Exhibit 99.2
AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF MAY 9, 2003 AND
AMENDED AND RESTATED AS OF JUNE 15, 2004
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
AS THE LENDERS
AND
WACHOVIA BANK, NATIONAL ASSOCIATION
AS THE AGENT
AND
SILVER POINT FINANCE, LLC
AS THE CO-AGENT, SYNDICATION AGENT, DOCUMENTATION AGENT,
ARRANGER AND BOOK RUNNER,
AND
SALTON, INC.
AS THE PARENT
AND
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
AS THE BORROWERS
AND
EACH OF ITS OTHER SUBSIDIARIES THAT ARE SIGNATORIES HERETO
AS GUARANTORS
ARTICLE 1 LOANS AND LETTERS OF CREDIT.......................................................... 2
1.1 Total Facility............................................................................. 2
1.2 Revolving Loans............................................................................ 2
1.3 Term Loan.................................................................................. 6
1.4 Letters of Credit.......................................................................... 7
1.5 Bank Products.............................................................................. 11
1.6 Registered Notes........................................................................... 11
1.7 Securitization............................................................................. 11
ARTICLE 2 INTEREST AND FEES.................................................................... 12
2.1 Interest................................................................................... 12
2.2 Continuation and Conversion Elections...................................................... 13
2.3 Maximum Interest Rate...................................................................... 14
2.4 Closing Fee................................................................................ 15
2.5 Unused Line Fee............................................................................ 15
2.6 Letter of Credit Fee....................................................................... 15
ARTICLE 3 PAYMENTS AND PREPAYMENTS............................................................. 16
3.1 Repayment of Revolving Loans and Term Loan................................................. 16
3.2 Termination of Facility.................................................................... 16
3.3 LIBOR Rate Loan Prepayments................................................................ 16
3.4 Payments by the Borrowers.................................................................. 17
3.5 Payments as Revolving Loans................................................................ 17
3.6 Apportionment, Application and Reversal of Payments........................................ 17
3.7 Indemnity for Returned Payments............................................................ 18
3.8 Agent's and Lenders' Books and Records; Monthly Statements................................. 19
ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY............................................... 19
4.1 Taxes...................................................................................... 19
4.2 Illegality................................................................................. 21
4.3 Increased Costs and Reduction of Return.................................................... 21
4.4 Funding Losses............................................................................. 22
4.5 Inability to Determine Rates............................................................... 23
4.6 Certificates of Agent...................................................................... 23
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4.7 Obligation to Mitigate..................................................................... 23
4.8 Survival................................................................................... 24
ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.................................... 24
5.1 Books and Records.......................................................................... 24
5.2 Financial Information...................................................................... 25
5.3 Notices to the Lenders..................................................................... 29
5.4 Collateral Reporting....................................................................... 31
ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS............................................... 33
6.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents....... 33
6.2 Validity and Priority of Security Interest................................................. 33
6.3 Organization and Qualification............................................................. 34
6.4 Corporate Name; Prior Transactions......................................................... 34
6.5 Subsidiaries and Affiliates................................................................ 34
6.6 Financial Statements and Projections....................................................... 34
6.7 Capitalization............................................................................. 35
6.8 Solvency................................................................................... 35
6.9 Debt....................................................................................... 35
6.10 Distributions.............................................................................. 35
6.11 Real Estate; Leases........................................................................ 35
6.12 Proprietary Rights......................................................................... 36
6.13 Trade Names................................................................................ 36
6.14 Litigation................................................................................. 36
6.15 Labor Disputes............................................................................. 37
6.16 Environmental Laws......................................................................... 37
6.17 No Violation of Law........................................................................ 38
6.18 No Default................................................................................. 38
6.19 ERISA Compliance........................................................................... 38
6.20 Taxes...................................................................................... 39
6.21 Regulated Entities......................................................................... 39
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6.22 Use of Proceeds; Margin Regulations........................................................ 40
6.23 Copyrights, Patents, Trademarks and Licenses, etc.......................................... 40
6.24 No Material Adverse Change................................................................. 40
6.25 Full Disclosure............................................................................ 40
6.26 Material Agreements........................................................................ 40
6.27 Bank Accounts.............................................................................. 41
6.28 Governmental Authorization................................................................. 41
6.29 Tax Shelter Regulations.................................................................... 41
ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS................................................... 41
7.1 Taxes and Other Obligations................................................................ 41
7.2 Legal Existence and Good Standing; Name Changes............................................ 42
7.3 Compliance with Law and Agreements; Maintenance of Licenses................................ 42
7.4 Maintenance of Property; Inspection of Property............................................ 42
7.5 Insurance.................................................................................. 43
7.6 Insurance and Condemnation Proceeds........................................................ 43
7.7 Environmental Laws......................................................................... 44
7.8 Compliance with ERISA...................................................................... 45
7.9 Mergers, Consolidations or Sales........................................................... 45
7.10 Distributions; Capital Change; Restricted Investments...................................... 46
7.11 [Intentionally Omitted].................................................................... 46
7.12 Guaranties................................................................................. 47
7.13 Debt....................................................................................... 47
7.14 Prepayment................................................................................. 48
7.15 Transactions with Affiliates............................................................... 48
7.16 Investment Banking and Finder's Fees....................................................... 48
7.17 Business Conducted......................................................................... 48
7.18 Liens...................................................................................... 48
7.19 Sale and Leaseback Transactions............................................................ 49
7.20 New Subsidiaries........................................................................... 49
7.21 Fiscal Year................................................................................ 49
7.22 Minimum EBITDA............................................................................. 50
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7.23 Capital Expenditures....................................................................... 50
7.24 Fixed Charge Coverage Ratio................................................................ 50
7.25 Foreign Leverage Ratio..................................................................... 51
7.26 Use of Proceeds............................................................................ 51
7.27 Cash Management............................................................................ 51
7.28 Restrictions on Pricing Adjustments........................................................ 52
7.29 Further Assurances......................................................................... 52
7.30 Certain Proprietary Rights................................................................. 52
ARTICLE 8 CONDITIONS OF LENDING................................................................ 53
8.1 Conditions Precedent to Making of Loans on the Closing Date................................ 53
8.2 Conditions Precedent to Each Loan.......................................................... 56
8.3 Conditions Subsequent to Making of Loans on the Closing Date............................... 56
ARTICLE 9 DEFAULT; REMEDIES.................................................................... 58
9.1 Events of Default.......................................................................... 58
9.2 Remedies................................................................................... 61
ARTICLE 10 TERM AND TERMINATION................................................................. 63
10.1 Term and Termination....................................................................... 63
ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS......................... 63
11.1 Amendments and Waivers..................................................................... 63
11.2 Assignments; Participations................................................................ 65
ARTICLE 12 THE AGENT AND THE CO-AGENT........................................................... 68
12.1 Appointment and Authorization.............................................................. 68
12.2 Delegation of Duties....................................................................... 69
12.3 Liability of Agent and Co-Agent............................................................ 69
12.4 Reliance by Agent and the Co-Agent......................................................... 70
12.5 Notice of Default.......................................................................... 70
12.6 Credit Decision............................................................................ 70
12.7 Indemnification............................................................................ 71
12.8 Agent in Individual Capacity............................................................... 71
12.9 Successor Agent............................................................................ 72
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12.10 Withholding Tax............................................................................ 72
12.11 Collateral Matters......................................................................... 74
12.12 Restrictions on Actions by Lenders; Sharing of Payments.................................... 75
12.13 Agency for Perfection...................................................................... 76
12.14 Payments by Agent to Lenders............................................................... 76
12.15 Settlement................................................................................. 76
12.16 Letters of Credit; Intra-Lender Issues..................................................... 80
12.17 Concerning the Collateral and the Related Loan Documents................................... 82
12.18 Field Audit and Examination Reports; Disclaimer by Lenders................................. 82
12.19 Relation Among Lenders..................................................................... 83
12.20 Additional Agents.......................................................................... 83
ARTICLE 13 MISCELLANEOUS........................................................................ 84
13.1 No Waivers; Cumulative Remedies............................................................ 84
13.2 Severability............................................................................... 84
13.3 Governing Law; Choice of Forum; Service of Process......................................... 84
13.4 Waiver of Jury Trial....................................................................... 85
13.5 Survival of Representations and Warranties................................................. 86
13.6 Other Security and Guaranties.............................................................. 86
13.7 Fees and Expenses.......................................................................... 86
13.8 Notices.................................................................................... 87
13.9 Waiver of Notices.......................................................................... 89
13.10 Binding Effect............................................................................. 89
13.11 Indemnity of the Agent, the Co-Agent and the Lenders by the Borrowers...................... 89
13.12 Limitation of Liability.................................................................... 91
13.13 Final Agreement............................................................................ 91
13.14 Counterparts............................................................................... 91
13.15 Captions................................................................................... 91
13.16 Right of Setoff............................................................................ 92
13.17 Confidentiality............................................................................ 92
13.18 Conflicts with Other Loan Documents........................................................ 93
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13.19 The Administrative Borrower................................................................ 93
13.20 Termination of Forbearance Agreement....................................................... 94
ARTICLE 14 JOINT AND SEVERAL OBLIGATIONS........................................................ 94
14.1 All Obligations to Constitute Joint and Several Obligations................................ 94
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ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A DEFINED TERMS
EXHIBIT A FORM OF NOTICE OF BORROWING
EXHIBIT B FORM OF NOTICE OF CONTINUATION/CONVERSION
EXHIBIT C FINANCIAL STATEMENTS
EXHIBIT D FORM OF GUARANTOR JOINDER AGREEMENT
EXHIBIT E FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT F FORM OF BORROWING BASE CERTIFICATE
SCHEDULE 1.2(a) - LENDERS' COMMITMENTS (ANNEX A - DEFINED TERMS)
SCHEDULE 6.3 - ORGANIZATION AND QUALIFICATIONS
SCHEDULE 6.4 - CORPORATE NAME; PRIOR TRANSACTIONS
SCHEDULE 6.5 - SUBSIDIARIES AND AFFILIATES
SCHEDULE 6.7 - CAPITALIZATION
SCHEDULE 6.9 - DEBT
SCHEDULE 6.11 - REAL ESTATE; LEASES
SCHEDULE 6.12 - PROPRIETARY RIGHTS
SCHEDULE 6.13 - TRADE NAMES
SCHEDULE 6.14 - LITIGATION
SCHEDULE 6.15 - LABOR DISPUTES
SCHEDULE 6.16(a) - ENVIRONMENTAL LAWS AND COMPLIANCE
SCHEDULE 6.16(f) - ENVIRONMENTAL DISCLOSURE
SCHEDULE 6.26 - MATERIAL AGREEMENTS
SCHEDULE 6.27 - BANK ACCOUNTS
SCHEDULE 6.28 - AUTHORIZATIONS
SCHEDULE 7.16 - FEES/COMMISSIONS
SCHEDULE 7.22 - EBITDA
SCHEDULE 9.1(f) - JUDGMENTS
SCHEDULE E-1 - LOCATIONS OF ELIGIBLE LANDED INVENTORY
SCHEDULE E-2 - PERMITTED LIENS
SCHEDULE E-3 - RESTRUCTURING CHARGES
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AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement, dated as of June 15, 2004
(this "Agreement"), among the financial institutions from time to time parties
hereto (such financial institutions, together with their respective successors
and assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), WACHOVIA BANK, NATIONAL ASSOCIATION, with an
office at 000 Xxxxxxxxx Xxxxxx, XX, Xxxxxxx, Xxxxxxx 00000-0000, as
administrative agent and collateral agent for the Lenders (the "Agent"), SILVER
POINT FINANCE, LLC, with an office at 000 Xxxxxxxxx Xxxx Xxxxxxxxx, Xxxxxxxxxxx
00000, as the co-agent, syndication agent, documentation agent (in its capacity
as agent, the "Co-Agent"), arranger and book runner, SALTON, INC., a Delaware
corporation, with offices at 0000 Xxxxx Xxxxx, Xxxx Xxxxxx, Xxxxxxxx 00000 (the
"Parent"), each of the Parent's Subsidiaries identified on the signature pages
hereof as Borrowers and each of the Parent's other Subsidiaries identified on
the signature pages hereof as Guarantors.
W I T N E S S E T H:
WHEREAS, the Agent, certain other agents named therein, the Borrowers, the
Guarantors, and certain lenders (the "Original Lenders") are parties to a Credit
Agreement dated as of May 9, 2003 (the "Original Loan Agreement");
WHEREAS, as of June 15, 2004, Silver Point (and certain of its Related
Funds) acquired an aggregate amount of 100% of the Commitments of the Original
Lenders;
WHEREAS, the parties hereto desire to amend, restate and modify, but not
extinguish, the Original Loan Agreement in its entirety as hereinafter set
forth; and
WHEREAS, capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings ascribed thereto in Annex A which is
attached hereto and incorporated herein; the rules of construction contained
therein shall govern the interpretation of this Agreement, and all Annexes,
Exhibits and Schedules attached hereto are incorporated herein by reference;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the Lenders, the Agent, Co-Agent, the
Borrowers, and the Guarantors hereby agree as follows.
ARTICLE 1
LOANS AND LETTERS OF CREDIT
1.1 Total Facility. Subject to all of the terms and conditions of this
Agreement, the Lenders agree to make available a total credit facility of up to
$275,000,000 (the "Total Facility") to the Borrowers from time to time during
the term of this Agreement. The Total Facility shall be composed of a revolving
line of credit consisting of Revolving Loans, Letters of Credit and the Term
Loan.
1.2 Revolving Loans.
(a) Allocation of Revolving Loans. Immediately prior to the Closing
Date, pursuant to the Lender Assignments, Silver Point and certain of its
Related Funds acquired an aggregate of 100% of the Revolving Loans made by the
Original Lenders under the Original Loan Agreement. On the Closing Date, the
Original Revolving Loans that have not been allocated to the Term Loan in
accordance with Section 1.3 shall automatically, and without any action on the
part of any Person, be deemed to be Revolving Loans under this Agreement, and
the Lenders shall, through the Agent (or the Co-Agent), make such other
adjustments among themselves as shall be necessary so that after giving effect
to such assignments and adjustments, each Lender holds its Pro Rata Share of the
Revolving Loans, provided that such amount is not greater than its Revolver
Commitment. On or prior to the Closing Date, the Agent (or the Co-Agent) shall
notify each Lender of any assignments or adjustments that the Agent (or the
Co-Agent) deems necessary and advisable, such that after giving effect to the
transactions contemplated to occur on the Closing Date each Lender's Revolving
Loan to Borrowers shall not exceed its Pro Rata Share of all Revolving Loans
then outstanding to Borrowers and its unused Revolver Commitment and so that all
outstanding Revolving Loans under this Agreement shall not exceed the total
Revolver Commitments. Any such assignment shall be deemed to occur hereunder
automatically on the Closing Date and without any requirement for additional
documentation, and, in the case of any such assignment, the assigning party
shall be deemed to represent and warrant to each assignee that it has not
created any adverse claim upon the interest being assigned and that such
interest is free and clear of any adverse claim. Each Lender hereby agrees to
give effect to the instruction of the Agent (or the Co-Agent) to such Lender
contained in the notice described above.
(b) Amounts. Subject to the satisfaction of the conditions precedent
set forth in Article 8, each Lender severally, but not jointly, agrees, upon the
Administrative Borrower's request from time to time on any Business Day during
the period from the Closing Date to the Termination Date, to make revolving
loans (the "Revolving Loans") to the Borrowers in amounts not to exceed such
Lender's Pro Rata Share of Availability, except for Non-Ratable Loans and Agent
Advances. The Lenders, however, in their unanimous discretion, may elect to make
Revolving Loans or issue or arrange to have issued Letters of Credit in excess
of the Borrowing Base on one or more occasions, but if they do so, neither the
Agent nor the Lenders shall be deemed thereby to
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have changed the limits of the Borrowing Base or to be obligated to exceed such
limits on any other occasion. If any Borrowing would exceed Availability, the
Lenders may refuse to make or may otherwise restrict the making of Revolving
Loans as the Lenders determine until such excess has been eliminated, subject to
the Agent's authority, in its sole discretion, to make Agent Advances pursuant
to the terms of Section 1.2(j).
(c) Procedure for Borrowing.
(1) Each Borrowing shall be made upon the Administrative
Borrower's written notice delivered, on behalf of the Borrowers, to the Agent a
notice of borrowing in the form attached hereto as Exhibit A ("Notice of
Borrowing"), which must be received by the Agent prior to (i) 11:00 a.m. (New
York, New York time) three (3) Business Days prior to the requested Funding
Date, in the case of LIBOR Rate Loans and (ii) 11:00 a.m. (New York, New York
time) on the requested Funding Date, in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which in the case of a
LIBOR Rate Loan must equal or exceed $5,000,000 and increments of $1,000,000 in
excess of such amount;
(B) the requested Funding Date, which must be a Business
Day;
(C) whether the Revolving Loans requested are to be Base
Rate Loans or LIBOR Rate Loans (and if not specified, it shall be deemed a
request for a Base Rate Loan); and
(D) the duration of the Interest Period for LIBOR Rate
Loans (and if not specified, it shall be deemed a request for an Interest Period
of one month);
provided, however, that with respect to the Borrowing to be made on the Closing
Date, such Borrowings will consist of Base Rate Loans only.
(2) In lieu of delivering a Notice of Borrowing, the
Administrative Borrower, on behalf of the Borrowers, may give the Agent
telephonic notice of such request for advances to the Designated Account on or
before the deadline set forth above; provided, that the Administrative Borrower
shall promptly deliver written confirmation of such telephonic notice to the
Agent; provided, further, that the Agent at all times shall be entitled to rely
on such telephonic notice in making such Revolving Loans, regardless of whether
any written confirmation is received.
(3) The Borrowers shall have no right to request a LIBOR Rate
Loan while a Default or Event of Default has occurred and is continuing.
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(d) Reliance upon Authority. Prior to the Closing Date, the
Administrative Borrower shall deliver to the Agent, on behalf of the Borrowers,
a notice setting forth the account of the Administrative Borrower (the
"Designated Account") to which the Agent is authorized to transfer the proceeds
of the Revolving Loans requested hereunder. The Administrative Borrower may
designate a replacement account from time to time by written notice. All such
Designated Accounts must be reasonably satisfactory to the Agent. The Agent is
entitled to rely conclusively on any person's request for Revolving Loans on
behalf of the Borrowers, so long as the proceeds thereof are to be transferred
to the Designated Account. The Agent has no duty to verify the identity of any
individual representing himself or herself as a person authorized by the
Administrative Borrower to make such requests on its behalf.
(e) No Liability. The Agent shall not incur any liability to the
Borrowers as a result of acting upon any notice referred to in Sections 1.2(c)
and (d), which the Agent believes in good faith to have been given by an officer
or other person duly authorized by the Administrative Borrower to request
Revolving Loans on its behalf. The crediting of Revolving Loans to the
Designated Account conclusively establishes the joint and several obligation of
the Borrowers to repay such Revolving Loans as provided herein.
(f) Notice Irrevocable. Except as provided in Section 4.5, any
Notice of Borrowing (or telephonic notice in lieu thereof) made pursuant to
Section 1.2(c) shall be irrevocable. The Borrowers shall be bound to borrow the
funds requested therein in accordance therewith.
(g) Agent's Election. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof), the Agent shall elect to have
the terms of Section 1.2(h) or the terms of Section 1.2(i) apply to such
requested Borrowing. If the Agent declines in its sole discretion to make a
Non-Ratable Loan pursuant to Section 1.2(i), the terms of Section 1.2(h) shall
apply to the requested Borrowing.
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(h) Making of Revolving Loans. If the Agent elects to have the terms
of this Section 1.2(h) apply to a requested Borrowing, then promptly after
receipt of a Notice of Borrowing or telephonic notice in lieu thereof, the Agent
shall notify the Lenders by telecopy, telephone or e-mail of the requested
Borrowing. Each Lender shall transfer its Pro Rata Share of the requested
Borrowing to the Agent in immediately available funds, to the account from time
to time designated by the Agent not later than 12:00 noon (New York, New York
time) on the applicable Funding Date. After the Agent's receipt of all proceeds
of such Revolving Loans, the Agent shall make the proceeds of such Revolving
Loans available to the Borrowers on the applicable Funding Date by transferring
same day funds to the account designated by the Borrower; provided, however,
that the amount of Revolving Loans so made on any date shall not exceed the
Availability on such date.
(i) Making of Non-Ratable Loans.
(A) If the Agent elects to have the terms of this
Section 1.2(i) apply to a requested Borrowing, the Agent shall make a Revolving
Loan in the amount of that Borrowing available to the Borrowers on the
applicable Funding Date by transferring same day funds to Administrative
Borrower's Designated Account. Each Revolving Loan made solely by the Agent
pursuant to this Section is herein referred to as a "Non-Ratable Loan", and such
Revolving Loans are collectively referred to as the "Non-Ratable Loans." Each
Non-Ratable Loan shall be subject to all the terms and conditions applicable to
other Revolving Loans except that all payments thereon shall be payable to the
Agent solely for its own account. The aggregate amount of Non-Ratable Loans
outstanding at any time shall not exceed $10,000,000. The Agent shall not make
any Non-Ratable Loan if (1) the Agent has received written notice from any
Lender that one or more of the applicable conditions precedent set forth in
Article 8 will not be satisfied on the requested Funding Date for the applicable
Borrowing, (2) the requested Borrowing would exceed Availability on that Funding
Date, or (3) the Co-Agent has not consented in writing to the making of such
Non-Ratable Loan.
(B) The Non-Ratable Loans shall be secured by the
Agent's Liens in and to the Collateral and shall constitute Base Rate Loans and
Obligations hereunder.
(C) Notwithstanding anything to the contrary set forth
herein, from the period beginning on the Closing Date and ending on the
Transition Period End Date, the Agent shall not make any Non-Ratable Loans. On
and after the Transition Period End Date, the SP Successor Agent shall have the
discretion to make Non-Ratable Loans in accordance with this Section 1.2(i).
(j) Agent Advances.
(C) Subject to the limitations set forth below, the
Agent (with the prior written consent of the Co-Agent) or the Co-Agent is
authorized by the
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Borrowers and the Lenders, from time to time in the Agent's (or the Co-Agent's,
as the case may be) discretion, (A) after the occurrence of a Default or an
Event of Default, or (B) at any time that any of the other conditions precedent
set forth in Article 8 have not been satisfied, to make Base Rate Loans to the
Borrowers on behalf of the Lenders in an aggregate amount outstanding at any
time not to exceed 10% of the Borrowing Base, but, together with all other
Revolving Loans, the Term Loan and Letters of Credit outstanding, not in excess
of the Maximum Amount, which the Agent (or the Co-Agent, as the case may be), in
its reasonable business judgment, deems necessary or desirable (1) to preserve
or protect the Collateral, or any portion thereof, (2) to enhance the likelihood
of, or maximize the amount of, repayment of the Loans and other Obligations, or
(3) to pay any other amount chargeable to the Borrowers pursuant to the terms of
this Agreement, including costs, fees and expenses as described in Section 13.7
(any of such advances are herein referred to as "Agent Advances").
(D) The Agent Advances shall be secured by the Agent's
Liens in and to the Collateral and shall constitute Base Rate Loans and
Obligations hereunder.
1.3 Term Loan. Immediately prior to the Closing Date, the aggregate
outstanding principal amount of the Original Revolving Loans was
$105,928,429.38. Subject to the terms and conditions hereof and in reliance upon
the representations and warranties set forth herein, on the Closing Date,
$100,000,000 of the Original Revolving Loans shall automatically, and without
any action on the part of any Person, be deemed to be converted into the Term
Loan under this Agreement and the Lenders shall, through the Agent (or the
Co-Agent), make such adjustments among themselves as shall be necessary so that
after giving effect to such assignments and adjustments the Term Loan Lenders
shall hold the Term Loan. On or prior to the Closing Date, the Agent (or the
Co-Agent) shall notify each Lender of any assignments or adjustments that the
Agent (or the Co-Agent) deems necessary or advisable such that, after giving
effect to the transactions contemplated to occur on the Closing Date, each
Lender's interest in the Term Loan shall be in accordance with the Term Loan
Commitments set forth opposite its name on Schedule 1.2(a). All such assignments
shall be deemed to occur hereunder automatically on the Closing Date and without
any requirement for additional documentation, and, in the case of any such
assignment, the assigning party shall be deemed to represent and warrant to each
assignee that it has not created any adverse claim upon the interest being
assigned and that such interest is free and clear of any adverse claim. Each
Lender hereby agrees to give effect to the instructions of the Agent (or the
Co-Agent) to such Lender contained in the notice described above. The Co-Agent
shall have the right, in its sole discretion, to convert all or any part of the
Term Loan to Revolving Loans at any time and from time to time.
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1.4 Letters of Credit.
(a) Agreement to Issue or Cause To Issue. Subject to the terms and
conditions of this Agreement, from and after the Transition Period End Date, the
Agent agrees (i) to cause a Letter of Credit Issuer to issue for the account of
the Borrowers one or more commercial/documentary and standby letters of credit
(each a "Letter of Credit") and/or (ii) to provide credit support or other
enhancement to a Letter of Credit Issuer reasonably acceptable to Agent, which
Letter of Credit Issuer issues a Letter of Credit for the account of the
Borrowers (any such credit support or enhancement being herein referred to as a
"Credit Support") from time to time during the term of this Agreement.
(b) Amounts; Outside Expiration Date. The Agent shall not have any
obligation to issue or cause to be issued any Letter of Credit or to provide
Credit Support for any Letter of Credit at any time if: (i) the maximum face
amount of the requested Letter of Credit is greater than the Unused Letter of
Credit Subfacility at such time; (ii) the maximum undrawn amount of the
requested Letter of Credit and all commissions, fees, and charges due from the
Borrowers in connection with the opening thereof would exceed Availability at
such time; or (iii) such Letter of Credit has an expiration date less than
thirty (30) days prior to the Stated Termination Date or more than twelve (12)
months from the date of issuance for standby letters of credit and one hundred
eighty (180) days for documentary letters of credit. With respect to any Letter
of Credit which contains any "evergreen" or automatic renewal provision, each
Lender shall be deemed to have consented to any such extension or renewal unless
any such Lender shall have provided to the Agent, written notice that it
declines to consent to any such extension or renewal at least thirty (30) days
prior to the date on which the Letter of Credit Issuer is entitled to decline to
extend or renew the Letter of Credit. If all of the requirements of this Section
1.4 are met and no Default or Event of Default has occurred and is continuing,
no Lender shall decline to consent to any such extension or renewal.
(c) Other Conditions. In addition to conditions precedent contained
in Article 8, the obligation of the Agent to issue or to cause to be issued any
Letter of Credit or to provide Credit Support for any Letter of Credit is
subject to the following conditions precedent having been satisfied in a manner
reasonably satisfactory to the Agent:
(1) The Administrative Borrower shall have delivered to the
Letter of Credit Issuer, at such times and in such manner as such Letter of
Credit Issuer may prescribe, an application in form and substance reasonably
satisfactory to such Letter of Credit Issuer and reasonably satisfactory to the
Agent for the issuance of the Letter of Credit and such other documents as may
be required pursuant to the terms thereof, and the form, terms and purpose of
the proposed Letter of Credit shall be reasonably satisfactory to the Agent and
the Letter of Credit Issuer; and
(2) As of the date of issuance, no order of any court,
arbitrator or Governmental Authority shall purport by its terms to enjoin or
restrain money center banks generally from issuing letters of credit of the type
and in the amount of the
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proposed Letter of Credit, and no law, rule or regulation applicable to money
center banks generally and no request or directive (whether or not having the
force of law) from any Governmental Authority with jurisdiction over money
center banks generally shall prohibit, or request that the proposed Letter of
Credit Issuer refrain from, the issuance of letters of credit generally or the
issuance of such Letters of Credit.
(d) Issuance of Letters of Credit.
(1) Request for Issuance. The Borrowers must notify the Agent
of a requested Letter of Credit at least three (3) Business Days prior to the
proposed issuance date. Such notice, which shall be given by the Administrative
Borrower, shall be irrevocable and must specify the original face amount of the
Letter of Credit requested, the Business Day of issuance of such requested
Letter of Credit, whether such Letter of Credit may be drawn in a single or in
partial draws, the Business Day on which the requested Letter of Credit is to
expire, the purpose for which such Letter of Credit is to be issued, and the
beneficiary of the requested Letter of Credit. The Administrative Borrower shall
attach to such notice the proposed form of the Letter of Credit.
(2) Responsibilities of the Agent; Issuance. As of the
Business Day immediately preceding the requested issuance date of the Letter of
Credit, the Agent shall determine the amount of the applicable Unused Letter of
Credit Subfacility and Availability. If (i) the face amount of the requested
Letter of Credit is less than the Unused Letter of Credit Subfacility and (ii)
the amount of such requested Letter of Credit and all commissions, fees, and
charges due from the Borrowers in connection with the opening thereof would not
exceed Availability, the Agent shall cause the Letter of Credit Issuer to issue
the requested Letter of Credit on the requested issuance date so long as the
other conditions hereof are met.
(3) No Extensions or Amendment. The Agent shall not be
obligated to cause the Letter of Credit Issuer to extend or amend any Letter of
Credit issued pursuant hereto unless the requirements of this Section 1.4 are
met as though a new Letter of Credit were being requested and issued.
(e) Payments Pursuant to Letters of Credit. The Borrowers agree to
reimburse immediately the Letter of Credit Issuer for any draw under any Letter
of Credit and the Agent for the account of the Lenders upon any payment pursuant
to any Credit Support, and to pay the Letter of Credit Issuer the amount of all
other charges and fees payable to the Letter of Credit Issuer in connection with
any Letter of Credit immediately when due, irrespective of any claim, setoff,
defense or other right which the Borrowers may have at any time against the
Letter of Credit Issuer or any other Person. Each drawing under any Letter of
Credit shall constitute a request by the Borrowers to the Agent for a Borrowing
of a Base Rate Loan in the amount of such drawing. The Funding Date with respect
to such borrowing shall be the date of such drawing.
8
(f) Indemnification; Exoneration; Power of Attorney.
(1) Indemnification. In addition to amounts payable as
elsewhere provided in this Section 1.4, the Borrowers agree to protect,
indemnify, pay and save the Lenders and the Agent harmless from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) which any Lender or the Agent
(other than a Lender in its capacity as Letter of Credit Issuer) may incur or be
subject to as a consequence, direct or indirect, of the issuance of any Letter
of Credit or the provision of any Credit Support or enhancement in connection
therewith, other than as a result of the gross negligence or willful misconduct
of the Letter of Credit Issuer. The Borrowers' obligations under this Section
shall survive payment of all other Obligations.
(2) Assumption of Risk by the Borrowers. As among the
Borrowers, the Lenders, and the Agent, the Borrowers assume all risks of the
acts and omissions of, or misuse of any of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit provided that acts or
omissions of the Letter of Credit Issuer or the Agent are done in the absence of
gross negligence or willful misconduct. In furtherance and not in limitation of
the foregoing, the Lenders and the Agent shall not be responsible for: (A) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any Person in connection with the application for and
issuance of and presentation of drafts with respect to any of the Letters of
Credit, even if it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (C) the failure of the beneficiary of any Letter of Credit to comply
duly with conditions required in order to draw upon such Letter of Credit; (D)
errors, omissions, interruptions, or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they be
in cipher; (E) errors in interpretation of technical terms; (F) any loss or
delay in the transmission or otherwise of any document required in order to make
a drawing under any Letter of Credit or of the proceeds thereof; (G) the
misapplication by the beneficiary of any Letter of Credit of the proceeds of any
drawing under such Letter of Credit; (H) any consequences arising from causes
beyond the control of the Lenders or the Agent, including any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
Governmental Authority or (I) any Letter of Credit Issuer's honor of a draw for
which the draw or any certificate fails to comply in any respect with the terms
of any Letter of Credit. None of the foregoing shall affect, impair or prevent
the vesting of any rights or powers of the Agent or any Lender under this
Section 1.4(f).
(3) Exoneration. Without limiting the foregoing, no action or
omission whatsoever by the Agent or any Lender (excluding any Lender in its
capacity as a Letter of Credit Issuer) shall result in any liability of the
Agent or any Lender to the
9
Borrowers, except for actions or omissions resulting from the gross negligence
or willful misconduct of the Agent or any Lender, or relieve any Borrower of any
of its obligations hereunder to any such Person.
(4) Rights Against Letter of Credit Issuer. Nothing contained
in this Agreement is intended to limit the Borrowers' rights, if any, with
respect to any Letter of Credit Issuer which arise as a result of the letter of
credit application and related documents executed by and between any Borrower
and any Letter of Credit Issuer.
(5) Account Party. The Borrowers hereby authorize and direct
any Letter of Credit Issuer to name any Borrower designated by the
Administrative Borrower or the Borrowers, or in the absence of such designation,
the Administrative Borrower, as the "Account Party" therein and to deliver to
the Agent all instruments, documents and other writings and property received by
such Letter of Credit Issuer pursuant to any Letters of Credit, and to accept
and rely upon the Agent's instructions and agreements with respect to all
matters arising in connection with the Letters of Credit or the application
therefor.
(g) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 1.4(b) and Section 10.1, any Letter of
Credit or Credit Support is outstanding upon the termination of this Agreement,
then upon such termination the Borrowers shall deposit with the Agent, for the
ratable benefit of the Agent and the Lenders, with respect to each Letter of
Credit or Credit Support then outstanding, a letter of credit (a "Supporting
Letter of Credit") in form and substance satisfactory to the Agent, issued by an
issuer satisfactory to the Agent, in an amount equal to the greater of (x) one
hundred five percent (105%) of the aggregate face value of the then existing
Letters of Credit, or (y) the maximum amount for which such Letter of Credit or
such Credit Support may be drawn plus any fees and expenses associated with such
Letter of Credit or such Credit Support; provided that in the event the
Borrowers demonstrate to the reasonable satisfaction of the Agent the inability
of the Borrowers, or any of them, to obtain a Supporting Letter of Credit, then
the Borrowers may deposit with the Agent, for the ratable benefit of the Agent
and the Lenders, with respect to each Letter of Credit or Credit Support then
outstanding, cash collateral pursuant to documentation reasonably acceptable to
the Agent, in an amount equal to the greater of (x) one hundred five percent
(105%) of the aggregate face value of the then existing Letters of Credit, or
(y) the maximum amount for which such Letter of Credit or such Credit Support
may be drawn plus any fees and expenses associated with such Letter of Credit or
such Credit Support. The Agent is entitled to use such cash collateral or draw
all amounts under the Supporting Letter of Credit, as applicable, as is
necessary to reimburse the Agent and the Lenders for payments to be made by the
Agent and the Lenders under such Letter of Credit or Credit Support and any fees
and expenses associated with such Letter of Credit or Credit Support. Such cash
collateral or Supporting Letter of Credit, as applicable, shall be held by the
Agent, for the ratable benefit of the Agent and the Lenders, as
10
security for, and to provide for the payment of, the aggregate undrawn amount of
such Letters of Credit or such Credit Support remaining outstanding.
1.5 Bank Products. The Borrowers may request and any Bank Products
Provider may, in its sole and absolute discretion, arrange for the Borrowers to
obtain from such Bank Products Provider or such Bank Products Provider's
Affiliates the Bank Products although no Borrower is required to do so. If Bank
Products are provided by an Affiliate of a Bank Products Provider, the Borrowers
agree to indemnify and hold the Agent, the Co-Agent, the applicable Bank
Products Provider and the Lenders harmless from any and all costs and
obligations now or hereafter incurred by the Agent or Co-Agent, such Bank
Products Provider or any of the Lenders which arise from any indemnity given by
the Agent, the Co-Agent and/or the applicable Bank Products Provider to any of
their Affiliates related to such Bank Products; provided, however, nothing
contained herein is intended to limit the Borrowers' rights, with respect to the
Bank Products Provider or any of their respective Affiliates, if any, which
arise as a result of the execution of documents by and among the Borrowers and
the Banks Product Provider, or any of them, which relate to Bank Products. The
agreement contained in this Section shall survive termination of this Agreement.
The Borrowers acknowledge and agree that the obtaining of Bank Products from any
Bank Products Provider or any Bank Products Provider's Affiliate (a) is in the
sole and absolute discretion of such Bank Products Provider or such Bank
Products Provider's Affiliate, and (b) is subject to all rules and regulations
of such Bank Products Provider or such Bank Products Provider's Affiliate.
1.6 Registered Notes. Administrative Borrower agrees to record each Term
Loan on the Register referred to in Section 11.2(g). Each Term Loan recorded on
the Register may not be evidenced by promissory notes other than Registered
Notes (as defined below). Upon the registration of each Term Loan,
Administrative Borrower agrees, at the request of any Lender, to execute and
deliver to such Lender a promissory note, in conformity with the terms of this
Agreement, in registered form to evidence such Registered Loan, in form and
substance reasonably satisfactory to such Lender, and registered as provided in
Section 11.2(g) (a "Registered Note"), payable to the order of such Lender and
otherwise duly completed. Once recorded on the Register, each Term Loan may not
be removed from the Register so long as it or they remain outstanding, and a
Registered Note may not be exchanged for a promissory note that is not a
Registered Note.
