Exhibit 10.18
CREDIT AGREEMENT
Dated as of December 28, 2001
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
and
BANK OF AMERICA, N.A.
as the Agent
and
APPLICA INCORPORATED
as the Borrower
and
ITS SUBSIDIARIES PARTY HERETO
as Guarantors
TABLE OF CONTENTS
Article Page
------- ----
ARTICLE 1 LOANS AND LETTERS OF CREDIT........................................ 1
1.1 Total Facility................................................... 1
1.2 Revolving Loans.................................................. 2
1.3 Reserved......................................................... 5
1.4 Letters of Credit................................................ 5
1.5 Bank Products.................................................... 9
ARTICLE 2 INTEREST AND FEES.................................................. 9
2.1 Interest......................................................... 9
2.2 Continuation and Conversion Elections............................ 10
2.3 Maximum Interest Rate............................................ 11
2.4 Closing Fee and Arrangement Fee.................................. 11
2.5 Unused Line Fee.................................................. 11
2.6 Letter of Credit Fee............................................. 12
ARTICLE 3 PAYMENTS AND PREPAYMENTS........................................... 12
3.1 Revolving Loans.................................................. 12
3.2 Termination of Facility.......................................... 13
3.3 Optional Commitment Reductions................................... 13
3.4 Payments from Distributions or Loans from Subsidiaries........... 14
3.5 Payments from Asset Dispositions................................. 14
3.6 LIBOR Rate Loan Prepayments...................................... 14
3.7 Payments by the Borrower......................................... 14
3.8 Payments as Revolving Loans...................................... 15
3.9 Apportionment, Application and Reversal of Payments.............. 15
3.10 Indemnity for Returned Payments.................................. 16
3.11 Agent's and Lenders' Books and Records; Monthly Statements....... 16
ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY............................. 16
4.1 Taxes............................................................ 16
4.2 Illegality....................................................... 18
4.3 Increased Costs and Reduction of Return.......................... 18
4.4 Funding Losses................................................... 19
4.5 Inability to Determine Rates..................................... 20
4.6 Certificates of Agent............................................ 20
4.7 Obligation to Mitigate........................................... 20
4.8 Survival......................................................... 21
ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.................. 21
5.1 Books and Records................................................ 21
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5.2 Financial Information............................................ 21
5.3 Notices to the Lenders........................................... 25
5.4 Revisions or Updates to Schedules................................ 27
ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS............................. 28
6.1 Authorization, Validity, and Enforceability of this
Agreement and the Loan Documents................................. 28
6.2 Validity and Priority of Security Interest....................... 28
6.3 Organization and Qualification................................... 28
6.4 [Reserved]....................................................... 29
6.5 Subsidiaries..................................................... 29
6.6 Financial Statements and Projections............................. 29
6.7 [Reserved]....................................................... 29
6.8 Solvency......................................................... 29
6.9 Debt............................................................. 30
6.10 Distributions.................................................... 30
6.11 Real Estate; Leases.............................................. 30
6.12 Proprietary Rights............................................... 30
6.13 Trade Names...................................................... 30
6.14 Litigation....................................................... 30
6.15 Labor Disputes................................................... 31
6.16 Environmental Laws............................................... 31
6.17 No Violation of Law.............................................. 32
6.18 No Default....................................................... 32
6.19 ERISA Compliance................................................. 32
6.20 Taxes............................................................ 33
6.21 Regulated Entities............................................... 33
6.22 Margin Regulations............................................... 33
6.23 Copyrights, Patents, Trademarks and Licenses, etc................ 33
6.24 Material Agreements.............................................. 34
6.25 Bank Accounts.................................................... 34
6.26 Governmental Authorization....................................... 34
6.27 Investment Property.............................................. 34
6.28 No Material Adverse Change....................................... 34
6.29 Full Disclosure.................................................. 35
6.30 Common Enterprise................................................ 35
ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS................................. 35
7.1 Taxes and Other Obligations...................................... 35
7.2 Legal Existence and Good Standing................................ 36
7.3 Compliance with Law and Agreements; Maintenance of Licenses...... 36
7.4 Maintenance of Property; Inspection of Property.................. 36
7.5 Insurance........................................................ 37
7.6 Insurance and Condemnation Proceeds.............................. 37
7.7 Environmental Laws............................................... 38
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7.8 Compliance with ERISA............................................ 39
7.9 Mergers, Consolidations or Sales................................. 40
7.10 Distributions; Capital Change; Restricted Investments............ 40
7.11 Reserved......................................................... 40
7.12 Third Party Guaranties........................................... 41
7.13 Debt............................................................. 41
7.14 Prepayment....................................................... 41
7.15 Transactions with Affiliates..................................... 41
7.16 [Reserved]....................................................... 42
7.17 [Reserved]....................................................... 42
7.18 Loan Party Guaranties............................................ 42
7.19 [Reserved]....................................................... 42
7.20 Investment Banking and Finder's Fees............................. 42
7.21 Business Conducted............................................... 42
7.22 Liens............................................................ 42
7.23 Sale and Leaseback Transactions.................................. 43
7.24 New Subsidiaries................................................. 43
7.25 Fiscal Year...................................................... 43
7.26 Capital Expenditures............................................. 44
7.27 Minimum EBITDA................................................... 44
7.28 Minimum Availability............................................. 44
7.29 Use of Proceeds.................................................. 45
7.30 Changes to Senior Subordinated Debt Offering Documents........... 45
7.31 Closure of Bank Accounts......................................... 45
7.32 Intercompany Security Interest................................... 46
7.33 Applica Canada Blocked Account................................... 46
7.34 Further Assurances............................................... 46
ARTICLE 8 CONDITIONS OF LENDING.............................................. 46
8.1 Conditions Precedent to Making of Loans on the Closing Date...... 46
8.2 Conditions Precedent to Each Loan................................ 51
ARTICLE 9 DEFAULT; REMEDIES.................................................. 52
9.1 Events of Default................................................ 52
9.2 Remedies......................................................... 55
ARTICLE 10 TERM AND TERMINATION.............................................. 55
10.1 Term and Termination............................................. 55
ARTICLE 11 AMENDMENTS; WAIVERs; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS...... 56
11.1 Amendments and Waivers........................................... 56
11.2 Assignments; Participations...................................... 57
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ARTICLE 12 THE AGENT......................................................... 60
12.1 Appointment and Authorization.................................... 60
12.2 Delegation of Duties............................................. 60
12.3 Liability of Agent............................................... 60
12.4 Reliance by Agent................................................ 61
12.5 Notice of Default................................................ 61
12.6 Credit Decision.................................................. 61
12.7 Indemnification.................................................. 62
12.8 Agent in Individual Capacity..................................... 62
12.9 Successor Agent.................................................. 63
12.10 Withholding Tax.................................................. 63
12.11 Collateral Matters............................................... 65
12.12 Restrictions on Actions by Lenders; Sharing of Payments.......... 66
12.13 Agency for Perfection............................................ 67
12.14 Payments by Agent to Lenders..................................... 67
12.15 Settlement....................................................... 67
12.16 Letters of Credit; Intra-Lender Issues........................... 71
12.17 Concerning the Collateral and the Related Loan Documents......... 73
12.18 Field Audit and Examination Reports; Disclaimer by Lenders....... 73
12.19 Relation Among Lenders........................................... 74
ARTICLE 13 MISCELLANEOUS..................................................... 74
13.1 No Waivers; Cumulative Remedies.................................. 74
13.2 Severability..................................................... 74
13.3 Governing Law; Choice of Forum; Service of Process............... 75
13.4 WAIVER OF JURY TRIAL............................................. 76
13.5 Survival of Representations and Warranties....................... 76
13.6 Other Security and Guaranties.................................... 76
13.7 Fees and Expenses................................................ 76
13.8 Notices.......................................................... 77
13.9 Waiver of Notices................................................ 78
13.10 Binding Effect................................................... 78
13.11 Indemnity of the Agent and the Lenders by the Borrower........... 78
13.12 [Reserved]....................................................... 79
13.13 Final Agreement.................................................. 79
13.14 Counterparts..................................................... 80
13.15 Captions......................................................... 80
13.16 Right of Setoff.................................................. 80
13.17 Confidentiality.................................................. 80
13.18 Conflicts with Other Loan Documents.............................. 82
13.19 Agency of the Borrower for Each Other Loan Party................. 82
13.20 Express Waivers By Loan Parties In Respect of Cross
Guaranties and Cross Collateralization........................... 82
13.21 Judgment Currency................................................ 84
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ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A - DEFINED TERMS
EXHIBIT A - [Reserved]
EXHIBIT B - BORROWING BASE CERTIFICATE
EXHIBIT C - FINANCIAL STATEMENTS
EXHIBIT D - NOTICE OF BORROWING
EXHIBIT E - NOTICE OF CONTINUATION/CONVERSION
EXHIBIT F - ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT G - COLLATERAL ACCESS AGREEMENT
EXHIBIT H - VENDOR LETTER
SCHEDULE 1.1 - ASSIGNMENT AND ACCEPTANCE
SCHEDULE 1.2 - COMMITMENTS
SCHEDULE 6.3 - ORGANIZATION AND QUALIFICATIONS
SCHEDULE 6.5 - SUBSIDIARIES AND AFFILIATES
SCHEDULE 6.9 - DEBT
SCHEDULE 6.11 - REAL ESTATE; LEASES
SCHEDULE 6.12 - PROPRIETARY RIGHTS
SCHEDULE 6.13 - TRADE NAMES
SCHEDULE 6.14 - LITIGATION
SCHEDULE 6.15 - LABOR DISPUTES
SCHEDULE 6.16 - ENVIRONMENTAL LAW
SCHEDULE 6.19 - ERISA COMPLIANCE
SCHEDULE 6.24 - MATERIAL AGREEMENTS
SCHEDULE 6.25 - BANK ACCOUNTS
v
SCHEDULE 6.27 - INVESTMENT PROPERTY
SCHEDULE A-1 - PERMITTED LIENS
SCHEDULE A-2 - RESTRICTED INVESTMENTS
vi
CREDIT AGREEMENT
This Credit Agreement, dated as of December 28, 2001, (this
"Agreement") among the financial institutions from time to time parties hereto
(such financial institutions, together with their respective successors and
assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), BANK OF AMERICA, N.A. with an office at 000
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, as agent for the Lenders (in its
capacity as agent, the "Agent"), and APPLICA INCORPORATED, a Florida
corporation, and each of its Subsidiaries party hereto.
W I T N E S S E T H:
WHEREAS, the Loan Parties have requested the Lenders to make
available to the Borrower a revolving line of credit for loans and letters of
credit in an amount not to exceed $205,000,000, and which extensions of credit
the Borrower will use for the purposes permitted by Section 7.29;
WHEREAS, the Borrower, Agent, Bank and certain other financial
institutions have entered into that certain Amended and Restated Credit
Agreement dated as of August 7, 1998 (as theretofore amended, supplemented or
restated from time to time, the "Original Credit Agreement"); and
WHEREAS, the Lenders have agreed to make available to the Borrower a
revolving credit facility upon the terms and conditions set forth in this
Agreement; and
WHEREAS, capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings ascribed thereto in Annex A which is
attached hereto and incorporated herein. The rules of construction contained in
Annex A shall govern the interpretation of this Agreement, and all Annexes,
Exhibits and Schedules attached hereto are incorporated herein by reference;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Lenders, the Agent and the Loan
Parties hereby agree as follows;
ARTICLE 1
LOANS AND LETTERS OF CREDIT
1.1 Total Facility.
Subject to all of the terms and conditions of this Agreement, the
Lenders agree to make available a total credit facility of up to $205,000,000
(the "Total Facility") to the Borrower
from time to time during the term of this Agreement. The Total Facility shall be
composed of a revolving line of credit consisting of Revolving Loans and Letters
of Credit and Credit Support as described in Section 1.2 and Section 1.4.
1.2 Revolving Loans.
(a) Amounts. Subject to the satisfaction of the
conditions precedent set forth in Article 8, each Lender severally,
but not jointly, agrees, upon the Borrower's request from time to
time on any Business Day during the period from and including the
Closing Date to the Termination Date, to make revolving loans (the
"Revolving Loans") to the Borrower in amounts not to exceed such
Lender's Pro Rata Share of Availability, except for Non-Ratable
Loans and Agent Advances. The Lenders, however, in their unanimous
discretion, may elect to make Revolving Loans or issue or arrange to
have issued Letters of Credit in excess of the Borrowing Base on one
or more occasions, but if they do so, neither the Agent nor the
Lenders shall be deemed thereby to have changed the limits of the
Borrowing Base or to be obligated to exceed such limits on any other
occasion. If any Borrowing would exceed Availability, the Lenders
may refuse to make or may otherwise restrict the making of Revolving
Loans as the Lenders determine until such excess has been
eliminated, subject to the Agent's authority, in its sole
discretion, to make Agent Advances pursuant to the terms of Section
1.2(i).
(b) Procedure for Borrowing.
(1) Each Borrowing shall be made upon the Borrower's
irrevocable written notice or by facsimile transmission delivered to the Agent
in the form of a notice of borrowing ("Notice of Borrowing"), which must be
received by the Agent prior to (i) 12:00 noon (Atlanta, Georgia time) three
Business Days prior to the requested Funding Date, in the case of LIBOR Rate
Loans and (ii) 11:00 a.m. (Atlanta, Georgia time) on the requested Funding Date,
in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which in the case of a
LIBOR Rate Loan must equal or exceed $2,500,000 (and increments of $500,000 in
excess of such amount);
(B) the requested Funding Date, which must be a Business
Day;
(C) whether the Revolving Loans requested are to be Base
Rate Revolving Loans or LIBOR Revolving Loans (and if not specified, it shall be
deemed a request for a Base Rate Revolving Loan); and
(D) the duration of the Interest Period for LIBOR
Revolving Loans (and if not specified, it shall be deemed a request for an
Interest Period of one month); and
2
(E) whether the proceeds of such Borrowing are to be
deposited to a Designated Account or sent by wire transfer to a third party, in
which case the Borrower shall provide the Agent with wire transfer instructions
satisfactory to the Agent;
provided, however, that with respect to the Borrowing to be made on the Closing
Date, such Borrowings will consist of Base Rate Revolving Loans only.
(2) In lieu of delivering a Notice of Borrowing, (I) a
Responsible Officer may give Agent telephonic notice of such request for
advances to a Designated Account on or before the deadline set forth in clause
(i) above and the Agent at all times shall be entitled to rely on such
telephonic notice in making such Revolving Loans, regardless of whether any
written confirmation is received, or (II) whenever a presentment or request for
payment is made against a Designated Account in an amount greater than the then
available balance therein, such presentment or request shall be deemed to be a
request for a Base Rate Revolving Loan on the date of such presentment in an
amount equal to the excess of such check or other presented payment item over
the available balance therein.
(3) The Borrower shall have no right to request a LIBOR
Rate Loan while a Default or Event of Default has occurred and is continuing.
(c) Reliance upon Authority. Prior to the Closing Date, the
Borrower shall deliver to the Agent a notice setting forth an
account ("Designated Account") to which the Agent is authorized by
the Borrower to transfer the proceeds of the Revolving Loans
requested hereunder. The Borrower may designate a replacement
account from time to time by written notice. All such Designated
Accounts must be reasonably satisfactory to the Agent. The Agent is
entitled to rely conclusively on any individual's request for
Revolving Loans on behalf of the Borrower, so long as the proceeds
thereof are to be transferred to a Designated Account. The Agent has
no duty to verify the identity of any individual representing
himself or herself as a person authorized by the Borrower to make
such requests on its behalf.
(d) No Liability. The Agent shall not incur any liability to
the Loan Parties as a result of acting upon any notice referred to
in Sections 1.2(b) and (c), which the Agent believes in good faith
to have been given by an officer or other person duly authorized by
the Borrower to request Revolving Loans on its behalf. The crediting
of Revolving Loans to a Designated Account or to such Persons as the
Borrower may direct pursuant to Section 1.2(b)(E) shall conclusively
establish the obligation of the Borrower to repay such Revolving
Loans as provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to Section 1.2(b) shall be
irrevocable and the Borrower shall be bound to borrow the funds
requested therein in accordance therewith.
(f) Agent's Election. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof), the Agent shall
elect to have the terms of
3
Section 1.2(g) or the terms of Section 1.2(h) apply to such
requested Borrowing. If the Bank declines in its sole discretion to
make a Non-Ratable Loan pursuant to Section 1.2(h), the terms of
Section 1.2(g) shall apply to the requested Borrowing.
(g) Making of Revolving Loans. If Agent elects to have the
terms of this Section 1.2(g) apply to a requested Borrowing, then
promptly after receipt of a Notice of Borrowing or telephonic notice
in lieu thereof, the Agent shall notify the Lenders by telecopy,
telephone or e-mail of the requested Borrowing. Each Lender shall
transfer its Pro Rata Share of the requested Borrowing available to
the Agent in immediately available funds, to the account from time
to time designated by Agent, not later than 2:00 p.m. (Atlanta,
Georgia time) on the applicable Funding Date. After the Agent's
receipt of all proceeds of such Revolving Loans, the Agent shall
make the proceeds of such Revolving Loans available to the Borrower
on the applicable Funding Date by transferring same day funds to the
account designated by the Borrower; provided, however, that except
as may otherwise be provided by this Agreement, the amount of
Revolving Loans so made on any date shall not exceed the
Availability on such date.
(h) Making of Non-Ratable Loans. If Agent elects, with the
consent of the Bank, to have the terms of this Section 1.2(h) apply
to a requested Borrowing, the Bank shall make a Revolving Loan in
the amount of that Borrowing available to the Borrower on the
applicable Funding Date by transferring same day funds to Borrowers'
Designated Account. Each Revolving Loan made solely by the Bank
pursuant to this Section is herein referred to as a "Non-Ratable
Loan", and such Revolving Loans are collectively referred to as the
"Non-Ratable Loans." Each Non-Ratable Loan shall be subject to all
the terms and conditions applicable to other Revolving Loans except
that all payments thereon shall be payable to the Bank solely for
its own account. The aggregate amount of Non-Ratable Loans
outstanding at any time shall not exceed $15,000,000. The Agent
shall not request the Bank to make any Non-Ratable Loan if (1) the
Agent has received written notice from any Lender that one or more
of the applicable conditions precedent set forth in Article 8 will
not be satisfied on the requested Funding Date for the applicable
Borrowing, or (2) the requested Borrowing would exceed Availability
on that Funding Date. The Non-Ratable Loans shall be secured by the
Agent's Liens in and to the Collateral and shall constitute LIBOR
Rate Loans hereunder to the extent the Borrower is then entitled to
additional Borrowings as LIBOR Rate Loans, and any amounts in excess
thereof shall constitute Base Rate Revolving Loans hereunder.
(i) Agent Advances. Subject to the limitations set forth
below, the Agent is authorized by the Borrower and the Lenders, from
time to time in the Agent's sole discretion, (A) after the
occurrence of a Default or an Event of Default, or (B) at any time
that any of the other conditions precedent set forth in Article 8
have not been satisfied, to make Base Rate Revolving Loans to the
Borrower on behalf of the Lenders in an aggregate amount outstanding
at any time not to exceed 5% of the Borrowing Base (but not to
exceed in the aggregate, with all of the Revolving Loans
outstanding, the Maximum Revolver Amount) for
4
a period not to exceed thirty (30) continuous days, which Agent, in
its reasonable business judgment, deems necessary or desirable (1)
to preserve or protect the Collateral, or any portion thereof, (2)
to enhance the likelihood of, or maximize the amount of, repayment
of the Loans and other Obligations, or (3) to pay any other amount
chargeable to the Borrower pursuant to the terms of this Agreement,
including costs, fees and expenses as described in Section 13.7 (any
of such advances are herein referred to as "Agent Advances");
provided, that the Required Lenders may at any time revoke the
Agent's authorization to make Agent Advances. Any such revocation
must be in writing and shall become effective prospectively upon the
Agent's receipt thereof. The Agent Advances shall be secured by the
Agent's Liens in and to the Collateral and shall constitute Base
Rate Revolving Loans and Obligations hereunder.
1.3 Reserved.
1.4 Letters of Credit.
(a) Agreement to Issue or Cause To Issue. Subject to the terms
and conditions of this Agreement, the Agent agrees, upon the request
from time to time of the Borrower, in accordance with Section
1.4(d), for the issuance of a Letter of Credit for the account of
the Borrower or another Loan Party as directed by the Borrower in
writing, (i) to cause the Letter of Credit Issuer to issue for the
account of the Borrower one or more commercial/documentary and/or
standby letters of credit (each a "Letter of Credit") and/or (ii) to
provide credit support or other enhancement to a Letter of Credit
Issuer acceptable to the Letter of Credit Issuer which issues a
Letter of Credit for the account of the Borrower (any such credit
support or enhancement being herein referred to as a "Credit
Support") from time to time during the term of this Agreement.
(b) Amounts; Outside Expiration Date. The Agent shall not have
any obligation to issue or cause to be issued any Letter of Credit
or to provide Credit Support for any Letter of Credit at any time
if: (i) the maximum face amount of the requested Letter of Credit is
greater than the Unused Letter of Credit Subfacility at such time;
(ii) the maximum undrawn amount of the requested Letter of Credit
and all commissions, fees, and charges due from the Borrower in
connection with the opening thereof would exceed Availability at
such time; or (iii) such Letter of Credit has an expiration date
less than 15 days prior to the Stated Termination Date or more than
12 months from the date of issuance for standby letters of credit or
more than 6 months from the date of issuance for documentary letters
of credit. With respect to any Letter of Credit which contains any
"evergreen" or automatic renewal provision, each Lender shall be
deemed to have consented to any such extension or renewal unless any
such Lender shall have provided to the Agent, written notice that it
declines to consent to any such extension or renewal at least thirty
(30) days prior to the date on which the Letter of Credit Issuer is
entitled to decline to extend or renew the Letter of Credit. If all
of the requirements of this Section 1.4 are met and no Default or
Event of Default
5
has occurred and is continuing, no Lender shall decline to consent
to any such extension or renewal.
(c) Other Conditions. In addition to conditions precedent
contained in Article 8, the obligation of the Agent to issue or to
cause to be issued any Letter of Credit or to provide Credit Support
for any Letter of Credit is subject to the following conditions
precedent having been satisfied in a manner reasonably satisfactory
to the Agent:
(1) the Borrower shall have delivered to the Letter of
Credit Issuer, at such times and in such manner as such Letter of Credit Issuer
may prescribe, an application in form and substance satisfactory to such Letter
of Credit Issuer and reasonably satisfactory to the Agent for the issuance of
the Letter of Credit and such other documents as may be required pursuant to the
terms thereof, and the form, terms and purpose of the proposed Letter of Credit
shall be reasonably satisfactory to the Agent and the Letter of Credit Issuer;
and
(2) as of the date of issuance, no order of any court,
arbitrator or Governmental Authority shall purport by its terms to enjoin or
restrain money center banks generally from issuing letters of credit of the type
and in the amount of the proposed Letter of Credit, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or the issuance of such Letters of Credit.
(d) Issuance of Letters of Credit.
(1) Request for Issuance. The Borrower shall notify
Agent by telephonic facsimile or electronic notice (via the Bank's "Bank Window"
system) of a requested Letter of Credit at least three (3) Business Days prior
to the proposed issuance date. Such notice shall be irrevocable and must specify
the original face amount of the Letter of Credit requested, the Business Day of
issuance of such requested Letter of Credit, whether such Letter of Credit may
be drawn in a single or in partial draws, the Business Day on which the
requested Letter of Credit is to expire, the purpose for which such Letter of
Credit is to be issued, and the beneficiary of the requested Letter of Credit.
The Borrower shall attach to such notice the proposed form of the Letter of
Credit.
(2) Responsibilities of the Agent; Issuance. As of the
Business Day immediately preceding the requested issuance date of the Letter of
Credit, the Agent shall determine the amount of the applicable Unused Letter of
Credit Subfacility and Availability. If (i) the face amount of the requested
Letter of Credit is less than the Unused Letter of Credit Subfacility and (ii)
the amount of such requested Letter of Credit and all commissions, fees, and
charges due from the Borrower in connection with the opening thereof would not
exceed Availability, the Agent shall cause the Letter of Credit Issuer to issue
the requested Letter of Credit on the requested issuance date so long as the
other conditions hereof are met.
6
(3) No Extensions or Amendment. Other than in accordance
with the last two sentences of Section 1.4(b) hereof, Agent shall not be
obligated to cause the Letter of Credit Issuer to extend or amend any Letter of
Credit issued pursuant hereto unless the requirements of this Section 1.4 are
met as though a new Letter of Credit were being requested and issued.
(e) Payments Pursuant to Letters of Credit. The Borrower
agrees to reimburse immediately the Letter of Credit Issuer for any
draw under any Letter of Credit and the Agent for the account of the
Lenders upon any payment pursuant to any Credit Support, in each
case in accordance with its respective terms, and to pay the Letter
of Credit Issuer the amount of all other charges and fees payable to
the Letter of Credit Issuer in connection with any Letter of Credit
immediately when due, irrespective of any claim, setoff, defense or
other right which the Borrower may have at any time against the
Letter of Credit Issuer or any other Person. Each drawing under any
Letter of Credit shall constitute a request by the Borrower at whose
request such Letter of Credit or Credit Support was issued for a
Borrowing of a Base Rate Revolving Loan in the amount of such
drawing. The Funding Date with respect to such borrowing shall be
the date of such drawing.
(f) Indemnification; Exoneration; Power of Attorney.
(1) Indemnification. In addition to amounts payable as
elsewhere provided in this Section 1.4, each Loan Party agrees to protect,
indemnify, pay and save the Lenders and the Agent harmless from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) which any Lender or the Agent
(other than a Lender in its capacity as Letter of Credit Issuer) may incur or be
subject to as a consequence, direct or indirect, of the issuance of any Letter
of Credit or the provision of any Credit Support or enhancement in connection
therewith. The Loan Parties' obligations under this Section shall survive
payment of all other Obligations.
(2) Assumption of Risk by the Borrower. As among the
Borrower, the Lenders, and Agent (excluding any Lender in its capacity as a
Letter of Credit Issuer), the Borrower assumes all risks of the acts and
omissions of, or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, the Lenders and the Agent (excluding any Lender in its capacity
as a Letter of Credit Issuer) shall not be responsible for: (A) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any Person in connection with the application for and issuance of
and presentation of drafts with respect to any of the Letters of Credit, even if
it should prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (C) the
failure of the beneficiary of any Letter of Credit to comply duly with
conditions required in order to draw upon such Letter of Credit; (D) errors,
omissions, interruptions, or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(E) errors in interpretation of technical
7
terms; (F) any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Letter of Credit or of the
proceeds thereof; (G) the misapplication by the beneficiary of any Letter of
Credit of the proceeds of any drawing under such Letter of Credit; (H) any
consequences arising from causes beyond the control of the Lenders or the Agent,
including any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto Governmental Authority or (I) the Letter of Credit
Issuer's honor of a draw for which the draw or any certificate fails to comply
in any respect with the terms of the Letter of Credit. None of the foregoing
shall affect, impair or prevent the vesting of any rights or powers of the Agent
or any Lender under this Section 1.4(f).
(3) Exoneration. Without limiting the foregoing, no
action or omission whatsoever by Agent or any Lender (excluding any Lender in
its capacity as a Letter of Credit Issuer) shall result in any liability of
Agent or and Lender to any Loan Party, or relieve such Loan Party of any of its
obligations hereunder to any such Person.
(4) Rights Against Letter of Credit Issuer. Nothing
contained in this Agreement is intended to limit the Borrower's rights, if any,
with respect to the Letter of Credit Issuer which arise as a result of the
letter of credit application and related documents executed by and between the
Borrower and the Letter of Credit Issuer.
(5) Account Party. The Borrower hereby authorizes and
directs any Letter of Credit Issuer to name any Loan Party as the "Account
Party" therein and to deliver to the Agent all instruments, documents and other
writings and property received by the Letter of Credit Issuer pursuant to the
Letter of Credit, and to accept and rely upon the Agent's instructions and
agreements with respect to all matters arising in connection with the Letter of
Credit or the application therefor.
(g) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 1.4(b) and Section 10.1,
any Letter of Credit or Credit Support is outstanding upon the
termination of this Agreement, then upon such termination the
Borrower shall deposit with the Agent, for the ratable benefit of
the Agent and the Lenders, with respect to each Letter of Credit or
Credit Support then outstanding, a standby letter of credit (a
"Supporting Letter of Credit") in form and substance reasonably
satisfactory to Agent, issued by an issuer satisfactory to the Agent
in an amount equal to the greatest amount for which such Letter of
Credit or such Credit Support may be drawn plus any fees and
expenses associated with such Letter of Credit or such Credit
Support, under which Supporting Letter of Credit the Agent is
entitled to draw amounts necessary to reimburse the Agent and the
Lenders for payments to be made by the Agent and the Lenders under
such Letter of Credit or Credit Support and any fees and expenses
associated with such Letter of Credit or Credit Support. Such
Supporting Letter of Credit shall be held by the Agent, for the
ratable benefit of the Agent and the Lenders, as security for, and
to provide for the payment of, the aggregate undrawn amount of such
Letters of Credit or such Credit Support remaining outstanding.
8
1.5 Bank Products.
The Loan Parties may request and the Agent may, in its sole and
absolute discretion, arrange for any Consolidated Member to obtain from the Bank
or any Lender or its Affiliates Bank Products although the Loan Parties are not
required to do so. If Bank Products are provided by the Bank or an Affiliate of
the Bank or a Lender, the Loan Parties agree to indemnify and hold the Agent and
the Lenders harmless from any and all costs and obligations now or hereafter
incurred by the Agent or any of the Lenders which arise from any indemnity given
by the Agent to its Affiliates or the Affiliates of such Lender related to such
Bank Products; provided, however, nothing contained herein is intended to limit
a Consolidated Member's rights, with respect to the Bank, a Lender or their
respective Affiliates, if any, which arise as a result of the execution of
documents by and between a Consolidated Member and the Bank or such Lender or
their Affiliates which relate to Bank Products. The agreement contained in this
Section shall survive termination of this Agreement. Each Loan Party
acknowledges and agrees that the obtaining of Bank Products from the Bank or a
Lender or its Affiliates (a) is in the sole and absolute discretion of the Bank,
such Lender or their Affiliates, and (b) is subject to all rules and regulations
of the Bank, such Lender or their Affiliates.
ARTICLE 2
INTEREST AND FEES
2.1 Interest.
(a) Interest Rates. All outstanding Revolving Loans shall bear
interest on the unpaid principal amount thereof (including, to the
extent permitted by law, on interest thereon not paid when due) from
the date made until paid in full in cash at a rate determined by
reference to the Base Rate or the LIBOR Rate plus the Applicable
Margins, but not to exceed the Maximum Rate. Any of the Loans may be
converted into, or continued as LIBOR Rate Loans, subject to and in
the manner provided in Section 2.2. If at any time Loans are
outstanding with respect to which the Borrower has not delivered to
the Agent a notice specifying the basis for determining the interest
rate applicable thereto in accordance herewith, those Loans shall
bear interest at a rate determined by reference to the Base Rate
until notice to the contrary has been given to the Agent in
accordance with this Agreement and such notice has become effective.
Except as otherwise provided herein, the outstanding Obligations
shall bear interest as follows:
(i) For all Base Rate Revolving Loans at a fluctuating
per annum rate equal to the Base Rate plus the Applicable Margin;
and
(ii) For all LIBOR Revolving Loans at a per annum rate
equal to the LIBOR Rate plus the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate applicable
to Base Rate Loans as of the effective date of such change. All interest charges
shall be computed on the basis of a year of 360 days and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). The Borrower shall pay to the Agent, for the ratable
9
benefit of Lenders, interest accrued on all Base Rate Loans in arrears on the
first day of each month hereafter and on the Termination Date. The Borrower
shall pay to the Agent, for the ratable benefit of Lenders, interest on all
LIBOR Rate Loans in arrears on each LIBOR Interest Payment Date.
(b) Default Rate. If an Event of Default occurs and is
continuing and the Agent or the Required Lenders in their discretion
so elect, then, while any such Event of Default is continuing, all
of the Obligations shall bear interest at the Default Rate
applicable thereto.
2.2 Continuation and Conversion Elections.
(a) The Borrower may:
(i) elect, as of any Business Day, in the case of Base
Rate Loans to convert any Base Rate Loans (or any part thereof in an
amount not less than $2,500,000, or that is in an integral multiple
of $500,000 in excess thereof) into LIBOR Rate Loans; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any LIBOR Rate Loans having Interest
Periods expiring on such day (or any part thereof in an amount not
less than $2,500,000, or that is in an integral multiple of $500,000
in excess thereof);
provided, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such LIBOR Rate Loans shall
automatically convert into Base Rate Loans; provided further that if the notice
shall fail to specify the duration of the Interest Period, such Interest Period
shall be one month.
(b) The Borrower shall deliver by telephonic facsimile notice
of continuation/conversion ("Notice of Continuation/Conversion") to
the Agent not later than 12:00 noon (Atlanta, Georgia time) at least
two (2) Business Days in advance of the Continuation/Conversion
Date, if the Loans are to be converted into or continued as LIBOR
Rate Loans and specifying:
(i) the proposed Continuation/Conversion Date;
(ii) the aggregate amount of Loans to be converted or
renewed;
(iii) the type of Loans resulting from the proposed
conversion or continuation; and
(iv) the duration of the requested Interest Period,
provided, however, the Borrower may not select an Interest Period
that ends after the Stated Termination Date.
