of counsel except that Borrowers and Guarantors shall
not have any obligation under this Section 11.5 to indemnify an Indemnitee with
respect to a matter covered hereby resulting from the gross negligence or
willful misconduct of such Indemnitee as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction (but without limiting
the obligations of Borrowers or Guarantors as to any other Indemnitee). To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
this Section may be unenforceable because it violates any law or public policy,
Borrowers and Guarantors shall pay the maximum portion which it is permitted to
pay under applicable law to Agent and Lenders in satisfaction of indemnified
matters under this Section. To the extent permitted by applicable law, no
Borrower or Guarantor shall assert, and each Borrower and Guarantor hereby
waives, any claim against any Indemnitee, on any theory of liability for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any of the other Financing Agreements or any undertaking or
transaction contemplated hereby. No Indemnitee referred to above shall be liable
for any damages arising from the use by unintended recipients of any information
or other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or any
of the other Financing Agreements or the transaction contemplated hereby or
thereby. All amounts due under this Section shall be payable upon demand. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
SECTION 12. THE AGENT
12.1 Appointment, Powers and Immunities. Each Lender and Issuing Bank
irrevocably designates, appoints and authorizes Wachovia to act as Agent
hereunder and under the other Financing Agreements with such powers as are
specifically delegated to Agent by the terms of this Agreement and of the other
Financing Agreements, together with such other powers as are reasonably
incidental thereto. Agent (a) shall have no duties or responsibilities except
those expressly set forth in this Agreement and in the other Financing
Agreements, and shall not by reason of this Agreement or any other Financing
Agreement be a trustee or fiduciary for any Lender; (b) shall not be responsible
to Lenders for any recitals, statements, representations or warranties contained
in this Agreement or in any of the other Financing Agreements, or in any
certificate or other document referred to or provided for in, or received by any
of them under, this Agreement or any other Financing Agreement, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Financing Agreement or any other document referred
to or provided for herein or therein or for any failure by any Borrower or any
Guarantor or any other Person to perform any of its obligations hereunder or
thereunder; and (c) shall not be responsible to Lenders for any action taken or
omitted to be taken by it hereunder or under any other Financing Agreement or
under any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith, except for its own gross
negligence or willful misconduct as
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determined by a final non-appealable judgment of a court of competent
jurisdiction. Agent may employ agents and attorneys in fact and shall not be
responsible for the negligence or misconduct of any such agents or attorneys in
fact selected by it in good faith. Agent may deem and treat the payee of any
note as the holder thereof for all purposes hereof unless and until the
assignment thereof pursuant to an agreement (if and to the extent permitted
herein) in form and substance satisfactory to Agent shall have been delivered to
and acknowledged by Agent.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not expressly
provided for by this Agreement or any other Financing Agreement, Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the Required Lenders or
all of Lenders as is required in such circumstance, and such instructions of
such Agents and any action taken or failure to act pursuant thereto shall be
binding on all Lenders.
12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of the occurrence
of a Default or an Event of Default or other failure of a condition precedent to
the Loans and Letters of Credit hereunder, unless and until Agent has received
written notice from a Lender, or Borrower specifying such Event of Default or
any unfulfilled condition precedent, and stating that such notice is a "Notice
of Default or Failure of Condition". In the event that Agent receives such a
Notice of Default or Failure of Condition, Agent shall give prompt notice
thereof to the Lenders. Agent shall (subject to Section 12.7) take such action
with respect to any such Event of Default or failure of condition precedent as
shall be directed by the Required Lenders to the extent provided for herein;
provided, that, unless and until Agent shall have received such directions,
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to or by reason of such Event of Default or
failure of condition precedent, as it shall deem advisable in the best interest
of Lenders. Without limiting the foregoing, and notwithstanding the existence or
occurrence and continuance of an Event of Default or any other failure to
satisfy any of the conditions precedent set forth in Section 4 of this Agreement
to the contrary, unless and until otherwise directed by the Required Lenders,
Agent may, but shall have no obligation to, continue to make Loans and Issuing
Bank may, but shall have no obligation to, issue or cause to be issued any
Letter of Credit for the ratable account and risk of Lenders from time to time
if Agent believes making such Loans or issuing or causing to be issued such
Letter of Credit is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender or Issuing
Bank may assert or exercise any enforcement right or remedy in respect of the
Loans, Letter of Credit Obligations or other Obligations, as against any
Borrower or Guarantor or any of the Collateral or other property of any Borrower
or Guarantor.
12.4 Wachovia in its Individual Capacity. With respect to its Commitment
and the Loans made and Letters of Credit issued or caused to be issued by it
(and any successor acting as Agent), so long as Wachovia shall be a Lender
hereunder, it shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as Agent, and the
term
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"Lender" or "Lenders" shall, unless the context otherwise indicates, include
Wachovia in its individual capacity as Lender hereunder. Wachovia (and any
successor acting as Agent) and its Affiliates may (without having to account
therefor to any Lender) lend money to, make investments in and generally engage
in any kind of business with Borrowers (and any of its Subsidiaries or
Affiliates) as if it were not acting as Agent, and Wachovia and its Affiliates
may accept fees and other consideration from any Borrower or Guarantor and any
of its Subsidiaries and Affiliates for services in connection with this
Agreement or otherwise without having to account for the same to Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent and Issuing Bank (to
the extent not reimbursed by Borrowers hereunder and without limiting any
obligations of Borrowers hereunder) ratably, in accordance with their Pro Rata
Shares, for any and all claims of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against Agent (including by any Lender)
arising out of or by reason of any investigation in or in any way relating to or
arising out of this Agreement or any other Financing Agreement or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable judgment of a court of competent jurisdiction. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that it
has, independently and without reliance on Agent or other Lender, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of Borrowers and Guarantors and has made its own decision to enter into
this Agreement and that it will, independently and without reliance upon Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Financing
Agreements. Agent shall not be required to keep itself informed as to the
performance or observance by any Borrower or Guarantor of any term or provision
of this Agreement or any of the other Financing Agreements or any other document
referred to or provided for herein or therein or to inspect the properties or
books of any Borrower or Guarantor. Agent will use reasonable efforts to provide
Lenders with any information received by Agent from any Borrower or Guarantor
which is required to be provided to Lenders or deemed to be requested by Lenders
hereunder and with a copy of any Notice of Default or Failure of Condition
received by Agent from any Borrower or any Lender; provided, that, Agent shall
not be liable to any Lender for any failure to do so, except to the extent that
such failure is attributable to Agent's own gross negligence or willful
misconduct as determined by a final non-appealable judgment of a court of
competent jurisdiction. Except for notices, reports and other documents
expressly required to be furnished to Lenders by Agent or deemed requested by
Lenders hereunder, Agent shall not have any duty or responsibility to provide
any Lender with any other credit or other information concerning the affairs,
financial condition or business of any Borrower or Guarantor that may come into
the possession of Agent.