1.7 Securitization. Each Borrower Party hereby acknowledges that each
Lender with a Commitment and each of its Affiliates and Related Funds may sell
or securitize the Loans (a "Securitization") through the pledge of the Loans as
collateral security for loans to such Lender or its Affiliates or Related Funds
or through the sale of the Loans or the issuance of direct or indirect interests
in the Loans, which loans to such Lender or its Affiliates or Related Funds or
direct or indirect interests will be rated by Xxxxx'x Investors Service, Inc.,
Standard & Poor's Rating Group or one or more other
11
rating agencies (the "Rating Agencies"). Each Borrower Party agrees to cooperate
with such Lenders and their Affiliates and Related Funds to effect the
Securitization, including, without limitation, by (a) executing such additional
documents, as reasonably requested by such Lenders in connection with the
Securitization, provided that (i) any such additional documentation does not
impose additional costs (other than de minimus costs) on any Borrower Party, and
(ii) any such additional documentation does not adversely affect the rights, or
increase the obligations, of any Borrower Party under the Loan Documents or
change or affect in a manner adverse to the Borrower Parties the financial terms
of the Loans, (b) providing such information as may be reasonably requested by
such Lenders in connection with the rating of the Loans or the Securitization,
and (c) if requested by such Lenders, providing in connection with any rating of
the Loans a certificate (i) agreeing to indemnify such Lenders and any of their
Affiliates and Related Funds, any of the Rating Agencies, or any party providing
credit support or otherwise participating in the Securitization (collectively,
the "Securitization Parties") for any losses, claims, damages or liabilities
(collectively, the "Securitization Liabilities") to which such Lenders or any of
their Affiliates or Related Funds, or such Securitization Parties, may become
subject insofar as the Securitization Liabilities arise out of or are based upon
a breach of the representation and warranty contained in Section 6.25, and (ii)
agreeing to reimburse such Lenders and their Affiliates and Related Funds, and
such Securitization Parties, for any legal or other expenses reasonably incurred
by such Persons in connection with defending the Securitization Liabilities.
Notwithstanding the foregoing, this Section 1.7 is subject to Agent's, Co-
Agent's and the Required Lenders' rights and obligations under Article 11 hereof
in all respects and, in the event of a direct conflict between this Section 1.7
and any provision of Article 11 with respect to Agent's, Co- Agent's and the
Required Lenders' rights and obligations, it is the intent of the parties that
the applicable provision of Article 11 shall control and govern.
ARTICLE 2
INTEREST AND FEES
2.1 Interest.
(a) Interest Rates. All outstanding Obligations shall bear interest
on the unpaid principal amount thereof (including, to the extent permitted by
law, on interest thereon not paid when due) from the date made until paid in
full in cash at a rate determined by reference to the Base Rate or the LIBOR
Rate plus the Applicable Margins as set forth below, but not to exceed the
Maximum Rate. If at any time Loans are outstanding with respect to which the
Administrative Borrower, on behalf of the Borrowers, has not delivered to the
Agent and the Co-Agent a notice specifying the basis for determining the
interest rate applicable thereto in accordance herewith, those Loans shall bear
interest at a rate determined by reference to the Base Rate until notice to the
contrary has been given to the Agent in accordance with this Agreement and such
notice
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has become effective. Except as otherwise provided herein, the outstanding
Obligations shall bear interest as follows:
(i) For all Base Rate Loans and other Obligations (other than
LIBOR Rate Loans), at a fluctuating per annum rate equal to the Base Rate plus
the Applicable Margin; and
(ii) For all LIBOR Rate Loans, at a per annum rate equal to
the LIBOR Rate plus the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate applicable
to Base Rate Loans as of the effective date of such change. All interest charges
shall be computed on the basis of a year of three hundred sixty (360) days and
actual days elapsed (which results in more interest being paid than if computed
on the basis of a three hundred and sixty-five (365) day year). The Borrowers
shall pay to the Agent, for the ratable benefit of Lenders, interest accrued on
all Base Rate Loans in arrears on the first day of each month hereafter and on
the Termination Date. The Borrowers shall pay to the Agent, for the ratable
benefit of Lenders, interest on all LIBOR Rate Loans in arrears on each LIBOR
Interest Payment Date.
(b) Default Rate. If any Default or Event of Default occurs and is
continuing and the Agent or the Required Lenders in their discretion so elect,
then, while any such Default or Event of Default is continuing, all of the
Obligations shall bear interest at the Default Rate applicable thereto;
provided, however, that the Obligations shall bear interest at the Default Rate
applicable thereto without notice or action by the Agent or the Required Lenders
upon a Default or Event of Default arising under Section 9.1(e) or Section
9.1(f).
2.2 Continuation and Conversion Elections.
(a) The Borrowers may:
(i) elect, as of any Business Day, in the case of Base Rate
Loans to convert any Base Rate Loans (or any part thereof in an amount not less
than $5,000,000 or that is in an integral multiple of $1,000,000 in excess
thereof) into LIBOR Rate Loans; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any LIBOR Rate Loans having Interest Periods expiring on
such day (or any part thereof in an amount not less than $1,000,000, or that is
in an integral multiple of $1,000,000 in excess thereof); provided, that if at
any time the aggregate amount of LIBOR Rate Loans in respect of any Borrowing is
reduced, by payment, prepayment, or conversion of part thereof to be less than
$1,000,000, such LIBOR Rate Loans shall automatically convert into Base Rate
Loans; provided further that if the notice shall fail to specify the duration of
the Interest Period, such Interest Period shall be one month.
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(b) The Administrative Borrower, on behalf of the Borrowers, shall
deliver a notice of continuation/conversion in the form attached hereto as
Exhibit B ("Notice of Continuation/Conversion") to the Agent not later than
11:00 a.m. (New York, New York time) at least three (3) Business Days in advance
of the Continuation/Conversion Date, if the Loans are to be converted into or
continued as LIBOR Rate Loans and specifying:
(1) the proposed Continuation/Conversion Date;
(2) the aggregate amount of Loans to be converted or renewed;
(3) the type of Loans resulting from the proposed conversion
or continuation; and
(4) the duration of the requested Interest Period, provided,
however, the Borrowers may not select an Interest Period that ends after the
Stated Termination Date.
(c) If upon the expiration of any Interest Period applicable to
LIBOR Rate Loans, the Borrowers have failed to continue the applicable LIBOR
Rate Loans or if any Default or Event of Default has occurred and is continuing,
the Borrowers shall be deemed to have elected to convert such LIBOR Rate Loans
into Base Rate Loans effective as of the expiration date of such Interest
Period.
(d) The Agent will promptly notify each Lender of its receipt of a
Notice of Continuation/Conversion. All conversions and continuations shall be
made ratably according to the respective outstanding principal amounts of the
Loans held by each Lender with respect to which the notice was given.
(e) There may not be more than eight (8) different LIBOR Rate Loans
in effect hereunder at any time.
2.3 Maximum Interest Rate. In no event shall any interest rate provided
for hereunder exceed the maximum rate legally chargeable by any Lender under
applicable law for such Lender with respect to loans of the type provided for
hereunder (the "Maximum Rate"). If, in any month, any interest rate, absent such
limitation, would have exceeded the Maximum Rate, then the interest rate for
that month shall be the Maximum Rate, and, if in future months, that interest
rate would otherwise be less than the Maximum Rate, then that interest rate
shall remain at the Maximum Rate until such time as the amount of interest paid
hereunder equals the amount of interest which would have been paid if the same
had not been limited by the Maximum Rate. In the event that, upon payment in
full of the Obligations, the total amount of interest paid or accrued under the
terms of this Agreement is less than the total amount of interest which would,
but for this Section 2.3, have been paid or accrued if the interest rate
otherwise set forth in this Agreement had at all times been in effect, then the
Borrowers shall, to the extent
14
permitted by applicable law, pay the Agent, for the account of the Lenders, an
amount equal to the excess of (a) the lesser of (i) the amount of interest which
would have been charged if the Maximum Rate had, at all times, been in effect or
(ii) the amount of interest which would have accrued had the interest rate
otherwise set forth in this Agreement, at all times, been in effect over (b) the
amount of interest actually paid or accrued under this Agreement. If a court of
competent jurisdiction determines that the Agent and/or any Lender has received
interest and other charges hereunder in excess of the Maximum Rate, such excess
shall be deemed received on account of, and shall automatically be applied to
reduce, the Obligations other than interest, in the inverse order of maturity,
and if there are no Obligations outstanding, the Agent and/or such Lender shall
refund to the Borrowers such excess.
2.4 Closing Fee. The Borrowers agree to pay the Co-Agent on the Closing
Date certain fees (the "Closing Fees") as set forth in the fee letter dated as
of the Closing Date (the "Silver Point Fee Letter") between Silver Point and the
Borrowers.
2.5 Unused Line Fee. On the first day of each month and on the Termination
Date, the Borrowers agree to pay to the Agent, for the account of the Lenders,
in accordance with their respective Pro Rata Shares, an unused line fee (the
"Unused Line Fee") equal to one half of one percent (0.50%) per annum times the
amount by which the Maximum Amount exceeded the sum of the average daily
outstanding amount of Revolving Loans, the Term Loan and the average daily
undrawn face amount of outstanding Letters of Credit, during the immediately
preceding month or shorter period if calculated for the first month hereafter or
on the Termination Date. The Unused Line Fee shall be computed on the basis of a
360-day year for the actual number of days elapsed. All principal payments
received by the Agent shall be deemed to be credited to the Borrowers' Loan
Account immediately upon receipt for purposes of calculating the Unused Line Fee
pursuant to this Section 2.5.
2.6 Letter of Credit Fee. The Borrowers agree to pay, for each Letter of
Credit, (a) to the Agent, for the account of the Lenders, in accordance with
their respective Pro Rata Shares, a fee (the "Letter of Credit Fee") equal to a
per annum rate in the amount of the Applicable Margin for LIBOR Rate Loans then
in effect, (b) to Agent for the benefit of the Letter of Credit Issuer, a
fronting fee of one-eighth of one percent (0.125%) per annum of the undrawn face
amount of each Letter of Credit, and (c) to the Letter of Credit Issuer, such
normal and customary costs, fees and expenses incurred by the Letter of Credit
Issuer in connection with the application for, processing of, issuance of,
extension of, or amendment to any Letter of Credit. The Letter of Credit Fee
shall be payable monthly in arrears on the first day of each month following any
month in which a Letter of Credit is outstanding and on the Termination Date.
The Letter of Credit Fee shall be computed on the basis of a 360-day year for
the actual number of days elapsed.
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ARTICLE 3
PAYMENTS AND PREPAYMENTS
3.1 Repayment of Revolving Loans and Term Loan
(a) Revolving Loans. The Borrowers shall repay the outstanding
principal balance of the Revolving Loans, plus all accrued but unpaid interest
thereon, on the Termination Date. The Borrowers may prepay Revolving Loans at
any time, and reborrow subject to the terms of this Agreement. In addition, and
without limiting the generality of the foregoing, upon demand the Borrowers
shall pay to the Agent, for account of the Lenders, the amount, without
duplication, by which the Aggregate Outstandings exceeds the lesser of the
Borrowing Base or the Maximum Amount. Any prepayment shall not affect the
obligations of any Borrower Party to continue making payments under any swap
agreement (as defined in 11 F.S.C. Section 101) or Hedge Agreement, which shall
remain in full force and effect notwithstanding such prepayment, subject to the
terms of such swap agreement.
(b) Term Loan. The Term Loan shall due and payable in full, together
with all accrued and unpaid interest thereon, on the Stated Termination Date.
The Term Loan may not be prepaid; provided, however, that the Borrowers may
prepay, without penalty or premium, the Term Loan, in part, so long as the
outstanding principal amount of the Term Loan, after giving effect to all such
prepayments, is not less than seventy-five million dollars ($75,000,000).
3.2 Termination of Facility. The Borrowers may terminate this Agreement
upon at least ten (10) Business Days' notice to the Agent, the Co-Agent and the
Lenders, upon (a) the payment in full of all outstanding Revolving Loans and the
Term Loan, together with accrued interest thereon, and (i) the cancellation and
return of Letters of Credit then outstanding or (ii) the delivery of a
Supporting Letter of Credit (or the deposit of cash collateral, if applicable)
in accordance with the provisions of Section 1.4(g), (b) the payment of the
Applicable Prepayment Premium, (c) the payment in full in cash of all
reimbursable expenses and other Obligations, and (d) with respect to any LIBOR
Rate Loans prepaid, payment of the amounts due under Section 4.4, if any.
3.3 LIBOR Rate Loan Prepayments. In connection with any prepayment, if any
LIBOR Rate Loans are prepaid prior to the expiration date of the Interest Period
applicable thereto, the Borrowers shall pay to the Lenders the amounts described
in Section 4.4.
3.4 Payments by the Borrowers.
(a) All payments to be made by the Borrowers shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Borrowers shall be made to the Agent for the account
of the Lenders, at the account designated by the Agent and shall be made in
Dollars and in immediately
16
available funds, no later than 2:00 p.m. (New York, New York time) on the date
specified herein. Any payment received by the Agent after such time shall be
deemed (for purposes of calculating interest only) to have been received on the
following Business Day and any applicable interest shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period", whenever any payment is due on a day other than a Business
Day, such payment shall be due on the following Business Day, and such extension
of time shall in such case be included in the computation of interest or fees,
as the case may be.
3.5 Payments as Revolving Loans. At the election of the Agent, all
payments of principal, interest, reimbursement obligations in connection with
Letters of Credit and Credit Support for Letters of Credit, fees, premiums,
reimbursable expenses and other sums payable hereunder may be paid from the
proceeds of Revolving Loans made hereunder. The Borrowers hereby irrevocably
authorize the Agent to charge the Loan Account for the purpose of paying all
amounts from time to time due hereunder and agree that all such amounts charged
shall constitute Revolving Loans (including Non-Ratable Loans and Agent
Advances); provided that, the Agent will endeavor to use its best efforts
(without any liability to the Agent or the Lenders for any failure to do so) to
provide the Administrative Borrower with notice in reasonable detail of such
charge.
3.6 Apportionment, Application and Reversal of Payments. Principal and
interest payments shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Loans held by each Lender and to which such
payments relate) and payments of the fees shall, as applicable, be apportioned
ratably among the Lenders, except for fees payable solely to the Agent, the
Co-Agent and the Letter of Credit Issuer and except as provided in Section
11.1(b). All payments shall be remitted to the Agent and all such payments not
relating to principal or interest of specific Loans, or not constituting payment
of specific fees, and all proceeds of Accounts or other Collateral received by
the Agent, shall be applied, ratably, subject to the provisions of this
Agreement, first, to pay any fees, indemnities or expense reimbursements then
due to the Agent and the Co-Agent, or any of them, from the Borrowers; second,
to pay any fees or expense reimbursements then due to the Lenders from the
Borrowers; third, to pay interest then due in respect of all Revolving Loans,
including Non-Ratable Loans and Agent Advances; fourth, to pay interest then due
on the Term Loan, fifth, to pay or prepay principal of the Non-Ratable Loans and
Agent Advances; sixth, to pay or prepay principal of the Revolving Loans (other
than Non-Ratable Loans and Agent Advances) and unpaid reimbursement obligations
in respect of Letters of Credit and to pay an amount to the Agent equal to all
outstanding Letter of Credit obligations to be held as cash collateral for such
Obligations; seventh, to pay or prepay principal of the Term Loan; eighth, to
the payment of any other Obligation due to the Agent or any Lender by the
Borrowers (including Obligations arising from Hedge Agreements); ninth, to pay
any fees, indemnities or expense reimbursements relating to Bank Products
(excluding Hedge Agreements) then due to the Bank Products Providers, or any of
them, from the
17
Borrowers; and tenth, upon request by the Borrowers, to the Borrowers.
Notwithstanding anything to the contrary contained in this Agreement, unless so
directed by the Borrowers, or unless an Event of Default has occurred and is
continuing, neither the Agent nor any Lender shall apply any payments which it
receives to any LIBOR Rate Loan, except (i) on the expiration date of the
Interest Period applicable to any such LIBOR Rate Loan, or (ii) in the event,
and only to the extent, that there are no outstanding Base Rate Loans and, in
any event, the Borrowers shall pay LIBOR breakage losses in accordance with
Section 4.4. The Agent and the Lenders shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments to
any portion of the Obligations in accordance with this Agreement.
3.7 Indemnity for Returned Payments. If after receipt of any payment which
is applied to the payment of all or any part of the Obligations, the Agent, the
Co-Agent, any Lender, any Bank Products Provider or any Affiliate of any Bank
Products Provider is for any reason compelled to surrender such payment or
proceeds to any Person because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible setoff, or a diversion of trust funds, or for any
other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continued and this Agreement shall continue in full force
as if such payment or proceeds had not been received by the Agent, the Co-Agent
or such Lender and the Borrowers shall be liable to pay to the Agent, the
Co-Agent and the Lenders, and each Borrower hereby does indemnify the Agent, the
Co-Agent and the Lenders and hold the Agent, the Co-Agent and the Lenders
harmless for, the amount of such payment or proceeds surrendered. The provisions
of this Section 3.7 shall be and remain effective notwithstanding any contrary
action which may have been taken by the Agent, the Co-Agent, or any Lender in
reliance upon such payment or application of proceeds, and any such contrary
action so taken shall be without prejudice to the Agent's, the Co-Agent's and
the Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment or application of proceeds having become final and
irrevocable. The provisions of this Section 3.7 shall survive the termination of
this Agreement.
3.8 Agent's and Lenders' Books and Records; Monthly Statements. The Agent
shall record the principal amount of the Loans owing to each Lender, the undrawn
face amount of all outstanding Letters of Credit and the aggregate amount of
unpaid reimbursement obligations outstanding with respect to the Letters of
Credit from time to time on its books. In addition, each Lender may note the
date and amount of each payment or prepayment of principal of such Lender's
Loans in its books and records. Failure by the Agent or any Lender to make such
notation shall not affect the obligations of the Borrowers with respect to the
Loans or the Letters of Credit. The Borrowers agree that the Agent's and each
Lender's books and records showing the Obligations and the transactions pursuant
to this Agreement and the other Loan Documents shall be admissible in any action
or proceeding arising therefrom, and shall constitute rebuttably presumptive
proof thereof, irrespective of whether any Obligation is also evidenced by a
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promissory note or other instrument. The Agent will provide to the
Administrative Borrower a monthly statement of Loans, payments, and other
transactions pursuant to this Agreement. Such statement shall be deemed correct,
accurate, and binding on the Borrowers and an account stated (except for
reversals and reapplications of payments made as provided in Section 3.6 and
corrections of errors discovered by or acknowledged and agreed to by the Agent),
unless the Administrative Borrower, on behalf of the Borrowers, notifies the
Agent in writing to the contrary within thirty (30) days after such statement is
rendered in accordance with Section 13.8. In the event a timely written notice
of objections is given by the Administrative Borrower, only the items to which
exception is expressly made will be considered to be disputed by the Borrowers.
ARTICLE 4
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 Taxes.
(a) Any and all payments by the Borrowers to each Lender, the Agent
or the Co-Agent under this Agreement and any other Loan Document and any Hedge
Agreement shall be made free and clear of, and without deduction or withholding
for, any Taxes excluding net income taxes and franchise taxes (imposed in lieu
of net income taxes) imposed on the Agent, the Co-Agent or any Lender as a
result of a present or former connection between the Agent, the Co-Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Agent's, the Co-Agent's or such Lender's
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document) ("Excluded
Taxes"). In addition, the Borrowers shall pay all Other Taxes.
(b) Each Borrower agrees to indemnify and hold harmless each Lender,
the Agent, and the Co-Agent for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section) paid by any Lender, the Agent or the Co-Agent and
any liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. Payment under this indemnification
shall be made within thirty (30) days after the date such Lender, the Agent or
the Co-Agent makes written demand therefor.
(c) If the Borrowers shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender, the Agent, or the Co-Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) such
Lender,
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Agent, or Co-Agent, as the case may be, receives an amount equal to the sum it
would have received had no such deductions or withholdings been made;
(ii) the Borrowers shall make such deductions and
withholdings;
(iii) the Borrowers shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance with
applicable law or, if being contested in good faith, set up reserves determined
by the Agent, or Co-Agent in its commercially reasonable discretion to be
adequate for such Taxes or Other Taxes; and
(iv) the Borrowers shall also pay to each Lender, the Agent or
the Co-Agent for the account of such Lender, at the time interest is paid, all
additional amounts which the respective Lender specifies as necessary to
preserve the after-tax yield such Lender would have received if such Taxes or
Other Taxes had not been imposed.
(d) At the Agent's or Co-Agent's request, within thirty (30) days
after the date of any payment by any Borrower of Taxes or Other Taxes, such
Borrower shall furnish the Agent or the Co-Agent, as applicable, the original or
a certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent or Co-Agent, as applicable.
(e) If the Borrowers are required to pay additional amounts to any
Lender, the Agent or the Co-Agent pursuant to subsection (c) of this Section,
then such Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its lending office so as
to eliminate any such additional payment by the Borrowers which may thereafter
accrue, if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.
4.2 Illegality.
(a) If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Lender or its applicable lending office to make
LIBOR Rate Loans, then, on notice thereof by that Lender to the Administrative
Borrower through the Agent, any obligation of that Lender to make LIBOR Rate
Loans shall be suspended until that Lender notifies the Agent and the
Administrative Borrower that the circumstances giving rise to such determination
no longer exist.
(b) If a Lender determines that it is unlawful to maintain any LIBOR
Rate Loan, the Borrowers shall, upon receipt by the Administrative Borrower of
notice of such fact and demand from such Lender (with a copy to the Agent and
the Co-Agent),
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prepay in full such LIBOR Rate Loans of that Lender then outstanding, together
with interest accrued thereon and amounts required under Section 4.4, either on
the last day of the Interest Period thereof, if that Lender may lawfully
continue to maintain such LIBOR Rate Loans to such day, or immediately, if that
Lender may not lawfully continue to maintain such LIBOR Rate Loans. In the event
such Lender shall have determined that it is no longer unlawful for it to
maintain a LIBOR Rate Loan, it shall give notice to the Administrative Borrower
and the Agent as soon as reasonably practicable. If the Borrowers are required
to so prepay any LIBOR Rate Loans, then concurrently with such prepayment, the
Borrowers shall borrow from the affected Lender, in the amount of such
repayment, a Base Rate Loan. Notwithstanding anything to the contrary in this
Agreement, the Borrowers shall not be liable for any losses, or be required to
reimburse a lender as set forth in Section 4.4 to the extent a LIBOR Rate Loan
has been prepaid in accordance with this Section 4.2.
4.3 Increased Costs and Reduction of Return.
(a) If any Lender determines that due to either (i) the introduction
of or any change in the interpretation of any law or regulation or (ii) the
compliance by that Lender with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law) made
subsequent to the date hereof, there shall be any increase in the cost to such
Lender of agreeing to make or making, funding or maintaining any LIBOR Rate
Loans, then the Borrowers shall be liable for, and shall from time to time, upon
demand (with a copy of such demand to be sent to the Agent), pay to the Agent
for the account of such Lender, additional amounts as are sufficient to
compensate such Lender for such increased costs or, alternatively, in the case
where the affected Lender's increased costs are material, the Borrowers may
choose to prepay such LIBOR Rate Loan and concurrently with such prepayment, the
Borrowers shall borrow from the affected Lender a Base Rate Loan in the amount
of such repayment; provided, however, that no Lender shall be entitled to claim
any additional amount hereunder with respect to the period which is more than
120 days prior to the date the Lender actually became aware of such additional
amounts; provided, further, that notwithstanding anything to the contrary in
this Agreement, the Borrowers shall not be liable for any losses, or be required
to reimburse any Lender as set forth in Section 4.4 to the extent a LIBOR Rate
Loan has been prepaid in accordance with this Section 4.3(a).
(b) If any Lender shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
such Lender or any corporation or other entity controlling such Lender with any
Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by such Lender or any corporation or other
entity controlling such Lender and (taking into consideration such Lender's or
such corporation's or other entity's policies
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with respect to capital adequacy and such Lender's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Commitments, loans, credits or obligations under this Agreement, then, upon
demand of such Lender to the Borrowers through the Agent, the Borrowers shall
pay to such Lender, from time to time as specified by such Lender, additional
amounts sufficient to compensate such Lender for such increase; provided,
however, that no Lender shall be entitled to claim any such additional amount
with respect to the period which is more than 120 days prior to the date the
Lender actually became aware of such additional amounts.
4.4 Funding Losses. The Borrowers shall reimburse each Lender and hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of:
(a) the failure of the Borrowers to make on a timely basis any
payment of principal of any LIBOR Rate Loan;
(b) the failure of the Borrowers to borrow or continue a LIBOR Rate
Loan or convert a Base Rate Loan into a LIBOR Rate Loan after the Administrative
Borrower has given (or is deemed to have given) a Notice of Borrowing or a
Notice of Continuation/Conversion; or
(c) the prepayment or other payment (including after acceleration
thereof) of any LIBOR Rate Loans on a day that is not the last day of the
relevant Interest Period;
including any such loss of anticipated profit and any loss or expense arising
from the liquidation or reemployment of funds obtained by it to maintain its
LIBOR Rate Loans to terminate the deposits from which such funds were obtained.
The Borrowers shall also pay any customary administrative fees charged by any
Lender in connection with the foregoing.
4.5 Inability to Determine Rates. If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the LIBOR Rate
for any requested Interest Period with respect to a proposed LIBOR Rate Loan, or
that the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan does not adequately and fairly reflect the cost to the Lenders
of funding such Loan, the Agent will promptly so notify the Borrowers and each
Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Rate
Loans hereunder shall be suspended until the Agent revokes such notice in
writing. Upon receipt of such notice, the Borrowers may revoke any Notice of
Borrowing or Notice of Continuation/ Conversion then submitted by the
Administrative Borrower, on behalf of the Borrowers. If the Borrowers do not
revoke such Notice, the Lenders shall make, convert or continue the Loans, as
proposed by the Borrowers, in the amount specified in the applicable notice
submitted by the Administrative Borrower, but such Loans shall be made,
converted or continued as Base Rate Loans instead of LIBOR Rate Loans.
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4.6 Certificates of Agent. If any Lender claims reimbursement or
compensation under this Article 4, the Agent shall determine the amount thereof
and shall deliver to the Borrowers (with a copy to the affected Lender) a
certificate setting forth in reasonable detail the amount payable to the
affected Lender, and such certificate shall be conclusive and binding on the
Borrowers in the absence of manifest error.
4.7 Obligation to Mitigate.
(a) Subject to Section 4.7(b) below, each Lender, Letter of Credit
Issuer, the Agent and each Bank Products Provider agrees that, as promptly as
practicable after the officer of such Lender, Letter of Credit Issuer, Agent or
Bank Products Provider responsible for administering the Loans or Letters of
Credit or such Lender, Letter of Credit Issuer, Agent or Bank Products Provider,
as the case may be, becomes aware of the occurrence of any event or the
existence of a condition that would cause such Lender, Letter of Credit Issuer
or Bank Products Provider to receive increased payments from the Borrowers under
Section 4.1, Section 4.2 or Section 4.3, it will, to the extent not inconsistent
with the formal internal policies of such Lender, Letter of Credit Issuer, the
Agent or such Bank Products Provider and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Commitments of such Lender or the affected Loans or Letters of Credit of such
Lender, Letter of Credit Issuer, the Agent or such Bank Products Provider
through another lending or letter of credit office of such Lender, Letter of
Credit Issuer, the Agent or such Bank Products Provider, or (ii) take such other
actions as Lender, Letter of Credit Issuer, the Agent or such Bank Products
Provider may deem reasonable to cause the additional amounts that the Borrowers
would be required to pay the Lender, Letter of Credit Issuer, the Agent or such
Bank Products Provider under Section 4.1, Section 4.2 or Section 4.3 to be
reduced.
(b) The Borrower(s) may, in their sole discretion, on ten (10)
Business Days' prior written notice to the Agent and the Co-Agent and the
applicable Lender, cause a Lender who has (i) incurred increased costs or is
unable to make LIBOR Rate Loans, or (ii) made any claim for taxes under Section
4.1 hereof (and such Lender shall), to assign, pursuant to Section 11.2 hereof,
all of its rights and obligations under this Agreement to an Eligible Assignee
designated by the Administrative Borrower and acceptable to the Agent which is
willing to become a Lender for a purchase price equal to the outstanding
principal amount of the Revolving Loans payable to such Lender plus any accrued
but unpaid interest on such Revolving Loans, any accrued but unpaid fees with
respect to this Agreement; provided, however, that any expenses or other amounts
which would be owing to such Lender pursuant to any indemnification provision
hereof (including, if applicable, Section 4.4 hereof) shall be payable by the
Borrowers as if the Borrowers had prepaid the Revolving Loans of such Lender
rather than such Lender having assigned its interest hereunder. The
Administrative Borrower or such Eligible Assignee shall pay the applicable
processing fee under Section 11.2 hereof.
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4.8 Survival. The agreements and obligations of the Borrowers in this
Article 4 shall survive the payment of all other Obligations.
ARTICLE 5
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
5.1 Books and Records. The Borrower Parties shall maintain, at all times,
correct and complete books, records and accounts in which complete, correct and
timely entries are made of its transactions and such books, records and accounts
on a consolidated basis shall be prepared in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 5.2(a). The Parent on a consolidated basis shall, by means
of appropriate entries, reflect in such accounts and in all Financial Statements
proper liabilities and reserves for all taxes and proper provision for
depreciation and amortization of property and bad debts, all in accordance with
GAAP. Each Borrower Party shall maintain at all times books and records
pertaining to the Collateral in such detail, form and scope as the Agent or any
Lender shall reasonably require, including, but not limited to, records of (a)
all payments received and all credits and extensions granted with respect to the
Accounts; (b) the return, rejection, repossession, stoppage in transit, loss,
damage, or destruction of any Inventory; and (c) all other dealings affecting
the Collateral.
5.2 Financial Information. The Borrower Parties shall promptly furnish to
each Lender all such financial information as the Agent or the Co-Agent shall
reasonably request. Such documents and financial information may be delivered by
electronic posting on a digital workspace provided by IntraLinks, Inc. or
another digital workspace provider reasonably acceptable to the Agent and the
Co-Agent and to which the Lenders have access; provided, however, if the
Borrower Parties determine such digital posting is or has become impractical,
then the Borrower Parties may deliver such information via any means described
in Section 13.8, including via electronic mail at the e-mail address set forth
therein. The Agent and the Co-Agent shall have no duty to maintain copies of any
such documents or notices. Without limiting the foregoing, the Administrative
Borrower will furnish to each Lender, in such detail as the Agent or the
Co-Agent shall reasonably request, the following:
(a) Annual Financial Statements. As soon as available, but in any
event not later than ninety (90) days after the close of each Fiscal Year,
consolidated audited balance sheets as of the date thereof and for the Fiscal
Year then ended, and consolidated audited statements of earnings, cash flows and
stockholders' equity for the Parent for such Fiscal Year, including a footnote
containing supplemental consolidating financial information for (a) the Borrower
Parties on a consolidated basis and (b) for the Subsidiaries of Parent other
than domestic Subsidiaries (collectively, the "Foreign Subsidiaries") on a
consolidated basis. Such supplemental consolidating financial information will
include balance sheets, statements of earnings and statements of cash flows.
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(b) General. The audited statements set forth above in Section
5.2(a) shall be examined in accordance with generally accepted auditing
standards by and, in the case of such statements performed on a consolidated
basis, accompanied by a report thereon unqualified with respect to going
concerns by independent certified public accountants selected by the audit
committee of the board of directors of the Parent and reasonably satisfactory to
the Agent and the Co-Agent. The Borrower Parties hereby authorize the Agent and
the Co-Agent (as directed by the Lenders) to communicate directly with their
certified public accountants and, by this provision, authorizes those
accountants to disclose to the Agent and the Co-Agent any and all financial
statements and other supporting financial documents and schedules relating to
the Borrower Parties and to discuss directly with the Agent and the Co-Agent the
finances and affairs of the Borrower Parties; provided, that together with each
of the audited Financial Statements delivered pursuant to Section 5.2(a), the
Administrative Borrower shall furnish a certificate of the independent certified
public accountants that examined such statements to the effect that they have
reviewed and are familiar with this Agreement and that, in examining such
Financial Statements, they did not become aware of any fact or condition which
then constituted a Default or Event of Default with respect to the financial
covenants set forth in Section 7.22, Section 7.23 or Section 7.24 hereof, except
for those Defaults or Event of Defaults, if any, described in reasonable detail
in such certificate.
(c) Quarterly Financial Statements. As soon as available, but in any
event not later than forty-five (45) days after the close of first, second and
third Fiscal Quarters of each Fiscal Year, consolidated unaudited balance sheets
as of the date thereof, and consolidated unaudited statements of earnings, cash
flows and stockholders' equity for the Parent for such Fiscal Quarter, including
a footnote containing supplemental consolidating financial information for (a)
the Borrower Parties on a consolidated basis and (b) for Foreign Subsidiaries on
a consolidated basis. Such supplemental consolidating financial information will
include balance sheets, statements of earnings and statements of cash flows. The
consolidated unaudited statements referred to in the first sentence of this
Section 5.2(c), shall fully present in all material respects the consolidated
financial position and consolidated results of operations of the Parent as at
the date thereof and for the Fiscal Quarter then ended, and, in each case, in
comparable form, figures for the corresponding period in the prior Fiscal Year
and prepared in accordance with GAAP applied consistently with the audited
Financial Statements required to be delivered pursuant to Section 5.2(a) (except
as disclosed therein). The Parent shall certify by a certificate signed by its
senior financial officer thereof that all such consolidated unaudited statements
referred to in the first sentence of this Section 5.2(c) have been prepared in
accordance with GAAP and present fairly in all material respects the Parent's
consolidated financial position as at the dates thereof and its consolidated
results of operations for the periods then ended, subject to recurring year-end
adjustments and required quarterly footnotes.
(d) Consolidated Monthly Financial Statements. As soon as available,
but in any event not later than thirty (30) days after the end of each month
occurring
25
during each Fiscal Year (other than the first, third, sixth, ninth and twelfth
such month and as to such months, as soon as available) unaudited consolidated
balance sheets of the Parent as at the end of such month, and unaudited
consolidated income statements and statements of cash flows for the Parent for
such month and for the period from the beginning of the Fiscal Year to the end
of such month, fairly presenting in all material respects the consolidated
financial position and consolidated results of operations of the Parent as at
the date thereof and for such periods, and prepared in accordance with GAAP
applied consistently with the audited Financial Statements required to be
delivered pursuant to Section 5.2(a) (except as disclosed therein). The Parent
shall certify by a certificate signed by its senior financial officer thereof
that all such statements have been prepared in accordance with GAAP and present
fairly in all material respects the Parent's consolidated financial position as
at the dates thereof and its consolidated results of operations for the periods
then ended, subject to normal year-end adjustments and the absence of footnotes.
(e) US Monthly Financial Statements. At all times during the
existence of any Increased Reporting Event, as soon as available, but in any
event not later than thirty (30) days after the end of each month occurring
during each Fiscal Year (other than the first, third, sixth, ninth and twelfth
such month and as to such months, as soon as available) unaudited consolidated
balance sheets of the Borrower Parties (i.e., excluding Foreign Subsidiaries) as
at the end of such month, and unaudited consolidated income statements and
statements of cash flows for the Borrower Parties (i.e., excluding Foreign
Subsidiaries) for such month and for the period from the beginning of the Fiscal
Year to the end of such month, all in reasonable detail, fairly presenting in
all material respects (subject to normal year-end audit adjustments) the
consolidated financial position and consolidated results of operations of the
Borrower Parties (i.e., excluding Foreign Subsidiaries) as at the date thereof
and for such periods, and prepared in accordance with GAAP applied consistently
with the audited Financial Statements required to be delivered pursuant to
Section 5.2(b) (except as disclosed herein). The Parent shall certify by a
certificate signed by its senior financial officer thereof that all such
statements have been prepared in accordance with GAAP and present fairly in all
material respects the Borrower Parties' financial position as at the dates
thereof and their results of operations for the periods then ended, subject to
normal year-end adjustments and the absence of footnotes.
(f) With each of the annual audited Financial Statements delivered
pursuant to Section 5.2, a certificate of the senior financial officer of the
Parent setting forth in reasonable detail the calculations required to establish
that the Borrower Parties were in compliance with the covenants set forth in
Sections 7.22, 7.23 and 7.24 during the period covered in such Financial
Statements and as at the end thereof. Within forty-five days after the end of
each Fiscal Quarter (after making all quarter end adjustments), a certificate of
the senior financial officer of the Parent setting forth in reasonable detail
(i) the amount of all Capital Expenditures incurred by the Borrower Parties for
the Fiscal Year to date and (ii) the calculations required to establish that the
Borrower Parties were
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in compliance with the covenants set forth in Sections 7.22, 7.23 and 7.24
during the period covered in such Financial Statements and as at the end
thereof. Within forty-five days after the end of each Fiscal Quarter, a
certificate of the chief financial officer of the Parent stating that, except as
explained in reasonable detail in such certificate, to the Knowledge of such
senior financial officer, (A) all of the representations and warranties of the
Borrower Parties contained in this Agreement and the other Loan Documents are
correct and complete in all material respects as at the date of such certificate
as if made at such time, except for those that speak as of a particular date,
(B) the Borrower Parties are, at the date of such certificate, in compliance
with all of their respective covenants and agreements in this Agreement and the
other Loan Documents, (C) no Default or Event of Default then exists or existed
during the period covered by the Financial Statements for such month, and (D)
the Management's Discussion and Analysis contained in the Form 10-Q for such
Fiscal Quarter filed with the SEC complies in all material respects with the
requirements of the SEC for that disclosure and does not contain any untrue
statement of material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they
were made, not misleading in any material respect. If such certificate discloses
that a representation or warranty is not correct or complete in all material
respects, or that a covenant has not been complied with, or that a Default or
Event of Default existed or exists, such certificate shall set forth what action
the Borrower Parties have taken or propose to take with respect thereto.