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(c) If upon the expiration of any Interest Period applicable
to LIBOR Rate Loans, the Borrower has failed to select timely a new
Interest Period to be applicable to LIBOR Rate Loans or if any
Default or Event of Default then exists, the Borrower shall be
deemed to have elected to convert such LIBOR Rate Loans into Base
Rate Loans effective as of the expiration date of such Interest
Period.
(d) The Agent will promptly notify each Lender of its receipt
of a Notice of Continuation/Conversion. All conversions and
continuations shall be made ratably according to the respective
outstanding principal amounts of the Loans with respect to which the
notice was given held by each Lender.
(e) There may not be more than seven (7) different LIBOR Rate
Loans in effect hereunder at any time.
2.3 Maximum Interest Rate.
In no event shall any interest rate provided for hereunder exceed
the maximum rate legally chargeable by any Lender under applicable law for such
Lender with respect to loans of the type provided for hereunder (the "Maximum
Rate"). If, in any month, any interest rate, absent such limitation, would have
exceeded the Maximum Rate, then the interest rate for that month shall be the
Maximum Rate, and, if in future months, that interest rate would otherwise be
less than the Maximum Rate, then that interest rate shall remain at the Maximum
Rate until such time as the amount of interest paid hereunder equals the amount
of interest which would have been paid if the same had not been limited by the
Maximum Rate. In the event that, upon payment in full of the Obligations, the
total amount of interest paid or accrued under the terms of this Agreement is
less than the total amount of interest which would, but for this Section 2.3,
have been paid or accrued if the interest rate otherwise set forth in this
Agreement had at all times been in effect, then the Borrower shall, to the
extent permitted by applicable law, pay the Agent, for the account of the
Lenders, an amount equal to the excess of (a) the lesser of (i) the amount of
interest which would have been charged if the Maximum Rate had, at all times,
been in effect or (ii) the amount of interest which would have accrued had the
interest rate otherwise set forth in this Agreement, at all times, been in
effect over (b) the amount of interest actually paid or accrued under this
Agreement. If a court of competent jurisdiction determines that the Agent and/or
any Lender has received interest and other charges hereunder in excess of the
Maximum Rate, such excess shall be deemed received on account of, and shall
automatically be applied to reduce, the Obligations other than interest, in the
inverse order of maturity, and if there are no Obligations outstanding, the
Agent and/or such Lender shall refund to the Borrower such excess.
2.4 Closing Fee and Arrangement Fee.
The Borrower agrees to pay the Agent on the Closing Date a closing
fee (the "Closing Fee") and the arrangement fee (the "Arrangement Fee") as set
forth in the Fee Letter.
2.5 Unused Line Fee.
On the first day of each month and on the Termination Date the
Borrower agrees to pay to the Agent for the account of the Lenders an unused
line fee ("Unused Line Fee") at a
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percentage rate per annum equal to (i) the Applicable Margin designated for
Unused Line Fees on any applicable date, times (ii) the amount by which the
Maximum Revolver Amount exceeded the Average Credit Facility Outstandings for
the immediately preceding month. The Unused Line Fee shall be computed on the
basis of a 360-day year for the actual number of days elapsed.
2.6 Letter of Credit Fee.
The Borrower agrees to pay to the Agent, for the account of the
Lenders, in accordance with their respective Pro Rata Shares, for each Letter of
Credit, a fee (the "Letter of Credit Fee") equal to the Applicable Margin per
annum in effect for LIBOR Revolving Loans on any applicable date on the undrawn
face amount of each Letter of Credit and to Agent for the benefit of the Letter
of Credit Issuer a fronting fee of one-quarter of one percent (0.25%) per annum
of the undrawn face amount of each Letter of Credit, and to the Letter of Credit
Issuer, all out-of-pocket costs, fees and expenses incurred by the Letter of
Credit Issuer in connection with the application for, processing of, issuance
of, or amendment to any Letter of Credit. The Letter of Credit Fee shall be
payable monthly in arrears on the first day of each month following any month in
which a Letter of Credit is outstanding and on the Termination Date. The Letter
of Credit Fee shall be computed on the basis of a 360-day year for the actual
number of days elapsed.
2.7 Administration Fee.
The Borrower agrees to pay the Agent on the Closing Date and on each
anniversary of the Closing Date the administration fee (the "Administration
Fee") as set forth in the Fee Letter.
2.8 Collections Fee.
The Borrower agrees to pay the Agent on the first day of each month
after the Closing Date the collections fee (the "Collections Fee") as set forth
in the Fee Letter.
ARTICLE 3
PAYMENTS AND PREPAYMENTS
3.1 Revolving Loans.
The Borrower shall repay the outstanding principal balance of the
Revolving Loans, plus all accrued but unpaid interest thereon, on the
Termination Date. The Borrower may prepay Revolving Loans at any time, and
reborrow subject to the terms of this Agreement. In addition, and without
limiting the generality of the foregoing, upon demand the Borrower shall pay to
the Agent, for account of the Lenders, the amount, without duplication, by which
the Aggregate Revolver Outstandings exceeds the lesser of the Borrowing Base or
the Maximum Revolver Amount.
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3.2 Termination of Facility.
The Borrower may terminate this Agreement upon at least ten (10)
Business Days' notice to the Agent and the Lenders, upon (a) the payment in full
of all outstanding Revolving Loans, together with accrued interest thereon, and
the cancellation and return of all outstanding Letters of Credit, (b) the
payment of the early termination fee set forth below, (c) the payment in full in
cash of all reimbursable expenses and other Obligations, and (d) with respect to
any LIBOR Rate Loans prepaid, payment of the amounts due under Section 4.4, if
any. If this Agreement is terminated at any time prior to the Stated Termination
Date, whether pursuant to this Section or pursuant to Section 9.2, the Borrower
shall, in addition to the foregoing, pay to the Agent, for the account of the
Lenders, an early termination fee determined in accordance with the following
table:
PERIOD DURING WHICH EARLY EARLY TERMINATION
TERMINATION OCCURS FEE
On or prior to the first 1% of the Maximum
Anniversary Date Revolver Amount
After the first Anniversary 0.5% of the Maximum
Date but on or prior to the Revolver Amount
second Anniversary Date
After the second 0.25% of the Maximum
Anniversary Date but prior Revolver Amount
to the third Anniversary
Date
The Third Anniversary Date None
and thereafter
3.3 Optional Commitment Reductions.
The Borrower shall, by notice from an Responsible Officer, have the
right from time to time but not more frequently than once each calendar month,
upon not less than three (3) Business Days' written notice to Agent, effective
upon receipt, to permanently reduce the total Commitments. Agent shall give each
Lender, within one (1) Business Day of receipt of such notice, telefacsimile
notice, or telephonic notice (confirmed in writing), of such reduction. Each
such reduction shall be in the aggregate amount of $5,000,000 or such greater
amount which is in an integral multiple of $1,000,000, or the entire remaining
total Commitments, and shall permanently reduce the total Commitments. Each
reduction of the total Commitments shall be accompanied by payment of the
Revolving Loans to the extent that the principal amount of Revolving Loans
outstanding, plus Non-Ratable Loans outstanding, plus Letters of Credit
outstanding exceeds the lesser of (i) the total Commitments or (ii) the
Borrowing Base, after giving effect to such reduction, together with accrued and
unpaid interest on the amounts
13
prepaid. No such reduction shall result in the payment of any LIBOR Rate Loans
other than on the last day of the Interest Period of such LIBOR Rate Loan unless
such prepayment is accompanied by amounts due, if any, under Section 4.4 hereof.
Notwithstanding the foregoing, if any of the Commitments are reduced at any time
or times prior to the Stated Termination Date, the Borrower shall pay to the
Agent in each instance, for the account of the Lenders, an early termination fee
on the portion of the Commitments so reduced (the "Commitment Reduction Amount")
in accordance with the applicable provisions of Section 3.2; provided, however,
that the reference to "Maximum Revolver Amount" as used therein shall be deemed
to refer to the Commitment Reduction Amount for purposes of calculating the
amount of such early termination fees.
3.4 Payments from Distributions or Loans from Subsidiaries.
All proceeds or other cash payments received by the Borrower
constituting proceeds of a Distribution, loan or other advance to the Borrower
shall be paid to the Agent, promptly upon the receipt thereof by the Borrower,
for application to the Revolving Loans.
3.5 Payments from Asset Dispositions.
All proceeds of any Asset Disposition by a Consolidated Member
received by a Loan Party shall be paid to the Agent, promptly upon the receipt
thereof by the Borrower, for application to the Revolving Loans. No provision
contained in this Section 3.5 shall constitute a consent to any Asset
Disposition that is not otherwise permitted by the express terms of this
Agreement.
3.6 LIBOR Rate Loan Prepayments.
Except as otherwise expressly provided in this Agreement, in
connection with any prepayment, if any LIBOR Rate Loans are prepaid prior to the
expiration date of the Interest Period applicable thereto, the Borrower shall
pay to the Lenders the amounts described in Section 4.4.
3.7 Payments by the Borrower.
(a) All payments to be made by the Borrower shall be made
without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Borrower or other
forms of payment received by the Agent shall be made to the Agent
for the account of the Lenders at the Payment Account or such other
account designated by the Agent in writing and shall be made in
Dollars and in immediately available funds, no later than 12:00 noon
(Atlanta, Georgia time) on the date such payment is due and shall be
deemed to have been received (subject to final collection) on the
Business Day that Agent receives such items in immediately available
funds for purposes of (i) determining Availability, (ii) calculating
the Unused Line Fee pursuant to Section 2.5 of this Agreement, and
(iii) calculating the amount of interest accrued thereon. Any
payment received by Agent after 12:00 noon (Atlanta, Georgia time)
shall be deemed to have been received on the next Business Day
thereafter and any applicable interest and other charges shall
continue to accrue for such period.
14
(b) Subject to the provisions set forth in the definition of
"Interest Period", whenever any payment is due on a day other than a
Business Day, such payment shall be due on the following Business
Day, and such extension of time shall in such case be included in
the computation of interest or fees, as the case may be.
3.8 Payments as Revolving Loans.
At the election of Agent, all payments of principal, interest,
reimbursement obligations in connection with Letters of Credit and Credit
Support for Letters of Credit, fees, premiums, reimbursable expenses and other
sums payable hereunder, may be paid from the proceeds of Revolving Loans made
hereunder. The Borrower hereby irrevocably authorizes the Agent to charge the
Loan Account for the purpose of paying all amounts from time to time due
hereunder and agrees that all such amounts charged shall constitute Base Rate
Revolving Loans (including Non-Ratable Loans and Agent Advances).
3.9 Apportionment, Application and Reversal of Payments.
Principal and interest payments shall be apportioned ratably among
the Lenders (according to the unpaid principal balance of the Loans to which
such payments relate held by each Lender) and payments of the fees shall, as
applicable, be apportioned ratably among the Lenders, except for fees payable
solely to Agent and the Letter of Credit Issuer and except as provided in
Section 11.1(b). All payments shall be remitted to the Agent and all such
payments not relating to principal or interest of specific Loans, or not
constituting payment of specific fees, and all proceeds of Accounts or other
Collateral received by the Agent, shall be applied, ratably, subject to the
provisions of this Agreement, first, to pay any fees, indemnities or expense
reimbursements then due to the Agent from the Borrower; second, to pay any fees
or expense reimbursements then due to the Lenders from the Borrower; third, to
pay interest due in respect of all Loans, including Non-Ratable Loans and Agent
Advances; fourth, to pay or prepay principal of the Non-Ratable Loans and Agent
Advances; fifth, to pay or prepay principal of the Revolving Loans (other than
Non-Ratable Loans and Agent Advances) and unpaid reimbursement obligations in
respect of Letters of Credit; sixth, to pay an amount to Agent equal to all
outstanding Letter of Credit Obligations to be held as cash collateral for such
Obligations; and seventh, to the payment of any other Obligation including any
amounts relating to Bank Products due to the Agent or any Lender by the
Borrower. Notwithstanding anything to the contrary contained in this Agreement,
neither Agent nor any Lender shall apply any payments which it receives to any
LIBOR Rate Loan, unless (a) so directed by the Borrower, (b) an Event of Default
has occurred and is continuing or (c) such payments are applied on the
expiration date of the Interest Period applicable to any such LIBOR Rate Loan.
For so long as Event of Default has occurred and is continuing, the Agent and
the Lenders shall have the continuing and exclusive right to apply and reverse
and reapply any and all such proceeds and payments to any portion of the
Obligations.
15
3.10 Indemnity for Returned Payments.
If after receipt of any payment which is applied to the payment of
all or any part of the Obligations, the Agent, any Lender, the Bank or any
Affiliate of the Bank or a Lender is for any reason compelled to surrender such
payment or proceeds to any Person because such payment or application of
proceeds is invalidated, declared fraudulent, set aside, determined to be void
or voidable as a preference, impermissible setoff, or a diversion of trust
funds, or for any other reason, then the Obligations or part thereof intended to
be satisfied shall be revived and continued and this Agreement shall continue in
full force as if such payment or proceeds had not been received by the Agent or
such Lender and the Borrower shall be liable to pay to the Agent and the
Lenders, and hereby does indemnify the Agent and the Lenders and hold the Agent
and the Lenders harmless for the amount of such payment or proceeds surrendered.
The provisions of this Section 3.10 shall be and remain effective
notwithstanding any contrary action which may have been taken by the Agent or
any Lender in reliance upon such payment or application of proceeds, and any
such contrary action so taken shall be without prejudice to the Agent's and the
Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment or application of proceeds having become final and
irrevocable. The provisions of this Section 3.10 shall survive the termination
of this Agreement.
3.11 Agent's and Lenders' Books and Records; Monthly Statements.
The Agent shall record the principal amount of the Loans owing to
each Lender, the undrawn face amount of all outstanding Letters of Credit and
the aggregate amount of unpaid reimbursement obligations outstanding with
respect to the Letters of Credit from time to time on its books. In addition,
each Lender may note the date and amount of each payment or prepayment of
principal of such Lender's Loans in its books and records. Failure by Agent or
any Lender to make such notation shall not affect the obligations of the
Borrower with respect to the Loans or the Letters of Credit. The Loan Parties
agree that the Agent's and each Lender's books and records showing the
Obligations and the transactions pursuant to this Agreement and the other Loan
Documents shall be admissible in any action or proceeding arising therefrom, and
shall constitute rebuttably presumptive proof thereof, irrespective of whether
any Obligation is also evidenced by a promissory note or other instrument. The
Agent will provide to the Borrower a monthly statement of Loans, payments, and
other transactions pursuant to this Agreement. Such statement shall be deemed
correct, accurate, and binding on the Loan Parties and an account stated (except
for reversals and reapplications of payments made as provided in Section 3.8 and
corrections of errors discovered by the Agent), unless the Borrower notifies the
Agent in writing to the contrary within thirty (30) days after such statement is
rendered. In the event a timely written notice of objections is given by the
Borrower, only the items to which exception is expressly made will be considered
to be disputed.
ARTICLE 4
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 Taxes.
(a) Any and all payments by the Loan Parties to each Lender or
the Agent under this Agreement and any other Loan Document shall be
made free
16
and clear of, and without deduction or withholding for any Taxes. In
addition, the Loan Parties shall pay all Taxes relating to present
or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan
Documents.
(b) The Loan Parties agree to indemnify and hold harmless each
Lender and the Agent for the full amount of Taxes (including any
Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by any Lender or Agent and any liability (including
penalties, interest, additions to tax and expenses) arising
therefrom or with respect thereto. Payment under this
indemnification shall be made within 30 days after the date such
Lender or Agent makes written demand therefor.
(c) If the Loan Parties shall be required by law to deduct or
withhold any Taxes from or in respect of any sum payable hereunder
to any Lender or Agent, then:
(i) the sum payable shall be increased as necessary so
that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums
payable under this Section) such Lender or Agent, as the case may
be, receives an amount equal to the sum it would have received had
no such deductions or withholdings been made;
(ii) the Loan Parties shall make such deductions and
withholdings;
(iii) the Loan Parties shall pay the full amount
deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable law or, if being contested
in good faith, set up adequate reserves for such Taxes; and
(iv) the Loan Parties shall also pay to each Lender or
Agent for the account of such Lender, at the time interest is paid,
all additional amounts which the respective Lender documents (in
reasonable detail) as being necessary to preserve the after-tax
yield such Lender would have received if such Taxes had not been
imposed.
(d) At the Agent's request, within 30 days after the date of
any payment by the Loan Parties of Taxes or Other Taxes, the Loan
Parties shall furnish the Agent the original or a certified copy of
a receipt evidencing payment thereof, or other evidence of payment
satisfactory to the Agent.
(e) If the Loan Parties are required to pay additional amounts
to any Lender or the Agent pursuant to subsection (c) of this
Section, then such Lender shall use reasonable efforts (consistent
with legal and regulatory restrictions) to change the jurisdiction
of its lending office so as to eliminate any such additional
17
payment by the Loan Parties which may thereafter accrue, if such
change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.
4.2 Illegality.
(a) If any Lender determines, based upon advice from legal
counsel, that the introduction of any Requirement of Law, or any
change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or
that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Lender or its applicable lending office
to make LIBOR Rate Loans, then, on notice thereof by that Lender to
the Borrower through the Agent, any obligation of that Lender to
make LIBOR Rate Loans shall be suspended until that Lender notifies
the Agent and the Borrower that the circumstances giving rise to
such determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any
LIBOR Rate Loan, the Borrower shall, upon receipt of notice of such
fact and demand from such Lender (with a copy to the Agent), prepay
in full such LIBOR Rate Loans of that Lender then outstanding,
together with interest accrued thereon and amounts required under
Section 4.4, either on the last day of the Interest Period thereof,
if that Lender may lawfully continue to maintain such LIBOR Rate
Loans to such day, or immediately, if that Lender may not lawfully
continue to maintain such LIBOR Rate Loans. In the event such Lender
shall have determined that it is no longer unlawful for it to
maintain a LIBOR Rate Loan, it shall promptly give notice to the
Borrower and Agent. If the Borrower is required to so prepay any
LIBOR Rate Loans, then concurrently with such prepayment, the
Borrower shall borrow from the affected Lender, in the amount of
such repayment, a Base Rate Loan. Notwithstanding anything to the
contrary in this Agreement, the Borrower shall not be liable for any
losses, or be required to reimburse an Lender as set forth in
Section 4.4 to the extent a LIBOR Rate Loan has been prepaid in
accordance with this Section 4.2.
4.3 Increased Costs and Reduction of Return.
(a) If any Lender determines, based upon advice from legal
counsel, that due to either (i) the introduction of or any change in
the interpretation of any law or regulation or (ii) the compliance
by that Lender with any guideline or request from any central bank
or other Governmental Authority (whether or not having the force of
law), there shall be any increase in the cost to such Lender of
agreeing to make or making, funding or maintaining any LIBOR Rate
Loans, then the Borrower shall be liable for, and shall from time to
time, upon demand (with a copy of such demand to be sent to the
Agent), pay to the Agent for the account of such Lender, additional
amounts as are sufficient to compensate such Lender for such
increased costs or, alternatively, in the case where the affected
Lender's increased costs are material, the Borrower may choose to
prepay such LIBOR Rate Loan and concurrently with such prepayment,
the Borrower shall borrow
18
from the affected Lender, a Base Rate Loan in the amount of such
repayment; provided, however, that no Lender shall be entitled to
claim any additional amount hereunder with respect to the period
which is more than 30 days prior to the date the Lender actually
became aware of such additional amounts; provided, further, that
notwithstanding anything to the contrary in this Agreement, the
Borrower shall not be liable for any losses, or be required to
reimburse any Lender as set forth in Section 4.4 to the extent a
LIBOR Rate Loan has been prepaid in accordance with this Section
4.3(a).
(b) If any Lender shall have determined, based upon advice
from legal counsel, that (i) the introduction of any Capital
Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration
of any Capital Adequacy Regulation by any central bank or other
Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by such Lender or any
corporation or other entity controlling such Lender with any Capital
Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by such Lender or any
corporation or other entity controlling such Lender and (taking into
consideration such Lender's or such corporation's or other entity's
policies with respect to capital adequacy and such Lender's desired
return on capital) determines that the amount of such capital is
increased as a consequence of its Commitments, loans, credits or
obligations under this Agreement, then, upon demand of such Lender
to the Borrower through the Agent, the Borrower shall pay to such
Lender, from time to time as specified by such Lender, additional
amounts sufficient to compensate such Lender for such non-material
increase; provided, however, that no Lender shall be entitled to
claim any such additional amount with respect to the period which is
more than 30 days prior to the date the Lender actually became aware
of such additional amounts.
4.4 Funding Losses.
The Borrower shall reimburse each Lender and hold each Lender
harmless from any loss or expense which such Lender may sustain or incur as a
consequence of:
(a) the failure of the Borrower to make on a timely basis any
payment of principal of any LIBOR Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert
a Loan after the Borrower has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Continuation/Conversion; or
(c) the prepayment or other payment (including after
acceleration thereof) of any LIBOR Rate Loans on a day that is not
the last day of the relevant Interest Period;
including any such loss of anticipated profit and any loss or expense arising
from the liquidation or reemployment of funds obtained by it to maintain its
LIBOR Rate Loans or from fees payable
19
to terminate the deposits from which such funds were obtained. Borrowers shall
also pay any customary administrative fees charged by any Lender in connection
with the foregoing.
4.5 Inability to Determine Rates.
If the Agent determines that for any reason adequate and reasonable
means do not exist for determining the LIBOR Rate for any requested Interest
Period with respect to a proposed LIBOR Rate Loan, or that the LIBOR Rate for
any requested Interest Period with respect to a proposed LIBOR Rate Loan does
not adequately and fairly reflect the cost to the Lenders of funding such Loan,
the Agent will promptly so notify the Borrower and each Lender. Thereafter, the
obligation of the Lenders to make or maintain LIBOR Rate Loans hereunder shall
be suspended until the Agent revokes such notice in writing. Upon receipt of
such notice, the Borrower may revoke any Notice of Borrowing or Notice of
Continuation/Conversion then submitted by it. If the Borrower does not revoke
such Notice, the Lenders shall make, convert or continue the Loans, as proposed
by the Borrower, in the amount specified in the applicable notice submitted by
the Borrower, but such Loans shall be made, converted or continued as Base Rate
Loans instead of LIBOR Rate Loans.
4.6 Certificates of Agent.
If any Lender claims reimbursement or compensation under this
Article 4, Agent shall deliver to the Borrower (with a copy to the affected
Lender) a certificate setting forth in reasonable detail the amount payable to
the affected Lender, and such certificate shall be conclusive and binding on the
Borrower in the absence of manifest error.
4.7 Obligation to Mitigate.
(a) Subject to Section 4.7(b) below, each Lender, Letter of
Credit Issuer, Agent and Bank agrees that, as promptly as
practicable after the officer of such Lender, Letter of Credit
Issuer, Agent or Bank responsible for administering the Loans or
Letters of Credit of such Lender, Letter of Credit Issuer, Agent or
Bank, as the case may be, becomes aware of the occurrence of any
event or the existence of a condition that would cause such Lender,
Letter of Credit Issuer or Bank to receive increased payments from
the Borrower under Section 4.1, Section 4.2 or Section 4.3, it will,
to the extent not inconsistent with the formal internal policies of
such Lender, Letter of Credit Issuer, the Agent or the Bank and any
applicable legal or regulatory restrictions, use reasonable efforts
(i) to make, issue, fund or maintain the Commitments of such Lender
or the affected Loans or Letters of Credit of such Lender, Letter of
Credit Issuer, the Agent or the Bank through another lending or
letter of credit office of such Lender, Letter of Credit Issuer, the
Agent or the Bank, or (ii) take such other actions as Lender, Letter
of Credit Issuer, the Agent or the Bank may deem reasonable to cause
the additional amounts that the Borrower would be required to pay
the Lender, Letter of Credit Issuer, the Agent or the Bank under
Section 4.1, Section 4.2 or Section 4.3 to be reduced.
20
(b) The Borrower may, in its sole discretion, on ten (10)
Business Days' prior written notice to the Agent and the applicable
Lender, cause a Lender who has (i) incurred increased costs or is
unable to make LIBOR Rate Loans, or (ii) made any claim for taxes
under Section 4.1 hereof, (and such Lender shall) to assign,
pursuant to Section 11.2 hereof, all of its rights and obligations
under this Agreement to an Eligible Assignee designated by the
Borrower and acceptable to the Agent which is willing to become a
Lender for a purchase price equal to the outstanding principal
amount of the Revolving Loans payable to such Lender plus any
accrued but unpaid interest on such Revolving Loans, any accrued but
unpaid fees with respect to such Agreement; provided, however, that
any expenses or other amounts which would be owing to such Lender
pursuant to any indemnification provision hereof (including, if
applicable, Section 4.4 hereof) shall be payable by the Borrower as
if the Borrower had prepaid the Revolving Loans of such Lender
rather than such Lender having assigned its interest hereunder. The
Borrower or such assignee shall pay the applicable processing fee
under Section 11.2 hereof.
4.8 Survival.
The agreements and obligations of the Borrower in this Article 4
shall survive the payment of all other Obligations.
ARTICLE 5
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
5.1 Books and Records.
The Borrower shall maintain, at all times, correct and complete
books, records and accounts in which complete, correct and timely entries are
made of its transactions in accordance with GAAP applied consistently with the
audited Financial Statements required to be delivered pursuant to Section
5.2(a). The Borrower shall, by means of appropriate entries, reflect in such
accounts and in all Financial Statements proper liabilities and reserves for all
taxes and proper provision for depreciation and amortization of property and bad
debts, all in accordance with GAAP. The Loan Parties shall maintain at all times
books and records pertaining to the Collateral in such detail, form and scope as
required under the Security Agreement as to the Borrower and its Domestic
Subsidiaries party thereto and as required under the Applica Canada Security
Agreement as to Applica Canada.
5.2 Financial Information.
The Loan Parties shall promptly furnish to the Agent all such
financial information regarding any Consolidated Member's financial and business
affairs as the Agent shall reasonably request. Without limiting the foregoing,
the Loan Parties will furnish to the Agent, via electronic notice or otherwise,
in sufficient copies for distribution by the Agent to each Lender (and upon
receipt, the Agent shall promptly distribute to the Lenders), in such detail as
the Agent or the Lenders shall request, the following:
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(a) As soon as available, but in any event not later than
ninety (90) days after the close of each Fiscal Year, consolidated
audited balance sheets, income statements, cash flow statements and
changes in stockholders' equity for the Consolidated Members for
such Fiscal Year and consolidating unaudited balance sheets, income
statements and cash flow statements prepared in accordance with the
footnotes regarding condensed and consolidating financial statements
in the Borrower's financial statements filed with the SEC in
relation to the Debt evidenced by the Senior Subordinated Debt
Offering Documents, for the Consolidated Members for such Fiscal
Year, and the accompanying notes thereto, setting forth in each case
in comparative form figures for the previous Fiscal Year, all in
reasonable detail, fairly presenting the financial position and the
results of operations of the Consolidated Members as at the date
thereof and for the Fiscal Year then ended, and prepared in
accordance with GAAP. Such statements shall be examined in
accordance with generally accepted auditing standards by and, in the
case of such statements performed on a consolidated basis,
accompanied by a report thereon unqualified in any respect of
independent certified public accountants selected by the Borrower
and reasonably satisfactory to the Agent. Each Loan Party hereby
authorizes the Agent to communicate, together with a representative
of the Borrower, directly with its certified public accountants and,
by this provision, authorizes those accountants to disclose to the
Agent any and all financial statements and other supporting
financial documents and schedules relating to the Consolidated
Members and to discuss directly with the Agent and a representative
of the Borrower the finances and affairs of the Consolidated
Members.
(b) As soon as available, but in any event not later than
forty-five (45) days after the end of each fiscal quarter,
consolidated unaudited balance sheets, income statements and cash
flow statements for the Consolidated Members for such fiscal quarter
and consolidating unaudited balance sheets, income statements and
cash flow statements prepared in accordance with the footnotes
regarding condensed and consolidating financial statements in the
Borrower's financial statements filed with the SEC in relation to
the Debt evidenced by the Senior Subordinated Debt Offering
Documents, for the Consolidated Members for such quarter and for the
period from the beginning of the Fiscal Year to the end of such
quarter, all in reasonable detail, fairly presenting the financial
position and results of operations of the Consolidated Members as at
the date thereof and for such periods, and, in each case, in
comparable form, figures for the corresponding period in the prior
Fiscal Year and prepared in accordance with GAAP applied
consistently with the audited Financial Statements required to be
delivered pursuant to Section 5.2(a). The Borrower shall certify by
a certificate signed by its chief financial officer that all such
statements have been prepared in accordance with GAAP and present
fairly the Consolidated Members' financial position as at the dates
thereof and its results of operations for the periods then ended,
subject to normal year-end adjustments and the absence of footnotes.
(c) As soon as available, but in any event not later than
thirty (30) days after the end of each month, consolidated unaudited
balance sheets of the
22
Consolidated Members as at the end of such month, and consolidated
unaudited income statements and cash flow statements for the
Consolidated Members for such month and for the period from the
beginning of the Fiscal Year to the end of such month, all in
reasonable detail, fairly presenting the financial position and
results of operations of the Consolidated Members as at the date
thereof and for such periods, and, in each case, in comparable form,
figures for the corresponding period in the prior Fiscal Year and
prepared in accordance with GAAP applied consistently with the
audited Financial Statements required to be delivered pursuant to
Section 5.2(a). The Borrower shall certify by a certificate signed
by its chief financial officer that all such statements have been
prepared in accordance with GAAP and present fairly the Consolidated
Members' financial position as at the dates thereof and its results
of operations for the periods then ended, subject to normal year-end
adjustments and the absence of footnotes.
(d) With each of the audited Financial Statements delivered
pursuant to Section 5.2(a), a certificate of the independent
certified public accountants that examined such statement to the
effect that they have reviewed and are familiar with this Agreement
and that, in examining such Financial Statements, they did not
become aware of any fact or condition which then constituted a
Default or Event of Default with respect to a financial covenant,
except for those, if any, described in reasonable detail in such
certificate.
(e) With each of the annual audited Financial Statements
delivered pursuant to Section 5.2(a), and within 45 days after the
end of each fiscal quarter, a certificate of the chief financial
officer of the Borrower setting forth in reasonable detail the
calculations required to establish that the Loan Parties were in
compliance with the covenants set forth in Sections 7.26 through
7.28 during the period covered in such Financial Statements and as
at the end thereof. Within 45 days after the end of each fiscal
quarter, a certificate of the chief financial officer of the
Borrower stating that, except as explained in reasonable detail in
such certificate, (A) all of the representations and warranties of
the Loan Parties contained in this Agreement and the other Loan
Documents are correct and complete in all material respects as at
the date of such certificate as if made at such time, except for
those that speak as of a particular date, (B) the Loan Parties are,
at the date of such certificate, in compliance in all material
respects with all of its respective covenants and agreements in this
Agreement and the other Loan Documents, (C) no Default or Event of
Default then exists or existed during the period covered by the
Financial Statements for such fiscal quarter, (D) describing and
analyzing in reasonable detail all material trends, changes, and
developments in each and all Financial Statements or, alternatively,
refer to the applicable documents filed by the Borrower with the
Securities and Exchange Commission in accordance with the Exchange
Act including, but not limited to, sections of such filings entitled
"Management's Discussion and Analysis"; and (E) explaining the
variances of the figures in the corresponding budgets and prior
Fiscal Year financial statements. If such certificate discloses that
a representation or warranty is not correct or complete, or that a
covenant has not been complied with, or that a
23
Default or Event of Default existed or exists, such certificate
shall set forth what action the Borrower has taken or proposes to
take with respect thereto.
(f) No sooner than sixty (60) days prior to the beginning of
each Fiscal Year, annual forecasts (to include forecasted
consolidated balance sheets, income statements and cash flow
statements) for the Consolidated Members as at the end of and for
each month of such Fiscal Year. No later than fifteen (15) days
after the beginning of each Fiscal Year, annual forecast statements
of profits and losses on a consolidating basis for the Loan Parties
as at the end of and for each month of such Fiscal Year.
(g) Promptly after filing with the PBGC and the IRS, a copy of
each annual report or other filing filed with respect to each Plan
of the Consolidated Members.
(h) Promptly upon the filing thereof, copies of all reports,
if any, to or other documents filed by any Consolidated Member with
the Securities and Exchange Commission under the Exchange Act, and
all material reports, notices, or statements sent by the Borrower to
holders of any equity interests of the Borrower (other than routine
non-material correspondence sent by the trustee under any indenture
under which the same is issued).
(i) As soon as available, but in any event not later than 15
days after any Loan Party's receipt thereof, a copy of all
management reports and management letters prepared by any
independent certified public accountants of any Loan Party.
(j) Promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which the
Borrower makes available to its shareholders.
(k) If requested by Agent in writing, promptly after filing
with the IRS, a copy of each tax return filed by the any
Consolidated Member.
(l) As soon as available, but in any event within 15 days
after the end of each month (for such month) (i) a Borrowing Base
Certificate supporting information in accordance with Section 9 of
the Security Agreement, (ii) a report showing the beginning and
ending balances of all intercompany loans, advances or investments
("Intercompany Accounts") for such month, and (iii) a calculation of
the Applica Canada Formula Amount and the Applica Consumer Products
Formula Amount as of the last day of such month.
(m) Such additional information as the Agent and/or any Lender
may from time to time reasonably request regarding the financial and
business affairs of any Consolidated Member.
(n) On the last Business Day of each month, duplicate original
bank statements for the preceding month in respect of the Applica
Canada Blocked Agreement.
