TERM LOAN AGREEMENT dated as of October 21, 2005 among APPLICA INCORPORATED as borrower, THE GUARANTORS PARTY HERETO, and MAST CREDIT OPPORTUNITIES I, (MASTER) LTD., as Lender
Exhibit 10.1
dated as of
October 21, 2005
among
APPLICA INCORPORATED
as borrower,
THE GUARANTORS PARTY HERETO,
and
MAST CREDIT OPPORTUNITIES I, (MASTER) LTD.,
as Lender
THIS TERM LOAN AGREEMENT dated as of October 21, 2005 (this “Agreement”) is by and among
Applica Incorporated, a Florida corporation as borrower, each of its Subsidiaries party hereto as
guarantors, and Mast Credit Opportunities I, (Master) Ltd., as Lender.
The parties hereto agree as follows:
ARTICLE 1
Definitions
1.1 Defined Terms. As used in this Agreement, the following terms have the meanings
specified below:
“Accounts” means all of the Borrower’s now owned or hereafter acquired or arising
accounts, as defined in the UCC, including all rights to payment for the sale or lease of goods or
rendition of services, whether or not such rights to payment have been earned by performance.
“Affiliate” means, with respect to a specified Person, another Person that Controls or
is Controlled by or is under common Control with the Person specified, provided, that, for
purposes of this Agreement, no Credit Party shall be deemed to be an Affiliate of any other Credit
Party.
“Anti-Terrorism Laws” mean any laws relating to terrorism or money laundering,
including Executive Order No. 13224 and the USA Patriot Act.
“Applica Americas” means Applica Americas, Inc., a Delaware corporation.
“Applica Canada” means Applica Canada Corporation, a Nova Scotia corporation.
“Applica Consumer Products” means Applica Consumer Products, Inc. a Florida
corporation.
“Applica Mexico” Applica Mexico Holdings, Inc., a Delaware corporation.
“Approved Receivables Program” shall have the meaning assigned to such term in the
Revolving Credit Agreement.
“Board” means the Board of Governors of the Federal Reserve System of the United
States of America.
“Borrower” means Applica Incorporated, a Florida corporation.
“Business Day” means any day that is not a Saturday, Sunday or other day on which
commercial banks in Boston, Massachusetts are authorized or required by law to remain closed.
“Canadian Guaranty” means an agreement of Guaranty executed by Applica Canada in
substantially the form of Exhibit E attached hereto, pursuant to which Applica Canada
guarantees all of the Obligations or any portion thereof.
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“Canadian Security Agreement” means the General Security Agreement, executed and and
delivered by Applica Canada in favor of the Lender in substantially the form of Exhibit F
attached hereto, as amended, supplemented, restated or otherwise modified from time to time.
“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,
Capital Lease Obligations, those costs arising in connection with the direct or indirect
acquisition of such asset by way of increased product or service charges, and other items presented
in accordance with GAAP.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of
such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
“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.
“Casualty Event” means, with respect to any Property of any Person, any loss of or
damage to, or any condemnation or other taking of, such Property for which such Person or any of
its Subsidiaries receives insurance proceeds, or proceeds of a condemnation award or other
compensation.
“Change in Law” means (a) the adoption of any law, rule or regulation after the
Closing Date, (b) any change after the Closing Date in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority or (c) compliance by the Lender
with any request, guideline or directive (whether or not having the force of law), other than a
request or directive to comply with any law, rule or regulation in effect on the Closing Date, of
any Governmental Authority made or issued after the Closing Date.
“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 Capital
Stock.
“Closing Date” means the date during which the Effective Time shall occur.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” means, collectively, all of the Property in which Liens are purported to
be granted hereunder and under the other Loan Documents as security for the Obligations of the
Credit Parties hereunder.
“Consolidated Members” means the Borrower and its Subsidiaries and “Consolidated
Member” means any of the foregoing.
“Control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
have meanings correlative thereto. A Person
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who owns or holds capital stock, beneficial interests or other securities representing ten
percent (10%) or more of the Total Voting Power of another Person shall be deemed, for purposes of
this Agreement, to “control” such other Person.
“Copyrights” means all copyrights, whether statutory or common law, owned by or
assigned to the Credit Parties, and all exclusive and nonexclusive licenses to the Credit Parties
from third parties or rights to use copyrights owned by such third parties, including, without
limitation, the registrations, applications and licenses listed on Schedule 4.10 hereto,
along with any and all (a) renewals and extensions thereof, (b) income, royalties, damages, claims
and payments now and hereafter due and/or payable with respect thereto, including, without
limitation, damages and payments for past, present or future infringements thereof, (c) rights to
xxx for past, present and future infringements thereof, and (d) foreign copyrights and any other
rights corresponding thereto throughout the world.
“Core Business” means, with respect to the Consolidated Members, the business of
marketing and distributing of household appliances, pest control products, personal care products,
pet products and related items consistent with past practices.
“Credit Parties” means the Borrower and all Subsidiary Guarantors.
“Default” means any event or condition which constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
“Designated Financial Officer” means an individual holding one or more of the
following offices with the Borrower: chief executive officer, chief financial officer, principal
accounting officer, treasurer, assistant treasurer or controller.
“Direct Foreign Subsidiary” means any Foreign Subsidiary whose outstanding voting
capital stock is owned by a Credit Party or a Domestic Subsidiary.
“Disclosed Matters” means the actions, suits and proceedings and the environmental
matters disclosed in Schedule 4.12.
“Disposition” means any sale, assignment, transfer or other disposition of any
property (whether now owned or hereafter acquired) by any Credit Party to any Person other than to
another Credit Party excluding (a) the granting of Liens permitted hereunder and (b) any sale,
assignment, transfer or other disposition of (i) any property sold or disposed of in the ordinary
course of business and on ordinary business terms, (ii) any property no longer used or useful in
the business of the Credit Parties and (iii) any Collateral pursuant to an exercise of remedies by
the Lender hereunder or under any other Loan Document.
“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.
“Domestic Subsidiary” means any Subsidiary of the Borrower organized or incorporated
under the laws of a state in the United States and denominated as a “Domestic Subsidiary” in
Schedule 4.4.
“Effective Time” means the time specified in a written notice from the Lender when the
conditions specified in Article 5 are satisfied (or waived in accordance with Section 9.2).
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“Environmental Laws” means all applicable laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the environment, preservation or
reclamation of natural resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
“Environmental Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of any
Credit Party directly or indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release
of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equipment” shall have the meaning assigned to such term in the Security Agreement.
“Equity Rights” means, with respect to any Person, any subscriptions, options,
warrants, commitments, preemptive rights or agreements of any kind (including any stockholders’ or
voting trust agreements) for the issuance or sale of, or securities convertible into, any
additional shares of capital stock of any class, or partnership or other ownership interests of any
type in, such Person.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that,
together with the Credit Parties, is treated as a single employer within the meaning of Section
414(b), (c), (m) or (o) of the Code. Notwithstanding the foregoing, for purposes of any liability
related to a Multiemployer Plan under Title IV of ERISA, the term “ERISA Affiliate” means any trade
or business that, together with the Credit Parties, is treated as a single employer within the
meaning of Section 4001(b) of ERISA.
“ERISA Event” means (a) a “reportable event”, as defined in Section 4043 of ERISA or
the regulations issued thereunder for which the notice requirement has not been waived with respect
to any Pension Plan, (b) the existence with respect to any Pension Plan of an “accumulated funding
deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived,
(c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application
for a waiver of the minimum funding standard with respect to any Pension Plan, (d) the incurrence
by any Credit Party or any ERISA Affiliate of any liability under Title IV of ERISA with respect to
the termination of any Pension Plan, (e) the receipt by any Credit Party or any ERISA Affiliate
from the PBGC or plan administrator of any notice relating to an intention to terminate any
Pension Plan or Pension Plans or to appoint a trustee to administer any Pension Plan, or (f) the
receipt by any Credit Party or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from any Credit Party or any ERISA Affiliate of any notice of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.
“Event of Default” has the meaning assigned to such term in Section 8.1.
“Excluded Taxes” means, with respect to the Lender or any other recipient of any
payment to be made by or on account of any Obligation hereunder, (a) income, net worth or franchise
taxes imposed on (or measured by) its net income or net worth by the United States of America, or
by the jurisdiction under the laws of which such recipient is organized or in which its principal
office is located or, in the case of the Lender, in which its lending office is located or in which
it is taxable solely on account of some
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connection other than the execution, delivery or performance of this Agreement or the receipt
of income hereunder, and (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which the Borrower is located.
“Executive Order No. 13224” means Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended,
amended or replaced.
“Existing Debt” means Indebtedness of the Credit Parties existing as of the Effective
Time which is permitted to remain outstanding after the Effective Time under Section 7.1 and is
listed on Schedule 7.1 hereto.
“Factoring Agreement” shall have the meaning assigned to such term in the Revolving
Credit Agreement.
“Fiscal Year” means, with respect to any Credit Party, such Credit Party’s fiscal year
for accounting purposes. The Fiscal Year of the Credit Parties is a calendar year.
“Fixed Assets” means the Equipment and Real Property Assets of the Credit Parties.
“Foreign Subsidiary” means any Subsidiary of the Borrower other than the Domestic
Subsidiaries, including, without limitation, Applica Canada and such other Foreign Subsidiaries as
are designation in Schedule 4.4.
“GAAP” means generally accepted accounting principles in the United States of America.
“Governmental Authority” means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
“Guarantee” 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. The terms
“Guarantee” and “Guaranteed” used as a verb shall have a correlative meaning. The
amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount
of the primary obligations in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person
is required to perform thereunder).
“Guarantor” means any Person, including, without limitation, the Subsidiary
Guarantors, which is a guarantor hereunder as of the Effective Time or which becomes a guarantor
hereunder after the Effective Time.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or
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asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical
wastes and all other substances or wastes of any nature, in each case regulated or subject to
regulation pursuant to any Environmental Law.
“Hedging Agreement” means any interest rate protection agreement, foreign currency
exchange agreement, commodity price protection agreement or other interest or currency exchange
rate or commodity price hedging arrangement.
“HP Delaware” means HP Delaware, Inc., a Delaware corporation.
“HPG” means HPG LLC, a Delaware limited liability company.
“HPI” means HP Intellectual Corp., a Delaware corporation.
“Indebtedness” means, without duplication, with respect to 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 Credit 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 Indebtedness 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 Capital Lease Obligations and other
obligations or liabilities created or arising under any 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 Indebtedness 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 Guarantees; (e) the present value (discounted
at the Prime Rate) of lease payments due under synthetic leases; (f) all obligations and
liabilities under any asset securitization (other than an Approved Receivables Program) or
sale/leaseback transaction; (g) obligations of such Person in respect of Hedging Agreements and (h)
obligations of such Person in respect of letters of credit or similar instruments issued or
accepted by banks and other financial institutions for the account of such Person; provided,
further, however, that in no event shall the term Indebtedness 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.
“Indemnified Taxes” means all Taxes other than (a) Excluded Taxes and Other Taxes and
(b) amounts constituting penalties or interest imposed with respect to Excluded Taxes or Other
Taxes.
“Intellectual Property Security Agreement” means the Intellectual Property Security
Agreement, substantially in the form of Exhibit C, executed and delivered by each of the
Credit Parties at the Effective Time and thereafter in accordance with Section 6.11, as such
agreement may be amended, supplemented or otherwise modified from time to time.
“Intercompany Indebtedness” has the meaning assigned to such term in Section 9.9.
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“Intercreditor Agreement” means the Lien Subordination Intercreditor Agreement among
the Lender, Bank of America, N.A. as administrative agent under the Revolving Credit Agreement and
the Credit Parties, in substantially the form of Exhibit G annexed hereto, as the same may
be modified or amended from time to time with the consent of the Lender.
“Inventory” shall have the meaning assigned to such term in the Security Agreement.
“Investment” means, for any Person: (a) the acquisition (whether for cash, Property,
services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership,
limited liability company or other ownership interests or other securities of any other Person or
any agreement to make any such acquisition (including, without limitation, any “short sale” or any
sale of any securities at a time when such securities are not owned by the Person entering into
such short sale); (b) the making of any deposit with, or advance, loan or other extension of credit
to, any other Person (including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to such Person, but
excluding any such advance, loan or extension of credit representing the purchase price of
inventory or supplies sold by such Person in the ordinary course of business provided that in no
event shall the term of any such inventory or supply advance, loan or extension of credit exceed
180 days); or (c) the entering into of any Guarantee of, or other contingent obligation with
respect to, Indebtedness or other liability of any other Person and (without duplication) any
amount committed to be advanced, lent or extended to such Person. Notwithstanding the foregoing,
none of the following shall be deemed “Investments” for purposes hereof: (i) Capital
Expenditures, (ii) acquisitions of Inventory in the ordinary course of business, and (iii)
acquisitions of current assets in the ordinary course of business.
“IP Collateral” means, collectively, the Collateral relating to intellectual property
rights of the Credit Parties hereunder or under any other Loan Document.
“Lender” means Mast Credit Opportunities I, (Master) Ltd. or any other party which
becomes a lender hereunder.
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same economic effect as any of
the foregoing), other than an operating lease, relating to such asset and (c) in the case of
securities, any purchase option, call or similar right of a third party with respect to such
securities.