(g) As soon as available in any event not later than forty-five (45)
days after the end of each Fiscal Year, annual forecasts (to include forecasted
consolidated and consolidating balance sheets, income statements and cash flow
statements) for the Parent as at the end of and for each fiscal month of such
Fiscal Year.
(h) Promptly, and in any event within five (5) Business Days after
filing with the PBGC and the IRS, a copy of each annual report or other filing
filed with respect to each Plan of any Borrower Party.
(i) Promptly, and in any event within five (5) Business Days after
the filing thereof, copies of all periodic reports, if any, or other documents
filed by the Parent or any of its Subsidiaries with the SEC under the Exchange
Act, and all reports, notices, or statements sent or received by the Parent or
any of its Subsidiaries to or from the holders of any equity interests of the
Parent (other than routine non-material correspondence sent by shareholders of
the Parent to the Parent and filings with the SEC by any shareholder of the
Parent pursuant to Section 13(d) or 16(a) of the Exchange Act) or any such
Subsidiary or of any Debt of the Parent or any of its Subsidiaries registered
under the Securities Act of 1933, as in effect from time to time, or to or from
the trustee under any indenture under which the same is issued.
(j) As soon as available, but in any event not later than fifteen
(15) days after any Borrower Party's receipt thereof, a copy of all management
reports and management letters prepared for such Borrower Party by any
independent certified public
27
accountants of the Borrower Parties; provided, that the Borrower Parties shall
have no liability hereunder for any failure to deliver such management reports
and management letters to the extent such failure results solely from the
refusal of such accountants to authorize the Borrower Parties to comply with
such obligation.
(k) Promptly, and in any event within two (2) Business Days after
filing with the SEC, copies of any and all proxy statements, financial
statements, and reports which the Parent makes available to its shareholders.
(l) As soon as available, but in any event (i) during the existence
of any Increased Reporting Event, not later than Tuesday each week for the prior
week and (ii) at all other times, within ten (10) days after the end of each
month (for such month), a Borrowing Base Certificate supporting information in
accordance with Section 9 of the Security Agreement.
(m) Such additional information as the Agent and/or any Lender may
from time to time reasonably request regarding the financial and business
affairs of the Parent or any Subsidiary (including, without limitation, a copy
of each tax return filed by any Borrower Party).
(n) As soon as available, but in any event not later than forty-five
(45) days after the close of each Fiscal Quarter, a report, in form and
substance satisfactory to the Agent, setting forth the reasonably estimated
amount of cash in the Foreign Subsidiaries that is available to be repatriated
to a Borrower Party without the incurrence of tax liability or other penalties
by such Borrower Party as of the close of such Fiscal Quarter, but only to the
extent not otherwise prohibited by any applicable financing arrangement.
5.3 Notices to the Lenders. The Administrative Borrower shall notify the
Agent, the Co-Agent and the Lenders in writing of the following matters at the
following times:
(a) Immediately after becoming aware of any Default or Event of
Default;
(b) Immediately after becoming aware of the assertion by the holder
of any capital stock of any Borrower Party or the holder of any Debt of the
Parent or any Subsidiary in an amount outstanding in excess of $1,000,000 or
with respect to any licensing agreement that a default exists with respect
thereto or that the Parent or such Subsidiary is not in compliance with the
terms thereof, or the commencement by such holder of any enforcement action
because of such asserted default or non-compliance;
(c) Immediately after becoming aware of any event or circumstance
which would have a Material Adverse Effect;
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(d) Immediately after any settlement offer is made by the Parent or
any Subsidiary in an amount that would, if consummated, result in an Event of
Default hereunder;
(e) Immediately after becoming aware of any pending action, suit, or
proceeding, by any Person, or any pending or threatened investigation by a
Governmental Authority, which could reasonably be expected to have a Material
Adverse Effect or which involves the same matters that are the subject of class
action litigation or matters related thereto;
(f) Immediately after becoming aware of any pending strike, work
stoppage, unfair labor practice claim, or other labor dispute affecting the
Parent or any of its Subsidiaries in a manner which could reasonably be expected
to have a Material Adverse Effect;
(g) Immediately after becoming aware of any violation of any law,
statute, regulation, or ordinance of a Governmental Authority affecting the
Parent or any Subsidiary which could reasonably be expected to have a Material
Adverse Effect;
(h) Immediately after receipt of any notice of any violation by the
Parent or any of its Subsidiaries of any Environmental Law which could
reasonably be expected to have a Material Adverse Effect or that any
Governmental Authority has asserted in writing that the Parent or any Subsidiary
is not in compliance with any Environmental Law or is investigating the Parent's
or such Subsidiary's compliance therewith;
(i) Immediately after receipt of any written notice that the Parent
or any of its Subsidiaries is or may be liable to any Person as a result of the
Release or threatened Release of any Contaminant or that the Parent or any
Subsidiary is subject to investigation by any Governmental Authority evaluating
whether any remedial action is needed to respond to the Release or threatened
Release of any Contaminant which, in either case, is reasonably likely to give
rise to liability that is not covered by insurance in excess of $1,000,000;
(j) Immediately after receipt of any written notice of the
imposition of any Environmental Lien against any property to the extent the
liability with respect thereto that is not covered by insurance and is in excess
of $1,000,000;
(k) Any change in the Parent's or any Subsidiary's name as it
appears in the state of its incorporation or other organization, state of
incorporation or organization, type of entity, organizational identification
number, or, with respect to any Borrower Party, locations of Collateral, or form
of organization, trade names under which such Person will sell Inventory or
create Accounts, or to which instruments in payment of Accounts may be made
payable, in each case at least thirty (30) days prior thereto;
29
(l) Within ten (10) Business Days after any Borrower Party or any
ERISA Affiliate knows, that an ERISA Event or a prohibited transaction (as
defined in Sections 406 of ERISA and 4975 of the Code) has occurred, and, when
known, any action taken or threatened by the IRS, the DOL or the PBGC with
respect thereto;
(m) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within three (3)
Business Days after the filing thereof with the PBGC, the DOL or the IRS, as
applicable, copies of the following: (i) each annual report (form 5500 series),
including Schedule B thereto, filed with the PBGC, the DOL or the IRS with
respect to each Plan, (ii) a copy of each funding waiver request filed with the
PBGC, the DOL or the IRS with respect to any Plan and all communications
received by any Borrower Party or any ERISA Affiliate from the PBGC, the DOL or
the IRS with respect to such request, and (iii) a copy of each other filing or
notice filed with the PBGC, the DOL or the IRS, with respect to each Plan by
either a Borrower Party or any ERISA Affiliate;
(n) Within three (3) Business Days after receipt thereof by any
Borrower Party or any ERISA Affiliate, copies of the following: (i) any notices
of the PBGC's intention to terminate a Plan or to have a trustee appointed to
administer such Plan; (ii) any favorable or unfavorable determination letter
from the IRS regarding the qualification of a Plan under Section 401(a) of the
Code; or (iii) any notice from a Multi-employer Plan regarding the imposition of
withdrawal liability;
(o) Within three (3) Business Days after the occurrence thereof: (i)
any changes in the benefits of any existing Plan which increase any Borrower
Party's annual costs with respect thereto by an amount in excess of $1,000,000,
or the establishment of any new Plan or the commencement of contributions to any
Plan to which any Borrower Party or any ERISA Affiliate was not previously
contributing; or (ii) any failure by any Borrower Party or any ERISA Affiliate
to make a required installment or any other required payment under Section 412
of the Code on or before the due date for such installment or payment; or
(p) Within three (3) Business Days after any Borrower Party or any
ERISA Affiliate knows or has reason to know that any of the following events has
or will occur: (i) a Multi-employer Plan has been or will be terminated; (ii)
the administrator or plan sponsor of a Multi-employer Plan intends to terminate
a Multi-employer Plan; or (iii) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multi-employer Plan.
(q) Within forty-five days of the end of each Fiscal Quarter,
updated or supplemented as of the last day of such Fiscal Quarter, Schedule 6.7,
Schedule 6.9, Schedule 6.11, Schedule 6.12, Schedule 6.13, Schedule 6.14,
Schedule 6.15, Schedule 6.16(a), Schedule 6.16(f), Schedule 6.26 or Schedule
6.27, or any of the foregoing in each case as may be required to render correct
the representations and warranties contained in the applicable sections to which
such schedules relate as of the last day of
30
such Fiscal Quarter without giving effect to any references therein to the
"Closing Date" in each case, appropriately marked to show the changes made
therein; provided that no such supplement to any such Schedule or representation
shall be deemed a waiver of any Default or Event of Default resulting from the
matters disclosed therein, except as consented to by the Required Lenders in
writing.
(r) Promptly after any Borrower Party has notified the Agent of any
intention by such Borrower Party to treat the Loans and/or Letters of Credit and
related transactions as being a "reportable transaction" (within the meaning of
Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or
any successor form.
Each notice given under this Section shall describe the subject matter
thereof in reasonable detail, and shall set forth the action that the Parent,
any Subsidiary or any ERISA Affiliate, as applicable, has taken or proposes to
take with respect thereto.
5.4 Collateral Reporting. Each Borrower, a portion of whose assets are
included in the Borrowing Base, shall provide the Agent and the Co-Agent with
the following documents at the following times in form satisfactory to the Agent
and the Co-Agent (including in sufficient number, if applicable, for the Agent
to provide a copy to those Lenders who request a copy thereof from the Agent):
(a) within ten (10) days after the end of each month (for such month), or more
frequently if reasonably requested by the Agent or the Co-Agent, an aging of
each Borrower's Accounts, together with, within ten (10) Business Days after the
end of each month (for such month), a reconciliation to the detailed calculation
of the Borrowing Base and to such Borrower's general ledger; (b) within ten (10)
days after the end of each month (for such month), or more frequently if
reasonably requested by the Agent or the Co-Agent, Inventory reports of each
Borrower by category (including Appliance, Salton at Home, Personal Care and
Wellness and In-Transit) and facility location, together with, within ten (10)
Business Days after the end of each month (for such month), a reconciliation to
the detailed calculation of the Borrowing Base and to such Borrower's general
ledger; (c) upon reasonable request, copies of invoices in connection with each
Borrower's Accounts, customer statements, credit memos, remittance advices and
reports, deposit slips, shipping and delivery documents in connection with such
Borrower's Accounts; (d) such other reports as to the Collateral of such
Borrower as the Agent or the Co-Agent shall reasonably request from time to
time; (e) on a monthly basis by the 10th day of the following month, or more
frequently if requested by the Agent or the Co-Agent, an aging of such Borrower
Party's accounts payable; and (f) with the delivery of each of the foregoing
(other than clause (c)), a certificate of the Administrative Borrower executed
by an officer thereof certifying as to the accuracy and completeness of the
foregoing. The Parent shall provide the Agent and the Co-Agent with the
following documents at the following times in form satisfactory to the Agent and
the Co-Agent: (i) upon reasonable request, a statement of the balance of each
intercompany account (including the Intercompany Account); (ii) such other
reports as to the Collateral of each Borrower Party as the Agent or the Co-
31
Agent shall reasonably request from time to time; and (iii) with the delivery of
each of the foregoing, upon the request of the Agent or the Co-Agent, a
certificate of the Parent executed by an officer thereof certifying as to the
accuracy and completeness of the foregoing. If any of the Borrower Parties'
records or reports of the Collateral are prepared by an accounting service or
other agent, each Borrower Party hereby authorizes such service or agent to
deliver such records, reports, and related documents to the Agent or Co-Agent,
for distribution to the Lenders.
ARTICLE 6
GENERAL WARRANTIES AND REPRESENTATIONS
In order to induce the Agent, the Co-Agent, and the Lenders to enter into
this Agreement, each Borrower Party makes the following representations and
warranties to the Agent, the Co-Agent and the Lenders which shall be true,
correct, and complete, in all material respects, as of the date hereof, and
shall be true, correct, and complete, in all material respects, as of the
Original Closing Date, and at and as of the date of the making of each Loan (or
other extension of credit) made thereafter, as though made on and as of the date
of such Loan (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
6.1 Authorization, Validity, and Enforceability of this Agreement and the
Loan Documents. Each Borrower Party has the power and authority to execute,
deliver and perform this Agreement and the other Loan Documents and any Hedge
Agreements to which it is a party and to grant to the Agent Liens upon and
security interests in the Collateral with respect to which it has rights, title
or ownership and each Borrower has the authority to incur the Obligations. Each
Borrower Party has taken all necessary action (including obtaining approval of
its stockholders if necessary) to authorize its execution, delivery, and
performance of this Agreement and the other Loan Documents and any Hedge
Agreements to which it is a party. This Agreement and the other Loan Documents
and any Hedge Agreements to which it is a party have been duly executed and
delivered by each Borrower Party, and constitute the legal, valid and binding
obligations of such Borrower Party, enforceable against it in accordance with
their respective terms except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law). Each
Borrower Party's execution, delivery, and performance of this Agreement and the
other Loan Documents and Hedge Agreements to which it is a party do not and will
not conflict with, or constitute a violation or breach of, or result in the
imposition of any Lien (other than the Liens created by this Agreement and the
other Loan Documents) upon the property of the Parent or any of its
Subsidiaries, by reason of the terms of (a) any contract, mortgage, lease,
agreement, indenture, or instrument to which the Parent or such Subsidiary is a
party or which is binding upon it, (b) any Requirement of Law applicable to the
Parent or
32
any of its Subsidiaries, or (c) the certificate or articles of incorporation or
by-laws or the limited liability company operating agreement or limited
partnership agreement of such Borrower Party.
6.2 Validity and Priority of Security Interest. The provisions of this
Agreement and the other Loan Documents create legal and valid Liens on all the
Collateral in favor of the Agent, for the ratable benefit of the Agent and the
Lenders, and such Liens constitute perfected and continuing Liens on all the
Collateral, having priority over all other Liens on the Collateral, except for
those Liens identified in clauses (c), (d), (e), (g), (h), and (i) of the
definition of Permitted Liens securing all the Obligations, and enforceable
against the Borrower Parties and all third parties.
6.3 Organization and Qualification. Each Borrower Party (a) is duly
organized or incorporated and validly existing in good standing under the laws
of the state of its organization or incorporation, (b) is qualified to do
business and is in good standing in the jurisdictions set forth on Schedule 6.3,
which are the only jurisdictions in which qualification is necessary in order
for it to own or lease its property and conduct its business, except where the
failure to so qualify would have a Material Adverse Effect and (c) has all
requisite power and authority to conduct its business and to own its property.
6.4 Corporate Name; Prior Transactions. Except as set forth on Schedule
6.4, to the Parent's Knowledge, none of the Borrower Parties has, during the
past five (5) years, been known by or used any other corporate or fictitious
name, or been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property
outside of the ordinary course of business.
6.5 Subsidiaries and Affiliates. Schedule 6.5 is a correct and complete
list of the name and relationship to the Parent of each and all of the
Subsidiaries and other Affiliates. Each Subsidiary is (a) duly incorporated or
organized and validly existing in good standing under the laws of its state of
incorporation or organization set forth on Schedule 6.5, and (b) qualified to do
business and in good standing in each jurisdiction, in which the failure to so
qualify or be in good standing could reasonably be expected to have a Material
Adverse Effect and (c) has all requisite power and authority to conduct its
business and own its property. The aggregate value of the assets or net worth of
Toastmaster V.I., Inc., a Virgin Islands corporation, does not exceed
$10,000.00.
6.6 Financial Statements and Projections.
(a) The Administrative Borrower has delivered to the Agent, the
Co-Agent and the Lenders the audited consolidated balance sheet and related
consolidated statements of income, retained earnings, cash flows, and changes in
stockholders equity for the Parent and its Subsidiaries as of June 28, 2003, and
for the Fiscal Year then ended, accompanied by the report thereon of the
Parent's independent certified public accountants, Deloitte & Touche. The
Administrative Borrower has also delivered to the Agent, the Co-Agent and the
Lenders the unaudited consolidated balance sheet and
33
related unaudited consolidated statements of income and cash flows for the
Parent and its Subsidiaries as of March 27, 2004. Such financial statements are
attached hereto as Exhibit C. All such financial statements have been prepared
in accordance with GAAP and present accurately and fairly in all material
respects the financial position of the Parent and its consolidated Subsidiaries
as at the dates thereof and their results of operations for the periods then
ended.
(b) The Latest Projections when submitted to the Lenders as required
herein represent the Borrower Parties' good faith estimate of the future
consolidated financial performance of the Parent and its Subsidiaries for the
periods set forth therein. The Latest Projections have been prepared on the
basis of the assumptions set forth therein, which the Borrower Parties believe
are fair and reasonable in light of current and reasonably foreseeable business
conditions at the time submitted to the Lenders.
(c) The Fiscal Year of the Parent ends each year on the Saturday
closest to June 30.
6.7 Capitalization. Schedule 6.7 sets forth, as of the Closing Date, a
complete and accurate description of the authorized capital stock of each
Borrower Party and each of its directly-owned Subsidiaries, by class, and a
description of the number of shares of each class that are issued and
outstanding and the par value thereof. All such shares of capital stock are
validly issued, fully-paid and non-assessable.
6.8 Solvency. The Parent and the Subsidiaries are Solvent on a
consolidated basis prior to (taking into account the Forbearance Agreement) and
after giving effect to the Borrowings to be made on the Closing Date and the
issuance of the Letters of Credit to be issued on the Closing Date, and shall
remain Solvent during the term of this Agreement.
6.9 Debt. After giving effect to the making of the Revolving Loans to be
made on the Closing Date, the Borrower Parties have no Debt, except (a) Debt
permitted under Section 7.13, and (b) Debt as of the Closing Date described on
Schedule 6.9.
6.10 Distributions. Except as permitted by Section 7.10, since June 28,
2003, no Distribution has been declared, paid, or made upon or in respect of any
capital stock or other securities of the Parent or any Subsidiary.
6.11 Real Estate; Leases. Schedule 6.11 sets forth, as of the Closing
Date, a correct and complete list of all Real Estate owned by any Borrower
Party, all leases and subleases of real property held by any Borrower Party as
lessee or sublessee, including all locations where any Borrower Party conduct
any manufacturing operations or distribution business, and all leases and
subleases of real property held by any of any Borrower Party as lessor, or
sublessor in excess of $200,000. Each of such leases and subleases is valid and
enforceable in accordance with its terms and is in full force and effect, no
default by any of any Borrower Party under any such lease or sublease exists
and, to the Parent's
34
Knowledge, no default by any other party under any such lease or sublease
exists. Each Borrower Party has good and marketable title in fee simple to the
Real Estate identified on Schedule 6.11 as owned by the Borrower Party, or valid
leasehold interests in all Real Estate designated therein as "leased" by any of
any Borrower Party and each Borrower Party has good, indefeasible, and
merchantable title to all of its other property reflected on the June 28, 2003
Financial Statements delivered to the Agent and the Lenders, except as disposed
of in the ordinary course of business since the date thereof, free of all Liens
except Permitted Liens.
6.12 Proprietary Rights. Schedule 6.12 sets forth a correct and complete
list as of the Closing Date of all of any Borrower Party's Proprietary Rights;
provided that with respect to Proprietary Rights such Schedule sets forth a
correct and complete list of all of any Borrower Party's trademarks then in use
by such Borrower Party. None of such Proprietary Rights is subject to any
licensing agreement or similar arrangement except as set forth on Schedule 6.12.
To the Parent's Knowledge (including, at the time of any launch of any new
product, after review of a patent search with respect to the Proprietary Rights
related to such product or an opinion of counsel with respect thereto and
determination by any Borrower Party that there is no infringement or conflict),
none of the Proprietary Rights infringes on or conflicts with any other Person's
property, and, to the Parent's Knowledge and except as otherwise disclosed in
writing to the Agent, no other Person's property infringes on or conflicts with
the Proprietary Rights, in each case, to the extent any such infringement,
individually or in the aggregate, could reasonably be expected to result in any
loss or damage to any Borrower Party in excess of $1,000,000. The Proprietary
Rights described on Schedule 6.12 constitute all of the property of such type
necessary to the current and anticipated future conduct of each of the Borrower
Parties' business. No claim or litigation regarding any of the foregoing is
pending or, to the Parent's Knowledge, threatened, and no patent, invention,
device or application for the same is pending or, to the Parent's Knowledge,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
6.13 Trade Names. All trade names or styles as of the Closing Date under
which the Borrower Parties sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable, are listed on Schedule
6.13.
6.14 Litigation. Except as set forth on Schedule 6.14 as of the Closing
Date, there is no pending, or to the Parent's Knowledge threatened, action,
suit, proceeding, or counterclaim by any Person, or to the Parent's Knowledge,
investigation by any Governmental Authority, or any basis for any of the
foregoing, which could reasonably be expected to have a Material Adverse Effect.
6.15 Labor Disputes. Except as set forth on Schedule 6.15, as of the
Closing Date (a) there is no collective bargaining agreement or other labor
contract covering employees of any of the Borrower Parties, (b) no such
collective bargaining agreement or other labor contract is scheduled to expire
during the term of this Agreement, (c) to the
35
Parent's Knowledge no union or other labor organization is seeking to organize,
or to be recognized as, a collective bargaining unit of employees of any of the
Borrower Parties or for any similar purpose, and (d) there is no pending or (to
the Parent's Knowledge) threatened, strike, work stoppage, material unfair labor
practice claim, or other material labor dispute against or affecting the Parent
or its Subsidiaries or their employees.
6.16 Environmental Laws. Except as otherwise disclosed in writing to the
Agent or except to the extent the failure of any of the following, individually
or in the aggregate, to be correct could reasonably be expected to result in any
uninsured claim, loss or damage to any Borrower Party in excess of $1,000,000:
(a) Except as disclosed on Schedule 6.16(a), each of the Parent and
each Subsidiary is and has been in compliance with, in all material respects,
all Environmental Laws and neither the Parent nor any Subsidiary, nor any of its
presently owned real property or presently conducted operations, nor its
previously owned real property or prior operations, is subject to any
Environmental Claim from any Governmental Authority or private Person respecting
(i) compliance with any Environmental Law or (ii) any potential liabilities and
costs or actions arising from a Release or threatened Release of a Contaminant.
(b) Each of the Parent and each Subsidiary has obtained all permits
necessary for its current operations under Environmental Laws, and all such
permits are in good standing and each of the Parent and each Subsidiary is in
compliance with all material terms and conditions of such permits.
(c) Neither the Parent nor any Subsidiary, nor, to the Parent's
Knowledge (after appropriate due diligence), any of its predecessors in
interest, has in violation of applicable law stored, treated or disposed of any
Contaminants on any property owned by the Parent or any Subsidiary.
(d) Neither the Parent nor any Subsidiary has received any summons,
complaint, order or similar written notice or an Environmental Claim indicating
that it is not currently in compliance with or that any Governmental Authority
is investigating its compliance with, any Environmental Laws or that it is or
may be liable to any other Person as a result of a Release or threatened Release
of a Contaminant.
(e) To the Parent's Knowledge, none of the present or past
operations of the Parent and its Subsidiaries is the subject of any
investigation by any Governmental Authority evaluating whether any remedial
action is needed to respond to a Release or threatened Release of a Contaminant.
(f) Except as described on Schedule 6.16(f), there is not now, nor
to the Parent's Knowledge has there ever been, on or in the Real Estate:
(1) any underground storage tanks or surface impoundments,
36
(2) any asbestos-containing material, or
(3) any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electrical transformers or other equipment.
(g) Neither the Parent nor any Subsidiary has filed, or has had the
duty to file, any notice under any requirement of Environmental Law reporting a
spill or accidental and unpermitted Release or discharge of a Contaminant into
the environment.
(h) Neither the Parent nor any Subsidiary has for the past five (5)
years entered into any negotiations or settlement agreements with any Person
(including any prior owner of its Real Property) imposing obligations or
liabilities on the Parent or any Subsidiary with respect to any Environmental
Claim in response to a Release of a Contaminant.
(i) None of the products manufactured, distributed or sold by the
Parent or any Subsidiary contain asbestos containing material.
(j) No Environmental Lien has attached to the Real Estate.
6.17 No Violation of Law. Neither the Parent nor any Subsidiary is in
violation in any material respect of any material law, statute, regulation,
ordinance, judgment, order, or decree applicable to it which could reasonably be
expected to have a Materially Adverse Effect.
6.18 No Default. Neither the Parent nor any Subsidiary is in default in
any material respect with respect to any material note, indenture, loan
agreement, mortgage, lease, deed, or other agreement to which the Parent or such
Subsidiary is a party or by which it is bound.
6.19 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other applicable federal or state
law. Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and to the Parent's
Knowledge, nothing has occurred which would cause the loss of such
qualification. Each of the Parent, each Subsidiary and each ERISA Affiliate has
made all required contributions to any Plan subject to Section 412 of the Code,
and no application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect to any
Plan.
(b) There are no pending or, to the Parent's Knowledge, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan which has resulted or could reasonably be expected to result
in a Material Adverse
37
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) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) none of
the Parent, any Subsidiary or any ERISA Affiliate has incurred, or reasonably
expects to incur, any material liability under Title IV of ERISA with respect to
any Pension Plan (other than premiums due and not delinquent under Section 4007
of ERISA); (iv) none of the Parent, any Subsidiary or any ERISA Affiliate has
incurred, or reasonably expects to incur, any material liability (and no event
has occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multi-employer Plan; and (v) none of the Parent, any Subsidiary or any ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.
6.20 Taxes. The Parent and the Subsidiaries have filed all federal and
other tax returns and reports required to be filed, and have paid all federal
and other taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due and
payable unless (i) such unpaid taxes and assessments would constitute a
Permitted Lien, or (ii) such taxes are being contested in good faith and
reserves adequate in the commercially reasonable determination of the Agent have
been provided by such Person.
6.21 Regulated Entities. No Borrower Party, any Person controlling a
Borrower Party, or any other Subsidiary, is an "Investment Company" within the
meaning of the Investment Company Act of 1940. No Borrower Party or any other
Subsidiary is subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code or law, or any other federal or state statute or regulation
limiting its ability to incur indebtedness.
6.22 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to
be used solely for working capital and other lawful corporate purposes. None of
the Parent or any Subsidiary is engaged in the business of purchasing or selling
Margin Stock or extending credit for the purpose of purchasing or carrying
Margin Stock.
6.23 Copyrights, Patents, Trademarks and Licenses, etc. Each Borrower owns
or is licensed or otherwise has the right to use all of the patents, trademarks,
service marks, trade names, copyrights, contractual franchises, licenses, rights
of way, authorizations and other rights that are reasonably necessary for the
operation of its businesses, without conflict with the rights of any other
Person. To the Parent's Knowledge, no slogan or other advertising device,
product, process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Borrower Parties infringes upon any rights
held by any other Person. No claim or
38
litigation regarding any of the foregoing is pending or (to the Parent's
Knowledge) threatened, and no patent, invention, device, application, principle
or any statute, law, rule, regulation, standard or code is pending or, to the
Parent's Knowledge, proposed, which, in either case, could reasonably be
expected to have a Material Adverse Effect.
6.24 No Material Adverse Change. No Material Adverse Effect has occurred
since the latest date of the Financial Statements delivered to the Lenders,
except as otherwise disclosed in the Parent's filings with the Securities and
Exchange Commission under the Exchange Act.
6.25 Full Disclosure. None of the representations or warranties made by
any Borrower Party in the Loan Documents or any Hedge Agreement as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of any Borrower Party in connection with the Loan Documents or
any Hedge Agreement (including the offering and disclosure materials delivered
by or on behalf of any Borrower Party to the Lenders prior to the Closing Date),
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading as of
the time when made or delivered.
6.26 Material Agreements. Schedule 6.26 hereto sets forth as of the
Closing Date all agreements and contracts material to the Borrower Parties which
would be deemed a material contract as provided in Regulation S-K promulgated by
the SEC under the Securities Act of 1933.
6.27 Bank Accounts. Schedule 6.27 contains, as of the Closing Date, a
complete and accurate list of all bank accounts maintained by each Borrower
Party with any bank or other financial institution.
6.28 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, any
Borrower Party of any Loan Document, except approvals, consents, exemptions,
authorizations, other actions, notices or filings described in Schedule 6.28,
which approvals, consents, exemptions, authorizations, other actions, notices or
filings have been made or obtained and are in full force and effect.
6.29 Tax Shelter Regulations. The Borrowers do not intend to treat the
Loans and/or Letters of Credit as being a "reportable transaction" (within the
meaning of Treasury Regulation Section 1.6011-4). In the event the Borrowers
determine to take any action inconsistent with such intention, each will
promptly notify the Agent thereof. If the Borrowers so notify the Agent, the
Borrowers acknowledge that one or more of the Lenders may treat its Loans and/or
its interest in Non-Ratable Loans and/or Agent Advances and/or Letters of Credit
as part of a transaction that is subject to Treasury
39
Regulation Section 301.6112-1, and such Lender or Lenders, as applicable, will
maintain the lists and other records required by such Treasury Regulation.
ARTICLE 7
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Borrower Party covenants to the Agent, the Co-Agent and each Lender
that so long as any of the Obligations remain outstanding or this Agreement is
in effect:
7.1 Taxes and Other Obligations. Each Borrower Party shall cause each of
its Subsidiaries to (a) file when due (after taking into account any applicable
exemptions) all tax returns and other reports which it is required to file; (b)
pay, or provide for the payment, when due, of all taxes, fees, assessments and
other governmental charges against it or upon its property, income and
franchises, make all required withholding and other tax deposits, and establish
adequate reserves for the payment of all such items, and provide to the Agent
and the Lenders, upon request, satisfactory evidence of its timely compliance
with the foregoing; and (c) pay when due all Debt owed by it and all claims of
materialmen, mechanics, carriers, warehousemen, landlords, processors and other
like Persons, and all other indebtedness owed by it and perform and discharge in
a timely manner all other obligations undertaken by it; provided, however, so
long as the Administrative Borrower has notified the Agent and the Co-Agent in
writing, no Borrower Party or Subsidiary need pay any tax, fee, assessment, or
governmental charge (i) it is contesting in good faith by appropriate
proceedings diligently pursued, (ii) as to which such Borrower Party has
established proper reserves as required under GAAP, and (iii) the nonpayment of
which does not result in the imposition of a Lien (other than a Permitted Lien).
7.2 Legal Existence and Good Standing; Name Changes.
(a) Each of the Parent and each Subsidiary shall (i) maintain its
legal existence, except as permitted by Section 7.9, and (ii) maintain its
qualification and good standing in all jurisdictions in which the failure to
maintain such existence and qualification or good standing could reasonably be
expected to have a Material Adverse Effect.
(b) No Borrower Party shall change its name, Federal Employment
Identification Number, organizational identification number, corporate structure
or identity, or add any new fictitious name or reincorporate or reorganize
itself under the laws of any jurisdiction other than the jurisdiction in which
it is incorporated or organized as of the date hereof.
7.3 Compliance with Law and Agreements; Maintenance of Licenses. The
Parent shall and shall cause each Subsidiary to comply in all material respects
with all material Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair Labor Standards
Act and all Environmental
40
Laws). The Parent shall and shall cause each of its Subsidiaries to obtain and
maintain all material licenses, permits, franchises, and governmental
authorizations necessary to own its property and to conduct its business as
conducted on the Closing Date. No Borrower Party shall modify, amend or alter
(a) its certificate or articles of incorporation, or its limited liability
company operating agreement or limited partnership agreement, as applicable,
other than in a manner which does not adversely affect the rights of the Lenders
or the Agent, or (b) licensing agreements, other than in a manner which does not
adversely affect the rights of the Lenders, the Agent, or the Co-Agent with
respect to the Inventory or (c) the Kmart Receivable Purchasing Agreement.
7.4 Maintenance of Property; Inspection of Property.
(a) Each Borrower Party shall maintain all of its property necessary
and useful in the conduct of its business, in good operating condition and
repair, ordinary wear and tear excepted.
(b) Each Borrower Party (in accordance with the terms and conditions
of Section 13.7) shall permit representatives and independent contractors of the
Agent and the Co-Agent to (i) provided no Event of Default or Increased
Reporting Event has occurred, at the expense of the Borrowers, (x) within any
twelve (12) month period, conduct up to two (2) appraisals of Inventory and one
(1) appraisal of Borrowers' intellectual property, and (y) during the term of
this Agreement, one (1) business enterprise valuation of the Borrower Parties;
provided, however, that if an Event of Default or an Increased Reporting Event
has occurred and is continuing, such limitations shall not apply, (ii) conduct
inspections and verifications of any or all of the Collateral, and (iii) conduct
field examinations and/or visit and inspect any of its properties, to examine
its corporate, financial and operating records, and make copies thereof or
abstracts therefrom and to discuss its affairs, finances and accounts with its
directors, officers and independent public accountants, at such reasonable times
during normal business hours and as soon as may be reasonably desired.
7.5 Insurance.
(a) Each Borrower Party shall maintain, with financially sound and
reputable insurers having a rating of at least A- or better by Best Rating
Guide, insurance against loss or damage by fire with extended coverage; theft,
burglary, pilferage and loss in transit; products liability and third party
property damage; larceny, embezzlement or other criminal liability; business
interruption; public liability and third party property damage; and such other
hazards or of such other types as is customary for Persons engaged in the same
or similar business, as the Agent or the Co-Agent, in each of their reasonable
discretion, or acting at the direction of the Required Lenders, shall specify,
in amounts, and under policies reasonably acceptable to the Agent and the
Required Lenders.
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(b) The Borrower Parties shall cause the Agent, for the ratable
benefit of the Agent and the Lenders, to be named as secured party or mortgagee
and sole loss payee or additional insured, in a manner acceptable to the Agent.
Each policy of insurance shall contain a clause or endorsement requiring the
insurer to give not less than thirty (30)-days' prior written notice to the
Agent in the event of cancellation of the policy for any reason whatsoever and a
clause or endorsement stating that the interest of the Agent shall not be
impaired or invalidated by any act or neglect of the Parent or any of its
Subsidiaries or the owner of any Real Estate for purposes more hazardous than
are permitted by such policy. All premiums for such insurance shall be paid by
the Borrower Parties when due, and certificates of insurance and, if requested
by the Agent or any Lender, photocopies of the policies, shall be delivered to
the Agent, in each case in sufficient quantity for distribution by the Agent to
each of the Lenders. If the Borrower Parties fail to procure such insurance or
to pay the premiums therefor when due, the Agent may, and at the direction of
the Majority Lenders shall, do so from the proceeds of Revolving Loans.
7.6 Insurance and Condemnation Proceeds. The Borrower Parties shall
promptly notify the Agent, the Co-Agent and the Lenders of any loss, damage, or
destruction to the Collateral whether or not covered by insurance. The Agent is
hereby authorized to collect all insurance and condemnation proceeds in respect
of Collateral directly and to apply or remit them as follows:
(i) With respect to insurance and condemnation proceeds relating to
Collateral other than Fixed Assets, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or handling
thereof, the Agent shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 3.6.
(ii) With respect to insurance and condemnation proceeds relating to
Collateral consisting of Fixed Assets, the Agent shall permit or require the
Borrowers to use such proceeds, or any part thereof, to replace, repair, restore
or rebuild the relevant Fixed Assets in a diligent and expeditious manner with
materials and workmanship of substantially the same quality as existed before
the loss, damage or destruction so long as (1) no Default or Event of Default
has occurred and is continuing, (2) the aggregate proceeds do not exceed
$1,000,000 and (3) the Borrower first (i) provides the Agent, the Co-Agent and
the Required Lenders with plans and specifications for any such repair or
restoration which shall be reasonably satisfactory to the Agent, the Co-Agent
and the Required Lenders and (ii) demonstrates to the reasonable satisfaction of
the Agent, the Co-Agent and the Required Lenders that the funds available to it
will be sufficient to complete such project in the manner provided therein. In
all other circumstances, the Agent shall apply such insurance and condemnation
proceeds, ratably, to the reduction of the Obligations in the order provided for
in Section 3.6.
7.7 Environmental Laws.
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(a) The Parent shall, and shall cause each of its Subsidiaries to,
conduct its business in compliance in all material respects with all material
Environmental Laws applicable to it, including those relating to the generation,
handling, use, storage, and disposal of any Contaminant. The Parent shall, and
shall cause each of its Subsidiaries to, take prompt and appropriate action to
respond to any material non-compliance with Environmental Laws and shall
regularly report to the Agent and the Co-Agent on such response.
(b) Without limiting the generality of the foregoing, the Borrower
Parties shall submit to the Agent, the Co-Agent and the Lenders annually,
commencing on the first anniversary Date and on each Anniversary Date
thereafter, an update of the status of each environmental compliance or
liability issue. The Agent, the Co-Agent or any Lender may obtain copies of
technical reports prepared by the Parent and its Subsidiaries and their
communications with any Governmental Authority to determine whether the
appropriate Borrower Parties are proceeding reasonably to correct, cure or
contest in good faith any alleged non-compliance or environmental liability.
7.8 Compliance with ERISA. Each Borrower Party shall, and shall cause each
of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) make all required contributions to any
Plan subject to Section 412 of the Code; (d) not engage in a prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan; and (e) not engage in a transaction that could be subject to Section
4069 or 4212(c) of ERISA.
