SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
Exhibit 10.3
SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”)
dated as of October 21, 2005, is by and among APPLICA INCORPORATED (the “Borrower”), a
Florida corporation, each of its Subsidiaries identified on the signature pages hereof, the Lenders
identified on the signature pages hereof and BANK OF AMERICA, N.A., as administrative agent for the
Lenders (in such capacity, the “Agent”). Terms used herein but not otherwise defined herein
shall have the meanings provided to such terms in the Credit Agreement (as hereinafter defined).
W I T N E S S E T H
WHEREAS, the Borrower, the Subsidiaries, the Lenders and the Agent are parties to that certain
Amended and Restated Credit Agreement, dated as of November 17, 2004 (as amended, modified,
supplemented, extended or restated from time to time, the “Credit Agreement”);
WHEREAS, the parties hereto desire to amend certain terms of the Credit Agreement as set forth
in this Amendment;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. The Credit Agreement is hereby amended as follows:
(a) by adding to Annex A to the Credit Agreement in the proper alphabetical location the
following new definitions:
“MAST” means MAST Credit Opportunities I (Master), Ltd., a
Cayman Islands corporation, and its successors and assigns.
“MAST Debt” means the Debt owing to MAST under the MAST Loan
Documents at any time.
“MAST Intercreditor Agreement” means the Intercreditor
Agreement, dated October 21, 2005, between MAST and the Agent.
“MAST Loan Documents” means: (i) the Promissory Note,
executed by the Borrower to the order of MAST, dated October 21, 2005, in
the principal amount of $20,000,000; (ii) the Term Loan Agreement, dated
October 21, 2005, between the Borrower and MAST; (iii) the Security
Agreement between the Borrower and MAST, dated October 21, 2005, and (iv)
all other agreements, instruments or documents executed or delivered by the
Borrower or the Guarantors in connection with the
foregoing, as any of the foregoing may be at any time amended or
modified.
(b) by amending and restating the definition of “Eligible Assignee” in Annex A to the
Credit Agreement as follows:
“Eligible Assignee” means (a) a commercial bank, commercial
finance company, financial institution or other asset based lender, having
total assets in excess of $1,000,000,000; (b) any Lender listed on the
signature page of this Agreement; (c) any Affiliate of any Lender; and (d)
if an Event of Default has occurred and is continuing, any Person
reasonably acceptable to the Agent. Neither MAST nor any Affiliate of MAST
shall not be deemed to be an Eligible Assignee, unless it shall exercise
its option to acquire the Obligations pursuant to the MAST Intercreditor
Agreement
(c) by amending the definition of “Permitted Liens” in Annex A to the Credit
Agreement by replacing the “.” after clause (j) thereof with “;” and adding thereafter a
new clause (k) to such definition, with such new clause (k) to provide as follows:
(k) Liens to secure the MAST Debt.
(d) by amending and restating the definition of “Permitted Senior Subordinated Debt
Prepayments” in Annex A to the Credit Agreement as follows:
“Permitted Senior Subordinated Debt Prepayments” means a prepayment of
principal in respect of Senior Subordinated Debt in an amount not to exceed
$5,000,000 from the proceeds of the MAST Debt or any other prepayment of principal
in respect of Senior Subordinated Debt (i) of which Agent shall have been given not
less than 5 Business Days’ prior written notice, (ii) no Event of Default has
occurred or is continuing after giving effect to any such prepayment, (iii) for 60
consecutive days prior to the effective date of such prepayment, Availability is not
less than $30,000,000 at any time, plus the amount of anticipated
prepayment, provided, that with respect to any prepayment occurring during
any Seasonal Inventory Period, any additional Availability derived by Borrower based
on the Seasonal Inventory Advance Amount shall be deemed to equal $0 for purposes of
calculating Availability pursuant to this clause (iii) during such Seasonal
Inventory Period; and (iv) immediately prior to and after giving effect to such
prepayment the Fixed Charge Coverage Ratio is not less than 1.1 to 1.0.
Notwithstanding the foregoing, (x) no proceeds from the Permitted Mexico Facility
Disposition may be used to prepay Senior Subordinated Debt until all severance and
other wind-down costs of the Mexico Facility shall have been paid and funded in
full, and (y) the Net Proceeds from other Asset Dispositions, to the extent such
dispositions are expressly permitted by the Agreement or otherwise consented to by
Agent in writing, may be used to
prepay Senior Subordinated Debt if and only if each of the conditions set forth
in clauses (i) through (iv) above are satisfied.