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5.3 Notices to the Lenders.
The Loan Parties shall notify the Agent and the Lenders in writing
of the following matters at the following times:
(a) Immediately after becoming aware of any Default or Event
of Default;
(b) Immediately after becoming aware of the assertion by the
holder of any Capital Stock of the Borrower or the holder of any
Debt of the Borrower or any Subsidiary in a face amount in excess of
$1,000,000 that a default exists with respect thereto or that any
Consolidated Member is not in compliance with the terms thereof, or
the threat or commencement by such holder of any enforcement action
because of such asserted default or non-compliance;
(c) Immediately after becoming aware of any event or
circumstance which could reasonably be expected to have a Material
Adverse Effect;
(d) Immediately after becoming aware of any pending or
threatened action, suit, or proceeding, by any Person, or any
pending or threatened investigation by a Governmental Authority,
which could reasonably be expected to have a Material Adverse
Effect;
(e) Immediately after becoming aware of any pending or
threatened strike, work stoppage, unfair labor practice claim, or
other labor dispute affecting any Consolidated Member in a manner
which could reasonably be expected to have a Material Adverse
Effect;
(f) Immediately after becoming aware of any violation of any
law, statute, regulation, or ordinance of a Governmental Authority
affecting the any Consolidated Member which could reasonably be
expected to have a Material Adverse Effect;
(g) Immediately after receipt of any notice of any violation
by the any Consolidated Member of any Environmental Law which could
reasonably be expected to have a Material Adverse Effect or that any
Governmental Authority has asserted in writing that any Consolidated
Member is not in compliance with any Environmental Law or is
investigating any Consolidated Member;
(h) Immediately after receipt of any written notice that any
Consolidated Member is or may be liable to any Person as a result of
the Release or threatened Release of any Contaminant or that any
Consolidated Member is subject to investigation by any Governmental
Authority evaluating whether any remedial action is needed to
respond to the Release or threatened Release of any Contaminant
which, in either case, is reasonably likely to give rise to
liability in excess of $1,000,000;
25
(i) Immediately after receipt of any written notice of the
imposition of any Environmental Lien against any property of any
Consolidated Member;
(j) Any change in any Loan Party's name as it appears in the
state of its incorporation or other organization, state of
incorporation or organization, type of entity, organizational
identification number, locations of Collateral other than those set
forth in Section 4 of the Security Agreement, or form of
organization, trade names under which a Loan Party sells Inventory
or create Accounts, or to which instruments in payment of Accounts
may be made payable, in each case at least ten (10) days prior
thereto, and, with regard to any other Consolidated Member, such
information as of the first day of the following fiscal quarter;
(k) Within ten (10) Business Days after any Loan Party or
any ERISA Affiliate knows or has reason to know, that an ERISA Event
or a prohibited transaction (as defined in Sections 406 of ERISA and
4975 of the Code) has occurred, which could reasonably be expected
to have a Material Adverse Effect, and, when known, any action taken
or threatened by the IRS, the DOL, the PBGC or any other
Governmental Authority with respect thereto;
(l) Upon Agent's written request, or, in the event that such
filing reflects a significant change with respect to the matters
covered thereby, within three (3) Business Days after the filing
thereof with the PBGC, the DOL, the IRS, or the Pension Commission
of Ontario or any other applicable Governmental Authority as
applicable, copies of the following: (i) each annual report (form
5500 series), including Schedule B thereto, filed with the PBGC, the
DOL or the IRS with respect to each Plan and in the case of any Plan
governed by the PBA, each report, valuation, request for amendment,
whole or partial withdrawal or termination or other variation, (ii)
a copy of each funding waiver request filed with the PBGC, the DOL,
the IRS or the Pension Commission of Ontario or any other applicable
Governmental Authority with respect to any Plan and all
communications received by the Borrower or any ERISA Affiliate from
the PBGC, the DOL, the IRS or the Pension Commission of Ontario or
any other applicable Governmental Authority with respect to such
request, and (iii) a copy of each other filing or notice filed with
the PBGC, the DOL, the IRS or the Pension Commission of Ontario or
any other applicable Governmental Authority, with respect to each
Plan by either a Loan Party or any ERISA Affiliate;
(m) Upon Agent's written request, copies of each actuarial
report for any Plan or Multi-employer Plan and annual report for any
Multi-employer Plan; and within three (3) Business Days after
receipt thereof by a Loan Party or any ERISA Affiliate, copies of
the following: (i) any notices of the PBGC, the Pension Commission
of Ontario or any other applicable Governmental Authority intention
to terminate a Plan or to have a trustee appointed to administer
such Plan; (ii) any favorable or unfavorable determination letter
from the IRS, the Pension Commission of Ontario or any other
applicable Governmental Authority regarding the qualification of a
Plan under Section 401(a) of the Code, the PBA or
26
other applicable laws; or (iii) any notice from a Multi-employer
Plan regarding the imposition of withdrawal liability;
(n) Within three (3) Business Days after the occurrence
thereof: (i) any changes in the benefits of any existing Plan which
increase a Loan Parties' annual costs with respect thereto by an
amount in excess of $500,000, or the establishment of any new Plan
or the commencement of contributions to any Plan to which the Loan
Parties or any ERISA Affiliate was not previously contributing; or
(ii) any failure by a Loan Party or any ERISA Affiliate to make a
required installment or any other required payment under Section 412
of the Code, the PBA or other applicable laws on or before the due
date for such installment or payment; or
(o) Within three (3) Business Days after a Loan Party or any
ERISA Affiliate knows or has reason to know that any of the
following events has or will occur: (i) a Multi-employer Plan has
been or will be terminated; (ii) the administrator or plan sponsor
of a Multi-employer Plan intends to terminate a Multi-employer Plan;
or (iii) the PBGC has instituted or will institute proceedings under
Section 4042 of ERISA to terminate a Multi-employer Plan, or (iv)
Reportable Event or Termination Event in respect of any Plan.
Each notice given under this Section shall describe the subject matter thereof
in reasonable detail, and shall set forth the action that the Loan Party or any
ERISA Affiliate, as applicable, has taken or proposes to take with respect
thereto.
5.4 Revisions or Updates to Schedules.
Should any of the information or disclosures provided on any of the
schedules originally attached hereto become outdated or incorrect in any
material respect, the Borrower from time to time shall deliver to the Agent and
the Lenders, together with an officer's certificate of the type required
pursuant to Section 5.2(e), such revisions or updates to such schedule(s)
whereupon such schedules shall be deemed to be amended by such revisions or
updates, as may be necessary or appropriate to update or correct such
schedule(s), provided that, notwithstanding the foregoing, (a) no such revisions
or updates to Schedules 6.5, 6.11-6.16, 6.19, 6.24, 6.25, or 6.27 shall be
deemed to have amended, modified, or superseded any such schedules as originally
attached hereto, or to have cured any breach of warranty or representation
resulting from the inaccuracy or incompleteness of any such schedules, unless
and until the Agent shall have accepted in writing such revisions or updates to
any such schedules and (b) no such revisions or updates to Schedules 6.9. shall
be deemed to have amended, modified, or superseded such schedule as originally
attached hereto, or to have cured any breach of warranty or representation
resulting from the inaccuracy or incompleteness of such schedule, unless and
until the Required Lenders shall have accepted in writing such revisions or
updates to such schedule.
27
ARTICLE 6
GENERAL WARRANTIES AND REPRESENTATIONS
Each Loan Party warrants and represents to Agent and the Lenders
that, after giving the effect to the Refinancing:
6.1 Authorization, Validity, and Enforceability of this Agreement
and the Loan Documents.
Each Obligated Party has the power and authority to execute, deliver
and perform this Agreement and the other Loan Documents to which it is a party,
to incur the Obligations, and to grant to the Agent Liens upon and security
interests in the Collateral. Each Obligated Party has taken all necessary action
(including obtaining approval of its stockholders if necessary) to authorize its
execution, delivery, and performance of this Agreement and the other Loan
Documents to which it is a party. This Agreement and the other Loan Documents to
which it is a party have been duly executed and delivered by each Obligated
Party, and, assuming this Agreement and the other Loan Documents constitute the
legal, valid and binding obligations of Agent, Bank and each of the Lenders
hereto, constitute the legal, valid and binding obligations of each Obligated
Party, enforceable against it in accordance with their respective terms. Each
Obligated Party's execution, delivery, and performance of this Agreement and the
other Loan Documents to which it is a party do not and will not conflict with,
or constitute a violation or breach of, or result in the imposition of any Lien
upon the property of an Obligated Party or any of its Subsidiaries, by reason of
the terms of (a) any contract, mortgage, lease, agreement, indenture, or
instrument to which such Obligated Party or any of its Subsidiaries is a party
or which is binding upon it, (b) any Requirement of Law applicable to the such
Obligated Party or any of its Subsidiaries, or (c) the certificate or articles
of incorporation or by-laws or the limited liability company or limited
partnership agreement of the Obligated Parties or any of their Subsidiaries.
6.2 Validity and Priority of Security Interest.
The provisions of this Agreement, and the other Loan Documents
create legal and valid Liens on all the Collateral in favor of the Agent, for
the ratable benefit of the Agent and the Lenders, and such Liens constitute
perfected and continuing Liens on all the Collateral, having priority over all
other Liens on the Collateral, except for those Liens identified in clauses (a),
(c), (d), (e), (g), (h) and (i) of the definition of Permitted Liens securing
all the Obligations, and enforceable against the Obligated Parties and all third
parties.
6.3 Organization and Qualification.
Each Obligated Party (a) is duly organized or incorporated and
validly existing in good standing under the laws of the state of its
organization or incorporation, (b) is qualified to do business and is in good
standing in the jurisdictions set forth on Schedule 6.3 which are the only
jurisdictions in which qualification is necessary in order for it to own or
lease its property and conduct its business, except where the failure to so
qualify would have a Material Adverse Effect, and (c) has all requisite power
and authority to conduct its business and to own its property.
28
6.4 [Reserved].
6.5 Subsidiaries.
Schedule 6.5 is a correct and complete list of the name and
relationship to the Borrower of each and all of the Borrower's Subsidiaries
(specifying whether such Subsidiaries are Domestic Subsidiaries or Foreign
Subsidiaries). Each Subsidiary is (a) duly incorporated or organized and validly
existing in good standing under the laws of its state of incorporation or
organization set forth on Schedule 6.5, and (b) qualified to do business and in
good standing in each jurisdiction in which the failure to so qualify or be in
good standing could reasonably be expected to have a Material Adverse Effect and
(c) has all requisite power and authority to conduct its business and own its
property.
6.6 Financial Statements and Projections.
(a) The Borrower has delivered to the Agent and the Lenders
the audited balance sheet and related statements of income, retained
earnings, cash flows, and changes in stockholders equity for the
Consolidated Members as of December 31, 2000, and for the Fiscal
Year then ended, accompanied by the report thereon of the Borrower's
independent certified public accountants, Xxxxx Xxxxxxxx LLP. The
Borrower has also delivered to the Agent and the Lenders the
unaudited balance sheet and related statements of income and cash
flows for the Consolidated Members as of September 30, 2001. Such
financial statements are attached hereto as Exhibit C. All such
financial statements have been prepared in accordance with GAAP
(except for the quarterly or monthly financial statements) and
present accurately and fairly in all material respects the financial
position of the Consolidated Members as at the dates thereof and
their results of operations for the periods then ended.
(b) The Latest Projections when submitted to the Agent as
required herein represent the Loan Party's good faith estimate of
the future financial performance of the Consolidated Members for the
periods set forth therein. The Latest Projections have been prepared
on the basis of the assumptions set forth therein, which the Loan
Parties believe are fair and reasonable in light of current and
reasonably foreseeable business conditions at the time submitted to
the Lenders.
6.7 [Reserved].
6.8 Solvency.
Each Loan Party is Solvent prior to and after giving effect to the
Borrowings to be made on the Closing Date and the issuance of the Letters of
Credit to be issued on the Closing Date and shall remain solvent during the term
of this Agreement.
29
6.9 Debt.
After giving effect to the making of the Revolving Loans to be made
on the Closing Date, the Loan Parties have no material Debt, except (a) the
Obligations, (b) Debt described on Schedule 6.9., and (c) other Debt as
permitted under Section 7.13.
6.10 Distributions.
Since December 31, 2000, no Distribution has been declared, paid, or
made upon or in respect of any Capital Stock of the Borrower.
6.11 Real Estate; Leases.
Schedule 6.11 sets forth, as of the Closing Date, a correct and
complete list of all Real Estate, all leases and subleases of real property held
by each Loan Party as lessee or sublessee, and all leases and subleases of real
property held by each Loan Party as lessor, or sublessor in excess of $100,000.
Each of such leases and subleases is valid and enforceable in accordance with
its terms and is in full force and effect, and no default by any party to any
such lease or sublease exists. Each Loan Party has good and marketable title in
fee simple to the Real Estate identified on Schedule 6.11 as owned by such Loan
Party, or valid leasehold interests in all Real Estate designated therein as
"leased" by such Loan Party and each Loan Party has good, indefeasible, and
merchantable title to all of its other property reflected on the December 31,
2000 Financial Statements delivered to Agent and the Lenders, except as disposed
of in the ordinary course of business since the date thereof, free of all Liens
except Permitted Liens.
6.12 Proprietary Rights.
Schedule 6.12 sets forth a correct and complete list of all of each
Loan Party's material Proprietary Rights. None of the material Proprietary
Rights is subject to any licensing agreement or similar arrangement except as
set forth on Schedule 6.12. To the knowledge of each Loan Party, none of the
Proprietary Rights infringes on or conflicts with any other Person's property,
and no other Person's property infringes on or conflicts with the Proprietary
Rights. The Proprietary Rights described on Schedule 6.12 constitute all of the
property of such type necessary to the current and anticipated future conduct of
the Loan Parties' business.
6.13 Trade Names.
All trade names or styles under which the Loan Parties currently or
currently intend to sell Inventory or create Accounts, or to which Instruments
in payment of Accounts may be made payable, are listed on Schedule 6.13.
6.14 Litigation.
Except as set forth on Schedule 6.14, there is no pending, or to the
knowledge of any Loan Party, there is not threatened, action, suit, proceeding,
or counterclaim by any Person, or to the knowledge of any Loan Party,
investigation by any Governmental Authority, or any basis for any of the
foregoing, which could reasonably be expected to have a Material Adverse Effect.
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6.15 Labor Disputes.
Except as set forth on Schedule 6.15, as of the Closing Date (a)
there is no collective bargaining agreement or other labor contract covering
employees of any Loan Party, (b) no such collective bargaining agreement or
other labor contract is scheduled to expire during the term of this Agreement,
(c) to the knowledge of any Loan Party, no union or other labor organization is
seeking to organize, or to be recognized as, a collective bargaining unit of
employees of any Loan Party or for any similar purpose, and (d) there is no
pending or, to the knowledge of any Loan Party, threatened, strike, work
stoppage, material unfair labor practice claim, or other material labor dispute
against or affecting any Loan Party or its employees.
6.16 Environmental Laws.
Except as otherwise disclosed on Schedule 6.16:
(a) The Loan Parties have complied in all respects with all
Environmental Laws except as could not reasonably be expected to
have a Material Adverse Effect and no Loan Party nor any of its
presently owned real property or presently conducted operations or
any property now or previously in its charge, management or control
(to the extent any Loan Party was the non-complying party in
connection with any property previously in its charge, management or
control), nor, to the knowledge of a Loan Party, its previously
owned real property or prior operations, is subject to any
enforcement order from or liability agreement with any Governmental
Authority or private Person respecting (i) compliance with any
Environmental Law or (ii) any potential liabilities and costs or
remedial action arising from the Release or threatened Release of a
Contaminant.
(b) Each Loan Party has obtained all permits necessary for
its current operations under Environmental Laws, and all such
permits are in good standing and each Loan Party is in compliance
with all material terms and conditions of such permits, except where
the failure to obtain or comply with such permits could not
reasonably be expected to have a Material Adverse Effect.
(c) No Loan Party, nor, to the knowledge of a Loan Party,
any of its predecessors in interest, has been or is in violation of
any applicable law relating to the storage, treatment or disposal of
any hazardous waste.
(d) No Loan Party has received any summons, complaint, order
or similar written notice indicating that it is not currently in
compliance with, or that any Governmental Authority is investigating
its compliance with, any Environmental Laws or that it is or may be
liable to any other Person as a result of a Release or threatened
Release of a Contaminant.
(e) To the knowledge of the Loan Party, none of the present
or past operations of the Loan Parties is the subject of any
investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to a Release or threatened
Release of a Contaminant.
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(f) No Loan Party has filed, within the past 5 years, any
notice under any requirement of Environmental Law reporting a spill
or accidental and unpermitted Release or discharge of a Contaminant
into the environment.
(g) No Loan Party has entered into any negotiations or
settlement agreements with any Person (including the prior owner of
its property and any Governmental Authority) imposing material
obligations or liabilities on any Loan Party with respect to any
remedial action in response to the Release of a Contaminant or
environmentally related claim.
(h) None of the products manufactured, distributed or sold
by a Loan Party contain asbestos containing material.
(i) No Environmental Lien has attached to any of the Real
Estate.
6.17 No Violation of Law.
No Loan Party is in violation of any law, statute, regulation,
ordinance, judgment, order, or decree applicable to it which violation could
reasonably be expected to have a Material Adverse Effect.
6.18 No Default.
No Loan Party is in default with respect to any note, indenture,
loan agreement, mortgage, lease, deed, or other agreement to which a Loan Party
is a party or by which it is bound, which default could reasonably be expected
to have a Material Adverse Effect.
6.19 ERISA Compliance.
Except as specifically disclosed in Schedule 6.19:
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code, the PBA and other
federal, provincial or state law, except where the lack of such
compliance could not reasonably be expected to have a Material
Adverse Effect. Each Plan which is intended to qualify under Section
401(a) of the Code has received a favorable determination letter
from the IRS and to the best knowledge of the Loan Parties, nothing
has occurred which would cause the loss of such qualification. The
Loan Parties and each ERISA Affiliate has made all required
contributions to any Plan when due other than any contributions that
could not reasonably be expected to have a Material Adverse Effect,
and no application for a funding waiver or an extension of any
amortization period has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of the
Loan Parties, threatened claims, actions or lawsuits, or action by
any Governmental Authority, with respect to any Plan which has
resulted or could reasonably be expected to result in a Material
Adverse Effect. There has been no prohibited transaction or
32
violation of the fiduciary responsibility rules with respect to any
Plan which has resulted or could reasonably be expected to result in
a Material Adverse Effect.
(c) Except as could not reasonably be expected to have a
Material Adverse Effect: (i) No ERISA Event has occurred or is
reasonably expected to occur; (ii) no Pension Plan has any Unfunded
Pension Liability; (iii) neither the Loan Parties nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) neither the Loan Parties nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section
4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multi-employer Plan; (v) neither the
Loan Parties nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA; and (vi)
no Lien has arisen, xxxxxx or inchoate, in respect of a Loan Party
or its property in connection with any Plan (save for contributions
amounts not yet due).
6.20 Taxes.
Each Loan Party has filed all federal, provincial, state and other
tax returns and reports required to be filed, and have paid all federal,
provincial, state and other taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable unless (i) such unpaid taxes and assessments would
constitute a Permitted Lien or (ii) such Taxes are being contested in good faith
and there are adequate reserves for such Taxes.
6.21 Regulated Entities.
No Consolidated Member nor any Person controlling a Consolidated
Member is an "Investment Company" within the meaning of the Investment Company
Act of 1940. No Consolidated Member is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code or law, or any other federal or
state statute or regulation limiting its ability to incur indebtedness.
6.22 Margin Regulations.
No Consolidated Member is engaged in the business of purchasing or
selling Margin Stock or extending credit for the purpose of purchasing or
carrying Margin Stock.
6.23 Copyrights, Patents, Trademarks and Licenses, etc.
Each Loan Party owns or is licensed or otherwise has the right to
use all of the patents, trademarks, service marks, trade names, copyrights,
contractual franchises, licenses, rights of way, authorizations and other rights
that are reasonably necessary for the operation of its businesses, without
conflict with the rights of any other Person. To the knowledge of the Loan
Parties, no slogan or other advertising device, product, process, method,
substance, part or other material now employed by the Consolidated Members
infringes upon any rights held by
33
any other Person which could reasonably be expected to have a Material Adverse
Effect. No claim or litigation regarding any of the foregoing is pending or, to
the knowledge of the Borrower, threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Loan Parties, proposed, which, in either
case, could reasonably be expected to have a Material Adverse Effect.
6.24 Material Agreements.
Schedule 6.24 hereto sets forth as of the Closing Date all Material
Contracts to which any Loan Party is a party or is bound as of the date hereof.
6.25 Bank Accounts.
Schedule 6.25 contains as of the Closing Date a complete and
accurate list of all bank accounts maintained by each Loan Party with any bank
or other financial institution.
6.26 Governmental Authorization.
No approval, consent, exemption, authorization, or other action by,
or notice to, or filing with, any Governmental Authority or other Person is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, a Loan Party of this Agreement or any other Loan
Document.
6.27 Investment Property.
(a) Schedule 6.27 sets forth a correct and complete list of all
material Investment Property owned by each Loan Party. Each Loan Party is the
legal and beneficial owner of such Investment Property, as so reflected, free
and clear of any Lien (other than Permitted Liens), and has not sold, granted
any option with respect to, assigned or transferred, or otherwise disposed of
any of its rights or interest therein.
(b) To the extent any Loan Party is the owner of or becomes the
issuer of any Investment Property that is Collateral (each such Person which
issues any such Investment Property being referred to herein as an "Issuer"):
(i) the Issuer's shareholders that are Loan Parties and the ownership interest
of each such shareholder are as set forth on Schedule 6.27, and each such
shareholder is the registered owner thereof on the books of the Issuer; (ii) the
Issuer acknowledges the Agent's Lien; (iii) to the extent required to perfect
the Agent's Liens, such security interest, collateral assignment, lien, and
pledge in favor of the Agent has been registered on the books of the Issuer for
such purpose as of the date hereof, and (iv) the Issuer is not aware of any
liens, restrictions, or adverse claims which exist on any such Investment
Property other than the Agent's Lien.
6.28 No Material Adverse Change.
No Material Adverse Effect has occurred since December 31, 2000,
except as otherwise disclosed (a) in the Borrower's filings with the Securities
and Exchange Commission under the Exchange Act and (b) to Agent and Lenders in
writing prior to the Closing Date.
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6.29 Full Disclosure.
None of the representations or warranties made by the Loan Party in
the Loan Documents as of the date such representations and warranties are made,
and none of the statements contained in any exhibit, report, statement or
certificate furnished by or on behalf of any Loan Party in connection with the
Loan Documents (including the offering and disclosure materials delivered by or
on behalf of the Loan Parties to the Lenders prior to the Closing Date),
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading as of
the time when made or delivered.
6.30 Common Enterprise.
The successful operation and condition of each of the Loan Parties
is dependent on the continued successful performance of the functions of the
group of Loan Parties as a whole and the successful operation of each Loan Party
is dependent on the successful performance and operation of each of the other
Loan Parties. Each of the Loan Parties expects to derive benefit (and its board
of directors or other governing body has determined that it may reasonably be
expected to derive benefit), directly and indirectly, from successful operations
of each of the other Loan Parties. Each Loan Party expects to derive benefit
(and the boards of directors or other governing body of each such Loan Party
have determined that it may reasonably be expected to derive benefit), directly
and indirectly, from the credit extended by the Lenders to the Loan Parties
hereunder, both in their separate capacities and as members of a group of
companies. Each Loan Party has determined that execution, delivery, and
performance of this Agreement and any other Loan Documents to be executed by
such Loan Party is within its corporate purpose, will be of direct and indirect
benefit to such Loan Party, and is in its best interest.
ARTICLE 7
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Loan Party covenants to Agent and each Lender that so long as
any of the Obligations remain outstanding or this Agreement is in effect:
7.1 Taxes and Other Obligations.
Each Consolidated Member shall (a) file when due (after taking into
account any applicable extensions) all tax returns and other reports which it is
required to file; (b) pay, or provide for the payment, when due, of all taxes,
fees, assessments and other governmental charges against it or upon its
property, income and franchises, make all required withholding and other tax
deposits, and provide to Agent and the Lenders, upon request, satisfactory
evidence of its timely compliance with the foregoing; and (c) pay when due all
Debt owed by it and all valid claims of materialmen, mechanics, carriers,
warehousemen, landlords, processors and other like Persons, and all other
indebtedness owed by it and perform and discharge in a timely manner all other
obligations undertaken by it; provided, however, so long as a Loan Party has
notified Agent in writing, no Consolidated Member need pay any tax, fee,
assessment, or governmental charge (i) it is contesting in good faith by
appropriate proceedings diligently pursued, (ii) as to
35
which a Consolidated Member has established proper reserves as required under
GAAP, and (iii) the nonpayment of which does not result in the imposition of a
Lien (other than a Permitted Lien).
7.2 Legal Existence and Good Standing.
Each Consolidated Member shall maintain its legal existence and its
qualification and good standing in all jurisdictions in which the failure to
maintain such existence and qualification or good standing could reasonably be
expected to have a Material Adverse Effect.
7.3 Compliance with Law and Agreements; Maintenance of Licenses.
Each Consolidated Member shall comply in all respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it or
its business (including the Federal Fair Labor Standards Act and all
Environmental Laws) except where the failure to comply could not reasonably be
expected to have a Material Adverse Effect. Each Consolidated Member shall
obtain and maintain all licenses, permits, franchises, and governmental
authorizations necessary to own its property and to conduct its business as
conducted on the Closing Date. No Consolidated Member shall modify, amend or
alter its certificate or articles of incorporation, or its limited liability
company operating agreement or limited partnership agreement, as applicable,
other than in a manner which does not adversely affect the rights of the Lenders
or the Agent.
7.4 Maintenance of Property; Inspection of Property.
(a) Each Consolidated Member shall maintain all of its
respective property necessary and useful in the conduct of its
business, in good operating condition and repair in accordance with
the standard of the Borrower's industry and consistent with the
Borrower's or Subsidiary's past conduct, ordinary wear and tear
excepted.
(b) Each Consolidated Member shall permit
representatives and independent contractors of the Agent or a Lender
(in the case of the Agent, at the expense of the Borrower not to
exceed four (4) times per year for quarterly field exams of the
Collateral within the United States and Canada unless an Event of
Default has occurred and is continuing, and in the case of any
Lender, at such Lender's expense) to visit and inspect any of its
properties, to examine its corporate, financial and operating
records, and make copies thereof or abstracts therefrom and to
discuss its affairs, finances and accounts with its directors,
officers and independent public accountants, at such reasonable
times during normal business hours and as soon as may be reasonably
desired, upon reasonable advance notice to such Consolidated Member
and such visits and inspections shall not interfere materially with
the business of any such Consolidated Member; provided, however,
when an Event of Default exists, the Agent or any Lender may do any
of the foregoing at the expense of the Loan Parties at any time
during normal business hours and without advance notice.
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7.5 Insurance.
(a) Each Loan Party shall maintain with financially
sound and reputable insurers, and in the manners as are customarily
insured against by similar business owning such properties similarly
situated, insurance against loss or damage by fire with extended
coverage; theft, burglary, pilferage and loss in transit; public
liability and third party property damage; larceny, embezzlement or
other criminal liability; business interruption; public liability
and third party property damage; and such other hazards or of such
other types as is customary for Persons engaged in the same or
similar business, as Agent, in its discretion, or acting at the
direction of the Required Lenders, shall reasonably specify, in
amounts, and under policies reasonably acceptable to Agent and the
Required Lenders. Without limiting the foregoing, in the event that
any Inventory or Equipment is located within an area that has been
identified by the Director of the Federal Emergency Management
Agency as a Special Flood Hazard Area ("SFHA"), the Loan Parties
shall purchase and maintain flood insurance on any such Equipment
and Inventory located in a SFHA.
(b) Each of the Loan Parties shall cause Agent, for
the ratable benefit of Agent and the Lenders, to be named as secured
party or mortgagee and sole loss payee or additional insured on all
insurance policies covering Collateral, in a manner reasonably
acceptable to Agent. Each policy of insurance shall contain a clause
or endorsement requiring the insurer to give not less than thirty
(30) days' prior written notice to Agent in the event of
cancellation of the policy for any reason whatsoever and a clause or
endorsement stating that the interest of Agent shall not be impaired
or invalidated by any act or neglect of the insured Person or the
owner of any premises for purposes more hazardous than are permitted
by such policy. All premiums for such insurance shall be paid by the
Borrower when due, and certificates of insurance and, if requested
by Agent or any Lender, photocopies of the policies, shall be
delivered to Agent, in each case in sufficient quantity for
distribution by the Agent to each of the Lenders. If any Loan Party
fails to procure such insurance or to pay the premiums therefor when
due, the Agent may, and at the direction of the Required Lenders
shall, do so from the proceeds of Revolving Loans.
7.6 Insurance and Condemnation Proceeds.
Each Loan Party shall promptly upon becoming aware, notify Agent and
the Lenders of any material loss, damage, or destruction to the Collateral,
whether or not covered by insurance. Agent is hereby authorized to collect all
insurance and condemnation proceeds in respect of Collateral directly and to
apply or remit them as follows:
(i) With respect to insurance and condemnation
proceeds relating to Collateral other than Fixed Assets, after
deducting from such proceeds the reasonable expenses, if any,
incurred by the Agent in the collection or handling thereof, the
Agent shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 3.9.
37
(ii) With respect to insurance and condemnation
proceeds relating to Collateral consisting of Fixed Assets, the
Agent shall permit or require affected Loan Party to use such
proceeds, or any part thereof, to replace, repair, restore or
rebuild the relevant Fixed Assets in a diligent and expeditious
manner with materials and workmanship of substantially the same
quality as existed before the loss, damage or destruction so long as
(1) no Default or Event of Default has occurred and is continuing,
(2) the aggregate proceeds do not exceed $500,000 and (3) such Loan
Party first, for such repairs using insurance and condemnation
proceeds in excess of $100,000 (i) provides Agent and the Required
Lenders with plans and specifications for any such repair or
restoration which shall be reasonably satisfactory to Agent and the
Required Lenders and (ii) demonstrates to the reasonable
satisfaction of Agent and the Required Lenders that the funds
available to it will be sufficient to complete such project in the
manner provided therein. In all other circumstances, the Agent shall
apply such insurance and condemnation proceeds, ratably, to the
reduction of the Obligations in the order provided for in Section
3.9.
7.7 Environmental Laws.
(a) Each Loan Party shall conduct, and shall cause
each other Consolidated Member to conduct, its business in
compliance with all Environmental Laws applicable to it, including
those relating to the generation, handling, use, storage, and
disposal of any Contaminant, except where the failure to so comply
could not reasonably be expected to have a Material Adverse Effect.
Each Loan Party shall take, and shall cause each other Consolidated
Member to take, prompt and appropriate action to respond to any
non-compliance with Environmental Laws and shall regularly report to
the Agent on such response.
(b) Without limiting the generality of the foregoing,
each Loan Party shall submit to the Agent and the Lenders annually,
commencing on the first Anniversary Date, and on each Anniversary
Date thereafter, an update of the status of each material
environmental compliance or liability issue, if any, concerning any
Consolidated Member or any of their respective properties or
operations (whether past or present). Agent or any Lender may
request, in which case the Loan Parties will promptly furnish or
cause to be furnished to Agent, copies of technical reports prepared
by the Borrower and its communications with any Governmental
Authority to determine whether the Borrower or any of its
Subsidiaries is proceeding reasonably to correct, cure or contest in
good faith any such alleged non-compliance or environmental
liability. Where a material non-compliance or alleged non-compliance
by a Governmental Authority with Environmental Laws has occurred,
the Loan Parties shall, at Agent's or the Required Lenders' request
and at the Loan Parties' expense, (i) retain an independent
environmental engineer acceptable to Agent to evaluate the site,
including tests if appropriate, and prepare and deliver to Agent, in
sufficient quantity for distribution by Agent to the Lenders, a
report setting forth the results of such evaluation, a proposed plan
for responding to any environmental problems described therein, and
an estimate of the costs thereof, and (ii) provide to Agent
38
and the Lenders a supplemental report of such engineer whenever the
scope of the environmental problems, or the response thereto or the
estimated costs thereof, shall increase in any material respect.
(c) The Agent and its representatives will have the
right at any reasonable time (accompanied by a representative of the
Borrower) to enter and visit the Real Estate and any other place
where any property of any Consolidated Member is located for the
purposes of observing the Real Estate, taking and removing soil or
groundwater samples, and conducting tests on any part of the Real
Estate. The Agent is under no duty, however, to visit or observe the
Real Estate or to conduct tests, and any such acts by the Agent will
be solely for the purposes of protecting the Agent's Liens and
preserving the Agent and the Lenders' rights under the Loan
Documents. No site visit, observation or testing by the Agent and
the Lenders will result in a waiver of any Default or Event of
Default or impose any liability on the Agent or the Lenders. In no
event will any site visit, observation or testing by the Agent be a
representation that hazardous substances are or are not present in,
on or under the Real Estate, or that there has been or will be
compliance with any Environmental Law. No Consolidated Member nor
any other party is entitled to rely on any site visit, observation
or testing by the Agent. The Agent and the Lenders owe no duty of
care to protect the Consolidated Members or any other party against,
or to inform any Consolidated Member or any other party of, any
hazardous substances or any other adverse condition affecting the
Real Estate. The Agent may in its discretion disclose to a
Consolidated Member or to any other party if so required by law any
report or findings made as a result of, or in connection with, any
site visit, observation or testing by the Agent. The Loan Parties
understand and agree that the Agent makes no warranty or
representation to the Consolidated Members or any other party
regarding the truth, accuracy or completeness of any such report or
findings that may be disclosed. The Loan Parties also understands
that depending on the results of any site visit, observation or
testing by the Agent and disclosed to any Consolidated Member, a
Consolidated Member may have a legal obligation to notify one or
more environmental agencies of the results, that such reporting
requirements are site-specific, and are to be evaluated by the
Consolidated Members without advice or assistance from the Agent. In
each instance, the Agent will give the Borrower reasonable notice
before entering the Real Estate or any other place the Agent is
permitted to enter under this Section 7.7(c). The Agent will make
reasonable efforts to avoid interfering with any Consolidated
Member's use of the Real Estate or any other property in exercising
any rights provided hereunder.