12.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act
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hereunder and thereunder unless it shall receive further assurances to its
satisfaction from Lenders of their indemnification obligations under Section
12.5 hereof against any and all liability and expense that may be incurred by it
by reason of taking or continuing to take any such action.
12.8 Additional Loans. Agent shall not make any Revolving Loans and Issuing
Bank shall not provide any Letter of Credit to any Borrower on behalf of Lenders
intentionally and with actual knowledge that such Revolving Loans or Letter of
Credit would cause the aggregate amount of the total outstanding Revolving Loans
and Letters of Credit to such Borrower to exceed the Borrowing Base of such
Borrower, without the prior consent of all Lenders, except, that, Agent may make
such additional Revolving Loans or Issuing Bank may provide such additional
Letter of Credit on behalf of Lenders, intentionally and with actual knowledge
that such Revolving Loans or Letter of Credit will cause the total outstanding
Revolving Loans and Letters of Credit to such Borrower to exceed the Borrowing
Base of such Borrower, as Agent may deem necessary or advisable in its
discretion, provided, that: (a) the total principal amount of the additional
Revolving Loans or additional Letters of Credit to any Borrower which Agent may
make or provide after obtaining such actual knowledge that the aggregate
principal amount of the Revolving Loans equal or exceed the Borrowing Bases of
Borrowers, plus the amount of Special Agent Advances made pursuant to Section
12.11(a)(ii) hereof then outstanding, shall not exceed the aggregate amount
equal to ten (10%) percent of the Maximum Credit and shall not cause the total
principal amount of the Loans and Letters of Credit to exceed the Maximum Credit
and (b) no such additional Revolving Loan or Letter of Credit shall be
outstanding more than ninety (90) days after the date such additional Revolving
Loan or Letter of Credit is made or issued (as the case may be), except as the
Required Lenders may otherwise agree. Each Lender shall be obligated to pay
Agent the amount of its Pro Rata Share of any such additional Revolving Loans or
Letters of Credit.
12.9 Concerning the Collateral and the Related Financing Agreements. Each
Lender authorizes and directs Agent to enter into this Agreement and the other
Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders 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.
12.10 Field Audit, Examination Reports and other Information; Disclaimer by
Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender, promptly
after it becomes available, a copy of each field audit or examination report and
report with respect to the Borrowing Base prepared or received by Agent (each
field audit or examination report and report with respect to the Borrowing Base
being referred to herein as a "Report" and collectively, "Reports"), appraisals
with respect to the Collateral and financial statements with respect to Parent
and its Subsidiaries received by Agent;
(b) expressly agrees and acknowledges that Agent (i) does not make any
representation or warranty as to the accuracy of any Report, appraisal or
financial statement or (ii) shall not be liable for any information contained in
any Report, appraisal or financial statement;
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(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or any other party performing
any audit or examination will inspect only specific information regarding
Borrowers and Guarantors and will rely significantly upon Borrowers' and
Guarantors' books and records, as well as on representations of Borrowers' and
Guarantors' personnel; and
(d) agrees to keep all Reports confidential and strictly for its internal
use in accordance with the terms of Section 13.5 hereof, and not to distribute
or use any Report in any other manner.
12.11 Collateral Matters.
(a) Agent may, at its option, from time to time, at any time on or after an
Event of Default and for so long as the same is continuing or upon any other
failure of a condition precedent to the Loans and Letters of Credit hereunder,
make such disbursements and advances ("Special Agent Advances") which Agent, in
its sole discretion, (i) deems necessary or desirable either to preserve or
protect the Collateral or any portion thereof or (ii) to enhance the likelihood
or maximize the amount of repayment by Borrowers and Guarantors of the Loans and
other Obligations, provided, that, (A) the aggregate principal amount of the
Special Agent Advances pursuant to this clause (ii) outstanding at any time,
plus the then outstanding principal amount of the additional Loans and Letters
of Credit which Agent may make or provide as set forth in Section 12.8 hereof,
shall not exceed the amount equal to ten (10%) percent of the Maximum Credit and
(B) the aggregate principal amount of the Special Agent Advances pursuant to
this clause (ii) outstanding at any time, plus the then outstanding principal
amount of the Loans, shall not exceed the Maximum Credit, except at Agent's
option, provided, that, to the extent that the aggregate principal amount of
Special Agent Advances plus the then outstanding principal amount of the Loans
exceed the Maximum Credit the Special Agent Advances that are in excess of the
Maximum Credit shall be for the sole account and risk of Agent and
notwithstanding anything to the contrary set forth below, no Lender shall have
any obligation to provide its share of such Special Agent Advances in excess of
the Maximum Credit, or (iii) to pay any other amount chargeable to any Borrower
or Guarantor pursuant to the terms of this Agreement or any of the other
Financing Agreements consisting of (A) costs, fees and expenses and (B) payments
to Issuing Bank in respect of any Letter of Credit Obligations. The Special
Agent Advances shall be repayable on demand and together with all interest
thereon shall constitute Obligations secured by the Collateral. Special Agent
Advances shall not constitute Loans but shall otherwise constitute Obligations
hereunder. Interest on Special Agent Advances shall be payable at the Interest
Rate then applicable to Prime Rate Loans and shall be payable on demand. Without
limitation of its obligations pursuant to Section 6.11, each Lender agrees that
it shall make available to Agent, upon Agent's demand, in immediately available
funds, the amount equal to such Lender's Pro Rata Share of each such Special
Agent Advance. If such funds are not made available to Agent by such Lender,
such Lender shall be deemed a Defaulting Lender and Agent shall be entitled to
recover such funds, on demand from such Lender together with interest thereon
for each day from the date such payment was due until the date such amount is
paid to Agent at the Federal Funds Rate for each day during such period (as
published by the Federal Reserve Bank of New York or at Agent's option based on
the arithmetic mean determined by Agent of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that
day by each of the three leading brokers of Federal funds transactions in New
York City selected by Agent) and if such amounts are not paid within three (3)
days of Agent's
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demand, at the highest Interest Rate provided for in Section 3.1 hereof
applicable to Prime Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, at its option and in its
discretion to release any security interest in, mortgage or lien upon, any of
the Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations and delivery of cash collateral to the
extent required under Section 13.1 below, or (ii) constituting property being
sold or disposed of if Administrative Borrower or any Borrower or Guarantor
certifies to Agent that the sale or disposition is made in compliance with
Section 9.7 hereof (and Agent may rely conclusively on any such certificate,
without further inquiry), or (iii) constituting property in which any Borrower
or Guarantor did not own an interest at the time the security interest, mortgage
or lien was granted or at any time thereafter, or (iv) having a value in the
aggregate in any twelve (12) month period of less than $500,000, and to the
extent Agent may release its security interest in and lien upon any such
Collateral pursuant to the sale or other disposition thereof, such sale or other
disposition shall be deemed consented to by Lenders, or (v) if required or
permitted under the terms of any of the other Financing Agreements, including
any intercreditor agreement, or (vi) approved, authorized or ratified in writing
by all of Lenders. Except as provided above, Agent will not release any security
interest in, mortgage or lien upon, any of the Collateral without the prior
written authorization of all of Lenders. Upon request by Agent at any time,
Lenders will promptly confirm in writing Agent's authority to release particular
types or items of Collateral pursuant to this Section. In no event shall the
consent or approval of Issuing Bank to any release of Collateral be required.
