1
EXHIBIT 10.33
================================================================================
$235,000,000
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
SALTON, INC.
AS BORROWER,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
▇▇▇▇▇▇ BROTHERS INC.,
AS ARRANGER,
FIRSTAR BANK, N.A.,
AS SYNDICATION AGENT,
▇▇▇▇▇▇ COMMERCIAL PAPER INC.,
AS ADMINISTRATIVE AGENT
AND
FLEET NATIONAL BANK,
AS DOCUMENTATION AGENT
DATED AS OF SEPTEMBER 26, 2000
================================================================================
2
TABLE OF CONTENTS
Page(s)
SECTION 1. DEFINITIONS......................................................................1
1.1 Defined Terms....................................................................1
1.2 Other Definitional Provisions...................................................28
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS.................................................29
2.1 Term Loan Commitments...........................................................29
2.2 Procedure for Term Loan Borrowing...............................................29
2.3 Repayment of Term Loans.........................................................29
2.4 Revolving Credit Commitments....................................................29
2.5 Procedure for Revolving Credit Borrowing........................................30
2.6 Repayment of Loans; Evidence of Debt............................................30
2.7 Commitment Fees, etc............................................................31
2.8 Termination or Reduction of Commitments; Increase of Commitments................32
2.9 Optional Prepayments............................................................33
2.10 Mandatory Prepayments and Revolving Credit Commitment Reductions................33
2.11 Conversion and Continuation Options.............................................35
2.12 Minimum Amounts and Maximum Number of Eurodollar Tranches.......................35
2.13 Interest Rates and Payment Dates................................................36
2.14 Computation of Interest and Fees................................................36
2.15 Inability to Determine Interest Rate............................................37
2.16 Pro Rata Treatment and Payments.................................................37
2.17 Requirements of Law.............................................................39
2.18 Taxes...........................................................................40
2.19 Indemnity.......................................................................41
2.20 Illegality......................................................................42
2.21 Change of Lending Office........................................................42
SECTION 3. LETTERS OF CREDIT...............................................................42
3.1 L/C Commitment..................................................................42
3.2 Procedure for Issuance of Letter of Credit......................................43
3.3 Fees and Other Charges..........................................................44
3.4 L/C Participations..............................................................44
3.5 Reimbursement Obligation of the Borrower........................................45
3.6 Obligations Absolute............................................................46
3.7 Letter of Credit Payments.......................................................47
3.8 Applications....................................................................47
3.9 Toastmaster or Sonex as Additional Account Parties..............................47
3.10 Letters of Credit Denominated in Available Foreign Currencies...................47
SECTION 4. REPRESENTATIONS AND WARRANTIES..................................................48
4.1 Financial Condition.............................................................48
4.2 No Change.......................................................................48
3
4.3 Corporate Existence; Compliance with Law........................................48
4.4 Corporate Power; Authorization; Enforceable Obligations.........................49
4.5 No Legal Bar....................................................................49
4.6 No Material Litigation..........................................................49
4.7 No Default......................................................................50
4.8 Ownership of Property; Liens....................................................50
4.9 Intellectual Property...........................................................50
4.10 Taxes...........................................................................50
4.11 Federal Regulations.............................................................50
4.12 Labor Matters...................................................................51
4.13 ERISA...........................................................................51
4.14 Investment Company Act; Other Regulations.......................................51
4.15 Subsidiaries....................................................................51
4.16 Use of Proceeds.................................................................52
4.17 Environmental Matters...........................................................52
4.18 Accuracy of Information, etc....................................................53
4.19 Security Documents..............................................................53
4.20 Solvency........................................................................53
4.21 Senior Indebtedness.............................................................54
4.22 Representations and Warranties in Existing Credit Agreement.....................54
SECTION 5. CONDITIONS PRECEDENT............................................................54
5.1 Conditions to Initial Extension of Credit.......................................54
5.2 Conditions to Each Extension of Credit..........................................56
SECTION 6. AFFIRMATIVE COVENANTS...........................................................57
6.1 Financial Statements............................................................57
6.2 Certificates; Other Information.................................................58
6.3 Payment of Obligations..........................................................59
6.4 Conduct of Business and Maintenance of Existence, etc...........................59
6.5 Maintenance of Property; Insurance..............................................60
6.6 Inspection of Property; Books and Records; Discussions..........................60
6.7 Notices.........................................................................60
6.8 Environmental Laws..............................................................61
6.9 Additional Collateral, etc......................................................61
6.10 Further Assurances..............................................................63
SECTION 7. NEGATIVE COVENANTS..............................................................63
7.1 Financial Condition Covenants...................................................63
7.2 Limitation on Indebtedness......................................................64
7.3 Limitation on Liens.............................................................65
7.4 Limitation on Fundamental Changes...............................................67
7.5 Limitation on Disposition of Property...........................................67
7.6 Limitation on Restricted Payments...............................................68
7.7 Limitation on Capital Expenditures..............................................68
7.8 Limitation on Investments.......................................................68
7.9 Limitation on Optional Payments and Modifications of Debt Instruments, etc......69
4
7.10 Limitation on Transactions with Affiliates......................................69
7.11 Limitation on Sales and Leasebacks..............................................70
7.12 Limitation on Changes in Fiscal Periods.........................................70
7.13 Limitation on Negative Pledge Clauses...........................................70
7.14 Limitation on Restrictions on Subsidiary Distributions..........................70
7.15 Limitation on Lines of Business.................................................70
SECTION 8. EVENTS OF DEFAULT...............................................................71
SECTION 9. THE ADMINISTRATIVE AGENT........................................................74
9.1 Appointment.....................................................................74
9.2 Delegation of Duties............................................................74
9.3 Exculpatory Provisions..........................................................74
9.4 Reliance by Administrative Agent................................................75
9.5 Notice of Default...............................................................75
9.6 Non-Reliance on Administrative Agent and Other Lenders..........................76
9.7 Indemnification.................................................................76
9.8 Administrative Agent in Its Individual Capacity.................................77
9.9 Successor Administrative Agent..................................................77
9.10 Authorization to Release Liens..................................................77
9.11 The Arranger; the Documentation Agent...........................................78
9.12 Release of Liens in Connection with Permitted Receivables Securitization........78
SECTION 10. MISCELLANEOUS...................................................................78
10.1 Amendments and Waivers..........................................................78
10.2 Notices.........................................................................79
10.3 No Waiver; Cumulative Remedies..................................................80
10.4 Survival of Representations and Warranties......................................80
10.5 Payment of Expenses.............................................................80
10.6 Successors and Assigns; Participations and Assignments..........................81
10.7 Adjustments; Set-off............................................................84
10.8 Counterparts....................................................................84
10.9 Severability....................................................................84
10.10 Integration.....................................................................85
10.11 GOVERNING LAW...................................................................85
10.12 Submission To Jurisdiction; Waivers.............................................85
10.13 Acknowledgments.................................................................85
10.14 Confidentiality.................................................................86
10.15 Accounting Charges..............................................................86
10.16 Restricted Subsidiaries.........................................................87
10.17 WAIVERS OF JURY TRIAL...........................................................87
10.18 Delivery of Lender Addenda......................................................87
10.19 Effect of Amendment and Restatement of the Existing Credit Agreement............87
10.20 Effectiveness of Revolving Credit Commitment Increases..........................88
5
THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
September 26, 2000, among SALTON, INC., a Delaware corporation (formerly known
as Salton/Maxim Housewares, Inc) (the "Borrower"), the several banks and other
financial institutions or entities from time to time parties to this Agreement
(the "Lenders"), ▇▇▇▇▇▇ BROTHERS INC., as advisor, arranger and book runner (in
such capacity, the "Arranger"), FIRSTAR BANK, N.A., as syndication agent (in
such capacity, the "Syndication Agent"), ▇▇▇▇▇▇ COMMERCIAL PAPER INC., as
administrative agent (in such capacity, the "Administrative Agent"), and FLEET
NATIONAL BANK, as documentation agent (in such capacity, the "Documentation
Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower is a party to the $160,000,000 Second
Amended and Restated Credit Agreement, dated as of December 10, 1999, as amended
by the First Amendment, dated as of May 31, 2000 (the "Existing Credit
Agreement"), with the Administrative Agent and the Lenders parties thereto,
pursuant to which such Lenders have agreed to extend, and have extended, credit
to the Borrower;
WHEREAS, the Borrower has requested certain amendments to the
Existing Credit Agreement to, among other things, increase, by $75,000,000, the
amount of the credit facilities made available thereunder and to amend certain
of the terms applicable thereto;
WHEREAS, to effect the requested amendments, the Existing
Credit Agreement will be amended and restated in its entirety; and
WHEREAS, in connection with the amendment and restatement of
the Existing Credit Agreement, the term loans outstanding thereunder will be
repaid in full, and new Term Loans will be made hereunder;
NOW, THEREFORE, in consideration of the premises and the
agreements hereinafter set forth, the parties hereto hereby agree that on the
Third Amendment and Restatement Effective Date, the Existing Credit Agreement
will be amended and restated in its entirety as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this
Section 1.1.
"Account Debtor": any Person who is or who may become
obligated under, with respect to, or on account of, an Account.
6
2
"Accounts": all currently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to
the Borrower arising out of the sale of goods by the Borrower,
irrespective of whether earned by performance, and any and all credit
insurance, guaranties, or security therefor.
"Acquisition Agreements": collectively, the ▇▇▇▇▇▇▇
Acquisition Agreement, the ▇▇▇▇▇▇▇▇▇▇ Acquisition Agreement and the
▇▇▇▇▇▇▇▇ Acquisition Agreement.
"Adjustment Date": as defined in the Pricing Grid.
"Advance Rate": (i) with respect to Eligible Accounts, 80%;
(ii) with respect to Eligible Inventory, 60%.
"Affiliate": 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. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either
to (a) vote 10% or more of the securities having ordinary voting power
for the election of directors (or persons performing similar functions)
of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
"Aggregate Exposure": with respect to any Lender at any time,
an amount equal to the sum of (a) the aggregate then unpaid principal
amount of such Lender's Term Loans and (b) the amount of such Lender's
Revolving Credit Commitment then in effect or, if the Revolving Credit
Commitments have been terminated, the amount of such Lender's Revolving
Extensions of Credit then outstanding.
"Aggregate Exposure Percentage": with respect to any Lender at
any time, the ratio (expressed as a percentage) of such Lender's
Aggregate Exposure at such time to the Aggregate Exposure of all
Lenders at such time.
"Aggregate Funded Exposure": at any time, the sum of (a) the
aggregate principal amount of Term Loans outstanding at such time plus
(b) the aggregate principal amount of Revolving Credit Loans
outstanding at such time plus (c) the aggregate undrawn and
unreimbursed face amount of all Letters of Credit at such time.
"Agreement": this Third Amended and Restated Credit Agreement,
as amended, supplemented or otherwise modified from time to time.
"Applicable Margin": with respect to Loans under each
Facility, the rate per annum determined for such Facility pursuant to
the Pricing Grid.
"Application": an application, in such form as the Issuing
Lender may specify from time to time, requesting the Issuing Lender to
open a Letter of Credit.
"Asset Sale": any Disposition of Property or series of related
Dispositions of Property (excluding any such Disposition permitted by
clause (a), (b), (c), (d), (e) or (i) of Section 7.5, and excluding any
such Disposition permitted by clause (h) of Section 7.5 to
7
3
the extent that the aggregate amount of Net Cash Proceeds of all such
Dispositions permitted by such clause (h) does not exceed $3,000,000)
which yields gross proceeds to the Borrower or any of its Subsidiaries
(valued at the initial principal amount thereof in the case of non-cash
proceeds consisting of notes or other debt securities and valued at
fair market value in the case of other non-cash proceeds) in excess of
$10,000.
"Assignee": as defined in Section 10.6(c).
"Assignor": as defined in Section 10.6(c).
"Available Foreign Currencies": euro, Italian Lira, Deutsche
▇▇▇▇ and any other available and freely-convertible non-U.S. Dollar
currency selected by the Borrower as the currency in which a Letter of
Credit issued hereunder is to be denominated and approved by the
Administrative Agent and the Issuing Lender that is requested to issue
such Letter of Credit.