“Loan Documents” means this Agreement, the Term Note, the Security Agreement, the
Intellectual Property Security Agreement, the Stock Pledge Agreement, the Intercreditor Agreement,
the Canadian Guaranty, the Canadian Security Agreement and any other instruments or documents
executed and delivered or to be delivered to the Lender from time to time pursuant to this
Agreement, as the same may be supplemented and amended from time to time in accordance with their
respective terms.
“Loans” means the Term Loan.
“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 Credit 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 Credit Party of any material Loan Document to which it is a party.
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“Material Indebtedness” means Indebtedness (other than the Term Loan), including,
without limitation, obligations in respect of one or more Hedging Agreements, in an aggregate
principal amount exceeding $500,000. For purposes of determining Material Indebtedness, the
“principal amount” of the obligations of any Person in respect of a Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements) that such Person
would be required to pay if such Hedging Agreement were terminated at such time.
“Mexico Facility” means the manufacturing facility and related Real Property Assets,
plant and Equipment owned by Applica Manufacturing, S. de X.X. de C.V. located in Queretaro,
Mexico.
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
“Net Cash Payments” means,
(a) with respect to any Casualty Event, the aggregate amount of cash proceeds of
insurance, condemnation awards and other compensation received by the Credit Parties in
respect of such Casualty Event net of (i) reasonable expenses incurred by the Credit Parties
in connection therewith and (ii) contractually required repayments of Indebtedness to the
extent secured by a Lien on such property and (iii) any income and transfer taxes payable by
the Credit Parties in respect of such Casualty Event;
(b) with respect to any Disposition, the aggregate amount of all cash payments received
by the Credit Parties directly or indirectly in connection with such Disposition, whether at
the time of such Disposition or after such Disposition under deferred payment arrangements
or Investments entered into or received in connection with such Disposition, net of (i) the
amount of any legal, title, transfer and recording tax expenses, commissions and other fees
and expenses payable by the Credit Parties in connection therewith, (ii) any Federal, state
and local income or other Taxes estimated to be payable by the Credit Parties as a result
thereof, (iii) any repayments by the Credit Parties of Indebtedness to the extent that such
Indebtedness is secured by a Lien on the property that is the subject of such Disposition
and the transferee of (or holder of a Lien on) such property requires that such Indebtedness
be repaid as a condition to the purchase of such property, and (iv) any repayments by the
Credit Parties to minority stockholders if and to the extent permitted hereby; and
(c) with respect to any incurrence of Indebtedness or offering of equity securities,
the aggregate amount of all cash proceeds received by the Credit Parties therefrom less all
legal, underwriting and similar fees and expenses incurred in connection therewith.
“Obligations” means (a) the aggregate outstanding principal balance of and all
interest on the Loans made by the Lender to the Borrower (including any interest accruing after the
commencement of any proceeding by or against the Borrower under the federal bankruptcy laws, as now
or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other
similar law, and any other interest that would have accrued but for the commencement of such
proceeding, whether or not any such interest is allowed as a claim enforceable against the Borrower
in any such proceeding), and (b) all fees, costs, charges, expenses and other obligations from time
to time owing to the Lender or any Affiliate of the Lender by the Credit Parties hereunder or under
any other Loan Document.
“Other Taxes” means any and all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any payment made hereunder
or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement and
the other Loan Documents, provided that there shall be excluded from “Other Taxes” all Excluded
Taxes.
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“Patents” means all patents issued or assigned to and all patent applications made by
the Credit Parties and, to the extent that the grant of a security interest does not cause a breach
or termination thereof, all exclusive and nonexclusive licenses to the Credit Parties from third
parties or rights to use patents owned by such third parties, including, without limitation, the
patents, patent applications and licenses listed on Schedule 4.10 hereto, along with any
and all (a) inventions and improvements described and claimed therein, (b) reissues, divisions,
continuations, extensions and continuations-in-part thereof, (c) income, royalties, damages, claims
and payments now and hereafter due and/or payable under and with respect thereto, including,
without limitation, damages and payments for past or future infringements thereof, (d) rights to
xxx for past, present and future infringements thereof, and (e) any other rights corresponding
thereto throughout the world.
“PBA” means the Pension Benefits Act of Ontario and all regulations thereunder, as
amended from time to time, and any successor legislation.
“Pension Plan” means any Plan that is a defined benefit pension plan subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect
of which any Credit Party or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Permitted Acquisitions” shall have the meaning assigned to such term in the Revolving
Credit Agreement.
“Permitted Investments” means:
(a) direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent
such obligations are backed by the full faith and credit of the United States of America), in each
case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 90 days from the date of acquisition
thereof and having, at such date of acquisition, the highest credit rating obtainable from Standard
and Poor’s Ratings Service or from Xxxxx’x Investors Service, Inc.;
(c) investments in certificates of deposit, banker’s acceptances and time deposits maturing
within one year from the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $100,000,000;
(d) fully collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial institution satisfying
the criteria described in clause (c) above;
(f) investments in money market mutual funds that are rated AAA by Standard & Poor’s Rating
Service; and
(g) obligations of any corporation organized under the laws of 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 & Poors and Moody’s;
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“Permitted Liens” has the meaning set forth in Section 7.2.
“Permitted Mexico Facility Disposition” means a sale by any Credit Party of the Mexico
Facility if (a) at the time of such sale, no Default or Event of Default has occurred and is
continuing, (b) the transaction is structured as a fee simple sale, a sale and leaseback, or a
significant reduction in operations at the Mexico Facility, (c) the buyer is a Person who is not an
Affiliate of a Consolidated Member, (d) upon the consummation of such sale the Credit Parties shall
receive not less than the lesser of (i) $8,000,000 in Net Cash Payments or (ii) sufficient cash to
cover all cash severance and other wind-down costs of the Mexico Facility.
“Permitted Officer Severance Payments” shall have the meaning assigned to such term in
the Revolving Credit Agreement.
“Person” means any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental Authority or other entity.
“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA in
which any Credit Party or any ERISA Affiliate is an “employer” as defined in Section 3(5) of ERISA,
including, but not limited to, any Pension Plan or Multiemployer Plan.
“Post-Default Rate” means, a rate per annum equal to the Term Loan Rate plus
three percent (3%).
“Prime Rate” means the rate of interest published from time to time by the Wall Street
Journal as the prime rate. Each change in the Prime Rate shall be effective from and including the
date such change is publicly announced as being effective.
“Property” means any interest of any kind in property or assets, whether real,
personal or mixed, and whether tangible or intangible.
“Proprietary Rights” means, with respect to any Credit Party, all Patents, Trademarks
and Copyrights and other intellectual property material to such Credit Party’s business.
“PTO” means the United States Patent and Trademark Office or any successor or
substitute office in which filings are necessary or, in the opinion of the Lender, desirable in
order to create or perfect Liens on any IP Collateral.
“Qualified
Refinancing” shall have the meaning assigned such term in
the Intercreditor Agreement.
“Real Property Asset” means, at any time of determination, any and all real property
owned, leased or subleased by the Credit Parties.
“Registered Proprietary Rights” has the meaning assigned to such term in Section
5.5(c).
“Reimbursement Obligation” has the meaning assigned to such term in Section 2.4(d).
“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.
“Restricted Junior Payment” means (i) any dividend or other distribution, direct or
indirect, on account of any shares of any class of Capital Stock in, any Credit Party or any
Subsidiary now or hereafter outstanding, except a dividend payable solely in shares of Capital
Stock, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of
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any shares of any class of Capital Stock in, any Credit Party or any Subsidiary now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of Capital Stock in,
any Credit Party or any Subsidiary, (iv) any payment or prepayment of principal of, premium, if
any, or interest on, or redemption purchase, retirement, defeasance (including economic or legal
defeasance), sinking fund or similar payment with respect to, any Senior Subordinated Debt or
Subordinated Indebtedness, and (v) any payment made to any Affiliates of any Credit Party or any
Subsidiary in respect of management, consulting or other similar services provided to any Credit
Party or any Subsidiary.
“Revolving Credit Agent” means Bank of America, N.A., or its successor in its capacity
as agent under the Revolving Credit Agreement.
“Revolving Credit Agreement” means that certain Amended and Restated Credit Agreement
dated as of November 17, 2004, as amended, among the financial institutions named therein, the
Revolving Credit Agent, General Electric Capital Corporation as documentation agent, Applica
Incorporated as borrower and the subsidiaries of Applica party thereto as Guarantors.
“Security Agreement” means the Security Agreement in substantially the form of
Exhibit B annexed hereto executed by each of the Credit Parties and delivered to the Lender
on the Closing Date, as the same may be modified or amended from time to time with the consent of
the Lender.
“Senior Subordinated Debt 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 original 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 of the Borrower and State Street Bank and Trust Company, as trustee; and (iii) all other
agreements, instruments, or documents executed or delivered by the Borrower in connection with the
foregoing, as any of the foregoing may be at any time amended or modified.
“Senior Subordinated Debt” means the Indebtedness evidenced by the Senior Subordinated
Debt Documents at any time.
“Special Counsel” means Xxxxxx & Dodge LLP, in its capacity as special counsel to the
Lender.
“Stock Pledge Agreement” means the Stock Pledge Agreement in substantially the form of
Exhibit D annexed hereto executed by the Credit Parties and delivered to the Lender on the
Closing Date with respect to the capital stock of each of the Credit Parties, as the same may be
modified or amended from time to time with the consent of the Lender.
“Subordinated Indebtedness” means any Indebtedness of the Credit Parties incurred
after the Closing Date with the consent of the Lender that by its terms (or by the terms of the
instrument under which it is outstanding and to which appropriate reference is made in the
instrument evidencing such Subordinated Indebtedness) is made subordinate and junior in right of
payment to the Term Loan and to the other Obligations of the Credit Parties by provisions in form
and substance reasonably satisfactory to the Lender and Special Counsel.
“Subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership, association or other entity
(a) of which securities or other
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ownership interests representing more than 50% of the ordinary voting power or, in the case of
a partnership, more than 50% of the general partnership interests are, as of such date, owned,
controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent and/or one
or more subsidiaries of the parent. References herein to “Subsidiaries” shall, unless the
context requires otherwise, be deemed to be references to Subsidiaries of the Borrower.
“Subsidiary Guarantor” means, each of Applica Consumer Products, Applica Canada,
Applica Mexico, WD Delaware, HPI, Windmere, HP Delaware, HPG, Applica Americas and any Subsidiary
of the Borrower which becomes a Guarantor hereunder after the Effective Time by complying with the
requirements of Section 6.11.
“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
“Term Loan” means the $20,000,000 Term Loan to be made by the Lender to the Borrower
at the Effective Time.
“Term Loan Maturity Date” means the earlier to occur of (a) November 17, 2009, and (b)
the date of acceleration of the Term Loan pursuant to Section 8.1 hereof.
“Term Loan Rate” means the rate per annum equal to Three Month LIBOR
plus 6.25%. If at any time the Lender determines that (i) adequate and reasonable means do
not exist for ascertaining Three Month LIBOR or (ii) as a result of any Change in Law it is
unlawful or impossible for the Lender to make or maintain Borrowing at a rate of interest
determined by reference to Three Month LIBOR; then in each case the Lender shall give notice
thereof to the Borrower as promptly as practicable thereafter and, until the Lender notifies the
Borrower that the circumstances giving rise to such notice no longer exist, the Term Loan Rate
shall be a rate per annum equal to the Prime Rate plus 5.0%.
“Term Note” means the promissory note, substantially in the form of Exhibit A
annexed hereto, issued by the Borrower in favor of the Lender and evidencing the Term Loan.
“Three Month LIBOR” means the London Interbank Offered Rate for an Interest Period of
three (3) months published in the Wall Street Journal. Three Month LIBOR shall be determined as of
the Closing Date and thereafter, on the first day of each month and, once determine shall remain in
effect until the first day of the next month.
“Total Voting Power” means, with respect to any Person, the total number of votes
which holders of securities having the ordinary power to vote, in the absence of contingencies, are
entitled to cast in the election of directors of such Person.
“Trademarks” means all trademarks (including service marks), federal and state
trademark registrations and applications made by the Credit Parties, common law trademarks and
trade names owned by or assigned to the Credit Parties, all registrations and applications for the
foregoing and all exclusive and nonexclusive licenses from third parties of the right to use
trademarks of such third parties, including, without limitation, the registrations, applications,
unregistered trademarks, service marks and licenses listed on Schedule 4.10 hereto, along
with any and all (a) renewals thereof, (b) income, royalties, damages and payments now and
hereafter due and/or payable with respect thereto, including, without limitation, damages, claims
and payments for past or future infringements thereof, (c) rights to xxx for past, present and
future infringements thereof, and (d) foreign trademarks, trademark registrations, and trade name
applications for any thereof and any other rights corresponding thereto throughout the world.
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“UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as
in effect from time to time, of Delaware or of any other state the laws of which are required as a
result thereof to be applied in connection with the attachment, perfection or priority of, or
remedies with respect to, the Liens in favor of the Agent and the Lenders in any portion of the
Collateral.
“USA Patriot Act” means the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272
(2001), as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
“U.S. Dollars” or “$” refers to lawful money of the United States of America.
“WD Delaware” means WD Delaware, Inc., a Delaware corporation.