(c) Without in any manner limiting Agent's authority to act without any
specific or further authorization or consent by the Required Lenders, each
Lender agrees to confirm in writing, upon request by Agent, the authority to
release Collateral conferred upon Agent under this Section. Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the security interest, mortgage or liens
granted to Agent upon any Collateral to the extent set forth above; provided,
that, (i) Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create any
obligations or entail any consequence other than the release of such security
interest, mortgage or liens without recourse or warranty and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
security interest, mortgage or lien upon (or obligations of any Borrower or
Guarantor in respect of) the Collateral retained by such Borrower or Guarantor.
(d) Agent shall have no obligation whatsoever to any Lender, Issuing Bank
or any other Person to investigate, confirm or assure that the Collateral exists
or is owned by any Borrower or Guarantor or is cared for, protected or insured
or has been encumbered, or that any particular items of Collateral meet the
eligibility criteria applicable in respect of the Loans or Letters of Credit
hereunder, or whether any particular reserves are appropriate, or that the liens
and security interests granted to Agent pursuant hereto or any of the Financing
Agreements or otherwise 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 Agent in this Agreement or in any
of the other Financing Agreements, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto,
subject to the other terms and conditions contained herein, Agent may act in any
manner it may
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deem appropriate, in its discretion, given Agent's own interest in the
Collateral as a Lender and that Agent shall have no duty or liability whatsoever
to any other Lender or Issuing Bank.
12.12 Agency for Perfection. Each Lender and Issuing Bank hereby appoints
Agent and each other Lender and Issuing Bank as agent and bailee for the purpose
of perfecting the security interests in and liens upon the Collateral of Agent
in assets which, in accordance with Article 9 of the UCC can be perfected only
by possession (or where the security interest of a secured party with possession
has priority over the security interest of another secured party) and Agent and
each Lender and Issuing Bank hereby acknowledges that it holds possession of any
such Collateral for the benefit of Agent as secured party. Should any Lender or
Issuing Bank obtain possession of any such Collateral, such Lender shall notify
Agent thereof, and, promptly upon Agent's request therefor shall deliver such
Collateral to Agent or in accordance with Agent's instructions.
12.13 Successor Agent. Agent may resign as Agent upon thirty (30) days'
notice to Lenders and Parent. If Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor agent for
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of Agent, Agent may appoint, after consulting with Lenders and
Parent, a successor agent from among Lenders. Upon the acceptance by the Lender
so selected of its appointment as successor agent hereunder, such successor
agent shall succeed to all of the rights, powers and duties of the retiring
Agent and the term "Agent" as used herein and in the other Financing Agreements
shall mean such successor agent and the retiring Agent's appointment, powers and
duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 12 shall inure to its benefit
as to any actions taken or omitted by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is thirty (30) days after the date of a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nonetheless thereupon become
effective and Lenders shall perform all of the duties of Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as provided
for above.
12.14 Other Agent Designations. Agent may at any time and from time to time
determine that a Lender may, in addition, be a "Co-Agent", "Syndication Agent",
"Documentation Agent" or similar designation hereunder and enter into an
agreement with such Lender to have it so identified for purposes of this
Agreement. Any such designation shall be effective upon written notice by Agent
to Administrative Borrower of any such designation. Any Lender that is so
designated as a Co-Agent, Syndication Agent, Documentation Agent or such similar
designation by Agent shall have no right, power, obligation, liability,
responsibility or duty under this Agreement or any of the other Financing
Agreements other than those applicable to all Lenders as such. Without limiting
the foregoing, the Lenders so identified shall not have or be deemed to have any
fiduciary relationship with any Lender and no Lender shall be deemed to have
relied, nor shall any Lender rely, on a Lender so identified as a Co-Agent,
Syndication Agent, Documentation Agent or such similar designation in deciding
to enter into this Agreement or in taking or not taking action hereunder.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1 Term.
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(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on February 1, 2011 (the "Renewal
Date"), and from year to year thereafter, unless sooner terminated pursuant to
the terms hereof. Agent may, at its option (or shall at the direction of any
Lender in writing received by Agent at least ninety (90) days prior to the
Renewal Date or the anniversary of any Renewal Date, as the case may be),
terminate this Agreement and the other Financing Agreements, or Administrative
Borrower or any Borrower may terminate this Agreement and the other Financing
Agreements, each case, effective on the Renewal Date or on the anniversary of
the Renewal Date in any year by giving to the other party at least sixty (60)
days prior written notice; provided, that, this Agreement and all other
Financing Agreements must be terminated simultaneously. In addition, Borrowers
may terminate this Agreement at any time upon ten (10) days prior written notice
to Agent (which notice shall be irrevocable) and Agent may, at its option, and
shall at the direction of Required Lenders, terminate this Agreement at any time
on or after an Event of Default. Upon the Renewal Date or any other effective
date of termination of the Financing Agreements, Borrowers shall pay to Agent
all outstanding and unpaid Obligations and shall furnish cash collateral to
Agent (or at Agent's option, a letter of credit issued for the account of
Borrowers and at Borrowers' expense, in form and substance satisfactory to
Agent, by an issuer acceptable to Agent and payable to Agent as beneficiary) in
such amounts as Agent determines are reasonably necessary to secure Agent and
Lenders from loss, cost, damage or expense, including attorneys' fees and
expenses, in connection with any contingent Obligations, including issued and
outstanding Letters of Credit and checks or other payments provisionally
credited to the Obligations and/or as to which Agent or any Lender has not yet
received final and indefeasible payment (and including any contingent liability
of Agent to any bank at which deposit accounts of Borrowers and Guarantors are
maintained under any Deposit Account Control Agreement) and for any of the
Obligations arising under or in connection with any Bank Products in such
amounts as the party providing such Bank Products may require (unless such
Obligations arising under or in connection with any Bank Products are paid in
full in cash and terminated in a manner satisfactory to such other party). The
amount of such cash collateral (or letter of credit, as Agent may determine) as
to any Letter of Credit Obligations shall be in the amount equal to one hundred
ten (110%) percent of the amount of the Letter of Credit Obligations plus the
amount of any fees and expenses payable in connection therewith through the end
of the latest expiration date of the Letters of Credit giving rise to such
Letter of Credit Obligations. Such payments in respect of the Obligations and
cash collateral shall be remitted by wire transfer in Federal funds to the Agent
Payment Account or such other bank account of Agent, as Agent may, in its
discretion, designate in writing to Administrative Borrower for such purpose.