(e) by amending and restating Section 7.12 of the Credit Agreement as follows:
7.12 Third Party Guaranties.
No Loan Party shall make, issue, or become liable on any Guaranty,
except (a) Guaranties of the Obligations in favor of the Agent, (b)
unsecured Guaranties of Debt incurred by a Foreign Subsidiary in an
aggregate principal amount at any time outstanding not to exceed
$40,000,000, or (c) Guaranties of the MAST Debt.
(f) by amending and restating Section 7.13 of the Credit Agreement as follows:
7.13. Debt.
No Loan Party shall incur or maintain any Debt, other than: (a) the
Obligations; (b) Debt described on Schedule 6.9; (c) Capital Leases of
Equipment and purchase money secured Debt incurred to purchase Equipment provided
that (i) Liens securing the same attach only to the Equipment acquired by the
incurrence of such Debt, and (ii) the aggregate amount of such Debt (including
Capital Leases) outstanding does not exceed $5,000,000 at any time; (d) Debt
consisting of intercompany loans and advances made between the Loan Parties to the
extent consistent with Section 7.29; (e) Debt evidencing a refunding,
renewal or extension of the Debt described on Schedule 6.9; provided that (i) the
principal amount thereof is not increased, (ii) the Liens, if any, securing such
refunded, renewed or extended Debt do not attach to any assets in addition to those
assets, if any, securing the Debt to be refunded, renewed or extended, (iii) no
Person that is not an obligor or guarantor of such Debt as of the Closing Date shall
become an obligor or guarantor thereof, and (iv) the terms of such refunding,
renewal or extension are not materially less favorable to such Consolidated Member,
the Agent or the Lenders than the original Debt; (f) Debt in respect of Hedge
Agreements entered into for non-speculative purposes related to hedging interest
rates, currency values and commodities in connection with the Core Business; (g) the
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; (h) Debt arising by reason of
Guaranties by a Loan Party permitted under Section 7.12(b); (i) Approved
Receivables Programs to the extent approved by the Required Lenders; (j) the MAST
Debt in a principal amount not to exceed $20,000,000, less any principal payments on
the MAST Debt from time to time; and (k) other unsecured Debt in an aggregate
principal amount at any time outstanding not to exceed $1,000,000.
(g) by amending and restating Section 9.1(d) of the Credit Agreement as follows:
(d) any default which has not been waived shall occur with
respect to (i) Debt of the Borrower evidenced by or arising under the
Senior Subordinated Debt Offering Documents or the MAST Loan Documents, or
(ii) any Debt (other than the Obligations and Debt contemplated by clause
(i) hereof) of any Loan Party in an outstanding principal amount which
exceeds $500,000, or under any agreement or instrument under or pursuant to
which any such Debt may have been issued, created, assumed, or guaranteed
by any Loan Party, and such default shall continue for more than the period
of grace, if any, therein specified, if the effect thereof (with or without
the giving of notice or further lapse of time or both) is to accelerate, or
to permit the holders of any such Debt to accelerate, the maturity of any
such Debt; or any such Debt shall be declared due and payable or be
required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof;
2. The Borrower has delivered to the Agent and its counsel copies of the material MAST Loan
Documents in the form attached hereto as Exhibit A. Subject to the satisfaction of each
of the conditions set forth in Section 5 of this Amendment, the Agent consents to the
Borrower’s entering into the MAST Loan Documents.
3. The Borrower covenants and agrees that it shall not:
(a) agree or consent to amend or modify any of the MAST Loan Documents if as a result thereof
MAST would be in breach of its covenants in the MAST Intercreditor Agreement; agree to shorten the
maturity date for the payment of any of the MAST Debt; or fail to provide prompt written notice to
Agent of any amendment to or modification of any of the MAST Loan Documents, including any
amendment or modification that would have the effect of extending the maturity date for payment of
the MAST Debt; or
(b) make any voluntary or any mandatory prepayments of the MAST Debt or,
make payments due upon default or
acceleration in respect of the MAST Debt, except as expressly
permitted under the MAST Intercreditor Agreement.