"Available Revolving Credit Borrowing Base": at any time, the
difference of (a) the Borrowing Base, minus (b) the aggregate principal
amount of Term Loans then outstanding.
"Available Revolving Credit Commitment": as to any Revolving
Credit Lender at any time, an amount equal to the excess, if any, of
(a) such Lender's Revolving Credit Commitment then in effect over (b)
such Lender's Revolving Extensions of Credit then outstanding.
"Base Rate": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean
the rate of interest per annum publicly announced from time to time by
the Reference Lender as its prime or base rate in effect at its
principal office in New York City (the Prime Rate not being intended to
be the lowest rate of interest charged by the Reference Lender in
connection with extensions of credit to debtors); "Base CD Rate" shall
mean the sum of (a) the product of (i) the Three-Month Secondary CD
Rate and (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the C/D Reserve Percentage and (b)
the C/D Assessment Rate; and "Three-Month Secondary CD Rate" shall
mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if
such day shall not be a Business Day, the next preceding Business Day)
by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current
practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or, if such rate
shall not be so reported on such day or such next preceding Business
Day, the average of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on such day
(or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Reference Lender from three New York City
negotiable certificate of deposit dealers of recognized standing
selected
8
4
by it. Any change in the Base Rate due to a change in the Prime Rate,
the Three-Month Secondary CD Rate or the Federal Funds Effective Rate
shall be effective as of the opening of business on the effective day
of such change in the Prime Rate, the Three-Month Secondary CD Rate or
the Federal Funds Effective Rate, respectively.
"Base Rate Loans": Loans for which the rate of interest is
based upon the Base Rate.
"Benefitted Lender": as defined in Section 10.7.
"Board": the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Borrowing Base": on any date of determination, the sum
(without duplication) of (a) (x) Eligible Accounts of the Borrower and
the Restricted Subsidiaries on such date times (y) the applicable
Advance Rate, plus (b) (x) Eligible Inventory of the Borrower and the
Restricted Subsidiaries on such date times (y) the applicable Advance
Rate; provided, that at no time shall (b) constitute more than 50% of
the Borrowing Base. The Borrowing Base will be computed monthly by the
Borrower; provided that, with respect to each of the months of July,
August and September, the Borrowing Base will be computed by the
Borrower on the Business Day next following the fifteenth calendar day
of such month and on the last Business Day of such month.
"Borrowing Base Certificate": a certificate duly executed by a
Responsible Officer, substantially in the form of Exhibit E.
"Borrowing Date": any Business Day specified by the Borrower
as a date on which the Borrower requests the relevant Lenders to make
Loans hereunder.
"Business": as defined in Section 4.17.
"Business Day": (i) for all purposes other than as covered by
clause (ii) below, a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by
law to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar
Loans, any day which is a Business Day described in clause (i) and
which is also a day for trading by and between banks in Dollar deposits
in the interbank eurodollar market.
"Capital Expenditures": for any period, with respect to any
Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing (pursuant to a capital
lease) of fixed or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period)
which should be capitalized under GAAP on a consolidated balance sheet
of such Person and its Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations
of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to
9
5
be classified and accounted for as capital leases on a balance sheet of
such Person under GAAP, and, for the purposes of this Agreement, the
amount of such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants, rights or options
to purchase any of the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of
the United States, in each case maturing within one year from the date
of acquisition; (b) certificates of deposit, time deposits, eurodollar
time deposits or overnight bank deposits having maturities of six
months or less from the date of acquisition issued by any Lender or by
any commercial bank organized under the laws of the United States of
America or any state thereof having combined capital and surplus of not
less than $500,000,000; (c) commercial paper of an issuer rated at
least A-2 by Standard & Poor's Ratings Services ("S&P") or P-2 by
▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's"), or carrying an equivalent
rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of commercial paper
issuers generally, and maturing within six months from the date of
acquisition; (d) repurchase obligations of any Lender or of any
commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by S&P or
A by Moody's; (f) securities with maturities of six months or less from
the date of acquisition backed by standby letters of credit issued by
any Lender or any commercial bank satisfying the requirements of clause
(b) of this definition; or (g) shares of money market mutual or similar
funds which invest exclusively in assets satisfying the requirements of
clauses (a) through (f) of this definition.
"C/D Assessment Rate": for any day as applied to any Base Rate
Loan, the annual assessment rate in effect on such day which is payable
by a member of the Bank Insurance Fund maintained by the Federal
Deposit Insurance Corporation (the "FDIC") classified as
well-capitalized and within supervisory subgroup "B" (or a comparable
successor assessment risk classification) within the meaning of 12
C.F.R. ss. 327.4 (or any successor provision) to the FDIC (or any
successor) for the FDIC's (or such successor's) insuring time deposits
at offices of such institution in the United States.
"C/D Reserve Percentage": for any day as applied to any Base
Rate Loan, that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the
10
6
Board, for determining the maximum reserve requirement for a Depositary
Institution (as defined in Regulation D of the Board as in effect from
time to time) in respect of new non-personal time deposits in Dollars
having a maturity of 30 days or more.
"Closing Date": the date on which the conditions precedent set
forth in Section 5.1 of the Existing Credit Agreement were satisfied,
which date occurred on January 7, 1999.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Commitment": as to any Lender, the sum of the Term Loan
Commitment and the Revolving Credit Commitment of such Lender.
"Commitment Fee Rate": the rate per annum determined pursuant
to the Pricing Grid.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit B.
"Concentrated Account": the Highly Concentrated Accounts and
the Accounts identified as Concentrated Accounts on Schedule 1.1.
"Confidential Information Memorandum": The Confidential
Information Memorandum dated August, 2000 and furnished to the initial
Lenders in connection with the syndication of the Facilities.
"Consolidated Current Assets": at any date, all amounts (other
than cash and Cash Equivalents) which would, in conformity with GAAP,
be set forth opposite the caption "total current assets" (or any like
caption) on a consolidated balance sheet of the Borrower and its
Restricted Subsidiaries at such date.
"Consolidated Current Liabilities": at any date, all amounts
which would, in conformity with GAAP, be set forth opposite the caption
"total current liabilities" (or any like caption) on a consolidated
balance sheet of the Borrower and its Restricted Subsidiaries at such
date, but excluding (a) the current portion of any Funded Debt of the
Borrower and its Restricted Subsidiaries and (b) without duplication of
clause (a) above, all Indebtedness consisting of Revolving Credit Loans
to the extent otherwise included therein.
11
7
"Consolidated EBITDA": for any period, Consolidated Net Income
for such period plus, without duplication and to the extent reflected
as a charge in the statement of such Consolidated Net Income for such
period, the sum of (a) income tax expense, (b) interest expense,
amortization or write-off of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with
Indebtedness (including the Loans), (c) depreciation and amortization
expense, (d) amortization of intangibles (including, but not limited
to, goodwill) and organization costs, (e) any extraordinary, unusual or
non-recurring expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net
Income for such period, losses on sales of assets outside of the
ordinary course of business), (f) up to $3,500,000 in the aggregate of
charges relating to the Agreement and Plan of Merger, dated as of
August 26, 1998, pursuant to which the Borrower acquired Toastmaster
and (g) any other non-cash charges, and minus, to the extent included
in the statement of such Consolidated Net Income for such period, the
sum of (a) interest income, (b) any extraordinary, unusual or
non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net
Income for such period, gains on the sales of assets outside of the
ordinary course of business) and (c) any other non-cash income, all as
determined on a consolidated basis. For purposes of calculating
Consolidated EBITDA of the Borrower and its Restricted Subsidiaries for
any period, (a) the Consolidated EBITDA of any Person (other than a
Person which becomes an Unrestricted Subsidiary upon the acquisition
thereof) acquired by the Borrower or its Restricted Subsidiaries during
such period shall be included on a pro forma basis for such period
(assuming the consummation of such acquisition occurred on the first
day of such period), if the consolidated balance sheet of such acquired
Person and its consolidated Subsidiaries as at the end of the period
preceding the acquisition of such Person and the related consolidated
statements of income and stockholders' equity and of cash flows for the
period in respect of which Consolidated EBITDA is to be calculated (i)
have been previously provided to the Administrative Agent and the
Lenders and (ii) either (A) have been reported on without a
qualification arising out of the scope of the audit by independent
certified public accountants of nationally recognized standing or (B)
have been found acceptable by the Administrative Agent and (b) the
Consolidated EBITDA of any Person Disposed of by the Borrower and its
Restricted Subsidiaries during such period shall be excluded (assuming
such Disposition occurred on the first day of such period).
"Consolidated Fixed Charge Coverage Ratio": for any period,
the ratio of (a) Consolidated EBITDA for such period less the aggregate
amount actually paid by the Borrower and its Restricted Subsidiaries in
cash during such period on account of Capital Expenditures to (b)
Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges": for any period, the sum (without
duplication) of (a) Consolidated Interest Expense for such period, (b)
cash income taxes paid or to be paid by the Borrower or any of its
Restricted Subsidiaries on a consolidated basis in respect of such
period and (c) scheduled payments made during such period on account of
principal of Indebtedness of the Borrower or any of its Restricted
Subsidiaries (including scheduled principal payments in respect of the
Term Loans).
12
8
"Consolidated Interest Coverage Ratio": for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated
Interest Expense for such period.
"Consolidated Interest Expense": for any period, total
interest expense (including interest expense attributable to Capital
Lease Obligations) of the Borrower and its Restricted Subsidiaries for
such period with respect to all outstanding Indebtedness of the
Borrower and its Restricted Subsidiaries (including, without
limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing and
net costs under Hedge Agreements in respect of interest rates to the
extent such net costs are allocable to such period in accordance with
GAAP).
"Consolidated Net Income": for any period, the consolidated
net income (or loss) of the Borrower and its Restricted Subsidiaries,
determined on a consolidated basis in accordance with GAAP; provided
that there shall be excluded (a) the income (or deficit) of any Person
accrued prior to the date it becomes a Restricted Subsidiary of the
Borrower or is merged into or consolidated with the Borrower or any of
its Restricted Subsidiaries, (b) the income (or deficit) of any Person
(other than a Restricted Subsidiary of the Borrower) in which the
Borrower or any of its Restricted Subsidiaries has an ownership
interest, except to the extent that any such income is actually
received by the Borrower or such Restricted Subsidiary in the form of
dividends or similar distributions and (c) the undistributed earnings
of any Restricted Subsidiary of the Borrower to the extent that the
declaration or payment of dividends or similar distributions by such
Restricted Subsidiary is not at the time permitted by the terms of any
Contractual Obligation (other than under any Loan Document) or
Requirement of Law applicable to such Restricted Subsidiary.
"Consolidated Senior Debt": all Consolidated Total Debt other
than Subordinated Debt.
"Consolidated Total Debt": at any date, the aggregate
principal amount of all Funded Debt of the Borrower and its Restricted
Subsidiaries at such date, determined on a consolidated basis in
accordance with GAAP. Consolidated Total Debt on any date shall in any
event include an amount equal to the amount of Indebtedness relating to
any Permitted Receivables Securitization consummated by the Borrower or
any of its Subsidiaries (or, in the event such Permitted Receivables
Securitization is structured such that no Indebtedness is deemed
incurred under GAAP, the amount that would constitute Indebtedness if
such Permitted Receivables Securitization were structured as a loan
secured by the receivables that are the subject of such Permitted
Receivables Securitization).
"Consolidated Working Capital": at any date, the excess of
Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"Continuing Directors": the directors of the Borrower on the
Third Amendment and Restatement Effective Date, and each other
director, if, in each case, such other
13
9
director's nomination for election to the board of directors of the
Borrower is recommended by at least 66-2/3% of the then Continuing
Directors.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its Property is bound.
"Convertible Preferred Stock": the Borrower's Series A
Convertible Preferred Stock issued pursuant to the Preferred Stock
Purchase Agreement.
"Default": any of the events specified in Section 8, whether
or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Disposition": with respect to any Property, any sale, lease,
sale and leaseback, assignment, conveyance, transfer or other
disposition thereof; the terms "Dispose" and "Disposed of" shall have
correlative meanings.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Subsidiary": any Subsidiary of the Borrower
organized under the laws of any jurisdiction within the United States
of America.