Interest shall be due until and including the next Business Day, if the amounts
so paid by Borrowers to the Agent Payment Account or other bank account
designated by Agent are received in such bank account later than 12:00 noon, New
York time.
(b) No termination of the Commitments, this Agreement or any of the other
Financing Agreements shall relieve or discharge any Borrower or Guarantor of its
respective duties, obligations and covenants under this Agreement or any of the
other Financing Agreements until all Obligations have been fully and finally
discharged and paid, and Agent's continuing security interest in the Collateral
and the rights and remedies of Agent and Lenders hereunder, under the other
Financing Agreements and applicable law, shall remain in effect until all such
Obligations have been fully and finally discharged and paid. Accordingly, each
Borrower and Guarantor waives any rights it may have under the UCC to demand the
filing of termination statements with respect to the Collateral and Agent shall
not be required to send such termination statements to Borrowers or Guarantors,
or to
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file them with any filing office, unless and until this Agreement shall have
been terminated in accordance with its terms and all Obligations paid and
satisfied in full in immediately available funds.
(c) If for any reason this Agreement is terminated prior to the Renewal
Date, in view of the impracticality and extreme difficulty of ascertaining
actual damages and by mutual agreement of the parties as to a reasonable
calculation of Agent's and each Lender's lost profits as a result thereof,
Borrowers agree to pay to Agent, for the benefit of Lenders, upon the effective
date of such termination, an early termination fee in the amount equal to
Amount Period
------ ------
(i) 1% of Maximum Credit From the date hereof to but not including the
second anniversary of the date hereof
(ii) 0.5% of Maximum Credit From and after the second anniversary of the
date hereof to but not including the third
anniversary of the date hereof
(iii) 0.375% of Maximum Credit From and after the third anniversary of the
date hereof to but not including the fourth
anniversary of the date hereof.
(iv) 0.25% of Maximum Credit From and after the fourth anniversary of the
date hereof to but not including the fifth
anniversary of the date hereof or if the term
of this Agreement is extended, at any time
prior to the end of the then current term.
Such early termination fee shall be presumed to be the amount of damages
sustained by Agent and Lenders as a result of such early termination and
Borrowers and Guarantors agree that it is reasonable under the circumstances
currently existing (including, but not limited to, the borrowings that are
reasonably expected by Borrowers hereunder and the interest, fees and other
charges that are reasonably expected to be received by Agent and Lenders
pursuant to the Credit Facility). In addition, Agent and Lenders shall be
entitled to such early termination fee upon the occurrence of any Event of
Default described in Sections 10.1(g) and 10.1(h) hereof, even if Agent and
Lenders do not exercise the right to terminate this Agreement, but elect, at
their option, to provide financing to any Borrower or permit the use of cash
collateral under the United States Bankruptcy Code. The early termination fee
provided for in this Section 13.1 shall be deemed included in the Obligations.
13.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1, Article 8 or
Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
(b) All references to the plural herein shall also mean the singular and to
the singular shall also mean the plural unless the context otherwise requires.
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(c) All references to any Borrower, Guarantor, Agent and Lenders pursuant
to the definitions set forth in the recitals hereto, or to any other person
herein, shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this Agreement" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not any particular provision of this Agreement and as this Agreement
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean "including,
without limitation" and the word "will" when used in this Agreement shall be
construed to have the same meaning and effect as the word "shall".
(f) An Event of Default shall exist or continue or be continuing until such
Event of Default is waived in accordance with Section 11.3 or is cured in a
manner satisfactory to Agent, if such Event of Default is capable of being cured
as determined by Agent.
(g) All references to the term "good faith" used herein when applicable to
Agent or any Lender shall mean, notwithstanding anything to the contrary
contained herein or in the UCC, honesty in fact in the conduct or transaction
concerned. Borrowers and Guarantors shall have the burden of proving any lack of
good faith on the part of Agent or any Lender alleged by any Borrower or
Guarantor at any time.
(h) Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given in accordance with
GAAP, and all financial computations hereunder shall be computed unless
otherwise specifically provided herein, in accordance with GAAP as consistently
applied and using the same method for inventory valuation as used in the
preparation of the financial statements of Parent most recently received by
Agent prior to the date hereof. Notwithstanding anything to the contrary
contained in GAAP or any interpretations or other pronouncements by the
Financial Accounting Standards Board or otherwise, the term "unqualified
opinion" as used herein to refer to opinions or reports provided by accountants
shall mean an opinion or report that is unqualified and also does not include
any explanation, supplemental comment or other comment concerning the ability of
the applicable person to continue as a going concern or the scope of the audit.
(i) 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".
(j) Unless otherwise expressly provided herein, (i) references herein to
any agreement, document or instrument shall be deemed to include all subsequent
amendments, modifications, supplements, extensions, renewals, restatements or
replacements with respect thereto, but only to the extent the same are not
prohibited by the terms hereof or of any other Financing Agreement, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
recodifying, supplementing or interpreting the statute or regulation.
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(k) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(l) This Agreement and other Financing Agreements 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.
(m) This Agreement and the other Financing Agreements are the result of
negotiations among and have been reviewed by counsel to Agent and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Agent or Lenders
merely because of Agent's or any Lender's involvement in their preparation.
13.3 Notices.
(a) All notices, requests and demands hereunder shall be in writing and
deemed to have been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one (1)
Business Day after sending; and if by certified mail, return receipt requested,
five (5) days after mailing. Notices delivered through electronic communications
shall be effective to the extent set forth in Section 13.3(b) below. All
notices, requests and demands upon the parties are to be given to the following
addresses (or to such other address as any party may designate by notice in
accordance with this Section):
If to any Borrower or Guarantor: FEDDERS NORTH AMERICA, INC.