4. The Borrower
agrees that for so long as the MAST Debt or any Qualified Refinancing (as defined in the MAST Intercreditor
Agreement) of the MAST Debt remains outstanding, the Borrower shall have no right to request any increase in
the Commitments under Section 1.3 of the Credit Agreement, notwithstanding anything to the contrary set forth
in such Section 1.3 or elsewhere in the Credit Agreement.
5. By their signature below, each of the Lenders authorizes the Agent to enter into the MAST
Intercreditor Agreement and agrees that it will be bound by the terms thereof including the terms
of the MAST Intercreditor Agreement relating to the priority, enforcement and release of Agent’s
Liens and the provisions relating to the sale of the Loans and other Obligations to MAST pursuant
to the option and on the terms described therein. Each Person that becomes a Lender after the
date of this Amendment shall be deemed to be bound by the MAST Intercreditor Agreement whether or
not a signatory thereto and shall, if requested to do so by Agent, execute a joinder agreement by
which such Lender becomes a signatory to the MAST Intercreditor Agreement.
6. The Borrower covenants and agrees that it will furnish to the Agent prompt written notice
of the occurrence of any Default or Event of Default as defined in and occurring under the MAST
Loan Documents.
7. In consideration of Agent’s and Lenders’ willingness to enter into this Amendment, the
Borrower agrees to pay to the Agent, for the benefit of itself and the Lenders, an amendment fee
in the amount of $50,000 in immediately available funds on the date hereof (the “Amendment Fee”).
8. The effectiveness of this Amendment is subject to the satisfaction of each of the following
conditions (in form and substance satisfactory to the Agent):
(a) The Agent shall have received original counterparts of this Amendment duly executed by the
Loan Parties, the Agent and the Lenders;
(b) The Borrower and MAST shall have entered into the MAST Loan Documents substantially in the
form attached hereto as Exhibit A and the Agent shall have received evidence that from the
proceeds of the term loan made to the Borrower under the MAST Loan Documents $5,000,000 shall be
applied by the Borrower to the redemption of Senior Subordinated Debt and the balance thereof, net
of fees and reasonable expenses incurred in connection with the closing of the MAST Loan Documents,
shall be applied to the repayment of the Obligations;
(c) The Agent and MAST shall have entered into the MAST Intercreditor Agreement in
substantially the form attached hereto as Exhibit B;
(d) The Agent shall have received the Amendment Fee; and
(e) The Agent shall have received such additional agreements, certificates or documents
as it may reasonably request in connection with this Amendment.
9. The Borrower and the Guarantors represent and warrant to the Agent and the Lenders that (i)
the representations and warranties of the Loan Parties set out in the Credit Agreement and in the
Security Agreement, each as amended by this Amendment, are true and correct as of the date hereof
(except those which expressly relate to an earlier period), (ii) no event has occurred and is
continuing which constitutes a Default or Event of Default and (iii) no Loan Party has any
counterclaims, offsets, credits or defenses to the Loan Documents and the performance of its
obligations thereunder, or if any Loan Party has any such claims, counterclaims, offsets, credits
or defenses to the Loan Documents or any transaction related to the Loan Documents, same are hereby
waived, relinquished and released in consideration of the Agent’s and the Lenders’ execution and
delivery of this Amendment.
10. The Guarantors (i) acknowledge and consent to all of the terms and conditions of this
Amendment, (ii) affirm all of their obligations under the Loan Documents and (iii) agree that this
Amendment and all documents executed in connection herewith do not operate to reduce or discharge
the Guarantors’ obligations under Article 13 of the Credit Agreement or the other Loan Documents.
11. The Borrower and the Guarantors hereby represent and warrant to the Agent and the Lenders
as follows:
(i) Each Loan Party has taken all necessary action to authorize the execution,
delivery and performance of this Amendment.
(ii) This Amendment has been duly executed and delivered by the Loan Parties and
constitutes each of the Loan Parties’ legal, valid and binding obligations, enforceable in
accordance with its terms, except as such enforceability may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting creditors’ rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
(iii) No consent, approval, authorization or order of, or filing, registration or
qualification with, any court or governmental authority or third party is required in
connection with the execution, delivery or performance by any Loan Party of this Amendment.