“Windmere” means Windmere Holdings Corporation, a Delaware corporation.
“Wholly Owned Subsidiary” means, with respect to any Person at any date, any
corporation, limited liability company, partnership, association or other entity of which
securities or other ownership interests representing 100% of the equity or ordinary voting power
(other than directors’ qualifying shares) or, in the case of a partnership, 100% of the general
partnership interests are, as of such date, directly or indirectly owned, controlled or held by
such Person or one or more Wholly Owned Subsidiaries of such Person or by such Person and one or
more Wholly Owned Subsidiaries of such Person.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.
1.2 Terms Generally. The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The
word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the
context requires otherwise (a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person’s successors and assigns, (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.
1.3 Accounting Terms; GAAP. Except as otherwise expressly provided herein, all
terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect
from time to time; provided that, if the Borrower notifies the Lender that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such provision (or if the Lender
notifies the Borrower that the Lender requests an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such change in GAAP or in
the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect
and applied immediately before such
change shall
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have become effective until such notice shall have been withdrawn or such
provision shall have been amended in accordance herewith.
1.4 Joint and Several Obligations; Designated Financial Officers.
(a) All Obligations of the Credit Parties hereunder shall be joint and several. Any
notice, request, waiver, consent or other action made, given or taken by any Credit Party shall
bind all Credit Parties.
(b) Each Credit Party hereby authorizes each of the Designated Financial Officers
listed in Schedule 1.4 hereto to act as agent for each Credit Party and to execute and
deliver on behalf of each Credit Party such notices, requests, waivers, consents, certificates and
other documents, and to take any and all actions required or permitted to be delivered or taken by
any Credit Party hereunder. The Borrower may replace any of the Designated Financial Officers
listed in Schedule 1.4 hereto or add any additional Designated Financial Officers by
delivering written notice to the Lender specifying the names of each new Designated Financial
Officer and the offices held by each such Person. Each Credit Party hereby agrees that any such
notices, requests, waivers, consents, certificates and other documents executed, delivered or sent
by any Designated Financial Officer and any such actions taken by any Designated Financial Officer
shall bind each Credit Party.
ARTICLE 2
The Term Loan
2.1 Term Loan.
(a) Funding of the Term Loan. Subject to the terms and conditions set forth
herein, the Lender agrees to fund the full amount of the Term Loan at the Effective Time.
Principal amounts of the Term Loan that have been repaid or prepaid may not be reborrowed.
(b) Interest on the Term Loan. The outstanding principal amount of the Term
Loan shall bear interest at a rate per annum equal to the Term Loan Rate. Notwithstanding the
foregoing, (i) any portion of the Term Loan which is not paid when due shall automatically bear
interest until paid in full at the Post-Default Rate, (ii) during the period when any Event of
Default of the type described in clauses (g) or (h) of Section 8.1 shall have occurred and be
continuing, the outstanding principal balance of the Term Loan shall automatically bear interest at
the Post-Default Rate and (iii) if there shall occur and be continuing any Event of Default (other
than an Event of Default of the type described in clauses (g) or (h) of Section 8.1), following
written notice delivered to the Borrower from the Lender, the outstanding principal balance of the
Term Loan shall bear interest at the Post-Default Rate during the period beginning on the date such
Event of Default first occurred, and ending on the date such Event of Default is cured or waived.
Accrued interest on the outstanding principal balance of the Term Loan shall be payable in arrears
on the first day of each month; provided that interest accrued at the Post-Default Rate shall be
payable on demand, and all accrued interest on the Term Loan shall be payable on each date that any
portion of the principal of the Term Loan shall be payable hereunder and on the Term Loan Maturity
Date. All interest hereunder shall be computed on the basis of a year of 360 days, and in each
case shall be payable for the actual number of days elapsed (including the first day but excluding
the last day).
(c) Repayment of Term Loan. The Borrower hereby unconditionally promises to
pay to the Lender the entire unpaid principal amount of the Term Loan on the Term Loan Maturity
Date.
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(d) Loan Account. The Lender shall maintain in accordance with commercially
reasonable practice an account evidencing the indebtedness of the Borrower to the Lender in respect
of the Term Loan, including the amounts of principal and interest payable and paid to the Lender
from time to time hereunder. The entries made in the account maintained pursuant to this
subsection 2.1(d) shall be prima facie evidence of the existence and amounts of the obligations
recorded therein; provided that the failure of the Lender to maintain such account or any error
therein shall not in any manner affect the obligation of the Borrower to repay the Term Loan in
accordance with the terms of this Agreement.
(e) Term Note. Prior to the Closing Date, the Borrower shall prepare,
execute and deliver to the Lender the Term Note evidencing the Borrower’s obligations in respect of
the Term Loan.
2.2 Exit Fee. In connection with any payment or prepayment of the principal amount
of the Term Loan, the Borrower shall (i) repay the entire principal balance of, and all accrued
interest and fees owing with respect to, the Term Loan, and (ii) pay to the Lender, an exit fee
(the “Exit Fee”) equal to the product of (A) the original principal amount of the Term Loan
multiplied by (B) the applicable Exit Fee Percentage set forth below as in effect on the
the repayment occurs:
| Period during which Repayment Occurs | Applicable Exit Fee | Percentage | |
Closing Date to June 30, 2006: |
0% | ||
July 1, 2006 to December 31, 2006: |
1.0% | ||
January 1, 2007 to December 31, 2007: |
2.0% | ||
January 1, 2008 to December 31, 2008: |
3.0% | ||
January 1, 2009 and thereafter: |
4.0% |
2.3 Payments. The Borrower shall be obligated to make each payment required to be
made by the Borrower hereunder (whether of principal, interest, fees or otherwise) to the Lender at
its offices in Boston, Massachusetts, prior to 3:00 p.m., Boston, Massachusetts time, on the date
when due (except that if any payment shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case of any payment
accruing interest, interest thereon shall be payable for the period of such extension). All
payments of principal shall be subject to payment of the Exit Fee as set forth in Section 2.2. All
payments shall be made in immediately available funds, in U.S. dollars without set-off or
counterclaim. Any amounts received after such time on any date may, in the reasonable discretion
of the Lender, be deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon.
2.4 Prepayment of Loans.
(a) Optional Prepayments of Loans. The Borrower shall have the right at any
time and from time to time to prepay the Term Loan at 100% of the outstanding principal amount
thereof, plus accrued and upaid interest and fees, subject to the payment of the Exit Fee as set
forth in Section 2.2.
(b) Mandatory Prepayments. After all obligations of the Credit Parties
under the Revolving Credit Agreement have been paid in full and discharged, the Borrower shall be
obligated to, and shall, make prepayments of the Term Loan hereunder as follows:
(i) Incurrence of Debt. Without limiting the obligation of the
Borrower to obtain the consent of the Lender to any incurrence of Indebtedness not otherwise
permitted hereunder, the Borrower shall prepay the Term Loan, upon the date of any
incurrence of Indebtedness (other than Indebtedness permitted pursuant to Section 7.1), in
an aggregate amount equal to 100% of the amount of the Net Cash Payments from such
incurrence of Indebtedness
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received by any Credit Party.
(ii) Sale or Offering of Securities. The Borrower shall prepay the
Term Loan upon the date of any sale or offering of securities by any Credit Party (other
than securities issued in connection with any benefit, management incentive or option plan),
in an aggregate amount equal to 100% of the amount of Net Cash Payments from such offering
of securities received by any such Credit Party.
(iii) Sale of Assets. Without limiting the obligation of the
Borrower to obtain the consent of the Lender to any Disposition not otherwise permitted
hereunder, the Borrower shall prepay the Term Loan upon the date of any Disposition by any
Credit Party, in an aggregate amount equal to 100% of the amount of such Net Cash Payments
from such Disposition received by any Credit Party on the date of such Disposition.
(iv) Proceeds of Casualty Events. Upon the receipt by the Lender or
the Credit Parties of the proceeds of insurance, condemnation award or other compensation in
respect of any Casualty Event affecting any property of the Credit Parties, the Borrower
shall prepay the Term Loan in an aggregate amount equal to 100% of the Net Cash Payments
from such Casualty Event.
(c) Notification of Certain Prepayments. The Borrower shall notify the
Lender by telephone (confirmed by telecopy) of any voluntary prepayment of the Term Loan not later
than 1:00 p.m., Boston, Massachusetts time, three Business Days before the date of such prepayment.
The Borrower shall notify the Lender of any mandatory prepayment of the Loans pursuant to
subsection 2.4(b) hereunder as soon as practicable. Each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid.
(d) Prepayments Accompanied by Exit Fee and Interest. All prepayments of
the Term Loan shall be accompanied by (i) the Exit Fee as set forth in Section 2.2 and (ii) accrued
interest through the date of prepayment.
2.5 Closing Fee. The Borrower shall pay to the Lender on the Closing Date
a non-refundable closing fee in an amount equal to $100,000.
2.6 Taxes.
(a) Any and all payments by or on account of any Obligations of the Borrower
hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional sums payable under
this Section 2.6) the Lender receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay all Other Taxes to the relevant Governmental
Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Lender, within 10 days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.6)
paid by the
- 16 -
Lender (and any penalties, interest and reasonable expenses arising therefrom or with respect
thereto during the period prior to the Borrower making the payment demanded under this paragraph
(c)), whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by the Lender shall be conclusive absent manifest error.
(d) Within thirty (30) days after any payment of Indemnified Taxes or Other Taxes by
the Borrower to a Governmental Authority, the Borrower shall deliver to the Lender the original or
a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment reasonably satisfactory to
the Lender.
ARTICLE 3
Guarantee by Guarantors
3.1 The Guarantee. The Guarantors hereby guarantee to the Lender and its successors
and assigns the prompt payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Obligations. The Guarantors hereby further agree that if the Borrower shall fail
to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the
Obligations, the Guarantors will promptly pay the same, without any demand or notice whatsoever,
and that in the case of any extension of time of payment or renewal of any of the Obligations, the
same will be promptly paid in full when due (whether at extended maturity, by acceleration or
otherwise) in accordance with the terms of such extension or renewal.
3.2 Obligations Unconditional. The obligations of the Guarantors under Section 3.1
are absolute and unconditional irrespective of the value, genuineness, validity, regularity or
enforceability of this Agreement, the other Loan Documents or any other agreement or instrument
referred to herein or therein, or any substitution, release or exchange of any other guarantee of
or security for any of the Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, it being the intent of this Section 3.2
that the obligations of the Guarantors hereunder shall be absolute and unconditional under any and
all circumstances. Without limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not alter or impair the liability of the
Guarantors hereunder which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to such Guarantors, the
time for any performance of or compliance with any of the Obligations shall be extended, or
such performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions hereof or of the
other Loan Documents or any other agreement or instrument referred to herein or therein
shall be done or omitted;
(iii) the maturity of any of the Obligations shall be accelerated, or any of
the Obligations shall be modified, supplemented or amended in any respect, or any right
hereunder or under the other Loan Documents or any other agreement or instrument referred to
herein or therein shall be waived or any other guarantee of any of the Obligations or any
security therefor shall be released or exchanged in whole or in part or otherwise dealt
with; or
(iv) any lien or security interest granted to, or in favor of, the Lender as
- 17 -
security for any of the Obligations shall fail to be perfected.
The Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and all
notices whatsoever, and any requirement that the Lender exhaust any right, power or remedy or
proceed against the Borrower hereunder or under the other Loan Documents or any other agreement or
instrument referred to herein or therein, or against any other Person under any other guarantee of,
or security for, any of the Obligations.
3.3 Reinstatement. The obligations of the Guarantors under this Article 3 shall be
automatically reinstated if and to the extent that for any reason any payment by or on behalf of
the Borrower in respect of the Obligations is rescinded or must be otherwise restored by any holder
of any of the Obligations, whether as a result of any proceedings in bankruptcy or reorganization
or otherwise, and each Guarantor agrees that it will indemnify the Lender on demand for all
reasonable costs and expenses (including fees and expenses of counsel) incurred by the Lender in
connection with such rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
3.4 Subrogation. Until such time as the Obligations shall have been indefeasibly
paid in full, each of the Guarantors hereby waives all rights of subrogation or contribution,
whether arising by contract or operation of law (including, without limitation, any such right
arising under the Federal Bankruptcy Code of 1978, as amended) or otherwise by reason of any
payment by it pursuant to the provisions of this Article 3 and further agrees with the Borrower for
the benefit of each creditor of the Borrower (including, without limitation, the Lender)
that any such payment by it shall constitute a contribution of capital by such Guarantor to the
Borrower.
3.5 Remedies. The Guarantors agree that, as between the Guarantors and the Lender,
the Obligations of the Borrower hereunder may be declared to be forthwith due and payable as
provided in Section 8.1 (and shall be deemed to have become automatically due and payable in the
circumstances provided in Sections 8.1(g) and (h)) for purposes of Section 3.1 notwithstanding any
stay, injunction or other prohibition preventing such declaration (or such Obligations from
becoming automatically due and payable) as against the Borrower and that, in the event of such
declaration (or such Obligations being deemed to have become automatically due and payable), such
Obligations (whether or not due and payable by the Borrower) shall forthwith become due and payable
by the Guarantors for purposes of Section 3.1.