"Eligible Accounts": those Accounts created by the Borrower
and its Subsidiaries in the ordinary course of business that arise out
of the Borrower's sale of goods or rendition of services, that strictly
comply with all of the Borrower's representations and warranties to the
Administrative Agent (including, without limitation, the representation
and warranty that such Accounts are subject to a perfected first
priority lien in favor of the Administrative Agent), and that are and
at all times shall continue to be reasonably acceptable to the
Administrative Agent in all respects; provided, however, that standards
of eligibility may be fixed and revised from time to time by the
Administrative Agent in the Administrative Agent's reasonable credit
judgment. Eligible Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within
(1) one hundred twenty (120) days of invoice date for Accounts with
selling terms of thirty (30) days or (2) Accounts which the Account
Debtor has failed to pay within one hundred eighty (180) days of
invoice date, or within ninety days (90) days after the due date of the
invoice, and (ii) all Accounts owed by an Account Debtor that has
failed to pay fifty percent (50%) or more of its Accounts owed to the
Borrower within the periods set forth in clauses (i) and (ii) as
applicable;
(b) Accounts with respect to which the Account Debtor is an
officer, employee, Affiliate, or agent of the Borrower;
(c) Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, ▇▇▇▇
and hold, or other terms by reason of which the payment by the Account
debtor may be conditional;
14
10
(d) Accounts with respect to which the Account Debtor is not a
resident of the United States or Canada, and which are not either (i)
covered by credit insurance in form and amount, and by an issuer,
satisfactory to the Administrative Agent, or (ii) supported by one or
more letters of credit that are assignable by their terms and have been
delivered to the Administrative Agent in an amount, of a duration, and
issued by a financial institution, acceptable to the Administrative
Agent;
(e) Accounts with respect to which the Account Debtor is the
United States or any department, agency, or instrumentality of the
United States except for Accounts not subject to the Armed Services
Procurement Regulations or any other government regulation either
prohibiting the assignment of Accounts or requiring special procedures
for perfection of the assignment of Accounts, unless, in each case, all
actions required for perfection have been taken;
(f) Accounts with respect to which the Borrower is or may
become liable to the Account Debtor for goods sold or services rendered
by the Account Debtor to the Borrower but excluding cooperative
advertising between the Borrower and an Account Debtor;
(g) Accounts with respect to an Account Debtor (other than
Concentrated Accounts) whose total obligations owing to the Borrower
exceed ten percent (10%) of all Eligible Accounts, to the extent the
obligations owing by such Account Debtor are in excess of such
percentage; Accounts with respect to a Concentrated Account whose total
obligations owing to the Borrower exceed twenty percent (20%) of all
Eligible Accounts, to the extent the obligations owing by such
Concentrated Accounts are in excess of such percentage, except that any
one (1) of the following may be true at any time: (A) total obligations
owing to the Borrower with respect to any two (2) Concentrated Account
(other than Highly Concentrated Accounts) may exceed twenty percent
(20%) at any time in the aggregate but shall not exceed thirty percent
(30%) in the aggregate, or (B) total obligations with respect to one
(1) of the Highly Concentrated Accounts may exceed twenty percent (20%)
at any time but shall not and does not exceed thirty percent (30%) at
any time, or (C) Accounts with respect to any two (2) of the Highly
Concentrated Accounts may exceed twenty percent (20%) at any time but
shall not, aggregated together, exceed fifty percent (50%) at any time;
(h) Accounts with respect to which the Account Debtor disputes
liability or makes any material claim with respect thereto, or is
subject to any proceeding of the type described in Section 8(f), or
becomes insolvent, or goes out of business;
(i) That portion of Accounts which have been rebilled to
Account Debtors as a result of the failure of the Account Debtor to pay
invoices representing the Account in full;
(j) Accounts the collection of which the Administrative Agent,
in its reasonable credit judgment, believes to be doubtful by reason of
the Account Debtor's financial condition;
15
11
(k) Accounts that are payable in other than United States
Dollars;
(l) Accounts that represent progress payments or other advance
▇▇▇▇▇▇▇▇ that are due prior to the completion of performance by the
Borrower of the subject contract for goods or services; and
(m) Accounts pledged, transferred or sold in connection with a
Permitted Receivables Securitization.
"Eligible Inventory": Inventory (net of reserves for slow
moving inventory in an amount acceptable to the Administrative Agent)
consisting of finished goods held for sale in the ordinary course of
the Borrower's business, that are located at the Borrower's premises or
such other locations as identified on Schedule 4.19(a) and replacement
parts and accessories inventory located at the Borrower's premises or
such other locations as identified on Schedule 4.19(a), or "In Transit
Inventory," which is acceptable to the Administrative Agent in all
respects, and strictly complies with all of the Borrower's
representations and warranties to the Administrative Agent. Eligible
Inventory shall not include obsolete items, restrictive or custom
items, work-in-process, components that are not part of finished goods,
Estimated Defects and Net Returns in transit outside the United States,
spare parts, packaging and shipping materials, supplies used or
consumed in the Borrower's business, Inventory at any location other
than those set forth on Schedule 4.19(a), Inventory subject to a
security interest or lien in favor of any third Person, ▇▇▇▇ and hold
goods, Inventory that is not subject to the Administrative Agent's
perfected security interests, defective goods, "seconds," and Inventory
acquired on consignment. Eligible Inventory shall be valued at the
lower of the Borrower's cost on a Landed Cost basis or market value. As
of the date hereof the amount acceptable to the Administrative Agent as
a reserve for slow moving inventory is 1.25% of the Borrower's Eligible
Inventory.
"Estimated Defects": Net Returns being held by the Borrower
pending return to the manufacturer.
"Environmental Laws": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority
or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as now or may at any
time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the maximum
rates (expressed as a decimal fraction) of reserve requirements in
effect on such day (including, without limitation, basic, supplemental,
marginal and emergency reserves under any regulations of the Board or
other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as
16
12
"Eurocurrency Liabilities" in Regulation D of the Board) maintained by
a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
determined on the basis of the rate for deposits in Dollars for a
period equal to such Interest Period commencing on the first day of
such Interest Period appearing on Page 3750 of the Dow ▇▇▇▇▇ Markets
screen as of 11:00 A.M., London time, two Business Days prior to the
beginning of such Interest Period. In the event that such rate does not
appear on Page 3750 of the Dow ▇▇▇▇▇ Markets screen (or otherwise on
such screen), the "Eurodollar Base Rate" for purposes of this
definition shall be determined by reference to such other comparable
publicly available service for displaying eurodollar rates as may be
selected by the Administrative Agent.
"Eurodollar Loans": Loans for which the rate of interest is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar
Loans the then current Interest Periods with respect to all of which
begin on the same date and end on the same later date (whether or not
such Loans shall originally have been made on the same day).
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the
excess, if any, of (a) the sum, without duplication, of (i)
Consolidated Net Income for such fiscal year, (ii) an amount equal to
the amount of all non-cash charges (including depreciation and
amortization) deducted in arriving at such Consolidated Net Income,
(iii) decreases in Consolidated Working Capital for such fiscal year,
(iv) an amount equal to the aggregate net non-cash loss on the
Disposition of Property by the Borrower and its Restricted Subsidiaries
during such fiscal year (other than sales of inventory in the ordinary
course of business), to the extent deducted in arriving at such
Consolidated Net Income and (v) the net increase during such fiscal
year (if any) in deferred tax accounts of the Borrower less (b) the
sum, without duplication, of (i) an amount equal to the amount of all
non-cash credits included in arriving at such Consolidated Net Income,
(ii) the aggregate amount actually paid by the Borrower and its
Restricted Subsidiaries in cash during such fiscal year on account of
Capital Expenditures (excluding the principal amount of Indebtedness
incurred in connection with such expenditures and any such expenditures
financed with the proceeds of any Reinvestment Deferred Amount), (iii)
the aggregate amount of all
17
13
prepayments of Revolving Credit Loans during such fiscal year to the
extent accompanying permanent optional reductions of the Revolving
Credit Commitments and all optional prepayments of the Term Loans and
other Funded Debt during such fiscal year, (iv) the aggregate amount of
all regularly scheduled principal payments of Funded Debt (including,
without limitation, the Term Loans) of the Borrower and its Restricted
Subsidiaries made during such fiscal year (other than in respect of any
revolving credit facility to the extent there is not an equivalent
permanent reduction in commitments thereunder), (v) increases in
Consolidated Working Capital for such fiscal year, (vi) an amount equal
to the aggregate net non-cash gain on the Disposition of Property by
the Borrower and its Restricted Subsidiaries during such fiscal year
(other than sales of inventory in the ordinary course of business), to
the extent included in arriving at such Consolidated Net Income, and
(vii) the net decrease during such fiscal year (if any) in deferred tax
accounts of the Borrower.
"Excess Cash Flow Application Date": as defined in Section
2.10(c).
"Excluded Foreign Subsidiaries": any Foreign Subsidiary in
respect of which either (i) the pledge of all of the Capital Stock of
such Subsidiary as Collateral or (ii) the guaranteeing by such
Subsidiary of the Obligations, would, in the good faith judgment of the
Borrower, result in adverse tax consequences to the Borrower.
"Existing Credit Agreement": as defined in the recitals to
this Agreement.
"Existing Fleet Letters of Credit": as defined in Section
3.1(d).
"Existing LaSalle Letters of Credit": as defined in Section
3.1(d).
"Facility": each of (a) the Term Loan Commitments and the Term
Loans made thereunder (the "Term Loan Facility") and (b) the Revolving
Credit Commitments and the extensions of credit made thereunder (the
"Revolving Credit Facility").
"Federal Funds Effective Rate"; for any day, the weighted
average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds
brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Reference Lender from
three federal funds brokers of recognized standing selected by it.
"FEMA": the Federal Emergency Management Agency, or any
similar successor agency of the federal government.
"Foreign Subsidiary": any Subsidiary of the Borrower that is
not a Domestic Subsidiary.
"▇▇▇▇▇▇▇ Acquisition Agreement": the Agreement, dated as of
July 1, 1999, between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Borrower.
18
14
"▇▇▇▇▇▇▇ Security Agreement": the Trademark Security
Agreement, dated as of July 1, 1999, between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the
Borrower.
"▇▇▇▇▇▇▇ Subordination Agreement": the Subordination
Agreement, dated as of July 1, 1999, among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the
Administrative Agent and the Borrower.
"FQ1", "FQ2 ", "FQ3", and "FQ4": when used with a numerical
year designation, means the first, second, third or fourth fiscal
quarters, respectively, of such fiscal year of the Borrower. (e.g., FQ1
2000 means the first fiscal quarter of the Borrower's 2000 fiscal year,
which ends September 30, 2000).
"Funded Debt": as to any Person, all Indebtedness of such
Person that matures more than one year from the date of its creation or
matures within one year from such date but is renewable or extendible,
at the option of such Person, to a date more than one year from such
date or arises under a revolving credit or similar agreement that
obligates the lender or lenders to extend credit during a period of
more than one year from such date, including, without limitation, all
current maturities and current sinking fund payments in respect of such
Indebtedness whether or not required to be paid within one year from
the date of its creation and, in the case of the Borrower, Indebtedness
in respect of the Loans.
"Funding Office": the office specified from time to time by
the Administrative Agent as its funding office by notice to the
Borrower and the Lenders.
"GAAP": generally accepted accounting principles in the United
States of America as in effect from time to time, except that for
purposes of Section 7.1, GAAP shall be determined on the basis of such
principles in effect on the date hereof and consistent with those used
in the preparation of the most recent audited financial statements
delivered pursuant to Section 4.1.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee and Collateral Agreement": the Second Amended and
Restated Guarantee and Collateral Agreement executed and delivered by
the Borrower and each Subsidiary Guarantor on the Closing Date,
substantially in the form of Exhibit A, as the same may be amended,
supplemented or otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation
of the guaranteeing person, whether or not contingent, (i) to purchase
any such primary obligation or any Property constituting direct or
indirect security therefor, (ii) to
19
15
advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase Property, securities
or services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in
respect thereof; provided, however, that the term Guarantee Obligation
shall not include endorsements of instruments for deposit or collection
in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lower
of (a) an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee Obligation is
made and (b) the maximum amount for which such guaranteeing person may
be liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the maximum
amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the Borrower in good
faith.