7.9 Mergers, Consolidations or Sales. No Borrower Party shall enter into
any transaction of merger, reorganization, or consolidation, or transfer, sell,
assign, lease, or otherwise dispose of all or any part of its property, or wind
up, liquidate or dissolve, or agree to do any of the foregoing, except:
(a) sales of Inventory in the ordinary course of its business;
(b) (i) sales or other dispositions of Equipment of the Parent or
the Subsidiaries in the ordinary course of business that are obsolete or no
longer useable on a commercially reasonable basis by any such Person in its
business, and (ii) so long as no Default or Event of Default has occurred and is
continuing, the sale of Equipment by a Borrower to another Borrower and the sale
of Equipment by a Guarantor to another Borrower Party. All proceeds of a sale or
disposition under clause (i) or (ii) above, after payment of reasonable selling
costs, shall be deposited in a Payment Account. All Equipment purchased with
such proceeds shall be free and clear of all Liens, except the Agent's Liens;
(c) the merger of a Borrower into another Borrower so long as (i) no
Default or Event of Default has occurred and is continuing or would be caused
thereby,
43
(ii) the Borrower Parties provide the Agent with 10 days prior written notice of
such merger, (iii) in the event of a merger involving the Parent, the Parent
shall be the surviving Person, and (iv) contemporaneously with such merger, the
Borrower Parties deliver to the Agent and the Co-Agent all documents reasonably
requested by the Agent or the Co-Agent to continue the Agent's Liens on the
Collateral, in each case, in form and substance satisfactory to the Agent,
including, without limitation, such pledge agreements, new stock certificates
and stock powers, financing statements or other documents as shall be reasonably
requested by the Agent or the Co-Agent;
(d) the merger of a Guarantor into another Guarantor so long as (i)
no Default or Event of Default has occurred and is continuing or would be caused
thereby, (ii) the Borrower Parties provide the Agent and the Co-Agent with 10
days prior written notice of such merger, and (iii) contemporaneously with such
merger, the Borrower Parties deliver to the Agent and the Co-Agent all documents
reasonably requested by the Agent or the Co-Agent to continue the Agent's Liens
on the Collateral, in each case, in form and substance satisfactory to the Agent
or the Co-Agent, including, without limitation, such pledge agreements, new
stock certificates and stock powers, financing statements or other documents as
shall be reasonably requested by the Agent or the Co-Agent; and
(e) the merger of a Guarantor into a Borrower so long as (i) no
Default or Event of Default has occurred and is continuing or would be caused
thereby, (ii) the applicable Borrower shall be the surviving Person, (iii) the
Borrower Parties provide the Agent and the Co-Agent with 10 days prior written
notice of such merger, and (iv) contemporaneously with such merger, the Borrower
Parties deliver to the Agent and the Co-Agent all documents reasonably requested
by the Agent or the Co-Agent to continue the Agent's Liens on the Collateral, in
each case, in form and substance satisfactory to the Agent or the Co-Agent,
including, without limitation, such pledge agreements, new stock certificates
and stock powers, financing statements or other documents as shall be reasonably
requested by the Agent or the Co-Agent;
(f) Permitted Acquisitions;
(g) disposition of other assets (excluding any assets the value of
which are included in the calculation of the Borrowing Base) having a fair
market value not to exceed $2,000,000 during any Fiscal Year or $7,000,000 in
the aggregate during the term of this Agreement;
(h) disposition of Real Estate acquired in connection with the
acquisition of Toastmaster Inc. set forth on Schedule 7.9 and any of the
personal property (except Inventory) located thereon; and
(i) disposition of Proprietary Rights to a Subsidiary of any
Borrower Party; provided, that prior to the consummation of any such
disposition, the Agent and
44
the Co-Agent shall be satisfied in their sole discretion of the continued
priority and validity of the Agent's Lien in all such Proprietary Rights.
7.10 Distributions; Capital Change; Restricted Investments. Except for (1)
Permitted Transactions, (2) Permitted Acquisitions and, (3) so long as the
holders of any such preferred Stock do not have any redemption rights on or
prior to the date one hundred eighty (180) days following the Termination Date,
the issuance of preferred Stock, no Borrower Party shall (a) directly or
indirectly declare or make, or incur any liability to make, any Distribution,
except Distributions to a Borrower by its Subsidiaries, (b) make any change in
its capital structure which could have a Material Adverse Effect or (c) make any
Restricted Investment.
7.11 [Intentionally Omitted.]
7.12 Guaranties. No Borrower Party shall make, issue, or become liable on
any Guaranty, except (a) Guaranties of the Obligations in favor of the Agent,
(b) Guaranties by the Parent of Debt permitted by Section 7.13, trade payables
and real estate operating leases and, (c) Guaranties of Debt by Guarantors
permitted by Section 7.13(e).
7.13 Debt. No Borrower Party shall incur or maintain any Debt, other than:
(a) the Obligations (including Debt incurred pursuant to any Hedge Agreements so
long as that the aggregate outstanding notional amount of all Hedge Agreements
shall not at any time exceed an amount equal to fifty-five percent (55%) of the
Commitments (it being understood that, for purposes of this clause (a), in
calculating the aggregate outstanding notional amount of Hedge Agreements, the
notional amount of Hedge Agreements providing for swaps of floating interest
rates for fixed interest rates shall be netted against the notional amount of
Hedge Agreements providing for swaps of fixed interest rates for floating
interest rates of similar tenors); (b) Debt described on Schedule 6.9; (c)
Capital Leases of Equipment and purchase money secured Debt incurred to purchase
Equipment (or any renewals or refinancing of such Debt on terms not materially
less favorable to the Borrower Parties) provided that (i) Liens securing the
same attach only to the applicable Equipment acquired by the incurrence of such
Debt, and (ii) the aggregate amount of such Debt (including Capital Leases)
outstanding does not exceed $3,000,000 at any time; (d) Debt evidencing a
refunding, renewal or extension of the Debt described on Schedule 6.9; provided
that (i) the principal amount thereof is not increased, (ii) the Liens, if any,
securing such refunded, renewed or extended Debt do not attach to any assets in
addition to those assets, if any, securing the Debt to be refunded, renewed or
extended, (iii) no Person that is not an obligor or guarantor of such Debt as of
the Closing Date shall become an obligor or guarantor thereof, and (iv) the
terms of such refunding, renewal or extension are not materially less favorable
to the Borrower Parties, the Agent, the Co-Agent or the Lenders than the
original Debt; (e) the Senior Notes and any refinancings, refundings, renewals
or extensions thereof; provided that any such refinancing, refundings, renewals
or extensions do not increase the aggregate principal amount outstanding
thereunder by more than $25,000,000 and do not shorten the maturity
45
of any principal amount thereof, (f) the Intercompany Account so long as such
Debt is subject to the Subordination Agreement, (g) Debt in respect of swap
agreements entered into for non-speculative purposes related to hedging interest
rates, currency values and commodities; (h) Debt arising by reason of Guaranties
by a Borrower Party permitted by Section 7.12(b); (i) Debt assumed or acquired
in connection with any Permitted Acquisition which Debt is outstanding on the
date of such Permitted Acquisition and does not, individually or in the
aggregate with respect to one or more Permitted Acquisitions, exceed $1,000,000;
and (j) Seller Subordinated Debt. The Parent shall not enter into any amendment
or modification of the documents evidencing the Debt permitted under clauses
(e), (f) or (g) above that is in any manner adverse to the Parent, any
Subsidiary, the Agent or any Lender.
7.14 Prepayment. No Borrower Party shall voluntarily prepay any Debt,
except (a) the Obligations in accordance with the terms of this Agreement or (b)
in connection with a refinancing permitted under Section 7.13(e) above including
the application of any proceeds received as a result of an equity infusion to
prepay the Debt described in Section 7.13(e).
7.15 Transactions with Affiliates. Except as set forth below and except
for mergers permitted under Section 7.9 and the Intercompany Account permitted
pursuant to Section 7.13, no Borrower Party shall sell, transfer, distribute, or
pay any money or property, including, but not limited to, any fees or expenses
of any nature (including, but not limited to, any fees or expenses for
management services), to any Affiliate, or lend or advance money or property to
any Affiliate, or invest in (by capital contribution or otherwise) or purchase
or repurchase any stock or indebtedness, or any property, of any Affiliate, or
become liable on any Guaranty of the indebtedness, dividends, or other
obligations of any Affiliate. Notwithstanding the foregoing, while no Event of
Default has occurred and is continuing, the Borrower Parties may engage in
transactions with Affiliates in the ordinary course of business consistent with
past practices, in amounts and upon terms fully disclosed to the Agent, the
Co-Agent and the Lenders, and no less favorable to the Borrower Parties than
would be obtained in a comparable arm's-length transaction with a third party
who is not an Affiliate; provided, that in any event all such transactions shall
be reflected and itemized on the Intercompany Account.
7.16 Investment Banking and Finder's Fees. Except as set forth on Schedule
7.16, no Borrower Party shall pay or agree to pay, or reimburse any other party
with respect to, any investment banking or similar or related fee, underwriter's
fee, finder's fee, or broker's fee to any Person in connection with this
Agreement. Each Borrower Party shall defend and indemnify the Agent, the
Co-Agent and the Lenders against and hold them harmless from all claims of any
Person that the Parent or any Subsidiary is obligated to pay for any such fees,
and all costs and expenses (including attorneys' fees) incurred by the Agent,
the Co-Agent and/or any Lender in connection therewith.
46
7.17 Business Conducted. No Borrower shall or shall permit any of its
Subsidiaries to engage, directly or indirectly, in any line of business other
than the businesses in which such Person is engaged on the Closing Date or which
are reasonably related thereto, including without limitation the design,
marketing and distribution of any products covered by the International
Housewares Association.
7.18 Liens. No Borrower Party shall create, incur, assume, or permit to
exist any Lien on any property, including without limitation to the Real Estate,
now owned or hereafter acquired by any of them, except Permitted Liens.
7.19 Sale and Leaseback Transactions. No Borrower Party shall, directly or
indirectly, enter into any arrangement or arrangements, with any Person
providing for the Parent or such Subsidiary to lease or rent property that the
Parent or such Subsidiary has sold or will sell or otherwise transfer to such
Person.
7.20 New Subsidiaries. No Borrower Party shall, directly or indirectly,
organize, create, acquire or permit to exist any Subsidiary other than
wholly-owned indirect foreign Subsidiaries or those listed on Schedule 6.5;
provided, however, that the Borrower Parties may create new wholly owned direct
or indirect Subsidiaries after the Closing Date so long as at the time of the
formation of any such direct or indirect Subsidiary of any Borrower Party, the
Borrower Parties, or any of them, as appropriate, shall (a) cause each new
domestic Subsidiary to provide to the Agent and the Co-Agent a joinder agreement
in the form of Exhibit D hereto (a "Guarantor Joinder Agreement"), a supplement
to the Subsidiary Guaranty, a supplement to the Security Agreement, and such
other security documents requested by the Agent or the Co-Agent in their
discretion, together with appropriate UCC-1 financing statements, all in form
and substance satisfactory to the Agent and the Co-Agent, (b) provide to the
Agent and the Co-Agent a pledge agreement and appropriate certificates and
powers or UCC-1 financing statements, pledging all direct or beneficial
ownership interests in each new domestic Subsidiary, in form and substance
satisfactory to the Agent and the Co-Agent, (c) provide to Agent and the
Co-Agent a pledge agreement with respect to any foreign Subsidiaries directly
owned by a Borrower Party a pledge by such Borrower of not less than sixty-five
percent (65%) of the equity interests of such foreign Subsidiaries, and (d) to
provide to the Agent and the Co-Agent all other documentation, including one or
more opinions of counsel satisfactory to the Agent and the Co-Agent, which in
their opinion is appropriate with respect to such formation and the execution
and delivery of the applicable documentation referred to above. Upon execution
and delivery of the supplements described above by each new domestic subsidiary,
such domestic Subsidiary shall become a Guarantor hereunder with the same force
and effect as if originally named as a Guarantor herein. The execution and
delivery of any Guaranty Joinder Agreement shall not require the consent of any
Borrower Party hereunder. The rights and obligations of each Borrower Party
hereunder shall remain in full force and effect notwithstanding the addition of
any Guarantor hereunder. Any document, agreement or instrument executed
47
or issued pursuant to this Section 7.20 shall be a "Loan Document" for purposes
of this Agreement.
7.21 Fiscal Year. No Borrower Party shall change its Fiscal Year without
the prior written consent of the Agent and the Co-Agent.
7.22 Minimum EBITDA. Borrower Parties shall maintain EBITDA, measured on a
consolidated basis, as set forth in Schedule 7.22.
7.23 Capital Expenditures. Commencing with the Fiscal Year ending June 30,
2004, no Borrower Party shall make or incur any Capital Expenditure if, after
giving effect thereto, the aggregate amount of all Capital Expenditures by the
Borrower Parties on a consolidated basis would exceed $8,000,000 plus, the Carry
Forward Amount, if any during any Fiscal Year.
7.24 Fixed Charge Coverage Ratio. No Borrower Party shall permit the
Consolidated Fixed Charge Coverage Ratio, calculated on a consolidated basis
with respect to the Parent and its Subsidiaries, as of the end of each fiscal
month for the twelve-month period then ending, to be less than the amount set
forth below for the applicable period set forth below:
Applicable Ratio Applicable Period
0.14 to 1.00 For the 12-month period ending June 30, 2004
0.14 to 1.00 For the 12-month period ending July 31, 2004
0.11 to 1.00 For the 12-month period ending August 31, 2004
0.12 to 1.00 For the 12-month period ending September 30, 2004
0.12 to 1.00 For the 12-month period ending October 31, 2004
(0.02 to 1.00) For the 12-month period ending November 30, 2004
(0.08 to 1.00) For the 12-month period ending December 31, 2004
(0.06 to 1.00) For the 12-month period ending January 31, 2005
0.03 to 1.00 For the 12-month period ending February 28, 2005
0.48 to 1.00 For the 12-month period ending March 31, 2005
0.54 to 1.00 For the 12-month period ending April 30, 2005
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0.67 to 1.00 For the 12-month period ending May 31, 2005
0.81 to 1.00 For the 12-month period ending June 30, 2005
0.85 to 1.00 For the 12-month period ending July 31, 2005
0.89 to 1.00 For the 12-month period ending August 31, 2005
0.92 to 1.00 For the 12-month period ending September 30, 2005
0.96 to 1.00 For the 12-month period ending October 31, 2005
1.00 to 1.00 For the 12-month period ending November 30, 2005
1.00 to 1.00 For each 12-month period ending thereafter
7.25 Foreign Leverage Ratio. No Borrower Party shall permit the Foreign
Leverage Ratio to be more than 1.5 to 1.0 for the twelve-month period then
ending calculated on a consolidated basis with respect to the Foreign
Subsidiaries, as of the end of each fiscal month for the twelve-month period
then ending.
7.26 Use of Proceeds. No Borrower shall, nor shall it suffer or permit any
Subsidiary to, use any portion of the Loan proceeds, directly or indirectly, (a)
for any purpose inconsistent with the purposes, terms and conditions hereof or
other than for lawful and permitted purposes, (b) to purchase or carry Margin
Stock, (c) to repay or otherwise refinance indebtedness of the Borrowers or
others incurred to purchase or carry Margin Stock, (d) to extend credit for the
purpose of purchasing or carrying any Margin Stock, or (e) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act.
7.27 Cash Management.
(a) Cash Sweep Period. Until the Agent or the Co-Agent notifies the
Borrowers to the contrary, each Borrower shall make collection of all Accounts
and other Collateral for the Agent, shall receive all payments as the Agent's
trustee, and shall immediately deliver all payments in their original form duly
endorsed in blank into a Payment Account established for the account of such
Borrower at a Clearing Bank acceptable to the Agent, subject to a Blocked
Account Agreement. On or prior to the date hereof, the Borrowers shall establish
a lock-box service for collections of Accounts at a Clearing Bank acceptable to
the Agent and the Co-Agent and subject to a Blocked Account Agreement and other
documentation acceptable to the Agent and the Co-Agent. Each Borrower shall
instruct all Account Debtors to make all payments directly to the
49
address established for such service. If, notwithstanding such instructions, any
Borrower receives any proceeds of Accounts, it shall receive such payments as
the Agent's trustee, and shall immediately deliver such payments to the Agent in
their original form duly endorsed in blank or deposit them into a Payment
Account, as the Agent may direct. All amounts that shall be deposited into such
Payment Account shall be under the control of the Agent and the Agent shall be
authorized to provide instructions to the applicable Clearing Bank with respect
thereto. Notwithstanding the foregoing, except during a Cash Sweep Period, the
Borrowers shall have the right to withdraw funds from, and otherwise exercise
authority with respect to, such Payment Account. During a Cash Sweep Period,
except as otherwise specifically provided herein, amounts deposited in such
Payment Account shall immediately be under the exclusive dominion and control of
the Agent, on behalf of itself and the Lenders, pursuant to the terms of the
applicable Blocked Account Agreement and, as provided in the applicable Blocked
Account Agreement, (x) all amounts deposited in such Payment Account shall be
immediately be forwarded by daily sweep to a deposit account of Agent as so
specified by Agent and (y) the Borrowers shall have no right to withdraw such
amounts or otherwise exercise authority with respect to such Payment Account
without the consent of the Required Lenders. From and after the termination of
any Cash Sweep Period, the Agent shall so notify the applicable Clearing Bank
and the Borrowers shall have the right to withdraw funds from, and exercise
authority with respect to, the applicable Payment Account.
(b) Period In Which Cash Sweep Is Not In Effect. Notwithstanding the
terms of Section 7.27(a) hereof, from the Closing Date through but not including
the Transition Period End Date, Borrowers shall be deemed to not be in a Cash
Sweep Period, provided, however, that during such period, to the extent
aggregate daily payments to the Payment Account exceed $8,000,000, such excess
amount shall be applied to the payment of the outstanding Loans in accordance
with Section 3.6 hereof.
7.28 Restrictions on Pricing Adjustments. Without immediate notice to the
Agent and the Co-Agent, no Borrower shall change or adjust (a) intercompany
commissions, or (b) transfer pricing policies or (c) standard costs of any
Inventory, in each case as in effect on the Closing Date. In response to any
such notification that would have an impact of in excess of $100,000, the Agent
or the Co-Agent may create a reasonable Reserve until the Agent and the Co-Agent
shall have received the results of the next subsequent appraisal or re-appraisal
of Inventory.
7.29 Further Assurances. The Borrower Parties shall execute and deliver,
or cause to be executed and delivered, to the Agent, the Co-Agent and/or the
Lenders such documents and agreements, and shall take or cause to be taken such
actions, as the Agent, the Co-Agent or any Lender may, from time to time,
reasonably request to carry out the terms and conditions of this Agreement and
the other Loan Documents and any Hedge Agreements.
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7.30 Certain Proprietary Rights. On or prior to the date that is 30 days
after the Closing Date, the Co-Agent will make a determination as to whether
there are any issues with respect to the matters set forth in clauses (a)
through (d) below, and each Borrower Party shall, within 30 days after such
determination, upon the request of the Co-Agent, do the following:
(a) with respect to all copyrightable, patentable and
trademarkable materials that are material to the conduct of its business that
are not already the subject of either a registration, patent number or a duly
prosecuted application with the appropriate filing office(s) therefor
(including, without limitation, in the United States Copyright Office and the
United States Patent and Trademark Office), cause to be filed all reasonably
necessary documents seeking registration of such materials (or, with respect to
patentable materials, issuance of a patent, as applicable), in good faith in
accordance with the procedures and regulations of such filing office(s) and in a
manner sufficient to impart constructive notice of the applicable Borrower
Party's complete and undivided ownership thereof;
(b) with respect to all copyrights, patents and trademarks that
are material to the conduct of its business that are already the subject of
either a registration, patent number or a duly prosecuted application therefor
with the appropriate filing office(s), cause to be filed all reasonably
necessary documents identifying the applicable Borrower Party as the sole
claimant thereto in a manner sufficient to impart constructive notice of the
applicable Borrower Party's complete and undivided ownership thereof (including,
without limitation, all assignments of ownership and changes in name since the
original date of registration or issuance of each such copyright, patent and
trademark) in good faith in accordance with the procedures and regulations of
such filing office(s);
(c) deliver or cause to be delivered to the appropriate filing
office(s) (including, without limitation, the United States Copyright Office and
the United States Patent and Trademark Office) in good faith in accordance with
the procedures and regulations of such office(s) all documents, instruments or
other information reasonably necessary for accurate and proper recordation of
the release of all security interests (other than the security interest of the
Agent for the benefit of the Lenders) in all copyrights, patents and trademarks
that are material to the conduct of such Borrower Party's business; and
(d) following each filing and/or delivery required under this
Section 7.29, promptly provide to the Agent and the Co-Agent reasonable
documentation of such filing and/or delivery, including verification of receipt
by the applicable filing office(s).
ARTICLE 8
CONDITIONS OF LENDING
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8.1 Conditions Precedent to Making of Loans on the Closing Date. The
obligation of the Lenders to make the initial Revolving Loans and the Term Loan
on the Closing Date, and the obligation of the Agent to cause the Letter of
Credit Issuer to issue any Letter of Credit on the Closing Date, are subject to
the following conditions precedent having been satisfied in a manner
satisfactory to the Co-Agent and each Lender:
(a) the Closing Date shall occur on or before June 15, 2004;
(b) the Co-Agent shall have received (i) the Silver Point Fee
Letter, and (ii) the Lender Assignments from the Original Lenders holding not
less than 66-2/3% of the Commitments (as such term is defined under the Original
Credit Agreement), each in form and substance satisfactory to the Co-Agent, duly
executed, and in full force and effect;
(c) the Co-Agent shall have received a certificate from the
Secretary of each Borrower Party (i) attesting to the resolutions of such
Borrower Party's board of directors authorizing its execution, delivery, and
performance of all Loan Documents required to be executed and delivered by such
Borrower Party on the Closing Date, and authorizing specific officers of such
Borrower Party to execute the same and (ii) certifying the names and true
signatures of the officers of such Borrower Party authorized to sign such Loan
Documents;
(d) the Co-Agent shall have received copies of each Borrower
Party's Governing Documents, as amended, modified, or supplemented to the
Closing Date, certified by the Secretary of each Borrower Party;
(e) the Co-Agent shall have received a certificate of status with
respect to each Borrower Party, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of the Borrower Party, which certificate shall indicate that such
Borrower Party is in good standing in such jurisdiction;
(f) except to the extent contemplated by Section 8.3(d), the
Co-Agent shall have received certificates of status with respect to each
Borrower Party, each dated within 30 days of the Closing Date, such certificates
to be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Borrower Party) in which its failure to be
duly qualified or licensed would constitute a Material Adverse Effect, which
certificates shall indicate that such Borrower Party is in good standing in such
jurisdictions;
(g) the Co-Agent shall have received an opinion of counsel for the
Borrower Parties in form and substance satisfactory to the Lenders;
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(h) the Co-Agent shall have received satisfactory evidence
(including a certificate of an officer of each Borrower Party) that all tax
returns required to be filed by such Borrower Party have been timely filed and
all taxes upon such Borrower Party or its properties, assets, income, and
franchises (including Real Estate taxes and payroll taxes) have been paid prior
to delinquency, except such taxes that are the subject of a Good-Faith Protest;
(i) the Co-Agent shall have completed its business, financial,
collateral, accounting and legal due diligence, the results of which shall be
satisfactory to the Co-Agent;
(j) the Co-Agent shall have received copies of all existing
Blocked Account Agreements, and shall be satisfied that all such agreements are
in full force and effect;
(k) the Co-Agent shall have received final credit approval to make
the Loans and other extensions of credit provided for hereunder;
(l) the Lenders shall be satisfied that existing financing
statements filed against all Borrower Parties naming Agent, for the benefit of
Lenders, as the secured creditor are sufficient to create a first priority
security interest in all Collateral, except as otherwise permitted herein, and
Lenders shall have received searches reflecting the filing of all such financing
statements;
(m) the Borrowers shall pay all of the Lenders' expenses incurred
in connection with the transactions evidenced by this Agreement;
(n) Each Borrower Party shall have received all licenses,
approvals or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by such Borrower Party of this
Agreement or any other Loan Document or with the consummation of the
transactions contemplated hereby and thereby; and
(o) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to the Co-Agent.
The acceptance by the Borrowers of any Loans made or Letters of Credit issued on
the Closing Date shall be deemed to be a representation and warranty made by the
Borrower Parties to the effect that all of the conditions precedent to the
making of such Loans or the issuance of such Letters of Credit have been
satisfied, with the same effect as delivery to the Agent and the Lenders of a
certificate signed by a Responsible Officer of the Administrative Borrower,
dated the Closing Date, to such effect.
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Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (i) all conditions
precedent in this Section 8.1 have been fulfilled to the satisfaction of such
Lender, (ii) the decision of such Lender to execute and deliver to the Agent an
executed counterpart of this Agreement was made by such Lender independently and
without reliance on the Agent or any other Lender as to the satisfaction of any
condition precedent set forth in this Section 8.1, and (iii) all documents sent
to such Lender for approval, consent, or satisfaction were acceptable to such
Lender.
8.2 Conditions Precedent to Each Loan. The obligation of the Lenders to
make each Loan, including the initial Revolving Loans on the Closing Date, and
the obligation of the Agent to cause the Letter of Credit Issuer to issue any
Letter of Credit, shall be subject to the further conditions precedent that on
and as of the date of any such extension of credit:
(a) The following statements shall be true, and the acceptance by
the Borrowers of any extension of credit shall be deemed to be a statement to
the effect set forth in clauses (i), (ii) and (iii) with the same effect as the
delivery to the Agent and the Lenders of a certificate signed by a Responsible
Officer of the Administrative Borrower, dated the date of such extension of
credit, stating that:
(i) After giving effect to any updated or supplemental
Schedules delivered pursuant to Section 5.3(q), the representations and
warranties contained in this Agreement and the other Loan Documents are correct
in all material respects on and as of the date of such extension of credit (or
with respect to such updated or supplemental Schedules, the last day of the
prior Fiscal Quarter) as though made on and as of such date, other than any such
representation or warranty which relates to a specified prior date and except to
the extent the Agent and the Lenders have been notified in writing by the
Borrowers that any representation or warranty is not correct and the Required
Lenders have explicitly waived in writing compliance with such representation or
warranty;
(ii) No event has occurred and is continuing, or would result
from such extension of credit, which constitutes a Default or an Event of
Default; and
(iii) After giving effect to such extension of credit, (A) the
Borrowers shall be in compliance with all of the terms and conditions of the
Indentures and (B) all Obligations shall be Senior Debt (as such term is defined
in Section 10.2 of each of the Indentures).
(b) No such Borrowing shall exceed Availability, provided,
however, that the foregoing conditions precedent are not conditions to each
Lender participating in or reimbursing the Agent for such Lenders' Pro Rata
Share of any Non-Ratable Loan or Agent Advance made in accordance with the
provisions of Sections 1.2(h) and (i).
54
8.3 Conditions Subsequent to Making of Loans on the Closing Date. The
failure of the Borrowers to comply with any of the following by the date set
forth below shall be deemed to constitute an Event of Default:
(a) Each Borrower Party shall cooperate with the Agent and the
Co-Agent and take all actions necessary to cause Silver Point or its designee
(the "SP Successor Agent") to become the successor Agent to the Agent on or
before July 15, 2004 (or such later date as is agreed to in writing by Co-Agent
and Wachovia Bank, National Association as Agent, the "Transition Period End
Date") such that the SP Successor Agent will enjoy all of the rights and powers
of the Agent, and hold all of the security and prior perfected Liens in the
Collateral granted to and currently held by the Agent for the benefit of the
Lenders. In furtherance thereof, the Borrower Parties shall (i) execute, amend
and restate Loan Documents naming the SP Successor Agent as the Agent
thereunder, (ii) do all things necessary to cause all UCC financing statements
and all filings made with the Patent and Trademark Office and the Copyright
Office by or on behalf of the Agent, to be amended to name the SP Successor
Agent as Agent thereunder, (iii) do all things necessary to cause all Collateral
in the possession of the Agent to be delivered to the SP Successor Agent, (iv)
deliver to the SP Successor Agent duly executed Blocked Account Agreements for
all Payment Accounts, in form and substance satisfactory to the SP Successor
Agent, and (v) execute or deliver to the SP Successor Agent any and all
financing statements, original financing statements in lieu of continuation
statements, amendments to financing statements, fixture filings, security
agreements, pledges, mortgages, surveys, assignments, endorsements of
certificates of title, and all other documents (collectively, the "Additional
Documents") that the SP Successor Agent may request, in form and substance
satisfactory to SP Successor Agent, to create, perfect, and continue perfected
or to better perfect the SP Successor Agent's Liens in the assets of the
Borrower Parties (whether now owned or hereafter arising or acquired, tangible
or intangible, real or personal), and to the maximum extent permitted by
applicable law, each Borrower Party authorizes the SP Successor Agent to execute
any such Additional Documents in such Borrower Party's name and authorizes the
SP Successor Agent to file such executed Additional Documents in any appropriate
filing office.
(b) On or before fifteen (15) days after the Closing Date, the
Co-Agent shall receive completed reference checks with respect to the Borrower
Parties' senior management, the results of which shall be satisfactory to the
Co-Agent in its sole discretion.
(c) On or before (i) ten (10) Business Days after the Closing Date
with respect to the Borrower Parties and (ii) thirty (30) days after the Closing
Date with respect to the Foreign Subsidiaries, the Co-Agent shall have received
the Latest Projections.
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(d) On or before ten (10) Business Days after the Closing Date,
the Co-Agent shall have received a certificate of status with respect to Salton,
Inc., such certificate to be issued by the appropriate officer of the State of
New Jersey, which certificate shall indicate that Salton, Inc. is in good
standing in such jurisdiction.
(e) On or before fifteen (15) days after the Closing Date,
Borrower Parties shall file UCC termination statements (and shall promptly
deliver evidence thereof to the Agent and the Co-Agent) with respect to the
following UCC filings: (1) filing number 4285260 filed with the Secretary of
State of Illinois, on October 19, 2000, naming Sonex International Corp. as
debtor and Xxxxxx Commercial Paper Inc. as Administrative Agent as secured
party; (2) filing number 201331 filed with the Secretary of State of New York,
on October 17, 2000, naming Sonex International Corporation as debtor and Xxxxxx
Commercial Paper Inc. as Administrative Agent as secured party; (3) filing
number 1899541 filed with the Department of Treasury Commercial Recording of New
Jersey, on April 12, 1999, naming Salton, Inc. as debtor and Xxxxxx Commercial
Paper Inc. as Administrative Agent as secured party; (4) filing number 4404782
filed with the Secretary of State of Illinois, on June 25, 2001, naming Salton
Holdings, Inc. as debtor and Xxxxxx Commercial Paper Inc. as secured party; (5)
filing number 9711573 filed with Lake County, Illinois, on June 28, 2001, naming
Salton Holdings, Inc. as debtor and Xxxxxx Commercial Paper Inc. as secured
party; (6) filing number 99-029 filed with Xxxxx County, Missouri, on January
19, 1999, naming Toastmaster, Inc. as debtor and Xxxxxx Commercial Paper Inc. as
Administrative Agent as secured party; (7) filing number 1999-79 filed with
Xxxxxx County, Missouri, on January 20, 1999, naming Toastmaster, Inc. as debtor
and Xxxxxx Commercial Paper Inc. as Administrative Agent as secured party; and
(8) filing number 9900043 filed with Macon County, Missouri, on January 19,
1999, naming Toastmaster, Inc. as debtor and Xxxxxx Commercial Paper Inc. as
Administrative Agent as secured party.
ARTICLE 9
DEFAULT; REMEDIES
9.1 Events of Default. It shall constitute an event of default ("Event
of Default") if any one or more of the following shall occur for any reason:
(a) any failure by the Borrowers to pay the principal of or
interest or premium on any of the Obligations or any fee or other amount owing
hereunder when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by any
Borrower Party in this Agreement or in any of the other Loan Documents, any
Hedge Agreement, any Financial Statement, or any certificate furnished by any
Borrower Party at any time to the Agent, the Co-Agent or any Lender shall prove
to be untrue in any material respect as of the date on which made, deemed made,
or furnished;
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(c) (i) any default shall occur in the observance or performance
of any of the covenants and agreements contained in Sections 5.2(l), 7.2(a),
7.5, 7.8 through 7.27, (ii) any default shall occur in the observance or
performance of any of the covenants and agreements contained in Sections 5.2
(other than 5.2(l)) or 5.3 and such default shall continue for five (5) days or
more; or (iii) any default shall occur in the observance or performance of any
of the other covenants or agreements contained in any other Section of this
Agreement or any other Loan Document, or any other agreement entered into at any
time to which any Borrower Party and the Agent, the Co-Agent or any Lender are
party (including in respect of any Bank Products) and such default shall
continue for fifteen (15) days or more;
(d) any default shall occur with respect to any Debt (other than
the Obligations) of any Borrower Party in an outstanding principal amount which
exceeds $1,000,000 or under any agreement or instrument under or pursuant to
which any such Debt may have been issued, created, assumed, or guaranteed by any
Borrower Party and such default shall continue for more than the period of
grace, if any, therein specified, if the effect thereof (with or without the
giving of notice or further lapse of time or both) is to accelerate, or to
permit the holders of any such Debt to accelerate, the maturity of any such
Debt; or any such Debt shall be declared due and payable or be required to be
prepaid (other than by a regularly scheduled required prepayment) prior to the
stated maturity thereof;
(e) the Parent or any of its Subsidiaries shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an answer or
otherwise commence any action or proceeding seeking reorganization, arrangement
or readjustment of its debts or for any other relief under the Bankruptcy Code,
as amended, or under any other bankruptcy or insolvency act or law, state or
federal, now or hereafter existing, or consent to, approve of, or acquiesce in,
any such petition, action or proceeding; (ii) apply for or acquiesce in the
appointment of a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for it or for all or any part of its
property; (iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;
(f) an involuntary petition shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of the Parent or any of its
Subsidiaries or for any other relief under the federal Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency act or law, state or
federal, now or hereafter existing and such petition or proceeding shall not be
dismissed within thirty (30) days after the filing or commencement thereof or an
order of relief shall be entered with respect thereto;
(g) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for the Parent or any of its Subsidiaries or
for all or any part of
57
its property shall be appointed or a warrant of attachment, execution or similar
process shall be issued against any part of the property of the Parent or any of
its Subsidiaries;
(h) any Borrower Party shall file a certificate of dissolution
under applicable state law or shall be liquidated, dissolved or wound-up or
shall commence, or the Parent or any of its Subsidiaries shall have commenced
against it, any action or proceeding for dissolution, winding-up or liquidation,
and such action or proceeding shall not be dismissed within thirty (30) days
after the filing or commencement thereof or an order of relief shall be entered
with respect thereto;
(i) all or any material part of the property (including Inventory)
of the Parent or any of its Subsidiaries shall be nationalized, expropriated or
condemned, recalled, seized or otherwise appropriated, or custody or control of
such property or of the Parent or such Subsidiary shall be assumed by any
Governmental Authority or any court of competent jurisdiction at the instance of
any Governmental Authority, except where contested in good faith by proper
proceedings diligently pursued where a stay of enforcement is in effect;
(j) (i) any Hedge Agreement shall be terminated as a result of a
default or event of default by any Borrower Party or revoked or declared void or
invalid or unenforceable or challenged by any Borrower Party or any other
obligor or (ii) any Loan Document shall be terminated, revoked or declared void
or invalid or unenforceable or challenged by any Borrower Party or any other
obligor;
(k) Except as set forth on Schedule 9.1(k), one or more judgments,
orders, decrees (including, without limitation, out of court settlements) or
arbitration or mediation awards is entered against or paid by any Borrower Party
involving in the aggregate liability (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage) as to
any single or related or unrelated series of transactions, incidents or
conditions, of $1,000,000 or more the same shall remain unsatisfied, unvacated
and unstayed pending appeal for a period of thirty (30) days after the entry
thereof;
(l) any loss, theft, damage or destruction of any item or items of
Collateral or other property of any Borrower Party occurs which could reasonably
be expected to cause a Material Adverse Effect and is not adequately covered by
insurance;
(m) there is filed against the Parent or any of its Subsidiaries
any action, suit or proceeding under any federal or state racketeering statute
(including the Racketeer Influenced and Corrupt Organization Act of 1970), which
action, suit or proceeding (i) is not dismissed within one hundred twenty (120)
days, or (ii) could reasonably be expected to result in the confiscation or
forfeiture of any material portion of the Collateral;
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(n) any Loan Document ceases to be in full force and effect or any
Lien with respect to any material portion of the Collateral intended to be
secured thereby ceases to be, or is not, valid, perfected and prior to all other
Liens (other than Permitted Liens) or is terminated, revoked or declared void;
(o) (i) an ERISA Event shall occur with respect to a Pension Plan
or Multi-employer Plan which has resulted or could reasonably be expected to
result in liability of any Borrower Party under Title IV of ERISA to the Pension
Plan, Multi-employer Plan or the PBGC in an aggregate amount, together with the
amount of any liability under clauses (ii) and (iii) of this Section 9.1(o), in
excess of $1,000,000; (ii) the aggregate amount of Unfunded Pension Liability
among all Pension Plans at any time, together with the amount of any liability
under clauses (i) and (iii) of this Section 9.1(o) exceeds $1,000,000; or (iii)
any Borrower Party or any ERISA Affiliate shall fail to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multi-employer
Plan in an aggregate amount, together with the amount of any liability under
clauses (i) and (ii) of this Section 9.1(o), in excess of $1,000,000;
(p) there occurs any default or event of default under the Senior
Notes, or the Kmart Receivable Purchasing Agreement;
(q) there occurs a Change of Control; or
(r) there occurs an event having a Material Adverse Effect.