000 Xxxxxxxxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxx Xxxxxx 00000
Attention: Chief Financial Officer
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to: FEDDERS CORPORATION
000 Xxxxxxxxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Executive Vice President
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to Agent or Issuing Bank: WACHOVIA BANK, NATIONAL ASSOCIATION
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Portfolio Manager
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
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(b) Notices and other communications to Lenders and Issuing Bank hereunder
may be delivered or furnished by electronic communication (including e-mail and
Internet or intranet websites) pursuant to procedures approved by Agent or as
otherwise determined by Agent, provided, that, the foregoing shall not apply to
notices to any Lender or Issuing Bank pursuant to Section 2 hereof if such
Lender or Issuing Bank, as applicable, has notified Agent that it is incapable
of receiving notices under such Section by electronic communication. Unless
Agent otherwise requires, (i) notices and other communications sent to an e-mail
address shall be deemed received upon the sender's receipt of an acknowledgement
from the intended recipient (such as by the "return receipt requested" function,
as available, return e-mail or other written acknowledgement), provided, that,
if such notice or other communication is not given during the normal business
hours of the recipient, such notice 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
communications is available and identifying the website address therefor.
13.4 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13.5 Confidentiality.
(a) Agent, each Lender and Issuing Bank shall use all reasonable efforts to
keep confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by any Borrower pursuant to this Agreement which is
clearly and conspicuously marked as confidential at the time such information is
furnished by such Borrower to Agent, such Lender or Issuing Bank, provided,
that, nothing contained herein shall limit the disclosure of any such
information: (i) to the extent required by statute, rule, regulation, subpoena
or court order, (ii) to bank examiners and other regulators, auditors and/or
accountants, in connection with any litigation to which Agent, such Lender or
Issuing Bank is a party, (iii) to any Lender or Participant (or prospective
Lender or Participant) or Issuing Bank or to any Affiliate of any Lender so long
as such Lender, Participant (or prospective Lender or Participant), Issuing Bank
or Affiliate shall have been instructed to treat such information as
confidential in accordance with this Section 13.5, or (iv) to counsel for Agent,
any Lender, Participant (or prospective Lender or Participant) or Issuing Bank.
(b) In the event that Agent, any Lender or Issuing Bank receives a request
or demand to disclose any confidential information pursuant to any subpoena or
court order, Agent or such Lender or Issuing Bank, as the case may be, agrees
(i) to the extent permitted by applicable law or if permitted by applicable law,
to the extent Agent or such Lender or Issuing Bank determines in good faith that
it will not create any risk of liability to Agent or such Lender or Issuing
Bank, Agent or such Lender or Issuing Bank will promptly notify Administrative
Borrower of such request so that Administrative Borrower may seek a protective
order or other appropriate relief or remedy and (ii) if disclosure of such
information is required, disclose such information and, subject to reimbursement
by Borrowers of Agent's or such Lender's or Issuing Bank's expenses, cooperate
with
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Administrative Borrower in the reasonable efforts to obtain an order or other
reliable assurance that confidential treatment will be accorded to such portion
of the disclosed information which Administrative Borrower so designates, to the
extent permitted by applicable law or if permitted by applicable law, to the
extent Agent or such Lender or Issuing Bank determines in good faith that it
will not create any risk of liability to Agent or such Lender or Issuing Bank.
(c) In no event shall this Section 13.5 or any other provision of this
Agreement, any of the other Financing Agreements or applicable law be deemed:
(i) to apply to or restrict disclosure of information that has been or is made
public by any Borrower, Guarantor or any third party or otherwise becomes
generally available to the public other than as a result of a disclosure in
violation hereof, (ii) to apply to or restrict disclosure of information that
was or becomes available to Agent, any Lender (or any Affiliate of any Lender)
or Issuing Bank on a non-confidential basis from a person other than a Borrower
or Guarantor, (iii) to require Agent, any Lender or Issuing Bank to return any
materials furnished by a Borrower or Guarantor to Agent, a Lender or Issuing
Bank or prevent Agent, a Lender or Issuing Bank from responding to routine
informational requests in accordance with the Code of Ethics for the Exchange of
Credit Information promulgated by The Xxxxxx Xxxxxx Associates or other
applicable industry standards relating to the exchange of credit information.
The obligations of Agent, Lenders and Issuing Bank under this Section 13.5 shall
supersede and replace the obligations of Agent, Lenders and Issuing Bank under
any confidentiality letter signed prior to the date hereof or any other
arrangements concerning the confidentiality of information provided by any
Borrower or Guarantor to Agent or any Lender. In addition, Agent and Lenders may
disclose information relating to the Credit Facility to Gold Sheets and other
similar bank trade publications, with such information to consist of deal terms
and other information customarily found in such publications.
13.6 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Agent, Lenders, Issuing Bank, Borrowers,
Guarantors and their respective successors and assigns, except that Borrower may
not assign its rights under this Agreement, the other Financing Agreements and
any other document referred to herein or therein without the prior written
consent of Agent and Lenders. Any such purported assignment without such express
prior written consent shall be void. No Lender may assign its rights and
obligations under this Agreement without the prior written consent of Agent,
except as provided in Section 13.7 below. The terms and provisions of this
Agreement and the other Financing Agreements are for the purpose of defining the
relative rights and obligations of Borrowers, Guarantors, Agent, Lenders and
Issuing Bank with respect to the transactions contemplated hereby and there
shall be no third party beneficiaries of any of the terms and provisions of this
Agreement or any of the other Financing Agreements.
13.7 Assignments; Participations.
(a) Each Lender may, with the prior written consent of Agent, assign all
or, if less than all, a portion equal to at least $10,000,000 in the aggregate
for the assigning Lender, of such rights and obligations under this Agreement to
one or more Eligible Transferees (but not including for this purpose any
assignments in the form of a participation), each of which assignees shall
become a party to this Agreement as a Lender by execution of an Assignment and
Acceptance; provided, that, (i) such transfer or assignment will not be
effective until recorded by Agent on the Register and (ii)
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Agent shall have received for its sole account payment of a processing fee from
the assigning Lender or the assignee in the amount of $5,000.
(b) Agent shall maintain a register of the names and addresses of Lenders,
their Commitments and the principal amount of their Loans (the "Register").
Agent shall also maintain a copy of each Assignment and Acceptance delivered to
and accepted by it and shall modify the Register to give effect to each
Assignment and Acceptance. The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and any Borrowers, Guarantors,
Agent and Lenders may treat each Person whose name is recorded in the Register
as a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by Administrative Borrower and any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(c) Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in each Assignment and Acceptance, the assignee
thereunder shall be a party hereto and to the other Financing Agreements and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations
(including, without limitation, the obligation to participate in Letter of
Credit Obligations) of a Lender hereunder and thereunder and the assigning
Lender shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement.