3.6 Instrument for the Payment of Money. Each of the Guarantors hereby acknowledges
that the guarantee in this Article 3 constitutes an instrument for the payment of money, and
consents and agrees that the Lender, at its sole option, in the event of a dispute by such
Guarantor in the payment of any moneys due hereunder, shall have the right to seek summary judgment
or such other expedited procedure as may be available for a suit on a note or other instrument for
the payment of money.
3.7 Continuing Guarantee. The guarantee in this Article 3 is a continuing
guarantee, and shall apply to all Obligations whenever arising.
3.8 General Limitation on Amount of Obligations Guaranteed. In any action or
proceeding involving any state or non-U.S. corporate law, or any state or Federal or non-U.S.
bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if
the obligations of the Guarantors under Section 3.1 would otherwise be held or determined to be
void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of
the amount of its liability under Section 3.1, then, notwithstanding any other provision hereof to the contrary, the amount of
such liability
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shall, without any further action by the Guarantors, Lender, or other Person, be
automatically limited and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or proceeding.
ARTICLE 4
Representations and Warranties
Each Credit Party represents and warrants to the Lender as to itself and each other Credit
Party, that:
4.1 Authorization, Validity, Enforceability. Each Credit 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 Lender Liens upon and security interests
in the Collateral. Each Credit 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. Each Credit Party has duly executed
and delivered this Agreement and the other Loan Documents to which it is a party. Assuming this
Agreement and the other Loan Documents constitute the legal, valid and binding obligations of the
Lender, this Agreement and the other Loan Documents constitute the legal, valid and binding
obligations of each Credit Party, enforceable against it in accordance with their respective terms.
Each Credit 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 such Credit Party or any of
its Subsidiaries, by reason of the terms of (a) any contract, mortgage, lease, agreement,
indenture, or instrument to which such Credit Party or any of its Subsidiaries is a party or which
is binding upon it, (b) any Requirement of Law applicable to the such Credit 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 Credit Parties or any of their
Subsidiaries.
4.2 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
Lender, 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 (b),
(c), (d), (e), (f), (g), (h), (i) and (j) of Section 7.2 securing all the Obligations, and
enforceable against the Credit Parties and all third parties.
4.3 Organization and Qualification. Each Credit 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 4.3 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 not have a Material Adverse Effect, and (c) has all requisite power and authority
to conduct its business and to own its property.
4.4 Subsidiaries. Schedule 4.4 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 4.4, 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
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Effect and (c) has all requisite power and authority to conduct its business and own its
property. As of the Effective Time, the capital structure and ownership of the Borrower and the
Borrower’s Subsidiaries are correctly described on Schedule 4.4. As of the Effective Time,
the authorized, issued and outstanding capital stock of the Borrower and the Borrower’s
Subsidiaries consists of the capital stock described on Schedule 4.4, all of which is duly
and validly issued and outstanding, fully paid and nonassessable. Except as set forth on
Schedule 4.4, as of the date hereof, (x) there are no outstanding Equity Rights with
respect to any Credit Party and, (y) there are no outstanding obligations of any Credit Party to
repurchase, redeem, or otherwise acquire any shares of capital stock of or other interest in any
Credit Party, nor are there any outstanding obligations of any Credit Party to make payments to any
Person, such as “phantom stock” payments, where the amount thereof is calculated with reference to
the fair market value or equity value of any Credit Party.
4.5 Financial Statements. The Borrower has delivered to the Lender 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, 2004, 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 the Lender the most recent
financial statements for the Consolidated Members filed with Securities and Exchange Commission or
otherwise made available to the holders of the Capital Stock of the Borrower. 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.
4.6 Solvency. As of the Effective Time and after giving effect to the funding of
the Term Loan and the other transactions contemplated hereby:
(a) the aggregate value of all properties of the Credit Parties at their present
fair saleable value on a going concern basis (i.e., the amount that may be realized within a
reasonable time, considered to be six months to one year, either through collection or sale at the
regular market value, conceiving the latter as the amount that could be obtained for such
properties within such period by a capable and diligent businessman from an interested buyer who is
willing to purchase under ordinary selling conditions), exceed the amount of all the debts and
liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of the
Credit Parties;
(b) the Credit Parties will not, on a consolidated basis, have an unreasonably small
capital with which to conduct their business operations as heretofore conducted; and
(c) the Credit Parties will have, on a consolidated basis, sufficient cash flow to
enable them to pay their debts as they mature.
4.7 Material Indebtedness, Liens and Agreements.
(a) Schedule 4.7 hereto contains a complete and correct list, as of the date
of this Agreement, of all Material Indebtedness or any extension of credit (or commitment for any
extension of credit) to, or guarantee by, any Credit Party the aggregate principal or face amount
of which equals or exceeds (or may equal or exceed) $500,000, and the aggregate principal or face
amount outstanding or that may become outstanding with respect thereto is correctly described on
Schedule 4.7. The Credit Parties are not in default under any such Indebtedness, which
default could have a Material Adverse Effect.
(b) Schedule 4.7 hereto is a complete and correct list, as of the date of
this Agreement, of
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each Lien (other than the Liens in favor of the Lender) securing Indebtedness of
any Person and covering any property of the Credit Parties, and the aggregate Indebtedness secured
(or which may be secured) by each such Lien and the Property covered by each such Lien is correctly
described in the appropriate part of Schedule 4.7.
4.8 Distributions. Since December 31, 2004, no Distribution has been declared,
paid, or made upon or in respect of any Capital Stock of the Borrower.
4.9 Real Property Assets.
(a) Schedule 4.9 sets forth, as of the Closing Date, a correct and complete
list of all Real Property Assets of each Credit Party, whether owned or leased, and all leases and
subleases of real property held by each Credit Party as lessor, or sublessor in excess of $100,000
per year. Each such lease and sublease 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 Credit Party has good and marketable title in fee simple to each Real Property Asset
identified on Schedule 4.9 as owned by such Credit Party, or valid leasehold interests in
each Real Property Asset designated therein as “leased” by such Credit Party and each Credit Party
has good, indefeasible, and merchantable title to all of its other property reflected on the
December 31, 2004 Financial Statements delivered to the Lender, except as disposed of in the
ordinary course of business since the date thereof, free of all Liens, except Permitted Liens.
4.10 Proprietary Rights.
(a) Schedule 4.10 sets forth a correct and complete list of all of each
Credit 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 4.10. To
the knowledge of each Credit 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 4.10 constitute all of
the property of such type necessary to the current and anticipated future conduct of the Credit
Parties’ business.
(b) Each Credit 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
Credit 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 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 Credit Parties, proposed,
which, in either case, could reasonably be expected to have a Material Adverse Effect.
4.11 Trade Names. All trade names or styles under which the Credit 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 4.11.
4.12 Litigation and Environmental Matters.
(a) Except for Disclosed Matters set forth on Schedule 4.12(a), there is no
pending, or to the knowledge of any Credit Party, there is not threatened, action, suit,
proceeding, or counterclaim by
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any Person, or to the knowledge of any Credit 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.
(b) Except for the Disclosed Matters set forth in Schedule 4.12(b) and
except with respect to any other matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, the Credit Parties (i) have not
failed to comply with any Environmental Law or to obtain, maintain or comply with any permit,
license or other approval required in connection with the operation of the Credit Parties’ business
to be in compliance with all applicable Environmental Laws, (ii) have not become subject to any
Environmental Liability; (iii) have not received notice of any claim with respect to any
Environmental Liability or any inquiry, allegation, notice or other communication from any
Governmental Authority which is currently outstanding or pending concerning its compliance with any
Environmental Law or (iv) do not know of any basis for any Environmental Liability.
(c) Since the date of this Agreement, there has been no change in the status of the
Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased
the likelihood of, a Material Adverse Effect.
4.13 Labor Disputes. Except as set forth on Schedule 4.13, as of the
Closing Date (a) there is no collective bargaining agreement or other labor contract covering
employees of any Credit 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 Credit Party,
no union or other labor organization is seeking to organize, or to be recognized as, a collective
bargaining unit of employees of any Credit Party or for any similar purpose, and (d) there is no
pending or, to the knowledge of any Credit Party, threatened, strike, work stoppage, material
unfair labor practice claim, or other material labor dispute against or affecting any Credit Party
or its employees.
4.14 Compliance with Laws and Agreements. No Credit 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.
4.15 ERISA Compliance. Except as specifically disclosed in Schedule 4.15:
(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 Internal Revenue Service and to the best knowledge of the Credit
Parties, nothing has occurred which would cause the loss of such qualification. The Credit 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 Credit 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 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
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Unfunded Pension Liability; (iii) neither the Credit 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
Credit 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 Credit Party or its property in connection with any Plan (save for contributions
amounts not yet due).
4.16 Taxes. Each Credit 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.
4.17 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.
4.18 Margin Regulations. No Credit Party is engaged principally or as one of its
important activities in the business of extending credit for the purpose of purchasing or carrying
margin stock (as defined in Regulation U of the Board). The making of the Loans hereunder, the use
of the proceeds thereof as contemplated hereby, and the security arrangements contemplated by the
Loan Documents, will not violate or be inconsistent with any of the provisions of Regulations T, U,
or X of the Board of Governors of the Federal Reserve System.
4.19 Bank Accounts. Schedule 4.19 contains as of the Closing Date a
complete and accurate list of all bank accounts maintained by each Credit Party with any bank or
other financial institution.
4.20 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
of this Agreement or any other Loan Document against any Credit Party.
4.21 Investments.
(a) Schedule 4.21 sets forth a correct and complete list of all material
Investments owned by each Credit Party. Each Credit Party is the legal and beneficial owner of such
Investments, 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 that is Collateral (each such Person which issues any such Investment being referred to
herein as an “Issuer”): (i) the Issuer’s shareholders that are Credit Parties and the
ownership interest of each such shareholder are as set forth on Schedule 4.21, and each
such shareholder is the registered owner thereof on the books of the Issuer; (ii) the Issuer acknowledges the Lender’s Lien; (iii) to the
extent required to perfect the Lender’s Liens, such security interest, collateral assignment, lien,
and pledge in favor of the Lender has been registered on the books of the Issuer for such purpose
as of the date hereof, and (iv) the
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Issuer is not aware of any liens, restrictions, or adverse
claims which exist on any such Investment other than the Lender’s Lien.
4.22 No Material Adverse Change. No Material Adverse Effect has occurred since
December 31, 2004, except as otherwise disclosed in the Borrower’s filings with the Securities and
Exchange Commission under the Exchange Act prior to the Closing Date.
4.23 Full Disclosure. None of the representations or warranties made by the Credit
Parties 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 Credit Party in connection with the Loan Documents (including the offering and
disclosure materials delivered by or on behalf of the Credit 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.
4.24 Common Enterprise. The successful operation and condition of each of the
Credit Parties is dependent on the continued successful performance of the functions of the group
of Credit Parties as a whole and the successful operation of each Credit Party is dependent on the
successful performance and operation of each of the other Credit Parties. Each of the Credit
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 Credit Parties. Each Credit Party expects to derive
benefit (and the boards of directors or other governing body of each such Credit Party have
determined that it may reasonably be expected to derive benefit), directly and indirectly, from the
credit extended by the Lenders to the Credit Parties hereunder, both in their separate capacities
and as members of a group of companies. Each Credit Party has determined that execution, delivery,
and performance of this Agreement and any other Loan Documents to be executed by such Credit Party
is within its corporate purpose, will be of direct and indirect benefit to such Credit Party, and
is in its best interest.
4.25 Ranking. The Obligations rank, and at all times after the Closing Date will
rank, (a) senior in right of payment to the obligations of the Borrower under the Senior
Subordinated Debt Documents and all other documents or agreements in respect of Subordinated
Indebtedness, (b) pari passu in right of payment with the obligations evidenced by Revolving Credit
Agreement, and (c) at least pari passu in right of payment with all other outstanding
unsubordinated obligations of the Borrower and its Subsidiaries. The Obligations constitute
“Permitted Debt” and “Senior Debt”, as such terms are defined in the Senior Subordinated Debt
Documents.
4.26 Anti-Terrorism Laws.
(a) No Credit Party or any of its Affiliates is in violation of any Anti-Terrorism
Law or engages in or conspires to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law.
(b) No Credit Party or any Affiliate of any Credit Party is (i) a Person that is
listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224;
(ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in
the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (iii) a
Person or entity with which any bank or other financial institution is prohibited from dealing or otherwise engaging in any transaction by
any Anti-Terrorism Law; (iv) a Person or entity that commits, threatens or conspires to commit or
supports “terrorism” as defined in Executive Order No. 13224; (v) a Person or entity that is named
as a “specially
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designated national” on the most current list published by the U.S. Treasury Department Office
of Foreign Asset Control at its official website or any replacement website or other replacement
official publication of such list; or (vi) a Person or entity who is affiliated with a Person or
entity listed above (each such Person described in clauses (i) through (vi) of this sentence, a
“Blocked Person”).
(c) No Credit Party or any Affiliate of any Credit Party (i) conducts any business
or engages in making or receiving any contribution of funds, goods or services to or for the
benefit of any Blocked Person or (ii) deals in, or otherwise engages in any transaction relating
to, any property or interests in property blocked pursuant to Executive Order No. 13224.