9.2 Remedies.
(a) If a Default or an Event of Default exists, the Agent shall,
at the direction of the Required Lenders, do one or more of the following at any
time or times and in any order, without notice to or demand on the Borrower
Parties: (i) reduce the Maximum Amount, or the advance rates against Eligible
Accounts and/or Eligible Inventory used in computing the Borrowing Base, or
reduce one or more of the other elements used in computing the Borrowing Base or
increasing Reserves; (ii) restrict the amount of or refuse to make Revolving
Loans; and (iii) restrict or refuse to provide Letters of Credit or Credit
Support. If an Event of Default exists, the Agent shall, at the direction of the
Required Lenders, do one or more of the following, in addition to the actions
described in the preceding sentence, at any time or times and in any order,
without notice to or demand on the Borrower Parties: (A) terminate the
Commitments and this Agreement; (B) declare any or all Obligations to be
immediately due and payable (excluding Obligations arising under any Hedge
Agreement); provided, however, that upon the occurrence of any Event of Default
described in Sections 9.1(e), 9.1(f), 9.1(g), or 9.1(h), the Commitments shall
automatically and immediately expire and all Obligations (excluding Obligations
arising under any Hedge Agreement) shall automatically become immediately due
and payable without notice or demand of any kind; (C) require the Borrowers to
deliver to the Agent and the Co-Agent a standby letter
59
of credit in form and substance satisfactory to the Agent and the Co-Agent,
issued by an issuer satisfactory to the Agent and the Co-Agent in an amount
equal to one hundred five percent (105%) of all outstanding Letter of Credit
obligations (or in the event the Borrowers demonstrate to the reasonable
satisfaction of the Agent and the Co-Agent the inability of the Borrowers, or
any of them, to obtain such standby letter of credit, cash collateralize one
hundred five percent (105%) of all outstanding Letter of Credit obligations);
and (D) pursue its other rights and remedies under the Loan Documents and
applicable law.
(b) If an Event of Default has occurred and is continuing: (i) the
Agent shall have for the benefit of the Lenders, in addition to all other rights
of the Agent and the Lenders, the rights and remedies of a secured party under
the Loan Documents and the UCC; (ii) the Agent may, at any time, take possession
of the Collateral and keep it on the Borrower Parties' premises, at no cost to
the Agent, the Co-Agent or any Lender, or remove any part of it to such other
place or places as the Agent may desire, or the Borrower Parties shall, upon the
Agent's demand, at the Borrowers' cost, assemble the Collateral and make it
available to the Agent at a place reasonably convenient to the Agent; and (iii)
the Agent may sell and deliver any Collateral at public or private sales, for
cash, upon credit or otherwise, at such prices and upon such terms as the Agent
deems advisable, in its sole discretion, and may, if the Agent deems it
reasonable, postpone or adjourn any sale of the Collateral by an announcement at
the time and place of sale or of such postponed or adjourned sale without giving
a new notice of sale. Without in any way requiring notice to be given in the
following manner, the Borrower Parties agree (on their behalf and on behalf of
their Subsidiaries) that any notice by the Agent of sale, disposition or other
intended action hereunder or in connection herewith, whether required by the UCC
or otherwise, shall constitute reasonable notice to the Parent and the
Subsidiaries if such notice is mailed by registered or certified mail, return
receipt requested, postage prepaid, or is delivered personally against receipt,
at least ten (10) calendar days prior to such action to the Administrative
Borrower's address specified in or pursuant to Section 13.8. If any Collateral
is sold on terms other than payment in full at the time of sale, no credit shall
be given against the Obligations until the Agent or the Lenders receive cash
payment, and if the buyer defaults in payment, the Agent may resell the
Collateral without further notice to the Parent and the Subsidiaries. In the
event the Agent seeks to take possession of all or any portion of the Collateral
by judicial process, the Borrower Parties (on their behalf and on behalf of
their Subsidiaries) irrevocably waive: (A) the posting of any bond, surety or
security with respect thereto which might otherwise be required; (B) any demand
for possession prior to the commencement of any suit or action to recover the
Collateral; and (C) any requirement that the Agent retain possession and not
dispose of any Collateral until after trial or final judgment. The Borrower
Parties agree (on their behalf and on behalf of their Subsidiaries) that the
Agent has no obligation to preserve rights to the Collateral or marshal any
Collateral for the benefit of any Person. The Agent is hereby granted a license
or other right to use, without charge, the Parent's and the Subsidiaries'
labels, patents, copyrights, names, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, in
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completing production of, advertising or selling any Collateral, and the
Parent's and the Subsidiaries' rights under all licenses and all franchise
agreements shall inure to the Agent's benefit for such purpose. The proceeds of
sale shall be applied first to all expenses of sale, including attorneys' fees,
and then to the Obligations. The Agent will return any excess to the Parent and
the Subsidiaries and the Parent and the Subsidiaries shall remain liable for any
deficiency.
(c) If an Event of Default has occurred and is continuing, the
Borrower Parties hereby waive to the extent permitted by law (on their behalf
and on behalf of the Subsidiaries) all rights to notice and hearing prior to the
exercise by the Agent of the Agent's rights to repossess the Collateral without
judicial process or to replevy, attach or levy upon the Collateral without
notice or hearing.
ARTICLE 10
TERM AND TERMINATION
10.1 Term and Termination. The term of this Agreement shall end on the
Stated Termination Date unless sooner terminated in accordance with the terms
hereof. The Agent upon direction from the Required Lenders shall terminate this
Agreement without notice upon the occurrence of an Event of Default. Upon the
effective date of termination of this Agreement for any reason whatsoever, all
Obligations (including all unpaid principal, accrued and unpaid interest and any
early termination or prepayment fees or penalties) shall become immediately due
and payable and the Borrowers shall immediately arrange for (a) the cancellation
and return of Letters of Credit then outstanding or (b) the delivery of a
Supporting Letter of Credit (or the deposit of cash collateral, if applicable)
in accordance with the provisions of Section 1.4(g). Notwithstanding the
termination of this Agreement, until all Obligations are indefeasibly paid and
performed in full in cash, the Borrower Parties shall remain bound by the terms
of this Agreement and shall not be relieved of any of their respective
Obligations hereunder or under any other Loan Document, or any Hedge Agreement
and the Agent, the Co-Agent and the Lenders shall retain all their rights and
remedies hereunder (including the Agent's Liens in and all rights and remedies
with respect to all then existing and after-acquired or after-arising
Collateral).
ARTICLE 11
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
11.1 Amendments and Waivers.
(a) No amendment or waiver of any provision of this Agreement or
any other Loan Document, and no consent with respect to any departure by the
Borrower Parties therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by the Agent at the written
request of the Required Lenders) and the Borrower Parties party thereto and then
any such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided,
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however, that no such waiver, amendment, or consent shall, unless in writing and
signed by all the Lenders and the Borrower Parties party thereto and
acknowledged by the Agent and the Co-Agent, do any of the following:
(i) increase or extend the Commitment of any Lender (it
being understood and agreed that a waiver of any Default or Event of Default or
a modification of any of the defined terms contained herein (other than those
defined terms specifically addressed in this Section 11.1) shall not constitute
a change in the terms of any Commitment of any Lender);
(ii) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document;
(iii) reduce the principal of, or the rate of interest
specified herein on any Loan, or any fees or other amounts payable hereunder or
under any other Loan Document;
(iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Lenders
or any of them to take any action hereunder;
(v) increase any of the percentages set forth in the
definition of the Borrowing Base;
(vi) amend this Section or any provision of this Agreement
providing for consent or other action by all Lenders;
(vii) release any Guaranties of the Obligations or release
Collateral other than as permitted by Section 12.11;
(viii) change the definitions of "Availability," "Bank
Products," "Bank Products Provider," "Co-Agent," "Ledger Products," "Letter of
Credit Issuer," "Majority Lenders" or "Required Lenders"; or
(ix) increase the Maximum Amount, Letter of Credit
Subfacility or the Term Loan Amount;
provided, however, the Agent may, in its sole discretion (with the prior written
consent of the Co-Agent) and notwithstanding the limitations contained in
clauses (v) and (ix) above and any other terms of this Agreement, make Agent
Advances in accordance with Section 1.2(j) and, provided further, that no
amendment, waiver or consent shall, unless in writing and signed by (x) the
Agent, affect the rights or duties of the Agent under this Agreement or any
other Loan Document and (y) the Co-Agent, affect the rights or duties of the
Co-Agent under this Agreement or any other Loan Document and, provided further,
that
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Schedule 1.2(a) hereto (Commitments) may be amended from time to time by Agent
(or the Co-Agent) alone to reflect assignments of Commitments in accordance
herewith.
(b) If any fees are paid to the Lenders as consideration for
amendments, waivers or consents with respect to this Agreement, at Agent's (or
the Co-Agent's) election, such fees may be paid only to those Lenders that agree
to such amendments, waivers or consents within the time specified for submission
thereof.
(c) If, in connection with any proposed amendment, waiver or
consent (a "Proposed Change"):
(i) requiring the consent of all Lenders, the consent
of Required Lenders is obtained, but the consent of other
Lenders is not obtained (any such Lender whose consent is not
obtained as described in this clause (i) and in clause (ii)
below being referred to as a "Non Consenting Lender "), or
(ii) requiring the consent of Required Lenders, the
consent of Majority Lenders is obtained,
then, so long as neither the Agent nor the Co-Agent is not a Non-Consenting
Lender, at the Borrowers' request, the Agent, the Co-Agent, or an Eligible
Assignee shall have the right (but not the obligation) with the Agent's and the
Co-Agent's approval, to purchase from the Non-Consenting Lenders, and the
Non-Consenting Lenders agree that they shall sell, all the Non-Consenting
Lenders' Commitments for an amount equal to the principal balances thereof and
all accrued interest and fees with respect thereto through the date of sale
pursuant to Assignment and Acceptance Agreement(s), without premium or discount.
11.2 Assignments; Participations.
(a) Any Lender may, with the written consent of the Agent and the
Co-Agent, assign and delegate to one or more Eligible Assignees (provided that
no consent of the Agent or the Co-Agent shall be required in connection with any
assignment and delegation by a Lender to an Affiliate of such Lender or a
Related Fund) (each an "Assignee") all, or any ratable part of all, of the
Loans, the Commitments and the other rights and obligations of such Lender
hereunder (provided that, in all cases, the Loans assigned by the assignor
Lender shall be composed of pro-rata portions of the assignor Lender's Revolving
Loan and Term Loan Commitments), in a minimum amount of $5,000,000 (provided
that, unless an assignor Lender has assigned and delegated all of its Loans and
Commitments, no such assignment and/or delegation shall be permitted unless,
after giving effect thereto, such assignor Lender retains a Commitment in a
minimum amount of $5,000,000); provided, however, that the Borrower Parties and
the Agent may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together
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with payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Administrative Borrower, the Agent and
the Co-Agent by such Lender and the Assignee; (ii) such Lender and its Assignee
shall have delivered to the Administrative Borrower, the Agent and the Co-Agent
an Assignment and Acceptance in the form of Exhibit E ("Assignment and
Acceptance") and (iii) the assignor Lender or Assignee has paid to the Agent a
processing fee in the amount of $3,500; provided, however, that no such
processing fee shall be due in connection with any assignment by a Lender to an
Affiliate of such Lender or a Related Fund.
(b) From and after the date that the Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance and payment of
the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations, including, but not
limited to, the obligation to participate in Letters of Credit and Credit
Support have been assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of a Lender under the Loan Documents, and
(ii) the assignor Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto or the attachment, perfection, or priority of any Lien granted
by the Parent and any Subsidiary to the Agent, the Co-Agent or any Lender in the
Collateral; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the Parent
and the Subsidiaries or the performance or observance by the Parent and the
Subsidiaries, as applicable, of any of their obligations under this Agreement or
any other Loan Document furnished pursuant hereto; (iii) such Assignee confirms
that it has received a copy of this Agreement, together with such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
Assignee will, independently and without reliance upon the Agent, the Co-Agent
such assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
Assignee appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Agent by the terms
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hereof, together with such powers, including the discretionary rights and
incidental power, as are reasonably incidental thereto; and (vi) such Assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon satisfaction of the requirements of Section
11.2(a), this Agreement shall be deemed to be amended to the extent, but only to
the extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of any Borrower
Party (a "Participant") participating interests in any Loans, the Commitment of
that Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Borrower Parties and the Agent shall continue to
deal solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan Document
except the matters set forth in Section 11.1(a) (i), (ii) and (iii), and all
amounts payable by the Borrowers hereunder shall be determined as if such Lender
had not sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent and subject to the same limitation as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve
Board or United States Treasury Regulation 31 C.F.R. Section 203.14, and such
Federal Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
(g) Administrative Borrower shall maintain, or cause to be
maintained, a register (the "Register") on which it enters the name of a Lender
as the registered owner of each Term Loan held by such Lender. Other than in
connection with an assignment by a Lender of all or any portion of its Term Loan
to an Affiliate of such Lender or a Related Fund of such Lender (i) a Registered
Loan (and the Registered Note, if any, evidencing
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the same) may be assigned or sold in whole or in part only by registration of
such assignment or sale on the Register (and each Registered Note shall
expressly so provide) and (ii) any assignment or sale of all or part of such
Registered Loan (and the Registered Note, if any, evidencing the same) may be
effected only by registration of such assignment or sale on the Register,
together with the surrender of the Registered Note, if any, evidencing the same
duly endorsed by (or accompanied by a written instrument of assignment or sale
duly executed by) the holder of such Registered Note, whereupon, at the request
of the designated assignee(s) or transferee(s), one or more new Registered Notes
in the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the registration of assignment or sale of
any Registered Loan (and the Registered Note, if any evidencing the same),
Administrative Borrower shall treat the Person in whose name such Loan (and the
Registered Note, if any, evidencing the same) is registered as the owner thereof
for the purpose of receiving all payments thereon and for all other purposes,
notwithstanding notice to the contrary. In the case of any assignment by a
Lender of all or any portion of its Term Loan to an Affiliate of such Lender or
a Related Fund of such Lender, and which assignment is not recorded in the
Register, the assigning Lender, on behalf of Administrative Borrower, shall
maintain a comparable register.
(h) In the event that a Lender sells participations in the
Registered Loan, such Lender, on behalf of Administrative Borrower, shall
maintain a register on which it enters the name of all participants in the
Registered Loans held by it (the "Participant Register"). A Registered Loan (and
the Registered Note, if any, evidencing the same) may be participated in whole
or in part only by registration of such participation on the Participant
Register (and each Registered Note shall expressly so provide). Any
participation of such Registered Loan (and the Registered Note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register.
ARTICLE 12
THE AGENT AND THE CO-AGENT
12.1 Appointment and Authorization. Each Lender hereby designates and
appoints the Agent and the Co-Agent as its agent under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes the Agent and
the Co-Agent to take such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform
such duties as are expressly delegated to them by the terms of this Agreement or
any other Loan Document, together with such powers as are reasonably incidental
thereto. Each of the Agent and the Co-Agent agrees to act as such on the express
conditions contained in this Article 12. The provisions of this Article 12 are
solely for the benefit of the Agent, the Co-Agent and the Lenders and, no
Borrower Party shall have any rights as a third party beneficiary of any of the
provisions contained herein, nor shall anything contained in this Article 12
limit any rights set forth elsewhere in this Agreement the Borrower Parties have
or may
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have against the Agent, the Co-Agent, any Bank Products Provider, any
Lender, any Letter of Credit Issuer or any other Agent-Related Person.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, neither the Agent nor the Co-Agent
shall have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent or the Co-Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent or the
Co-Agent. Without limiting the generality of the foregoing sentence, the use of
the term "agent" in this Agreement with reference to the Agent or the Co-Agent
is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law. Instead, such
term is used merely as a matter of market custom, and is intended to create or
reflect only an administrative relationship between independent contracting
parties. Except as expressly otherwise provided in this Agreement, the Agent and
the Co-Agent shall have and may use their sole discretion with respect to
exercising or refraining from exercising any discretionary rights or taking or
refraining from taking any actions which the Agent or the Co-Agent is expressly
entitled to take or assert under this Agreement and the other Loan Documents,
including (a) the determination of the applicability of ineligibility criteria
with respect to the calculation of the Borrowing Base, (b) the making of Agent
Advances pursuant to Section 1.2(j), and (c) the exercise of remedies pursuant
to Section 9.2, and any action so taken or not taken shall be deemed consented
to by the Lenders.
12.2 Delegation of Duties. The Agent and the Co-Agent may execute any of
their duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys in fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. Neither the Agent nor
the Co-Agent shall be responsible for the negligence or misconduct of any agent
or attorney in fact that it selects as long as such selection was made without
gross negligence or willful misconduct.
12.3 Liability of Agent and Co-Agent. None of the Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by any Borrower Party, or
any officer thereof, contained in this Agreement or in any other Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Agent or the Co-Agent under or in connection
with, this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Borrower Party or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to ascertain or
to inquire as to
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the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Parent or any of the Parent's Subsidiaries
or Affiliates.
12.4 Reliance by Agent and the Co-Agent. The Agent and the Co-Agent shall
be entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to the Borrower Parties), independent
accountants and other experts selected by the Agent or the Co-Agent. The Agent
and the Co-Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless they shall first
receive such advice or concurrence of the Required Lenders as they deem
appropriate and, if they so request, they shall first be indemnified to their
satisfaction by the Lenders against any and all liability and expense which may
be incurred by them by reason of taking or continuing to take any such action.
The Agent and the Co-Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required Lenders (or all Lenders if
so required by Section 11.1) and such request and any action taken or failure to
act pursuant thereto shall be binding upon all of the Lenders.
12.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, unless the Agent
shall have received written notice from a Lender or the Borrowers referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 9.
12.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent and the Co-Agent hereinafter taken, including any review of the
affairs of Borrower Parties and their Affiliates, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent and the Co-Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrower Parties and their Affiliates,
and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Borrowers. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its
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own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrower Parties. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the Agent,
neither the Agent nor the Co-Agent shall have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of Borrower Parties which may come into the possession of any
of the Agent-Related Persons.
12.7 Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Lenders shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Borrowers and
without limiting the obligation of the Borrowers to do so), in accordance with
their Pro Rata Shares, from and against any and all Indemnified Liabilities as
such term is defined in Section 13.11; provided, however, that no Lender shall
be liable for the payment to the Agent-Related Persons of any portion of such
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender shall
reimburse the Agent and the Co-Agent upon demand for its Pro Rata Share of any
costs or out of pocket expenses (including Attorney Costs) incurred by the Agent
and the Co-Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the Agent
or the Co-Agent is not reimbursed for such expenses by or on behalf of the
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent or the
Co-Agent.
12.8 Agent in Individual Capacity. The Agent, the Co-Agent and their
respective Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, acquire equity interests in and generally engage in
any kind of banking, trust, financial advisory, underwriting or other business
with the Parent and its Subsidiaries and Affiliates as though the Agent were not
the Agent and the Co-Agent were not the Co-Agent hereunder and without notice to
or consent of the Lenders. The Agent, the Co-Agent or their respective
Affiliates may receive information regarding the Borrowers, their Affiliates and
Account Debtors (including information that may be subject to confidentiality
obligations in favor of the Borrowers or such Affiliates) and acknowledge that
the Agent, the Co-Agent and the Bank Products Providers shall be under no
obligation to provide such information to them. With respect to its Loans, if
any, the Agent and the Co-Agent shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent or the Co-Agent, as the case may be, and the terms "Lender" and
"Lenders" include the Agent or the Co-Agent in their individual capacities.
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12.9 Successor Agent. The Agent may resign as Agent upon at least thirty
(30) days' prior notice to the Lenders and the Borrowers, such resignation to be
effective upon the acceptance of a successor agent to its appointment as Agent.
In the event the Agent sells all of its Commitment, Revolving Loans and/or Term
Loans as part of a sale, transfer or other disposition by the Agent of
substantially all of its loan portfolio, the Agent shall resign as Agent and
Collateral Agent and such purchaser or transferee shall become the successor
Agent hereunder. Notwithstanding the foregoing, Wachovia Bank, National
Association will continue to serve as Agent through and including the Transition
Period End Date and shall resign as Agent on the Transition Period End Date
without regard to the 30-day notice period set forth in this Section, and shall
continue to be entitled to all of the rights granted to the Agent hereunder,
unless replaced by the SP Successor Agent prior to such date. Notwithstanding
anything to the contrary set forth herein or in any other Loan Document, until
the Transition Period End Date, the Co-Agent (and not the Agent) will have the
sole authority with respect to any matters referred to herein or in any other
Loan Document which require the permission or consent of the Agent and Co-Agent
hereunder or thereunder. Subject to the foregoing, if the Agent resigns under
this Agreement, the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders. If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Lenders and the Borrowers, a successor agent from among the
Lenders. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article 12 shall continue to inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
12.10 Withholding Tax.
(a) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Lender claims exemption from, or a
reduction of, U. S. withholding tax under Sections 1441 or 1442 of the Code,
such Lender agrees with and in favor of the Agent, to deliver to the Agent:
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States of America tax treaty, properly
completed IRS Forms W-8BEN and W-8ECI before the payment of any interest in the
first calendar year and before the payment of any interest in each third
succeeding calendar year during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States of America withholding tax because it is
effectively connected with a United States of America trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI before the
payment of
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any interest is due in the first taxable year of such Lender and in each
succeeding taxable year of such Lender during which interest may be paid under
this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States of America as a condition to exemption
from, or reduction of, United States of America withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States of America tax treaty by providing IRS
Form FW-8BEN and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations owing to such Lender, such
Lender agrees to notify the Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Borrowers to such Lender. To
the extent of such percentage amount, the Agent will treat such Lender's IRS
Form W-8BEN as no longer valid.
(c) If any Lender claiming exemption from United States of America
withholding tax by filing IRS Form W-8ECI with the Agent sells, assigns, grants
a participation in, or otherwise transfers all or part of the Obligations owing
to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States of America or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax ineffective,
or for any other reason) such Lender shall indemnify the Agent fully for all
amounts paid, directly or indirectly, by the Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section, together
with all costs and expenses (including Attorney Costs). The obligation of the
Lenders under this subsection shall survive the payment of all Obligations and
the resignation or replacement of the Agent.
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12.11 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Agent's Liens upon any
Collateral, other than any cash collateral or Supporting Letter of Credit
provided by Borrowers pursuant to Section 1.4(g) (i) upon the termination of the
Commitments and payment and satisfaction in full by Borrowers of all Loans and
reimbursement obligations in respect of Letters of Credit and Credit Support,
and the termination of all outstanding Letters of Credit (whether or not any of
such obligations are due), unless such Letters of Credit are cash collateralized
or supported by a Supporting Letter of Credit pursuant to Section 1.4(g) and all
other Obligations; (ii) constituting property being sold or disposed of if the
Borrowers certify to the Agent that the sale or disposition is made in
compliance with Section 7.9 (and the Agent may rely conclusively on any such
certificate, without further inquiry); (iii) constituting property in which the
Borrower Parties owned no interest at the time the Lien was granted or at any
time thereafter; or (iv) constituting property leased to the Borrower Parties
under a lease which has expired or been terminated in a transaction permitted
under this Agreement. Except as provided above, the Agent will not release any
of the Agent's Liens without the prior written authorization of all Lenders;
provided that the Agent may, in its discretion, release the Agent's Liens on
Collateral valued in the aggregate not in excess of $500,000 during each Fiscal
Year without the prior written authorization of the Lenders and the Agent may
release the Agent's Liens on Collateral valued in the aggregate not in excess of
$1,000,000 during each Fiscal Year with the prior written authorization of
Required Lenders. Upon request by the Agent or the Borrowers at any time, the
Lenders will confirm in writing the Agent's authority to release any Agent's
Liens upon particular types or items of Collateral pursuant to this Section
12.11.
(b) Upon receipt by the Agent of any authorization required
pursuant to Section 12.11(a) from the Lenders of the Agent's authority to
release any Agent's Liens upon particular types or items of Collateral, and upon
at least five (5) Business Days' prior written request by the Borrowers, the
Agent shall (and is hereby irrevocably authorized by the Lenders to) execute
such documents as may be necessary to evidence the release of the Agent's Liens
upon such Collateral; provided, however, that (i) the Agent shall not be
required to execute any such document on terms which, in the Agent's opinion,
would expose the Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Liens (other than those expressly being released) upon (or
obligations of the Borrower Parties in respect of) all interests retained by any
Borrower Party, including the proceeds of any sale, all of which shall continue
to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by the Borrower Parties
or is cared for, protected or insured or has been encumbered, or that the
Agent's Liens have
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been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to the Agent pursuant to any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission or
event related thereto, the Agent may act in any manner it may deem appropriate
in its sole discretion given the Agent's own interest in the Collateral in its
capacity as one of the Lenders and that the Agent shall have no other duty or
liability whatsoever to any Lender as to any of the foregoing.
12.12 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Required Lenders, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of all Lenders, set-off against the
Obligations, any amounts owing by such Lender to the Borrowers or any accounts
of the Borrower Parties now or hereafter maintained with such Lender. Each of
the Lenders further agrees that it shall not, unless specifically requested to
do so by the Agent and the Co-Agent, take or cause to be taken any other action
to enforce its rights under this Agreement or against the Borrower Parties,
including the commencement of any legal or equitable proceedings, to foreclose
any Lien on, or otherwise enforce any security interest in, any of the
Collateral.
(b) If at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations of the Borrowers to such Lender arising
under, or relating to, this Agreement or the other Loan Documents, except for
any such proceeds or payments received by such Lender from the Agent pursuant to
the terms of this Agreement, or (ii) payments from the Agent in excess of such
Lender's ratable portion of all such distributions by the Agent, such Lender
shall promptly (A) turn the same over to the Agent, in kind, and with such
endorsements as may be required to negotiate the same to the Agent, or in same
day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (B) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
12.13 Agency for Perfection. Each Lender hereby appoints each other Lender
as agent for the purpose of perfecting the Lenders' security interest in assets
which, in
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accordance with Article 9 of the UCC can be perfected only by possession as of
the Closing Date. Should any Lender (other than the Agent) obtain possession of
any such Collateral, such Lender shall notify the Agent thereof, and, promptly
upon the Agent's request therefor shall deliver such Collateral to the Agent or
in accordance with the Agent's instructions.
12.14 Payments by Agent to Lenders. All payments to be made by the Agent
to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, on the applicable Assignment and Acceptance),
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest on the Revolving Loans, the Term Loan
or otherwise. Unless the Agent receives notice from the Borrowers prior to the
date on which any payment is due to the Lenders that the Borrowers will not make
such payment in full as and when required, the Agent may assume that the
Borrowers have made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent the
Borrowers have not made such payment in full to the Agent, each Lender shall
repay to the Agent on demand such amount distributed to such Lender, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
12.15 Settlement.
(a) (i) Each Lender's funded portion of the Revolving Loans is
intended by the Lenders to be equal at all times to such Lender's Pro Rata Share
of the outstanding Revolving Loans. Notwithstanding such agreement, the Agent,
the Co-Agent, and the other Lenders agree (which agreement shall not be for the
benefit of or enforceable by the Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Revolving Loans, the Non-Ratable Loans and the Agent Advances
shall take place on a periodic basis in accordance with the following
provisions:
(ii) The Agent shall request settlement ("Settlement") with
the Lenders on at least a weekly basis, or on a more frequent basis at Agent's
election, (A) on behalf of the Lenders, with respect to each outstanding
Non-Ratable Loan, (B) for itself or the Co-Agent, with respect to each Agent
Advance, and (C) with respect to collections received, in each case, by
notifying the Lenders of such requested Settlement by telecopy, telephone or
other similar form of transmission, of such requested Settlement, no later than
11:00 a.m. (New York, New York time) on the date of such requested Settlement
(the "Settlement Date"). Each Lender (other than the Agent, in the case of
Non-Ratable
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Loans and the Agent or the Co-Agent in the case of Agent Advances) shall
transfer the amount of such Lender's Pro Rata Share of the outstanding principal
amount of the Non-Ratable Loans and Agent Advances with respect to each
Settlement to the Agent, to Agent's account, not later than 3:00 p.m. (New York,
New York time), on the Settlement Date applicable thereto. Settlements may occur
during the continuation of a Default or an Event of Default and whether or not
the applicable conditions precedent set forth in Article 8 have then been
satisfied. Such amounts made available to the Agent shall be applied against the
amounts of the applicable Non-Ratable Loan or Agent Advance and, together with
the portion of such Non-Ratable Loan or Agent Advance representing the Agent's
(or, in the case of Agent Advances, the Co-Agent) Pro Rata Share thereof, shall
constitute Revolving Loans of such Lenders. If any such amount is not
transferred to the Agent by any Lender on the Settlement Date applicable
thereto, the Agent shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Federal Funds Rate for the first
three (3) days from and after the Settlement Date and thereafter at the Interest
Rate then applicable to the Revolving Loans (A) for itself, with respect to each
outstanding Non-Ratable Loan, and (B) for itself, with respect to each Agent
Advance.
(iii) Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Agent (whether before or after the
occurrence of a Default or an Event of Default and regardless of whether the
Agent has requested a Settlement with respect to a Non-Ratable Loan or Agent
Advance), each other Lender (A) shall irrevocably and unconditionally purchase
and receive from the Agent without recourse or warranty, an undivided interest
and participation in such Non-Ratable Loan or Agent Advance equal to such
Lender's Pro Rata Share of such Non-Ratable Loan or Agent Advance and (B) if
Settlement has not previously occurred with respect to such Non-Ratable Loans or
Agent Advances, upon demand by Agent or Co-Agent, as applicable, shall pay to
the Agent (or, in the case of Agent Advances, the Co-Agent) as the purchase
price of such participation an amount equal to one-hundred percent (100%) of
such Lender's Pro Rata Share of such Non-Ratable Loans or Agent Advances. If
such amount is not in fact made available to the Agent or the Co-Agent by any
Lender, the Agent or the Co-Agent shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the Federal Funds Rate
for the first three (3) days from and after such demand and thereafter at the
Interest Rate then applicable to Base Rate Loans.
(iv) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any Non-Ratable Loan or
Agent Advance pursuant to clause (iii) above, the Agent shall promptly
distribute to such Lender, such Lender's Pro Rata Share of all payments of
principal and interest and all proceeds of Collateral received by the Agent in
respect of such Non-Ratable Loan or Agent Advance.
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(v) Between Settlement Dates, the Agent, to the extent no
Agent Advances are outstanding, may pay to itself any payments received by the
Agent, which in accordance with the terms of this Agreement would be applied to
the reduction of the Revolving Loans, for application to the Agent's Revolving
Loans including Non-Ratable Loans. If, as of any Settlement Date, collections
received since the then immediately preceding Settlement Date have been applied
to the Agent's Revolving Loans (other than to Non-Ratable Loans or Agent
Advances in which such Lender has not yet funded its purchase of a participation
pursuant to clause (iii) above), as provided for in the previous sentence, the
Agent shall pay to itself for the accounts of the Lenders, to be applied to the
outstanding Revolving Loans of such Lenders, an amount such that each Lender
shall, upon receipt of such amount, have, as of such Settlement Date, its Pro
Rata Share of the Revolving Loans. During the period between Settlement Dates,
the Agent with respect to Non-Ratable Loans, the Agent or the Co-Agent with
respect to Agent Advances, and each Lender with respect to the Revolving Loans
other than Non-Ratable Loans and Agent Advances, shall be entitled to interest
at the applicable rate or rates payable under this Agreement on the actual
average daily amount of funds employed by the Agent, the Co-Agent and the other
Lenders.
(vi) Unless the Agent has received written notice from a
Lender to the contrary, the Agent may assume that the applicable conditions
precedent set forth in Article 8 have been satisfied and the requested Borrowing
will not exceed Availability on any Funding Date for a Revolving Loan or
Non-Ratable Loan.
(b) Lenders' Failure to Perform. All Revolving Loans (other than
Non-Ratable Loans and Agent Advances) shall be made by the Lenders
simultaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Revolving Loans hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligation to make any Revolving Loans
hereunder, (ii) no failure by any Lender to perform its obligation to make any
Revolving Loans hereunder shall excuse any other Lender from its obligation to
make any Revolving Loans hereunder, and (iii) the obligations of each Lender
hereunder shall be several, not joint and several.
(c) Defaulting Lenders. Unless the Agent receives notice from a
Lender on or prior to the Closing Date or, with respect to any Borrowing after
the Closing Date, at least one (1) Business Day prior to the date of such
Borrowing, that such Lender will not make available as and when required
hereunder to the Agent that Lender's Pro Rata Share of a Borrowing, the Agent
may assume that each Lender has made such amount available to the Agent in
immediately available funds on the Funding Date. Furthermore, the Agent may, in
reliance upon such assumption, make available to the Borrowers on such date a
corresponding amount. If any Lender has not transferred its full Pro Rata Share
to the Agent in immediately available funds and the Agent has transferred
corresponding amount to the Borrowers on the Business Day following such
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Funding Date that Lender shall make such amount available to the Agent, together
with interest at the Federal Funds Rate, for that day. A notice by the Agent
submitted to any Lender with respect to amounts owing shall be conclusive,
absent manifest error. If each Lender's full Pro Rata Share is transferred to
the Agent as required, the amount transferred to the Agent shall constitute that
Lender's Revolving Loan for all purposes of this Agreement. If that amount is
not transferred to the Agent on the Business Day following the Funding Date, the
Agent will notify the Borrowers of such failure to fund and, upon demand by the
Agent, the Borrowers shall pay such amount to the Agent for the Agent's account,
together with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the Interest Rate applicable at the time
to the Revolving Loans comprising that particular Borrowing. The failure of any
Lender to make any Revolving Loan on any Funding Date (any such Lender, prior to
the cure of such failure, being hereinafter referred to as a "Defaulting
Lender") shall not relieve any other Lender of its obligation hereunder to make
a Revolving Loan on that Funding Date. No Lender shall be responsible for any
other Lender's failure to advance such other Lenders' Pro Rata Share of any
Borrowing.
(d) Retention of Defaulting Lender's Payments. The Agent shall not
be obligated to transfer to a Defaulting Lender any payments made by Borrowers
to the Agent for the Defaulting Lender's benefit; nor shall a Defaulting Lender
be entitled to the sharing of any payments hereunder. Amounts payable to a
Defaulting Lender shall instead be paid to or retained by the Agent. In its
discretion, the Agent may loan to the Borrowers the amount of all such payments
received or retained by it for the account of such Defaulting Lender. Any
amounts so loaned to the Borrowers shall bear interest at the rate applicable to
Base Rate Loans and for all other purposes of this Agreement shall be treated as
if they were Revolving Loans, provided, however, that for purposes of voting or
consenting to matters with respect to the Loan Documents and determining Pro
Rata Shares, such Defaulting Lender shall be deemed not to be a "Lender". Until
a Defaulting Lender cures its failure to fund its Pro Rata Share of any
Borrowing (A) such Defaulting Lender shall not be entitled to any portion of the
Unused Line Fee and (B) the Unused Line Fee shall accrue in favor of the Lenders
which have funded their respective Pro Rata Shares of such requested Borrowing
and shall be allocated among such performing Lenders ratably based upon their
relative Commitments. This Section shall remain effective with respect to such
Lender until such time as the Defaulting Lender shall no longer be in default of
any of its obligations under this Agreement. The terms of this Section shall not
be construed to increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by the Borrowers of their duties and
obligations hereunder.
(e) Removal of Defaulting Lender. At the Borrowers' request, the
Agent or an Eligible Assignee reasonably acceptable to the Agent, the Co-Agent
and the Borrowers shall have the right (but not the obligation) to purchase from
any Defaulting Lender, and each Defaulting Lender shall, upon such request, sell
and assign to the Agent or such Eligible Assignee, all of the Defaulting
Lender's outstanding Commitments
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hereunder. Such sale shall be consummated promptly after Agent has arranged for
a purchase by Agent or an Eligible Assignee pursuant to an Assignment and
Acceptance, and at a price equal to the outstanding principal balance of the
Defaulting Lender's Loans, plus accrued interest and fees, without premium or
discount.
12.16 Letters of Credit; Intra-Lender Issues.
(a) Notice of Letter of Credit Balance. On each Settlement Date,
the Agent shall notify each Lender of the issuance of all Letters of Credit
since the prior Settlement Date.
(b) Participations in Letters of Credit.
(i) Purchase of Participations. Immediately upon issuance of
any Letter of Credit in accordance with Section 1.4(d), each Lender shall be
deemed to have irrevocably and unconditionally purchased and received without
recourse or warranty, an undivided interest and participation equal to such
Lender's Pro Rata Share of the face amount of such Letter of Credit or the
Credit Support provided through the Agent to the Letter of Credit Issuer, if not
a Bank Products Provider, in connection with the issuance of such Letter of
Credit (including all obligations of the Borrowers with respect thereto, and any
security therefor or guaranty pertaining thereto).