(d) By execution and delivery of an Assignment and Acceptance, the assignor
and assignee thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than as provided in such Assignment and
Acceptance, the 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 any of the other Financing
Agreements or the execution, legality, enforceability, genuineness, sufficiency
or value of this Agreement or any of the other Financing Agreements furnished
pursuant hereto, (ii) the assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Borrower, Guarantor or any of their Subsidiaries or the performance or
observance by any Borrower or Guarantor of any of the Obligations; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Financing Agreements, together with such other documents and information 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 assigning Lender, Agent 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 and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof and thereof, together with such powers 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 and the
other Financing Agreements are required to be performed by it as a Lender. Agent
and Lenders may furnish any information concerning any Borrower or Guarantor in
the possession of Agent or any Lender from time to time to assignees and
Participants.
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(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement and the other Financing Agreements (including, without limitation, all
or a portion of its Commitments and the Loans owing to it and its participation
in the Letter of Credit Obligations, without the consent of Agent or the other
Lenders); provided, that, (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitment hereunder) and the other
Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrowers, Guarantors, the other Lenders and Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Financing
Agreements, and (iii) the Participant shall not have any rights under this
Agreement or any of the other Financing Agreements (the Participant's rights
against such Lender in respect of such participation to be those set forth in
the agreement executed by such Lender in favor of the Participant relating
thereto) and all amounts payable by any Borrower or Guarantor hereunder shall be
determined as if such Lender had not sold such participation.
(f) Nothing in this Agreement shall prevent or prohibit any Lender from
pledging its Loans hereunder to a Federal Reserve Bank in support of borrowings
made by such Lenders from such Federal Reserve Bank; provided, that, no such
pledge shall release such Lender from any of its obligations hereunder or
substitute any such pledgee for such Lender as a party hereto.
(g) Borrowers and Guarantors shall assist Agent or any Lender permitted to
sell assignments or participations under this Section 13.7 in whatever manner
reasonably necessary in order to enable or effect any such assignment or
participation, including (but not limited to) the execution and delivery of any
and all agreements, notes and other documents and instruments as shall be
requested and the delivery of informational materials, appraisals or other
documents for, and the participation of relevant management in meetings and
conference calls with, potential Lenders or Participants. Borrowers shall
certify the correctness, completeness and accuracy, in all material respects, of
all descriptions of Borrowers and Guarantors and their affairs provided,
prepared or reviewed by any Borrower or Guarantor that are contained in any
selling materials and all other information provided by it and included in such
materials.
(h) Any Lender that is an Issuing Bank may at any time assign all of its
Commitments pursuant to this Section 13.7. If such Issuing Bank ceases to be
Lender, it may, at its option, resign as Issuing Bank and such Issuing Bank's
obligations to issue Letters of Credit shall terminate but it shall retain all
of the rights and obligations of Issuing Bank hereunder with respect to Letters
of Credit outstanding as of the effective date of its resignation and all Letter
of Credit Obligations with respect thereto (including the right to require
Lenders to make Revolving Loans or fund risk participations in outstanding
Letter of Credit Obligations), shall continue.
13.8 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.
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13.9 USA Patriot Act. Each Lender subject to the USA PATRIOT Act (Title III
of Pub.L. 107-56 (signed into law October 26, 2001) (the "Act") hereby notifies
Borrowers and Guarantors that pursuant to the requirements of the Act, it is
required to obtain, verify and record information that identifies each person or
corporation who opens an account and/or enters into a business relationship with
it, which information includes the name and address of Borrowers and Guarantors
and other information that will allow such Lender to identify such person in
accordance with the Act and any other applicable law. Borrowers and Guarantors
are hereby advised that any Loans or Letters of Credit hereunder are subject to
satisfactory results of such verification.
13.10 Waiver of Consolidated Working Capital Default. Fedders and
Subsidiaries failed to maintain "Consolidated Working Capital" for the month of
September, 2005 as required by, and as such quoted term is defined in, the
Covenant Supplement previously executed by Borrowers and Guarantors in
connection with the Existing Financing Agreements (the "Working Capital
Default"). In response to the request of Borrowers and Guarantors, Agent and
Lenders hereby waive the Working Capital Default, provided, however, that
nothing contained in this Section 13.10 or otherwise in this Agreement shall be
construed to waive, limit, impair or otherwise affect any rights of Agent and
Lenders in respect of any other Event of Default that may exist as of the date
hereof, whether under the Existing Financing Agreements or under this Agreement,
or in respect of any future non-compliance with any covenant, term or provision
of the Financing Agreements.
13.11 Amendment and Restatement; No Extinguishment. This Agreement
consolidates and amends and restates in their entirety, and supersedes, all of
the Existing Loan Agreements and this Agreement and the other Financing
Agreements amend and restate in their entirety, and supersede, all of the
Existing Financing Agreements; except, that, notwithstanding such amendment and
restatement or anything to the contrary contained in this Agreement, nothing
contained in this Agreement shall be deemed to waive, release, limit, adversely
affect or impair, (a) any "Obligations" arising under or in connection with (and
as such quoted term is defined in) the Existing Financing Agreements, including
without limitation, any such Obligations which are not due and payable under the
Existing Financing Agreements as of the date of this Agreement, including,
without limitation, all loans and advances made by Wachovia to Borrowers
pursuant to the Existing Loan Agreements, any and all costs and expenses arising
under the Existing Financing Agreements and any and all other contingent
"Obligations" arising under, and as such quoted term is defined in, the Existing
Financing Agreements (collectively, the "Surviving Existing Obligations"), and
all Surviving Existing Obligations shall be deemed and shall constitute
Obligations hereunder, payable to Agent and Lenders in accordance with the terms
and provisions hereof, or (b) the security interests, liens and other interests
in the Collateral heretofore granted, pledged and/or assigned by the Borrowers
and Guarantors to Wachovia under the Existing Financing Agreements, which on and
after the date hereof shall be deemed to have been granted to Agent for the
benefit of Agent and Secured Parties hereunder. The amendment and restatement
contained herein shall not, in any manner, be construed to constitute payment
of, or impair, limit, cancel or extinguish, or constitute a novation in respect
of, the Surviving Existing Obligations of Borrowers or Guarantors evidenced by
or arising under the Existing Financing Agreements, and the liens and security
interests of Wachovia securing such Surviving Existing Obligations, which shall
not in any manner be impaired, limited, terminated, waived or released, but
shall continue in full force and effect in favor of Agent for the benefit of
Agent and Secured Parties under this Agreement.