7.8 Compliance with ERISA.
Except as could not reasonably be expected to have a Material
Adverse Effect, the Loan Party shall, and shall cause each of its ERISA
Affiliates to: (a) maintain each Plan in compliance in all material respects
with the applicable provisions of ERISA, the Code, the PBA and other federal,
provincial or state law; (b) cause each Plan which is qualified under Section
401 (a) of the Code to maintain such qualification; (c) make all required
contributions to any
39
Plan subject to Section 412 of the Code; (d) not engage in a prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan; (e) not engage in a transaction that could be subject to Section 4069
or 4212(c) of ERISA and (f) not permit any Lien, xxxxxx or inchoate, to arise or
exist in connection with any Plan (save for contribution amounts not yet due).
7.9 Mergers, Consolidations or Sales.
No Loan Party shall enter into any transaction of merger,
reorganization, or consolidation, or transfer, sell, assign, lease as lessor, or
otherwise dispose of all or any part of its property, or wind up, liquidate or
dissolve, or agree to do any of the foregoing, except (a) for sales of Inventory
in the ordinary course of its business, (b) dispositions of Equipment which (i)
is replaced with Equipment of like kind, function and value, provided the
replacement Equipment shall be acquired prior to or substantially
contemporaneously with any disposition of the Equipment that is to be replaced,
and the replacement Equipment shall be free and clear of Liens other than
Permitted Liens or (ii) are in the ordinary course of its business that is
obsolete or no longer useable by the Borrower in its business with an orderly
liquidation value not to exceed $500,000 in any Fiscal Year (c) dispositions of
accounts receivable pursuant to any Approved Receivables Program or (d) pursuant
to the Headquarters Financing Transaction; provided, however, that (i) any
Guarantor may merge or transfer all or any part of its assets into or
consolidate with a Loan Party, in each case, provided the requirements of the
Security Agreement are complied with as of the effective date of the
consummation of such merger, (ii) any Guarantor may merge into another Person
that is not a Subsidiary prior to such merger whereby such other Person is the
surviving corporation provided the requirements of the Security Agreement and
Section 7.24 hereof are complied with and such other Person becomes a Subsidiary
as of the effective date of the consummation of such merger and that such merger
would be a Permitted Acquisition but for the Subsidiary not being the surviving
corporation, and (iii) the Loan Parties may make a Permitted Acquisition.
Notwithstanding the foregoing or any other provision of this Agreement, as long
as no Default or Event of Default exists or would result therefrom and provided
the Borrower gives the Agent and the Lenders prior written notice: (x) a Loan
Party, other than the Borrower, may wind-up, dissolve, or liquidate if (i) its
property is transferred to the Borrower or another Loan Party and (ii) the
Person acquiring such property complies with its obligations under Section 3.4
and Section 7.31 simultaneously with such acquisition; and (y) a Loan Party,
other than the Borrower, may merge or consolidate with the Borrower or another
Loan Party (provided the Borrower or such other Loan Party is the survivor of
any such merger or consolidation to which it is a party).
7.10 Distributions; Capital Change; Restricted Investments.
No Loan Party shall (i) directly or indirectly declare or make, or
incur any liability to make, any Distribution, except Distributions by a Loan
Party to another Loan Party, (ii) make any change in its capital structure which
could have a Material Adverse Effect or (iii) make any Restricted Investment.
7.11 Reserved.
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7.12 Third Party Guaranties.
No Loan Party shall make, issue, or become liable on any Guaranty,
except (a) Guaranties of the Obligations in favor of the Agent, or (b) unsecured
Guaranties of Debt incurred by a Foreign Subsidiary in an aggregate principal
amount at any time outstanding not to exceed $40,000,000.
7.13 Debt.
No Loan Party shall incur or maintain any Debt, other than: (a) the
Obligations; (b) Debt described on Schedule 6.9; (c) Capital Leases of Equipment
and purchase money secured Debt incurred to purchase Equipment provided that (i)
Liens securing the same attach only to the Equipment acquired by the incurrence
of such Debt, and (ii) the aggregate amount of such Debt (including Capital
Leases) outstanding does not exceed $5,000,000 at any time; (d) Debt consisting
of intercompany loans and advances made between the Loan Parties to the extent
consistent with Section 7.29; (e) Debt evidencing a refunding, renewal or
extension of the Debt described on Schedule 6.9; provided that (i) the principal
amount thereof is not increased, (ii) the Liens, if any, securing such refunded,
renewed or extended Debt do not attach to any assets in addition to those
assets, if any, securing the Debt to be refunded, renewed or extended, (iii) no
Person that is not an obligor or guarantor of such Debt as of the Closing Date
shall become an obligor or guarantor thereof, and (iv) the terms of such
refunding, renewal or extension are not materially less favorable to such
Consolidated Member, the Agent or the Lenders than the original Debt; (f) Debt
in respect of Hedge Agreements entered into for non-speculative purposes related
to hedging interest rates, currency values and commodities in connection with
the Core Business; (g) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; (h) Debt
arising by reason of Guaranties by a Loan Party permitted under Section 7.12(b);
(i) Debt incurred with respect to the Headquarters Financing Transaction, such
Debt not to exceed 80% of the value of the Headquarters; (j) Approved
Receivables Programs to the extent approved by the Required Lenders; and (j)
other unsecured Debt in an aggregate principal amount at any time outstanding
not to exceed $1,000,000.
7.14 Prepayment.
No Loan Party voluntarily shall prepay any Debt, except (a) the
Obligations in accordance with the terms of this Agreement, (b) in connection
with the Refinancing and (c) Debt evidenced by the Senior Subordinated Debt
Offering Documents in an aggregate amount not to exceed $15,000,000 during any
Fiscal Year, if and only if, (i) no Event of Default then exists or would exist
after giving effect to any such prepayment and (ii) for 30 consecutive days
prior to and immediately after such prepayment Availability is not less than
$35,000,000.
7.15 Transactions with Affiliates.
Except as permitted under Section 7.9, Section 7.10, Section 7.12 or
Section 7.13 and except as set forth below, no Loan Party shall sell, transfer,
distribute, or pay any money or property, including, but not limited to, any
fees or expenses of any nature (including, but not limited to, any fees or
expenses for management services), to any Affiliate that is not a Loan
41
Party, or lend or advance money or property to any Affiliate that is not a Loan
Party, or invest in (by capital contribution or otherwise) or purchase or
repurchase any Capital Stock or indebtedness, or any property, of any Affiliate
that is not a Loan Party, or become liable on any Guaranty of the indebtedness,
dividends, or other obligations of any Affiliate that is not a Loan Party.
Notwithstanding the foregoing, if no Default or Event of Default is in existence
or would result therefrom, any Consolidated Member may engage in transactions
with an Affiliate in the ordinary course of such Consolidated Member's business
consistent with past practices and upon terms no less favorable to such
Consolidated Member than would be obtained in a comparable arm's-length
transaction with a third party who is not an Affiliate.
7.16 [Reserved]
7.17 [Reserved]
7.18 Loan Party Guaranties.
Each Loan Party other than the Borrower shall guarantee payment and
performance of the Obligations pursuant to a Guaranty Agreement (including,
without limitation, the Applica Canada Guaranty) in form and substance
satisfactory to the Agent, duly executed by each such Loan Party.
7.19 [Reserved].
7.20 Investment Banking and Finder's Fees.
No Consolidated Member shall pay or agree to pay, or reimburse any
other party with respect to, any investment banking or similar or related fee,
underwriter's fee, finder's fee, or broker's fee to any Person in connection
with this Agreement. The Loan Parties shall defend and indemnify the Agent and
the Lenders and their affiliates against and hold them harmless from all claims
of any Person that a Consolidated Member is obligated to pay for any such fees,
and all costs and expenses (including attorneys' fees) incurred by the Agent
and/or any Lender and their affiliates in connection therewith.
7.21 Business Conducted.
The Consolidated Members shall not and shall not permit any of its
Subsidiaries to, engage directly or indirectly, in any line of business other
than the Core Business or those businesses that reasonably and rationally
develop from such Core Business from time to time.
7.22 Liens.
No Loan Party shall create, incur, assume, or permit to exist any
Lien on any property now owned or hereafter acquired by any of them, except (a)
Permitted Liens, (b) Liens securing Capital Leases and purchase money Debt
permitted in Section 7.13 and (c) any Lien incurred with respect to the
Headquarters Financing Transaction, such Lien not to attach to any Collateral or
to exceed 80% of the value of the Headquarters.
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7.23 Sale and Leaseback Transactions.
No Loan Party shall, directly or indirectly, enter into any
arrangement with any Person providing for a Loan Party to lease or rent property
that a Loan Party has sold or will sell or otherwise transfer to such Person,
except with respect to the Headquarters Financing Transaction.
7.24 New Subsidiaries.
The Loan Parties shall not, directly or indirectly, organize,
create, acquire, or permit to exist any Subsidiary except as permitted by this
Section 7.24. The Loan Parties shall (a) in the event of the acquisition or
creation of any Subsidiary (a "New Subsidiary") cause to be delivered to Agent
for the benefit of the Lenders a Pledge Agreement with respect to the Capital
Stock of such New Subsidiary substantially in the form of the Pledge Agreement
executed and delivered to Agent on the Closing Date within thirty (30) Business
Days of the acquisition or creation of a Subsidiary; provided, however, that if
such New Subsidiary is a Foreign Subsidiary, such pledge of Capital Stock shall
be limited to 65% of the outstanding voting stock of such New Subsidiary and
shall only be required if it is a Direct Foreign Subsidiary; (b) in the event of
the acquisition or creation of any Domestic Subsidiary, cause to be delivered to
the Agent for the benefit of the Lenders each of the following, in each case to
be duly executed and delivered by such Subsidiary within thirty (30) Business
Days of the acquisition or creation of such Subsidiary: (i) a Subsidiary
Guaranty; (ii) a security agreement in substantially the form of the Security
Agreement; (iii) if such Subsidiary has any material leased locations, a
Collateral Access Agreement with respect thereto; and (iv) if such Subsidiary
owns any real property, a Mortgage executed by such Subsidiary in form and
substance acceptable to the Agent; and (c) in the event of the acquisition or
creation of any Subsidiary subject to the provisions of clauses (a) or (b)
above, cause to be delivered to Agent for the benefit of the Lenders each of the
following within the time periods indicated therein: (i) an opinion of counsel
to such Subsidiary dated as of the date of the delivery of the other documents
required to be delivered pursuant to this Section 7.24 and addressed to Agent
and the Lenders, in form and substance identical to the opinion of counsel
delivered pursuant to Section 8.1(a)(xviii) hereof on the Closing Date with
respect to any Guarantor; and (ii) current certified copies of the
Organizational Documents and Operating Documents of such Subsidiary, minutes of
duly called and conducted meetings (or duly effected consent actions) of the
Board of Directors, or appropriate committees thereof (and, if required by such
Organizational Documents or Operating Documents or by applicable laws, of the
shareholders), of such Subsidiary authorizing it to enter into the agreements
required under this Section 7.24 and evidence satisfactory to Agent
(confirmation of the receipt of which will be provided by Agent to the Lenders)
that such Subsidiary is Solvent as of such date after giving effect to such
Guaranty, Security Agreement and Pledge Agreement.
7.25 Fiscal Year.
The Borrower shall not change and shall not permit the Loan Parties
to change its Fiscal Year.
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7.26 Capital Expenditures.
The Loan Parties shall not make or incur any Capital Expenditures
if, after giving effect thereto, the aggregate amount of all Capital
Expenditures by the Loan Parties on a consolidated basis would exceed
$30,000,000 during any Fiscal Year. Seventy-five percent (75%) of the amount by
which Capital Expenditures made in any Fiscal Year are less than $30,000,000 may
be carried over by the Loan Parties only to the next Fiscal Year; provided,
however, that any amounts so carried over shall be deemed used by the Loan
Parties only after all sums otherwise permitted for Capital Expenditures in such
next Fiscal Year have been utilized.
7.27 Minimum EBITDA.
If the Loan Parties fail to maintain Availability of at least
$30,000,000 on any date on or after January 1, 2002 (any date on or after
January 1, 2002 on which the Loan Parties fail to maintain such Availability
being hereinafter referred to as the "Trigger Date"), then as of the last day of
the fiscal quarter in which the Trigger Date occurs, the Loan Parties shall not
permit Consolidated EBITDA or North American EBITDA to be less than the amounts
set forth below for the test period applicable for the fiscal quarter in which
such Trigger Date occurs:
Period Minimum Consolidated Minimum North American
EBITDA EBITDA
Fiscal Quarter ending $6,500,000 $5000
March 31, 2002
Two (2) Fiscal Quarters $17,000,000 $2,500,000
ending June 30, 2002
Three (3) Fiscal Quarters $33,500,000 $4,000,000
ending September 30, 2002
The Applicable Period $55,000,000 $6,500,000
ending December 31, 2002
and as of the last day of
each Fiscal Quarter
thereafter, in each case
for the Applicable Period
then ending
If the Loan Parties maintain Availability of at least $30,000,000 on
each day during any fiscal quarter, the Loan Parties shall not be required to
satisfy the foregoing Consolidated EBITDA and North American EBITDA requirements
as of the last day of such fiscal quarter.
7.28 Minimum Availability.
The Loan Parties shall maintain Availability of not less than (a)
$20,000,000 at all times
44
after the Closing Date through and including January 1, 2002, and (b)
$10,000,000 at all times thereafter during the term of this Agreement.
7.29 Use of Proceeds.
The Loan proceeds shall be used by the Borrower solely for one or
more of the following purposes: (i) to satisfy in full and terminate any and all
obligations of the Borrower and its respective Subsidiaries (including the
termination of any Liens granted under the Original Credit Agreement) under the
Original Credit Agreement (the "Refinancing"), (ii) to satisfy reimbursement
Debt in respect of Letters of Credit and (iii) to finance the ongoing working
capital and other general corporate purposes of the Borrower, Applica Consumer
Products to the extent of the Applica Consumer Products Formula Amount at any
date, and Applica Canada to the extent of the Applica Canada Formula Amount at
any date. The financing of the ongoing working capital and other general
corporate purposes of Loan Parties other than the Borrower, Applica Consumer
Products and Applica Canada shall be provided solely by Applica Consumer
Products to the extent expressly permitted under the terms of this Agreement. In
no event shall any portion of the Loan proceeds be used by a Loan Party or any
Subsidiary, directly or indirectly, to purchase or carry Margin Stock, to repay
or otherwise refinance indebtedness of a Loan Party or others incurred to
purchase or carry Margin Stock, to extend credit for the purpose of purchasing
or carrying any Margin Stock, or to acquire any security in any transaction that
is subject to Section 13 or 14 of the Exchange Act, other than a Permitted
Acquisition.
7.30 Changes to Senior Subordinated Debt Offering Documents.
The Loan Parties shall not modify or amend the terms of the Senior
Subordinated Debt Offering Documents if the effect of such amendment is to: (a)
increase the maximum principal amount of the Debt thereunder or the interest
rate payable in respect thereof; (b) change the dates upon which payments of
principal or interest are due under the Senior Subordinated Debt Offering
Documents; (c) modify any event of default or add any covenant with respect to
such Debt; (d) modify the payment, redemption or prepayment provisions of such
Debt; (e) modify the subordination provisions under the Senior Subordinated Debt
Offering Documents; or (f) modify any other term of the Senior Subordinated Debt
Offering Documents if such modification would materially increase the
obligations of any obligor thereunder or confer additional material rights to
the holder of such Debt in a manner adverse to the Loan Parties, the Borrower,
or any of the other Consolidated Members, Agent or any Lender.
7.31 Closure of Bank Accounts; Blocked Account Agreement; AmEx
Termination.
No later than thirty (30) days after Closing Date, the Loan Parties
shall close (a) the Standalone Bank Account (Applica Consumer Products, Inc.)
Account Number 36407011679 with XX Xxxxxx Xxxxx, (b) the Standalone Bank Account
(HP Americas, Inc.) Account Number 101210 with Citibank, and (c) the Standalone
Bank Account (Applica Canada Corporation) Account Number 000-000-0 with Royal
Bank of Canada. On or before January 15, 2002, (y) Applica Canada shall have
obtained an Applica Canada Blocked Account Agreement from Scotia Bank in respect
of the Lockbox and Disbursement Account Number 000000000000
45
and an authenticated account control agreement in respect of Standalone Bank
Account (Applica Canada Corporation) Account Number 228220140414 and (z)
terminations of all UCC financing statements filed against the Borrower in favor
of American Express Business Finance Corporation.
7.32 Intercompany Security Interest.
At any time that Applica Consumer Products shall have a Tangible Net
Worth of less than $250,000,000, upon Agent's request the Loan Parties shall
enter into security agreements pursuant to which each Loan Party other than the
Borrower shall grant to the Borrower a security interest in the Collateral to
secure all Intercompany Accounts owing by them from time to time to the Borrower
and the Borrower shall collaterally assign such security interest to the Agent
for the benefit of the Lenders as additional security for the Obligations.
7.33 Applica Canada Blocked Account.
For so long as no Event of Default has occurred and is continuing,
the Borrower shall cause to be transferred to it no less frequently than weekly
all cash balances contained in the Applica Canada Blocked Account for
application to the Payment Account pursuant to Section 3.7.; provided, however,
that for so long as no Event of Default exists, Applica Canada may retain from
such cash balances solely for working capital purposes related to its Core
Business in Canada an aggregate amount not to exceed $(Cdn)3,500,000 during any
month. Any sums so retained by Applica Canada shall be reflected in each
Borrowing Base for any applicable period and to Applica Canada's general ledger.
After the occurrence of an Event of Default, upon written notice from the Agent
to any bank maintaining the Applica Canada Blocked Account and to the Borrower,
Applica Canada shall not be entitled to retain any such balances and the Agent
shall have the sole and exclusive right to withdraw funds from time to time in
the Applica Canada Blocked Account and all amounts so collected by the Agent
shall be applied to the Payment Account in accordance with Section 3.7.
7.34 Further Assurances.
The Loan Parties shall execute and deliver, or cause to be executed
and delivered, to the Agent such documents and agreements, and shall take or
cause to be taken such actions as the Agent may, from time to time, reasonably
request to carry out the terms and conditions of this Agreement and the other
Loan Documents.
ARTICLE 8
CONDITIONS OF LENDING
8.1 Conditions Precedent to Making of Loans on the Closing Date.
The obligation of the Lenders to make the initial Loans on the
Closing Date, and the obligation of the Agent to cause the Letter of Credit
Issuer to issue any Letter of Credit or Credit Support on the Closing Date, are
subject to the following conditions precedent having
46
been satisfied in a manner satisfactory to the Agent and each Lender:
(a) The Agent shall have received each of the following documents,
all of which shall be satisfactory in form and substance to the Agent and
the Lenders:
(i) certified copies of the certificate of incorporation,
certificate of the organizational document of each of the Loan
Parties, with all amendments, if any, certified by the appropriate
Governmental Authority (provided that upon request by any Loan Party
and with the consent of the Agent, any such certified certificate of
incorporation, certificate of limited partnership, or comparable
organizational document for such Loan Party to the extent not
provided on the Closing Date, may be provided within thirty (30)
days of the Closing Date, provided that an uncertified copy thereof
has been delivered to the Agent together with a written statement by
a Responsible Officer confirming that such copy is true, correct,
and complete), and the bylaws, regulations, operating agreement, or
similar governing document of each Loan Party, in each case
certified by the corporate secretary, general partner, or comparable
authorized representative of such Loan Party, as being true and
correct and in effect on the Closing Date;
(ii) certificates of incumbency and specimen signatures
with respect to each Person authorized to execute and deliver this
Agreement and the other Loan Documents on behalf of each Loan Party
and each other Person executing any document, certificate, or
instrument to be delivered in connection with this Agreement and the
other Loan Documents and, in the case of the Borrower, to request
Borrowings and the issuance of Letters of Credit or Credit Support;
(iii) a certificate evidencing the existence of each Loan
Party, and certificates evidencing the good standing of each Loan
Party in the jurisdiction of its organization and in each other
jurisdiction in which it is required to be qualified as a foreign
business entity to transact its business as presently conducted,
provided that upon request by any Loan Party and with the consent of
the Agent, certificates of good standing for any Loan Party from a
Governmental Authority other than the jurisdiction of its
organization and chief executive office, to the extent not provided
on the Closing Date, may be provided within thirty (30) days of the
Closing Date;
(iv) this Agreement and the other Loan Documents duly
executed and delivered by each Loan Party that is a party thereto;
(v) certified copies of all action taken by each Loan
Party to authorize the execution, delivery, and performance of this
Agreement, the other Loan Documents, and with respect to the
Borrower, the Borrowings and the issuance of Letters of Credit
and/or Credit Support;
(vi) a certificate of each Loan Party signed by a
Responsible Officer:
(A) stating that all of the representations and
warranties made
47
or deemed to be made under this Agreement are true and correct
as of the Closing Date, after giving effect to the Loans to be
made at such time and the application of the proceeds thereof
and the issuance of any Letter(s) of Credit and/or Credit
Support at such time,
(B) stating that no Default or Event of Default
exists,
(C) specifying the account of the Borrower which
is a Designated Account, and
(D) certifying as to such other factual matters
as may be reasonably requested by the Agent;
(vii) with respect to any Letter of Credit or Credit
Support to be issued, all documentation required by Section 1.4,
duly executed and delivered by each Loan Party, complying with the
requirements of such Section;
(viii) (A) UCC or PPSA financing statements and/or
amendments to existing UCC or PPSA financing statements with respect
to all Collateral as may be requested by the Agent (and in all
events in each state of incorporation of an Obligated Party), duly
executed by the respective Loan Parties, to the extent any such
Liens may be perfected under the UCC or PPSA and (B) with respect to
any Loan Party located in, or organized under the laws of, Canada
and all filings and recordations required by Requirements of Law of
Canada (including without limitation under the PPSA and RDPRM),
respectively, as the case may be, in all jurisdictions that the
Agent may deem necessary or desirable in order to perfect the
Agent's Lien in all the Collateral, including without limitation,
Accounts and Deposit Accounts of such Loan Party;
(ix) (A) duly executed UCC-3 termination statements or
assignments with respect to the UCC and such other releases or
instruments, in each case in form and substance satisfactory to the
Agent, as in each case shall be necessary to terminate and satisfy
all Liens, except Permitted Liens, on the property of the Loan
Parties, to the extent the Agent's Liens therein may be perfected
under the UCC and (B) releases, terminations or other instruments
under the Requirements of Law of Canada (including without
limitation under the PPSA and other applicable law), and such other
releases or instruments, in each case in form and substance
satisfactory to the Agent, in each case as shall be necessary to
terminate and satisfy all Liens, except Permitted Liens, on all the
Collateral, including without limitation, the Accounts and Deposit
Accounts of any Loan Party;
(x) as may be required by the Agent in its discretion,
notifications of security interests, in patents, trademarks and
copyrights under the Security Agreement, as applicable, with respect
to any and all Proprietary Rights, if any, owned by any Loan Party
which must be registered with any Governmental Authority to perfect
the Agent's Liens in such Proprietary Rights, duly executed
48
by each such Consolidated Member, as applicable;
(xi) each Guaranty Agreement (including the Applica Canada
Guarantee), duly executed and delivered by each Person required
pursuant to Section 7.18;
(xii) (A) stock certificates and stock powers (duly
executed in blank) for all Capital Stock (to the extent
certificated) owned by a Loan Party in any Loan Party, in form and
substance satisfactory to the Agent and (B) as may be required by
the Agent in its discretion, "control" agreements (pursuant to the
UCC), each duly executed, as the Agent may request with respect to
any other Investment Property listed in Schedule 6.27;
(xiii) a Borrowing Base Certificate effective as of the
Business Day preceding the day such initial Loans are to be funded
or any such Letter of Credit or Credit Support is to be issued;
(xiv) as requested by the Agent in its discretion, a
landlord's or mortgagee's waiver and consent agreement, in form and
substance reasonably acceptable to the Agent, duly executed on
behalf of each landlord or mortgagee, as the case may be, of Real
Estate on which any Collateral is located provided, that the Agent
may, in its discretion, establish, without duplication, a reserve in
an amount equal to three (3) months rent with respect to the
Collateral located on any Real Estate for which the Agent has not
received an acceptable waiver and consent agreement);
(xv) Each Blocked Account Agreement (including each
Applica Canada Blocked Account Agreement) duly executed as required
by the Security Agreement;
(xvi) the Applica Canada Security Agreement duly executed
and delivered by Applica Canada;
(xvii) (A) the Agent shall have received satisfactory
evidence that the Agent has a valid, exclusive (other than Permitted
Liens), and perfected first priority security interest, lien,
collateral assignment, and pledge as of such date in all Collateral
as security for all Obligations, to the extent any such Liens may be
perfected under the UCC (excluding any Liens on vehicles for which a
certificate of title has been issued and Liens perfected solely by
possession, but only to the extent the Agent has not requested
perfection of its Liens in such vehicles or possession of such
Collateral) and (B) with respect to any Loan Party located in, or
organized under the laws of Canada, the Agent shall have received
satisfactory evidence that the Agent has a valid, exclusive (other
than Permitted Liens), and perfected first priority Lien in all
personal Property of any such Loan Party, to the extent any such
Liens may be perfected under the Requirements of Law of Canada
including without limitation under the PPSA and other applicable law
49
respectively, as the case may be, in each case in form and substance
satisfactory to the Agent; provided further, that upon the Agent's
request, the Loan Parties shall provide any additional agreement,
document, instrument, certificate, or other item relating to any
Collateral as may be required for perfection under any Requirement
of Law;
(xviii) opinions of counsel for the Loan Parties, each such
opinion to be in a form, scope, and substance reasonably
satisfactory to the Agent, the Lenders, and their respective
counsel; and
(xix) such other documents and instruments as the Agent or
any Lender may reasonably request.
(b) After giving effect to the making of all Loans (including any
Loans made to finance payment or reimbursement for fees, costs, and
expenses then payable under or pursuant to this Agreement) and issuance of
all Letters of Credit and Credit Support and with all of their obligations
current, the Loan Parties shall have remaining Availability in an amount
not less than $25,000,000 on the Closing Date.
(c) All representations and warranties made hereunder and in the
other Loan Documents shall be true and correct as if made on the Closing
Date.
(d) No Event of Default shall exist or would exist after giving
effect to the Refinancing, the Loans to be made and the Letters of Credit
and Credit Support to be issued.
(e) Subject to Section 13.7 hereof, the Loan Parties shall have
paid all fees and expenses of Agent and the Attorney Costs incurred in
connection with any of the Loan Documents and the transactions
contemplated thereby to the extent invoiced.
(f) Agent shall have received evidence, in form, scope, and
substance, reasonably satisfactory to the Agent, of all insurance coverage
as required by this Agreement.
(g) All proceedings taken in connection with the execution of this
Agreement, the other Loan Documents, and all documents and papers relating
thereto shall be reasonably satisfactory in form, scope, and substance to
the Agent and the Lenders.
(h) Without limiting the generality of the items described above,
the Loan Parties and each Person guaranteeing or securing payment of the
Obligations shall have delivered or caused to be delivered to the Agent
(in form and substance reasonably satisfactory to the Agent), the
financial statements, instruments, resolutions, documents, agreements,
certificates, opinions and other items required by the Agent.
The acceptance by the Borrower of any Loans made or Letters of Credit or Credit
Support issued on the Closing Date shall be deemed to be a representation and
warranty made by the Loan
50
Parties to the effect that all of the conditions precedent to the making of such
Loans or issuance of such Letters of Credit or Credit Support have been
satisfied, with the same effect as delivery to the Agent and the Lenders of a
certificate signed by a Responsible Officer of the Loan Parties, dated the
Closing Date, to such effect. Execution and delivery to the Agent by a Lender of
a counterpart of this Agreement shall be deemed confirmation by such Lender that
(i) the decision of such Lender to execute and deliver to the Agent an executed
counterpart of this Agreement was made by such Lender independently and without
reliance on the Agent or any other Lender as to the satisfaction of any
condition precedent set forth in this Section 8.1, and (ii) all documents sent
to such Lender for approval, consent, or satisfaction were acceptable to such
Lender.
8.2 Conditions Precedent to Each Loan.
The obligation of the Lenders to make each Loan, including the
initial Loans on the Closing Date, and the obligation of the Agent to cause the
Letter of Credit Issuer to issue any Letter of Credit or Credit Support shall be
subject to the further conditions precedent that on and as of the date of any
such extension of credit the following statements shall be true, and the
acceptance by the Borrower of any extension of credit shall be deemed to be a
statement to the effect set forth in clause (a), clause (b), and clause (c)
following with the same effect as the delivery to the Agent and the Lenders of a
certificate signed by a Responsible Officer of the Loan Parties, dated the date
of such extension of credit, stating that:
(a) the representations and warranties contained in this Agreement
and the other Loan Documents are correct in all material respects on and as of
the date of such extension of credit as though made on and as of such date,
other than any such representation or warranty which relates to a specified
prior date and except to the extent the Agent and the Lenders have been notified
in writing by the Loan Parties that any representation or warranty is not
correct and the Required Lenders have explicitly waived in writing compliance
with such representation or warranty;
(b) No Default or Event of Default has occurred and is continuing,
or would result from such proposed Borrowing; and
(c) The proposed Borrowing will not cause the aggregate principal
amount of all outstanding Revolving Loans plus the aggregate amount available
for drawing under all outstanding Letters of Credit and in respect of any Credit
Support, to exceed the Borrowing Base or the combined Commitments of the
Lenders.
Except as provided by Section 11.1(a), no Borrowing or issuance of any Letter of
Credit or Credit Support shall exceed the Availability, provided, however, that
the foregoing conditions precedent are not conditions to the requirement for
each Lender participating in or reimbursing the Bank or the Agent for such
Lenders' Pro Rata Share of any Non-Ratable Loan or Agent Advance made in
accordance with the provisions of Section 1.2(h) and Section 1.2(i).