12. Except as modified hereby, all of the terms and provisions of the Credit Agreement
(including Schedules and Exhibits), the Security Agreement (including Schedules and Exhibits) and
the other Loan Documents, and the obligations of the Loan Parties under the Credit Agreement, the
Security Agreement and the other Loan Documents, are hereby ratified and confirmed and shall remain
in full force and effect.
13. This Amendment shall be deemed part of the Credit Agreement and a breach of any
representation, warranty or covenant herein shall constitute an Event of Default under the Credit
Agreement.
14. This Amendment may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed an original and it shall not be necessary in making proof of
this Amendment to produce or account for more than one such counterpart.
15. This Amendment shall be deemed to be a contract made under, and for all purposes shall be
construed in accordance with, the laws of the State of New York.
16. To the fullest extent permitted by applicable law, the parties hereto each hereby waives
the right to trial by jury in any action, suit, counterclaim or proceeding arising out of or
related to this Amendment.
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to
be duly executed and delivered as of the date first above written.
| “BORROWER” | ||||||
| APPLICA INCORPORATED, a Florida corporation | ||||||
| By: | /s/ Xxxxx Xxxxxxxxx | |||||
| Name: Xxxxx Xxxxxxxxx | ||||||
| Title: Senior Vice President and Chief Financial Officer | ||||||
| “GUARANTORS” | ||||||
| APPLICA CONSUMER PRODUCTS, INC., a Florida corporation | ||||||
| By: | /s/ Xxxxx Xxxxxxxxx | |||||
| Name: Xxxxx Xxxxxxxxx | ||||||
| Title: Senior Vice President and Chief Financial Officer | ||||||
| APPLICA CANADA CORPORATION, a Nova Scotia corporation |
||||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Secretary | ||||||
| WD DELAWARE, INC., a Delaware corporation | ||||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Corporate Secretary | ||||||
[Signatures continued on following page]
| HP INTELLECTUAL CORP., a Delaware corporation | ||||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Secretary | ||||||
| WINDMERE HOLDINGS CORPORATION, a Delaware corporation | ||||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Secretary | ||||||
| HP DELAWARE, INC., a Delaware corporation | ||||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Corporate Secretary | ||||||
| HPG LLC, a Delaware limited liability company | ||||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Corporate Secretary | ||||||
| APPLICA AMERICAS, INC., a Delaware corporation | ||||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Corporate Secretary | ||||||
| APPLICA MEXICO HOLDINGS, INC., a Delaware corporation | ||||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: Corporate Secretary | ||||||
[Signatures continued on following page]
| “AGENT” | ||||
| BANK OF AMERICA, N.A., as the Agent | ||||
| By: | /s/ Xxxxxx Xxxx | |||
| Name: | Xxxxxx Xxxx | |||
| Title: | SVP | |||
| “LENDERS” | ||||
| BANK OF AMERICA, N.A., as a Lender | ||||
| By: | /s/ Xxxxxx Xxxx | |||
| Name: | Xxxxxx Xxxx | |||
| Title: | SVP | |||
| WACHOVIA BANK, NATIONAL ASSOCIATION, successor by merger to Congress Financial Corporation (Florida), as a Lender | ||||
| By: | /s/ Xxxxxx Xxxxxxxxxxx | |||
| Name: | Xxxxxx Xxxxxxxxxxx | |||
| Title: | Vice President | |||
| LASALLE BUSINESS CREDIT, LLC, successor by merger to LaSalle Business Credit, Inc., as agent for Standard Federal Bank National Association, as a Lender | ||||
| By: | Xxxxxxx Aarors | |||
| Name: | Xxxxxxx Aarors | |||
| Title: | First VP | |||
| GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender | ||||
| By: | /s/ Xxxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxxx X. Xxxxxx | |||
| Title: | Duly Authorized Signatory | |||
[Signatures continued on following page]
| HSBC BUSINESS CREDIT (USA), INC., as a Lender | ||||
| By: | /s/ Xxxxx Xxxxxxxx | |||
| Name: | Xxxxx Xxxxxxxx | |||
| Title: | Vice President | |||
| PNC BANK, NATIONAL ASSOCIATION, as a Lender | ||||
| By: | /s/ Xxx Xxxxx | |||
| Name: | Xxx Xxxxx | |||
| Title: | Vice President | |||