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13.12 Counterparts, Etc. This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile or other electronic method of
transmission shall have the same force and effect as the delivery of an original
executed counterpart of this Agreement or any of such other Financing
Agreements. Any party delivering an executed counterpart of any such agreement
by telefacsimile or other electronic method of transmission shall also deliver
an original executed counterpart, but the failure to do so shall not affect the
validity, enforceability or binding effect of such agreement.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have caused
these presents to be duly executed as of the day and year first above written.
AGENT: BORROWERS:
WACHOVIA BANK, NATIONAL ASSOCIATION, FEDDERS NORTH AMERICA, INC.
as Agent and Issuing Bank
By: By:
--------------------------------- ------------------------------------
Title: Title: Vice President and Treasurer
------------------------------
LENDERS:
WACHOVIA BANK, NATIONAL ASSOCIATION XXXXXXX QUIET KOOL CORPORATION
By: By:
--------------------------------- ------------------------------------
Title: Title: Vice President and Treasurer
------------------------------
Commitment: $45,000,000
THE CIT GROUP BUSINESS CREDIT, INC. COLUMBIA SPECIALTIES, INC.
By: By:
--------------------------------- ------------------------------------
Title: Title: Vice President and Treasurer
------------------------------
Commitment: $30,000,000
TRION, INC.
By:
------------------------------------
Title: Vice President and Treasurer
ENVIRCO CORPORATION
By:
------------------------------------
Title: Vice President and Treasurer
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
FEDDERS XXXXXX COMPANY, INC.
By:
------------------------------------
Title: Vice President and Treasurer
FEDDERS ADDISON COMPANY, INC.
By:
------------------------------------
Title: Vice President and Treasurer
FEDDERS ISLANDAIRE, INC.
By:
------------------------------------
Title: Vice President and Treasurer
ISLAND METAL FABRICATING, INC.
By:
------------------------------------
Title: Vice President and Treasurer
GUARANTORS:
FEDDERS CORPORATION
By:
------------------------------------
Title: Vice President and Treasurer
FEDDERS INTERNATIONAL, INC.
By:
------------------------------------
Title: Vice President and Treasurer
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
FEDDERS INVESTMENT CORPORATION
By:
------------------------------------
Title: Vice President and Treasurer
FEDDERS, INC.
By:
------------------------------------
Title: Vice President and Treasurer
ROTOREX COMPANY, INC.
By:
------------------------------------
Title: Vice President and Treasurer
HERRMIDIFIER COMPANY, INC.
By:
------------------------------------
Title: Vice President and Treasurer
AMENDMENT NO. 1
TO
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT,
dated as of February 15, 2006 (this "Amendment"), is entered into by and among
WACHOVIA BANK, NATIONAL ASSOCIATION, in its capacity as agent for Lenders (in
such capacity, "Agent") and as a Lender, THE CIT GROUP BUSINESS CREDIT, INC., as
a Lender, FEDDERS NORTH AMERICA, INC., a Delaware corporation, and the other
Borrowers party to the Loan Agreement referred to below, and FEDDERS
CORPORATION, a Delaware corporation, and the other Guarantors party to the Loan
Agreement.
WITNESSETH:
WHEREAS, Agent, Lenders, Borrowers and Guarantors are party to that certain
Amended and Restated Loan and Security Agreement, dated as of January 31, 2006
(the "Loan Agreement"); and
WHEREAS, Fedders International, Inc., a Delaware corporation ("Fedders
International"), a Guarantor under the Loan Agreement, owns one hundred (100%)
percent of the issued and outstanding Capital Stock of Fedders International Air
Conditioning PVT Ltd., a company incorporated under the provisions of the India
Companies Act of 1956 ("Fedders India"), and Fedders India owns fifty (50%)
percent of the issued and outstanding Capital Stock of Universal Comfort
Products Private Ltd., a joint venture company formed in India (the "India JV");
and
WHEREAS, Borrowers and Guarantors have requested that Required Lenders
agree to amend the Loan Agreement to permit Borrowers to make certain
intercompany loans to Fedders, the proceeds of which will be (a) remitted by
Fedders to Fedders International as an additional contribution to the capital of
Fedders International and (b) in turn remitted by Fedders International to
Fedders India, as an additional contribution to the capital of Fedders India, in
order to enable Fedders India to in turn make capital contributions to the India
JV in support of the operations thereof; and Agent and Lenders are willing to
agree to the foregoing, on and subject to the terms and conditions contained in
this Amendment.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and covenants set forth herein and other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, it is hereby agreed as follows:
1. Definitions. All capitalized terms used and not otherwise defined herein
shall have their respective meanings as set forth in the Loan Agreement.
2. Additional Definitions. Section 1 of the Loan Agreement is hereby
amended to include, in addition and not in limitation, the following defined
terms:
"Amendment No. 1" shall mean Amendment No. 1 to Loan and Security
Agreement, dated as of February 15, 2006, executed among Agent,
Required Lenders, Borrowers and Guarantors."
"Amendment No. 1 Effective Date" shall mean the date on which all
conditions precedent to the effectiveness of Amendment No. 1 have been
fully satisfied, as determined by Agent."
"Capital Expenditures" shall mean all expenditures made after the
date hereof for any fixed or capital assets or improvements, or for
replacements, substitutions or additions thereto, and any other
amounts which would, in accordance with GAAP, be set forth as capital
expenditures on the consolidated financial statements of Parent and
its Subsidiaries."
"Fedders India" shall mean Fedders International Air Conditioning
PVT Ltd., a company incorporated under the provisions of the India
Companies Act of 1956, and its successors and assigns."
"Fedders International" shall mean Fedders International, Inc., a
Delaware corporation, and its successors and assigns permitted
hereunder."
"India JV" shall mean Universal Comfort Products Private Ltd., a
joint venture company formed by Fedders India and Voltas Limited under
the laws of India."
"India JV Intercompany Loans" shall mean intercompany loans made
by Borrowers to Parent at any time from and after the Amendment No. 1
Effective, the proceeds of which will be used by, respectively,
Fedders and Fedders International solely to make India JV
Investments."
"India JV Investments" shall mean 15.1 as to Borrowers, India JV
Intercompany Loans to Parent, 15.2 as to Parent, investments by Parent
in Fedders International consisting of the proceeds of India JV
Intercompany Loans received by Parent at any time from and after the
Amendment No. 1 Effective Date, and 15.3 as to Fedders International,
investments by Fedders International in Fedders India consisting of
the proceeds of the India JV Investments made by Parent in Fedders
International at any time after the Amendment No. 1 Effective Date.