ARTICLE 5
Conditions
The obligations of the Lender to make the Term Loan shall not become effective until the date
on which each of the following conditions is satisfied (or waived in accordance with Section 9.2):
(a) Counterparts of Agreement. The Lender shall have received from each
party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii)
written evidence satisfactory to the Lender (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart of this Agreement.
(b) Note. The Lender shall have received a duly completed and executed Term
Note.
(c) Organizational Structure. The corporate organizational structure,
capitalization and ownership of the Credit Parties, shall be as set forth on Schedule 4.4
annexed hereto.
(d) Existence and Good Standing. The Lender shall have received such
documents and certificates as the Lender or Special Counsel may reasonably request relating to the
organization, existence and good standing of each Credit Party, the authorization of the
transactions contemplated hereby and any other legal matters relating to the Credit Parties, this
Agreement or the other Loan Documents, all in form and substance reasonably satisfactory to the
Lender and Special Counsel.
(e) Canadian Guaranty. The Lender shall have received the Canadian
Guaranty, duly executed by Applica Canada, in substantially the form of Exhibit E attached
hereto.
(f) Security Interests in Personal and Mixed Property. The Lender shall
have received evidence satisfactory to it that the Credit Parties shall have taken or caused to be
taken all such actions, executed and delivered or caused to be executed and delivered all such
agreements, documents and instruments and made or caused to be made all such filings and recordings
(other than filings or recordings to be made by the Lender on or after the Closing Date) that may
be necessary in order to create in favor of the Lender, valid and (upon such filing and recording)
perfected first priority security interests (subject to Permitted Liens) in the entire personal and
mixed property Collateral.
(g) Evidence of Insurance. The Lender shall have received certificates from
the Credit Parties’ insurance brokers that all insurance required to be maintained pursuant to
Section 6.5 is in full force and effect and that the Lender has been named as additional insured or
loss payee thereunder to the extent required under Section 6.5.
(h) Necessary Governmental Permits, Licenses and Authorizations and Consents;
Etc. The Credit Parties shall have obtained all other permits, licenses, authorizations and
consents from all
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other Governmental Authorities and all consents of other Persons with respect to Material
Indebtedness, Liens and material agreements listed on Schedule 4.7 (and so identified
thereon) annexed hereto, in each case that are necessary or advisable in connection with the
transactions contemplated by the Loan Documents, and each of the foregoing shall be in full force
and effect, in each case other than those the failure to obtain or maintain which, either
individually or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect. No action, request for stay, petition for review or rehearing, reconsideration or appeal
with respect to any of the foregoing shall be pending, and the time for any applicable Governmental
Authority to take action to set aside its consent on its own motion shall have expired.
(i) Financial Officer Certificate. The Lender shall have received a
certificate, dated the Closing Date and signed by a Designated Financial Officer, certifying that,
as of the Effective Time:
(i) The representations and warranties of each Credit Party set forth in this
Agreement and the other Loan Documents are true and correct in all material respects on and
as of the date hereof, both before and after giving effect to the funding of the Term Loan
and to the use of the proceeds thereof (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, such representation or warranty is
true and correct as of such specific date ); and
(ii) At the time of, and immediately after giving effect to, the funding of
the Term Loan, no Default has occurred and is continuing.
(j) No Material Adverse Change. There shall have occurred no material
adverse change in the businesses, operations, properties (including tangible properties), or
conditions (financial or otherwise), assets, liabilities or income of the Credit Parties taken as a
whole.
(k) Opinion of Counsel to Credit Parties. The Lender shall have received
written opinions (addressed to the Lender and dated the Closing Date) of (i) Xxxxxxxxx Xxxxxxx,
P.A., special counsel to the Credit Parties, substantially in the form of Exhibit H annexed
hereto and (ii) Minden, Gross, Grofstein & Xxxxxxxxxx LLC, local counsel to the Credit Parties in
Canada, each covering such matters relating to the Credit Parties, this Agreement, the other Loan
Documents or the transactions contemplated hereby as the Lender shall reasonably request.
(l) Fees and Expenses. The Lender shall have received all fees and other
amounts due and payable to such Person and Special Counsel at or prior to the Effective Time,
including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Borrower hereunder.
(m) Other Documents. The Lender shall have received all material contracts,
instruments, opinions, certificates, assurances and other documents as the Lender or Special
Counsel shall have reasonably requested and the same shall be reasonably satisfactory to each of
them.
(n) Repurchase of Senior Subordinated Debt. At the Effective Time, the
Borrower shall repurchase Senior Subordinated Debt from the Lender (or any Affiliate of the Lender)
in an aggregate face amount of $5,000,000.
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ARTICLE 6
Affirmative Covenants
Until the principal of and interest on the Term Loan and all fees payable hereunder shall have
been paid in full, each Credit Party covenants and agrees with the Lender that:
6.1 Financial Statements and Other Information. The Credit Parties will furnish to
the Lender:
(a) promptly after the sending or filing thereof, as the case may be, copies of any
financial statements, proxy statements, or reports which the Borrower or any Subsidiary has made
available to the holders of its Capital Stock and copies of any regular, periodic and special
reports or registration statements which the Borrower or any Subsidiary files with the Securities
and Exchange Commission or any governmental authority which may be substituted therefor, or any
national securities exchange; and
(b) promptly following any request therefor, such other information regarding the
operations, business affairs and financial condition of the Credit Parties, or compliance with the
terms of this Agreement, as the Lender may reasonably request in writing.
6.2 Notices of Material Events. The Credit Parties will furnish to the Lender
prompt written notice of the following:
(a) the occurrence of any Default;
(b) the occurrence of any Event of Default under the Revolving Credit Agreement; and
(c) the occurrence of any event or condition occurs that results in the Senior
Subordinated Debt becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holders of the Senior Subordinated
Debt or any trustee or agent on behalf of such holders to cause the Senior Subordinated Debt to
become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to
its scheduled maturity.
Each notice delivered under this Section 6.2 shall be accompanied by a statement of a Designated
Financial Officer setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.
6.3 Existence; Conduct of Business. Each Consolidated Member shall do or cause to
be done all things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material to the conduct of
its business; provided that the foregoing shall not prohibit any merger, consolidation,
liquidation, dissolution or any discontinuance or sale of such business permitted under Section
7.4.
6.4 Payment of Obligations. Each Consolidated Member shall pay its obligations,
including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the
same shall become delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) such Consolidated Member has set
aside on its books adequate reserves with respect thereto in accordance with GAAP, which reserves
shall be acceptable to Lender, and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect.
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6.5 Maintenance of Properties; Insurance. Each Credit Party shall (a) keep and
maintain all property material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted, and (b) maintain insurance, with financially sound and reputable
insurance companies, as may be required by law and such other insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations, including, without limitation, business interruption
and product liability insurance. Without limiting the generality of the foregoing, (a) the Credit
Parties will maintain or cause to be maintained replacement value casualty insurance on the
Collateral under such policies of insurance, in each case with such insurance companies, in such
amounts, with such deductibles, and covering such terms and risks as are at all times satisfactory
to the Lender in its commercially reasonable judgment and (b) 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 Credit Parties
shall purchase and maintain flood insurance on any such Equipment and Inventory located in a SFHA.
All general liability and other liability policies with respect to the Credit Parties shall name
the Lender as an additional insured thereunder as its interests may appear, and all business
interruption and casualty insurance policy shall contain a loss payable clause or endorsement,
satisfactory in form and substance to the Lender that names the Lender as the loss payee
thereunder. All policies of insurance shall provide for at least 30 days prior written notice to
the Lender of any modifications or cancellation of such policy.
6.6 Books and Records; Inspection Rights. Each Consolidated Member shall keep
proper books of record and account in which entries are made of all dealings and transactions in
relation to its business and activities which fairly record such transactions and activities. Upon
the occurrence and during the continuance of an Event of Default, each Consolidated Member shall
permit any representatives designated by the Lender to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs, finances and condition
with its officers and independent accountants as frequently as the Lender deems appropriate
provided that, so long as no Default has occurred and is continuing, all such visits shall be on
reasonable prior notice, at reasonable times during regular business hours of such Consolidated
Member, and provided further that after the occurrence and during the continuance of any Default,
the Lender may visit at any reasonable times. The Borrower shall reimburse the Lender for all
reasonable examination and inspections costs.
6.7 Compliance with Laws. Each Consolidated Member shall comply with (i) all
permits, licenses and authorizations, including, without limitation, environmental permits,
licenses and authorizations, issued by a Governmental Authority, (ii) all laws, rules, regulations
and orders including, without limitation, Environmental Laws, of any Governmental Authority and
(iii) all contractual obligations, in each case applicable to it or its property, except in each
such case where the failure to do so could not reasonably be expected to result in a Material
Adverse Effect.
6.8 Use of Proceeds. The proceeds of the Loans will be used only for (i) the
refinancing of existing indebtedness, (ii) fees and expenses incurred in connection with the
transactions contemplated by this Agreement, and (iii) for general corporate and working capital
purposes of the Credit Parties. No part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X.
6.9 ERISA. Except where a failure to comply with any of the following, individually
or in the aggregate, would not or could not reasonably be expected to result in a Material Adverse
Effect, (i) the Credit Parties will maintain, and cause each ERISA Affiliate to maintain, each Plan
in compliance with all applicable requirements of ERISA, the Code, the PBA, other federal,
provincial or state law and with all applicable rulings and regulations issued under the provisions
of ERISA, the Code, the PBA and other federal, provincial or state law and (ii) the Credit Parties
will not and, to the extent authorized, will
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not permit any of the ERISA Affiliates to (a) engage in any transaction with respect to any
Plan which would subject any Credit Party to either a civil penalty assessed pursuant to Section
502(i) of ERISA or a tax imposed by Section 4975 of the Code, (b) fail to make full payment when
due of all amounts which, under the provisions of any Plan, any Credit Party or any ERISA Affiliate
is required to pay as contributions thereto, or permit to exist any accumulated funding deficiency
(as such term is defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, with respect to any Pension Plan or (c) fail to make any payments to any Multiemployer Plan
that any Credit Party or any of the ERISA Affiliates may be required to make under any agreement
relating to such Multiemployer Plan or any law pertaining thereto.
6.10 Environmental Matters. The Credit Parties will observe and comply with, and
cause each Subsidiary to observe and comply with all Environmental Laws to the extent
non-compliance could reasonably be expected to have a Material Adverse Effect.
6.11 New Subsidiaries. The Credit Parties shall not, directly or indirectly,
organize, create, acquire, or permit to exist any Subsidiary except as permitted by this Section
6.11. The Credit Parties shall (a) in the event of the acquisition or creation of any Subsidiary
(a “New Subsidiary”) cause to be delivered to the Lender a Stock Pledge Agreement with
respect to the Capital Stock of such New Subsidiary within 30 Business Days of the acquisition or
creation of such Subsidiary; provided, however, that if such New Subsidiary is a Foreign
Subsidiary, such pledge shall be limited to 65% of the outstanding voting stock of such New
Subsidiary and shall only be required if such Subsidiary is a Direct Foreign Subsidiary; (b) in the
event of the acquisition or creation of any Domestic Subsidiary, cause such Subsidiary to deliver
to the Lender within 30 Business Days of the acquisition or creation of such Subsidiary the
following items: (i) a counterpart to this Agreement (and thereby to become a party to this
Agreement, as a “Subsidiary Guarantor” hereunder, (ii) a counterpart to the Security Agreement and
(iii) an Intellectual Property Security Agreement; 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 Lender 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 6.11 and addressed to the Lender in form and
substance satisfactory to the Lender and Special Counsel; and (ii) such proof of corporate action,
incumbency of officers and other documents as is consistent with those delivered by each Credit
Party pursuant to Article 5 at the Effective Time or as the Lender shall have reasonably requested.
6.12 Senior Subordinated Debt. On or prior to April 30, 2008, the Borrower shall
(a) retire, defease or refinance (subject to Section 7.6) the Senior Subordinated Debt or (b) cause
the maturity date of the Senior Subordinated Debt to be extended to a date which is not earlier
than ninety-one (91) days after the Term Loan Maturity Date.
6.13 Deposit Account Control Agreements. Within 30 days after the Closing Date, the
Credit Parties shall have delivered to the Lender a Deposit Account Control Agreement, in form and
substance reasonably satisfactory to the Lender (but in each case providing that the Lender’s Liens
with respect to the Deposit Accounts covered by such Deposit Account Control Agreement are
expressly junior and subordinate to the Liens of the Revolving Credit Agent with respect to such
Deposit Accounts), duly executed by each financial institution at which any Credit Party maintains
Deposit Accounts; provided, however, that the Credit Parties shall not be obligated
to deliver Deposit Account Control Agreements with respect to Deposit Accounts having an aggregate
balance of up to $35,000 at any time; provided, further, however, that the
Credit Parties shall not deliver to the Lender Deposit Account Control Agreements (or equivalent
instruments under applicable Canadian law) in respect of Deposit Accounts maintained in Canada that
are not subject to the Liens of the Revolving Credit Agent.