(ii) Sharing of Reimbursement Obligation Payments. Whenever
the Agent receives a payment from the Borrowers on account of reimbursement
obligations in respect of a Letter of Credit or Credit Support as to which the
Agent has previously received for the account of the Letter of Credit Issuer
thereof payment from a Lender, the Agent shall promptly pay to such Lender such
Lender's Pro Rata Share of such payment from the Borrowers. Each such payment
shall be made by the Agent on the next Settlement Date.
(iii) Documentation. Upon the request of any Lender, the Agent
shall furnish to such Lender copies of any Letter of Credit, Credit Support for
any Letter of Credit, reimbursement agreements executed in connection therewith,
applications for any Letter of Credit, and such other documentation as may
reasonably be requested by such Lender.
(iv) Obligations Irrevocable. The obligations of each Lender
to make payments to the Agent with respect to any Letter of Credit or with
respect to their participation therein or with respect to any Credit Support for
any Letter of Credit or with respect to the Revolving Loans made as a result of
a drawing under a Letter of Credit and the obligations of the Borrowers for
whose account the Letter of Credit or Credit Support was issued to make payments
to the Agent, for the account of the Lenders, shall be irrevocable and shall not
be subject to any qualification or exception whatsoever, including any of the
following circumstances:
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(1) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(2) the existence of any claim, setoff, defense or other
right which the Borrowers may have at any time against a beneficiary named in a
Letter of Credit or any transferee of any Letter of Credit (or any Person for
whom any such transferee may be acting), any Lender, the Agent, the issuer of
such Letter of Credit, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transactions between the
Borrowers or any other Person and the beneficiary named in any Letter of
Credit);
(3) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
(4) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents;
(5) the occurrence of any Default or Event of Default; or
(6) the failure of the Borrowers to satisfy the applicable
conditions precedent set forth in Article 8.
(c) Recovery or Avoidance of Payments; Refund of Payments In
Error. In the event any payment by or on behalf of the Borrowers received by the
Agent with respect to any Letter of Credit or Credit Support provided for any
Letter of Credit and distributed by the Agent to the Lenders on account of their
respective participations therein is thereafter set aside, avoided or recovered
from the Agent in connection with any receivership, liquidation or bankruptcy
proceeding, the Lenders shall, upon demand by the Agent, pay to the Agent their
respective Pro Rata Shares of such amount set aside, avoided or recovered,
together with interest at the rate required to be paid by the Agent upon the
amount required to be repaid by it. Unless the Agent receives notice from the
Borrowers prior to the date on which any payment is due to the Lenders that the
Borrowers will not make such payment in full as and when required, the Agent may
assume that the Borrowers have made such payment in full to the Agent on such
date in immediately available funds and the Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent the Borrowers have not made such payment in full to the Agent, each
Lender shall repay to the Agent on demand such amount distributed to such
Lender, together with interest thereon at the Federal Funds Rate for each day
from the date such amount is distributed to such Lender until the date repaid.
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(d) Indemnification by Lenders. To the extent not reimbursed by
the Borrowers and without limiting the obligations of the Borrowers hereunder,
the Lenders agree to indemnify the Letter of Credit Issuer ratably in accordance
with their respective Pro Rata Shares, for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including attorneys' fees) or disbursements of any kind and nature whatsoever
that may be imposed on, incurred by or asserted against the Letter of Credit
Issuer in any way relating to or arising out of any Letter of Credit or the
transactions contemplated thereby or any action taken or omitted by the Letter
of Credit Issuer under any Letter of Credit or any Loan Document in connection
therewith; provided that no Lender shall be liable for any of the foregoing to
the extent it arises from the gross negligence or willful misconduct of the
Person to be indemnified. Without limitation of the foregoing, each Lender
agrees to reimburse the Letter of Credit Issuer promptly upon demand for its Pro
Rata Share of any costs or expenses payable by the Borrowers to the Letter of
Credit Issuer, to the extent that the Letter of Credit Issuer is not promptly
reimbursed for such costs and expenses by the Borrowers. The agreement contained
in this Section shall survive payment in full of all other Obligations.
12.17 Concerning the Collateral and the Related Loan Documents. Each
Lender authorizes and directs the Agent and the Co-Agent to enter into the other
Loan Documents, for the ratable benefit and obligation of the Agent, the
Co-Agent and the Lenders. Each Lender agrees that any action taken by the Agent,
the Co-Agent, Majority Lenders or Required Lenders, as applicable, in accordance
with the terms of this Agreement or the other Loan Documents, and the exercise
by the Agent, the Majority Lenders, or the Required Lenders, as applicable, of
their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders. The Lenders acknowledge that the Revolving Loans, the Term Loan, Agent
Advances, Non-Ratable Loans, Hedge Agreements, Bank Products and all interest,
fees and expenses hereunder constitute one Debt, secured pari passu by all of
the Collateral.
12.18 Field Audit and Examination Reports; Disclaimer by Lenders. By
signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by or
on behalf of the Agent;
(b) expressly agrees and acknowledges that none of any Bank
Products Provider, the Agent or the Co-Agent (i) makes any representation or
warranty as to the accuracy of any Report, or (ii) shall be liable for any
information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent, the Co-Agent, or any Bank
Products Provider or other party performing any audit or examination will
inspect only
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specific information regarding the Borrower Parties and will rely significantly
upon the Borrower Parties' books and records, as well as on representations of
the Borrower Parties' personnel;
(d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent, the
Co-Agent and any such other Lender preparing a Report harmless from any action
the indemnifying Lender may take or conclusion the indemnifying Lender may reach
or draw from any Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may make to the
Borrowers, or the indemnifying Lender's participation in, or the indemnifying
Lender's purchase of, a loan or loans of the Borrowers; and (ii) to pay and
protect, and indemnify, defend and hold the Agent, the Co-Agent and any such
other Lender preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses and other amounts (including Attorney
Costs) incurred by the Agent, the Co-Agent and any such other Lender preparing a
Report as the direct or indirect result of any third parties who might obtain
all or part of any Report through the indemnifying Lender.
12.19 Relation Among Lenders. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent, or the Co-Agent)
authorized to act for, any other Lender.
12.20 Additional Agents. None of the Lenders or other entities identified
on the facing page of or elsewhere in this Agreement as a "Book Manager",
"Arranger", "Syndication Agent" or "Documentation Agent" shall, in such
capacities, have any right, power, obligation, liability, responsibility or duty
under this Agreement or any other Loan Document other than those applicable to
all Lenders as such. Without limiting the foregoing, none of the Lenders so
identified shall have or be deemed to have any fiduciary relationship with any
other Lender. Each Lender acknowledges that it has not relied, and will not
rely, on any of the Lenders or other Persons so identified in deciding to enter
into this Agreement or any other Loan Document or in taking or not taking action
hereunder or thereunder.
ARTICLE 13
MISCELLANEOUS
13.1 No Waivers; Cumulative Remedies. No failure by the Agent, the
Co-Agent or any Lender to exercise any right, remedy, or option under this
Agreement or any present or future supplement thereto, or in any other agreement
between or among the Borrower Parties and the Agent, the Co-Agent and/or any
Lender, or delay by the Agent, the Co-Agent, or any Lender in exercising the
same, will operate as a waiver
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thereof. No waiver by the Agent, the Co-Agent or any Lender will be effective
unless it is in writing, and then only to the extent specifically stated. No
waiver by the Agent, the Co-Agent or the Lenders on any occasion shall affect or
diminish the Agent's, the Co-Agent's and each Lender's rights thereafter to
require strict performance by the Borrower Parties of any provision of this
Agreement. The Agent, the Co-Agent and the Lenders may proceed directly to
collect the Obligations without any prior recourse to the Collateral. The
Agent's, the Co-Agent's and each Lender's rights under this Agreement will be
cumulative and not exclusive of any other right or remedy which the Agent, the
Co-Agent or any Lender may have.
13.2 Severability. The illegality or unenforceability of any provision of
this Agreement or any Loan Document or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this Agreement or any instrument or agreement
required hereunder.
13.3 Governing Law; Choice of Forum; Service of Process.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION
ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE
OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF NEW
YORK; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR ANY HEDGE AGREEMENT MAY BE BROUGHT IN THE COURTS
OF THE STATE OF NEW YORK OR OF THE UNITED STATES LOCATED IN NEW YORK CITY, NEW
YORK; AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF EACH BORROWER
PARTY, THE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF EACH
BORROWER PARTY, THE AGENT EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS
SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER
PARTIES OR THEIR PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR
THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE
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COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES
HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE
IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE
THOSE JURISDICTIONS.
(c) EACH BORROWER PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE ADMINISTRATIVE
BORROWER AT ITS ADDRESS SET FORTH IN SECTION 13.8 AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED
IN THE U.S. MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE
RIGHT OF AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER
PERMITTED BY LAW.
13.4 Waiver of Jury Trial. THE BORROWER PARTIES, THE LENDERS AND THE
AGENT EACH IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, ANY HEDGE AGREEMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF
ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY
AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER PARTIES, THE LENDERS AND THE
AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS, ANY HEDGE AGREEMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
13.5 Survival of Representations and Warranties. All of the Borrower
Parties' representations and warranties contained in this Agreement shall
survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Agent, the Co-Agent or the Lenders or
their respective agents.
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13.6 Other Security and Guaranties. The Agent, may, without notice or
demand and without affecting the Borrower Parties' obligations hereunder, from
time to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce or release such collateral or any part thereof; and (b) accept and hold
any endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
13.7 Fees and Expenses. The Borrowers agree to pay to the Agent and the
Co-Agent, for their respective benefit, on demand, all costs and expenses that
such Agent and/or Co-Agent pays or incurs in connection with the negotiation,
preparation, syndication, consummation, administration, enforcement, and
termination of this Agreement or any of the other Loan Documents or Hedge
Agreements, including: (a) Attorney Costs; (b) costs and expenses (including
attorneys' and paralegals' fees and disbursements) for any amendment,
supplement, waiver, consent, or subsequent closing in connection with the Loan
Documents or Hedge Agreements and the transactions contemplated thereby; (c)
costs and expenses of lien and title searches and title insurance; (d) taxes,
fees and other charges for recording any mortgages, filing financing statements
and continuations, and other actions to perfect, protect, and continue the
Agent's Liens (including costs and expenses paid or incurred by the Agent and
the Co-Agent in connection with the consummation of Agreement); (e) sums paid or
incurred to pay any amount or take any action required of the Borrower Parties
under the Loan Documents or Hedge Agreements that the Borrower Parties fail to
pay or take; (f) costs of appraisals, inspections, and verifications of the
Collateral and other due diligence, including travel, lodging, and meals for
inspections of the Collateral and the Borrower Parties' operations by the Agent
and/or the Co-Agent plus the Agent's and/or the Co-Agent's then
generally-applicable and customary charge for field examinations and audits or
any reappraisals following notice by the Administrative Borrower pursuant to
Section 7.28 and the preparation of reports thereof for each Person retained or
employed by the Agent and/or the Co-Agent with respect to each field examination
or audit); provided, however, absent the existence of an Increased Reporting
Event, Default or an Event of Default, the obligations of the Borrowers to
reimburse the Agent and/or the Co-Agent for the costs of appraisals (other than
for field examinations and audits) shall be limited as set forth in Section 7.4,
and (g) costs and expenses of forwarding loan proceeds, collecting checks and
other items of payment, and establishing and maintaining Payment Accounts and
lock boxes, and costs and expenses of preserving and protecting the Collateral.
In addition, the Borrowers agree to pay costs and expenses incurred by the Agent
and the Co-Agent (including Attorneys' Costs) to the Agent and the Co-Agent, for
their respective benefit, on demand, and to the other Lenders for their benefit,
on demand, and all reasonable fees, expenses and disbursements incurred by such
other Lenders, in each case, paid or incurred to obtain payment of the
Obligations, enforce the Agent's Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the
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Loan Documents or Hedge Agreements, or to defend any claims made or threatened
against the Agent, the Co-Agent or any Lender arising out of the transactions
contemplated hereby (including preparations for and consultations concerning any
such matters). The foregoing shall not be construed to limit any other
provisions of the Loan Documents or Hedge Agreements regarding costs and
expenses to be paid by the Borrowers. All of the foregoing costs and expenses
shall be charged to the Borrowers' Loan Account as Revolving Loans as described
in Section 3.5.
13.8 Notices. Except as otherwise provided herein, all notices, demands
and requests that any party is required or elects to give to any other shall be
in writing, or by a telecommunications device capable of creating a written
record, and any such notice shall become effective (a) upon personal delivery
thereof, including, but not limited to, delivery by overnight mail and courier
service, (b) four (4) days after it shall have been mailed by United States
mail, first class, certified or registered, with postage prepaid, or (c) in the
case of notice by such a telecommunications device, when properly transmitted
and confirmed, in each case addressed to the party to be notified as follows:
If to the Agent:
Wachovia Bank, National Association
000 Xxxxxxxxx Xxxxxx, X.X.
Mail Code 8056
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Asset Based Lending
Telecopy No.: (000) 000-0000
Email: xxxx.xxxxxx@xxxxxxxx.xxx
with copies to:
Xxxx Xxxxxxxx, Xxxxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
Email: xxxxxxxxxx@xxxxxxxxxxxx.xxx
If to the Borrower Parties, or any of them:
Salton, Inc.
0000 Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
Email: xxxxxxx@xxxxxxxxx.xxx
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with copies to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
Email: xxxxxxxxxxx@xxxxxxxxxxxx.xxx
If to the Co-Agent:
Silver Point Finance, LLC
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxxxxxx XxxXxxxxx
Xxxx Xxxxxxxxxx
Telecopy No.: (000) 000-0000
Email: xxxxxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
xxxxxxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
with copies to:
Xxxxxxxx & Xxxxxxxx LLP
1290 Avenue of the Americas, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
Email: xxxxxxxx@xxxx.xxx
If to a Lender, to such Lender at such address as shall be set forth on
its signature page hereof,
in each case above, or to such other address as each party may designate for
itself by like notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to the
persons designated above to receive copies shall not adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
13.9 Waiver of Notices. Unless otherwise expressly provided herein, the
Borrower Parties waive presentment, and notice of demand or dishonor and protest
as to any instrument, notice of intent to accelerate the Obligations and notice
of acceleration of the Obligations, as well as any and all other notices to
which it might otherwise be entitled. No notice to or demand on the Borrower
Parties which the Agent, the Co-Agent or any Lender may elect to give shall
entitle the Borrower Parties, or any of them, to any or further notice or demand
in the same, similar or other circumstances.
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13.10 Binding Effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective representatives, successors, and
assigns of the parties hereto; provided, however, that no interest herein may be
assigned by the Borrower Parties without prior written consent of the Agent, the
Co-Agent and each Lender. The rights and benefits of the Agent, the Co-Agent and
the Lenders hereunder shall, if such Persons so agree, inure to any party
acquiring any interest in the Obligations or any part thereof.
13.11 Indemnity of the Agent, the Co-Agent and the Lenders by the
Borrowers.
(a) Each Borrower agrees to defend, indemnify and hold the
Agent-Related Persons, and each Lender and each of its respective officers,
directors, employees, counsel, representatives, agents and attorneys in fact
(each, an "Indemnified Person") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including Attorney Costs) of any
kind or nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent and/or the Co-Agent or replacement of any Lender) be imposed on, incurred
by or asserted against any such Person in any way relating to or arising out of
this Agreement or any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any Insolvency
Proceeding or appellate proceeding) related to or arising out of this Agreement,
any other Loan Document, or any Hedge Agreements, or the Loans or the use of the
proceeds thereof, whether or not any Indemnified Person is a party thereto (all
the foregoing, collectively, the "Indemnified Liabilities"); provided, that the
Borrowers shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting from the gross negligence or
willful misconduct of such Indemnified Person. The agreements in this Section
shall survive payment of all other Obligations.
(b) Each Borrower agrees to indemnify, defend and hold harmless
the Agent, the Co-Agent and the Lenders from any loss or liability directly or
indirectly arising out of the use, generation, manufacture, production, storage,
release, threatened release, discharge, disposal or presence of a hazardous
substance relating to the Borrowers' operations, business or property. This
indemnity will apply whether the hazardous substance is on, under or about the
Borrower's property or operations or property leased to the Borrowers. The
indemnity includes but is not limited to Attorneys Costs. The indemnity extends
to the Agent, the Co-Agent and the Lenders, their parents, affiliates,
subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys and assigns. "Hazardous substances" means any substance,
material or waste that is or becomes designated or regulated as "toxic,"
"hazardous," "pollutant," or "contaminant" or a similar designation or
regulation under any federal, state or local law (whether under common law,
statute, regulation or otherwise) or judicial or
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administrative interpretation of such, including petroleum or natural gas. This
indemnity will survive repayment of all other Obligations.
(c) It is understood that the handling of the Loan Account and
Collateral of the Borrowers in a combined fashion, as more fully set forth
herein, is done solely as an accommodation to the Borrowers in order to utilize
the collective borrowing powers of the Borrowers in the most efficient and
economical manner and at their request, and that none of the Agent, the Co-Agent
nor any Lender shall incur liability to any Borrower as a result hereof. Each
Borrower expects to derive benefit, directly or indirectly, from the handling of
the Loan Account and the Collateral in a combined fashion since the successful
operation of each Borrower is dependent on the continued successful performance
of the integrated group. To induce the Agent, the Co-Agent and the Lenders to do
so, and in consideration thereof, each Borrower hereby jointly and severally
agrees to indemnify and hold harmless the Agent, the Co-Agent and the Lenders
against any and all liability, expense, loss or claim of damage or injury, made
against the Agent, the Co-Agent or the Lenders by any Borrower or by any third
party whosoever, arising from or incurred by reason of (i) the handling of the
Loan Account and Collateral of the Borrowers as herein provided, (ii) the
Agent's, the Co-Agent's or any Lender's relying on any instructions of the
Administrative Borrower, or (iii) any other action taken by the Agent, the
Co-Agent or any Lender hereunder or under the other Loan Documents.
13.12 Limitation of Liability. NO CLAIM MAY BE MADE BY EACH OF ANY
BORROWER PARTY, ANY LENDER OR OTHER PERSON AGAINST THE AGENT, THE CO-AGENT, ANY
LENDER, OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL,
REPRESENTATIVES, AGENTS OR ATTORNEYS-IN-FACT OF ANY OF THEM FOR ANY SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH
OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY
HEDGE AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, AND EACH BORROWER PARTY AND EACH LENDER HEREBY WAIVES, RELEASES AND
AGREES NOT TO XXX UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND
WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
13.13 Final Agreement. This Agreement and the other Loan Documents are
intended by the Borrower Parties, the Agent, the Co-Agent and the Lenders to be
the final, complete, and exclusive expression of the agreement between them.
This Agreement supersedes any and all prior oral or written agreements relating
to the subject matter hereof. No modification, rescission, waiver, release, or
amendment of any provision of this Agreement or any other Loan Document shall be
made, except by a
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written agreement signed by the Borrower Parties party thereto and a duly
authorized officer of each of the Agent and the requisite Lenders.
13.14 Counterparts. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender, and each Borrower Party in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement; signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so that
all signature pages are physically attached to the same document.
13.15 Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
13.16 Right of Setoff. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Borrowers, any such notice being waived by the
Borrowers to the fullest extent permitted by law, to set-off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Lender or any
Affiliate of such Lender to or for the credit or the account of the Borrowers
against any and all Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not the Agent or such Lender shall have made demand
under this Agreement or any Loan Document and although such Obligations may be
contingent or unmatured. Each Lender agrees promptly to notify the Borrowers and
the Agent after any such set-off and application made by such Lender; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL
EXERCISE ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT
ACCOUNT OR PROPERTY OF ANY BORROWER HELD OR MAINTAINED BY SUCH LENDER WITHOUT
THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.
13.17 Confidentiality.
(a) The Borrower Parties hereby consent that the Agent and each
Lender may issue and disseminate to the public general information describing
the credit accommodation entered into pursuant to this Agreement, including the
name and address of the Borrower Parties and a general description of the
Borrower Parties' businesses and may use the Borrower Parties' name in
advertising and other promotional material.
(b) Each Lender severally agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by the Borrowers Parties
and provided to the Agent, the Co-Agent or such Lender by or on behalf of the
Borrower Parties, under this
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Agreement or any other Loan Document, except to the extent that such information
(i) was or becomes generally available to the public other than as a result of
disclosure by the Agent or such Lender, or (ii) was or becomes available on a
nonconfidential basis from a source other than the Borrower Parties, provided
that such source is not bound by a confidentiality agreement with the Borrower
Parties known to the Agent, the Co-Agent or such Lender; provided, however, that
the Agent, the Co-Agent and any Lender may disclose such information (1) at the
request or pursuant to any requirement of any Governmental Authority to which
the Agent or such Lender is subject or in connection with an examination of the
Agent or such Lender by any such Governmental Authority; (2) pursuant to
subpoena or other court process; (3) when required to do so in accordance with
the provisions of any applicable Requirement of Law; (4) to the extent
reasonably required in connection with any litigation or proceeding (including,
but not limited to, any bankruptcy proceeding) to which the Agent, any Lender or
their respective Affiliates may be party; (5) to the extent reasonably required
in connection with the exercise of any remedy hereunder or under any other Loan
Document; (6) to the Agent's, the Co-Agent's or such Lender's independent
auditors, accountants, attorneys and other professional advisors; (7) to any
prospective Participant or Assignee under any Assignment and Acceptance, actual
or potential, provided that such prospective Participant or Assignee agrees to
keep such information confidential to the same extent required of the Agent and
the Lenders hereunder; (8) as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Borrower Parties
are party or is deemed party with the Agent, the Co-Agent or such Lender, (9) to
its Affiliates and (10) for the purpose of defending itself, reducing its
liability, or protecting or exercising any of its claims, rights, remedies or
interests under or in connection with any Loan Document or any Hedge Agreement.
(c) Each Lender acknowledges that, under certain circumstances the
United States securities laws may prohibit a person who has received material,
non-public information from an issuer from purchasing or selling securities of
such issuer or from communicating such information to any other Person under
circumstances in which it is reasonably foreseeable that such other Person is
likely to purchase or sell such securities. Each Lender further acknowledges
that certain Confidential Information could be considered material non-public
information and agrees that it will not, and it will use reasonable efforts to
ensure that its employees will not, trade in the securities of the Parent on the
basis of such information or communicate such information to any other Person
under circumstances in which it is reasonably foreseeable that such other Person
is likely to purchase or sell such securities.
(d) This Section 13.17 shall survive the termination of this
Agreement.
13.18 Conflicts with Other Loan Documents. Unless otherwise expressly
provided in this Agreement (or in another Loan Document by specific reference to
the applicable provision contained in this Agreement), if any provision
contained in this
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Agreement conflicts with any provision of any other Loan Document, the provision
contained in this Agreement shall govern and control.
13.19 The Administrative Borrower. Each Borrower hereby irrevocably
appoints Salton, Inc. as the borrowing agent and attorney-in-fact for all
Borrowers (the "Administrative Borrower"), which appointment shall remain in
full force and effect unless and until the Agent and the Co-Agent shall have
received prior written notice signed by each Borrower that such appointment has
been revoked and that another Borrower has been appointed the Administrative
Borrower. Each Borrower hereby irrevocably appoints and authorizes the
Administrative Borrower (i) to provide the Agent and the Co-Agent with all
notices with respect to Revolving Loans and Letters of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Revolving Loans and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement.
13.20 Termination of Forbearance Agreement. The Forbearance Agreement is
hereby terminated and shall be of no further force or effect.
ARTICLE 14
JOINT AND SEVERAL OBLIGATIONS
14.1 All Obligations to Constitute Joint and Several Obligations.
(a) All Obligations shall constitute joint and several obligations
of the Borrowers and shall be secured by the Agent's Lien upon all of the
Collateral, and by all other security interests and Liens heretofore, now or at
any time hereafter granted by each Borrower to the Agent, the Co-Agent, the
Letter of Credit Issuer and the Lenders, to the extent provided in the Loan
Documents under which such Lien arises. Each Borrower expressly represents and
acknowledges that it is part of a common enterprise with the other Borrowers and
that any financial accommodations by the Agent, the Co-Agent, the Letter of
Credit Issuer and the Lenders to any other Borrower hereunder and under the
other Loan Documents are and will be of direct and indirect interest, benefit
and advantage to all Borrowers. Each Borrower acknowledges that any Notice of
Borrowing, Notice of Continuation/Conversion or other notice or request given by
the Administrative Borrower (including the Administrative Borrower) to the
Agent, the Co-Agent, Letter of Credit Issuer or any Lender shall bind all
Borrowers, and that any notice given by the Agent, the Co-Agent, or any Lender
to any Borrower shall be effective with respect to all Borrowers. Each Borrower
acknowledges and agrees that each Borrower shall be liable, on a joint and
several basis, for all of the Loans and other Obligations, regardless of which
Borrower actually may have received the proceeds of any of the Loans or other
extensions of credit or have had Letters of Credit issued hereunder or the
amount of such Loans received, Letters of Credit issued or the manner in which
the Agent, the Co-Agent, the Letter of Credit Issuer or any of the Lenders
accounts among the Borrowers for such Loans, Letters of Credit or other
extensions of credit on its books and records, and further
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acknowledges and agrees that Loans to any Borrower inure to the mutual benefit
of all of the Borrowers and that the Agent, the Co-Agent, the Letter of Credit
Issuer and the Lenders are relying on the joint and several liability of the
Borrowers in extending the Loans and other financial accommodations hereunder.
Each Borrower shall be entitled to subrogation and contribution rights from and
against the other Borrowers to the extent any Borrower is required to pay to the
Lenders or the Letter of Credit Issuer any amount in excess of the Loans
advanced directly to, or other Obligations incurred directly by, such Borrower
or as otherwise available under Applicable Law; provided, however, that such
subrogation and contribution rights are and shall be subject to the terms and
conditions of this Section 14.1.
(b) It is the intent of the Borrowers, the Agent, the Co-Agent and
the Lenders and any other Person holding any of the Obligations that each
Borrower's maximum obligations hereunder (such Borrower's "Maximum Borrower
Liability") in any case or proceeding referred to below (but only in such a case
or proceeding) shall not be in excess of:
(i) in a case or proceeding commenced by or against such Borrower
under the Bankruptcy Code on or within one (1) year from the date on which
any of the Obligations of such Borrower are incurred, the maximum amount
that would not otherwise cause the Obligations of such Borrower hereunder
(or any other Obligations of such Borrower to the Agent, the Letter of
Credit Issuer, the Lenders and any other Person holding any of the
Obligations) to be avoidable or unenforceable against such Borrower under
(A) Section 548 of the Bankruptcy Code or (B) any state fraudulent
transfer or fraudulent conveyance act or statute applied in such case or
proceeding by virtue of Section 544 of the Bankruptcy Code; or
(ii) in a case or proceeding commenced by or against such Borrower
under the Bankruptcy Code subsequent to one (1) year from the date on
which any of the Obligations of such Borrower are incurred, the maximum
amount that would not otherwise cause the Obligations of such Borrower
hereunder (or any other Obligations of such Borrower to the Agent, the
Letter of Credit Issuer, the Lenders and any other Person holding any of
the Obligations) to be avoidable or unenforceable against such Borrower
under any state fraudulent transfer or fraudulent conveyance act or
statute applied in any such case or proceeding by virtue of Section 544 of
the Bankruptcy Code; or
(iii) in a case or proceeding commenced by or against such Borrower
under any law, statute or regulation other than the Bankruptcy Code
relating to dissolution, liquidation, conservatorship, bankruptcy,
moratorium, readjustment of debt, compromise, rearrangement, receivership,
insolvency, reorganization or similar debtor relief from time to time in
effect affecting the rights of creditors generally (collectively, "Other
Debtor Relief Law"), the
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maximum amount that would not otherwise cause the Obligations of such
Borrower hereunder (or any other Obligations of such Borrower to the
Agent, the Letter of Credit Issuer and the Lenders and any other Person
holding any of the Obligations) to be avoidable or unenforceable against
such Borrower under such Other Debtor Relief Law, including, without
limitation, any state fraudulent transfer or fraudulent conveyance act or
statute applied in any such case or proceeding. (The substantive state or
federal laws under which the possible avoidance or unenforceability of the
Obligations of any Borrower hereunder (or any other Obligations of such
Borrower to the Agent, the Letter of Credit Issuer, the Lenders and any
other Person holding any of the Obligations) shall be determined in any
such case or proceeding shall hereinafter be referred to as the "Avoidance
Provisions").
Notwithstanding the foregoing, no provision of this Section 14.1(b) shall limit
any Borrower's liability for loans advanced directly or indirectly to it under
this Agreement.
(c) To the extent set forth in Section 14.1(b) hereof, but only to
the extent that the Obligations of any Borrower hereunder, or the transfers made
by such Borrower under any Loan Document, would otherwise be subject to
avoidance under any Avoidance Provisions if such Borrower is not deemed to have
received valuable consideration, fair value, fair consideration or reasonably
equivalent value for such transfers or obligations, or if such transfers or
obligations of any Borrower hereunder would render such Borrower insolvent, or
leave such Borrower with an unreasonably small capital or unreasonably small
assets to conduct its business, or cause such Borrower to have incurred debts
(or to have intended to have incurred debts) beyond its ability to pay such
debts as they mature, in each case as of the time any of the obligations of such
Borrower are deemed to have been incurred and transfers made under such
Avoidance Provisions, then the obligations of such Borrower hereunder shall be
reduced to that amount which, after giving effect thereto, would not cause the
Obligations of such Borrower hereunder (or any other Obligations of such
Borrower to the Agent, the Letter of Credit Issuer, the Lenders or any other
Person holding any of the Obligations), as so reduced, to be subject to
avoidance under such Avoidance Provisions. This Section 14.1(c) is intended
solely to preserve the rights hereunder of the Agent, the Co-Agent, the Letter
of Credit Issuer, the Lenders and any other Person holding any of the
Obligations to the maximum extent that would not cause the obligations of the
Borrowers hereunder to be subject to avoidance under any Avoidance Provisions,
and none of the Borrowers nor any other Person shall have any right, defense,
offset, or claim under this Section 14.1(c) as against the Agent, the Co-Agent,
the Letter of Credit Issuer, the Lenders or any other Person holding any of the
Obligations that would not otherwise be available to such Person under the
Avoidance Provisions.
(d) Each Borrower agrees that the Obligations may at any time and
from time to time exceed the Maximum Borrower Liability of such Borrower, and
may exceed the aggregate Maximum Borrower Liability of all Borrowers hereunder,
without
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impairing this Agreement or any provision contained herein or affecting the
rights and remedies of the Lenders, the Letter of Credit Issuer, the Co-Agent or
the Agent hereunder.
(e) In the event any Borrower (a "Funding Borrower") shall make
any payment or payments under this Agreement or shall suffer any loss as a
result of any realization upon any collateral granted by it to secure its
obligations hereunder, each other Borrower (each, a "Contributing Borrower")
shall contribute to such Funding Borrower an amount equal to such payment or
payments made, or losses suffered, by such Funding Borrower determined as of the
date on which such payment or loss was made multiplied by the ratio of (i) the
Maximum Borrower Liability of such Contributing Borrower (without giving effect
to any right to receive any contribution or other obligation to make any
contribution hereunder), to (ii) the aggregate Maximum Borrower Liability of all
Borrowers (including the Funding Borrowers) hereunder (without giving effect to
any right to receive, or obligation to make, any contribution hereunder).
Nothing in this Section 14.1(e) shall affect any Borrower's joint and several
liability to the Agent, the Letter of Credit Issuer and the Lenders for the
entire amount of its Obligations. Each Borrower covenants and agrees that its
right to receive any contribution hereunder from a Contributing Borrower shall
be subordinate and junior in right of payment to all obligations of the
Borrowers to the Agent, the Co-Agent, the Letter of Credit Issuer and the
Lenders hereunder.
(f) No Borrower will exercise any rights that it may acquire by
way of subrogation hereunder or under any other Loan Document or at law by any
payment made hereunder or otherwise, nor shall any Borrower seek or be entitled
to seek any contribution or reimbursement from any other Borrower in respect of
payments made by such Borrower hereunder or under any other Loan Document, until
all amounts owing to the Agent, the Co-Agent, the Letter of Credit Issuer and
the Lenders on account of the Obligations are paid in full in cash (or, with
respect to Letters of Credit, are either cash collateralized or supported by a
Letter of Credit in accordance with the provisions of Section 1.4(g) of this
Agreement) and the Commitments are terminated. If any amounts shall be paid to
any Borrower on account of such subrogation or contribution rights at any time
when all of the Obligations shall not have been paid in full, such amount shall
be held by such Borrower in trust for the Agent, the Co-Agent, the Letter of
Credit Issuer and the Lenders, segregated from other funds of such Borrower, and
shall, forthwith upon receipt by such Borrower, be turned over to the Agent in
the exact form received by such Borrower (duly endorsed by such Borrower to the
Agent, if required), to be applied against the Obligations, whether matured or
unmatured, as provided for herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
94
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
BORROWERS:
SALTON, INC., a Delaware corporation
By:_______________________________________
Title:____________________________________
TOASTMASTER INC., a Missouri corporation
By:_______________________________________
Title:____________________________________
SALTON TOASTMASTER LOGISTICS LLC, a
Delaware limited liability company
By:_______________________________________
Title:____________________________________
GUARANTORS:
HOME CREATIONS DIRECT, LTD.,
a Delaware corporation
By:_______________________________________
Title:____________________________________
SONEX INTERNATIONAL CORPORATION, a
Delaware corporation
By:_______________________________________
Title:____________________________________
ICEBOX, LLC, an Illinois limited liability
company
By:_______________________________________
Title:____________________________________
FAMILY PRODUCTS INC., a Delaware
corporation
By:_______________________________________
Title:____________________________________
SALTON HOLDINGS, INC., a Delaware
corporation
By:_______________________________________
Title:____________________________________
AGENT :
WACHOVIA BANK, NATIONAL ASSOCIATION
as the Agent, the Collateral Agent and a
Letter of Credit Issuer
By:_______________________________________
Its:______________________________________
SILVER POINT FINANCE, LLC, as the Co-
Agent, the Documentation Agent, and the
Syndication Agent
By:_______________________________________
Its:______________________________________
TRS THEBE LLC, as a Lender
By:_______________________________________
Its:______________________________________
Address for Notices:
SPCP Group LLC
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Fax: (000) 000-0000
xxxxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
SEA PINES FUNDING LLC, as a Lender
By:_______________________________________
Its:______________________________________
Address for Notices:
SPCP Group LLC
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Fax: (000) 000-0000
xxxxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
SPIRIT IV LOAN TRUST 2003-A, as a Lender
By:_______________________________________
Its:______________________________________
Address for Notices:
SPCP Group LLC
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Fax: (000) 000-0000
xxxxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
SPCP GROUP LLC, as a Lender
By:_______________________________________
Its:______________________________________
Address for Notices:
SPCP Group LLC
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Fax: (000) 000-0000
xxxxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
ANNEX A
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have the following
respective meanings (unless otherwise defined therein), and all section
references in the following definitions shall refer to sections of the
Agreement:
"Account Debtor" means each Person obligated in any way on or in
connection with an Account, Chattel Paper or General Intangibles (including a
payment intangible).
"Accounts" means all of each Borrower's now owned or hereafter acquired or
arising accounts, as defined in the UCC, including any rights to payment for the
sale or lease of goods or rendition of services, whether or not they have been
earned by performance and all health care receivables.
"ACH Transactions" means any cash management or related services including
the automatic clearing house transfer of funds by any Bank Products Provider for
the account of any Borrower pursuant to agreement or overdrafts.
"Additional Documents" has the meaning specified in Section 8.3(a).
"Administrative Borrower" has the meaning specified in Section 13.19.
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person or which owns, directly or indirectly, five percent (5%) or more of
the outstanding equity interest of such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agent" means Wachovia Bank, National Association, solely in its capacity
as agent for the Lenders, and any successor agent (including, without
limitation, the SP Successor Agent).
"Agent Advances" has the meaning specified in Section 1.2(j).
"Agent's Liens" means the Liens in the Collateral granted to the Agent,
for the benefit of the Lenders, the Bank Products Providers, the Co-Agent and
the Agent pursuant to this Agreement and the other Loan Documents.
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"Agent-Related Persons" means the Agent, the Co-Agent, together with their
respective Affiliates, and the officers, directors, employees, counsel,
representatives, agents and attorneys-in-fact of the Agent and the Co-Agent and
such Affiliates.
"Aggregate Outstandings" means, at any date of determination: the sum of
(a) the unpaid balance of Revolving Loans, (b) the unpaid balance of the Term
Loan, (c) the aggregate amount of Pending Revolving Loans, (d) one hundred
percent (100%) of the aggregate undrawn face amount of all outstanding Letters
of Credit, and (e) the aggregate amount of any unpaid reimbursement obligations
in respect of Letters of Credit.
"Agreement" means the Amended and Restated Credit Agreement to which this
Annex A is attached, as from time to time amended, restated, supplemented or
otherwise modified.
"Anniversary Date" means each anniversary of the Closing Date.
"Applicable Prepayment Premium" means, as of any date of determination, an
amount equal to (a) during the period of time from and after the date of the
execution and delivery of this Agreement up to the date that is the first
anniversary of the Closing Date, 3.00% times the Maximum Amount; (b) during the
period of time from and including the date that is the first anniversary of the
Closing Date up to the second anniversary of the Closing Date, 2.00% times the
Maximum Amount; and (c) during the period of time from and including the date
that is the second anniversary of the Closing Date up to the Stated Termination
Date, 1.00% times the Maximum Amount; provided, however, that if this Agreement
is terminated as a result of Borrowers entering into a new financing arrangement
in which Silver Point and its Affiliates initially hold, in the aggregate, a
commitment in an amount equal to at least $35,000,000, then the Applicable
Prepayment Premium shall be deemed to be zero (0).