51
ARTICLE 9
DEFAULT; REMEDIES
9.1 Events of Default.
It shall constitute an event of default ("Event of Default") if any
one or more of the following shall occur for any reason:
(a) any failure by the Borrower to pay the principal of or
interest or premium on any of the Obligations or any fee or other
amount owing hereunder when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by a
Loan Party in this Agreement or by a Loan Party in any of the other
Loan Documents, any Financial Statement, or any certificate
furnished by any Consolidated Member at any time to the Agent or any
Lender shall prove to be untrue in any material respect as of the
date on which made, deemed made, or furnished;
(c) (i) any default shall occur in the observance or
performance of any of the covenants and agreements contained in
Sections 5.2(l), 7.2, 7.5, 7.9-7.31, or Section 11 of the Security
Agreement, (ii) any default shall occur in the observance or
performance of any of the covenants and agreements contained in
Sections 5.2 (a)-(f) or 5.3 (a)-(j) and such default shall continue
for five (5) days or more; or (iii) any default shall occur in the
observance or performance of any of the other covenants or
agreements contained in any other Section of this Agreement or any
other Loan Document, any other Loan Documents, or any other
agreement entered into at any time to which any Loan Party and the
Agent or any Lender are a party (including in respect of any Bank
Products) and such default shall continue for twenty (20) days or
more;
(d) any default which has not been waived shall occur with
respect to (i) Debt of the Borrower evidenced by or arising under
the Senior Subordinated Debt Offering Documents or (ii) any Debt
(other than the Obligations and Debt contemplated by clause (i)
hereof) of any Loan Party in an outstanding principal amount which
exceeds $500,000, or under any agreement or instrument under or
pursuant to which any such Debt may have been issued, created,
assumed, or guaranteed by any Loan Party, and such default shall
continue for more than the period of grace, if any, therein
specified, if the effect thereof (with or without the giving of
notice or further lapse of time or both) is to accelerate, or to
permit the holders of any such Debt to accelerate, the maturity of
any such Debt; or any such Debt shall be declared due and payable or
be required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof;
(e) any Loan Party shall (i) file a voluntary petition in
bankruptcy or file a voluntary petition or an answer or file any
proposal or notice of intent to file a proposal or otherwise
commence any action or proceeding seeking reorganization,
arrangement, consolidation or readjustment of its debts or which
52
seeks to stay or has the effect of staying any creditor or for any
other relief under the federal Bankruptcy Code, as amended, or under
any other bankruptcy, insolvency, liquidation, winding up, corporate
or similar act or law, provincial, state or federal (including
without limitation, the BIA or the Companies' Creditors Arrangement
Act (Canada)), now or hereafter existing, or consent to, approve of,
or acquiesce in, any such petition, proposal, action or proceeding;
(ii) apply for or acquiesce in the appointment of a receiver,
assignee, liquidator, sequestrator, custodian, monitor,
administrator, trustee or similar officer for it or for all or any
part of its property; (iii) make an assignment for the benefit of
creditors; or (iv) be unable generally to pay its debts as they
become due;
(f) an involuntary petition shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of any Loan Party or for
any other relief under the federal Bankruptcy Code, as amended, or
under any other bankruptcy, insolvency, liquidation, winding up,
corporate or similar act or law (including, without limitation, the
BIA or the Companies' Creditors Arrangement Act (Canada)),
provincial, state or federal, now or hereafter existing and either
such petition, proposal or proceeding shall not be dismissed within
forty-five (45) days after the filing or commencement thereof or an
order of relief shall be entered with respect thereto;
(g) a receiver, assignee, liquidator, sequestrator,
custodian, monitor, administrator, trustee or similar officer for
any Loan Party or for all or any part of its property shall be
appointed or a warrant of attachment, execution, writ of seizure or
seizure and sale or similar process shall be issued against any part
of the property of any Loan Party or any distress or analogous
process is levied upon all or any part of any Loan Party;
(h) any Loan Party shall file a certificate of dissolution
or like process under applicable state law or shall be liquidated,
dissolved or wound-up or shall commence or have commenced against it
any action or proceeding for dissolution, winding-up or liquidation,
or shall take any corporate action in furtherance thereof, except as
permitted under Section 7.9(x);
(i) all or any material part of the property of any Loan
Party shall be nationalized, expropriated or condemned, seized or
otherwise appropriated, or custody or control of such property or of
such Loan Party shall be assumed by any Governmental Authority or
any court of competent jurisdiction at the instance of any
Governmental Authority or any other Person, except where contested
in good faith by proper proceedings diligently pursued where a stay
of enforcement is in effect;
(j) any Loan Document shall be terminated, revoked or
declared void or invalid or unenforceable or any material Loan
Document is challenged by any Loan Party or any Affiliate;
53
(k) one or more judgments, orders, decrees or arbitration
awards is entered against any Loan Party involving in the aggregate
liability for all Loan Party (to the extent not covered by
independent third-party insurance as to which the insurer does not
dispute coverage) as to any single or related or unrelated series of
transactions, incidents or conditions, of $1,000,000 or more, and,
whether or not covered by insurance, the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of
thirty (30) days after the entry thereof;
(l) payment by a Loan Party under an agreement of Guaranty
issued by such Loan Party with respect to any Debt of a Foreign
Subsidiary or a judgment, order, decree or arbitration award is
entered against a Loan Party with respect to any such agreement of
Guaranty, in either case in an aggregate amount in excess of
$10,000,000 during the term of this Agreement;
(m) any loss, theft, damage or destruction of any item or
items of Collateral or other property of any Loan Party occurs which
could reasonably be expected to cause a Material Adverse Effect and
is not adequately covered by insurance;
(n) there is filed against any Loan Party any action, suit
or proceeding under any federal or state racketeering statute
(including the Racketeer Influenced and Corrupt Organization Act of
1970), which action, suit or proceeding (i) is not dismissed within
one hundred twenty (120) days, and (ii) could reasonably be expected
to result in the confiscation or forfeiture of any material portion
of the Collateral;
(o) for any reason other than the failure of the Agent to
take any action available to it to maintain perfection of the
Agent's Liens, pursuant to the Loan Documents, any material Loan
Document ceases to be in full force and effect or any Lien with
respect to any material portion of the Collateral intended to be
secured thereby ceases to be, or is not, valid, perfected and prior
to all other Liens (other than Permitted Liens) or is terminated,
revoked or declared void;
(p) (i) an ERISA Event shall occur with respect to a Pension
Plan or Multi-employer Plan which has resulted or could reasonably
be expected to result in liability of the Loan Parties or any ERISA
Affiliate under applicable laws in an aggregate amount in excess of
$500,000; (ii) the aggregate amount of Unfunded Pension Liability
among all Pension Plans at any time exceeds $500,000; (iii) the Loan
Parties or any ERISA Affiliate shall fail to pay when due, after the
expiration of any applicable grace period, any installment payment
with respect to its withdrawal liability under Section 4201 of ERISA
under a Multi-employer Plan in an aggregate amount in excess of
$500,000; or (iv) any Lien (save for contribution amounts not yet
due) arises in connection with any Plan;
(q) (i) there occurs a Change of Control of the Borrower or
(ii) any Loan Party or any Foreign Subsidiary ceases to be a
Wholly-Owned Subsidiary;
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(r) the Black & Xxxxxx License Agreement shall be
terminated, revoked or declared void or invalid or unenforceable for
any reason; or
(s) there occurs an event having a Material Adverse Effect.
9.2 Remedies.
(a) If a Default or an Event of Default exists, the Agent
may, in its discretion, and shall, at the direction of the Required
Lenders, do one or more of the following at any time or times and in
any order, without notice to or demand on the Borrower: (i) reduce
the Maximum Revolver Amount, or the advance rates against Eligible
Accounts and/or Eligible Inventory used in computing the Borrowing
Base, or reduce one or more of the other elements used in computing
the Borrowing Base; (ii) restrict the amount of or refuse to make
Revolving Loans; and (iii) restrict or refuse to provide Letters of
Credit or Credit Support. If an Event of Default exists, the Agent
shall, at the direction of the Required Lenders, do one or more of
the following, in addition to the actions described in the preceding
sentence, at any time or times and in any order, without notice to
or demand on the Borrower: (A) terminate the Commitments and this
Agreement; (B) declare any or all Obligations to be immediately due
and payable; provided, however, that upon the occurrence of any
Event of Default described in Sections 9.1(e), 9.1(f), 9.1(g), or
9.1(h), the Commitments shall automatically and immediately expire
and all Obligations shall automatically become immediately due and
payable without notice or demand of any kind; (C) require the Loan
Parties to cash collateralize all outstanding Letter of Credit
Obligations in an amount not less than 105% of the outstanding face
amount of such Letter of Credit Obligations and, if the Loan Parties
fail to make such deposit promptly, the Lenders may (and shall upon
the direction of the Required Lenders) advance such amount as a
Revolving Loan (whether or not such loan would be in excess of the
Borrowing Base). Any such deposit or advance shall be held by the
Agent as a reserve to fund future payments on any Letter of Credit
Obligations; and (D) pursue its other rights and remedies under the
Loan Documents and applicable law.
(b) If an Event of Default has occurred and is continuing:
the Agent shall have for the benefit of the Lenders, in addition to
all other rights of the Agent and the Lenders, the rights and
remedies of a secured party under the Loan Documents, the UCC, the
PPSA, and other applicable law.
ARTICLE 10
TERM AND TERMINATION
10.1 Term and Termination.
The term of this Agreement shall end on the Stated Termination Date
unless sooner terminated in accordance with the terms hereof. The Agent upon
direction from the Required Lenders shall terminate this Agreement without
notice upon the occurrence of an Event
55
of Default. Upon the effective date of termination of this Agreement for any
reason whatsoever, all Obligations (including all unpaid principal, accrued and
unpaid interest and any early termination or prepayment fees or penalties) shall
become immediately due and payable and the Loan Parties shall immediately
arrange for the cancellation and return of Letters of Credit then outstanding.
Notwithstanding the termination of this Agreement, until all Obligations are
indefeasibly paid and performed in full in cash, the Loan Parties shall remain
bound by the terms of this Agreement and shall not be relieved of any of their
Obligations hereunder or under any other Loan Document, and the Agent and the
Lenders shall retain all their rights and remedies hereunder (including the
Agent's Liens in and all rights and remedies with respect to all then existing
and after-arising Collateral).
ARTICLE 11
AMENDMENTS; WAIVERs; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
11.1 Amendments and Waivers.
(a) No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to
any departure by the Loan Parties therefrom, shall be effective
unless the same shall be in writing and signed by the Required
Lenders (or by the Agent at the written request of the Required
Lenders) and the Loan Parties and then any such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such
waiver, amendment, or consent shall, unless in writing and signed by
all the Lenders and the Loan Parties and acknowledged by the Agent,
do any of the following:
(i) increase or extend the Commitment of any Lender;
(ii) postpone or delay any date fixed by this Agreement
or any other Loan Document for any payment of principal, interest,
fees or other amounts due to the Lenders (or any of them) hereunder
or under any other Loan Document;
(iii) reduce the principal of, or the rate of interest
specified herein on any Loan, or any fees or other amounts payable
hereunder or under any other Loan Document;
(iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for
the Lenders or any of them to take any action hereunder;
(v) increase any of the percentages set forth in the
definition of the Borrowing Base or in Section 1.2(i);
(vi) amend this Section or any provision of this
Agreement providing for consent or other action by all Lenders;
56
(vii) release any Loan Parties from their obligations
under this Agreement or any of the other Loan Documents, release any
Guaranties of the Obligations or release Collateral other than as
permitted by Section 12.11;
(viii) amend the definition of "Required Lenders;"
(ix) increase the Maximum Revolver Amount, the Maximum
Inventory Loan Amount, Letter of Credit Subfacility or the maximum
permitted amount of Non-Ratable Loans;
(x) reduce, amend, waive or eliminate the minimum
Availability requirement set forth in Section 7.28; or
(xi) amend the definition of "Borrowing Base" (other
than reduce the advance rates set forth therein) or "In-Transit
Inventory."
provided, however, the Agent may, in its sole discretion and notwithstanding the
limitations contained in clauses (v) and (xi) above and any other terms of this
Agreement, make Agent Advances in accordance with Section 1.2(i) and, provided
further, that no amendment, waiver or consent shall, unless in writing and
signed by the Agent, affect the rights or duties of the Agent under this
Agreement or any other Loan Document and provided further, that Schedule 1.2
hereto (Commitments) may be amended from time to time by Agent alone to reflect
assignments of Commitments in accordance herewith.
(b) If, in connection with any proposed amendment, waiver or
consent (a "Proposed Change") requiring the consent of all Lenders,
the consent of Required Lenders is obtained, but the consent of
other Lenders is not obtained (any such Lender whose consent is not
obtained as described in this clause (c) being referred to as a
"Non-Consenting Lender"), then, so long as the Agent is not a
Non-Consenting Lender, at the Loan Parties' request, the Agent or an
Eligible Assignee shall have the right (but not the obligation) with
the Agent's approval, to purchase from the Non-Consenting Lenders,
and the Non-Consenting Lenders agree that they shall sell, all the
Non-Consenting Lenders' Commitments for an amount equal to the
principal balances thereof and all accrued interest and fees (except
any fees arising in connection with such purchase that would
otherwise arise under Section 4.4, for which the Loan parties shall
not be liable) with respect thereto through the date of sale
pursuant to Assignment and Acceptance Agreement(s), without premium
or discount.
11.2 Assignments; Participations.
(a) Any Lender may, with the written consent of the Agent
(which consent shall not be unreasonably delayed or withheld),
assign and delegate to one or more Eligible Assignees (provided that
no consent of the Agent shall be required in connection with any
assignment and delegation by a Lender to another Lender or an
Affiliate of such Lender) (each an "Assignee") all, or any ratable
part of all, of the Loans, the Commitments and the other rights and
obligations of such Lender hereunder, in a minimum amount of
$10,000,000 (provided that,
57
unless an assignor Lender has assigned and delegated all of its
Loans and Commitments, no such assignment and/or delegation shall be
permitted unless, after giving effect thereto, such assignor Lender
retains a Commitment in a minimum amount of $10,000,000; provided,
however, that the Loan Parties and the Agent may continue to deal
solely and directly with such Lender in connection with the interest
so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and
related information with respect to the Assignee, shall have been
given to the Loan Parties and the Agent by such Lender and the
Assignee; (ii) such Lender and its Assignee shall have delivered to
the Loan Parties and the Agent an Assignment and Acceptance in the
form of Exhibit F ("Assignment and Acceptance") together with any
note or notes subject to such assignment and (iii) except for an
assignment to an Affiliate, the assignor Lender or Assignee has paid
to the Agent a processing fee in the amount of $3,500.
(b) From and after the date that the Agent notifies the
assignor Lender that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i)
the Assignee thereunder shall be a party hereto and, to the extent
that rights and obligations, including, but not limited to, the
obligation to participate in Letters of Credit and Credit Support
have been assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that
rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under
this Agreement (and in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease
to be a party hereto).
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee
thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or
in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other Loan Document furnished pursuant hereto or
the attachment, perfection, or priority of any Lien granted by the
Loan Parties to the Agent or any Lender in the Collateral; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the
Consolidated Members or any of them or the performance or observance
by any Loan Party of any of its obligations under this Agreement or
any other Loan Document furnished pursuant hereto; (iii) such
Assignee confirms that it has received a copy of this Agreement,
together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Agent, such
58
assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action
under this Agreement; (v) such Assignee appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are
delegated to the Agent by the terms hereof, together with such
powers, including the discretionary rights and incidental power, as
are reasonably incidental thereto; and (vi) such Assignee agrees
that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) Immediately upon satisfaction of the requirements of
Section 11.2(a), this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of
the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce
such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more
commercial banks, financial institutions, or other Persons not
Affiliates of a Consolidated Member (a "Participant") participating
interests in any Loans, the Commitment of that Lender and the other
interests of that Lender (the "originating Lender") hereunder and
under the other Loan Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain
unchanged, (ii) the originating Lender shall remain solely
responsible for the performance of such obligations, (iii) the Loan
Parties and the Agent shall continue to deal solely and directly
with the originating Lender in connection with the originating
Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any
participating interest under which the Participant has rights to
approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document except the matters set
forth in Section 11.1(a) (i), (ii) and (iii), and all amounts
payable by the Loan Parties hereunder shall be determined as if such
Lender had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have
become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this
Agreement to the same extent and subject to the same limitation as
if the amount of its participating interest were owing directly to
it as a Lender under this Agreement.
(f) Notwithstanding any other provision in this Agreement,
any Lender may at any time create a security interest in, or pledge,
all or any portion of its rights under and interest in this
Agreement in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR
Section 203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable
law.
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ARTICLE 12
THE AGENT
12.1 Appointment and Authorization.
Each Lender hereby designates and appoints Bank as its Agent under
this Agreement and the other Loan Documents and each Lender hereby irrevocably
authorizes the Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. The Agent agrees to act as such on the express
conditions contained in this Article 12. The provisions of this Article 12 are
solely for the benefit of the Agent and the Lenders and the Loan Parties shall
have no rights as a third party beneficiary of any of the provisions contained
herein, nor shall anything contained in this Article 12 limit any rights the
Loan Parties have or may have as against Agent, Bank, any Lender, any Letter of
Credit Issuer or any other Agent-Related Person. Notwithstanding any provision
to the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties. Except as expressly
otherwise provided in this Agreement, the Agent shall have and may use its sole
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions which the
Agent is expressly entitled to take or assert under this Agreement and the other
Loan Documents, including (a) the determination of the applicability of
ineligibility criteria with respect to the calculation of the Borrowing Base,
(b) the making of Agent Advances pursuant to Section 1.2(i), and (c) the
exercise of remedies pursuant to Section 9.2, and, with respect to any such
action so taken, if exercised in good faith, Agent shall have no liability to
the Lenders for any errors in judgement.
12.2 Delegation of Duties.
The Agent may execute any of its duties under this Agreement or any
other Loan Document by or through agents, employees or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or misconduct of
any agent or attorney-in-fact that it selects as long as such selection was made
without gross negligence or willful misconduct.
12.3 Liability of Agent.
None of the Agent-Related Persons shall (i) be liable for any action
taken or omitted to be taken by any of them under or in connection with this
Agreement or any other
60
Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (ii) be responsible in any manner to any
of the Lenders for any recital, statement, representation or warranty made by
any Loan Party or any other Consolidated Member, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of any Loan Party or any other Consolidated Member or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of any Loan Party or any other
Consolidated Member.
12.4 Reliance by Agent.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to the Loan Parties), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Required
Lenders (or all Lenders if so required by Section 11.1) and such request and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
12.5 Notice of Default.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default, unless the Agent shall have
received written notice from a Lender or any of the Loan Parties referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall promptly take such action with
respect to such Default or Event of Default as may be requested by the Required
Lenders in accordance with Section 9; provided, however, that unless and until
the Agent has received any such request, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable.
12.6 Credit Decision.
Each Lender acknowledges that none of the Agent-Related Persons has
made any representation or warranty to it, and that no act by the Agent
hereinafter taken, including any
61
review of the affairs of the Loan Parties and their Affiliates, shall be deemed
to constitute any representation or warranty by any Agent-Related Person to any
Lender. Each Lender represents to the Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Loan Parties or the other
Consolidated Members, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Loan Parties. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the Agent,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of any Loan Party or
any other Consolidated Member which may come into the possession of any of the
Agent-Related Persons.
12.7 Indemnification.
Whether or not the transactions contemplated hereby are consummated,
the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent
not reimbursed by or on behalf of the Loan Parties and without limiting the
obligation of the Loan Parties to do so), in accordance with their Pro Rata
Shares, from and against any and all Indemnified Liabilities as such term is
defined in Section 13.11; provided, however, that no Lender shall be liable for
the payment to the Agent-Related Persons of any portion of such Indemnified
Liabilities to the extent resulting from such Person's gross negligence or
willful misconduct or from the breach of any representation, warranty or
covenant contained herein or in another Loan Document by such Indemnified
Person. Without limitation of the foregoing, each Lender shall reimburse the
Agent upon demand for its Pro Rata Share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Agent is not reimbursed for such expenses by or on behalf
of the Loan Parties. The undertaking in this Section shall survive the payment
of all Obligations hereunder and the resignation or replacement of the Agent.
12.8 Agent in Individual Capacity.
The Bank and its Affiliates may make loans to, issue letters of
credit for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with the Consolidated Members and their Affiliates as though
the Bank were not the Agent hereunder and without notice to or consent of the
Lenders. The Bank or its Affiliates may receive information regarding the
62
Consolidated Members, their Affiliates and Account Debtors (including
information that may be subject to confidentiality obligations in favor of the
Consolidated Members) and acknowledge that except as required by the Loan
Documents and applicable law, the Agent and the Bank shall be under no
obligation to provide such information to them. With respect to its Loans, the
Bank shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the Agent, and the terms
"Lender" and "Lenders" include the Bank in its individual capacity.
12.9 Successor Agent.
The Agent may resign as Agent upon at least 30 days' prior notice to
the Lenders and the Borrower, such resignation to be effective upon the
acceptance of a successor agent to its appointment as Agent. In the event the
Bank sells all of its Commitment and Revolving Loans as part of a sale, transfer
or other disposition by the Bank of substantially all of its loan portfolio, the
Bank shall resign as Agent and such purchaser or transferee shall become the
successor Agent hereunder. Subject to the foregoing, if the Agent resigns under
this Agreement, the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders. If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Lenders and the Loan Parties, a successor agent from among
the Lenders. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article 12 shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. Notwithstanding anything herein to the contrary, the Borrower shall
have the right to consult with the Agent and the Lenders in the choice of any
such successor Agent so long as no Event of Default exists.
12.10 Withholding Tax.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under
Sections 1441 or 1442 of the Code, such Lender agrees with and in
favor of the Agent, to deliver to the Agent:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States of America tax
treaty, properly completed IRS Forms W-8BEN and W-8ECI before the
payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year
during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under
this Agreement is exempt from United States of America withholding
tax because it is effectively connected with a United States of
America trade or business of such Lender, two properly completed and
executed copies of IRS Form W-8ECI before the payment of any
interest is due in the first taxable year of such Lender and in
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each succeeding taxable year of such Lender during which interest
may be paid under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under
the Code or other laws of the United States of America as a
condition to exemption from, or reduction of, United States of
America withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States of America tax treaty by
providing IRS Form FW-8BEN and such Lender sells, assigns, grants a
participation in, or otherwise transfers all or part of the
Obligations owing to such Lender, such Lender agrees to notify the
Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Loan Parties to such Lender.
To the extent of such percentage amount, the Agent will treat such
Lender's IRS Form W-8BEN as no longer valid.
(c) If any Lender claiming exemption from United States of
America withholding tax by filing IRS Form W-8ECI with the Agent
sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations owing to such Lender, such Lender
agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of
the Code.
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any interest
payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the
forms or other documentation required by subsection (a) of this
Section are not delivered to the Agent, then the Agent may withhold
from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable
withholding tax.
(e) If the IRS or any other Governmental Authority of the
United States of America or other jurisdiction asserts a claim that
the Agent did not properly withhold tax from amounts paid to or for
the account of any Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed
to notify the Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for
any other reason) such Lender shall indemnify the Agent fully for
all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to the Agent
under this Section, together with all costs and expenses (including
Attorney Costs). The obligation of the Lenders under this subsection
shall survive the payment of all Obligations and the resignation or
replacement of the Agent. For any period with respect to which a
Lender has
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failed to provide a Loan Parties and Agent with the appropriate form
pursuant to this Section 12.10 hereof (unless such failure is due to
a change in treaty, law, or regulation occurring subsequent to the
date on which a form originally was required to be provided), such
Lender shall not be entitled to indemnification under Section
4.1(a), 4.1(b) or 4.1(c) hereof with respect to Taxes imposed by the
United States; provided, however, that should a Lender, which is
otherwise exempt from or subject to a reduced rate of withholding
tax, become subject to Taxes because of its failure to deliver a
form required hereunder, the Loan Parties shall take such steps as
such Lender shall reasonably request to assist such Lender to
recover such Taxes at such Lender's expense.
12.11 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at
its option and in its sole discretion, to release any Agent's Liens
upon any Collateral (i) upon the termination of the Commitments and
payment and satisfaction in full of all Loans and reimbursement
obligations in respect of Letters of Credit and Credit Support, and
the termination of all outstanding Letters of Credit (whether or not
any of such obligations are due) and all other Obligations; (ii)
constituting property being sold or disposed of if the Loan Party
certifies to the Agent that the sale or disposition is made in
compliance with Section 7.9 and Section 3.5 (and the Agent may rely
conclusively on any such certificate, without further inquiry);
(iii) constituting property in which no Loan Party owned an interest
at the time the Lien was granted or at any time thereafter; or (iv)
constituting property leased to an Loan Party under a lease which
has expired or been terminated in a transaction permitted under this
Agreement. Except as provided above, the Agent will not release any
of the Agent's Liens without the prior written authorization of the
Lenders; provided that the Agent may, in its discretion, release the
Agent's Liens on Collateral valued in the aggregate not in excess of
$1,000,000 during each Fiscal Year without the prior written
authorization of the Lenders and the Agent may release the Agent's
Liens on Collateral valued in the aggregate not in excess of
$2,000,000 during each Fiscal Year with the prior written
authorization of Required Lenders. Upon request by the Agent or the
Loan Parties at any time, the Lenders will confirm in writing the
Agent's authority to release any Agent's Liens upon particular types
or items of Collateral pursuant to this Section 12.11.
(b) Upon receipt by the Agent of any authorization required
pursuant to Section 12.11(a) from the Lenders of the Agent's
authority to release Agent's Liens upon particular types or items of
Collateral, and upon at least five (5) Business Days prior written
request by the Loan Parties, the Agent shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as
may be necessary to evidence the release of the Agent's Liens upon
such Collateral; provided, however, that (i) the Agent shall not be
required to execute any such document on terms which, in the Agent's
opinion, would expose the Agent to liability or create any material
obligation or entail any material consequence other than the release
of such Liens without recourse or warranty, and (ii) such release
shall not in any manner discharge, affect or impair the Obligations
or any Liens
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(other than those expressly being released) upon (or obligations of
the Loan Parties in respect of) all interests retained by any Loan
Party, including the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of
the Lenders to assure that the Collateral exists or is owned by any
Loan Party or is cared for, protected or insured or has been
encumbered, or that the Agent's Liens have been properly or
sufficiently or lawfully created, perfected, protected or enforced
or are entitled to any particular priority, or to exercise at all or
in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities
and powers granted or available to the Agent pursuant to any of the
Loan Documents, it being understood and agreed that in respect of
the Collateral, or any act, omission or event related thereto, the
Agent may act in any manner it may deem appropriate, in its sole
discretion given the Agent's own interest in the Collateral in its
capacity as one of the Lenders and that the Agent shall have no
other duty or liability whatsoever to any Lender as to any of the
foregoing.
12.12 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without
the express consent of all Lenders, and that it shall, to the extent
it is lawfully entitled to do so, upon the request of all Lenders,
set off against the Obligations, any amounts owing by such Lender to
an Loan Party or any accounts of an Loan Party now or hereafter
maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so by the Agent,
take or cause to be taken any action to enforce its rights under
this Agreement or against any Loan Party, including the commencement
of any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff or otherwise, any proceeds of
Collateral or any payments with respect to the Obligations of any
Loan Party to such Lender arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds
or payments received by such Lender from the Agent pursuant to the
terms of this Agreement, or (ii) payments from the Agent in excess
of such Lender's ratable portion of all such distributions by the
Agent, such Lender shall promptly (1) turn the same over to the
Agent, in kind, and with such endorsements as may be required to
negotiate the same to the Agent, or in same day funds, as
applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable
provisions of this Agreement, or (2) purchase, without recourse or
warranty, an undivided interest and participation in the Obligations
owed to the other Lenders so that such excess payment received shall
be applied ratably as among the Lenders in accordance with their Pro
Rata Shares; provided, however, that if all or part of such excess
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payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in
whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing
party, but without interest except to the extent that such
purchasing party is required to pay interest in connection with the
recovery of the excess payment.
12.13 Agency for Perfection.
Each Lender hereby appoints each other Lender as agent for the
purpose of perfecting the Lenders' security interest in assets which, in
accordance with Article 9 of the UCC or the applicable provisions of the PPSA or
other applicable law can be perfected only by possession. Should any Lender
(other than the Agent) obtain possession of any such Collateral, such Lender
shall notify the Agent thereof, and, promptly upon the Agent's request therefor
shall deliver such Collateral to the Agent or in accordance with the Agent's
instructions.
12.14 Payments by Agent to Lenders.
All payments to be made by the Agent to the Lenders shall be made by
bank wire transfer or internal transfer of immediately available funds to each
Lender pursuant to wire transfer instructions delivered in writing to the Agent
on or prior to the Closing Date (or if such Lender is an Assignee, on the
applicable Assignment and Acceptance), or pursuant to such other wire transfer
instructions as each party may designate for itself by written notice to the
Agent. Concurrently with each such payment, the Agent shall identify whether
such payment (or any portion thereof) represents principal, premium or interest
on the Revolving Loans or otherwise. Unless the Agent receives notice from the
Loan parties prior to the date on which any payment is due to the Lenders that
the Loan Parties will not make such payment in full as and when required, the
Agent may assume that the Loan Parties has made such payment in full to the
Agent on such date in immediately available funds and the Agent may (but shall
not be so required), in reliance upon such assumption, distribute to each Lender
on such due date an amount equal to the amount then due such Lender. If and to
the extent the Loan Parties have not made such payment in full to the Agent,
each Lender shall repay to the Agent on demand such amount distributed to such
Lender, together with interest thereon at the Federal Funds Rate for each day
from the date such amount is distributed to such Lender until the date repaid.
12.15 Settlement.
(a) (i) Each Lender's funded portion of the Revolving
Loans is intended by the Lenders to be equal at all times to such
Lender's Pro Rata Share of the outstanding Revolving Loans.
Notwithstanding such agreement, the Agent, the Bank, and the other
Lenders agree (which agreement shall not be for the benefit of or
enforceable by the Loan Parties or any other Consolidated Member)
that in order to facilitate the administration of this Agreement and
the other Loan Documents, settlement among them as to the Revolving
Loans, the Non-Ratable Loans and the Agent Advances shall take place
on a periodic basis in accordance with the following provisions:
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(ii) The Agent shall request settlement ("Settlement")
with the Lenders on at least a weekly basis, or on a more frequent
basis at Agent's election, (A) on behalf of the Bank, with respect
to each outstanding Non-Ratable Loan, (B) for itself, with respect
to each Agent Advance, and (C) with respect to collections received,
in each case, by notifying the Lenders of such requested Settlement
by telecopy, telephone or other similar form of transmission, of
such requested Settlement, no later than 12:00 noon (Atlanta,
Georgia time) on the date of such requested Settlement (the
"Settlement Date"). Each Lender (other than the Bank, in the case of
Non-Ratable Loans and the Agent in the case of Agent Advances) shall
transfer the amount of such Lender's Pro Rata Share of the
outstanding principal amount of the Non-Ratable Loans and Agent
Advances with respect to each Settlement to the Agent, to Agent's
account, not later than 2:00 p.m. (Atlanta, Georgia time), on the
Settlement Date applicable thereto. Settlements may occur during the
continuation of a Default or an Event of Default and whether or not
the applicable conditions precedent set forth in Article 8 have then
been satisfied. Such amounts made available to the Agent shall be
applied against the amounts of the applicable Non-Ratable Loan or
Agent Advance and, together with the portion of such Non-Ratable
Loan or Agent Advance representing the Bank's Pro Rata Share
thereof, shall constitute Revolving Loans of such Lenders. If any
such amount is not transferred to the Agent by any Lender on the
Settlement Date applicable thereto, the Agent shall be entitled to
recover such amount on demand from such Lender together with
interest thereon at the Federal Funds Rate for the first three (3)
days from and after the Settlement Date and thereafter at the
Interest Rate then applicable to the Revolving Loans (A) on behalf
of the Bank, with respect to each outstanding Non-Ratable Loan, and
(B) for itself, with respect to each Agent Advance.
(iii) Notwithstanding the foregoing, not more than one
(1) Business Day after demand is made by the Agent (whether before
or after the occurrence of a Default or an Event of Default and
regardless of whether the Agent has requested a Settlement with
respect to a Non-Ratable Loan or Agent Advance), each other Lender
(A) shall irrevocably and unconditionally purchase and receive from
the Bank or the Agent, as applicable, without recourse or warranty,
an undivided interest and participation in such Non-Ratable Loan or
Agent Advance equal to such Lender's Pro Rata Share of such
Non-Ratable Loan or Agent Advance and (B) if Settlement has not
previously occurred with respect to such Non-Ratable Loans or Agent
Advances, upon demand by Bank or Agent, as applicable, shall pay to
Bank or Agent, as applicable, as the purchase price of such
participation an amount equal to one-hundred percent (100%) of such
Lender's Pro Rata Share of such Non-Ratable Loans or Agent Advances.
If such amount is not in fact made available to the Agent by any
Lender, the Agent shall be entitled to recover such amount on demand
from such Lender together with interest thereon at the Federal Funds
Rate for the first three (3) days from and after such demand and
thereafter at the Interest Rate then applicable to Base Rate
Revolving Loans.
(iv) From and after the date, if any, on which any
Lender
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purchases an undivided interest and participation in any Non-Ratable
Loan or Agent Advance pursuant to clause (iii) above, the Agent
shall promptly distribute to such Lender, such Lender's Pro Rata
Share of all payments of principal and interest and all proceeds of
Collateral received by the Agent in respect of such Non-Ratable Loan
or Agent Advance.
(v) Between Settlement Dates, the Agent, to the extent
no Agent Advances are outstanding, may pay over to the Bank any
payments received by the Agent, which in accordance with the terms
of this Agreement would be applied to the reduction of the Revolving
Loans, for application to the Bank's Revolving Loans including
Non-Ratable Loans. If, as of any Settlement Date, collections
received since the then immediately preceding Settlement Date have
been applied to the Bank's Revolving Loans (other than to
Non-Ratable Loans or Agent Advances in which such Lender has not yet
funded its purchase of a participation pursuant to clause (iii)
above), as provided for in the previous sentence, the Bank shall pay
to the Agent for the accounts of the Lenders, to be applied to the
outstanding Revolving Loans of such Lenders, an amount such that
each Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Revolving Loans. During
the period between Settlement Dates, the Bank with respect to
Non-Ratable Loans, the Agent with respect to Agent Advances, and
each Lender with respect to the Revolving Loans other than
Non-Ratable Loans and Agent Advances, shall be entitled to interest
at the applicable rate or rates payable under this Agreement on the
actual average daily amount of funds employed by the Bank, the Agent
and the other Lenders.
(b) Lenders' Failure to Perform. All Revolving Loans (other
than Non-Ratable Loans and Agent Advances) shall be made by the
Lenders simultaneously and in accordance with their Pro Rata Shares.
It is understood that (i) no Lender shall be responsible for any
failure by any other Lender to perform its obligation to make any
Revolving Loans hereunder, nor shall any Commitment of any Lender be
increased or decreased as a result of any failure by any other
Lender to perform its obligation to make any Revolving Loans
hereunder, (ii) no failure by any Lender to perform its obligation
to make any Revolving Loans hereunder shall excuse any other Lender
from its obligation to make any Revolving Loans hereunder, and (iii)
the obligations of each Lender hereunder shall be several, not joint
and several.
(c) Defaulting Lenders. Unless the Agent receives notice
from a Lender on or prior to the Closing Date or, with respect to
any Borrowing after the Closing Date, at least one Business Day
prior to the date of such Borrowing, that such Lender will not make
available as and when required hereunder to the Agent that Lender's
Pro Rata Share of a Borrowing, the Agent may assume that each Lender
has made such amount available to the Agent in immediately available
funds on the Funding Date. Furthermore, the Agent may, in reliance
upon such assumption, make available to the Loan Parties on such
date a corresponding amount. If any Lender has not transferred its
full Pro Rata Share to the Agent in immediately available funds and
the Agent has transferred corresponding amount
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to the Loan Parties on the Business Day following such Funding Date
that Lender shall make such amount available to the Agent, together
with interest at the Federal Funds Rate for that day. A notice by
the Agent submitted to any Lender with respect to amounts owing
shall be conclusive, absent manifest error. If each Lender's full
Pro Rata Share is transferred to the Agent as required, the amount
transferred to the Agent shall constitute that Lender's Revolving
Loan for all purposes of this Agreement. If that amount is not
transferred to the Agent on the Business Day following the Funding
Date, the Agent will notify the Loan Parties of such failure to fund
and, upon demand by the Agent, the Loan Parties shall pay such
amount to the Agent for the Agent's account, together with interest
thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the Interest Rate applicable at the time to
the Revolving Loans comprising that particular Borrowing. The
failure of any Lender to make any Revolving Loan on any Funding Date
(any such Lender, prior to the cure of such failure, being
hereinafter referred to as a "Defaulting Lender") shall not relieve
any other Lender of its obligation hereunder to make a Revolving
Loan on that Funding Date. No Lender shall be responsible for any
other Lender's failure to advance such other Lenders' Pro Rata Share
of any Borrowing.