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ARTICLE 7
Negative Covenants
Until the principal of and interest on the Term Loan and all fees payable hereunder have been
paid in full, each Credit Party covenants and agrees with the Lender that:
7.1 Indebtedness. The Credit Parties will not, and will not permit any other
Consolidated Member to, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness created hereunder;
(b) Existing Debt on the Closing Date which is set forth in Schedule 7.1 and
has been designated on such schedule as Indebtedness that will remain outstanding following the
funding of the initial Loans, and any extension, renewal, refunding or replacement of any such
Indebtedness, provided that (i) such extension, renewal, refunding or replacement does not
increase the principal amount of such Indebtedness, and (ii) the terms of such refunding, renewal
or extension are not materially less favorable to such Consolidated Member or the Lender than the
original Indebtedness;
(c) Intercompany Indebtedness to the extent consistent with Section 9.9;
(d) other Indebtedness incurred after the Closing Date (determined on a consolidated
basis without duplication in accordance with GAAP) consisting of Capital Lease Obligations and/or
secured by Liens permitted under Section 7.2(h), in an aggregate principal amount at any time
outstanding not in excess of $5,000,000;
(e) endorsements of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business;
(f) Guarantees permitted under section 7.3
(g) Senior Subordinated Debt;
(h) Subordinated Indebtedness;
(i) Approved Receivables Programs;
(j) Indebtedness in respect of Hedging Agreements entered into for non-speculative
purposes related to hedging interest rates, currency values and commodities in connection with the
Core Business;
(k) Indebtedness of the Credit Parties under the Revolving Credit Agreement and all
related loan documentation, including any Qualified Refinancing
thereof; provided, however, that the aggregate principal amount of
such Qualified Refinancing shall not exceed $175,000,000; and
(l) other unsecured Indebtedness in an aggregate principal amount at any time
outstanding not to exceed $1,000,000.
7.2 Liens. The Credit Parties will not, and will not permit any other Consolidated
Member to, create, incur, assume or permit to exist any Lien on any Property or asset now owned or
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hereafter acquired by it, or assign or sell any income or revenues (including accounts
receivable) or rights in respect of any thereof, except (the following being called “Permitted
Liens”):
(a) Liens created hereunder or under the other Loan Documents;
(b) any Lien on any property or asset of any Credit Party existing on the date
hereof and set forth in Schedule 7.1 (excluding, however, following the making of the
initial Loans hereunder, the Liens in favor of any Person other than the Lender securing
Indebtedness not designated on said schedule as Indebtedness to remain outstanding following the
funding of the initial Loans), provided that (i) such Lien shall not apply to any other property or
asset of any Credit Party and (ii) such Lien shall secure only those obligations which it secures
on the date hereof and extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
(c) Liens imposed by any Governmental Authority for taxes, assessments or charges
(i) not delinquent or (ii) (in the case of property taxes and assessments not exceeding $500,000 in
the aggregate more than 90 days overdue) which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the books of the applicable
Credit Party in accordance with GAAP and which reserves shall be acceptable to the Lender;
(d) landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens, and vendors’ Liens imposed by statute or common law not securing the repayment of
Indebtedness; provided that if any such Lien arises from the nonpayment of such such claims or
demand when due, such claims or demands do not exceed $200,000 in the aggregate, and Liens securing
judgments and attachments in connection with court proceedings (including, without limitation,
pre-judgment attachments) but only to the extent for an amount and for a period not resulting in an
Event of Default under Section 8.1(j) hereof;
(e) pledges, deposits or other Liens under worker’s compensation, unemployment
insurance and other social security or similar legislation and pledges, deposits or other Liens to
secure the performance of bids, tenders, trade contracts (other than for borrowed money), leases
(other than capital leases), utility purchase obligations, statutory obligations, surety and appeal
bonds, performance bonds (including indemnity performance) and other obligations of a like nature;
(f) Liens constituting easements, rights-of-way, restrictions and other similar
encumbrances and encumbrances consisting of zoning restrictions, easements, licenses, restrictions
on the use of Property or minor imperfections in title which do not, in the aggregate, materially
detract from the value of the Property of any Credit Party or materially interfere with the
ordinary conduct of the business of any Credit Party;
(g) Liens consisting of bankers’ liens and rights of setoff, in each case, arising
by operation of law, and Liens on documents presented in letter of credit drawings;
(h) Liens on fixed or capital assets, including real or personal property, acquired,
constructed or improved by any Credit Party, provided that (A) such Liens secure Indebtedness
(including Capital Lease Obligations) permitted by Section 7.1(d), (B) such Liens and the
Indebtedness secured thereby are incurred prior to or within 90 days after such acquisition or the
completion of such construction or improvement or were in effect at the time the Credit Parties
acquired the assets or stock, (C) the Indebtedness secured thereby does not exceed the cost of
acquiring, constructing or improving such fixed or capital assets, and (D) such security interests
shall not apply to any other property or assets of the Credit Parties;
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(i) Liens on Accounts subject to any Approved Receivables Program; and
(j) Liens securing Indebtedness described in Section 7.1(k) hereof.
7.3 Contingent Liabilities. The Credit Parties will not Guarantee the Indebtedness
or other obligations of any Person, or Guarantee the payment of dividends or other distributions
upon the stock of, or the earnings of, any Person, except:
(a) Guarantees and letters of credit in effect on the date hereof which are
disclosed in Schedule 7.1, and any replacements thereof in amounts not exceeding such
Guarantees;
(b) Unsecured Guarantees of Indebtedness incurred by a Foreign Subsidiary in an
aggregate principal amount at any time not to exceed $40,000,000;
(c) Guarantees of Indebtedness of the Borrower owing under the Revolving Credit
Agreement and all related loan documentation; and
(d) Guarantees of Indebtedness of the Borrower owing to the Lender hereunder and
under the Loan Documents.
7.4 Fundamental Changes; Asset Sales.
(a) No Credit Party will enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution).
The Credit Parties will not acquire any business or property from, or Capital Stock of, or be a
party to any acquisition of, any Person except for purchases of property to be used in the ordinary
course of business, Investments permitted under Section 7.5 and Capital Expenditures.
(b) The Credit Parties will not convey, sell, lease, transfer or otherwise dispose
(including any Disposition) of, in one transaction or a series of transactions, any part of their
business or property, whether now owned or hereafter acquired (including, without limitation,
receivables and leasehold interests, but excluding (x) obsolete or worn-out property (including
leasehold interests), or tools, equipment or other property no longer used or useful in their
business with an orderly liquidation value not to exceed $500,000 in any Fiscal Year, (y) any
inventory or other property sold or disposed of in the ordinary course of business and on ordinary
business terms), provided that the Credit Parties may sublease real property to the extent such
sublease would not interfere with the operation of the business of the Credit Parties.
(c) Notwithstanding the foregoing provisions of this Section 8.4:
(i) any Credit Party may be merged or combined with or into any other Credit
Party (provided that if such merger involves the Borrower, (x) the Borrower shall be the
surviving entity and (y) no Change of Control shall occur);
(ii) any Credit Party may sell, lease, transfer or otherwise dispose of any
or all of its property (upon voluntary liquidation or otherwise) to any other Credit Party;
(iii) the Credit Parties may consummate the Permitted Mexico Facility
Disposition; and
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(iv) the Credit Parties may dispose of accounts receivable pursuant to any
Approved Receivables Program, including a Factoring Agreement.
7.5 Investments. The Credit Parties will not make or permit to remain
outstanding any Investment, except:
(a) Investments consisting of Guarantees permitted by Section 7.3(c) and Indebtedness
permitted by Section 7.1; Intercompany Indebtedness to the extent consistent with Section 9.9; and
capital contributions by any Credit Party to any other Credit Party;
(b) Investments existing on the Closing Date and set forth in Schedule 4.21
hereto;
(c) Permitted Investments;
(d) Permitted Acquisitions;
(e) 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;
(f) Checking and deposit accounts with banks used in the ordinary course of
business; and
(g) So long as no Event of Default shall have occurred and be continuing, and to the
extent permitted pursuant to the Revolving Credit Agreement, Investments in an aggregate amount at
any time outstanding not in excess of $10,000,000.
7.6 Restricted Junior Payments. The Credit Parties will not declare or make any
Restricted Junior Payment at any time; provided, however, that (a) any Credit Party that is a
Subsidiary of another Credit Party may pay dividends or make distributions to such Credit Party and
may make payments of principal and interest to another Consolidated Member in respect of
Intercompany Indebtedness, (b) so long as no Default shall have occurred and be continuing and no
Default shall be caused thereby, the Borrower may make regularly scheduled payments of interest in
respect of the Senior Subordinated Debt on the dates and in the amounts set forth in the Senior
Subordinated Debt Documents, (c) the Borrower may use up to $5,000,000 of the proceeds of the Term
Loan to repurchase Senior Subordinated Debt, and (d) the Borrower may otherwise prepay, retire,
redeem or refinance all or any portion of the Senior Subordinated Debt to the extent expressly
permitted pursuant to the Revolving Credit Agreement as in effect on the Closing Date or, if not
expressly permitted pursuant to the Revolving Credit Agreement as in effect on the Closing Date,
upon the prior written consent of the Lender.
7.7 Transactions with Affiliates. Except as expressly permitted by this Agreement,
the Credit Parties will not directly or indirectly (a) make any Investment in an Affiliate; (b)
transfer, sell, lease, assign or otherwise dispose of any property to an Affiliate; (c) merge into
or consolidate with an Affiliate, or purchase or acquire property from an Affiliate; or (d) enter
into any other transaction directly or indirectly with or for the benefit of an Affiliate
(including, without limitation, guarantees and assumptions of obligations of an Affiliate);
provided that:
(i) any Affiliate who is an individual may serve as a director, officer,
employee or consultant of any Credit Party, receive reasonable compensation for his or her
services in such capacity and benefit from Permitted Investments to the extent specified in
clause
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(e) of the definition thereof;
(ii) the Credit Parties may engage in and continue the transactions with or
for the benefit of Affiliates which are described in Schedule 7.7 or are referred to
in Section 7.6 (but only to the extent specified in such section);
(iii) the Credit Parties may engage in transactions with Affiliates in the
ordinary course of business on terms which are no less favorable to the Credit Parties than
those likely to be obtained in an arms’ length transaction between a Credit Party and a
non-affiliated third party; and
(iv) the Borrower may make Permitted Officer Severance Payments.
7.8 Restrictive Agreements. The Credit Parties will not directly or indirectly,
enter into, incur or permit to exist any agreement or other arrangement (other than this Agreement,
the Revolving Credit Agreement or the Senior Subordinated Debt Documents) that prohibits, restricts
or imposes any condition upon (a) the ability of any Credit Party to create, incur or permit to
exist any Lien upon any of its property or assets, or (b) the ability of any Credit Party that is a
Subsidiary of another Credit Party to pay dividends or other distributions with respect to any
shares of its Capital Stock or to make or repay loans or advances to any other Credit Party or to
Guarantee Indebtedness of any other Credit Party; provided that (i) the foregoing shall not apply
to restrictions and conditions imposed by law or by this Agreement, (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof identified on Schedule 7.8
(but shall apply to any extension or renewal of, or any amendment or modification expanding the
scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of stock or assets of a
Subsidiary of a Credit Party pending such sale, provided such restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause (a) of
the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to
secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to
the property or assets securing such Indebtedness, and (v) clause (a) of the foregoing shall not
apply to customary provisions in leases and other contracts (excluding license agreements)
restricting the assignment thereof.
7.9 Sale-Leaseback Transactions. No Credit Party will directly or indirectly, enter
into any arrangements with any Person whereby such Credit Party shall sell or transfer (or request
another Person to purchase) any property, real, personal or mixed, used or useful in its business,
whether now owned or hereafter acquired, and thereafter rent or lease such property from any
Person, except with respect to the Permitted Mexico Facility Disposition.
7.10 Lines of Business. The Credit Parties shall not and shall not permit any other
Consolidated Member to engage directly or indirect, in any line of business or ther than the Core
Business or those businesses that reasonably and rationally develop from such Core Business from
time to time.
7.11 Fiscal Year. The Borrower shall not change and shall not permit any Credit
Party to change its Fiscal Year.
7.12 Other Indebtedness. The Credit Parties will not purchase, redeem, retire or
otherwise acquire for value, or set apart any money for a sinking, defeasance or other analogous
fund for the purchase, redemption, retirement or other acquisition of, or make any voluntary
payment or prepayment of the principal of or interest on, or any other amount owing in respect of
any Senior Subordinated Debt or Subordinated Indebtedness, except (i) to the extent permitted by
Section 7.6 and (ii) the purchase of $5,000,000 face amount of Senior Subordinated Debt on the
Closing Date .
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7.13 Modifications of Certain Documents. The Credit Parties will not consent to any
modification, supplement or waiver of any of the provisions of any documents or agreements
evidencing or governing any Subordinated Indebtedness or any other Existing Debt (other than the
Senior Subordinated Debt and the Indebtedness under the Revolving Credit Agreement). The Credit
Parties will not modify or amend the terms of the Senior Subordinated Debt Documents if the effect
of such amendment is to: (a) increase the maximum principal amount of the Senior Subordinated Debt
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 Documents other than to extend the
maturity of the Senior Subordinated Debt; (c) modify any event of default or add any covenant with
respect to the Senior Subordinated Debt; (d) modify the payment, redemption or prepayment
provisions of the Senior Subordinated Debt; (e) modify the subordination provisions under the
Senior Subordinated Debt Documents; or (f) modify any other term of the Senior Subordinated Debt
Documents if such modification would materially increase the obligations of any obligor thereunder
or confer additional material rights to the holder of such Indebtedness in a manner adverse to the
Credit Parties, the Borrower, any of the other Consolidated Members or the Lender.