"Applicable Margin" means
(i) with respect to Base Rate Loans and all other Obligations (other
than LIBOR Rate Loans), 3.00%; and
(ii) with respect to LIBOR Rate Loans, 5.00%.
"Approved Freight Handler" means any freight forwarder, customs broker,
customs agent or similar Person acceptable to the Agent and the Co-Agent in
their sole discretion utilized by Borrowers from time to time in connection with
its importation of Inventory that has delivered a Lien Acknowledgment Agreement
in favor of the Agent in form and substance satisfactory to the Agent and the
Co-Agent, so long as such Lien Acknowledgement Agreement remains in full force
and effect and the Agent has not received any notice of termination with respect
thereto.
"Assignee" has the meaning specified in Section 11.2(a).
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"Assignment and Acceptance" has the meaning specified in Section 11.2(a).
"Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other counsel engaged by the Agent and/or the
Co-Agent, and the reasonably allocated costs and expenses of internal legal
services of the Agent and/or the Co-Agent.
"Availability" means, at any time, the lesser of (a) $207,000,000 (or such
greater amount as agreed to in writing by the Agent, the Co-Agent and all
Lenders) and (b) (I) the lesser of (A) the Maximum Amount and (B) the Borrowing
Base, minus (II) Reserves other than Reserves deducted in the calculation of the
Borrowing Base, minus (III) in each case, the Aggregate Outstandings plus (IV)
sixty-five percent (65%) of the aggregate undrawn face amount of all outstanding
commercial Letters of Credit issued for the purpose of purchasing Eligible
In-Transit Inventory not included in the calculation of the Borrowing Base.
"Avoidance Provisions" has the meaning specified in Section 14.1(b)(iii).
"Bank Product Reserves" means all reserves which the Agent, as directed by
a Bank Products Provider, from time to time establishes in its reasonable
discretion for the Bank Products then provided or outstanding.
"Bank Products" means any one or more of the following types of services
or facilities extended to the Borrowers, or any of them, by any Bank Products
Provider or any affiliate of any Bank Products Provider in reliance on such Bank
Products Provider's agreement to indemnify such affiliate or such Bank Products
Provider; (i) credit cards; (ii) ACH Transactions; (iii) cash management,
including controlled disbursement services; (iv) Hedge Agreements; and (v)
Ledger Products.
"Bank Products Provider" means any Lender (or its Affiliate or designee)
that provides Bank Products to Borrowers with the prior written consent of the
Co-Agent.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.), as in effect from time to time.
"Base Rate" means, for any day, the rate of interest in effect for such
day as publicly announced by a commercial bank selected by the Co-Agent or the
SP Successor Agent from time to time at such location as selected by the
Co-Agent or the SP Successor Agent as its "prime rate" (the "prime rate" being a
rate (which is not necessarily the lowest of such rates) based upon various
factors including such commercial bank's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced
rate). Any change in the prime rate announced by the such commercial bank shall
take effect at the opening of business on the day specified in the public
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announcement of such change. Each Interest Rate based upon the Base Rate shall
be adjusted simultaneously with any change in the Base Rate.
"Base Rate Loan" means a Revolving Loan during any period in which it
bears interest based on the Base Rate.
"Blocked Account Agreement" means any agreement among a Borrower, the
Agent and a Clearing Bank, in form and substance reasonably satisfactory to the
Agent and the Co-Agent, concerning the collection of payments which represent
the proceeds of Accounts or of any other Collateral.
"Borrower Parties" means the Parent, the Borrowers and the Guarantors, and
"Borrower Party" shall mean any one of the foregoing Borrower Parties.
"Borrowers" means the Parent, Toastmaster, Inc. and Salton Toastmaster
Logistics LLC and "Borrower" shall mean any one of the foregoing Borrowers.
"Borrowing" means a borrowing hereunder consisting of Revolving Loans and
the Term Loan made on the same day by the Lenders to the Borrowers or by the
Agent in the case of a Borrowing funded by Non-Ratable Loans or by the Agent in
the case of a Borrowing consisting of an Agent Advance, or the issuance of
Letters of Credit hereunder.
"Borrowing Base" means, at any time, an amount equal to
(a) the sum of:
(A) eighty-five percent (85%) of the Net Amount of Eligible
Accounts, plus,
(B) the lesser of (I) seventy percent (70%) of the value of the
Eligible Landed Inventory and (II) eighty-five percent (85%) of the Net
Liquidation Value of Eligible Landed Inventory; plus,
(C) the lesser of (I) sixty-five percent (65%) of the book value
of Eligible In-Transit Inventory valued at the lower of cost (determined on a
first-in, first-out basis) or market and, (II) eighty-five percent (85%) of the
Net Liquidation Value of Eligible In-Transit Inventory; provided, however, that
in no event shall the amount available under this clause (C) exceed thirty
percent (30%) of the value of all Eligible Inventory, plus,
(D) the lesser of
(i) the sum of
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(x) ten percent (10%) of the Net Amount of Eligible
Accounts, plus,
(y) the sum of (I) twenty-four percent (24%) of the
value of the Eligible Landed Inventory, plus (II) twenty-nine percent (29%) of
the book value of Eligible In-Transit Inventory valued at the lower of cost
(determined on a first-in, first-out basis) or market; and
(ii) $30,000,000,
minus
(b) Reserves.
"Borrowing Base Certificate" means a certificate by a Responsible Officer
of the Administrative Borrower, substantially in the form of Exhibit F (or
another form acceptable to the Agent and the Co-Agent) setting forth the
calculation of the Borrowing Base, including a calculation of each component
thereof, all in such detail as shall be reasonably satisfactory to the Agent and
the Co-Agent. All calculations of the Borrowing Base in connection with the
preparation of any Borrowing Base Certificate shall originally be made by the
Borrowers and certified to the Agent and the Co-Agent; provided, that the Agent
and the Co-Agent shall have the right to review and adjust, in the exercise of
their reasonable credit judgment, any such calculation (1) to reflect its
reasonable estimate of declines in value of any of the Collateral described
therein, and (2) to the extent that such calculation is not in accordance with
this Agreement.
"Business Day" means (a) any day that is not a Saturday, Sunday, or a day
on which banks in New York, New York are required or permitted to be closed, and
(b) with respect to all notices, determinations, fundings and payments in
connection with the LIBOR Rate or LIBOR Rate Loans, any day that is a Business
Day pursuant to clause (a) above and that is also a day on which trading in
Dollars is carried on by and between banks in the London interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not paid during
any fiscal period) in respect of the cost of any Fixed Asset or improvement, or
replacement, substitution, or addition thereto, which has a useful life of more
than one year, including, without limitation, those costs arising in connection
with the direct or indirect acquisition of such asset by way of increased
product or service charges or in connection with a Capital Lease.
A-5
"Capital Lease" means any lease of property by the Parent or a Subsidiary
which, in accordance with GAAP, should be reflected as a capital lease on the
consolidated balance sheet of the Parent.
"Carry Forward Amount" means to the extent positive, for any Fiscal Year,
a carry forward amount, not to exceed $3,000,000 equal to (a) $8,000,000 minus
(b) the aggregate amount of Capital Expenditures made pursuant to Section 7.22
in the immediately preceding Fiscal Year.
"Cash Sweep Period" means the period of time from and after any Cash Sweep
Trigger, subject to Section 7.27(b), Date and continuing though the earlier of
(a) the date two (2) Business Days following the occurrence of any Cash Sweep
Termination Date or (b) the date the Commitments are terminated and the
Obligations are paid in full.
"Cash Sweep Termination Date" means any date on which the Borrowers shall
deliver evidence to the Agent and the Co-Agent, in form and substance
satisfactory to the Agent and the Co-Agent, that Availability, for the 365
consecutive calendar days then most recently ending, was not less than (a)
$45,000,000 at all times during the months of January, February, March, April,
May and June and (b) $35,000,000 at all times during the months of July, August,
September, October, November and December.
"Cash Sweep Trigger Date" means any date (a) that the Borrowers fail to
maintain Availability of not less than (i) $35,000,000 at all times during the
months of January, February, March, April, May and June of each year, and (ii)
$25,000,000 at all times during the months of July, August, September, October,
November and December of each year, or (b) at the discretion of the Agent or at
the direction of the Required Lenders, following the occurrence of any Event of
Default. Notwithstanding the foregoing, no more frequently than two (2) times in
any calendar year, no Cash Sweep Trigger Date shall be deemed to have occurred
so long as within five (5) days from the occurrence of any Cash Sweep Trigger
Date (a "Cure Period"), the Borrowers shall deliver evidence to the Agent and
the Co-Agent, in form and substance satisfactory to the Agent and the Co-Agent,
that Availability, as of the last day during the Cure Period is not less than
(a) $35,000,000 if such days occur during the months of January, February,
March, April, May and June and (b) $25,000,000 if such days occur during the
months of July, August, September, October, November and December; provided,
that no Default or Event of Default shall exist or be continuing on such date.
"Change of Control" shall mean (i) directly or indirectly a sale,
transfer, or other conveyance of all or substantially all of the assets of the
Parent in one transaction or a series of transactions, (ii) any "person" or
"group" (as such terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange Act, whether or not applicable), other than the shareholders of the
Parent as of the Original Closing Date (or any Person or group of Persons that,
as of the Agreement Date, are Affiliates of such shareholders), is or becomes
the "beneficial owner" (as that term is used in Rules 13d-3 and 13d-5 under the
Exchange Act, whether or not applicable, except that a Person shall be deemed to
have
A-6
"beneficial ownership" of all shares that any such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than thirty-five percent (35%) of the
aggregate number of votes of all classes of capital stock of the Parent that
ordinarily have voting power for the election of directors of the Parent, (iii)
during any period of twenty-four (24) consecutive months, individuals who at the
beginning of such period constituted the board of directors of the Parent,
together with any new directors whose election by such board or whose nomination
for election by the shareholders of the Parent was approved by a vote of a
majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority of the
board of directors of the Parent then in office or (iv) the Parent shall cease
to own, directly or indirectly, one hundred percent (100%) of the Stock of any
Subsidiary, except as otherwise permitted by Section 7.9.
"Chattel Paper" means all of the Parent's and each Subsidiary's now owned
or hereafter acquired chattel paper, as defined in the UCC, including electronic
chattel paper and tangible chattel paper.
"Clearing Bank" means any banking institution with whom a Payment Account
has been established pursuant to a Blocked Account Agreement.
"Closing Date" means the date of this Agreement.
"Closing Fees" has the meaning specified in Section 2.4.
"Co-Agent" has the meaning specified in the preamble to this Agreement.
"Code" means the Internal Revenue Code of 1986, as in effect from time to
time.
"Collateral" means all of each Borrower Party's Accounts, Inventory,
Chattel Paper, Documents, Investment Property, Deposit Accounts, Equipment and
General Intangibles, and all other assets of any Person from time to time
subject to the Agent's Liens securing payment or performance of the Obligations,
but excluding up to 35% of the equity interests of any Borrower Party in any
Foreign Subsidiary.
"Commitment" means, with respect to each Lender, its Revolver Commitment,
its Term Loan Commitment, or its Total Commitment, as the context requires, and,
with respect to all Lenders, their Revolver Commitments, their Term Loan
Commitments, or their Total Commitments, as the context requires, in each case
as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule 1.2(a) or on the signature page of the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 11.2, as such Commitment may be
adjusted from time to time in accordance with the provisions of Section 11.2,
and "Commitments" means, collectively, the aggregate amount of the
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commitments of all of the Lenders, as such obligations may be reduced from time
to time pursuant to the terms hereof.
"Consolidated Adjusted Net Earnings from Operations" means, with respect
to any fiscal period of the Parent, the Parent's net income on a consolidated
basis after provision for income taxes for such fiscal period, as determined in
accordance with GAAP and reported on the Financial Statements for such period,
excluding any and all of the following included in such net income: (a) gain or
loss arising from the sale of any capital assets; (b) gain arising from any
write-up in the book value of any asset or loss arising from any write-down in
the book value of any asset other than an asset the value of which is included
in the calculation of the Borrowing Base; (c) earnings or losses of any Person,
substantially all the assets or Stock of which have been acquired by the Parent
or any of its Subsidiaries in any manner, to the extent realized by such other
Person prior to the date of acquisition; (d) earnings or losses of any Person in
which the Parent or any of its Subsidiaries has a minority ownership interest
unless (and only to the extent) such earnings or losses shall actually have been
received by the Parent or any of its Subsidiaries in the form of cash
distributions; (e) earnings or losses of any Person to which assets of the
Parent or any of its Subsidiaries shall have been sold, transferred or disposed
of, or into which the Parent or any of its Subsidiaries shall have been merged,
or which has been a party with the Parent or any of its Subsidiaries to any
consolidation or other form of reorganization, prior to the date of such
transaction; (f) gain arising from the acquisition of debt or equity securities
of the Parent or any of its Subsidiaries or from cancellation or forgiveness of
Consolidated Debt; (g) gain and non-cash loss arising from extraordinary items
or from any other non-recurring transaction, as determined in accordance with
GAAP; and (h) all restructuring charges incurred through October 31, 2004 as
described on Schedule E-3.
"Consolidated Debt" means, without duplication, all indebtedness for
borrowed money or the deferred purchase price of property, to any Person, of any
kind or nature, now or hereafter owing, arising, due or payable, howsoever
evidenced, created, incurred, acquired or owing, whether primary, secondary,
direct, contingent, fixed or otherwise, excluding trade payables, but including
(a) all Obligations; (b) all obligations or liabilities created or arising under
any Capital Lease or conditional sale or other title retention agreement with
respect to property used or acquired by any Borrower Party, even if the rights
and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property; provided, however, that all such obligations and
liabilities which are limited in recourse to such property shall be included in
Debt only to the extent of the book value of such property as would be shown on
a balance sheet of the Borrower Parties prepared in accordance with GAAP; (c)
all obligations and liabilities under Guaranties, (d) the present value
(discounted at the Base Rate) of lease payments due under synthetic leases, and
(e) earn-outs or other contingent payments incurred in connection with any
acquisition to the extent such earn-outs or payments are not reflected as
expenses on the income statements of such Person; provided, further, however,
that in no event shall the term Consolidated Debt include the capital stock
surplus, retained
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earnings, minority interests in the common stock of Subsidiaries, lease
obligations (other than pursuant to (b) or (d) above), reserves for deferred
income taxes and investment credits, or other deferred credits or reserves.
"Consolidated EBITDA" means, with respect to any fiscal period of the
Parent, Consolidated Adjusted Net Earnings from Operations, plus, to the extent
deducted in the determination of Consolidated Adjusted Net Earnings from
Operations for that fiscal period, interest expenses, Federal, state, local and
foreign income taxes, depreciation and amortization (including, without
limitation, amortization of restricted stock, stock appreciation rights and
similar equity instruments).
"Consolidated Fixed Charge Coverage Ratio" means, as of any date of
determination, with respect to any fiscal period of the Parent, on a
consolidated basis, the ratio of (a) the sum of (i) Consolidated EBITDA minus
(ii) Capital Expenditures (excluding Capital Expenditures funded with
Consolidated Debt other than Revolving Loans, but including, without
duplication, principal payments with respect to such Consolidated Debt) to (b)
Consolidated Fixed Charges.
"Consolidated Fixed Charges" means, with respect to any fiscal period of
the Parent on a consolidated basis, without duplication, cash interest expense,
principal payments of Consolidated Debt (excluding any historical or future cash
payments made with respect to the refinancing of principal of Consolidated
Debt), all Distributions paid, all cash Investments, all Specified Transactions,
and Federal, state, local and foreign income taxes paid in cash.
"Contaminant" means any material defined as waste, pollutant, hazardous
substance, toxic substance, hazardous waste or special waste under Environmental
Laws, including without limitation, petroleum or petroleum-derived substance or
waste, asbestos in any form or condition, polychlorinated biphenyls ("PCBs"), or
any constituent of any such substance or waste.
"Continuation/Conversion Date" means the date on which a Loan is converted
into or continued as a LIBOR Rate Loan.
"Contributing Borrower" has the meaning specified in Section 14.1(e).
"Copyright Security Agreement" means Copyright Security Agreement,
executed and delivered by the Borrowers to the Agent, for the benefit of the
Agent, the Co-Agent and the Lenders, to evidence and perfect the Agent's
security interest in the Borrowers' present and future copyrights and related
licenses and rights.
"Credit Support" has the meaning specified in Section 1.4(a).
"Debt" means, without duplication, all indebtedness for borrowed money or
the deferred purchase price of property, to any Person, of any kind or nature,
now or
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hereafter owing, arising, due or payable, howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, excluding trade payables, but including (a) all Obligations;
(b) all obligations or liabilities created or arising under any Capital Lease or
conditional sale or other title retention agreement with respect to property
used or acquired by any Borrower Party, even if the rights and remedies of the
lessor, seller or lender thereunder are limited to repossession of such
property; provided, however, that all such obligations and liabilities which are
limited in recourse to such property shall be included in Debt only to the
extent of the book value of such property as would be shown on a balance sheet
of the Borrower Parties prepared in accordance with GAAP; (c) all obligations
and liabilities under Guaranties;(d) the present value (discounted at the Base
Rate) of lease payments due under synthetic leases, and (e) earn-outs or other
contingent payments incurred in connection with any acquisition to the extent
such earn-outs or payments are not reflected as expenses on the income
statements of such Person; provided, further, however, that in no event shall
the term Debt include the capital stock surplus, retained earnings, minority
interests in the common stock of Subsidiaries, lease obligations (other than
pursuant to (b) or (d) above), reserves for deferred income taxes and investment
credits, or other deferred credits or reserves.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured, waived, or otherwise
remedied during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at all times
equal to the sum of (a) the otherwise applicable Interest Rate plus (b) two
percent (2%) per annum. Each Default Rate shall be adjusted simultaneously with
any change in the applicable Interest Rate. In addition, the Default Rate shall
result in an increase in the Letter of Credit Fee by two (2) percentage points
per annum.
"Defaulting Lender" has the meaning specified in Section 12.15(c).
"Deposit Accounts" means all "deposit accounts" as such term is defined in
the UCC, now or hereafter held in the name of any Borrower Party, including,
without limitation, any checking or other demand deposit account, time, savings,
passbook or similar account maintained with a bank.
"Designated Account" has the meaning specified in Section 1.2(d).
"Distribution" means, in respect of any corporation: (a) the payment or
making of any dividend or other distribution of property in respect of capital
stock (excluding any options or warrants for, or other rights with respect to,
such stock) of such corporation, other than distributions in capital stock (or
any options or warrants for such stock) of the same class; or (b) the redemption
or other acquisition by such corporation of any capital stock (or any options or
warrants for such stock) of such corporation.
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"Documents" means all "documents" as such term is defined in the UCC,
including bills of lading, warehouse receipts or other documents of title, now
owned or hereafter acquired by any Borrower Party.
"DOL" means the United States Department of Labor or any successor
department or agency.
"Dollar" and "$" means dollars in the lawful currency of the United
States. Unless otherwise specified, all payments under this Agreement shall be
made in Dollars.
"EBITDA" means, with respect to any fiscal period of the Borrowers, US
Adjusted Net Earnings from Operations, plus, to the extent deducted in the
determination of US Adjusted Net Earnings from Operations for that fiscal
period, interest expenses, Federal, state, local and foreign income taxes,
depreciation and amortization (including, without limitation, amortization of
restricted stock, stock appreciation rights and similar equity instruments).
"Eligible Accounts" means the Accounts which the Agent or the Required
Lenders in the exercise of reasonable commercial discretion determine to be
Eligible Accounts. Without limiting such discretion of the Agent or the Required
Lenders to establish other criteria of ineligibility, Eligible Accounts shall
not, unless the Agent or the Required Lenders elect, include any Account:
(a) with respect to which more than one hundred twenty (120) days have
elapsed since the date of the original invoice or which is more than sixty (60)
days past due; provided, however, that "Eligible Accounts" may include up to
$10,000,000 in aggregate invoice amount of (i) Accounts with respect to which
not more than one hundred eighty (180) days have elapsed since the date of the
original invoice and which is more than thirty (30) days past due;
(b) with respect to which any of the representations, warranties,
covenants, and agreements contained in the Security Agreement are incorrect or
have been breached;
(c) with respect to which Account (or any other Account due from such
Account Debtor), in whole or in part, a check, promissory note, draft, trade
acceptance or other instrument for the payment of money has been received,
presented for payment and returned uncollected for any reason;
(d) which represents a progress billing (as hereinafter defined) or as
to which any Borrower has extended the time for payment without the consent of
the Agent; for the purposes hereof, "progress billing" means any invoice for
goods sold or leased or services rendered under a contract or agreement pursuant
to which the Account Debtor's obligation to pay such invoice is conditioned upon
such Borrower's completion of any further performance under the contract or
agreement;
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(e) with respect to which any one or more of the following events has
occurred to the Account Debtor on such Account: death or judicial declaration of
incompetency of an Account Debtor who is an individual; the filing by or against
the Account Debtor of a request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as a bankrupt, winding-up, or
other relief under the bankruptcy, insolvency, or similar laws of the United
States, any state or territory thereof, or any foreign jurisdiction, now or
hereafter in effect; the making of any general assignment by the Account Debtor
for the benefit of creditors; the appointment of a receiver or trustee for the
Account Debtor or for any of the assets of the Account Debtor, including,
without limitation, the appointment of or taking possession by a "custodian," as
defined in the Bankruptcy Code; the institution by or against the Account Debtor
of any other type of insolvency proceeding (under the bankruptcy laws of the
United States or otherwise) or of any formal or informal proceeding for the
dissolution or liquidation of, settlement of claims against, or winding up of
affairs of, the Account Debtor; the sale, assignment, or transfer of all or any
material part of the assets of the Account Debtor; the nonpayment generally by
the Account Debtor of its debts as they become due; or the cessation of the
business of the Account Debtor as a going concern;
(f) if fifty percent (50%) or more of the aggregate Dollar amount of
outstanding Accounts owed (excluding chargebacks and deductions) at such time by
the Account Debtor thereon is classified as ineligible under clause (a) above;
(g) owed by an Account Debtor which: (i) does not maintain its executive
office in the United States of America or Canada (provided, that, at any time
promptly upon the Agent's request, the Borrowers shall execute and deliver, or
cause to be executed and delivered, such other agreements, documents and
instruments as may be required by the Agent to perfect the security interests of
the Agent in those Accounts of an Account Debtor with its executive office or
principal place of business in Canada in accordance with the applicable laws of
the applicable Province of Canada in which such executive office or principal
place of business is located and take or cause to be taken such other and
further actions as the Agent may request to enable the Agent as secured party
with respect thereto to collect such Accounts under the applicable Federal or
Provincial laws of Canada); or (ii) is not organized under the laws of the
United States of America or Canada or any state or province thereof; or (iii) is
the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof; except
to the extent that such Account is secured or payable by a letter of credit
satisfactory to the Agent in its discretion;
(h) owed by an Account Debtor which is an Affiliate or employee of any
Borrower;
(i) except as provided in clause (k) below, with respect to which either
the perfection, enforceability, or validity of the Agent's Liens in such
Account, or the
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Agent's right or ability to obtain direct payment to the Agent of the proceeds
of such Account, is governed by any federal, state, or local statutory
requirements other than those of the UCC or the applicable Federal or Provincial
laws of Canada;
(j) owed by an Account Debtor to which the Parent, any Borrower or any
other Subsidiary is indebted in any way, or which is subject to any right of
setoff or recoupment by the Account Debtor, unless the Account Debtor has
entered into an agreement acceptable to the Agent to waive setoff rights; or if
the Account Debtor thereon has disputed liability or made any claim with respect
to any other Account due from such Account Debtor; but in each such case only to
the extent of such indebtedness, setoff, recoupment, dispute, or claim;
(k) owed by the government of the United States, or any department,
agency, public corporation, or other instrumentality thereof, unless the Federal
Assignment of Claims Act of 1940, as amended (31 U.S.C. Section 3727 et seq.),
and any other steps necessary to perfect the Agent's Liens therein, have been
complied with to the Agent's satisfaction with respect to such Account;
(l) owed by any state, municipality, or other political subdivision of
the United States of America, or any department, agency, public corporation, or
other instrumentality thereof and as to which the Agent determines that its Lien
therein is not or cannot be perfected;
(m) which represents a sale on a xxxx-and-hold, guaranteed sale, sale
and return, sale on approval, consignment, or other repurchase or return basis;
(n) which is evidenced by a promissory note or other instrument or by
chattel paper;
(o) if the Agent or Required Lenders believe, in the exercise of their
reasonable judgment, that the prospect of collection of such Account is impaired
or that the Account may not be paid by reason of the Account Debtor's financial
inability to pay;
(p) with respect to which the Account Debtor is located in any state
requiring the filing of a Notice of Business Activities Report or similar report
in order to permit any Borrower to seek judicial enforcement in such State of
payment of such Account, unless such Borrower has qualified to do business in
such state or has filed a Notice of Business Activities Report or equivalent
report for the then current year;
(q) which arises out of a sale not made in the ordinary course of a
Borrower's business;
(r) with respect to which the goods giving rise to such Account have not
been shipped and delivered to and accepted by the Account Debtor or the services
giving rise to such Account have not been performed by the Borrowers, and, if
applicable, accepted
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by the Account Debtor, or the Account Debtor revokes its acceptance of such
goods or services;
(s) with respect to which the Account Debtor is Kmart Corporation,
unless the applicable Borrower Party shall deliver to the Agent documentation
(including, in the form of an intercreditor agreement or letter agreement), in
form and substance reasonably satisfactory to the Agent and the Required
Lenders, of the priority of the Agent's Lien on such Account or the
acknowledgment of any transferee of such Account of the Agent's Lien on the
proceeds thereof;
(t) owed by (i) any Account Debtor that is Sears, Target, Federated, or
Wal-Mart which is obligated to the Borrowers respecting Accounts the aggregate
unpaid balance of which exceeds thirty percent (30%) of the aggregate unpaid
balance of all Accounts owed to the Borrowers at such time by all of the
Borrowers' Account Debtors, but only to the extent of such excess, or (ii) any
other Account Debtor which is obligated to the Borrowers respecting Accounts the
aggregate unpaid balance of which exceeds twenty percent (20%) of the aggregate
unpaid balance of all Accounts owed to the Borrowers at such time by all of the
Borrowers' Account Debtors, but only to the extent of such excess; or
(u) which is not subject to a first priority and perfected security
interest in favor of the Agent for the benefit of the Lenders.
If any Account at any time ceases to be an Eligible Account, then such
Account shall promptly be excluded from the calculation of Eligible Accounts.
Notwithstanding the foregoing, none of the Accounts described in clauses (a)
through (p) above shall be excluded from Eligible Accounts if the payments of
such Accounts are (i) covered by insurance policies or (ii) secured or payable
by a letter of credit, in each case, as is reasonably satisfactory to the Agent
and the Required Lenders.
"Eligible Assignee" means (a) a commercial bank, commercial finance
company or other asset based lender, having total assets in excess of
$1,000,000,000; (b) any Lender listed on the signature page of this Agreement;
(c) any Affiliate of any Lender; (d) a Related Fund; and (e) if an Event of
Default has occurred and is continuing, any Person reasonably acceptable to the
Agent and the Co-Agent.
"Eligible In-Transit Inventory" means those items of Inventory that do not
qualify as Eligible Landed Inventory solely because they are not in a location
set forth on Schedule E-1 or in transit among such locations, but as to which
(a) such Inventory currently is in transit (whether by vessel, air, or land)
from a location outside of the continental United States to a location set forth
on Schedule E-1 that is the subject of a landlord waiver or bailee letter, in
form and substance satisfactory to the Agent, in favor of the Agent, (b) title
to such Inventory has passed to a Borrower, (c) such Inventory is insured
against types of loss, damage, hazards, and risks, and in amounts, satisfactory
to the Agent in its sole discretion, (d) such Inventory is the subject of a
non-negotiable xxxx
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of lading or, to the extent not the subject of a xxxx of lading, a
non-negotiable cargo receipt, in each case that (x) is consigned to the Agent
(either directly or by means of endorsements) and such xxxx of lading or cargo
receipt shall reflect "[Name of Borrower], subject to the security interest of
[Wachovia Bank, National Association, as agent, 000 Xxxxxxxxx Xxxxxx, X.X.,
Xxxxxxx, Xxxxxxx 00000][Xxxx and Address of SP Successor Agent]" thereon, (y)
was issued by the carrier respecting the subject Inventory, and (z) is in the
physical possession of an Approved Freight Handler, and (e) the applicable
Borrower has provided a certificate to the Agent that certifies (1) that, to the
Knowledge of the Administrative Borrower, such Inventory meets all of the
Borrowers' representations and warranties contained in the Loan Documents
concerning Eligible Inventory and (2) that it knows of no reason why such
Inventory would not be accepted by the applicable Borrower.
"Eligible Inventory" means Eligible Landed Inventory and Eligible
In-Transit Inventory.
"Eligible Landed Inventory" means Inventory valued at the lower of cost
(on a first-in, first-out basis), or market, which the Agent or the Required
Lenders, in its or their reasonable discretion, determine to be Eligible Landed
Inventory. Without limiting such discretion of the Agent or the Required Lenders
to establish other criteria of ineligibility, Eligible Landed Inventory shall
not, unless the Agent or the Required Lenders elect, include any Inventory:
(a) that is not owned by a Borrower;
(b) that is not subject to the Agent's Liens, which are perfected as to
such Inventory, or that are subject to any other Lien whatsoever (other than the
Liens described in clause (d) of the definition of Permitted Liens provided that
such Permitted Liens (i) are junior in priority to the Agent's Liens or subject
to Reserves and (ii) do not impair directly or indirectly the ability of the
Agent to realize on or obtain the full benefit of the Collateral);
(c) that does not consist of finished goods or raw materials;
(d) that consists of work-in-process, chemicals, samples, prototypes,
supplies, or packing and shipping materials;
(e) (i) that is not in good condition, is unmerchantable, or does not
meet all standards imposed by any Governmental Authority, having regulatory
authority over such goods, their use or sale or (ii) that is subject to ongoing
patent infringement litigation;
(f) that is not currently either usable or salable, at prices
approximating at least cost, in the normal course of a Borrower's business, or
that is slow moving or stale (provided, however, that the Agent, consistent with
current or prior Borrowing Base
A-15
calculations, may include slow moving or stale inventory as Eligible Landed
Inventory subject to Reserves);
(g) that is obsolete or returned or repossessed or used goods taken in
trade (other than returned goods that are readily saleable and without defects);
(h) that is located outside the United States of America or Canada (or
that is in-transit from vendors or suppliers or to buyers);
(i) that is located in a public warehouse or in possession of a bailee
or in a facility leased by a Borrower, if the warehouseman, or the bailee, or
the lessor has not delivered to the Agent, if requested by the Agent, a
subordination agreement in form and substance satisfactory to the Agent and the
Required Lenders or if a Reserve for rents or storage charges has not been
established for Inventory at that location;
(j) that contains or bears any Proprietary Rights licensed to a Borrower
by any Person, if the Agent is not satisfied that it may sell or otherwise
dispose of such Inventory in accordance with the terms of the Security Agreement
and Section 9.2 without infringing the rights of the licensor of such
Proprietary Rights or violating any contract with such licensor (and without
payment of any royalties other than any royalties due with respect to the sale
or disposition of such Inventory pursuant to the existing license agreement),
and, as to which the applicable Borrower has not delivered to the Agent a
consent or sublicense agreement from such licensor in form and substance
acceptable to the Agent and the Required Lenders if requested; provided, that,
"Eligible Inventory" shall not at any time include any Inventory bearing any
Proprietary Rights with respect to Warner Brothers unless the applicable
Borrower has delivered to the Agent a consent or sublicense agreement from such
licensor in form and substance acceptable to the Agent and the Required Lenders;
(k) that is not reflected in the details of a current perpetual
inventory report;
(l) that is Inventory placed on consignment;
(m) that is Inventory subject to positive purchase price variance, but
only to the extent of such variance;
(n) that is Inventory that is subject to a xxxx-and-hold sale; or
(o) that is Inventory that is to be returned to the vendor.
If any Inventory at any time ceases to be Eligible Landed Inventory, such
Inventory shall promptly be excluded from the calculation of Eligible Landed
Inventory.
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"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for a Release.
"Environmental Laws" means all federal, state or local, or foreign
Governmental Authority, laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative orders, directed duties,
licenses, authorizations and permits of, and agreements with, any Governmental
Authority, in each case relating to environmental, health, safety and land use
matters.
"Environmental Lien" means a Lien in favor of any Governmental Authority
for (a) any liability under Environmental Laws, or (b) damages arising from, or
costs incurred by such Governmental Authority in response to, a Release or
threatened Release of a Contaminant into the environment.
"Equipment" means all of any Borrower Party's now owned and hereafter
acquired machinery, equipment, furniture, furnishings, fixtures, and other
tangible personal property (other than consumer goods, farm products or
Inventory), including embedded software, motor vehicles with respect to which a
certificate of title has been issued, aircraft, dies, tools, jigs, molds and
office equipment, as well as all of such types of property leased by any
Borrower Party and all of any Borrower Party's rights and interests with respect
thereto under such leases (including, without limitation, options to purchase);
together with all present and future additions and accessions thereto,
replacements therefor, component and auxiliary parts and supplies used or to be
used in connection therewith, and all substitutes for any of the foregoing, and
all manuals, drawings, instructions, warranties and rights with respect thereto;
wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder, as in effect from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with any Borrower Party within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan,
(b) a withdrawal by any Borrower Party or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA, (c) a complete or partial withdrawal by the any Borrower Party or any
ERISA Affiliate from a Multi-employer Plan or notification that a Multi-employer
Plan is in reorganization, (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to
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terminate a Pension Plan or Multi-employer Plan, (e) the occurrence of an event
or condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan or Multi-employer Plan, or (f) the imposition of
any liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon any Borrower Party or any ERISA
Affiliate.
"Event of Default" has the meaning specified in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, and regulations
promulgated thereunder, as in effect from time to time.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to the Bank on such
day on such transactions as determined by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Financial Statements" means, according to the context in which it is
used, the financial statements referred to in Sections 5.2 and 6.6 or any other
financial statements required to be given to the Lenders pursuant to this
Agreement.
"Fiscal Month" means any fiscal month of any Fiscal Year.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the Parent's fiscal year for financial accounting
purposes which ends each year on the Saturday closest to June 30. The current
Fiscal Year of the Parent will end on June 28, 2003.
"Fixed Assets" means the Equipment and Real Estate of the Borrowers.
"Forbearance Agreement" means that certain Forbearance Agreement and
Amendment dated as of May 10, 2004, among the Borrower Parties, the Agent and
the
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Original Lenders party thereto, as amended by that certain First Amendment to
Forbearance Agreement dated as of June 10, 2004.
"Foreign Adjusted Net Earnings from Operations" means, with respect to any
fiscal period of the Foreign Subsidiaries, the Foreign Subsidiaries' net income
on a consolidated basis after provision for income taxes for such fiscal period,
as determined in accordance with GAAP and reported on the Financial Statements
for such period, excluding any and all of the following included in such net
income: (a) gain or loss arising from the sale of any capital assets; (b) gain
arising from any write-up in the book value of any asset or loss arising from
any write-down in the book value of any asset other than an asset the value of
which is included in the calculation of the Borrowing Base; (c) earnings or
losses of any Person, substantially all the assets or Stock of which have been
acquired by the Foreign Subsidiaries in any manner, to the extent realized by
such other Person prior to the date of acquisition; (d) earnings or losses of
any Person in which any Foreign Subsidiary has a minority ownership interest
unless (and only to the extent) such earnings or losses shall actually have been
received by such Foreign Subsidiary in the form of cash distributions; (e)
earnings or losses of any Person to which assets of any Foreign Subsidiary shall
have been sold, transferred or disposed of, or into which any Foreign Subsidiary
shall have been merged, or which has been a party with any Foreign Subsidiary to
any consolidation or other form of reorganization, prior to the date of such
transaction; (f) gain arising from the acquisition of debt or equity securities
of any Foreign Subsidiary or from cancellation or forgiveness of Debt; (g) gain
and non-cash losses arising from extraordinary items or from any other
non-recurring transaction, as determined in accordance with GAAP; and (h) all
restructuring charges incurred by the Foreign Subsidiaries through October 31,
2004 as described on Schedule E-3.
"Foreign EBITDA" means, with respect to any fiscal period of the Foreign
Subsidiaries, Foreign Adjusted Net Earnings from Operations, plus, to the extent
deducted in the determination of Foreign Adjusted Net Earnings from Operations
for that fiscal period, interest expenses, Federal, state, local and foreign
income taxes, depreciation and amortization (including, without limitation,
amortization of restricted stock, stock appreciation rights and similar equity
instruments).
"Foreign Leverage Ratio" means a ratio determined as of the relevant
calculation date by dividing Foreign Net Debt as of the last day of the
applicable period by Foreign EBITDA for such period.