"Hazardous Materials": all or any of the following: (a)
substances that are defined or listed in, or otherwise classified
pursuant to, any applicable laws or regulations as "hazardous
substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or
classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive
toxicity, or "EP toxicity"; (b) oil, petroleum, or petroleum derived
substances, natural gas, natural gas liquids, synthetic gas, drilling
fluids, produced waters, and other wastes associated with the
exploration, development, or production of crude oil, natural gas, or
geothermal resources; (c) any flammable substances or explosives or any
radioactive materials; and (d) asbestos in any form or electrical
equipment which contains any oil or dielectric fluid containing levels
of polychlorinated biphenyls in excess of fifty (50) parts per million.
"Hedge Agreements": all interest rate swaps, caps or collar
agreements or similar arrangements entered into by the Borrower
providing for protection against fluctuations in interest rates or
currency exchange rates or the exchange of nominal interest
obligations, either generally or under specific contingencies.
"Highly Concentrated Accounts": the accounts identified as
such on Schedule 1.1.
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money,
(b) all obligations of such Person for the deferred purchase price of
Property or services (other than current trade payables and account
payables incurred in the ordinary course of such Person's business),
(c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created
or arising under any conditional sale or other title retention
agreement with respect to Property acquired by such Person (even though
20
16
the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such
Property), (e) all Capital Lease Obligations of such Person, (f) all
obligations of such Person, contingent or otherwise, as an account
party under acceptance, letter of credit or similar facilities, (g) all
obligations of such Person, contingent or otherwise, to purchase,
redeem, retire or otherwise acquire for value any Capital Stock of such
Person, (h) all Guarantee Obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (g) above;
(i) all obligations of the kind referred to in clauses (a) through (h)
above secured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured by) any Lien on
Property (including, without limitation, accounts and contract rights)
owned by such Person, whether or not such Person has assumed or become
liable for the payment of such obligation, (j) for the purposes of
Section 8(e) only, all obligations of such Person in respect of Hedge
Agreements and (k) the liquidation value of any mandatorily redeemable
preferred Capital Stock of such Person or its Subsidiaries held by any
Person other than such Person and its Wholly Owned Subsidiaries; with
respect to the Borrower, such term shall include, without limitation,
the Borrower's cash payment obligations under the ▇▇▇▇▇▇▇ Acquisition
Agreement, the ▇▇▇▇▇▇▇▇▇▇ Acquisition Agreement and the ▇▇▇▇▇▇▇▇
Acquisition Agreement.
"Indemnified Liabilities": as defined in Section 10.5.
"Indemnitee": as defined in Section 10.5.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all
rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or
otherwise, including, without limitation, copyrights, copyright
licenses, patents, patent licenses, trademarks, trademark licenses,
technology, know-how and processes, and all rights to ▇▇▇ at law or in
equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.
"Interest Payment Date": (a) as to any Base Rate Loan, the
last day of each March, June, September and December to occur while
such Loan is outstanding and the final maturity date of such Loan, (b)
as to any Eurodollar Loan having an Interest Period of three months or
less, the last day of such Interest Period, (c) as to any Eurodollar
Loan having an Interest Period longer than three months, each day which
is three months, or a whole multiple thereof, after the first day of
such Interest Period and the last day of such Interest Period and (d)
as to any Loan (other than any Revolving Credit Loan that is a Base
Rate Loan), the date of any repayment or prepayment made in respect
thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially,
the period commencing on the borrowing or conversion date, as the case
may be, with respect to such Eurodollar
21
17
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and (b) thereafter, each
period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six
months thereafter, as selected by the Borrower by irrevocable notice to
the Administrative Agent not less than three Business Days prior to the
last day of the then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(n) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension would
be to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(i) any Interest Period that would otherwise extend beyond
the Scheduled Revolving Credit Termination Date or beyond the date
final payment is due on the Term Loans, as the case may be, shall end
on the Revolving Credit Termination Date or such due date, as
applicable;
(ii) any Interest Period 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 a calendar month; and
(iii) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"In Transit Inventory": Eligible Inventory purchased by the
Borrower where the Borrower has legal title but the goods have not been
received by the Borrower at one of its locations and entered into its
perpetual inventory system.
"Inventory": all present and future inventory in which the
Borrower has any interest, including goods held for sale and all of the
Borrower's present and future raw materials (but excluding any
Hazardous Materials), work in process, finished goods, and packing and
shipping materials, wherever located, and any documents of title
representing any of the above.
"Investments": as defined in Section 7.8.
"Issuing Lender": (a) with respect to the Existing LaSalle
Letters of Credit, LaSalle Bank National Association, (b) with respect
to the Existing Fleet Letters of Credit, Fleet National Bank and (c)
with respect to any Letters of Credit issued hereunder after the Third
Amendment and Restatement Effective Date, any Revolving Credit Lender
selected by the Borrower with the consent of such Revolving Credit
Lender, in its capacity as issuer of any Letter of Credit.
22
18
"Landed Costs": the Borrower's "book cost" (on a "FIFO" basis
in accordance with GAAP) for Eligible Inventory purchased by the
Borrower from a Person as opposed to the actual amount paid by the
Borrower to said Person and the Borrower's book cost may include tax,
freight and duty.
"L/C Commitment": $25,000,000.
"L/C Fee Payment Date": the last day of each March, June,
September and December and the last day of the Revolving Credit
Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum in
Dollars (determined, with respect to any obligation denominated in any
Available Foreign Currency, at the U.S. Dollar Equivalent of such
obligation) of (a) the aggregate then undrawn and unexpired amount of
the then outstanding Letters of Credit and (b) the aggregate amount of
drawings under Letters of Credit which have not then been reimbursed
pursuant to Section 3.5.
"L/C Participants": the collective reference to all the
Revolving Credit Lenders other than the Issuing Lender.
"▇▇▇▇▇▇ Entity": ▇▇▇▇▇▇ Commercial Paper Inc. or any of its
affiliates (including Syndicated Loan Funding Trust).
"Letter of Credit": as defined in Section 3.1(a).
"Lender Addendum": with respect to each Lender becoming a
party hereto on the Third Amendment and Restatement Effective Date, a
Lender Addendum, substantially in the form of Exhibit J, executed and
delivered by such Lender as provided in Section 10.18.
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any capital lease having substantially the same
economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this
Agreement.
"Loan Documents": this Agreement, the Security Documents, and
the Notes.
"Loan Parties": the Borrower and each Subsidiary of the
Borrower which is a party to a Loan Document.
"Majority Facility Lenders": with respect to any Facility, the
holders of more than 50% of the aggregate unpaid principal amount of
the Term Loans or the Total Revolving Extensions of Credit, as the case
may be, outstanding under such Facility (or, in the case of the
Revolving Credit Facility, prior to any termination of the Revolving
23
19
Credit Commitments, the holders of more than 50% of the Total Revolving
Credit Commitments).
"Majority Revolving Credit Facility Lenders": the Majority
Facility Lenders in respect of the Revolving Credit Facility.
"Margin Stock": as defined in Regulation U.
"Margin Stock Restriction": any restriction, contained in any
agreement or other arrangement between the Borrower and/or any of its
Restricted Subsidiaries, on the one hand, and any Agent or Lender or
any affiliate thereof, on the other hand, on the right or ability of
the Borrower or any Restricted Subsidiary to sell, pledge or otherwise
Dispose of any Restricted Margin Stock.
"Material Adverse Effect": a material adverse effect on (a)
the business, assets, property or condition (financial or otherwise) of
the Borrower and its Subsidiaries taken as a whole or (b) the validity
or enforceability of this Agreement or any of the other Loan Documents
or the rights or remedies of the Administrative Agent or the Lenders
hereunder or thereunder.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Mortgages": each of the mortgages and deeds of trust, if any,
made by any Loan Party in favor of, or for the benefit of, the
Administrative Agent for the benefit of the Lenders (which mortgages
and/or deeds of trust shall be in form and substance reasonably
satisfactory to the Administrative Agent), as the same may be amended,
supplemented or otherwise modified from time to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Average Senior Debt": on any date, the average of the
amount of Consolidated Senior Debt outstanding (net of cash and Cash
Equivalents held by the Borrower and its Restricted Subsidiaries) on
the last day of each of the twelve consecutive calendar months ended
prior to the date of such determination (or, if fewer than twelve
months have elapsed between the Closing Date and the date of such
determination, then on the Closing Date and the last day of each such
month).
"Net Average Senior Debt Ratio": as of the last day of any
period of four consecutive fiscal quarters, the ratio of (a) Net
Average Senior Debt on such day to (b) Consolidated EBITDA for such
period.
"Net Average Total Debt": on any date, the average of the
amount of Consolidated Total Debt outstanding (net of cash and Cash
Equivalents held by the
24
20
Borrower and its Restricted Subsidiaries) on the last day of each of
the twelve consecutive calendar months ended prior to the date of such
determination (or, if fewer than twelve months have elapsed between the
Closing Date and the date of such determination, then on the Closing
Date and the last day of each such month).
"Net Average Total Debt Ratio": as of the last day of any
period of four consecutive fiscal quarters, the ratio of (a) Net
Average Total Debt on such day to (b) Consolidated EBITDA for such
period.
"Net Cash Proceeds": (a) in connection with any Asset Sale or
any Recovery Event or any Permitted Receivables Securitization, the
proceeds thereof in the form of cash and Cash Equivalents (including
any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received) of
such Asset Sale or Recovery Event or Permitted Receivables
Securitization, net of attorneys' fees, accountants' fees, investment
banking fees, amounts required to be applied to the repayment of
Indebtedness secured by a Lien expressly permitted hereunder on any
asset which is the subject of such Asset Sale or Recovery Event of
Permitted Receivables Securitization (other than any Lien pursuant to a
Security Document) and other customary fees and expenses actually
incurred in connection therewith and net of taxes paid or reasonably
estimated to be payable as a result thereof (after taking into account
any available tax credits or deductions and any tax sharing
arrangements) and (b) in connection with any issuance or sale of equity
securities or debt securities or instruments or the incurrence of
loans, the cash proceeds received from such issuance or incurrence, net
of attorneys' fees, investment banking fees, accountants' fees,
underwriting discounts and commissions and other customary fees and
expenses actually incurred in connection therewith.
"Net Returns": inventory previously sold that has been
returned to warehouses designated and owned, leased or otherwise
controlled by the Borrower and its Subsidiaries for investigation
and/or repair of claimed defects.
"New Lender Supplement": a New Lender Supplement,
substantially in the form of Exhibit M.
"Non-Excluded Taxes": as defined in Section 2.18(a).
"Non-U.S. Lender": as defined in Section 2.18(d).
"Notes": the collective reference to any promissory note
evidencing Loans.
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of
the Loans and Reimbursement Obligations and interest accruing after the
filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the
Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans and all other
obligations and liabilities of the Borrower to the Administrative Agent
or to any Lender (or, in the case of Hedge Agreements, any
25
21
affiliate of any Lender), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Hedge
Agreement entered into with any Lender or any affiliate of any Lender
or any other document made, delivered or given in connection herewith
or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without
limitation, all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by
the Borrower pursuant hereto) or otherwise.
"Offered Increase Amount": as defined in Section 2.8(b).
"Other Taxes": any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or
similar levies arising from any payment made hereunder or from the
execution, delivery or enforcement of, or otherwise with respect to,
this Agreement or any other Loan Document.
"Participant": as defined in Section 10.6(b).
"Payment Office": the office specified from time to time by
the Administrative Agent as its payment office by notice to the
Borrower and the Lenders.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"▇▇▇▇▇▇▇▇▇▇ Acquisition Agreement": the Agreement, dated as of
July 1, 1999, between ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and the Borrower.