7.14 Anti-Terrorism Laws. No Credit Party shall conduct any business or engage in
any transaction or dealing with any Blocked Person (as defined in Section 4.26(b), including the
making or receiving any contribution of funds, goods or services to or for the benefit of any
Blocked Person; deal in, or otherwise engage in any transaction relating to, any property or
interests in property blocked pursuant to Executive Order No. 13224; or engage in or conspire to
engage in any transaction with the intent to evade, avoid or violate, any of the prohibitions set
forth in Executive Order No. 13224 or the USA Patriot Act. The Credit Parties shall deliver to the
Lender any certification or other evidence reasonably requested from time to time by the Lender
confirming the Credit Parties’ compliance with this Section 7.13.
ARTICLE 8
Events of Default
8.1 Events of Default. The occurrence of any of the following events shall be
deemed to constitute an “Event of Default” hereunder:
(a) the Credit Parties shall fail to pay to the Lender any principal of or interest
on any Loan or any other Obligation of the Credit Parties to the Lender when the same shall become
due and payable, whether at the due date thereof or at a date fixed for prepayment thereof, by
acceleration of such due or prepayment date, or otherwise;
(b) any representation or warranty made or deemed made by or on behalf of any Credit
Party or any other Consolidated Member in or in connection with this Agreement, any of the other
Loan Documents or any amendment or modification hereof or thereof, or in any report, certificate or
financial statement furnished pursuant to or in connection with this Agreement, any of the other
Loan Documents or any amendment or modification hereof or thereof, shall prove to have been
incorrect in any material respect when made or deemed made;
(c) the Credit Parties (i) shall fail to observe or perform any covenant, condition
or agreement contained in Section 7.6 or (ii) shall fail to observe or perform any covenant,
condition or agreement contained in Article 7 (other than in Section 7.6) and such failure
described in this clause (ii) shall continue unremedied for a period of 20 days after the earlier
of (x) actual knowledge thereof by an officer of any Credit Party or (y) notice thereof from the
Lender to the Credit Parties;
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(d) the Credit Parties shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those specified in clauses (a), (b) or (c) of
this Section 8.1) or any other Loan Document, and such failure shall continue unremedied for a
period of 30 days after notice thereof from the Lender to the Credit Parties;
(e) the Credit Parties shall fail to make any payment (whether of principal,
interest or otherwise and regardless of amount) in respect of (i) any Senior Subordinated Debt or
(ii) any other Material Indebtedness when and as the same shall become due and payable, after
giving effect to any grace period with respect thereto;
(f) any default which has not been waived shall occur with respect to (i) the Senior
Subordinated Debt or (ii) any Indebtedness (other than Senior Subordinated Debt, the Obligations,
or Indebtedness described in Section 7.1(k) hereof) of any Credit Party in an outstanding principal
amount in excess of $500,000, or under any agreement or instrument under or pursuant to which such
Indebtedness may have been issued, created, assumed, or guaranteed by any Credit 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, the lapse of time or both) is to accelerate, or to
permit the holders of such Indebtedness to accelerate, the maturity of such Indebtedness;
(g) an involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect of any Credit Party or any
Other Obligor or its debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for
any Credit Party or any Other Obligor or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for 45 days or an order or decree
approving or ordering any of the foregoing shall be entered;
(h) any Credit Party or any Other Obligor shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (g) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official
for any Credit Party or any Other Obligor or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against it in any such proceeding,
(v) make an assignment for the benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;
(i) any Credit Party or any Other Obligor shall become unable, admit in writing or
fail generally to pay its debts as they become due;
(j) one or more judgments, orders, decrees or arbitration awards is entered against
any Credit Party or Other Obligor 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 30 days after the entry thereof;
(k) an ERISA Event shall have occurred that, when taken together with all other
ERISA Events that have occurred, has resulted or could reasonably be expected to result in a
Material Adverse Effect;
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(l) there shall occur any Change of Control of the Borrower or any other Credit
Party ceases to be a wholly-owned Subsidiary;
(m) any of the following shall occur: (i) the Liens with respect to any material
portion of the Collateral created hereunder or under the other Loan Documents shall at any time
(other than by reason of the Lender relinquishing such Lien) cease to constitute valid and
perfected Liens on the Collateral intended to be covered thereby; (ii) except for expiration in
accordance with its respective terms, any Loan Document shall for whatever reason be terminated, or
shall cease to be in full force and effect; or (iii) the enforceability of any Loan Document shall
be contested by any Credit Party or any Other Obligor;
(n) there shall occur any loss theft, damage or destruction of any Collateral not
fully covered (subject to such reasonable deductibles as the Lender shall have approved) by
insurance which could reasonably be expected to have a Material Adverse Effect on the Credit
Parties taken as a whole;
(o) any Guarantor shall assert that its obligations under any Loan Document shall be
invalid or unenforceable;
(p) there shall occur any material adverse change in the businesses, operations,
properties, conditions (financial or otherwise), assets, liabilities, income or prospects of the
Credit Parties, taken as a whole; or
(q) there shall occur an Event of Default under the Revolving Credit Agreement,
which has not been cured or waived;
then, and in every such event (other than an event described in clause (g) or (h) of this Section
8.1), and at any time thereafter during the continuance of such event, subject to the terms of the
Intercreditor Agreement, the Lender may, by notice to the Borrower, take any or all of the
following actions, at the same or different times: (i) notify the Borrower that the outstanding
principal of the Loans shall bear interest at the Post-Default Rate, and thereupon the outstanding
principal of the Loans shall bear interest at the Post-Default Rate, (ii) declare the Loans then
outstanding to be due and payable in whole (or in part, in which case any principal not so declared
to be due and payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued interest thereon
and all fees and other Obligations, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by the Credit Parties
and the Other Obligors, and (iii) the Lender and any Affiliate of the Lender may exercise all of
the rights as secured party and mortgagee hereunder or under the other Loan Documents; and in case
of any event with respect to the Credit Parties or any Subsidiary described in clause (g) or (h) of
this Section 8.1, the principal of the Loans then outstanding shall automatically bear interest at
the Post-Default Rate, the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other Obligations shall automatically become due and payable without
presentment, demand, protest or other notice of any kind, all of which are hereby waived by the
Credit Parties and the Other Obligors, and the Lender and all Affiliates of the Lender shall be
permitted to exercise such rights as secured party and mortgagee hereunder or under the other Loan
Documents to the extent permitted by applicable law.
ARTICLE 9
Miscellaneous
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9.1 Notices. Except in the case of notices and other communications expressly
permitted to be given by telephone, all notices and other communications provided for herein shall
be in writing and shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telephonic facsimile (fax), as follows:
(a) if to any Credit Party, to Applica Incorporated, 0000 Xxxxxxxx Xxxx, Xxxxxxx,
Xxxxxxx 00000, Attention: Chief Financial Officer (Fax no. 000-000-0000) with a copy to Xxxxxxxxx
Xxxxxxx, P.A., 0000 Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000, Attention: Xxxx Xxxxxxxxx (Fax no. 000-
000-0000); and
(b) if to the Lender, to , Mast Credit Opportunities I, (Master) Ltd., c/o Mast
Capital Management, LLC, 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxx
Xxxxxxxxx (Fax no.: 000-000-0000), with a copy Xxxxxx & Dodge LLP, 000 Xxxxxxxxxx Xxxxxx at
Prudential Center, Boston, Massachusetts 02199-7613, Attention: Xxxxx X. Xxxxxxxx (Fax no.
000-000-0000).
Any party hereto may change its address or fax number for notices and other communications
hereunder by notice to the other parties hereto. All notices and other communications given to any
party hereto in accordance with the provisions of this Agreement shall be deemed to have been given
on the date of receipt.
9.2 Waivers; Amendments.
(a) No failure or delay by the Lender or any Affiliate of the Lender in exercising
any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such
a right or power, preclude any other or further exercise thereof or the exercise of any other right
or power. The rights and remedies of the Lender and all Affiliates of the Lender hereunder and
under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Credit Party or Subsidiary therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section 9.2, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given. Without limiting
the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Lender may have had notice or knowledge of such Default at the
time.
(b) Neither this Agreement nor any other Loan Document nor any provision hereof or
thereof may be waived, amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Lender.
9.3 Expenses; Indemnity: Damage Waiver.
(a) The Credit Parties and the Other Obligors jointly and severally agree to pay, or
reimburse the Lender for paying, (i) all reasonable out-of-pocket expenses incurred by the Lender
and its Affiliates, including the reasonable fees, charges and disbursements of Special Counsel, in
connection with the preparation of this Agreement and the other Loan Documents or any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by the Lender or any Affiliate of the Lender, including the reasonable fees, charges and
disbursements of any counsel for the Lender or any Affiliate of the Lender, in connection with the
enforcement or protection of their rights in connection with this Agreement and the other Loan
Documents, including their rights under this Section 9.3, or in connection with the Loans made
hereunder, including in connection with any workout,
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restructuring or negotiations in respect thereof, and (iv) all Other Taxes levied by any
Governmental Authority in respect of this Agreement or any of the other Loan Documents or any other
document referred to herein or therein and all costs, expenses, taxes, assessments and other
charges incurred in connection with any filing, registration, recording or perfection of any
security interest contemplated by any Loan Document or any other document referred to therein.
(b) The Credit Parties and the Other Obligors jointly and severally agree to
indemnify the Lender, each Affiliate of the Lender and each Related Party of any of the foregoing
Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses, including the fees,
charges and disbursements of any counsel for any Indemnitee and settlement costs, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement, the other Loan Documents or any agreement or instrument
contemplated hereby, the performance by the parties hereto and thereto of their respective
obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or
any other transactions contemplated hereby or thereby, (ii) any Loan or the use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any
property owned, leased or operated by any Credit Party or any Subsidiary, or any Environmental
Liability related in any way to any Credit Party or any Subsidiary, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the
extent that such losses, claims, damages, liabilities or related expenses are determined by a court
of competent jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) To the extent permitted by applicable law, none of the Credit Parties or Other
Obligors shall assert, and each Credit Party and Other Obligor hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or as a result of,
this Agreement, the other Loan Documents or any agreement or instrument contemplated hereby or
thereby, the transactions contemplated hereby, any Loan or the use of the proceeds thereof.
(d) All amounts due under this Section 9.3 shall be payable promptly after written
demand therefor and delivery to the Credit Parties of copies of all relevant invoices, receipts or
other evidence reasonably requested by the Credit Parties.
9.4 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns permitted hereby, except that no
Credit Party or Other Obligor may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of the Lender (and any attempted assignment or transfer
without such consent shall be null and void). Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the
Related Parties of the Lender) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) The Lender may at any time and from time to time assign to one or more assignees
all or a portion of its rights and obligations under this Agreement (including all or a portion of
the Loans at the time owing to it).
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(c) The Lender may at any time and from time to time, sell participations to one or
more banks or other entities (a “Participant”) in all or a portion of the Lender’s rights and
obligations under this Agreement (including all or a portion of the Loans owing to it); provided
that (i) the Lender’s obligations under this Agreement shall remain unchanged, (ii) the Lender
shall remain solely responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower shall continue to deal solely and directly with the Lender in connection
with the Lender’s rights and obligations under this Agreement. The Borrower agrees that each
Participant shall be entitled to the benefits of this Agreement to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 9.4;
provided that a Participant shall not be entitled to receive any greater payment under this
Agreement than the Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such Participant is made with the
Borrower’s prior written consent.
(d) The Lender may furnish any information concerning any Credit Party, any
Subsidiary or any Other Obligor in the possession of the Lender from time to time to assignees and
participants (including prospective assignees and participants) subject, however, to and so long as
the recipient agrees in writing to be bound by, the provisions of Section 9.13. In addition, the
Lender may furnish any information concerning any Credit Party, any Subsidiary, any Affiliate or
any Other Obligor in the Lender’s possession to any Affiliate of the Lender, subject, however, to
the provisions of Section 9.13. The Credit Parties shall assist the Lender in effectuating any
assignment or participation pursuant to this Section 9.4 in whatever manner the Lender reasonably
deems necessary, including participation in meetings with prospective transferees.
9.5 Survival. All covenants, agreements, representations and warranties made by the
Credit Parties, Subsidiaries and Other Obligors herein and in the other Loan Documents, and in the
certificates or other instruments delivered in connection with or pursuant to this Agreement and
the other Loan Documents, shall be considered to have been relied upon by the other parties hereto
and shall survive the execution and delivery of this Agreement and the other Loan Documents and the
making of any Loans, regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and shall continue in full
force and effect so long as the principal of or any accrued interest on any Loan or any fee or any
other Obligation payable under this Agreement or the other Loan Documents is outstanding and
unpaid. The provisions of Sections 2.6 and 9.3 shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans
or the termination of this Agreement or any other Loan Document or any provision hereof or thereof.