(d) Retention of Defaulting Lender's Payments. The Agent
shall not be obligated to transfer to a Defaulting Lender any
payments made by Loan Parties to the Agent for the Defaulting
Lender's benefit; nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder. Amounts payable to a Defaulting
Lender shall instead be paid to or retained by the Agent. In its
discretion, the Agent may loan the amount of all such payments
received or retained by it for the account of such Defaulting
Lender. Any amounts so loaned to the Loan Parties shall bear
interest at the rate applicable to Base Rate Revolving Loans and for
all other purposes of this Agreement shall be treated as if they
were Revolving Loans, provided, however, that for purposes of voting
or consenting to matters with respect to the Loan Documents and
determining Pro Rata Shares, such Defaulting Lender shall be deemed
not to be a "Lender". Until a Defaulting Lender cures its failure to
fund its Pro Rata Share of any Borrowing (A) such Defaulting Lender
shall not be entitled to any portion of the Unused Line Fee and (B)
the Unused Line Fee shall accrue in favor of the Lenders which have
funded their respective Pro Rata Shares of such requested Borrowing
and shall be allocated among such performing Lenders ratably based
upon their relative Commitments. This Section shall remain effective
with respect to such Lender until such time as the Defaulting Lender
shall no longer be in default of any of its obligations under this
Agreement. The terms of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by the Loan Parties of their
duties and obligations hereunder.
(e) Removal of Defaulting Lender. At the Borrower's request,
the Agent or an Eligible Assignee reasonably acceptable to the Agent
and the Borrower shall have the right (but not the obligation) to
purchase from any Defaulting Lender, and each Defaulting Lender
shall, upon such request, sell and
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assign to the Agent or such Eligible Assignee, all of the Defaulting
Lender's outstanding Commitments hereunder. Such sale shall be
consummated promptly after Agent has arranged for a purchase by
Agent or an Eligible Assignee pursuant to an Assignment and
Acceptance, and at a price equal to the outstanding principal
balance of the Defaulting Lender's Loans, plus accrued interest and
fees (except any fees in connection with such sale that would
otherwise arise under Section 4.4 hereof, for which the Borrower
shall not be liable), without premium or discount .
12.16 Letters of Credit; Intra-Lender Issues.
(a) Notice of Letter of Credit Balance. On each Settlement
Date the Agent shall notify each Lender of the issuance of all Letters of Credit
since the prior Settlement Date and indicate the expiry dates and terms of any
evergreen provisions therein.
(b) Participations in Letters of Credit.
(i) Purchase of Participations. Immediately upon
issuance of any Letter of Credit in accordance with Section 1.4(d),
each Lender shall be deemed to have irrevocably and unconditionally
purchased and received without recourse or warranty, an undivided
interest and participation equal to such Lender's Pro Rata Share of
the face amount of such Letter of Credit or the Credit Support
provided through the Agent to the Letter of Credit Issuer, if not
the Bank, in connection with the issuance of such Letter of Credit
(including all obligations of the Borrower with respect thereto, and
any security therefor or guaranty pertaining thereto).
(ii) Sharing of Reimbursement Obligation Payments.
Whenever the Agent receives a payment from the Loan Parties on
account of reimbursement obligations in respect of a Letter of
Credit or Credit Support as to which the Agent has previously
received for the account of the Letter of Credit Issuer thereof
payment from a Lender, the Agent shall promptly pay to such Lender
such Lender's Pro Rata Share of such payment from the Borrower. Each
such payment shall be made by the Agent on the next Settlement Date.
(iii) Documentation. Upon the request of any Lender, the
Agent shall furnish to such Lender copies of any Letter of Credit,
Credit Support for any Letter of Credit, reimbursement agreements
executed in connection therewith, applications for any Letter of
Credit, and such other documentation as may reasonably be requested
by such Lender.
(iv) Obligations Irrevocable. The obligations of each
Lender to make payments to the Agent with respect to any Letter of
Credit or with respect to their participation therein or with
respect to any Credit Support for any Letter of Credit or with
respect to the Revolving Loans made as a result of a drawing under a
Letter of Credit and the obligations of the Loan Parties for whose
account the Letter of Credit or Credit Support was issued to make
payments to the Agent, for
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the account of the Lenders, shall be irrevocable and shall not be
subject to any qualification or exception whatsoever, including any
of the following circumstances:
(1) any lack of validity or enforceability of
this Agreement or any of the other Loan Documents;
(2) the existence of any claim, setoff, defense
or other right which any Loan Party may have at any time against a beneficiary
named in a Letter of Credit or any transferee of any Letter of Credit (or any
Person for whom any such transferee may be acting), any Lender, the Agent, the
issuer of such Letter of Credit, or any other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying transactions between the
Borrower or any other Person and the beneficiary named in any Letter of Credit);
(3) any draft, certificate or any other document
presented under the Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(4) the surrender or impairment of any security
for the performance or observance of any of the terms of any of the Loan
Documents;
(5) the occurrence of any Default or Event of
Default; or
(6) the failure of the Borrower to satisfy the
applicable conditions precedent set forth in Article 8.
(c) Recovery or Avoidance of Payments; Refund of Payments In
Error. In the event any payment by or on behalf of the Borrower
received by the Agent with respect to any Letter of Credit or Credit
Support provided for any Letter of Credit and distributed by the
Agent to the Lenders on account of their respective participations
therein is thereafter set aside, avoided or recovered from the Agent
in connection with any receivership, liquidation or bankruptcy
proceeding, the Lenders shall, upon demand by the Agent, pay to the
Agent their respective Pro Rata Shares of such amount set aside,
avoided or recovered, together with interest at the rate required to
be paid by the Agent upon the amount required to be repaid by it.
Unless the Agent receives notice from the Borrower prior to the date
on which any payment is due to the Lenders that the Borrower will
not make such payment in full as and when required, the Agent may
assume that the Borrower has made such payment in full to the Agent
on such date in immediately available funds and the Agent may (but
shall not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrower has
not made such payment in full to the Agent, each Lender shall repay
to the Agent on demand such amount distributed to such Lender,
together with interest thereon at the Federal Funds Rate for each
day from the date such amount is distributed to such Lender until
the date repaid.
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(d) Indemnification by Lenders. To the extent not reimbursed
by the Loan Parties and without limiting the obligations of the Loan
Parties hereunder, the Lenders agree to indemnify the Letter of
Credit Issuer ratably in accordance with their respective Pro Rata
Shares, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including
attorneys' fees) or disbursements of any kind and nature whatsoever
that may be imposed on, incurred by or asserted against the Letter
of Credit Issuer in any way relating to or arising out of any Letter
of Credit or the transactions contemplated thereby or any action
taken or omitted by the Letter of Credit Issuer under any Letter of
Credit or any Loan Document in connection therewith; provided that
no Lender shall be liable for any of the foregoing to the extent it
arises from the gross negligence or willful misconduct of the Person
to be indemnified. Without limitation of the foregoing, each Lender
agrees to reimburse the Letter of Credit Issuer promptly upon demand
for its Pro Rata Share of any costs or expenses payable by any Loan
Party to the Letter of Credit Issuer, to the extent that the Letter
of Credit Issuer is not promptly reimbursed for such costs and
expenses by the Loan Parties. The agreement contained in this
Section shall survive payment in full of all other Obligations.
12.17 Concerning the Collateral and the Related Loan Documents.
Each Lender authorizes and directs the Agent to enter into the other
Loan Documents, for the ratable benefit and obligation of the Agent and the
Lenders. Each Lender agrees that any action taken by the Agent or Required
Lenders in accordance with the terms of this Agreement or the other Loan
Documents, and the exercise by the Agent or the Required Lenders, as applicable,
of their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders. The Lenders acknowledge that the Revolving Loans, Agent Advances,
Non-Ratable Loans, Hedge Agreements, Bank Products and all interest, fees and
expenses hereunder constitute one Debt, secured pari passu by all of the
Collateral.
12.18 Field Audit and Examination Reports; Disclaimer by Lenders.
By signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field
audit or examination report (each a "Report" and collectively,
"Reports") prepared by or on behalf of the Agent;
(b) expressly agrees and acknowledges that neither the Bank
nor the Agent (i) makes any representation or warranty as to the
accuracy of any Report, or (ii) shall be liable for any information
contained in any Report;
(c) expressly agrees and acknowledges that the Reports are
not comprehensive audits or examinations, that the Agent or the Bank
or other party performing any audit or examination will inspect only
specific information
73
regarding the Loan Parties and will rely significantly upon the Loan
Parties' books and records, as well as on representations of the
Loan Parties' personnel;
(d) agrees to keep all Reports confidential and strictly for
its internal use, and not to distribute except to its participants,
or use any Report in any other manner; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i)
to hold the Agent and any such other Lender preparing a Report
harmless from any action the indemnifying Lender may take or
conclusion the indemnifying Lender may reach or draw from any Report
in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to the Borrower, or the
indemnifying Lender's participation in, or the indemnifying Lender's
purchase of, a loan or loans of the Borrower; and (ii) to pay and
protect, and indemnify, defend and hold the Agent and any such other
Lender preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses and other amounts
(including Attorney Costs) incurred by the Agent and any such other
Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
12.19 Relation Among Lenders.
The Lenders are not partners or co-venturers, and no Lender shall be
liable for the acts or omissions of, or (except as otherwise set forth herein in
case of the Agent) authorized to act for, any other Lender.
ARTICLE 13
MISCELLANEOUS
13.1 No Waivers; Cumulative Remedies.
No failure by the Agent or any Lender to exercise any right, remedy,
or option under this Agreement or any present or future supplement thereto, or
in any other agreement between or among the Loan Parties and the Agent and/or
any Lender, or delay by the Agent or any Lender in exercising the same, will
operate as a waiver thereof. No waiver by the Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by the Agent or the Lenders on any occasion shall affect or
diminish the Agent's and each Lender's rights thereafter to require strict
performance by the Loan Parties of any provision of this Agreement. The Agent
and the Lenders may proceed directly to collect the Obligations without any
prior recourse to the Collateral. The Agent's and each Lender's rights under
this Agreement will be cumulative and not exclusive of any other right or remedy
which the Agent or any Lender may have.
13.2 Severability.
The illegality or unenforceability of any provision of this
Agreement or any Loan Document or any instrument or agreement required hereunder
shall not in any way affect or
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impair the legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.
13.3 Governing Law; Choice of Forum; Service of Process.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS
PROVIDED THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC
MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET
FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF NEW YORK; PROVIDED
THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF
THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA LOCATED IN
NEW YORK COUNTY, NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE LOAN PARTIES, THE AGENT AND THE LENDERS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE LOAN
PARTIES, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE
TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN
RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL
HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE LOAN
PARTIES OR THEIR PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION
THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND
(2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM
THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE
TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.
(c) EACH OF THE LOAN PARTIES HEREBY WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO THE ADDRESS SET FORTH IN SECTION 13.8 AND SERVICE SO
MADE SHALL BE DEEMED TO BE COMPLETED SEVEN (7) DAYS AFTER THE
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SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID.
NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE
LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
13.4 WAIVER OF JURY TRIAL.
EACH OF THE LOAN PARTIES, THE LENDERS AND THE AGENT EACH IRREVOCABLY
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE LOAN PARTIES,
THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION
SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING,
THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS
WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
13.5 Survival of Representations and Warranties.
All of the Loan Parties' representations and warranties contained in
this Agreement shall survive the execution, delivery, and acceptance thereof by
the parties, notwithstanding any investigation by the Agent or the Lenders or
their respective agents.
13.6 Other Security and Guaranties.
The Agent, may, without notice or demand and without affecting the
Loan Parties' obligations hereunder, from time to time: (a) take from any Person
and hold collateral (other than the Collateral) for the payment of all or any
part of the Obligations and exchange, enforce or release such collateral or any
part thereof; and (b) accept and hold any endorsement or guaranty of payment of
all or any part of the Obligations and release or substitute any such endorser
or guarantor, or any Person who has given any Lien in any other collateral as
security for the payment of all or any part of the Obligations, or any other
Person in any way obligated to pay all or any part of the Obligations.
13.7 Fees and Expenses.
Each Loan Party agrees to pay to the Agent, for its benefit, on
demand, all costs and expenses that Agent pays or incurs in connection with the
negotiation, preparation, syndication, consummation, administration,
enforcement, and termination of this Agreement or
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any of the other Loan Documents, including: (a) Attorney Costs, provided, that
the Loan Parties shall not be obligated to pay Attorney Costs incurred by the
Agent in connection with the negotiation, preparation, syndication and
consummation of this Agreement or any of the other Loan Documents which exceed
the sum of (i) $100,000 for the Agent's local outside counsel and (ii)
$(Cdn)20,000 for the Attorney Costs of Agent's Canadian counsel; (b) costs and
expenses (including attorneys' and paralegals' fees and disbursements) for any
amendment, supplement, waiver, consent, or subsequent closing in connection with
the Loan Documents and the transactions contemplated thereby; (c) costs and
expenses of lien and title searches; (d) taxes, fees and other charges for
filing financing statements and continuations, and other actions to perfect,
protect, and continue the Agent's Liens (including costs and expenses paid or
incurred by the Agent in connection with the consummation of Agreement); (e)
sums paid or incurred to pay any amount or take any action required of any Loan
Party under the Loan Documents that such Loan Party fails to pay or take; (f)
costs of appraisals, inspections, and verifications of the Collateral, including
reasonable travel, lodging, and meals for inspections of the Collateral and the
Loan Parties' operations by the Agent plus the Agent's then customary charge for
field examinations and audits and the preparation of reports thereof (such
charge is currently $750 per day (or portion thereof) for each Person retained
or employed by the Agent with respect to each field examination or audit);
provided, however, that unless an Event of Default shall exist and be
continuing, the Borrower shall not be obligated to the Agent for any expenses
set forth in this clause (f) for travel and visits to Consolidated Members'
facilities located in The People's Republic of China or Mexico; and (g) without
duplication, costs and expenses of forwarding loan proceeds, collecting checks
and other items of payment, and establishing and maintaining Payment Accounts
and lock boxes, and costs and expenses of preserving and protecting the
Collateral. In addition, each Loan Party agrees to pay costs and expenses
incurred by the Agent (including Attorneys' Costs) to the Agent, for its
benefit, on demand, and to the other Lenders for their benefit, on demand, and
all reasonable fees, expenses and disbursements incurred by such other Lenders,
including reasonable attorneys' fees and disbursements, in each case, paid or
incurred to obtain payment of the Obligations, enforce the Agent's Liens, sell
or otherwise realize upon the Collateral, and otherwise enforce the provisions
of the Loan Documents, or to defend any claims made or threatened against the
Agent or any Lender arising out of the transactions contemplated hereby
(including preparations for and consultations concerning any such matters). The
foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by the Loan Parties. All of
the foregoing costs and expenses shall be charged to the Loan Account as
Revolving Loans as described in Section 3.7.
13.8 Notices.
Except as otherwise provided herein, all notices, demands and
requests that any party is required or elects to give to any other shall be in
writing, or by a telecommunications device capable of creating a written record,
and any such notice shall become effective (a) upon personal delivery thereof,
including, but not limited to, delivery by overnight mail and courier service,
(b) four (4) days after it shall have been mailed by United States mail, first
class, certified or registered, with postage prepaid, or (c) in the case of
notice by such a telecommunications device, when properly transmitted, in each
case addressed to the party to be notified as follows:
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If to the Agent or to the Bank:
Bank of America, N.A.
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Business Credit-Account Executive
Telecopy No.: 404.607.6059
If to a Loan Party:
Applica Incorporated
0000 Xxxxx Xxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
Attention: Treasurer
Telecopy No.: 305.364-0502
Xxxx: xxxx.Xxxxxx@xxxxxxxxxxx.xxx
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
13.9 Waiver of Notices.
Unless otherwise expressly provided herein, the Loan Parties waive
presentment, and notice of demand or dishonor and protest as to any instrument,
notice of intent to accelerate the Obligations and notice of acceleration of the
Obligations, as well as any and all other notices to which they might otherwise
be entitled. No notice to or demand on a Loan Party which the Agent or any
Lender may elect to give shall entitle the Loan Parties to any or further notice
or demand in the same, similar or other circumstances.
13.10 Binding Effect.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective representatives, successors, and assigns of the
parties hereto; provided, however, that no interest herein may be assigned by
any Loan Party without prior written consent of the Agent and each Lender. The
rights and benefits of the Agent and the Lenders hereunder shall, if such
Persons so agree, inure to any party acquiring any interest in the Obligations
or any part thereof.
13.11 Indemnity of the Agent and the Lenders by the Borrower.
(a) Each Loan Party agrees to defend, indemnify and hold the
Agent-Related Persons, and each Lender, its Affiliates, and each of
their respective officers, directors, employees, counsel,
representatives, agents and
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attorneys-in-fact (each, an "Indemnified Person") harmless from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and
disbursements (including Attorney Costs) of any kind or nature
whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or
replacement of the Agent or replacement of any Lender) be imposed
on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or any document
contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate proceeding)
related to or arising out of this Agreement, any other Loan
Document, or the Loans or the use of the proceeds thereof, whether
or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided, that the
Loan Parties shall have no obligation hereunder to any Indemnified
Person with respect to Indemnified Liabilities resulting solely from
the gross negligence or willful misconduct of such Indemnified
Person. The agreements in this Section shall survive payment of all
other Obligations.
(b) Each Loan Party agrees to indemnify, defend and hold
harmless the Agent and the Lenders and their Affiliates from any
loss or liability directly or indirectly arising out of the use,
generation, manufacture, production, storage, release, threatened
release, discharge, disposal or presence of a hazardous substance
relating to a Consolidated Member's operations, business or
property. This indemnity will apply whether the hazardous substance
is on, under or about the Consolidated Member's property or
operations or property leased to a Consolidated Member. The
indemnity includes but is not limited to Attorneys Costs. The
indemnity extends to the Agent and the Lenders, their parents,
affiliates, subsidiaries and all of their directors, officers,
employees, agents, successors, attorneys and assigns. "Hazardous
substances" means any substance, material or waste that is or
becomes designated or regulated as "toxic," "hazardous,"
"pollutant," or "contaminant" or a similar designation or regulation
under any federal, state or local law (whether under common law,
statute, regulation or otherwise) or judicial or administrative
interpretation of such, including petroleum or natural gas. This
indemnity will survive repayment of all other Obligations.
13.12 [Reserved].
13.13 Final Agreement.
This Agreement, together with the other Loan Documents, are intended
by the Loan Parties, the Agent and the Lenders to be the final, complete, and
exclusive expression of the agreement between them. This Agreement and the other
Loan Documents supersede any and all prior oral or written agreements relating
to the subject matter hereof, except for the Fee Letter. Nothing contained
herein shall be deemed to be or operate as a novation or an accord and
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satisfaction of any of the Obligations. No modification, rescission, waiver,
release, or amendment of any provision of this Agreement or any other Loan
Document shall be made, except by a written agreement signed by the Loan Parties
and a duly authorized officer of each of the Agent and the requisite Lenders.
13.14 Counterparts.
This Agreement may be executed in any number of counterparts,
including facsimile copies thereof, and by the Agent, each Lender and the Loan
Parties in separate counterparts, each of which shall be an original, but all of
which shall together constitute one and the same agreement; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
13.15 Captions.
The captions contained in this Agreement are for convenience of
reference only, are without substantive meaning and should not be construed to
modify, enlarge, or restrict any provision.
13.16 Right of Setoff.
In addition to any rights and remedies of the Lenders provided by
law, if an Event of Default exists or the Loans have been accelerated, each
Lender is authorized (subject to the terms of Section 12.12(b)) at any time and
from time to time, without prior notice to the Loan Parties, any such notice
being waived by the Loan Parties to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing by, such Lender or any Affiliate of such Lender to or for the credit or
the account of the Loan Parties against any and all Obligations owing to such
Lender or its Affiliates, now or hereafter existing, irrespective of whether or
not the Agent or such Lender shall have made demand under this Agreement or any
Loan Document and although such Obligations may be contingent or unmatured. Each
Lender agrees promptly to notify the Loan Parties and the Agent after any such
set-off and application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT
OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY
OF A LOAN PARTY HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN
UNANIMOUS CONSENT OF THE LENDERS.
13.17 Confidentiality.
The Agent and each Lender (each, a "Lending Party") agrees to keep
Confidential any information furnished or made available to it by the Borrower,
any Guarantor or any of their Affiliates (each, a "Disclosing Party") that is
marked as confidential or, with respect to verbal information, explicitly
identified as confidential when furnished ("Confidential Information").
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(a) For purposes of this Agreement, the term "Confidential
Information" shall not include information that (i) is in the
Lending Party's possession prior to it being provided by or on
behalf of the Disclosing Party, provided that such information is
not known by the Lending Party to be subject to another
confidentiality agreement with, or other legal or contractual
obligation of confidentiality to, a Disclosing Party (ii) is or
becomes publicly available (other than through a breach of this
Agreement by any Lending Party), or (iii) becomes available to the
Lending Party on a non-confidential basis, provided that the source
of such information was not known by the Lending Party to be bound
by a confidentiality agreement or other legal or contractual
obligation of confidentiality with respect to such information.
(b) Notwithstanding the foregoing, a Lending Party may
disclose Confidential Information to: (i) any governmental agency or
regulatory body having or reasonably claiming to have authority to
regulate or oversee any aspect of the Lending Party's business in
connection with the exercise of such authority or claimed authority;
(ii) the extent necessary or appropriate to effect or preserve the
Lending Party's security (if any) hereunder or to enforce any right
or remedy provided pursuant to this Agreement or in connection with
any claims asserted by or against the Lending Party or the Borrower
or any other person or entity involved herewith; (iii) its
directors, officers, employees, attorneys, accountants, and auditors
(collectively, the "Representatives") whom it reasonably determines
need to know such information; and the Lending Party agrees inform
the Representatives to whom it discloses Confidential Information of
the confidential nature of the Confidential Information; (iv)
pursuant to subpoena or other court process; (v) when required to do
so in accordance with the provisions of any applicable Requirement
of Law; (vi) to the extent reasonably required in connection with
any litigation or proceeding (including, but not limited to, any
bankruptcy proceeding) to which any Lending Party or their
respective Affiliates may be party; and (vii) any bank or financial
institution or other entity to which the Lending Party has sold or
desires to sell an interest or participation in the Commitment and
the Loan Documents, provided that any such recipient of such
Confidential Information agrees in writing to keep such Confidential
Information confidential as specified in this Section 13.16;
provided, however, in the event a Lending Party is requested or
required (by interrogatory, court order, subpoena, administrative
proceeding, civil investigatory demand, or any similar legal
process) to disclose any of the Confidential Information, the
Lending Party, in the absence of a protective order, may disclose
such information without liability. The Lending Party, however,
shall, to the extent permitted by law and as promptly as
practicable, make reasonable efforts to notify the Disclosing Party
and the Borrower prior to such disclosure by the Lending Party so
that the Disclosing Party may seek at its sole expense a protective
order or other appropriate remedy.
(c) Each Lending Party acknowledges that, under certain
circumstances, the United States securities laws may prohibit a
person who has received material, non-public information from an
issuer from purchasing or selling securities of such issuer or from
communicating such information to any other person under
81
circumstances in which it is reasonably foreseeable that such other
person is likely to purchase or sell such securities. Each Lending
Party further acknowledges that certain Confidential Information
could be considered material non-public information and agrees that
it will not, and it will use reasonable efforts to ensure that its
Representatives will not, trade in the securities of the Borrower on
the basis of such information or communicate such information to any
other person under circumstances in which it is reasonably
foreseeable that such other person is likely to purchase or sell
such securities.
(d) This Section 13.17 shall survive the termination of this
Agreement.
13.18 Conflicts with Other Loan Documents.
Unless otherwise expressly provided in this Agreement (or in another
Loan Document by specific reference to the applicable provision contained in
this Agreement), if any provision contained in this Agreement conflicts with any
provision of any other Loan Document, the provision contained in this Agreement
shall govern and control.
13.19 Agency of the Borrower for Each Other Loan Party.
Each of the Loan Parties other than the Borrower irrevocably
appoints the Borrower as its agent for all purposes relevant to this Agreement,
including the giving and receipt of notices and execution and delivery of all
documents, instruments, and certificates contemplated herein (including, without
limitation, execution and delivery to the Agent of Borrowing Base Certificates,
Notices of Borrowing, and Notices of Continuation/Conversion) and all
modifications hereto. Any agreement, acknowledgment, consent, direction,
certification, or other action which might otherwise be valid or effective only
if given or taken by all or any of the Loan Parties or acting singly, shall be
valid and effective if given or taken only by the Borrower, whether or not any
of the other Loan Parties joins therein, and the Agent and the Lenders shall
have no duty or obligation to make further inquiry with respect to the authority
of the Borrower under this Section 13.19, provided that nothing in this Section
13.19 shall limit the effectiveness of, or the right of the Agent and the
Lenders to rely upon, any notice (including without limitation a Notice of
Borrowing or a Notice of Continuation/Conversion), document, instrument,
certificate, acknowledgment, consent, direction, certification, or other action
delivered by the Borrower or other Loan Party pursuant to this Agreement.
13.20 Express Waivers By Loan Parties In Respect of Cross Guaranties
and Cross Collateralization.
Each Loan Party agrees as follows:
(a) Each Loan Party hereby waives: (i) notice of acceptance of
this Agreement; (ii) notice of the making of any Loans, the issuance of
any Letter of Credit or Credit Support, or any other financial
accommodations made or extended under the Loan Documents or the creation
or existence of any Obligations; (iii) notice of the amount of the
Obligations, subject, however, to such Loan Party's right to make inquiry
of the Agent to ascertain the amount of the Obligations at any reasonable
time; (iv) notice of any
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adverse change in the financial condition of any other Obligated Party or
of any other fact that might increase such Loan Party's risk with respect
to such other Obligated Party under the Loan Documents; (v) notice of
presentment for payment, demand, protest, and notice thereof as to any
promissory notes or other instruments among the Loan Documents; and (vii)
all other notices (except if such notice is specifically required to be
given to such Loan Party hereunder or under any of the other Loan
Documents to which such Loan Party is a party) and demands to which such
Loan Party might otherwise be entitled;
(b) Each Loan Party hereby waives the right by statute or
otherwise to require the Agent or any Lender to institute suit against any
other Obligated Party or to exhaust any rights and remedies which the
Agent or any Lender has or may have against any other Obligated Party.
Each Loan Party further waives any defense arising by reason of any
disability or other defense of any other Obligated Party (other than the
defense that the Obligations shall have been fully and finally performed
and indefeasibly paid) or by reason of the cessation from any cause
whatsoever of the liability of any such Obligated Party in respect
thereof.
(c) Each Loan Party hereby waives and agrees not to assert against
the Agent, any Lender, or the Letter of Credit Issuer: (i) any defense
(legal or equitable), setoff, counterclaim, or claim which such Loan Party
may now or at any time hereafter have against any other Obligated Party;
(ii) any defense, setoff, counterclaim, or claim of any kind or nature
available to any other Obligated Party against the Agent, any Lender, the
Bank, or the Letter of Credit Issuer, arising directly or indirectly from
the present or future lack of perfection, sufficiency, validity, or
enforceability of the Obligations or any security therefor; (iii) any
right or defense arising by reason of any claim or defense based upon an
election of remedies by the Agent, any Lender, the Bank, or the Letter of
Credit Issuer under any applicable law; (iv) the benefit of any statute of
limitations affecting any other Loan Party's liability hereunder;
(d) Each Loan Party consents and agrees that, without notice to or
by such Loan Party and without affecting or impairing the obligations of such
Loan Party hereunder, the Agent may (subject to any requirement for consent of
any of the Lenders to the extent required by this Agreement), by action or
inaction: (i) compromise, settle, extend the duration or the time for the
payment of, or discharge the performance of, or may refuse to or otherwise not
enforce the Loan Documents; (ii) release all or any one or more parties to any
one or more of the Loan Documents or grant other indulgences to any other
Obligated Party in respect thereof, (iii) amend or modify in any manner and at
any time (or from time to time) any of the Loan Documents; or (iv) release or
substitute any Person liable for payment of the Obligations, or enforce,
exchange, release, or waive any security for the Obligations or any Guaranty of
the Obligations;
Each Loan Party represents and warrants to the Agent and the Lenders
that such Loan Party is currently informed of the financial condition of all
other Consolidated Members and all other circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonpayment of the Obligations. Each
Loan Party further represents and warrants that such Loan Party has read and
understands the terms and conditions of the Loan Documents. Each
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Loan Party agrees that neither the Agent, any Lender, the Bank, nor the Letter
of Credit Issuer has any responsibility to inform any Loan Party of the
financial condition of any other Obligated Party or of any other circumstances
which bear upon the risk of nonpayment or nonperformance of the Obligations.
13.21 Judgment Currency.
If for the purpose of obtaining judgment in any court it is
necessary to convert an amount due hereunder in the currency in which it is due
(the "Original Currency") into another currency (the "Second Currency"), the
rate of exchange applied shall be that at which, in accordance with normal
banking procedures, the Agent or any Lender could purchase in the New York
foreign exchange market, the Original Currency with the Second Currency on the
date on which judgment is given, or the preceding Business Day if such date is
not a Business Day. Each Loan Party agrees that its obligation in respect of any
Original Currency due from it hereunder shall, notwithstanding any judgment or
payment in such other currency, be discharged only to the extent that, on the
Business Day following the date the Lender receives payment of any sum so
adjudged to be due hereunder in the Second Currency, the Lender may, in
accordance with normal banking procedures, purchase, in the New York foreign
exchange market, the Original Currency with the amount of the Second Currency so
paid; and if the amount of the Original Currency so purchased or could have been
so purchased is less than the amount originally due in the Original Currency,
each Loan Party agrees, as a separate obligation and notwithstanding any such
payment or judgment, to indemnify the Agent or any Lender against such loss. The
term "rate of exchange" in this Section 13.20 means the spot rate at which Agent
or any Lender, in accordance with normal practices, is able on the relevant date
to purchase the Original Currency with the Second Currency, and includes any
premium and costs of exchange payable in connection with such purchase.
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IN WITNESS WHEREOF, the parties have entered into this Agreement on
the date first above written.
"BORROWER"
APPLICA INCORPORATED, a Florida
corporation
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer
"GUARANTORS"
APPLICA CONSUMER PRODUCTS, INC., a
Florida corporation
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer
APPLICA CANADA CORPORATION, a Nova Scotia
corporation
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer
WD DELAWARE, INC., a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer
HP INTELLECTUAL CORP., a Delaware
corporation
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer
85
WINDMERE HOLDINGS CORPORATION, a Delaware
corporation
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer
HP DELAWARE, INC., a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer
HPG LLC, a Delaware limited liability
company
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer
HP AMERICAS, INC., a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer
[Signatures continued on following page]
86
"AGENT"
Bank of America, N.A., as the Agent
By: /s/ Xxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
"LENDERS"
Bank of America, N.A., as a Lender
By: /s/ Xxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
[Signatures continued on following page]
87
FLEET CAPITAL CORPORATION, as a Lender
By: /s/ Xxxxxxx XxXxxxxxx
--------------------------------------
Name: Xxxxxxx XxXxxxxxx
Title: Vice President
[Signatures continued on following page]
88
CONGRESS FINANCIAL CORPORATION (FLORIDA),
as a Lender
By: /s/ Xxxx Xxxxx
--------------------------------------
Name: Xxxx Xxxxx
Title: Vice President
[Signatures continued on following page]
89
LASALLE BUSINESS CREDIT, INC., as agent
for Standard Federal Bank National
Association, as a Lender
By: /s/ Xxxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
[Signatures continued on following page]
90
GENERAL ELECTRIC CAPITAL CORPORATION, as
a Lender
By: /s/ Xxxxx Xxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxx
Title: Senior Vice President
[Signatures continued on following page]
91
HSBC BUSINESS CREDIT (USA), INC., as a
Lender
By: /s/ Xxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
[Signatures continued on following page]
92
NATIONAL BANK OF CANADA, as a Lender
By: /s/ Xxx Xxxxx
--------------------------------------
Name: Xxx Xxxxx
Title: Vice President
By: /s/ Xxxx Page
--------------------------------------
Name: Xxxx Page
Title: Vice President
93
ANNEX A
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have the
following respective meanings (unless otherwise defined therein), and all
section references in the following definitions shall refer to sections of the
Agreement:
"Accounts" means all of the Borrower's now owned or hereafter
acquired or arising accounts, as defined in the UCC, including any rights to
payment for the sale or lease of goods or rendition of services, whether or not
they have been earned by performance.
"Account Debtor" means each Person obligated in any way on or in
connection with an Account, Chattel Paper or General Intangibles (including a
payment intangible).