"Permitted Acquisition": any acquisition by the Borrower or
any of its Subsidiaries of all of the Capital Stock of, or all or
substantially all of the assets constituting a business unit of, any
other Person so long as, with respect to any such acquisition, the
following conditions are satisfied:
(A) no Default or Event of Default shall have occurred and be
continuing or would result from such acquisition;
(B) after giving effect to such acquisition, the Borrower
shall be in pro forma compliance with the financial covenants set forth
in Section 7.1;
(C) the acquisition shall conform with the Borrower's stated
management strategy as in effect on the Closing Date, and the target of
such acquisition shall be in the same or a similar line of business,
including the housewares business, as the Borrower and its
Subsidiaries;
(D) the aggregate consideration for such acquisition shall not
exceed $40,000,000;
26
22
(E) the target of such acquisition either (a) shall have had
positive consolidated net income before interest, taxes, depreciation
and amortization, determined in accordance with GAAP ("EBITDA") for the
four consecutive fiscal quarters of such target most recently ended
prior to the date of such acquisition, or (b) shall have had positive
pro forma EBITDA for such period (giving effect to such cost savings as
can be documented in accordance with Regulation S-X under the
Securities Act of 1933, as amended); and
(F) the Borrower shall have performed reasonable and customary
due diligence with respect to such acquisition and the target thereof,
including with respect to environmental matters.
"Permitted Investors": Centre Capital Investors II, L.P.,
Centre Capital Tax-Exempt Investors II, L.P., Centre Capital Offshore
Investors II, L.P., The State Board of Administration of Florida,
Centre Parallel Management Partners, L.P., and Centre Partners
Coinvestment, L.P.
"Permitted Receivables Securitization": any transaction or
series of related transactions providing for the securitization of any
Accounts yielding Net Cash Proceeds not exceeding $20,000,000; provided
that any such transaction shall be consummated pursuant to
documentation in form and substance reasonably satisfactory to the
Administrative Agent.
"Person": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Preferred Stock Purchase Agreement": the Stock Purchase
Agreement, dated July 27, 1998, by and among the Borrower and the
Purchasers named therein, consisting of Centre Capital Investors II,
L.P., certain of its affiliates and certain investment vehicles or
investors managed or advised by such affiliates.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Projections": as defined in Section 6.2(c).
"Properties": as defined in Section 4.17.
"Property": any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible
or intangible, including, without limitation, Capital Stock.
27
23
"Recovery Event": any settlement of or payment in respect of
any property or casualty insurance claim or any condemnation proceeding
relating to any asset of the Borrower or any of its Subsidiaries.
"Reference Lender": Deutsche Bank AG New York Branch or any
successor.
"Register": as defined in Section 10.6(d).
"Regulation U": Regulation U of the Board as in effect from
time to time and any successor law, rule or regulation having similar
effect to all or a portion thereof.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn
under Letters of Credit.
"Reinvestment Deferred Amount": with respect to any
Reinvestment Event, the aggregate Net Cash Proceeds received by the
Borrower or any of its Subsidiaries in connection therewith which are
not applied to prepay the Term Loans or reduce the Revolving Credit
Commitments pursuant to Section 2.10 as a result of the delivery of a
Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in
respect of which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a
Responsible Officer stating that no Event of Default has occurred and
is continuing and that the Borrower (directly or indirectly through a
Restricted Subsidiary) intends and expects to use all or a specified
portion of the Net Cash Proceeds of an Asset Sale or Recovery Event to
acquire assets useful in its business.
"Reinvestment Prepayment Amount": with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating thereto
less any amount expended prior to the relevant Reinvestment Prepayment
Date to acquire assets useful in the Borrower's business.
"Reinvestment Prepayment Date": with respect to any
Reinvestment Event, the earlier of (a) the date occurring six months
after such Reinvestment Event and (b) the date on which the Borrower
shall have determined not to, or shall have otherwise ceased to,
acquire assets useful in the Borrower's business with all or any
portion of the relevant Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .27, .28, .29, .30, .31, .32,
.34 or .35 of PBGC Reg. ss. 4043.
28
24
"Required Lenders": at any time, the holders of more than 50%
of the sum of (a) the aggregate unpaid principal amount of the Term
Loans then outstanding and (b) the Total Revolving Credit Commitments
then in effect or, if the Revolving Credit Commitments have been
terminated, the Total Revolving Extensions of Credit then outstanding.
"Required Prepayment Lenders": the Majority Facility Lenders
in respect of each Facility.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its Property or to which such Person or any of its Property is
subject.
"Responsible Officer": the chief executive officer, president
or chief financial officer of the Borrower, but in any event, with
respect to financial matters, the chief financial officer of the
Borrower.
"Restricted Margin Stock": all Margin Stock owned by the
Borrower and its Restricted Subsidiaries to the extent that the market
value thereof constitutes more than 25% of the value of the assets of
the Borrower and its Subsidiaries which constitute Collateral and/or
which are subject to the restrictions of Sections 7.3, 7.4 or 7.5.
"Restricted Payments": as defined in Section 7.6.
"Restricted Subsidiary": each Subsidiary of the Borrower other
than an Unrestricted Subsidiary.
"Revolving Credit Commitment": as to any Lender, the
obligation of such Lender, if any, to make Revolving Credit Loans, and
participate in Letters of Credit, in an aggregate principal and/or face
amount not to exceed the amount set forth under the heading "Revolving
Credit Commitment" opposite such Lender's name on Schedule 1 to the
Lender Addendum delivered by such Lender, or, in the case of a Lender
that becomes a Revolving Credit Lender pursuant to an Assignment and
Acceptance or a New Lender Supplement, on Schedule 1 to such Assignment
and Acceptance or New Lender Supplement, as the case may be, in each
case as the same may be changed from time to time pursuant to the terms
hereof. The aggregate amount of the Total Revolving Credit Commitments
as of the Third Amendment and Restatement Effective Date will be
$160,000,000.
"Revolving Credit Commitment Increase Notice": as defined in
Section 2.8(b).
"Revolving Credit Commitment Increase Supplement": a Revolving
Credit Commitment Increase Supplement, substantially in the form of
Exhibit N.
"Revolving Credit Commitment Period": the period from and
including the Closing Date to the Revolving Credit Termination Date.
29
25
"Revolving Credit Lender": each Lender which has a Revolving
Credit Commitment or which is the holder of Revolving Credit Loans.
"Revolving Credit Loans": as defined in Section 2.4.
"Revolving Credit Percentage": as to any Revolving Credit
Lender at any time, the percentage which such Lender's Revolving Credit
Commitment then constitutes of the Total Revolving Credit Commitments
(or, at any time after the Revolving Credit Commitments shall have
expired or terminated, the percentage which the aggregate principal
amount of such Lender's Revolving Credit Loans then outstanding
constitutes of the aggregate principal amount of the Revolving Credit
Loans then outstanding).
"Revolving Credit Termination Date": the earlier of (a) the
Scheduled Revolving Credit Termination Date and (b) the date on which
the Term Loans shall be paid in full.
"Revolving Extensions of Credit": as to any Revolving Credit
Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all Revolving Credit Loans made by such Lender then
outstanding and (b) such Lender's Revolving Credit Percentage of the
L/C Obligations then outstanding.
"Salton Hong Kong": Salton Hong Kong Ltd., a Hong Kong
company.
"Scheduled Revolving Credit Termination Date": January 7,
2004.
"Security Documents": the collective reference to the
Guarantee and Collateral Agreement, any Mortgages and all other
security documents hereafter delivered to the Administrative Agent
granting a Lien on any Property of any Person to secure the Obligations
and all liabilities of any Loan Party under any Loan Document.
"Seller Note": the $15,000,000 aggregate principal amount
subordinated note of the Borrower made to Windmere-Durable Holdings,
Inc. in connection with the Stock Agreement, dated as of May 6, 1998,
among the Borrower, Windmere-Durable Holdings, Inc., and others.
"Seller Subordinated Debt": unsecured Indebtedness of the
Borrower incurred in connection with any Permitted Acquisition and
initially owing to the seller in such Permitted Acquisition; provided,
that (a) such Indebtedness shall be subordinated, pursuant to
subordination provisions reasonably acceptable to the Administrative
Agent and such provisions shall be no less favorable to the Lenders
than the subordination provisions of the existing subordinated debt, to
the obligations of the Borrower under this Agreement and the other Loan
Documents, (b) such Indebtedness shall not be guaranteed by any
Subsidiary of the Borrower (provided, that such Indebtedness may be
guaranteed by the Subsidiary acquired in such Permitted Acquisition, if
the obligations of such Subsidiary under such guarantee are
subordinated to the obligations of such Subsidiary under the Loan
Documents pursuant to subordination provisions reasonably acceptable to
the Administrative Agent), (c) the other terms and conditions of such
Indebtedness are reasonably acceptable to the Administrative Agent (and
in any event such Indebtedness shall mature no less than one year after
the final maturity date of the Term Loans and
30
26
shall have covenants no more restrictive than those set forth herein)
and (d) after giving effect to the incurrence of such Indebtedness, no
Default or Event of Default shall be in existence.
"Senior Subordinated Note Indenture": the Indenture, dated as
of December 16, 1998, between the Borrower and Norwest Bank Minnesota,
National Association, as trustee, pursuant to which the Senior
Subordinated Notes were issued.
"Senior Subordinated Notes": the 10-3/4% Senior Subordinated
Notes due 2005 of the Borrower, in the aggregate principal amount of
$125,000,000.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that,
as of any date of determination, (a) the amount of the "present fair
saleable value" of the assets of such Person will, as of such date,
exceed the amount of all "liabilities of such Person, contingent or
otherwise", as of such date, as such quoted terms are determined in
accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be
greater than the amount that will be required to pay the liability of
such Person on its debts as such debts become absolute and matured, (c)
such Person will not have, as of such date, an unreasonably small
amount of capital with which to conduct its business, and (d) such
Person will be able to pay its debts as they mature. For purposes of
this definition, (i) "debt" means liability on a "claim", and (ii)
"claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured or (y) right to an equitable remedy for breach of performance
if such breach gives rise to a right to payment, whether or not such
right to an equitable remedy is reduced to judgment, fixed, contingent,
matured or unmatured, disputed, undisputed, secured or unsecured.
"Specified Change of Control": a "Change of Control", as
defined in the Senior Subordinated Note Indenture.
"▇▇▇▇▇▇▇▇ Acquisition Agreement": the Agreement, dated as of
July 1, 1999, between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and the Borrower.
"Standard Flood Hazard Determination Form": Form 81-93 or any
successor or replacement thereof developed by FEMA pursuant to Section
528 of the National Flood Insurance Reform Act of 1994 (42 U.S.C.
1365(a)), for determining whether a building or structure is located in
an area identified as an area having special flood hazard, whether
flood insurance is required and whether flood insurance is available
under 42 U.S.C. 4001, et seq.
"Subordinated Debt": the Seller Note, the Senior Subordinated
Notes and the Indebtedness of the Borrower and its Subsidiaries
pursuant to the ▇▇▇▇▇▇▇ Acquisition
31
27
Agreement, the ▇▇▇▇▇▇▇▇▇▇ Acquisition Agreement and the ▇▇▇▇▇▇▇▇
Acquisition Agreement.
"Subsidiary": as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or
other ownership interests having ordinary voting power (other than
stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation, partnership
or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified,
all references to a "Subsidiary" or to "Subsidiaries" in this Agreement
shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantor": each Subsidiary of the Borrower other
than any Excluded Foreign Subsidiary.
"Term Loan": as defined in Section 2.1.
"Term Loan Commitment": as to any Lender, the obligation of
such Lender, if any, to make a Term Loan to the Borrower hereunder in a
principal amount not to exceed the amount set forth under the heading
"Term Loan Commitment" opposite such Lender's name on Schedule 1 to the
Lender Addendum delivered by such Lender or, as the case may be, in
Schedule 1 to the Assignment and Acceptance pursuant to which such
Lender acquired such commitment. The original aggregate amount of the
Term Loan Commitments on the Third Amendment and Restatement Effective
Date is $75,000,000.
"Term Loan Lender": each Lender which has a Term Loan
Commitment or is the holder of a Term Loan.
"Term Loan Percentage": as to any Term Loan Lender at any
time, the percentage which such Lender's Term Loan Commitment then
constitutes of the aggregate Term Loan Commitments (or, at any time
after the Third Amendment and Restatement Effective Date, the
percentage which the aggregate principal amount of such Lender's Term
Loans then outstanding constitutes of the aggregate principal amount of
the Term Loans then outstanding).