9.6 Counterparts; Integration; References to Agreement; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement constitutes the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Whenever there is a
reference in any Loan Document or UCC Financing Statement to the “Credit Agreement” to which the
Lender and the Credit Parties are parties, such reference shall be deemed to be made to this
Agreement among the parties hereto. Except as provided in Article 5, this Agreement shall become
effective when it shall have been executed by the Lender and when the Lender shall have received
counterparts hereof which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
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9.7 Severability. Any provision of this Agreement held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
9.8 Right of Setoff. Each Credit Party and Other Obligor hereby grants to the
Lender and each Affiliate of the Lender that from time to time maintains any deposit accounts,
holds any funds or otherwise becomes indebted to the Credit Parties or any Other Obligor a security
interest in all deposits (general or special, time or demand, provisional or final) and funds at
any time held and other indebtedness at any time owing by the Lender or any such Affiliate of the
Lender to or for the credit or the account of any Credit Party or any Other Obligor as security for
the Obligations, and the Credit Parties hereby agree that if an Event of Default shall have
occurred and be continuing, the Lender and each Affiliate of the Lender are hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) or other funds at any
time held and other indebtedness at any time owing by the Lender or any Affiliate of the Lender to
or for the credit or the account of any Credit Party or any Other Obligor against any and all of
the Obligations, irrespective of whether or not the Lender shall have made any demand under this
Agreement and although any of the Obligations may be unmatured. The rights of the Lender and each
Affiliate of the Lender under this Section 9.8 are in addition to any other rights and remedies
(including other rights of setoff) which the Lender or any Affiliate of the Lender may have.
9.9 Subordination by Credit Parties. The Credit Parties hereby agree that all
present and future Indebtedness of any Credit Party to any Consolidated Member and of any
Consolidated Member to any Credit Party (“Intercompany Indebtedness”) shall be subordinate
and junior in right of payment and priority to the Obligations, and each Credit Party agrees not to
make, demand, accept or receive any payment in respect of any present or future Intercompany
Indebtedness, including, without limitation, any payment received through the exercise of any right
of setoff, counterclaim or cross claim, or any collateral therefor, unless and until such time as
the Obligations shall have been indefeasibly paid in full; provided that, so long as no Default
shall have occurred and be continuing and no Default shall be caused thereby, the Credit Parties
may make and receive such payments. Without in any way limiting the foregoing, in the event of any
insolvency or bankruptcy proceedings, or any receivership, liquidation, reorganization, dissolution
or other similar proceedings relative to any Credit Party or to its businesses, properties or
assets, the Lender shall be entitled to receive payment in full of all of the Obligations before
any Credit Party shall be entitled to receive any payment in respect of any present or future
Intercompany Indebtedness.
9.10 Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the
internal laws (including, without limitation, Section 5-1401 of the New York State Consolidated
Laws, but otherwise without regard to the conflict of laws provisions) of the State of New York.
(b) Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction
of any U.S. federal or New York State court sitting in New York, New York in any action or
proceeding arising out of or relating to any Loan Document any each party hereto hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard and determined in any
such court and irrevocably waives any objection it may now or hereafter have as to the venue of any
such suit, action, or proceeding brought in such a court or that such court is an inconvenient
forum. Each of the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. Nothing in this Agreement
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shall affect any right that the Lender may otherwise have to bring any action or proceeding
relating to this Agreement against any Credit Party or any Subsidiary or its properties in the
courts of any jurisdiction.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or hereafter have to
the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement
or the other Loan Documents in any court referred to in paragraph (b) of this Section 9.10. Each
of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 9.1. Nothing in this Agreement will affect the right of any
party to this Agreement to serve process in any other manner permitted by law.
9.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 10.11.
9.12 Headings. Article and Section headings and the Table of Contents used herein
are for convenience of reference only, are not part of this Agreement and shall not affect the
construction of, or be taken into consideration in interpreting, this Agreement.
9.13 Confidentiality. Notwithstanding anything set forth herein or in any other
Loan Document to the contrary, the Lender shall not be deemed to have requested, and the Borrower
shall not provide to the Lender or any Affiliate of the Lender, any material, non-public
information relating to to Borrower, unless the Lender specifically requests such information in
writing. In the event that the Lender requests that the Borrower deliver any material, non-public
information relating to the Borrower, the Borrower shall xxxx such information “confidential” prior
to the delivery of such information to the Lender. The Lender shall keep such information
confidential in accordance with the Lender’s customary practices and shall only use such
information in connection with the transactions contemplated by this Agreement and not disclose any
of such information other than (a) to the Lender’s employees, representatives, directors,
attorneys, auditors, agents, professional advisors, trustees or Affiliates who are advised of the
confidential nature of such information or to any direct or indirect contractual counterparty in
swap agreements or such contractual counterparty’s professional advisor (so long as such
contractual counterparty or professional advisor to such contractual counterparty agrees to be
bound by the provisions of this Section 9.13), (b) to the extent such information presently is or
hereafter becomes available to the Lender on a non-confidential basis from any source of such
information that is in the public domain at the time of disclosure, (c) to the extent disclosure is
required by law (including applicable securities law), regulation, subpoena or judicial order or
process (provided that notice of such requirement or order shall be promptly furnished to the
Borrower unless such notice is legally prohibited) or requested or required by bank, securities,
insurance or investment company regulators or auditors or any administrative body or commission to
whose jurisdiction the Lender may be subject, (d) to any rating agency to the extent required in
connection with any rating to be assigned to the Lender, (e) to assignees or participants or
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prospective assignees or participants who agree to be bound by the provisions of this Section
9.13, (f) to the extent required in connection with any litigation between any Credit Party and the
Lender with respect to the Loans or this Agreement and the other Loan Documents or (g) with the
Borrower’s prior written consent. The Lender is aware that, under certain circumstances, the
United States securities laws may prohibit a Person who has received material, non-public
information from an issuer from purchasing or selling securities of such issuer or from
communicating such information to any other Person under circumstances in which it is reasonably
foreseeable that such other person is likely to purchase or sell such securities.
-43-
IN WITNESS WHEREOF, the parties hereto have caused this Term Loan Agreement to be duly
executed by their respective authorized officers as of the day and year first above written.
| BORROWER | ||||||
| APPLICA INCORPORATED | ||||||
| By: | /s/ Xxxxx Xxxxxxxxx | |||||
| Name: Xxxxx Xxxxxxxxx | ||||||
| Title: Senior Vice President and Chief Financial Officer | ||||||
| GUARANTORS | ||||||
| APPLICA CONSUMER PRODUCTS, INC. | ||||||
| By: | /s/ Xxxxx Xxxxxxxxx | |||||
| Name: Xxxxx Xxxxxxxxx | ||||||
| Title: Senior Vice President and Chief Financial Officer | ||||||
| APPLICA CANADA CORPORATION | ||||||
| By: | /s/Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Secretary | ||||||
| WD DELAWARE, INC. | ||||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Corporate Secretary | ||||||
| HP INTELLECTUAL CORP. | ||||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Secretary | ||||||
| WINDMERE HOLDINGS CORPORATION | ||||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Secretary | ||||||
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| HP DELAWARE, INC. | ||||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Corporate Secretary | ||||||
| HPG LLC | ||||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Corporate Secretary | ||||||
| APPLICA AMERICAS, INC. | ||||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Corporate Secretary | ||||||
| APPLICA MEXICO HOLDINGS, INC. | ||||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Corporate Secretary | ||||||
| LENDER | ||||||
| MAST CREDIT OPPORTUNITIES I (MASTER), LTD., as Lender | ||||||
| By: | /s/ Xxxxx Xxxxxxx | |||||
| Name: | Xxxxx Xxxxxxx | |||||
| Title: | Director | |||||
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TABLE OF CONTENTS
| Page | ||||||
ARTICLE 1 |
DEFINITIONS | 1 | ||||
1.1 |
Defined Terms | 1 | ||||
1.2 |
Terms Generally | 13 | ||||
1.3 |
Accounting Terms; GAAP | 13 | ||||
1.4 |
Joint and Several Obligations; Designated Financial Officers | 14 | ||||
ARTICLE 2 |
THE TERM LOAN | 14 | ||||
2.1 |
Term Loan | 14 | ||||
2.2 |
Exit Fee | 15 | ||||
2.3 |
Payments | 15 | ||||
2.4 |
Prepayment of Loans | 15 | ||||
2.5 |
Closing Fee | 16 | ||||
2.6 |
Taxes | 16 | ||||
ARTICLE 3 |
GUARANTEE BY GUARANTORS | 17 | ||||
3.1 |
The Guarantee | 17 | ||||
3.2 |
Obligations Unconditional | 17 | ||||
3.3 |
Reinstatement | 18 | ||||
3.4 |
Subrogation | 18 | ||||
3.5 |
Remedies | 18 | ||||
3.6 |
Instrument for the Payment of Money | 18 | ||||
3.7 |
Continuing Guarantee | 18 | ||||
3.8 |
General Limitation on Amount of Obligations Guaranteed | 18 | ||||
ARTICLE 4 |
REPRESENTATIONS AND WARRANTIES | 19 | ||||
4.1 |
Authorization, Validity, Enforceability | 19 | ||||
4.2 |
Validity and Priority of Security Interest | 19 | ||||
4.3 |
Organization and Qualification | 19 | ||||
4.4 |
Subsidiaries | 19 | ||||
4.5 |
Financial Statements | 20 | ||||
4.6 |
Solvency | 20 | ||||
4.7 |
Material Indebtedness, Liens and Agreements | 20 | ||||
4.8 |
Distributions | 21 | ||||
-i-
TABLE
OF CONTENTS
(continued)
(continued)
| Page | ||||||
4.9 |
Real Property Assets | 21 | ||||
4.10 |
Proprietary Rights | 21 | ||||
4.11 |
Trade Names | 21 | ||||
4.12 |
Litigation and Environmental Matters | 21 | ||||
4.13 |
Labor Disputes | 22 | ||||
4.14 |
Compliance with Laws and Agreements | 22 | ||||
4.15 |
ERISA Compliance | 22 | ||||
4.16 |
Taxes | 23 | ||||
4.17 |
Regulated Entities | 23 | ||||
4.18 |
Margin Regulations | 23 | ||||
4.19 |
Bank Accounts | 23 | ||||
4.20 |
Governmental Authorization | 23 | ||||
4.21 |
Investments | 23 | ||||
4.22 |
No Material Adverse Change | 24 | ||||
4.23 |
Full Disclosure | 24 | ||||
4.24 |
Common Enterprise | 24 | ||||
4.25 |
Ranking | 24 | ||||
4.26 |
Anti-Terrorism Laws | 24 | ||||
ARTICLE 5 |
CONDITIONS | 25 | ||||
ARTICLE 6 |
AFFIRMATIVE COVENANTS | 27 | ||||
6.1 |
Financial Statements and Other Information | 27 | ||||
6.2 |
Notices of Material Events | 27 | ||||
6.3 |
Existence; Conduct of Business | 27 | ||||
6.4 |
Payment of Obligations | 27 | ||||
6.5 |
Maintenance of Properties; Insurance | 28 | ||||
6.6 |
Books and Records; Inspection Rights | 28 | ||||
6.7 |
Compliance with Laws | 28 | ||||
6.8 |
Use of Proceeds | 29 | ||||
6.9 |
ERISA | 28 | ||||
6.10 |
Environmental Matters | 28 | ||||
-ii-
TABLE
OF CONTENTS
(continued)
(continued)
| Page | ||||||
6.11 |
New Subsidiaries | 29 | ||||
6.12 |
Senior Subordinated Debt | 29 | ||||
6.13 |
Deposit Account Control Agreements | 29 | ||||
ARTICLE 7 |
NEGATIVE COVENANTS | 30 | ||||
7.1 |
Indebtedness | 30 | ||||
7.2 |
Liens | 30 | ||||
7.3 |
Contingent Liabilities | 32 | ||||
7.4 |
Fundamental Changes; Asset Sales | 32 | ||||
7.5 |
Investments | 33 | ||||
7.6 |
Restricted Junior Payments | 33 | ||||
7.7 |
Transactions with Affiliates | 33 | ||||
7.8 |
Restrictive Agreements | 34 | ||||
7.9 |
Sale-Leaseback Transactions | 34 | ||||
7.10 |
Lines of Business | 34 | ||||
7.11 |
Fiscal Year | 34 | ||||
7.12 |
Other Indebtedness | 34 | ||||
7.13 |
Modifications of Certain Documents | 35 | ||||
7.14 |
Anti-Terrorism Laws | 35 | ||||
ARTICLE 8 |
EVENTS OF DEFAULT | 35 | ||||
8.1 |
Events of Default | 35 | ||||
ARTICLE 9 |
MISCELLANEOUS | 37 | ||||
9.1 |
Notices | 38 | ||||
9.2 |
Waivers; Amendments | 38 | ||||
9.3 |
Expenses; Indemnity: Damage Waiver | 38 | ||||
9.4 |
Successors and Assigns | 39 | ||||
9.5 |
Survival | 40 | ||||
9.6 |
Counterparts; Integration; References to Agreement; Effectiveness | 40 | ||||
9.7 |
Severability | 41 | ||||
9.8 |
Right of Setoff | 41 | ||||
9.9 |
Subordination by Credit Parties | 41 | ||||
-iii-
TABLE
OF CONTENTS
(continued)
(continued)
| Page | ||||||
9.10 |
Governing Law; Jurisdiction; Consent to Service of Process | 41 | ||||
9.11 |
WAIVER OF JURY TRIAL | 42 | ||||
9.12 |
Headings | 42 | ||||
9.13 |
Confidentiality | 42 | ||||
-iv-