3. India JV Reporting. Section 9.6(a) of the Loan Agreement is hereby
amended by deleting the word "and" at the end of Section 9.6(a)(iv), deleting
the period at the end of Section 9.6(a)(v) and substituting "; and" therefor,
and adding thereto the following new Section 9.6(a)(vi):
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"(vi) Within forty-five (45) days after the end of each fiscal
quarter, a report, in form and substance reasonably satisfactory to
Agent, setting forth all India JV Investments made by Borrowers,
Parent and Fedders International during the fiscal quarter then ended,
together with such other information concerning the India JV as Agent
shall reasonably request."
4. Permitted India JV Investments. Section 9.10 of the Loan Agreement is
hereby amended by deleting the word "and" at the end of Section 9.10(g)(ii),
deleting the period at the end of Section 9.10(h) and substituting "; and"
therefor, and adding thereto the following new Section 9.10(i):
"(i) In addition to, and not in limitation of, the loans by a
Borrower or Guarantor to another Borrower or Guarantor which are
permitted by Section 9.10(g) above, India JV Investments by Borrowers
to Fedders, by Fedders to Fedders International and by Fedders
International to Fedders India in an aggregate principal amount not to
exceed (A) $2,000,000 for all India JV Investments during Borrowers'
2006 fiscal year and (B) during their 2007 fiscal year and subsequent
fiscal years, a maximum aggregate principal amount to be agreed upon
by Required Lenders and Borrowers in an amendment with respect to this
Section 9.10(i) in accordance with Section 11.3, which maximum
aggregate amount shall be determined based on projections, budgets,
forecasts and other information delivered by Borrowers to Agent on or
prior to January 30, 2007 and prior to January 30 of each successive
year thereafter, pursuant to Section 9.6(a), which shall be acceptable
to Agent in its sole reasonable discretion; provided that, (1) on the
date of any such India JV Investment by Borrowers, and after giving
effect thereto, Borrowers shall have Excess Availability of not less
than $4,000,000 and (2) Fedders International shall cause Fedders
India to use all proceeds of India JV Investments solely for the
purpose of enabling the India JV to conduct its business operations in
the ordinary course."
5. Capital Expenditures Covenant. Section 9.18 of the Loan Agreement is
hereby amended and restated in its entirety to read as follows:
"9.18 Capital Expenditures. Borrowers shall not make Capital
Expenditures in an aggregate amount in excess of (a) $4,650,000 during
their 2006 fiscal year and (b) in their 2007 fiscal year and in each
subsequent fiscal year, a maximum amount to be agreed upon by Required
Lenders and Borrowers in an amendment to this Section 9.18 in
accordance with Section 11.3, which amount shall be determined based
on projections, budgets, forecasts and other information delivered by
Borrowers to Agent on or prior to January 30, 2007 and prior to
January 30 each successive year thereafter,
3
pursuant to Section 9.6(a), which shall be acceptable to Agent in its
sole reasonable discretion. For the purposes of this Section 9.18, all
India JV Investments made by Borrowers, Fedders and/or Fedders
International shall be deemed and shall constitute Capital
Expenditures made by Borrowers in the fiscal year in which such India
JV Investments are made."
6. Conditions Precedent. The effectiveness of the Amendments made in this
Amendment are subject to the satisfaction of each of the following conditions
precedent:
(a) Agent shall have received an executed copy (or executed faxed or
electronic copy) of this Amendment duly authorized, executed and delivered by
the parties hereto other than Agent and Required Lenders; and
(b) as of the date of this Amendment, no Default or Event of Default
shall have occurred and be continuing.
7. Further Assurances. Borrowers and Guarantors shall execute and deliver
such additional documents and take such additional actions as may be reasonably
requested by Agent to effectuate the provisions and purposes of this Amendment.
8. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the internal laws of the State of New York (without giving effect to
principles of conflicts of laws).
9. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
10. Counterparts. This Amendment may be executed in any number of
counterparts, all of which counterparts shall together constitute one and the
same agreement. In making proof of this Amendment, it shall not be necessary to
produce or account for more than one counterpart hereof signed by each of the
parties hereto.
11. Inconsistencies. To the extent that any provision of the Loan Agreement
or any Financing Agreement is inconsistent with the provisions of this
Amendment, such other provision shall be deemed to be amended so that it is made
consistent with the provisions of this Amendment. Except as expressly agreed
herein, the Loan Agreement and all of the other Financing Agreements and all
covenants, representations and warranties contained therein, are hereby ratified
and confirmed in all respects and shall remain in full force and effect in
accordance with their terms.
[SIGNATURE PAGES FOLLOW]
4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first above written.
AGENT: BORROWERS:
WACHOVIA BANK, NATIONAL ASSOCIATION, FEDDERS NORTH AMERICA, INC.
as Agent and Issuing Bank
By: By:
--------------------------------- ------------------------------------
Title: Title:
------------------------------ ---------------------------------
REQUIRED LENDERS:
WACHOVIA BANK, NATIONAL ASSOCIATION XXXXXXX QUIET KOOL CORPORATION
By: By:
--------------------------------- ------------------------------------
Title: Title:
------------------------------ ---------------------------------
THE CIT GROUP BUSINESS CREDIT, INC. COLUMBIA SPECIALTIES, INC.
By: By:
--------------------------------- ------------------------------------
Title: Title:
------------------------------ ---------------------------------
TRION, INC.
By:
------------------------------------
Title:
---------------------------------
ENVIRCO CORPORATION
By:
------------------------------------
Title:
---------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
FEDDERS XXXXXX COMPANY, INC.
By:
------------------------------------
Title:
---------------------------------
FEDDERS ADDISON COMPANY, INC.
By:
------------------------------------
Title:
---------------------------------
FEDDERS ISLANDAIRE, INC.
By:
------------------------------------
Title:
---------------------------------
ISLAND METAL FABRICATING, INC.
By:
------------------------------------
Title:
---------------------------------
GUARANTORS:
FEDDERS CORPORATION
By:
------------------------------------
Title:
---------------------------------
FEDDERS INTERNATIONAL, INC.
By:
------------------------------------
Title:
---------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
FEDDERS INVESTMENT CORPORATION
By:
------------------------------------
Title:
---------------------------------
FEDDERS, INC.
By:
------------------------------------
Title:
---------------------------------
ROTOREX COMPANY, INC.
By:
------------------------------------
Title:
---------------------------------
HERRMIDIFIER COMPANY, INC.
By:
------------------------------------
Title:
---------------------------------