"Third Amendment and Restatement Effective Date": the date on
which each of the conditions precedent specified in Section 5.1 shall
have been satisfied.
"Toastmaster": Toastmaster Inc., a Missouri corporation.
"Total Revolving Credit Commitments": at any time, the
aggregate amount of the Revolving Credit Commitments then in effect.
"Total Revolving Extensions of Credit": at any time, the
aggregate amount of the Revolving Extensions of Credit of the Revolving
Credit Lenders outstanding at such time.
32
28
"Transferee": as defined in Section 10.14.
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (current version), International Chamber of
Commerce Publication No. 500, as the same may be amended from time to
time.
"Unrestricted Margin Stock": all Margin Stock owned by the
Borrower and its Restricted Subsidiaries other than Restricted Margin
Stock.
"Unrestricted Subsidiary": any Subsidiary of the Borrower
which is designated as an Unrestricted Subsidiary pursuant to Section
10.16.
"U.S. Dollar Equivalent": on any date with respect to an
amount denominated in any currency other than Dollars, the equivalent
on such date in Dollars of such amount determined by the Administrative
Agent by reference to such publicly-available sources as the
Administrative Agent shall reasonably select.
"Wholly Owned Subsidiary": as to any Person, any other Person
all of the Capital Stock of which (other than directors' qualifying
shares required by law) is owned by such Person directly and/or through
other Wholly Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor
that is a Wholly Owned Subsidiary of the Borrower.
1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in the other Loan Documents
or any certificate or other document made or delivered pursuant hereto or
thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) Each reference to the "Credit Agreement" in any Loan Document
shall be deemed to be a reference to this Third Amended and Restated Credit
Agreement.
33
29
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Loan Commitments.
Subject to the terms and conditions hereof, the Term Loan
Lenders severally agree to make term loans (each, a "Term Loan") to the Borrower
on the Third Amendment and Restatement Effective Date in an amount for each Term
Loan Lender not to exceed the amount of the Term Loan Commitment of such Lender.
The Term Loans may from time to time be Eurodollar Loans or Base Rate Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.2 and 2.13.
2.2 Procedure for Term Loan Borrowing.
The Borrower shall deliver to the Administrative Agent a
Borrowing Notice (which Borrowing Notice must be received by the Administrative
Agent prior to 10:00 A.M., New York City time, one Business Day prior to the
anticipated Third Amendment and Restatement Effective Date) requesting that the
Term Loan Lenders make the Term Loans on the Third Amendment and Restatement
Effective Date. The Term Loans made on the Third Amendment and Restatement
Effective Date shall initially be Base Rate Loans, and no Term Loan may be
converted into or continued as a Eurodollar Loan having an Interest Period in
excess of one month prior to the date which is 30 days after the Third Amendment
and Restatement Effective Date. Upon receipt of such Borrowing Notice the
Administrative Agent shall promptly notify each Term Loan Lender thereof. Not
later than 12:00 Noon, New York City time, on the Third Amendment and
Restatement Effective Date each Term Loan Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available
funds equal to the Term Loan to be made by such Lender. The Administrative Agent
shall make available to the Borrower the aggregate of the amounts made available
to the Administrative Agent by the Term Loan Lenders, in like funds as received
by the Administrative Agent.
2.3 Repayment of Term Loans.
The Term Loan of each Lender shall mature in 16 consecutive
quarterly installments, payable on the last Business Day in each of the
Borrower's fiscal quarters, commencing on March 31, 2001, with the last
installment payment on December 31, 2004, each such installment to be in an
amount equal to such Lender's Term Loan Percentage of $4,687,500.
2.4 Revolving Credit Commitments.
(a) Subject to the terms and conditions hereof, each Revolving
Credit Lender severally agrees to make revolving credit loans ("Revolving Credit
Loans") to the Borrower from time to time during the Revolving Credit Commitment
Period in an aggregate principal amount at any one time outstanding which, when
added to such Lender's Revolving Credit Percentage of the L/C Obligations then
outstanding, does not exceed the lesser of (i) the amount of such Lender's
Revolving Credit Commitment minus the amount of such Lender's Revolving Credit
Commitment percentage of Consolidated Total Debt at such time attributable to
Permitted Receivables Securitizations and (ii) such Lender's Revolving
Commitment Percentage of the Available Revolving Credit Borrowing Base then in
effect. During the Revolving Credit
34
30
Commitment Period the Borrower may use the Revolving Credit Commitments by
borrowing, prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof. The
Revolving Credit Loans may from time to time be Eurodollar Loans or Base Rate
Loans, as determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.5 and 2.11, provided that no Revolving Credit Loan
shall be made as a Eurodollar Loan after the day that is one month prior to the
Revolving Credit Termination Date.
(b) The Borrower shall repay all outstanding Revolving Credit
Loans on the Revolving Credit Termination Date.
(c) Revolving Credit Loans made under (and as defined in) the
Existing Credit Agreement prior to the Third Amendment and Restatement Effective
Date and outstanding on such date shall constitute Revolving Credit Loans
hereunder.
2.5 Procedure for Revolving Credit Borrowing.
The Borrower may borrow under the Revolving Credit Commitments
during the Revolving Credit Commitment Period on any Business Day, provided that
the Borrower shall give the Administrative Agent irrevocable notice (which
notice must be received by the Administrative Agent prior to 12:00 Noon, New
York City time, (a) three Business Days prior to the requested Borrowing Date,
in the case of Eurodollar Loans, or (b) one Business Day prior to the requested
Borrowing Date, in the case of Base Rate Loans), specifying (i) the amount and
Type of Revolving Credit Loans to be borrowed, (ii) the requested Borrowing Date
and (iii) in the case of Eurodollar Loans, the respective amounts of each such
Type of Loan and the respective lengths of the initial Interest Period therefor.
Each borrowing under the Revolving Credit Commitments shall be in an amount
equal to (x) in the case of Base Rate Loans, $1,000,000 or a whole multiple
thereof (or, if the then aggregate Available Revolving Credit Commitments are
less than $1,000,000, such lesser amount) and (y) in the case of Eurodollar
Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon
receipt of any such notice from the Borrower, the Administrative Agent shall
promptly notify each Revolving Credit Lender thereof. Each Revolving Credit
Lender will make the amount of its pro rata share of each borrowing available to
the Administrative Agent for the account of the Borrower at the Funding Office
prior to 12:00 Noon, New York City time, on the Borrowing Date requested by the
Borrower in funds immediately available to the Administrative Agent. Such
borrowing will then be made available to the Borrower by the Administrative
Agent in like funds as received by the Administrative Agent.
2.6 Repayment of Loans; Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of the appropriate Revolving Credit Lender
or Term Loan Lender, as the case may be, (i) the then unpaid principal amount of
each Revolving Credit Loan of such Revolving Credit Lender on the Revolving
Credit Termination Date (or such earlier date on which the Loans become due and
payable pursuant to Section 8) and (ii) the principal amount of each Term Loan
of such Term Loan Lender in installments according to the amortization schedule
set forth in Section 2.3 (or on such earlier date on which the Loans become due
and
35
31
payable pursuant to Section 8). The Borrower hereby further agrees to pay
interest on the unpaid principal amount of the Loans from time to time
outstanding from the date hereof until payment in full thereof at the rates per
annum, and on the dates, set forth in Section 2.13.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 10.6(d), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such Loan, the Type thereof and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.6(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
such Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing any Term Loans or
Revolving Credit Loans, as the case may be, of such Lender, substantially in the
forms of Exhibit I-1 or I-2, respectively, with appropriate insertions as to
date and principal amount.
2.7 Commitment Fees, etc.
(a) The Borrower agrees to pay to the Administrative Agent for the
account of each Revolving Credit Lender a commitment fee for the period from and
including the Closing Date to the last day of the Revolving Credit Commitment
Period, computed at the Commitment Fee Rate on the average daily amount of the
Available Revolving Credit Commitment of such Lender during the period for which
payment is made, payable quarterly in arrears on the last day of each March,
June, September and December and on the Revolving Credit Termination Date,
commencing on the first of such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent the
fees in the amounts and on the dates from time to time agreed to in writing by
the Borrower and the Administrative Agent.
36
32
2.8 Termination or Reduction of Commitments; Increase of
Commitments.
(a) The Borrower shall have the right, upon not less than three
Business Days' notice to the Administrative Agent, to terminate the Revolving
Credit Commitments or, from time to time, to reduce the amount of the Revolving
Credit Commitments; provided that no such termination or reduction of Revolving
Credit Commitments shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Credit Loans made on the effective date thereof,
the Total Revolving Extensions of Credit would exceed the Total Revolving Credit
Commitments. Any such reduction shall be in an amount equal to $1,000,000, or a
whole multiple thereof, and shall reduce permanently the Revolving Credit
Commitments then in effect.
(b) In the event that the Borrower wishes to increase the
aggregate Revolving Credit Commitments at any time when no Default or Event of
Default has occurred and is continuing, it shall notify the Administrative Agent
in writing of the amount (the "Offered Increase Amount") of such proposed
increase (such notice, a "Revolving Credit Commitment Increase Notice"). The
Borrower shall offer each of the Lenders the opportunity to participate in its
Revolving Credit Percentage of the Offered Increase Amount pursuant to paragraph
(c) below and if any Lender, in its sole discretion, elects not to participate
in its portion of the Offered Increase Amount, the Borrower may, with the
consent of the Administrative Agent (which consent shall not be unreasonably
withheld), offer one or more additional banks or financial institutions the
opportunity to participate in such portion of the Offered Increase Amount
pursuant to paragraph (d) below. The Borrower or, if requested by the Borrower,
the Administrative Agent, will notify all Lenders, and, if applicable, the other
banks or financial institutions, of such offer.
(c) Any Lender which accepts an offer to it by the Borrower to
increase its Revolving Credit Commitment pursuant to this Section shall, in each
case, execute a Revolving Credit Commitment Increase Supplement with the
Borrower and the Administrative Agent, whereupon such Lender shall be bound by
and entitled to the benefits of this Agreement with respect to the full amount
of its Revolving Credit Commitment as so increased.
(d) Any additional bank, financial institution or other entity
which the Borrower selects to offer participation in the increased Revolving
Credit Commitments and which elects to become a party to this Agreement and
provide a Revolving Credit Commitment in an amount so offered and accepted by it
pursuant to this Section shall execute a New Lender Supplement with the Borrower
and the Administrative Agent, whereupon such bank, financial institution or
other entity shall become a Lender for all purposes and to the same extent as if
originally a party hereto and shall be bound by and entitled to the benefits of
this Agreement, provided that the Revolving Credit Commitment of any such new
Lender shall be in an amount not less than $5,000,000.
(e) Notwithstanding anything to the contrary in this Section, (i)
in no event shall any transaction effected pursuant to this Section cause the
aggregate Revolving Credit Commitments to exceed $180,000,000, and (ii) no
Lender shall have any obligation to increase its Revolving Credit Commitment
unless it agrees to do so in its sole discretion.
37
33
2.9 Optional Prepayments.
The Borrower may at any time and from time to time prepay the
Loans, in whole or in part, without premium or penalty, upon irrevocable notice
delivered to the Administrative Agent at least three Business Days prior thereto
in the case of Eurodollar Loans and at least one Business Day prior thereto in
the case of Base Rate Loans, which notice shall specify the date and amount of
prepayment and whether the prepayment is of Eurodollar Loans or Base Rate Loans;
provided, that if a Eurodollar Loan is prepaid on any day other than the last
day of the Interest Period applicable thereto, the Borrower shall also pay any
amounts owing pursuant to Section 2.19. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof. If any
such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with (except in the case of
Revolving Credit Loans which are Base Rate Loans) accrued interest to such date
on the amount prepaid. Partial prepayments of Term Loans and Revolving Credit
Loans shall be in an aggregate principal amount of $1,000,000 or a whole
multiple thereof.
2.10 Mandatory Prepayments and Revolving Credit Commitment
Reductions.