"ACH Transactions" means any cash management or related services
including the automatic clearing house transfer of funds by the Bank or any
Lender for the account of any Consolidated Member.
"Acquisition" means the acquisition of (i) a controlling equity
interest in another Person (including the purchase of an option, warrant or
convertible or similar type security to acquire such a controlling interest at
the time it becomes exercisable by the holder thereof), whether by purchase of
such equity interest or upon exercise of an option or warrant for, or conversion
of securities into, such equity interest, or (ii) assets of another Person which
constitute any material part of the assets of such Person or of a line or lines
of business conducted by such Person.
"Adjusted Net Earnings from Operations" means, with respect to any
relevant fiscal period of the Borrower, the Consolidated Member's net income
after provision for income taxes for such fiscal period, as determined in
accordance with GAAP and reported on the Financial Statements for such period,
excluding any and all of the following included in such net income: (a) gain or
loss arising from the sale of any capital assets; (b) gain arising from any
write-up in the book value of any asset; (c) earnings of any Person,
substantially all the assets of which have been acquired by a Consolidated
Member in any manner, to the extent realized by such other Person prior to the
date of acquisition; (d) earnings of any Person in which a Consolidated Member
has an ownership interest (other than a Subsidiary) unless (and only to the
extent) such earnings shall actually have been received by such Consolidated
Member in the form of cash distributions; (e) gains arising from any foreign
currency translations or in connection with Hedge Agreements to the extent not
included as a component of the Borrower's consolidated operating profit or
interest expense in the Financial Statements; (f) gain arising from the
acquisition of debt or equity securities of the Borrower or any other
Consolidated Member or from cancellation or forgiveness of Debt; and (g) gain
arising from extraordinary items, as determined in accordance with GAAP, or from
any other non-recurring transaction.
"Administration Fee" has the meaning specified in Section 2.7.
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"Affiliate" means, as to any Person, including any Consolidated
Member (the "subject Person"), any other Person which, directly or indirectly,
is in control of, is controlled by, or is under common control with, the subject
Person or which owns, directly or indirectly, ten percent (10%) or more of the
outstanding equity interest of the subject Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agent" means the Bank, solely in its capacity as administrative and
collateral agent for the Lenders, and any successor administrative and
collateral agent.
"Agent Advances" has the meaning specified in Section 1.2(i).
"Agent-Related Persons" means Agent, together with its Affiliates,
and the officers, directors, employees, counsel, representatives, agents and
attorneys-in-fact of Agent and such Affiliates.
"Agent's Liens" means the Liens in the Collateral granted to the
Agent, for the benefit of the Lenders and the Agent, pursuant to this Agreement
and the other Loan Documents.
"Aggregate Revolver Outstandings" means, at any time, the sum of (a)
the unpaid balance of the Revolving Loans, (b) 100% of the aggregate undrawn
face amount of all Letters of Credit and Credit Support, and (c) the aggregate
amount of any unpaid reimbursement obligations in respect of Letters of Credit
and Credit Support.
"Agreement" means the Credit Agreement to which this Annex A is
attached, as from time to time amended, modified or restated.
"Anniversary Date" means each anniversary of the Closing Date.
"Applica Canada" means Applica Canada Corporation, a Nova Scotia
corporation.
"Applica Canada Blocked Account Agreement" means the Blocked Account
Agreements entered into between Applica Canada and Scotia Bank, as amended.
"Applica Canada Formula Amount" means, at any date of determination,
that portion of the Borrowing Base comprised of Eligible Accounts and Eligible
Inventory owned by Applica Canada.
"Applica Canada Guaranty" means an agreement of Guaranty executed by
Applica Canada pursuant to which Applica Canada guarantees the Obligations or
any portion thereof.
"Applica Canada Security Agreement" means the General Security
Agreement, dated on or about the Closing Date, executed and delivered by Applica
Canada in favor of Agent for the benefit of itself and the Lenders, as at any
time amended.
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"Applica Canada Sublimit" means, as of any date of determination,
the lesser of (a) $54,000,000 or (b) 30% of the Borrowing Base on any date of
determination thereof.
"Applica Consumer Products" means Applica Consumer Products,
Inc., a Florida corporation, and its successors and assigns.
"Applica Consumer Products Formula Amount" means, at any date of
determination, that portion of the Borrowing Base comprised of Eligible Accounts
and Eligible Inventory owned by Applica Consumer Products.
"Applicable Margin" means, as of the Closing Date,
(i) with respect to Base Rate Revolving Loans, .35%;
(ii) with respect to LIBOR Revolving Loans, 2.35%; and
(iii) with respect to the Unused Line Fee, .375%.
The Applicable Margins shall be adjusted (up or down) prospectively
on a quarterly basis as determined by the Borrower's consolidated financial
performance, commencing with the first day of the first calendar month that
occurs more than five (5) days after the date of the delivery to the Agent of
the Borrower's audited Financial Statements for the Fiscal Year ending December
31, 2002. Adjustments in Applicable Margins shall be determined by reference to
the following grids:
IF FUNDED DEBT TO LEVEL OF
CONSOLIDATED EBITDA RATIO IS: APPLICABLE MARGINS:
----------------------------- -------------------
> or = 2.5 Level I
> or = 2.0, but < 2.5 Level II
> or = 1.75, but < 2.0 Level III
> or = 1.25, but < 1.75 Level IV
< 1.25 Level V
LOW TO HIGH
APPLICABLE MARGINS
------------------
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
------- -------- --------- -------- -------
Base Rate Revolving Loans .75% .50% .35% .25% -0-%
LIBOR Revolving Loans 2.75% 2.50% 2.35% 2.25% 2.0%
Unused Line Fee .50% .375% .375% .375% .25%
All adjustments in the Applicable Margins after December 31, 2002
shall be implemented quarterly on a prospective basis for each calendar month
commencing at least five (5) days after the date of delivery to the Agent of
quarterly unaudited or annual audited (as applicable) Financial Statements
evidencing the need for an adjustment. Concurrently with the delivery of those
Financial Statements, the Borrower shall deliver to the Agent and the Lenders a
A-3
certificate, signed by a Responsible Officer, setting forth in reasonable detail
the basis for the continuance of, or any change in, the Applicable Margins. For
the final quarter of any Fiscal Year of the Borrower, the Borrower may provide
unaudited Financial Statements of the Borrower, subject only to year-end
adjustments, for the purpose of determining the Applicable Margin; provided,
however, that if, upon delivery of the annual audited Financial Statements
required to be submitted by the Borrower to Agent pursuant to Section 5.2(a) of
this Agreement, Loan Parties have not met the criteria for reduction of the
Applicable Margin pursuant to the terms hereinabove for the final fiscal quarter
of the Fiscal Year of the Borrower then ended, then (a) such Applicable Margin
reduction shall be terminated and, effective on the first day of the month
following receipt by Agent of such audited Financial Statements, the Applicable
Margin shall be the Applicable Margin that would have been in effect if such
reduction had not been implemented based upon the unaudited Financial Statements
for the final fiscal quarter of the Fiscal Year of the Borrower then ended, and
(b) the Borrower shall pay to Agent, for the Pro Rata benefit of the Lenders, on
the first day of the month following receipt by Agent of such audited Financial
Statements, an amount equal to the difference between the amount of interest
that would have been paid on the principal amount of the Obligations using the
Applicable Margin determined based upon such audited Financial Statements and
the amount of interest actually paid during the period in which the reduction of
the Applicable Margin was in effect based upon the unaudited Financial
Statements for the final fiscal quarter of the Fiscal Year then ended. Failure
to timely deliver such Financial Statements shall, in addition to any other
remedy provided for in this Agreement, result in an increase in the Applicable
Margins to the highest level set forth in the foregoing grid, until the first
day of the first calendar month following the delivery of those Financial
Statements demonstrating that such an increase is not required. If a Default or
Event of Default has occurred and is continuing at the time any reduction in the
Applicable Margins is to be implemented, no reduction may occur until the first
day of the first calendar month following the date on which such Default or
Event of Default is waived or cured.
"Applicable Period" means, as of any date, the preceding four fiscal
quarters.
"Approved Receivables Program" means any securitization, factoring
or receivables program of the Loan Parties as may be approved in writing by the
Required Lenders in their sole discretion and subject to such intercreditor
agreements, assignments or other agreements as the Agent may deem appropriate or
reasonably necessary.
"Arrangement Fee" has the meaning specified in Section 2.4.
"Asset Disposition" means, with respect to any Person, the sale,
lease or other disposition of any asset of such Person other than the sale of
Inventory or the use of cash in the ordinary course of business.
"Assignee" has the meaning specified in Section 11.2(a).
"Assignment and Acceptance" has the meaning specified in Section
11.2(a).
"Attorney Costs" means and includes all reasonable fees, expenses
and disbursements of any law firm or other counsel engaged by the Agent.
A-4
"Availability" means, at any time (a) the lesser of (i) the Maximum
Revolver Amount or (ii) the Borrowing Base, minus (b) Reserves other than
Reserves deducted in the calculation of the Borrowing Base, minus (c) in each
case, the Aggregate Revolver Outstandings.
"Average Credit Facility Outstandings" means for any period, the
average daily Aggregate Revolver Outstandings at the end of each day during a
month or during shorter periods if the foregoing is calculated for the first
month after the Closing Date or as of the Termination Date.
"Bank" means Bank of America, N.A., a national banking
association, or any successor entity thereto.
"Bank Products" means any one or more of the following types of
services or facilities extended to a Consolidated Member by the Bank, any
Lender, any affiliate of the Bank or a Lender, and, solely in the case of an
affiliate of the Bank or a Lender, in reliance on the Bank's or such Lender's
agreement to indemnify such affiliate in connection with: (i) credit cards; (ii)
ACH Transactions; (iii) cash management, including controlled disbursement
services; and (iv) Hedge Agreements.
"Bank Product Reserves" means all reserves which the Agent from time
to time establishes in its reasonable discretion for the Bank Products then
provided or outstanding.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C. Section 101 et seq.).
"Base Rate" means, for any day, the rate of interest in effect for
such day as publicly announced from time to time by the Bank in Charlotte, North
Carolina as its "prime rate" (the "prime rate" being a rate set by the Bank
based upon various factors including the Bank's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate). Any change in the prime rate announced by the Bank shall take effect at
the opening of business on the day specified in the public announcement of such
change. Each Interest Rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.
"Base Rate Loans" means, collectively, the Base Rate Revolving
Loans.
"Base Rate Revolving Loan" means a Revolving Loan during any period
in which it bears interest based on the Base Rate.
"BIA" means the Bankruptcy and Insolvency Act (Canada) and all
regulations thereunder.
"Black & Xxxxxx License Agreement" means the Trademark License
Agreement, dated June 26, 1998, The Black & Xxxxxx Corporation and the Borrower,
as at any time amended, modified, extended or renewed.
"Blocked Account Agreement" means an agreement, including, inter
alia, a collection account agreement, among one or more of the Loan Parties, the
Agent and a Clearing
A-5
Bank, in form and substance reasonably satisfactory to the Agent, concerning the
collection of payments which represent the proceeds of Accounts or of any other
Collateral.
"Borrower" means Applica Incorporated, a Florida corporation, and
its successors and assigns.
"Borrowing" means a borrowing hereunder consisting of Revolving
Loans made on the same day by the Lenders to the Borrower or by Bank (in the
case of a Borrowing funded by Non-Ratable Loans) or by the Agent in the case of
a Borrowing consisting of an Agent Advance, or the issuance of Letters of Credit
or Credit Support hereunder.
"Borrowing Base" means, at any time, an amount equal to (a) the sum
of (i) 85% of the Net Amount of Eligible Accounts; plus (ii) the lesser of (A)
$100,000,000 or (B) the lesser of (I) 70% of the Cost Value of Eligible
Inventory or (II) 85% of the Net Orderly Liquidation Value; minus (b), without
duplication, Reserves.
Notwithstanding the foregoing, in no event shall the aggregate
amount of Revolving Loans outstanding at any date (a) as measured by Eligible
Inventory comprised of In-Transit Inventory exceed (i) $24,500,000 with respect
to In-Transit Inventory destined for a United States port of entry, or (ii)
$3,500,000 with respect to In-Transit Inventory destined for a Canadian port of
entry, or (b) as measured by Eligible Accounts and Eligible Inventory of Applica
Canada exceed the Applica Canada Sublimit.
For purposes of the calculation of the Borrowing Base, (1) the value
of Eligible Accounts and Eligible Inventory shall be calculated based on Dollar
Equivalents at any date of determination, and (2) the value of Eligible
Inventory consisting of In-Transit Inventory shall be net of all duty, freight,
taxes, costs, insurance and other charges and expenses which customarily pertain
to such In-Transit Inventory.
"Borrowing Base Certificate" means a certificate by a Responsible
Officer of the Borrower, substantially in the form of Exhibit B (or another form
acceptable to the Agent) setting forth the calculation of the Borrowing Base,
including a calculation of each component thereof, all in such detail as shall
be reasonably satisfactory to the Agent. All calculations of the Borrowing Base
in connection with the preparation of any Borrowing Base Certificate shall
originally be made by the Borrower and certified to the Agent; provided, that
the Agent shall have the right to review and adjust, in the exercise of its
reasonable credit judgment, any such calculation (1) to reflect its reasonable
estimate of declines in value of any of the Collateral described therein, and
(2) to the extent that such calculation is not in accordance with this
Agreement.
"Business Day" means (a) any day that is not a Saturday, Sunday, or
a day on which banks in Atlanta, Georgia or Charlotte, North Carolina are
required or permitted to be closed, and (b) with respect to all notices,
determinations, fundings and payments in connection with the LIBOR Rate or LIBOR
Rate Loans, any day that is a Business Day pursuant to clause (a) above and that
is also a day on which trading in Dollars is carried on by and between banks in
the London interbank market.
A-6
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not paid
during any fiscal period) in respect of the cost of any fixed asset or
improvement, or replacement, substitution, or addition thereto, which has a
useful life of more than one year, including, without limitation, those costs
arising in connection with the direct or indirect acquisition of such asset by
way of increased product or service charges or in connection with a Capital
Lease, and other items presented in accordance with the GAAP.
"Capital Lease" means any lease of property by a Consolidated Member
which, in accordance with GAAP, should be reflected as a capital lease on the
consolidated balance sheet of the Borrower.
"Capital Stock" means any and all corporate stock, units, shares,
partnership interests, membership interests, equity interests, rights,
securities, or other equivalent evidences of ownership (however designated)
issued to any Person.
"Change of Control" means if any Person or group of Persons acting
in concert, other than the owners of more than 10% of outstanding securities of
the Borrower as of Closing Date having voting rights in the election of
directors, shall own or control, directly or indirectly, more than 30% of the
outstanding securities of the Borrower having voting rights in the election of
directors, in each case to be determined on a fully diluted basis and taking
into account any outstanding securities or contract rights exercisable,
exchangeable or convertible into equity interests.
"Chattel Paper" shall have the meaning specified in the Security
Agreement.
"Clearing Bank" means the Bank or any other banking institution with
whom a Payment Account has been established pursuant to a Blocked Account
Agreement.
"Closing Date" means the date of this Agreement.
"Closing Fee" has the meaning specified in Section 2.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning specified in the Security Agreement.
"Collateral Access Agreement" shall mean a Warehousemen's Agreement
or a Landlord Agreement, among Agent, a Loan Party and/or a Loan Party's
Affiliate and certain third parties named therein, as of the date hereof and
from time to time after the date hereof, in each case substantially in the form
attached hereto as Exhibit G.
"Collections Fee" has the meaning specified in Section 2.8.
A-7
"Commitment" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"Commitment" on Schedule 1.2 attached to the Agreement or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 11.2, as such Commitment
may be adjusted from time to time in accordance with the provisions of Section
11.2, and "Commitments" means, collectively, the aggregate amount of the
Commitments of all of the Lenders.
"Confidential Information" has the meaning specified in Section
13.17.
"Consolidated EBITDA" means, with respect to any fiscal period of
the Borrower, the Adjusted Net Earnings from Operations of the Borrower and the
other Consolidated Members,, plus, to the extent deducted in the determination
of Adjusted Net Earnings from Operations for that fiscal period, interest
expenses, federal, state, local and foreign income taxes, depreciation,
amortization, and, solely for purposes of calculating Consolidated EBITDA for
any period during the Borrower's 2002 Fiscal Year, those costs associated with
the Borrower's consolidation of its Shelton, Connecticut facility into its Miami
Lake, Florida facility that were not previously accrued, as determined in
accordance with GAAP.
"Consolidated Members" means the Borrower and its Subsidiaries and
"Consolidated Member" means any of the foregoing.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any constituent of any such substance or waste.
"Continuation/Conversion Date" means the date on which a Loan is
converted into or continued as a LIBOR Rate Loan.
"Core Business" means, with respect to the Consolidated Members, the
business of manufacturing and distributing of household and outdoor appliances,
personal care products, pet products and related items consistent with past
practices.
"Cost of Acquisition" means, with respect to any Acquisition, as at
the date of consummation of any such Acquisition, the sum of the following
(without duplication): (i) the value of the capital stock, warrants or options
to acquire capital stock of a Loan Party to be transferred in connection
therewith, (ii) any cash or other property and the unpaid principal amount of
any debt instrument given as consideration, (iii) any Debt assumed by a Loan
Party in connection with such Acquisition, and (iv) out of pocket transaction
costs for the services and expenses of attorneys, accountants and other
consultants incurred in effecting such a transaction, and other similar
transactions costs so incurred. For purposes of determining the Cost of
Acquisition for any transaction, (A) the capital stock of a Loan Party shall be
valued (I) at its market value as reported on the New York Stock Exchange with
respect to shares that are freely tradable, and (II) with respect to shares that
are not freely tradable, as determined by the Board of Directors of the Borrower
and, if requested by Agent, determined to be a reasonable valuation by the
independent public accountants referred to in Section 5.2 hereof, (B) the
capital stock of
A-8
any Subsidiary shall be valued as determined by the Board of Directors of the
Borrower or such Subsidiary and, if requested by Agent, determined to be a
reasonable valuation by the independent public accountants referred to in
Section 5.2 hereof, and (C) with respect to any Acquisition accomplished
pursuant to the exercise of options or warrants or the conversion of securities,
the Cost of Acquisition shall include both the cost of acquiring such option,
warrant or convertible security as well as the cost of exercise or conversion.
"Cost Value" means, with reference to Eligible Inventory, the
applicable Loan Party's cost of such Eligible Inventory calculated on a
first-in, first-out basis determined in accordance with GAAP.
"Credit Support" has the meaning specified in Section 1.4(a).
"Debt" means, without duplication, with respect any Person (the
"subject Person"), all liabilities, obligations and indebtedness of the subject
Person to any other Person, of any kind or nature, now or hereafter owing,
arising, due or payable, howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise,
consisting of indebtedness for borrowed money or the deferred purchase price of
property, excluding purchases of property, product, merchandise and services in
the ordinary course of business, but including (a) in the case of the Loan
Parties, all Obligations; (b) all obligations and liabilities of any Person
secured by any Lien on the subject Person's property, even though the subject
Person shall not have assumed or become liable for the payment thereof; (except
unperfected Liens incurred in the ordinary course of business and not in
connection with the borrowing of money); provided, however, that all such
obligations and liabilities which are limited in recourse to such property shall
be included in Debt only to the extent of the book value of such property as
would be shown on a balance sheet of the subject Person prepared in accordance
with GAAP; (c) all obligations or liabilities created or arising under any
Capital Lease or conditional sale or other title retention agreement with
respect to property used or acquired by the subject Person, even if the rights
and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property; provided, however, that all such obligations and
liabilities which are limited in recourse to such property shall be included in
Debt only to the extent of the book value of such property as would be shown on
a balance sheet of the subject Person prepared in accordance with GAAP; (d) all
obligations and liabilities under Guaranties; (e) the present value (discounted
at the Base Rate) of lease payments due under synthetic leases; and (f) all
obligations and liabilities under any asset securitization (other than an
Approved Receivables Program) or sale/leaseback transaction (other than the
Headquarters Financing Transaction); provided, further, however, that in no
event shall the term Debt include the capital stock surplus, retained earnings,
minority interests in the common stock of Subsidiaries, lease obligations (other
than pursuant to (c) or (e) above), reserves for deferred income taxes and
investment credits, other deferred credits or reserves.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured, waived, or otherwise
remedied during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at all
times equal to the sum of (a) the otherwise applicable Interest Rate plus (b)
two percent (2%) per annum. Each
A-9
Default Rate shall be adjusted simultaneously with any change in the applicable
Interest Rate. In addition, the imposition of the Default Rate shall result in
an increase in the Letter of Credit Fee by two percent (2%) per annum.
"Defaulting Lender" has the meaning specified in Section 12.15(c).
"Deposit Accounts" shall have the meaning specified in the Security
Agreement.
"Designated Account" has the meaning specified in Section 1.2(c).
"Direct Foreign Subsidiary" means any Foreign Subsidiary whose
outstanding voting Capital Stock is owned by a Loan Party or a Domestic
Subsidiary.
"Disclosing Party" has the meaning specified in Section 13.17.
"Distribution" means, in respect of any Person (other than a natural
Person): (a) the payment or making of any dividend or other distribution of
property in respect of such Person's Capital Stock (excluding any options or
warrants for, or other rights with respect to, such stock) of such corporation,
other than distributions in such Person's Capital Stock of the same class; or
(b) the redemption or other acquisition by such corporation of any Capital Stock
(or any options or warrants for such Capital Stock) of such Person.
"Documents" shall have the meaning specified in the Security
Agreement.
"DOL" means the United States Department of Labor or any successor
department or agency.
"Dollar" and "$" means dollars in the lawful currency of the United
States. Unless otherwise specified, all payments under the Agreements shall be
made in Dollars.
"Dollar(Cdn)" and "$(Cdn)" means dollars in the lawful currency of
Canada.
"Dollar Equivalent" means, with respect to any monetary amount in a
currency other than Dollars, at any time for the determination thereof, the
amount of Dollars obtained by converting such foreign currency involved in such
computation into Dollars at the spot rate for the purchase of Dollars with the
applicable foreign currency as quoted by Agent at approximately 11:00 a.m.
(Atlanta, Georgia time) on any date of determination thereof specified in this
Agreement or, if the day of determination thereof is not otherwise specified in
this Agreement, on the date two (2) Business Days prior to such determination.
"Domestic Subsidiaries" means the Subsidiaries of the Borrower
organized or incorporated under the laws of a state in the United States and
denominated as a "Domestic Subsidiary" in Schedule 6.5.
"Eligible Accounts" means the Accounts of a Loan Party which the
Agent in the exercise of its reasonable commercial discretion determines to be
Eligible Accounts. Without limiting the discretion of the Agent to establish
additional criteria of ineligibility, Eligible Accounts shall not include any
Account:
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(a) with respect to which more than 120 days have elapsed since
the date of the original invoice therefor or which is more than 60 days past
due, whichever is sooner;
(b) with respect to which any of the representations, warranties,
covenants, and agreements contained in the Security Agreement are incorrect or
have been breached;
(c) with respect to which Account (or any other Account due from
such Account Debtor), in whole or in part, a check, promissory note, draft,
trade acceptance or other instrument for the payment of money has been received,
presented for payment and returned uncollected by reason of insufficient funds;
(d) which represents a progress billing (as hereinafter defined)
or as to which the applicable Loan Party has materially extended the time for
payment without the consent of the Agent; for the purposes hereof, "progress
billing" means any invoice for goods sold or leased or services rendered under a
contract or agreement pursuant to which the Account Debtor's obligation to pay
such invoice is conditioned upon the applicable Loan Party's completion of any
further performance under the contract or agreement;
(e) with respect to which any one or more of the following events
has occurred to the Account Debtor on such Account: the filing by or against the
Account Debtor of a petition for liquidation, reorganization, arrangement,
adjustment of debts, adjudication as a bankrupt, winding-up, or other relief
under the bankruptcy, insolvency, or similar laws of the United States or
Canada, any state, province or territory thereof, or any foreign jurisdiction,
now or hereafter in effect; the making of any general assignment by the Account
Debtor for the benefit of creditors; the appointment of a receiver or trustee
for the Account Debtor or for any of the assets of the Account Debtor,
including, without limitation, the appointment of or taking possession by a
"custodian," as defined in the Federal Bankruptcy Code; the institution by or
against the Account Debtor of any other type of insolvency proceeding (under the
bankruptcy laws of the United States or otherwise) or of any formal or informal
proceeding for the dissolution or liquidation of, settlement of claims against,
or winding up of affairs of, the Account Debtor; the nonpayment generally by the
Account Debtor of its debts as they become due; or the cessation of the business
of the Account Debtor as a going concern; provided, however, that none of the
foregoing exclusions from Eligible Accounts shall include any Account to the
extent there is any post-petition receivable that has the status of an
administrative claim and is entitled to be paid in the ordinary course;
(f) if 50% or more of the aggregate Dollar amount of outstanding
Accounts owed at such time by the Account Debtor thereon is classified as
ineligible under clause (a) above;
(g) owed by an Account Debtor which: (i) does not maintain its
chief executive office in the United States of America, Canada or the
Commonwealth of Puerto Rico (and, with respect to Accounts owed by an Account
Debtor located in the Commonwealth of Puerto Rico, no more than $1,000,000 in
aggregate face amount of such Accounts shall be deemed Eligible Accounts at any
time); or (ii) is not organized under the laws of the United States of America,
Canada, the Commonwealth of Puerto Rico any state or province thereof; or (iii)
is the government of any foreign country or sovereign state, or of any state,
province,
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municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof; except to the
extent that such Account is secured or payable by a letter of credit
satisfactory to the Agent in its discretion;
(h) owed by an Account Debtor which is an Affiliate or employee of
a Loan Party;
(i) except as provided in clause (k) below, with respect to which
either the perfection, enforceability, or validity of the Agent's Liens in such
Account, or the Agent's right or ability to obtain direct payment to the Agent
of the proceeds of such Account, is governed by any federal, state, or local
statutory requirements other than those of the UCC;
(j) owed by an Account Debtor to which the applicable Loan Party
or any of its Subsidiaries, is indebted in any way, or which is subject to any
right of setoff or recoupment by the Account Debtor, unless the Account Debtor
has entered into an agreement acceptable to the Agent to waive setoff rights; or
if the Account Debtor thereon has disputed liability or made any claim with
respect to any other Account due from such Account Debtor; but in each such case
only to the extent of such indebtedness, setoff, recoupment, dispute, or claim;
(k) owed by the government of the United States of America or
Canada, or any department, agency, public corporation, or other instrumentality
thereof, unless in the case of the United States of America, the Federal
Assignment of Claims Act of 1940, as amended (31 U.S.C. Section 3727 et seq.),
and any other steps necessary to perfect the Agent's Liens therein, have been
complied with to the Agent's satisfaction with respect to such Account;
(l) owed by any state, province, municipality, or other political
subdivision of the United States of America or Canada, or any department,
agency, public corporation, or other instrumentality thereof and as to which the
Agent determines that its Lien therein is not or cannot be perfected;
(m) which represents a sale on a xxxx-and-hold, guaranteed sale,
sale and return, sale on approval, consignment, or other repurchase or return
basis;
(n) which is evidenced by a promissory note or other instrument or
by chattel paper;
(o) if the Agent believes, in the exercise of its reasonable
judgment, that the prospect of collection of such Account is impaired or that
the Account may not be paid by reason of the Account Debtor's financial
inability to pay;
(p) with respect to which the Account Debtor is located in any
state requiring the filing of a Notice of Business Activities Report or similar
report in order to permit the applicable Loan Party to seek judicial enforcement
in such State of payment of such Account, unless such Loan Party has qualified
to do business in such state or has filed a Notice of Business Activities Report
or equivalent report for the then current year;
(q) which arises out of a sale not made in the ordinary course of
the applicable Loan Party's business;
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(r) with respect to which the goods giving rise to such Account
have not been shipped and delivered to and accepted by the Account Debtor or the
services giving rise to such Account have not been performed by the applicable
Loan Party, and, if applicable, accepted by the Account Debtor, or the Account
Debtor revokes its acceptance of such goods or services;
(s) owed by an Account Debtor which is obligated to the applicable
Loan Party respecting Accounts the aggregate unpaid balance of which exceeds 30%
of the aggregate unpaid balance of all Accounts owed to such Loan Party at such
time by all of such Loan Party's Account Debtors, but only to the extent of such
excess;
(t) which is not subject to a first priority and perfected
security interest in favor of the Agent for the benefit of the Lenders.
If any Account at any time ceases to be an Eligible Account, then
such Account shall promptly be excluded from the calculation of Eligible
Accounts until reinstated by the Agent as an Eligible Account in the exercise of
its reasonable credit judgment. Notwithstanding the foregoing, none of the
Accounts described in clauses (a) through (o) above shall be excluded from
Eligible Accounts if the payments of such Accounts are (i) guaranteed by any
third party, (ii) covered by insurance policies or (iii) secured or payable by a
letter of credit, in each case as is satisfactory to Agent in its sole
discretion.
"Eligible Assignee" means (a) a commercial bank, commercial finance
company, financial institution or other asset based lender, having total assets
in excess of $1,000,000,000; (b) any Lender listed on the signature page of this
Agreement; (c) any Affiliate of any Lender; and (d) if an Event of Default has
occurred and is continuing, any Person reasonably acceptable to the Agent.
"Eligible Inventory" means Inventory of a Loan Party which the
Agent, in its reasonable discretion, determines to be Eligible Inventory.
Without limiting the discretion of the Agent to establish additional criteria of
ineligibility, Eligible Inventory shall not include any Inventory:
(a) that is not owned by a Loan Party;
(b) that is not subject to the Agent's Liens, which are perfected
as to such Inventory, or that are subject to any other Lien whatsoever (other
than the Liens described in clause (d) of the definition of Permitted Liens
provided that such Permitted Liens (i) are junior in priority to the Agent's
Liens or subject to Reserves and (ii) do not impair directly or indirectly the
ability of the Agent to realize on or obtain the full benefit of the
Collateral);
(c) that does not consist of finished goods;
(d) that consists of work-in-process, chemicals, samples,
prototypes, supplies, or packing and shipping materials;
(e) that is not in good condition, is unmerchantable, or does not
meet all standards imposed by any Governmental Authority having regulatory
authority over such goods, their use or sale;
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(f) that is not currently either usable or salable, at prices
approximating at least cost, in the normal course of such Loan Party's business,
or that is slow moving or stale;
(g) that is obsolete or returned (to the extent the aggregate Cost
Value of returned Inventory exceeds $5,000,000 and such returned Inventory
otherwise satisfies the criteria applicable to Eligible Inventory) or
repossessed or used goods taken in trade;
(h) that is located outside the United States of America or Canada
or that is in-transit from vendors or suppliers except to extent such Inventory
constitutes In-Transit Inventory;
(i) that is located in a public warehouse or in possession of a
bailee or in a facility leased by the applicable Loan Party, if the
warehouseman, or the bailee, or the lessor has not delivered to the Agent, if
requested by the Agent, a subordination agreement in form and substance
satisfactory to the Agent or if a Reserve for rents or storage charges has not
been established for Inventory at that location;
(j) that contains or bears any Proprietary Rights licensed to such
Loan Party by any Person, if the Agent is not satisfied that it may sell or
otherwise dispose of such Inventory in accordance with the terms of the Security
Agreement and Section 9.2 without infringing the rights of the licensor of such
Proprietary Rights or violating any contract with such licensor (and without
payment of any royalties other than any royalties due with respect to the sale
or disposition of such Inventory pursuant to the existing license agreement),
and, as to which such Loan Party has not delivered to the Agent a consent or
sublicense agreement from such licensor in form and substance acceptable to the
Agent if requested;
(k) that is not reflected in the details of a current perpetual
inventory report; or
(l) that is Inventory placed on consignment.
If any Inventory at any time ceases to be Eligible Inventory, such
Inventory shall promptly be excluded from the calculation of Eligible Inventory
until reinstated by Agent in the exercise of its reasonable credit judgment as
Eligible Inventory.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for a Release or
injury to the environment.
"Environmental Laws" means all federal, state, provincial or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case relating to environmental, health, safety and land use matters.
"Environmental Lien" means a Lien in favor of any Governmental
Authority or any other Person for (a) any liability under Environmental Laws, or
(b) damages arising from, or costs incurred by such Governmental Authority in
response to, a Release or threatened Release of a Contaminant into the
environment.
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"Equipment" shall have the meaning specified in the Security
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with a Loan Party within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event and or Termination Event
with respect to a Pension Plan, (b) a withdrawal by a Loan Party or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or employer under the PBA
or a cessation of operations which is treated as such a withdrawal, (c) a
complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a
Multi-employer Plan or notification that a Multi-employer Plan or plan regulated
or governed by the PBA is in reorganization, (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination or the
commencement of proceedings by the PBGC or other applicable Governmental
Authority to terminate a Pension Plan or Multi-employer Plan, (e) the occurrence
of an event or condition which might reasonably be expected to constitute
grounds for the termination of, or the appointment of a trustee to administer,
any Pension Plan or Multi-employer Plan, (f) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA or PBA or other applicable law of any jurisdiction,
upon a Loan Party or any ERISA Affiliate; or (g) failure to make or remit any
contribution when due in respect of any Plan.
"Event of Default" has the meaning specified in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to the Bank on such
day on such transactions as determined by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
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"Fee Letter" means the letter from Agent to the Borrower, dated
December __, 0000, xxxxxxx xxxxx xxxxxxx fees and other charges payable by the
Loan Parties in connection with the provision and syndication of the credit
facilities contemplated under this Agreement.