"Foreign Net Debt" means, with respect to the Foreign Subsidiaries,
without duplication, (I) all indebtedness for borrowed money or the deferred
purchase price of property, to any Person, of any kind or nature, now or
hereafter owing, arising, due or payable, howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, excluding trade payables, but including (a) all Obligations
of the Foreign Subsidiaries; (b) all obligations or liabilities created or
arising under any Capital Lease or conditional sale or other title retention
agreement with
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respect to property used or acquired by any Foreign Subsidiary, even if the
rights and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property; provided, however, that all such obligations and
liabilities which are limited in recourse to such property shall be included in
Foreign Net Debt only to the extent of the book value of such property as would
be shown on a balance sheet of the Foreign Subsidiaries prepared in accordance
with GAAP; (c) all obligations and liabilities of the Foreign Subsidiaries under
Guaranties; (d) the present value (discounted at the Base Rate) of lease
payments of the Foreign Subsidiaries due under synthetic leases, and (e)
earn-outs or other contingent payments incurred by the Foreign Subsidiaries in
connection with any acquisition to the extent such earn-outs or payments are not
reflected as expenses on the income statements of such Person; provided,
further, however, that in no event shall the term Foreign Net Debt include the
capital stock surplus, retained earnings, minority interests in the common stock
of Subsidiaries, lease obligations (other than pursuant to (b) or (d) above),
reserves for deferred income taxes and investment credits, or other deferred
credits or reserves, minus (II) cash held by the Foreign Subsidiaries.
"Foreign Pledge Agreements" means, collectively those certain pledge
agreements among the Borrower Parties, or any of them, and the Agent for the
benefit of the Agent, the Co-Agent and the other Lenders pursuant to which one
or more Borrower Parties may pledge up to and including sixty-five percent (65%)
of the equity interests of directly-owned Foreign Subsidiaries.
"Foreign Subsidiaries" has the meaning specified in Section 5.2(a).
"Funded Debt" shall mean, for any date, total outstanding Obligations of
Borrowers as of the date of determination.
"Funding Borrower" has the meaning specified in Section 14.1(e).
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles and practices set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
United States accounting profession), which are applicable to the circumstances
as of the Closing Date.
"General Intangibles" means all of the Parent's and each Subsidiary's now
owned or hereafter acquired general intangibles, choses in action and causes of
action and all other intangible personal property of the Parent and each
Subsidiary of every kind and nature (other than Accounts), including, without
limitation, all contract rights (excluding contract rights in Hedge Agreements),
payment intangibles, Proprietary Rights, corporate or other business records,
inventions, designs, blueprints, plans, specifications, patents,
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patent applications, trademarks, service marks, trade names, trade secrets,
goodwill, copyrights, computer software, customer lists, registrations,
licenses, franchises, tax refund claims, any funds which may become due to the
Parent or any Subsidiary in connection with the termination of any Plan or other
employee benefit plan or any rights thereto and any other amounts payable to the
Parent or any Subsidiary from any Plan or other employee benefit plan, rights
and claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, property, casualty or any similar
type of insurance and any proceeds thereof, proceeds of insurance covering the
lives of key employees on which the Parent or any Subsidiary is beneficiary,
rights to receive dividends, distributions, cash, Instruments and other property
in respect of or in exchange for pledged equity interests or Investment Property
and any letter of credit, guarantee, claim, security interest or other security
held by or granted to the Parent or any Subsidiary.
"Good-Faith Protest" means the right of a Borrower Party to protest any
Lien described in clause (d) of the definition of Permitted Liens, provided that
(a) a reserve acceptable to the Agent in its commercially reasonable discretion
with respect to such obligation is established, (b) any such protest is
instituted promptly and prosecuted diligently by such Borrower Party in good
faith, and (c) the Agent is satisfied that, while any such protest is pending,
there will be no impairment of the enforceability, validity, or priority of any
of the Agent's Liens.
"Goods" means all "goods" as defined in the UCC, now owned or hereafter
acquired by any Borrower Party, wherever located, including embedded Software to
the extent included in "goods" as defined in the UCC.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantors" means the Parent and those Subsidiaries signatory to the
Subsidiary Guaranty from time to time.
"Guaranty" means, with respect to any Person, all obligations of such
Person which in any manner directly or indirectly guarantee or assure, or in
effect guarantee or assure, the payment or performance of any indebtedness,
dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working
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capital or other balance sheet condition; or (c) to lease property or to
purchase any debt or equity securities or other property or services.
"Hedge Agreement" means any and all transactions, agreements or documents
now existing or hereafter entered into between or among any Borrower and any
Lender which provides for an interest rate, credit, commodity or equity swap,
cap, floor, collar, forward foreign exchange transaction, currency swap, cross
currency rate swap, currency option, or any combination of, or option with
respect to, these or similar transactions, for the purpose of hedging the
Borrower Parties' exposure to fluctuations in interest or exchange rates, loan,
credit exchange, security or currency valuations or commodity prices.
"Increased Reporting Event" means the failure of the Borrowers to maintain
Availability of not less than (a) $50,000,000 at all times during the months of
January, February, March, April, May and June of each year, and (b) $25,000,000
at all times during the months of July, August, September, October, November and
December of each year.
"Indentures" has the meaning specified in the definition of Senior Notes.
"Insolvency Proceeding" means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code or under any other state or
federal bankruptcy or insolvency law, assignment for the benefit of creditors,
formal or informal moratoria, composition, extension generally with creditors or
proceedings seeking reorganization, arrangement or other similar relief.
"Instruments" means all "instruments" as such term is defined in the UCC,
now owned or hereafter acquired by any Borrower Party.
"Intercompany Account" means the net aggregate month-end sum of the
following accounts: (a) "Notes Receivable-Salton CV"; plus (b) "Interest
Receivable- Salton CV" minus (c) "Interco Payable-Salton Hong Kong"; minus (d)
Other Payables -Salton UK; plus (e) Interco receivable-Toastmaster de Mexico
plus (f) all other accounts receivable maintained by Borrowers with Foreign
Subsidiaries minus (g) all other accounts payable maintained by Borrowers with
Foreign Subsidiaries.
"Interest Period" means, as to any LIBOR Rate Loan, the period commencing
on the Funding Date of such Loan or on the Continuation/Conversion Date on which
the Loan is converted into or continued as a LIBOR Rate Loan, and ending on the
date one, two, three or six months thereafter as selected by the Administrative
Borrower in its Notice of Borrowing, or Notice of Continuation/Conversion,
provided that:
(a) if any Interest Period would otherwise end on a day that is not a
Business Day, that Interest Period shall be extended to the following Business
Day unless the
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result of such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the preceding
Business Day;
(b) any Interest Period pertaining to a LIBOR Rate Loan that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period; and
(c) no Interest Period shall extend beyond the Stated Termination Date.
"Interest Rate" means each or any of the interest rates, including the
Default Rate, set forth in Section 2.1.
"Inventory" means all of any Borrower Party's right, title and interest
with respect to "inventory," as such term is defined in the UCC, wherever
located, and in any event including now owned and hereafter acquired inventory,
goods and merchandise, wherever located, to be furnished under any contract of
service or held for sale or lease, all returned goods, raw materials,
work-in-process, finished goods (including embedded Software), other materials
and supplies of any kind, nature or description which are used or consumed in
any Borrower Party's business or used in connection with the packing, shipping,
advertising, selling or finishing of such goods, merchandise, and all documents
of title or other Documents representing them.
"Investment" means, as to any Borrower Party, any acquisition of property
by such Borrower Party in exchange for cash or other property, whether in the
form of an acquisition of stock, debt, or other indebtedness or obligation, or
the purchase or acquisition of any other property, or a loan, advance, capital
contribution, or subscription.
"Investment Property" means all of any Borrower Party's right, title and
interest in and to any and all: (a) securities, whether certificated or
uncertificated; (b) securities entitlements; (c) securities accounts; (d)
commodity contracts; or (e) commodity accounts.
"IRS" means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.
"Kmart Receivable Purchasing Agreement" means that certain Amended and
Restated Single Customer Credit-Approved Receivables Purchasing Agreement, dated
as of May 8, 2003 between Salton Toastmaster Logistics LLC and The CIT
Group/Commercial Services, Inc., as amended.
"Knowledge" means, with respect to the Parent or the Administrative
Borrower, as applicable, the best knowledge of the senior executive officers of
the Parent or the Administrative Borrower, as applicable.
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"Latest Projections" means: (a) on the date specified in Section 8.3(c)
and thereafter until the Agent and the Co-Agent receive new projections pursuant
to Section 5.2(g), the projections of the Parent's and the Subsidiaries'
financial condition, results of operations, and cash flows, for the period
commencing on the Closing Date and ending on June 30, 2007; and (b) thereafter,
the projections most recently received by the Agent and the Co-Agent pursuant to
Section 5.2(g).
"Ledger Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Parent or any
of its Subsidiaries to Silver Point or its Affiliates in respect of any Ledger
Products irrespective of whether for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all such amounts that Parent or any of its
Subsidiaries is obligated to reimburse to Silver Point or any Lender as a result
of Silver Point or such Lender purchasing participations or executing
indemnities or reimbursement obligations with respect to the Ledger Products.
"Ledger Products" means any service or facility extended to any supplier
of Parent or any of its Subsidiaries pursuant to which Silver Point and/or
certain of its Affiliates may (a) provide credit insurance for certain accounts
receivable that are owed by Parent or any of its Subsidiaries to such supplier
or (b) purchase accounts receivable that are owed by Parent or any of its
Subsidiaries to such supplier.
"Lender" and "Lenders" have the meanings specified in the introductory
paragraph hereof and shall include the Agent or Co-Agent to the extent of any
Agent Advance outstanding and the Agent to the extent of any Non-Ratable Loan
outstanding; provided that no such Agent Advance or Non-Ratable Loan shall be
taken into account in determining any Lender's Pro Rata Share.
"Lender Assignments" means the Assignment and Acceptance Agreements
executed and delivered immediately prior to the effectiveness of this Agreement
by Silver Point, the Agent and each of the Original Lenders.
"Letter of Credit" has the meaning specified in Section 1.3(a).
"Letter of Credit Fee" has the meaning specified in Section 2.6.
"Letter of Credit Issuer" means any Lender or any affiliate of any Lender
that issues any Letter of Credit pursuant to this Agreement.
"Letter-of-Credit Rights" means "letter-of-credit rights" as such term is
defined in the UCC, now owned or hereafter acquired by the Parent or any
Subsidiary, including rights to payment or performance under a letter of credit,
whether or not the Parent or a Subsidiary, as beneficiary, has demanded or is
entitled to demand payment or performance.
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"Letter of Credit Subfacility" means $10,000,000.
"LIBOR Interest Payment Date" means, with respect to a LIBOR Rate Loan,
the Termination Date and the last day of each Interest Period applicable to such
Loan or, with respect to each Interest Period of greater than three months in
duration, the last day of the third month of such Interest Period and the last
day of such Interest Period.
"LIBOR Rate" means, for any Interest Period, with respect to LIBOR Rate
Loans, the greater of (a) 2.00% or (b) the rate of interest per annum determined
pursuant to the following formula as follows:
Offshore Base Rate
LIBOR Rate = ---------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Offshore Base Rate" means for the Interest Period of such
LIBOR Rate Loan, the rate per annum determined on the basis of the
offered rate for deposits in Dollars of amounts equal or comparable
to the principal amount of such LIBOR Rate Loan offered for a term
comparable to such Interest Period, which rates appear on the
Telerate Page 3750 effective as of 11:00 a.m., London time, two (2)
Business Days prior to the first day of such Interest Period,
provided that if no such offered rates appear on such page, the
Offshore Rate for such Interest Period will be the arithmetic
average (rounded upward, if necessary, to the next higher 1/100th of
1%) of rates quoted by not less than two (2) major banks in New York
City, selected by the Agent, at approximately 10:00 a.m. (New York,
New York) time, two (2) Business Days prior to the first day of such
Interest Period, for deposits in Dollars offered by leading European
banks for a period comparable to such Interest Period in an amount
comparable to the principal amount of such LIBOR Rate Loan;
provided, further, that if no such offered rates appear on such page
and any Hedge Agreement is in effect on such date, the Offshore Rate
for such Interest Period will be the sum of (a) the applicable
floating rate payable by the applicable Co-Agent with respect to the
applicable Hedge Agreement (without regard to any applicable margins
added thereto under the terms of such Hedge Agreement) plus (b) the
Applicable Margin then in effect, plus (c) the Default Rate, if then
in effect.
and
"Eurodollar Reserve Percentage" means, for any day during any
Interest Period, the reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1%) in effect on such day
applicable to member banks under regulations issued from time to
time by the Federal
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Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"). The Offshore Rate for
each outstanding LIBOR Rate Loan shall be adjusted automatically as
of the effective date of any change in the Eurodollar Reserve
Percentage.
"LIBOR Rate Loan" means a Revolving Loan during any period in which it
bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, charge, claim, or lien arising from a mortgage, deed of
trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes; (b) to the extent not included
under the preceding clause (a), any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or other title
exception or encumbrance affecting property; and (c) any contingent or other
agreement to provide any of the foregoing.
"Lien Acknowledgement Agreement" means an agreement between an Approved
Freight Handler and the Agent, in form and substance satisfactory to the Agent
and the Co-Agent, pursuant to which, among other things, the Approved Freight
Handler acknowledges the Lien of the Agent in the Collateral in the possession
of the Approved Freight Handler and any documents evidencing same.
"Loan Account" means the loan account of the Borrowers, which account
shall be maintained by the Agent.
"Loan Documents" means this Agreement, the Patent and Trademark Security
Agreement, the Copyright Security Agreement, Security Agreement, the Subsidiary
Guaranty, the Pledge Agreement, the Foreign Pledge Agreements, the Silver Point
Fee Letter, the Subordination Agreement, any Lien Acknowledgement Agreement and
any other agreements, instruments, and documents heretofore, now or hereafter
evidencing, securing, guaranteeing or otherwise relating to the Obligations, the
Collateral, or any other aspect of the transactions contemplated by this
Agreement, in each case as amended, restated, supplemented or otherwise modified
from time to time. No Hedge Agreement shall be deemed to constitute a Loan
Document.
"Loans" means, collectively, all loans and advances provided for in
Article 1.
"Majority Lenders" means at any date of determination Lenders whose Pro
Rata Shares aggregate more than fifty percent (50%).
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"Margin Stock" means "margin stock" as such term is defined in Regulation
T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Borrower Parties on a consolidated
basis or of the Collateral (b) a material impairment of the ability of the
Borrower Parties, taken as a whole, to perform under any Loan Document or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against any Borrower Party of any Loan Document to which it is a
party.
"Maximum Amount" means $275,000,000.
"Maximum Borrower Liability" has the meaning specified in Section 14.1(b).
"Maximum Rate" has the meaning specified in Section 2.3.
"Multi-employer Plan" means a "multi-employer plan" as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately preceding six (6) years contributed to by any Borrower Party or any
ERISA Affiliate.
"Net Amount of Eligible Accounts" means, at any time, the gross amount of
Eligible Accounts less sales, excise or similar taxes, and less returns,
discounts, claims, credits, allowances, accrued rebates, offsets, deductions,
counterclaims, disputes and other defenses of any nature at any time issued,
owing, granted, outstanding, available or claimed.
"Net Liquidation Value of Inventory" means the recovery value of the
Borrowers' Eligible Landed Inventory that is estimated to be recoverable in an
orderly liquidation of such Eligible Landed Inventory net of estimated
liquidation expenses, such amounts to be determined from time to time by a
qualified appraisal company selected by the Agent and the Co-Agent in their
reasonable discretion.
"Non-Ratable Loan" and "Non-Ratable Loans" have the meanings specified in
Section 1.2(h).
"Notice of Borrowing" has the meaning specified in Section 1.2(b).
"Notice of Continuation/Conversion" has the meaning specified in Section
2.2(b).
"Obligations" means all present and future loans, advances, liabilities,
obligations, covenants, duties, and debts owing by the Borrowers to the Agent
and/or any Lender, arising under or pursuant to this Agreement or any of the
other Loan Documents or any Hedge Agreement, whether or not evidenced by any
note, or other instrument or
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document, whether arising from an extension of credit, opening of a letter of
credit, acceptance, loan, guaranty, indemnification or otherwise, whether direct
or indirect, absolute or contingent, due or to become due, primary or secondary,
as principal or guarantor, and including all principal, interest, charges,
expenses, fees, attorneys' fees, filing fees and any other sums chargeable to
any Borrower hereunder or under any of the other Loan Documents. "Obligations"
includes, without limitation, (a) all debts, liabilities, and obligations now or
hereafter arising from or in connection with the Letters of Credit, and (b) all
debts, liabilities and obligations now or hereafter arising from or in
connection with Bank Products.
"Original Closing Date" means May 9, 2003.
"Original Lenders" has the meaning set forth in the recitals of this
Agreement.
"Original Loan Agreement" has the meaning set forth in the preamble to
this Agreement.
"Original Revolving Loans" means Revolving Loans as defined in the
Original Loan Agreement which are outstanding immediately prior to the Closing
Date.
"Other Debtor Relief Law" has the meaning specified in Section
14.1(b)(iii).
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Loan Documents.
"Parent" has the meaning specified in the preamble of this Agreement.
"Participant" means any Person who shall have been granted the right by
any Lender to participate in the financing provided by such Lender under this
Agreement, and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender.
"Participant Register" has the meaning set forth in Section 11.2(h).
"Patent and Trademark Security Agreement" means any Patent Security
Agreement and the Trademark Security Agreement executed and delivered by certain
of the Borrower Parties to the Agent to evidence and perfect the Agent's
security interest in such Borrower Parties' present and future patents,
trademarks, and related licenses and rights, for the benefit of the Agent, the
Co-Agent and the Lenders.
"Payment Account" means each bank account, including, without limitation,
each lockbox account to which the proceeds of Accounts and other Collateral are
deposited or credited, and which is maintained in the name of a Borrower Party
or, at any time after
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Agent has taken full dominion over the Payment Accounts, on terms acceptable to
the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any Governmental
Authority succeeding to the functions thereof.
"Pending Revolving Loans" means, at any time, the aggregate principal
amount of all Revolving Loans requested in any Notice of Borrowing received by
the Agent which have not yet been advanced.
"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which the Parent or any Subsidiary sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multi-employer Plan has made contributions at
any time during the immediately preceding five (5) plan years.
"Permitted Acquisition" means any acquisition by any Borrower Party of all
or substantially all of the assets or Stock of a Person so long as (a) no
Default or Event of Default exists or would be caused thereby and (b) the
Administrative Borrower delivers evidence to the Agent that Availability (x) for
each of the thirty (30) days most recently ending was not (and after giving
effect to such transaction would not have been) and (y) for each of the thirty
(30) days immediately succeeding such transaction on a pro forma basis (after
giving effect to such transaction) would not be (i) less than (1) $40,000,000
for any day from and after January 1 though June 30 of any year and (2)
$30,000,000 for any day from and after July 1 through December 31 of any year,
Permitted Acquisitions which do not exceed $5,000,000 with respect to any
individual acquisition and (ii) less than (1) $55,000,000 for any day from and
after January 1 though June 30 of any year and (2) $40,000,000 for any day from
and after July 1 through December 31 of any year, Permitted Acquisitions which
exceed $5,000,000 with respect to any individual acquisition; provided, however,
that no assets so acquired shall be included in the Borrowing Base without the
prior written consent of the Agent and completion of a field examination of such
assets by the Agent; and "Permitted Acquisitions" means each Permitted
Acquisition.
"Permitted Liens" means:
(a) (i) Liens for Taxes not delinquent or (ii) statutory Liens for Taxes
in an amount not to exceed $500,000 (or such greater amount as shall be covered
by a bond) provided that the payment of such taxes which are due and payable is
being contested in good faith and by appropriate proceedings diligently pursued
and as to which adequate financial reserves have been established on the
Parent's and the Subsidiaries' books and records and a stay of enforcement of
any such Lien is in effect;
(b) the Agent's Liens;
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(c) Liens incurred or deposits made in the ordinary course of business
in connection with, or to secure payment of, obligations under worker's
compensation, unemployment insurance, social security and other similar laws, or
to secure the performance of bids, tenders or contracts (other than for the
repayment of Debt) or to secure indemnity, performance or other similar bonds
for the performance of bids, tenders or contracts (other than for the repayment
of Debt) or to secure statutory obligations (other than liens arising under
ERISA or Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds;
(d) Liens securing the claims or demands of materialmen, mechanics,
carriers, repairmen, warehousemen, landlords and other like Persons, so long as
(i) such Liens are subject to a Good-Faith Protest or (ii) with respect to such
Liens arising from the nonpayment of such claims or demand when due, such claims
or demands do not exceed $200,000 in the aggregate (or such greater amount as
shall be covered by a bond);
(e) Liens constituting encumbrances in the nature of reservations,
exceptions, encroachments, easements, rights of way, covenants running with the
land, and other similar title exceptions or encumbrances affecting any Real
Estate; provided that they do not in the aggregate materially detract from the
value of the Real Estate or materially interfere with its use in the ordinary
conduct of any Borrower Party's business;
(f) Liens arising from judgments and attachments in connection with
court proceedings provided that the attachment or enforcement of such Liens
would not result in an Event of Default hereunder and such Liens are being
contested in good faith by appropriate proceedings, adequate reserves have been
set aside and no material Property is subject to a material risk of loss or
forfeiture and the claims in respect of such Liens are fully covered by
insurance (subject to ordinary and customary deductibles) and a stay of
execution pending appeal or proceeding for review is in effect;
(g) Liens securing Capital Leases and purchase money Debt permitted in
Section 7.13;
(h) any Liens on Property of a Person acquired in any Permitted
Acquisition otherwise permitted hereunder; provided that such Liens (i) attach
to assets valued individually or in the aggregate not in excess of $1,000,000
and (b) are existing on the date of such Permitted Acquisition and do not relate
to any other then-existing or after-acquired assets of a Borrower Party
following such Permitted Acquisition; and
(i) Liens, if any, in effect as of the Closing Date and described in
Schedule E-2.
"Permitted Transaction" means any one or more of the following
transactions of a Borrower Party, on the condition that the Administrative
Borrower delivers evidence to the Agent that no Default or Event of Default then
exists and that the Availability (x) for each of the thirty (30) days most
recently ending was not (and after giving effect to such
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transaction would not have been) and (y) for each of the thirty (30) days
immediately succeeding such transaction on a pro forma basis (after giving
effect to such transaction) would not be less than (a) $55,000,000 for any day
from and after January 1 through June 30 of any year and (b) $40,000,000 for any
day from and after July 1 through December 31 of any year,
(i) dividends on capital stock of Parent not to exceed $3,000,000 in the
aggregate during any Fiscal Year;
(ii) the redemption or other acquisitions by Parent of any of its bonds or
capital stock (or any options or warrants for such stock);
and "Permitted Transactions" means each Permitted Transaction.
"Person" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which a Borrower Party sponsors or maintains or to which a Borrower Party
makes, is making, or is obligated to make contributions and includes any Pension
Plan.
"Pledge Agreement" means the Pledge Agreement of even date herewith among
certain of the Borrower Parties party thereto and the Agent for the benefit of
the Agent, the Co-Agent and the other Lenders.
"Proprietary Rights" means all of any Borrower Party's now owned and
hereafter arising or acquired: licenses, franchises, permits, patents, patent
rights, copyrights, works which are the subject matter of copyrights,
trademarks, service marks, trade names, trade styles, patent applications,
copyright applications, trademark and service xxxx applications, and all
licenses and rights related to any of the foregoing, including those patents,
trademarks, service marks, trade names and copyrights set forth on Schedule 6.12
hereto, and all other rights under any of the foregoing, all extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any
of the foregoing, and all rights to xxx for past, present and future
infringement of any of the foregoing.
"Pro Rata Share" means, with respect to a Lender, a fraction (expressed as
a percentage), the numerator of which is the amount of such Lender's Commitment
and the denominator of which is the sum of the amounts of all of the Lenders'
Commitments, or if no Commitments are outstanding, a fraction (expressed as a
percentage), the numerator of which is the amount of Obligations owed to such
Lender and the denominator of which is the aggregate amount of the Obligations
owed to the Lenders, in each case giving effect to a Lender's participation in
Non-Ratable Loans and Agent Advances.
"Rating Agencies" has the meaning set forth in Section 1.7.
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"Real Estate" means all of any Borrower Party's now or hereafter owned or
leased estates in real property, including, without limitation, all fees,
leaseholds and future interests, together with all of such Borrower Party's now
or hereafter owned or leased interests in the improvements thereon, the fixtures
attached thereto and the easements appurtenant thereto.
"Register" has the meaning set forth in Section 11.2(g).
"Registered Loan" means any loan recorded on the Register pursuant to
Section 11.2(g).
"Registered Note" has the meaning set forth in Section 1.6.
"Related Fund" means any fund or account managed by any Lender or an
Affiliate of any Lender or by the investment manager of any such fund or
account.
"Release" means a release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant
into the indoor or outdoor environment or into or out of any Real Estate or
other property, including the movement of Contaminants through or in the air,
soil, surface water, groundwater or Real Estate or other property.
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder, other than any such event for which the
thirty (30) day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Required Lenders" means, at any time, (a) the Co-Agent and (b) Lenders
whose Pro Rata Shares aggregate more than sixty-six and two-thirds percent
(66-2/3%).
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Reserves" means reserves that limit, without duplication, the
availability of credit hereunder, consisting of reserves against Availability,
Eligible Accounts or Eligible Inventory, and at any time any payment of Debt
(excluding the Obligations) is due and payable from (or in the case of the
Senior Notes, subject to mandatory redemption by) any Borrower Party during the
ninety (90) day period subsequent to such date of determination, the Short-Term
Obligations Reserve and such other reserves established by the Agent or the
Co-Agent from time to time in the Agent's or the Co-Agent's reasonable credit
judgment. In addition, and without limiting the generality of the foregoing, the
following reserves shall also be deemed to be a reasonable exercise of the
Agent's or the Co-Agent's credit judgment: (a) Bank Product Reserves, (b) a
reserve for
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accrued, unpaid interest on the Obligations, (c) reserves for three months rent
at leased locations where Collateral that is included in the Borrowing Base is
located unless a landlord agreement with respect to such location reasonably
acceptable to the Agent and the Co-Agent has been delivered to the Agent and the
Co-Agent, (d) reserves for Inventory shrinkage, (e) reserves for customs charges
and freight, (f) reserves for dilution with respect to Accounts, (g) reserves
for warehousemen's or bailees' charges, (h) reserves for accrued rebates or
returns of Inventory, (i) reserves for any other matter that has a negative
impact on the value of the Borrowers' Collateral, including royalty obligations,
(j) reserves with respect to certain Inventory designated as "Rejuvenique" and
(k) at any time from and after receipt by the Agent and the Co-Agent of notice
pursuant to Section 7.28 until the date the Agent and the Co-Agent shall have
received the results of the next subsequent appraisal or re-appraisal of
Inventory, a reserve to reflect changes or adjustments to intercompany
commissions, transfer pricing policies or standard cost of Inventory to the
extent such changes or adjustments, individually or in the aggregate, would have
an impact of in excess of $100,000.
"Responsible Officer" means the corporate comptroller, vice president of
finance, chief financial officer or the president of the Administrative
Borrower, any other officer having substantially the same authority and
responsibility.
"Restricted Investment" means, as to any Borrower Party, any Investment,
except the following: (a) acquisitions of Equipment and intellectual property to
be used in the business of such Borrower Party so long as the acquisition costs
thereof constitute, or are deemed to constitute, Capital Expenditures permitted
hereunder; (b) acquisitions of Inventory in the ordinary course of business of
such Borrower Party; (c) acquisitions of current assets acquired in the ordinary
course of business of the Parent; (d) direct obligations of the United States of
America, or any agency thereof, or obligations guaranteed by the United States
of America, provided that such obligations mature within one year from the date
of acquisition thereof; (e) acquisitions of certificates of deposit maturing
within one year from the date of acquisition, bankers' acceptances, Eurodollar
bank deposits, or overnight bank deposits, in each case issued by, created by,
or with a bank or trust company organized under the laws of the United States of
America or any state thereof having capital and surplus aggregating at least
$1,000,000,000; (f) acquisitions of commercial paper given a rating of "A2" or
better by Standard & Poor's Corporation or "P2" or better by Xxxxx'x Investors
Service, Inc. and maturing not more than 90 days from the date of creation
thereof; (g) Hedge Agreements and (h) Permitted Acquisitions.
Revolver Commitment" means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule 1.2(a) hereto or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 11.2
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"Revolving Loans" has the meaning specified in Section 1.2 and includes
each Agent Advance and Non-Ratable Loan.
"SEC" means the United States Securities and Exchange Commission and any
successor thereto.
"Securitization" has the meaning set forth in Section 1.7.
"Securitization Liabilities" has the meaning set forth in Section 1.7.
"Securitization Parties" has the meaning set forth in Section 1.7.
"Security Agreement" means the Security Agreement of even date herewith
among the Borrower Parties and the Agent for the benefit of the Agent, the
Co-Agent and other Lenders.
"Seller Subordinated Debt" means Debt of the Borrower Parties incurred in
connection with any Permitted Acquisition and initially owing to the seller in
such Permitted Acquisition; provided, that (a) such Debt shall be subordinated,
pursuant to subordination provisions acceptable to the Agent and the Co-Agent in
their sole discretion and such provisions shall be no less favorable to the
Lenders than the subordination provisions of any existing subordinated debt, to
the obligations of the Borrowers under this Agreement and the other Loan
Documents, (b) such Debt shall mature no less than one hundred eighty (180) days
after the Termination Date and shall have covenants no more restrictive than
those set forth herein and (c) after giving effect to the incurrence of such
Debt, no Default or Event of Default shall be in existence.
"Senior Notes" means, collectively, those (a) 10 -3/4% Senior Subordinated
Notes Due 2005, issued by the Parent, pursuant to that certain Indenture, dated
as of December 16, 1998 in favor of Xxxxx Fargo Bank Minnesota, N.A., as Trustee
(the "December 16, 1998 Indenture") and (b) 12 -1/4% Senior Subordinated Notes
Due 2008, issued by the Parent, pursuant to that certain Indenture, dated as of
April 23, 2001 in favor of Xxxxx Fargo Bank Minnesota, N.A., as Trustee (the
"April 23, 2001 Indenture" and together with the December 16, 1998 Indenture,
the "Indentures"), as amended, restated, supplemented or otherwise modified from
time to time.
"Settlement" and "Settlement Date" have the meanings specified in Section
12.15(a)(ii).
"Short Term Obligations Reserve" means as of any date of determination, a
reserve established by the Agent in its discretion in an amount equal to the
lesser of (a) $50,000,000 or (b) the aggregate sum of all payments on Debt
(excluding the Obligations) due and payable from (or in the case of the Senior
Notes, subject to mandatory redemption by) any Borrower Party at any time during
the ninety (90) day period subsequent to such date of determination.
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"Silver Point" means Silver Point Finance, LLC, a Delaware limited
liability company.
"Silver Point Fee Letter" has the meaning specified in Section 2.4.
"Software" means all "software" as such term is defined in the UCC, now
owned or hereafter acquired by any Borrower Party, other than software embedded
in any category of Goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.
"Solvent" means, when used with respect to any Person, that at the time of
determination:
(a) the assets of such Person, at a fair valuation, are in excess of the
total amount of its debts (including contingent liabilities); and
(b) the present fair saleable value of its assets is greater than its
probable liability on its existing debts as such debts become absolute and
matured; and
(c) it is then able and expects to be able to pay its debts (including
contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business as conducted and
as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Specified Transaction" means any one or more of the following
transactions of a Borrower Party, (a) dividends on capital stock of Parent and
(b) the redemption or other acquisitions by Parent of any of its bonds or
capital stock (or any options or warrants for such stock); and "Specified
Transactions" means each Specified Transaction.
"SP Successor Agent" has the meaning specified in Section 8.3(a).
"Stated Termination Date" means June 15, 2007.
"Stock" means all shares, options, warrants, interests, participations, or
other equivalents (regardless of how designated) of or in a Person, whether
voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Exchange Act).
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"Subordination Agreement" means that certain Subordination Agreement in
favor of the Agent pursuant to which the Parent or any of the Parent's
Subsidiaries subordinate any Debt owing in favor of such Person by the Parent or
such Subsidiary.
"Subsidiary" of a Person means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than fifty percent (50%) of the voting stock or other equity interests (in the
case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Parent, including, without
limitation, each Borrower.
"Subsidiary Guaranty" means the Subsidiary Guaranty dated as of the date
hereof, executed and delivered by the Guarantors for the benefit of the Agent,
the Co-Agent and the Lenders to guarantee the Obligations of the Borrowers under
this Agreement.
"Supporting Letter of Credit" has the meaning specified in Section 1.3(g).
"Supporting Obligations" means all "supporting obligations" as such term
is defined in the UCC, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments,
or Investment Property.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender, the Co-Agent and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by the
Agent's, the Co-Agent's or each Lender's net income in any the jurisdiction
(whether federal, state or local and including any political subdivision
thereof) under the laws of which such Lender, the Co-Agent or the Agent, as the
case may be, is organized or maintains a lending office.
"Term Loan" has the meaning set forth in Section 1.3.
"Term Loan Amount" means $100,000,000.
"Term Loan Commitment" means, with respect to each Lender, its Term
Commitment, and, with respect to all Lenders, their Term Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule 1.2(a) hereto or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 11.2
"Term Loan Lenders" mean TRS Thebe LLC, Sea Pines Funding LLC and Spirit
IV Loan Trust 2003-A.
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"Termination Date" means the earliest to occur of (i) the Stated
Termination Date, (ii) the date the Total Facility is terminated either by the
Borrowers pursuant to Section 3.2 or by the Required Lenders pursuant to Section
9.2, and (iii) the date this Agreement is otherwise terminated for any reason
whatsoever pursuant to the terms of this Agreement.
Total Commitment" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule 1.2(a) attached hereto or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 11.2.
"Total Facility" has the meaning specified in Section 1.1.
"Transition Period End Date" has the meaning specified in Section 8.3(a).
"UCC" means the Uniform Commercial Code, as in effect from time to time,
of the State of New York or of any other state the laws of which are required as
a result thereof to be applied in connection with the issue of perfection of
security interests; provided, that to the extent that the UCC is used to define
any term herein or in any other documents and such term is defined differently
in different Articles or Divisions of the UCC, the definition of such term
contained in Article or Division 9 shall govern.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"Unused Letter of Credit Subfacility" means an amount equal to $10,000,000
minus the sum of (a) the aggregate undrawn amount of all outstanding Letters of
Credit plus, without duplication, (b) the aggregate unpaid reimbursement
obligations with respect to all Letters of Credit.
"Unused Line Fee" has the meaning specified in Section 2.5.
"US Adjusted Net Earnings from Operations" means, with respect to any
fiscal period of the Borrowers, the Borrowers' net income on a consolidated
basis after provision for income taxes for such fiscal period, as determined in
accordance with GAAP and reported on the Financial Statements for such period,
excluding any and all of the following included in such net income: (a) gain or
loss arising from the sale of any capital assets; (b) gain arising from any
write-up in the book value of any asset or loss arising from any write-down in
the book value of any asset other than an asset the value of which is included
in the calculation of the Borrowing Base; (c) earnings or losses of any Person,
substantially all the assets or Stock of which have been acquired by the
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Borrowers in any manner, to the extent realized by such other Person prior to
the date of acquisition; (d) earnings or losses of any Person in which any
Borrower has a minority ownership interest unless (and only to the extent) such
earnings or losses shall actually have been received by such Borrower in the
form of cash distributions; (e) earnings or losses of any Person to which assets
of any Borrower shall have been sold, transferred or disposed of, or into which
any Borrower shall have been merged, or which has been a party with any Borrower
to any consolidation or other form of reorganization, prior to the date of such
transaction; (f) gain arising from the acquisition of debt or equity securities
of any Borrower or from cancellation or forgiveness of Debt; (g) gain and
non-cash losses arising from extraordinary items or from any other non-recurring
transaction, as determined in accordance with GAAP; and (h) all restructuring
charges incurred by the Borrowers through October 31, 2004 as described on
Schedule E-3.
Accounting Terms. Any accounting term used in the Agreement shall have,
unless otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations in the Agreement shall be
computed, unless otherwise specifically provided therein, in accordance with
GAAP as consistently applied and using the same method for inventory valuation
as used in the preparation of the Financial Statements.
Interpretive Provisions. (a) The meanings of defined terms are equally
applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words refer to
the Agreement as a whole and not to any particular provision of the Agreement;
and Subsection, Section, Schedule and Exhibit references are to the Agreement
unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified date to
a later specified date, the word "from" means "from and including," the
words "to" and "until" each mean "to but excluding" and the word "through"
means "to and including."
(iv) The word "or" is not exclusive.
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(d) Unless otherwise expressly provided herein, (i) references to
agreements (including the Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of the Agreement and other Loan Documents
are for convenience of reference only and shall not affect the interpretation of
the Agreement.
(f) The Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) For purposes of Section 9.1, a breach of a financial covenant
contained in Sections 7.22, 7.23 and 7.24 shall be deemed to have occurred as of
any date of determination thereof by the Agent or as of the last day of any
specified measuring period, regardless of when the Financial Statements
reflecting such breach are delivered to the Agent.
(h) The Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Borrower
Parties and the other parties, and are the products of all parties. Accordingly,
they shall not be construed against the Lenders or the Agent merely because of
the Agent's or Lenders' involvement in their preparation.
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