(a) Unless the Required Prepayment Lenders shall otherwise agree,
if any Indebtedness shall be incurred by the Borrower or any of its Restricted
Subsidiaries (excluding any Indebtedness incurred in accordance with Section
7.2), an amount equal to 100% of the Net Cash Proceeds thereof shall be applied
on the date of such incurrence toward the prepayment of the Term Loans and the
reduction of Revolving Credit Commitments as set forth in Section 2.10(e).
(b) Unless the Required Prepayment Lenders shall otherwise agree,
if on any date the Borrower or any of its Restricted Subsidiaries shall receive
Net Cash Proceeds from any Asset Sale or Recovery Event then, unless a
Reinvestment Notice shall be delivered in respect thereof, such Net Cash
Proceeds shall be applied on such date toward the prepayment of the Term Loans
and the reduction of the Revolving Credit Commitments as set forth in Section
2.10(e); provided, that, notwithstanding the foregoing, (i) the aggregate Net
Cash Proceeds of Asset Sales and Recovery Events that may be excluded from the
foregoing requirement pursuant to a Reinvestment Notice shall not exceed
$2,000,000 in any fiscal year of the Borrower and (ii) on each Reinvestment
Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with
respect to the relevant Reinvestment Event shall be applied toward the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.10(e).
(c) Unless the Required Prepayment Lenders shall otherwise agree,
if, for any fiscal year of the Borrower commencing with the fiscal year ending
July 1, 2000, there shall be Excess Cash Flow, the Borrower shall, on the
relevant Excess Cash Flow Application Date, apply 50% of such Excess Cash Flow
toward the prepayment of the Term Loans (but not toward reduction of the
Revolving Credit Commitments) as set forth in Section 2.10(e). Each such
prepayment shall be made on a date (an "Excess Cash Flow Application Date") no
later than five days after the earlier of (i) the date on which the financial
statements of the Borrower referred to in Section 6.1(a), for the fiscal year
with respect to which such prepayment is made, are required to be delivered to
the Lenders and (ii) the date such financial statements are actually delivered.
38
34
(d) If, at any time, the Aggregate Funded Exposure exceeds the
Borrowing Base then in effect, the Borrower shall, without notice or demand,
immediately repay first, the Revolving Credit Loans (without any reduction in
Revolving Credit Commitments) and, second, the Term Loans, in an aggregate
principal amount equal to such excess, together with interest accrued to the
date of such payment or prepayment. To the extent that after giving effect to
any prepayment of the Revolving Credit Loans or Term Loans, as the case may be,
required by the preceding sentence, the Aggregate Funded Exposure exceeds the
Borrowing Base (because L/C Obligations constitute a portion of the Aggregate
Funded Exposure) the Borrower shall, without notice or demand, immediately
deposit in a cash collateral account with an Issuing Lender identified by the
Administrative Agent, having terms and conditions satisfactory to the
Administrative Agent, as collateral security for the liability of the Issuing
Lender (whether direct or contingent) under any Letters of Credit then
outstanding, an aggregate amount equal to the amount by which the Aggregate
Funded Exposure exceeds the Borrowing Base.
(e) Amounts to be applied in connection with Loan prepayments and
Revolving Credit Commitment reductions made pursuant to paragraphs (a), (b) and
(c) of this Section shall be applied first, to the prepayment of the Term Loans,
and, second, to reduce permanently the Revolving Credit Commitments; provided,
that the Excess Cash Flow amounts described in Section 2.10(c) shall not reduce
the Revolving Credit Commitments. Any such reduction of the Revolving Credit
Commitments shall be accompanied by prepayment of the Revolving Credit Loans to
the extent, if any, that the Total Revolving Extensions of Credit exceed the
amount of the Total Revolving Credit Commitments as so reduced, provided that if
the aggregate principal amount of Revolving Credit Loans then outstanding is
less than the amount of such excess (because L/C Obligations constitute a
portion thereof), the Borrower shall, to the extent of the balance of such
excess, replace outstanding Letters of Credit and/or deposit an amount in cash
and/or Cash Equivalents in a cash collateral account established with the
Administrative Agent for the benefit of the Lenders on terms and conditions
satisfactory to the Administrative Agent. The application of any prepayment
pursuant to this Section shall be made first to Base Rate Loans and second to
Eurodollar Loans. Each prepayment of the Loans under this Section (except in the
case of Revolving Credit Loans that are Base Rate Loans) shall be accompanied by
accrued interest to the date of such prepayment on the amount prepaid.
(f) If, at any time during the Revolving Credit Commitment Period,
by reason of a change in currency exchange rates, the amount of the Total
Revolving Extensions of Credit exceeds the aggregate amount of the Revolving
Credit Commitments of all Lenders, the Borrower shall, upon learning thereof or
upon the request of the Administrative Agent, immediately prepay the Revolving
Credit Loans by an amount at least equal to the amount of such excess. For
purposes of this paragraph, the Administrative Agent, in cooperation with the
relevant Issuing Lenders, will calculate the amount of L/C Obligations
outstanding no less frequently than once per calendar month.
(g) If, at any time during the Revolving Credit Commitment Period
the amount of the Total Revolving Extension of Credit exceeds the Total
Revolving Credit Commitments minus the amount of Consolidated Total Debt at such
time attributable to Permitted Receivables Securitizations, the Borrower shall
immediately prepay Revolving Credit Loans (without any reduction of Revolving
Credit Commitments) by the amount of such excess. For purposes of this
paragraph, the Administrative Agent, in cooperation with the relevant Issuing
Lenders, will
39
35
calculate the amount of L/C Obligations outstanding no less frequently than once
per calendar month.
2.11 Conversion and Continuation Options.
(a) The Borrower may elect from time to time to convert Eurodollar
Loans to Base Rate Loans by giving the Administrative Agent at least two
Business Days' prior irrevocable notice of such election, provided that any such
conversion of Eurodollar Loans may only be made on the last day of an Interest
Period with respect thereto. The Borrower may elect from time to time to convert
Base Rate Loans to Eurodollar Loans by giving the Administrative Agent at least
three Business Days' prior irrevocable notice of such election (which notice
shall specify the length of the initial Interest Period therefor), provided that
no Base Rate Loan under a particular Facility may be converted into a Eurodollar
Loan (i) when any Event of Default has occurred and is continuing and the
Administrative Agent or the Majority Facility Lenders in respect of such
Facility have determined in its or their sole discretion not to permit such
conversions or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Facility. Upon receipt of any
such notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
(b) Any Eurodollar Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving irrevocable notice to the Administrative Agent, in accordance
with the applicable provisions of the term "Interest Period" set forth in
Section 1.1, of the length of the next Interest Period to be applicable to such
Loans, provided that no Eurodollar Loan under a particular Facility may be
continued as such (i) when any Event of Default has occurred and is continuing
and the Administrative Agent has or the Majority Facility Lenders in respect of
such Facility have determined in its or their sole discretion not to permit such
continuations or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Facility, and provided, further,
that if the Borrower shall fail to give any required notice as described above
in this paragraph or if such continuation is not permitted pursuant to the
preceding proviso such Loans shall be automatically converted to Base Rate Loans
on the last day of such then expiring Interest Period. Upon receipt of any such
notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
2.12 Minimum Amounts and Maximum Number of Eurodollar Tranches.
Notwithstanding anything to the contrary in this Agreement,
all borrowings, conversions, continuations and optional prepayments of
Eurodollar Loans hereunder and all selections of Interest Periods hereunder
shall be in such amounts and be made pursuant to such elections so that, (a)
after giving effect thereto, the aggregate principal amount of the Eurodollar
Loans comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole
multiple of $1,000,000 in excess thereof and (b) no more than ten Eurodollar
Tranches shall be outstanding at any one time.
40
36
2.13 Interest Rates and Payment Dates.
(a) Each Eurodollar Loan shall bear interest for each day during
each Interest Period with respect thereto at a rate per annum equal to the
Eurodollar Rate determined for such day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum which is equal to (x) in the case of the Loans, the rate
that would otherwise be applicable thereto pursuant to the foregoing provisions
of this Section plus 2% or (y) in the case of Reimbursement Obligations, the
rate applicable to Base Rate Loans under the Revolving Credit Facility plus 2%,
and (ii) if all or a portion of any interest payable on any Loan or
Reimbursement Obligation or any commitment fee or other amount payable hereunder
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal to
the rate then applicable to Base Rate Loans under the relevant Facility plus 2%
(or, in the case of any such other amounts that do not relate to a particular
Facility, the rate then applicable to Base Rate Loans under the Revolving Credit
Facility plus 2%), in each case, with respect to clauses (i) and (ii) above,
from the date of such non-payment until such amount is paid in full (as well
after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
shall be payable from time to time on demand.
2.14 Computation of Interest and Fees.
(a) Interest, fees and commissions payable pursuant hereto shall
be calculated on the basis of a 360-day year for the actual days elapsed, except
that, with respect to Base Rate Loans the rate of interest on which is
calculated on the basis of the Prime Rate, the interest thereon shall be
calculated on the basis of a 365- (or 366-, as the case may be) day year for the
actual days elapsed. The Administrative Agent shall as soon as practicable
notify the Borrower and the relevant Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the Base Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.13(a).
41
37
2.15 Inability to Determine Interest Rate.
If prior to the first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that the
Eurodollar Rate determined or to be determined for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining their affected Loans during
such Interest Period,
(c) the Administrative Agent shall give telecopy or telephonic
notice thereof to the Borrower and the relevant Lenders as soon as practicable
thereafter. If such notice is given (x) any Eurodollar Loans under the relevant
Facility requested to be made on the first day of such Interest Period shall be
made as Base Rate Loans, (y) any Loans under the relevant Facility that were to
have been converted on the first day of such Interest Period to Eurodollar Loans
shall be continued as Base Rate Loans and (z) any outstanding Eurodollar Loans
under the relevant Facility shall be converted, on the first day of such
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans under the relevant Facility
shall be made or continued as such, nor shall the Borrower have the right to
convert Loans under the relevant Facility to Eurodollar Loans.
2.16 Pro Rata Treatment and Payments.
(a) Each borrowing by the Borrower from the Lenders hereunder,
each payment by the Borrower on account of any commitment fee and any reduction
of the Commitments of the Lenders shall be made pro rata according to the
respective Term Loan Percentages or Revolving Credit Percentages, as the case
may be, of the relevant Lenders. Each payment (other than prepayments) in
respect of principal or interest in respect of the Loans, each payment in
respect of fees payable hereunder, and each payment in respect of Reimbursement
Obligations, shall be applied to the amounts of such obligations owing to the
Lenders pro rata according to the respective amounts then due and owing to the
Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Term Loans shall be made pro rata
according to the respective outstanding principal amounts of such Term Loans
then due and owing to the Term Loan Lenders. The amount of each principal
prepayment of the Term Loans shall be applied to reduce the then remaining
installments of the Term Loans pro rata based upon the then remaining principal
amount thereof. Amounts prepaid on account of the Term Loans may not be
reborrowed.
(c) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Credit Loans shall be made
pro rata according to the
42
38
respective outstanding principal amounts of the Revolving Credit Loans then held
by the Revolving Credit Lenders.
(d) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, at the Payment Office, in Dollars and in
immediately available funds. The Administrative Agent shall distribute such
payments to the Lenders promptly upon receipt in like funds as received. If any
payment hereunder (other than payments on the Eurodollar Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day. If any payment on a Eurodollar Loan becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day. In
the case of any extension of any payment of principal pursuant to the preceding
two sentences, interest thereon shall be payable at the then applicable rate
during such extension.
(e) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the
absence of manifest error. If such Lender's share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans under the relevant Facility, within two Business Days of the
Administrative Agent's demand, from the Borrower.
(f) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment being made hereunder
that the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective pro rata shares
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.