"Financial Statements" means, according to the context in which it
is used, the financial statements referred to in Sections 5.2 and 6.6 or any
other financial statements required to be given to the Agent and the Lenders
pursuant to this Agreement.
"Fiscal Year" means, with respect to the Loan Parties, their fiscal
year for financial accounting purposes. The current Fiscal Year of the Loan
Parties will end on December 31, 2001.
"Fixed Assets" means the Equipment and Real Estate of the Loan
Parties.
"Foreign Security Document" means a Guaranty, pledge, mortgage,
personal property mortgage, security agreement, assignment, security instrument,
hypothecation, charge or other agreement or document by which any Foreign
Subsidiary grants or otherwise conveys to the Agent or any Affiliate of the
Agent for the benefit of the Agent, or any agent or trustee for or on behalf of
the Agent or any such Affiliate, any Guaranty, pledge, lien, security interest,
mortgage, charge, collateral assignment or similar interest in property of such
Foreign Subsidiary as security for the Obligations or any portion thereof, and
any and all renewals, extensions, modifications, amendments or restatements
thereof.
"Foreign Subsidiary" means any Subsidiary of the Borrower other than
the Domestic Subsidiaries, which shall include Applica Canada and such other
Foreign Subsidiaries as are designated in Schedule 6.5.
"Funded Debt to Consolidated EBITDA Ratio" means, as of any date of
determination, the ratio of (i) the Average Credit Facility Outstandings for the
last month of any applicable fiscal quarter of the Borrower, to (ii)
Consolidated EBITDA as of the last day of any applicable fiscal quarter of
Borrower for the Applicable Period then ending.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles and practices
set forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
date of the report.
"General Intangibles" shall have the meaning specified in the
Security Agreement.
"Goods" shall have the meaning specified in the Security Agreement.
"Governmental Authority" means any nation or government, any state,
province, municipality, region or other political subdivision thereof, any
central bank (or similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory
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or administrative functions of or pertaining to government, any corporation or
other entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing and any department, agency, board,
commission, tribunal, committee or instrumentality of any of the foregoing.
"Guarantor" means Applica Canada and any other Subsidiary of the
Borrower that has executed and delivered to the Agent an agreement of Guaranty
in respect of the Obligations.
"Guaranty" means, with respect to any Person, all obligations of
such Person which in any manner directly or indirectly guarantee or assure, or
in effect guarantee or assure, the payment or performance of any indebtedness,
dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition;
or (c) to lease property or to purchase any debt or equity securities or other
property or services.
"Headquarter Financing Transaction" shall mean any financing
transaction after the date hereof involving the Headquarters.
"Headquarters" shall mean the Real Estate located at 0000 Xxxxx
Xxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxx.
"Hedge Agreements" means any and all transactions, agreements or
documents now existing or hereafter entered into, which provides for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging a Person's exposure to fluctuations in interest or
exchange rates, loan, credit exchange, security or currency valuations or
commodity prices.
"Intercompany Accounts" has the meaning specified in Section 5.2(l).
"Instruments" shall have the meaning specified in the Security
Agreement.
"Interest Period" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Continuation/Conversion
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the date one, two, three or six months thereafter as selected by the
Borrower in its Notice of Borrowing, in the form attached hereto as Exhibit D,
or Notice of Continuation/Conversion, in the form attached hereto as Exhibit E,
provided that:
(a) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(b) any Interest Period pertaining to a LIBOR Rate Loan that
begins on the
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last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month
at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the Stated Termination
Date.
"Interest Rate" means each or any of the interest rates, including
the Default Rate, set forth in Section 2.1.
"In-Transit Inventory" means Inventory of a Loan Party (i)
consisting of finished goods that is in transit to a Loan Party; (ii) with
respect to which Agent has received from the vendor of such Inventory and each
of the Loan Parties a duly executed letter agreement in substantially the form
of Exhibit H and such vendor and the Loan Parties are in compliance with the
terms and provisions of such letter agreement, as Agent may determine in its
sole discretion; (iii) the In-Transit Perfection Documents with respect thereto
have been presented to and are in the possession of Agent or its authorized
bailees; and (iv) such Inventory it is fully insured by marine cargo or other
insurance on terms in an amount and subject to deductibles satisfactory to Agent
and with respect to which Agent has been named additional insured and loss
payee.
"In-Transit Perfection Documents" mean all filings, agreements or
other documents requested by Agent to perfect (or continue the perfection of) a
first priority Lien in favor of Agent (except for possessory liens upon such
goods in the possession of a freight carrier or shipping company securing only
the freight charges for the transportation of such goods to a Loan Party) upon
Inventory in-transit to a Loan Party, including delivery to the Agent or a
bailee of the Agent of all original Documents issued with respect to such
Inventory (which shall in each instance be negotiable (as defined in the UCC))
and such other agreements as may be requested by Agent with each common carrier,
shipper, customs agent, freight forwarder or other Person, in form and substance
reasonably satisfactory to Agent.
"Inventory" shall have the meaning specified in the Security
Agreement.
"Investment Property" shall have the meaning specified in the
Security Agreement.
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Latest Projections" means: (a) on the Closing Date and thereafter
until the Agent receives new projections pursuant to Section 5.2(e), the
projections of the Borrower's balance sheets, income statements and cash flows,
for the period commencing on October 1, 2001 and ending on September 30, 2002
and delivered to Agent prior to the Closing Date; and (b) thereafter, the
projections most recently received by Agent pursuant to Section 5.2(f).
"Lender" and "Lenders" have the meanings specified in the
introductory paragraph hereof and shall include Agent to the extent of any Agent
Advance outstanding and the Bank to the extent of any Non-Ratable Loan
outstanding; provided that no such Agent Advance or Non-Ratable Loan shall be
taken into account in determining any Lender's Pro Rata
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Share.
"Lending Party" has the meaning specified in Section 13.17.
"Letter of Credit" has the meaning specified in Section 1.4(a).
"Letter of Credit Fee" has the meaning specified in Section 2.6.
"Letter of Credit Issuer" means the Bank, any Affiliate of the Bank,
a Lender or any other financial institution that issues any Letter of Credit
pursuant to this Agreement.
"Letter-of-Credit Rights" shall have the meaning specified in the
Security Agreement.
"Letter of Credit Subfacility" means $10,000,000.
"LIBOR Interest Payment Date" means, with respect to a LIBOR Rate
Loan, the Termination Date and the last day of each Interest Period applicable
to such Loan or, with respect to each Interest Period of greater than three
months in duration, the last day of the third month of such Interest Period and
the last day of such Interest Period.
"LIBOR Rate" means, for any Interest Period, with respect to LIBOR
Rate Loans, the rate of interest per annum determined pursuant to the following
formula:
LIBOR Rate = Offshore Base Rate
------------------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Offshore Base Rate" means, for any Revolving Loan bearing
interest at the LIBOR Rate the rate per annum appearing on Telerate Page
3750 (or any successor page) as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable
to such Interest Period. If for any reason such rate is not available, the
Offshore Base Rate shall be, for any Interest Period, the rate per annum
appearing on Reuters Screen LIBO Page as the London interbank offered rate
for deposits in Dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more than one
rate is specified on Reuters Screen LIBO Page, the applicable rate shall
be the arithmetic mean of all such rates. If for any reason none of the
foregoing rates is available, the Offshore Base Rate shall be, for any
Interest Period, the rate per annum determined by Agent as the rate of
interest at which dollar deposits in the approximate amount of the LIBOR
Rate Loan comprising part of such Borrowing would be offered by the Bank's
London Branch to major banks in the offshore dollar market at their
request at or about 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such
Interest Period.
"Eurodollar Reserve Percentage" means, for any day during any
Interest Period, the reserve percentage (expressed as a decimal, rounded
upward to the next
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1/100th of 1%) in effect on such day applicable to member banks under
Regulation D or any successor regulation issued from time to time by the
Federal Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve
requirement) applicable with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities" under Regulation D). The
Offshore Rate for each outstanding LIBOR Rate Loan shall be adjusted
automatically as of the effective date of any change in the Eurodollar
Reserve Percentage.
"LIBOR Rate Loans" means, the LIBOR Revolving Loans.
"LIBOR Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in property securing an obligation
owed to, or a claim by, a Person other than the owner of the property, whether
such interest is based on the common law, statute, or contract, and including a
security interest, hypothec, charge, claim, or lien arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, agreement, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes; and (b) any contingent
or other agreement to provide any of the foregoing.
"Loan Account" means the loan account of the Borrower, which account
shall be maintained by the Agent.
"Loan Documents" means this Agreement, the Security Agreement,
Subsidiary Guaranties, the Applica Canada Guaranty, the Applica Canada Security
Agreement, the Pledge Agreement, the Fee Letter and any other agreements,
instruments, and documents heretofore, now or hereafter evidencing, securing,
guaranteeing or otherwise relating to the Obligations, the Collateral, or any
other aspect of the transactions contemplated by this Agreement.
"Loan Party" means each of the Borrower, the Guarantors and Applica
Canada, and "Loan Parties" means any two or more of the foregoing.
"Loans" means, collectively, all loans and advances provided for in
Article 1.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change in, or
a material adverse effect upon, the operations, business, properties or
condition (financial or otherwise) or prospects of the Consolidated Members
taken as a whole, or the Collateral; (b) a material impairment of the ability of
any Obligated Party to perform under any Loan Document to which it is a party;
or (c) a material adverse effect upon the legality, validity, binding effect or
enforceability against any Obligated Party of any material Loan Document to
which it is a party.
"Material Contracts" means an agreement to which a Loan Party is a
party (other than a Loan Document) (i) which would be deemed to be a material
contract as provided in Regulation S-K promulgated by the SEC under the
Securities Act of 1933 or (ii) for which
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breach, termination, cancellation, non-performance or failure to renew could
reasonably be expected to have a Material Adverse Effect.
"Maximum Rate" has the meaning specified in Section 2.3.
"Maximum Revolver Amount" means $205,000,000.
"Multi-employer Plan" means a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by the Borrower or any
ERISA Affiliate.
"Net Amount of Eligible Accounts" means, at any time, the gross
Dollar Equivalent amount of Eligible Accounts less, unless already included as a
Reserve, sales, excise or similar taxes, returns, discounts, claims, credits,
allowances accrued rebates, offsets, deductions, counterclaims, disputes and
other defenses of any nature at any time issued, owing, granted, outstanding,
available or claimed.
"Net Inventory Proceeds" means, with regard to any sale or
disposition of Inventory, the gross cash proceeds received from such sale or
disposition, net of the reasonable costs of such sale (including attorneys fees,
charges and commissions), and all transfer, sales and other taxes paid or
payable as a result of such sale.
"Net Orderly Liquidation Value" shall mean at any date of
determination the Net Inventory Proceeds expected to be realized at an orderly,
negotiated sale of applicable items of Inventory located in the United States or
Canada as determined by a "desktop" professional opinion of Ozer Valuation
Services or other appraisal company of similar qualifications and standing
acceptable to the Agent, with each such opinion assuming that such sale is held
within a reasonable period of time after the date of the opinion.
"Net Proceeds" means, in respect of an Asset Disposition of by a
Person, all proceeds received by and/or payable to such Person in consideration
thereof, net of (A) commissions and other reasonable and customary transaction
costs, fees and expenses properly attributable to such transaction and payable
by such Person in connection therewith (in each case, paid to non-Affiliates),
(B) transfer taxes, (C) amounts payable to holders of senior Liens (other than
the Agent's Liens and to the extent such Liens constitute Permitted Liens), if
any, and (D) an appropriate reserve for income taxes in accordance with GAAP in
connection therewith.
"New Subsidiary" has the meaning specified in Section 7.24.
"Net Worth" means with respect to any Person, such Person's total
shareholder's equity (including capital stock, additional paid-in capital and
retained earnings, after deducting treasury stock) which would appear as such on
a balance sheet of such Person prepared in accordance with GAAP.
"Non-Ratable Loan" and "Non-Ratable Loans" have the meanings
specified in Section 1.2(h).
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"North American EBITDA" means, with respect to any fiscal period of
the Borrower, the Adjusted Net Earnings from Operations of the Borrower, the
Domestic Subsidiaries and Applica Canada, plus, to the extent deducted in the
determination of Adjusted Net Earnings from Operations for that fiscal period,
interest expenses, federal, state, local and foreign income taxes, depreciation,
amortization, and, solely for purposes of calculating North American EBITDA for
any period during the Borrower's 2002 Fiscal Year, those costs associated with
the Borrower's consolidation of its Shelton, Connecticut facility into its Miami
Lake, Florida facility that were not previously accrued, as determined in
accordance with GAAP.
"Notice of Borrowing" has the meaning specified in Section 1.2(b).
"Notice of Continuation/Conversion" has the meaning specified in
Section 2.2(b).
"Obligated Parties" means (i) the Loan Parties and (ii) any other
Consolidated Member that executes and delivers to the Agent any Foreign Security
Document, and "Obligated Party" means any of the foregoing.
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Borrower or
any of the other Loan Parties, or any of them, to the Agent and/or any Lender,
arising under or pursuant to this Agreement or any of the other Loan Documents,
whether or not evidenced by any note, or other instrument or document, whether
arising from an extension of credit, opening of a letter of credit, acceptance,
loan, guaranty, indemnification or otherwise, whether direct or indirect,
absolute or contingent, due or to become due, primary or secondary, as principal
or guarantor, and including all principal, interest, charges, expenses, fees,
attorneys' fees, filing fees and any other sums chargeable to the Borrower or
other Loan Party hereunder or under any of the other Loan Documents.
"Obligations" includes, without limitation, (a) all debts, liabilities, and
obligations now or hereafter arising from or in connection with the Letters of
Credit and Credit Support and (b) all debts, liabilities and obligations now or
hereafter arising from or in connection with Bank Products.
"Operating Documents" means with respect to any corporation, limited
liability company, partnership, limited partnership, limited liability
partnership or other legally authorized incorporated or unincorporated entity,
the bylaws, operating agreement, partnership agreement or limited agreement of
such entity.
"Organization Documents" means with respect to any corporation,
limited liability company, partnership, limited liability partnership or other
legally authorized incorporated or unincorporated entity, the articles of
incorporation, certificate of incorporation, articles of organization or
certificate of limited partnership of such entity.
"Participant" means any Person who shall have been granted the right
by any Lender to participate in the financing provided by such Lender under this
Agreement, and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender.
"Payment Account" has the meaning specified in the Security
Agreement.
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"PBA" means the Pension Benefits Act of Ontario and all regulations
thereunder as amended from time to time, and any successor legislation.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"Pending Revolving Loans" means, at any time, the aggregate
principal amount of all Revolving Loans requested in any Notice of Borrowing
received by the Agent which have not yet been advanced.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA or the applicable laws of any other jurisdiction including the PBA)
subject to Title IV of ERISA or the applicable laws of any other jurisdiction
including the PBA which any Loan Party or any ERISA Affiliate sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or has made contributions at any time during the immediately
preceding five (5) plan years.
"Permitted Acquisition" means an Acquisition effected with the
consent and approval of the board of directors or other applicable governing
body of the Person being acquired ("Target"), and with the duly obtained
approval of such shareholders or other holders of equity interest as such Target
may be required to obtain, so long as (i) immediately prior to and after giving
effect to the consummation of such Acquisition, no Event of Default has or would
exist, (ii) with respect to an Acquisition where the Cost of Acquisition exceeds
$2,500,000, substantially all of the sales and operating profits generated by
the Target (or its assets) so acquired or invested are derived from a line or
lines of business that are consistent with the Core Business, (iii) pro forma
historical financial statements as of the end of the most recent fiscal quarter
for the trailing twelve month period giving effect to such Acquisition are
delivered to Agent not less than ten (10) Business Days prior to the
consummation of such Acquisition, together with a certificate of an Responsible
Officer stating that no Default or Event of Default exists before or after
giving effect to such Acquisition and demonstrating compliance with Section 7.27
hereof, if then-applicable, after giving effect to such Acquisition on a pro
forma basis; provided, that such Consolidated EBITDA and North American EBITDA
tests shall be measured as of the most recently ended fiscal quarter for the
Applicable Period then ended and shall include the EBITDA of any Target acquired
through such Acquisition as if such Acquisition had been consummated on the
first day of such Applicable Period, (iv) the aggregate Cost of Acquisition
(excluding the value of any capital stock of the Borrower given as part of the
Cost of Acquisition) with respect to any Acquisitions consummated during any
Fiscal Year shall not exceed $20,000,000; (v) the aggregate Cost of Acquisition
which consists in whole or in part of the value of any capital stock of the
Borrower (including without limitation when combined with cash, debt or the
assumption of indebtedness for any specific Acquisition) with respect to any
single Acquisition consummated after the Closing Date shall not exceed
$10,000,000; (vi) appropriate phase I environmental reports in respect of any
real property of the Target shall have been delivered to the Agent not less than
ten (10) days prior to the consummation of such Acquisition and such reports
shall be acceptable to the Agent in its sole discretion; (vii) after giving
effect to the consummation of such Acquisition (including any Loans made
hereunder to finance such Acquisition), Availability is greater than $30,000,000
for each of the 30 days immediately preceding and immediately following the date
of the consummation of such
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Acquisition; provided, that no assets of the Target shall be included in the
calculation of Availability for purposes of this clause (vii), or for purposes
of Section 7.27 or otherwise until the Agent has completed a satisfactory field
examination with respect to the Target and its assets; (viii) after giving
effect to the consummation of such Acquisition (including any Loans made
hereunder to finance such acquisition) the Aggregate Revolver Outstandings shall
not exceed the amount of the Maximum Revolver Amount minus $10,000,000; (ix) if
the Target will become a Domestic Subsidiary of a Loan Party in connection with
such Acquisition, the Loan Parties shall cause the Target to become a Guarantor
hereunder and grant to the Agent, for the benefit of the Agent and the Lenders,
a perfected, first-priority Lien on substantially all of the assets of the
Target, all pursuant to documentation in form and substance acceptable to the
Agent in its discretion; and (x) if the Target will become a Foreign Subsidiary
of a Loan Party in connection with such Acquisition, the Loan Parties shall
cause the parent Loan Party to pledge to Agent, for the benefit of the Lenders,
65% of the Capital Stock of the Target.
"Permitted Liens" means:
(a) Liens for Taxes, fees, assessments or other charges of a
Governmental Authority which are not (i) delinquent or (ii) statutory Liens for
taxes, fees, assessments or other charges in an amount not to exceed $500,000;
provided that the payment of such taxes which are due and payable is being
contested in good faith and by appropriate proceedings diligently pursued and as
to which adequate financial reserves have been established on the applicable
Loan Party's books and records and a stay of enforcement of any such Lien is in
effect;
(b) the Agent's Liens;
(c) Liens incurred or deposits made in the ordinary course of
business in connection with, or to secure payment of, obligations under worker's
compensation, unemployment insurance, social security and other similar laws, or
to secure the performance of bids, tenders or contracts (other than for the
repayment of Debt) or to secure indemnity, performance or other similar bonds
for the performance of bids, tenders or contracts (other than for the repayment
of Debt) or to secure statutory obligations (other than liens arising under
ERISA or Environmental Liens) or other similar obligations or arising as a
result of progress payments under government contracts or surety or appeal
bonds, or to secure indemnity, performance or other similar bonds;
(d) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons, provided
that if any such Lien arises from the nonpayment of such claims or demand when
due, such claims or demands do not exceed $200,000 in the aggregate;
(e) Liens constituting encumbrances in the nature of reservations,
exceptions, encroachments, easements, rights of way, covenants running with the
land, and other similar title exceptions or encumbrances affecting any Real
Estate; provided that they do not in the aggregate materially detract from the
value of the Real Estate or materially interfere with its use in the ordinary
conduct of the applicable Loan Party's business;
A-24
(f) Liens arising from judgments and attachments in connection
with court proceedings provided that the attachment or enforcement of such Liens
would not result in an Event of Default hereunder and such Liens are being
contested in good faith by appropriate proceedings, adequate reserves have been
set aside and no material Property is subject to a material risk of loss or
forfeiture and the claims in respect of such Liens are fully covered by
insurance (subject to ordinary and customary deductibles) and a stay of
execution pending appeal or proceeding for review is in effect; and
(g) Liens in respect of purchase-money Debt permitted to be
incurred pursuant to Section 7.13(c) hereof in connection with the acquisition
of Equipment; provided that (a) the original principal balance of the Debt
secured by such Lien constitutes not more than 100% of the purchase price of the
Equipment acquired and (b) such Lien extends only to the Equipment acquired with
the proceeds of the Debt so secured;
(h) Liens on real property securing Debt permitted under Section
7.13(a), (c), (k) hereof;
(i) Liens on Accounts subject to any Approved Receivables Program;
and
(j) Liens, if any, which are described in Schedule A-1 on the
Closing Date and Liens resulting from the refinancing of the related Debt,
provided that such refinancing is on the same or substantially similar terms,
the Debt secured thereby shall not be increased, and the Liens shall not cover
any additional property of the any Loan Party.
"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA or the applicable laws of any other jurisdiction) which the Borrower or
any other Loan Party sponsors or maintains or to which the Borrower or any other
Loan Party makes, is making, or is obligated to make contributions and includes
any Pension Plan.
"Pledge Agreement" means the Stock Pledge Agreement, dated on or
about the Closing Date, executed by the Borrower and certain of the Domestic
Subsidiaries in favor of Agent, with respect of all of the Capital Stock of the
Domestic Subsidiaries referenced therein and 65% of the Capital Stock of the
Direct Foreign Subsidiaries, as at any time amended.
"PPSA" means, collectively, the Personal Property Security Acts of
the Provinces of Ontario and Nova Scotia, and all regulations thereunder, as
amended from time to time, and any successor legislation.
"Proposed Change" has the meaning specified in Section 11.1(c).
"Proprietary Rights" shall have the meaning specified in the
Security Agreement.
"Pro Rata Share" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the
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denominator of which is the sum of the amounts of all of the Lenders'
Commitments, or if no Commitments are outstanding, a fraction (expressed as a
percentage), the numerator of which is the amount of Obligations (exclusive
indebtedness in respect of Bank Products) owed to such Lender and the
denominator of which is the aggregate amount of the Obligations (exclusive
indebtedness in respect of Bank Products) owed to the Lenders, in each case
giving effect to a Lender's participation in Non-Ratable Loans and Agent
Advances.
"Real Estate" means, with respect to any Person, all of such
Person's now or hereafter owned or leased estates in real property, including,
without limitation, all fees, leaseholds and future interests, together with all
of such Person's now or hereafter owned or leased interests in the improvements
thereon, the fixtures attached thereto and the easements appurtenant thereto.
"Refinancing" has the meaning specified in Section 7.29.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System (or any successor body) as the same may be amended or
supplemented from time to time.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Representatives" has the meaning specified in Section 13.16.
"Required Lenders" means at any time Lenders whose Pro Rata Shares
aggregate more than 50%.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator declared
final and binding by a Governmental Authority or of a Governmental Authority, in
each case applicable to or binding upon the Person or any of its property or to
which the Person or any of its property is subject.
"Reserves" means reserves that limit, without duplication, the
availability of credit hereunder, consisting of reserves against Availability,
Eligible Accounts or Eligible Inventory, established by Agent from time to time
in Agent's reasonable credit judgment. Without limiting the generality of the
foregoing or in duplication thereof, the following reserves shall be deemed to
be a reasonable exercise of Agent's credit judgment: (a) Bank Product Reserves,
(b) a reserve for accrued, unpaid interest on the Obligations, (c) reserves for
rent at leased locations subject to statutory or contractual landlord liens, (d)
Inventory shrinkage consistent with the Borrower's standard accounting
practices, (e) customs charges, (f) dilution, and (g) warehousemen's or bailees'
charges.
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"Responsible Officer" means, with respect to any Loan Party, the
chief executive officer, the president, the senior treasury officer, the chief
financial officer, the treasurer, the controller or any senior vice president or
any other officer having substantially the same authority and responsibility;
or, with respect to compliance with financial covenants and the preparation of
Borrowing Base Certificates, the chief financial officer or the treasurer of the
Borrower, or any other officer having substantially the same authority and
responsibility.
"Restricted Investment" means, with respect to any Loan Party, any
acquisition of property by such Loan Party in exchange for cash or other
property, whether in the form of an acquisition of stock, debt, or other
indebtedness or obligation, or the purchase or acquisition of any other
property, or a loan, advance, capital contribution, or subscription, except the
following: (a) acquisitions of Equipment to be used in the business of such Loan
Party so long as the acquisition costs thereof constitute Capital Expenditures
permitted hereunder; (b) acquisitions of Inventory in the ordinary course of
business of such Loan Party; (c) acquisitions of current assets acquired in the
ordinary course of business of the Loan Parties; (d) direct obligations of the
United States of America, or any agency thereof, or obligations guaranteed by
the United States of America, provided that such obligations mature within one
year from the date of acquisition thereof; (e) acquisitions of certificates of
deposit maturing within one year from the date of acquisition, bankers'
acceptances, Eurodollar bank deposits, or overnight bank deposits, in each case
issued by, created by, or with a bank or trust company organized under the laws
of the United States of America or any state thereof having capital and surplus
aggregating at least $100,000,000; (f) acquisitions of commercial paper given a
rating of "A2" or better by Standard & Poor's Corporation or "P2" or better by
Xxxxx'x Investors Service, Inc. and maturing not more than 90 days from the date
of creation thereof; (g) Hedge Agreements; (h) investments, loans and advances
existing as of the date hereof and as set forth in Schedule A -2; (i) Accounts
arising and trade credit granted in the ordinary course of business and any
securities received in satisfaction or partial satisfaction thereof in
connection with accounts of financially troubled Persons to the extent
reasonably necessary in order to prevent or limit loss; (j) investments
consisting of loans and advances between any Loan Party and another Loan Party
to the extent funded in a manner consistent with Section 7.29; (k) Permitted
Acquisitions; (l) for so long as no Event of Default exists and the Borrower has
Availability of not less than $15,000,000 after giving effect thereto, other
loans, advances and investments in an aggregate principal amount at any time
outstanding not to exceed $10,000,000; (m) the Debt evidenced by the Senior
Subordinated Debt Offering Documents; and (n) shares of mutual funds, the shares
of which mutual funds are at all times rated "AAA" by Standard & Poor's; (o)
cash or other cash equivalents owned by the Borrower and in the possession or
control of the Agent or an Affiliate of Agent invested in short terms vehicles
such as repurchase agreements, overnight bank deposits, bankers' acceptances or
other investments as may be mutually acceptable to the Borrower and the Agent;
and (q) obligations of any corporation organized under the laws of any state of
the United States of America or under the laws of any other nation, payable in
the United States of America, expressed to mature not later than 180 days
following the date of issuance thereof and rated in an investment grade rating
category by Standard & Poor's and Moody's; provided, however, that with respect
to clauses (d) - (h) and clauses (n) - (q), such investments are not subject to
rights of offset (other than nominal amounts for brokerage fees and other,
similar charges of financial intermediaries) in favor of any Person other than
the Agent or a Lender.
"Revolving Loans" has the meaning specified in Section 1.2 and
includes each
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Agent Advance and Non-Ratable Loan.
"Security Agreement" means the Security Agreement of even date
herewith among the Loan Parties and Agent for the benefit of the Agent and the
Lenders.
"Senior Subordinated Debt Offering Documents" means: (i) the 10%
Senior Subordinated Notes due 2008, executed by Windmere-Durable Holdings, Inc.,
now known as Applica Incorporated, dated July 27, 1998, in the principal amount
of $130,000,000; (ii) the 10% Senior Subordinated Notes due 2008 Supplemental
Indenture, dated as of July 27, 1998, by and among the Borrower, certain
Affiliates listed on the signature pages thereof and State Street Bank and Trust
Company; and (iii) all other agreements, instruments or documents executed or
delivered by Borrowers in connection with the foregoing, as any of the foregoing
may be at any time amended or modified.
"Settlement" and "Settlement Date" have the meanings specified in
Section 12.15(a)(ii).
"Software" shall have the meaning specified in the Security
Agreement..
"Solvent" means, when used with respect to any Person, that at the
time of determination:
(a) the assets of such Person, at a fair valuation, are in
excess of the total amount of its debts (including contingent
liabilities); and
(b) the present fair saleable value of its assets is greater than
its probable liability on its existing debts as such debts become absolute
and matured; and
(c) it is then able and expects to be able to pay its debts
(including contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount
of any contingent liability shall be computed as the amount that, in light of
all the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.
"Stated Termination Date" means December __, 2005.
"Subsidiary" of a Person, with respect to any Person (the "subject
Person"), means any corporation, association, partnership, limited liability
company, joint venture or other business entity of which more than fifty percent
(50%) of the voting stock or other equity interests (in the case of Persons
other than corporations), is owned or controlled directly or indirectly by the
subject Person, or one or more of the Subsidiaries of the subject Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Borrower.
A-28
"Subsidiary Guaranty" means an agreement of Guaranty executed by any
Subsidiary of the Borrower pursuant to which such Subsidiary guarantees the
Obligations or any portion thereof.
"Supporting Obligations" shall have the meaning specified in the
Security Agreement.
"Tangible Net Worth" shall mean, as applied to any Person, the Net
Worth of such Person at the time in question, after deducting therefrom the
amount of all intangible items reflected therein, including all unamortized debt
discount and expense, unamortized research and development expense, unamortized
deferred charges, goodwill, patents, trademarks, service marks, trade names,
copyrights, unamortized excess cost of investment in Subsidiaries over equity at
dates of acquisition, and all similar items which should properly be treated as
intangibles in accordance with GAAP.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
including any present or future stamp or documentary taxes or any other excise
or property taxes, charges or similar levies which arise from any payment made
hereunder of from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Documents, but excluding, in the
case of each Lender and the Agent, such taxes (including income taxes or
franchise taxes) as are imposed on or measured by the Agent's or each Lender's
net income in any the jurisdiction (whether federal, state or local and
including any political subdivision thereof) under the laws of which such Lender
or the Agent, as the case may be, is organized or maintains a lending office.
"Termination Date" means the earliest to occur of (i) the Stated
Termination Date, (ii) the date the Total Facility is terminated either by the
Borrower pursuant to Section 3.2 or by the Required Lenders pursuant to Section
9.2, and (iii) the date this Agreement is otherwise terminated for any reason
whatsoever pursuant to the terms of this Agreement.
"Termination Event" means (a) the whole or partial withdrawal of the
Borrower(s) or any Subsidiary from a Plan during a plan year; or (b) the filing
of a notice of intent to terminate in whole or in part a Plan or the treatment
of a Plan amendment as a termination or partial termination; or (c) the
institution of proceedings by any Governmental Authority to terminate in whole
or in part or have a trustee appointed to administer a Plan; or (d) any other
event or condition which might constitute grounds for the termination of,
winding up or partial termination or winding up or the appointment of trustee to
administer any Plan.
"Total Facility" has the meaning specified in Section 1.1.
"Trademark Use Agreement" means the Agreement Regarding Use of
Trademarks, dated on or about the Closing Date, among the Borrower, Agent and
Black & Xxxxxx, Inc.
"UCC" has the meaning specified in the Security Agreement.
"Unfunded Pension Liability" means the sum of (1) the amount by
which a Pension Plan (other than a Multi-employer Plan) fails to satisfy the
minimum funding standard
A-29
pursuant to Section 412 of the Code for the applicable plan year, exclusive of
any waived funding deficiency, as that term is defined in Section 412(d)((3) of
the Code, and (2) with respect to any Pension Plan regulated or governed by the
PBA or applicable laws of any jurisdiction, any unfunded liability or solvency
deficiency as determined under the PBA or other applicable laws.
"United States" means the United States of America.
"Unused Letter of Credit Subfacility" means an amount equal to
$10,000,000 minus the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit plus, without duplication, (b) the aggregate unpaid
reimbursement obligations with respect to all Letters of Credit.
"Unused Line Fee" has the meaning specified in Section 2.5.
"Wholly-Owned Subsidiary" when used to determine the relationship of
a Subsidiary to a Person, means a Subsidiary all of the issued and outstanding
Capital Stock (other than directors' qualifying shares) of which shall at the
time be owned by such Person or one or more of such Person's Wholly-Owned
Subsidiaries or by such Person and one or more of such Person's Wholly-Owned
Subsidiaries.
Accounting Terms. Any accounting term used in the Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations in the Agreement
shall be computed, unless otherwise specifically provided therein, in accordance
with GAAP as consistently applied and using the same method for inventory
valuation as used in the preparation of the Financial Statements.
Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words
refer to the Agreement as a whole and not to any particular provision of the
Agreement; and Subsection, Section, Schedule and Exhibit references are to the
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to but excluding" and
the word "through" means "to and including."
(iv) The word "or" is not exclusive.
(d) Unless otherwise expressly provided herein, (i) references to
agreements
A-30
(including the Agreement) and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document, and (ii) references to any statute or regulation are
to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of the Agreement and other Loan
Documents are for convenience of reference only and shall not affect the
interpretation of the Agreement.
(f) The Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(g) For purposes of Section 9.1, a breach of a financial covenant
contained in Sections 7.26-7.28 shall be deemed to have occurred as of any date
of determination thereof by Agent or as of the last day of any specified
measuring period, regardless of when the Financial Statements reflecting such
breach are delivered to Agent.
(h) The Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Borrower
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Lenders or the Agent merely because of the
Agent's or Lenders' involvement in their preparation.
(i) As used in this Agreement, and the other Loan Documents,
"knowledge" of the Borrower shall mean the actual knowledge (after due inquiry)
of any Responsible Officer.
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