43
39
2.17 Requirements of Law.
(a) If the adoption of or any change in any Requirement of Law or
in the interpretation or application thereof or compliance by any Lender or the
Issuing Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(A) shall subject any Lender or Issuing Lender to any
tax of any kind whatsoever with respect to this Agreement, any
Letter of Credit, any Application or any Eurodollar Loan made
by it, or change the basis of taxation of payments to such
Lender or Issuing Lender in respect thereof (except for
Non-Excluded Taxes covered by Section 2.18 and changes in the
rate of tax on the overall net income of such Lender or
Issuing Lender);
(B) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar
requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans, letters
of credit or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender or Issuing
Lender which is not otherwise included in the determination of
the Eurodollar Rate hereunder; or
(C) shall impose on such Lender or Issuing Lender any
other condition;
and the result of any of the foregoing is to increase the cost to such Lender or
Issuing Lender, by an amount which such Lender or Issuing Lender deems to be
material, of making, converting into, continuing or maintaining Eurodollar Loans
or issuing or participating in Letters of Credit, or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, the Borrower
shall promptly pay such Lender or Issuing Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable. If any Lender or Issuing Lender becomes entitled
to claim any additional amounts pursuant to this Section, it shall promptly
notify the Borrower (with a copy to the Administrative Agent) of the event by
reason of which it has become so entitled.
(b) If any Lender or Issuing Lender shall have determined that the
adoption of or any change in any Requirement of Law regarding capital adequacy
or in the interpretation or application thereof or compliance by such Lender or
Issuing Lender or any corporation controlling such Lender or Issuing Lender with
any request or directive regarding capital adequacy (whether or not having the
force of law) from any Governmental Authority made subsequent to the date hereof
shall have the effect of reducing the rate of return on such Lender's or Issuing
Lender's or such corporation's capital as a consequence of its obligations
hereunder or under or in respect of any Letter of Credit to a level below that
which such Lender or Issuing Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Lender's
or Issuing Lender's or such corporation's policies with respect to capital
adequacy) by an amount deemed by such Lender or Issuing Lender to be material,
then from time to time, after submission by such Lender to the Borrower (with a
copy to the Administrative Agent) of a written request therefor, the Borrower
shall pay to such Lender
44
40
or Issuing Lender such additional amount or amounts as will compensate such
Lender or Issuing Lender for such reduction.
(c) A certificate as to any additional amounts payable pursuant to
this Section submitted by any Lender or Issuing Lender to the Borrower (with a
copy to the Administrative Agent) shall be conclusive in the absence of manifest
error. The obligations of the Borrower pursuant to this Section shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
2.18 Taxes.
(a) All payments made by the Borrower under this Agreement shall
be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on any Agent or any Lender as a result of a present or former connection
between the Administrative 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 Administrative Agent or such Lender having executed, delivered or performed
its obligations or received a payment under, or enforced, this Agreement or any
other Loan Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") or Other Taxes
are required to be withheld from any amounts payable to any Agent or any Lender
hereunder, the amounts so payable to the Administrative Agent or such Lender
shall be increased to the extent necessary to yield to the Administrative Agent
or such Lender (after payment of all Non-Excluded Taxes and Other Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement, provided, however, that the Borrower shall
not be required to increase any such amounts payable to any Lender with respect
to any Non-Excluded Taxes (i) that are attributable to such Lender's failure to
comply with the requirements of paragraph (d) or (e) of this Section or (ii)
that are United States withholding taxes imposed on amounts payable to such
Lender at the time the Lender becomes a party to this Agreement, except to the
extent that such Lender's assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Borrower with respect to such
Non-Excluded Taxes pursuant to Section 2.18(a).
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for the account of the relevant Agent or Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes or Other Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by any Agent or any Lender as a result of
45
41
any such failure. The agreements in this Section 2.18 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
(d) Each Lender (or Transferee) that is not a "U.S. Person" as
defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver
to the Borrower and the Administrative Agent (or, in the case of a Participant,
to the Lender from which the related participation shall have been purchased)
two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest" a statement substantially in the form of
Exhibit F and a Form W-8BEN, or any subsequent versions thereof or successors
thereto properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete, execute and deliver such documentation and in such
Lender's reasonable judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.
2.19 Indemnity.
The Borrower agrees to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (b)
default by the Borrower in making any prepayment after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of Eurodollar Loans on a day which is not the last day of
an Interest Period with respect thereto. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
46
42
borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. A certificate as to any
amounts payable pursuant to this Section submitted to the Borrower by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
2.20 Illegality.
Notwithstanding any other provision herein, if the adoption of
or any change in any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for any Lender to make or maintain Eurodollar
Loans as contemplated by this Agreement, (a) the commitment of such Lender
hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b)
such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 2.19.
2.21 Change of Lending Office.
Each Lender agrees that, upon the occurrence of any event
giving rise to the operation of Section 2.17, 2.18(a) or 2.20 with respect to
such Lender, it will, if requested by the Borrower, use reasonable efforts
(subject to overall policy considerations of such Lender) to designate another
lending office for any Loans affected by such event with the object of avoiding
the consequences of such event; provided, that such designation is made on terms
that, in the sole judgment of such Lender, cause such Lender and its lending
office(s) to suffer no economic, legal or regulatory disadvantage, and provided,
further, that nothing in this Section shall affect or postpone any of the
obligations of any Borrower or the rights of any Lender pursuant to Section
2.17, 2.18(a) or 2.20.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment.
(a) Subject to the terms and conditions hereof, the Issuing
Lender, in reliance on the agreements of the other Revolving Credit Lenders set
forth in Section 3.4(a), agrees to issue letters of credit ("Letters of Credit")
for the account of the Borrower (or Toastmaster, as provided in Section 3.9) on
any Business Day during the Revolving Credit Commitment Period in such form as
may be approved from time to time by the Issuing Lender; provided that the
Issuing Lender shall have no obligation to issue any Letter of Credit if, after
giving effect to such
47
43
issuance, (i) the Aggregate Funded Exposure would exceed the Borrowing Base then
in effect, (ii) the L/C Obligations would exceed the L/C Commitment or (iii) the
aggregate amount of the Available Revolving Credit Commitments, minus the amount
of Consolidated Total Debt at such time attributable to Permitted Receivables
Securitizations, would be less than zero. Each Letter of Credit shall (i) be
denominated in Dollars or any Available Foreign Currency (provided that the U.S.
Dollar Equivalent of all L/C Obligations denominated in Available Foreign
Currency shall not exceed, in the aggregate, $10,000,000) and (ii) expire no
later than the earlier of (x) the first anniversary of its date of issuance and
(y) the date which is five Business Days prior to the Scheduled Revolving Credit
Termination Date, provided that any Letter of Credit with a one-year term may
provide for the renewal thereof for additional one-year periods (which shall in
no event extend beyond the date which is five Business Days prior to the
Revolving Credit Termination Date.
(b) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York.
(c) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
(d) Each of the letters of credit identified on Schedules 3.1(d)-1
hereto (each, an "Existing LaSalle Letter of Credit") shall be deemed to be a
Letter of Credit hereunder for all purposes, and LaSalle Bank National
Association shall be deemed to be the Issuing Lender in respect of such Letter
of Credit. Each of the letters of credit identified on Schedule 3.1(d)-2 hereto
(each, an "Existing Fleet Letter of Credit") shall be deemed to be a Letter of
Credit hereunder for all purposes and Fleet National Bank shall be deemed to be
the Issuing Lender in respect of each such Letter of Credit.
3.2 Procedure for Issuance of Letter of Credit.
The Borrower may from time to time request that the Issuing
Lender issue a Letter of Credit by delivering to the Issuing Lender and the
Administrative Agent at its address for notices specified herein an Application
therefor, completed to the satisfaction of the Issuing Lender, and such other
certificates, documents and other papers and information as the Issuing Lender
may request. The Administrative Agent shall provide the Issuing Lender with a
notice as to whether the Borrower has satisfied the conditions precedent
hereunder to the issuance of a Letter of Credit and a calculation of
availability under Section 3.1 as a condition to the Issuing Lender's obligation
to issue a Letter of Credit hereunder. Upon receipt of any Application, the
Issuing Lender will process such Application and the certificates, documents and
other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue the Letter of
Credit requested thereby (but in no event shall the Issuing Lender be required
to issue any Letter of Credit earlier than three Business Days after its receipt
of the Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such
Letter of Credit to the Borrower promptly following the issuance thereof. The
Issuing Lender shall promptly furnish to the Administrative
48
44
Agent, which shall in turn promptly furnish to the Lenders, notice of the
issuance of each Letter of Credit (including the amount thereof).
3.3 Fees and Other Charges.
(a) The Borrower will pay to the Administrative Agent a fee on all
outstanding Letters of Credit at a per annum rate equal to the Applicable Margin
then in effect with respect to Eurodollar Loans under the Revolving Credit
Facility, shared ratably among the Revolving Credit Lenders and payable
quarterly in arrears on each L/C Fee Payment Date after the issuance date. In
addition, the Borrower shall pay to the Issuing Lender for its own account a
fronting fee, in an amount agreed upon by the Borrower and the Issuing Bank,
payable quarterly in arrears on each L/C Fee Payment Date after the Issuance
Date.
(b) In addition to the foregoing fees, the Borrower shall pay or
reimburse the Issuing Lender for such normal and customary costs and expenses
(as agreed upon by the Borrower and the Issuing Lender) as are incurred or
charged by the Issuing Lender in issuing, negotiating, effecting payment under,
amending or otherwise administering any Letter of Credit.
3.4 L/C Participations.
(a) The Issuing Lender irrevocably agrees to grant and hereby
grants to each L/C Participant, and, to induce the Issuing Lender to issue
Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept
and purchase and hereby accepts and purchases from the Issuing Lender, on the
terms and conditions hereinafter stated, for such L/C Participant's own account
and risk an undivided interest equal to such L/C Participant's Revolving Credit
Percentage in the Issuing Lender's obligations and rights under each Letter of
Credit issued hereunder and the amount of each draft paid by the Issuing Lender
thereunder. Each L/C Participant unconditionally and irrevocably agrees with the
Issuing Lender that, if a draft is paid under any Letter of Credit for which the
Issuing Lender is not reimbursed in full by the Borrower in accordance with the
terms of this Agreement, such L/C Participant shall pay to the Issuing Lender
upon demand at the Issuing Lender's address for notices specified herein an
amount equal to such L/C Participant's Revolving Credit Percentage (a
calculation of which shall be provided by the Administrative Agent) of the
amount of such draft, or any part thereof, which is not so reimbursed. Any
demand by the Issuing Lender may be made through the Administrative Agent.
(b) If any amount required to be paid by any L/C Participant to
the Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit is
paid to the Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Lender on demand
an amount equal to the product of such amount, times the daily average Federal
Funds Effective Rate during the period from and including the date such payment
is required to the date on which such payment is immediately available to the
Issuing Lender, times a fraction the numerator of which is the number of days
that elapse during such period and the denominator of which is 360. If any such
amount required to be paid by any L/C Participant pursuant to Section 3.4(a) is
not made available to the Issuing Lender by such L/C Participant within three
Business
49
45
Days after the date such payment is due, the Issuing Lender shall be entitled to
recover from such L/C Participant, on demand, such amount with interest thereon
calculated from such due date at the rate per annum applicable to Base Rate
Loans under the Revolving Credit Facility. A certificate of the Issuing Lender
submitted to any L/C Participant with respect to any amounts owing under this
Section shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C Participant its
pro rata share of such payment in accordance with Section 3.4(a), the Issuing
Lender receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of collateral applied thereto
by the Issuing Lender), or any payment of interest on account thereof, the
Issuing Lender will distribute to such L/C Participant its pro rata share
thereof; provided, however, that in the event that any such payment received by
the Issuing Lender shall be required to be returned by the Issuing Lender, such
L/C Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower.
(a) The Borrower agrees to reimburse the Issuing Lender on each
date on which the Issuing Lender notifies the Borrower of the date and amount of
a draft presented under any Letter of Credit and paid by the Issuing Lender for
the amount of (a) such draft so paid and (b) any taxes, fees, charges or other
costs or expenses incurred by the Issuing Lender in connection with such
payment. Each such payment shall be made to the Issuing Lender at its address
for notices specified herein in lawful money of the United States of America and
in immediately available funds. Interest shall be payable on any and all amounts
remaining unpaid by the Borrower under this Section from the date such amounts
become payable (whether at stated maturity, by acceleration or otherwise) until
payment in full at the rate set forth in (i) until the second Business Day
following the date of the applicable drawing, Section 2.13(b) and (ii)
thereafter, Section 2.13(c). Each drawing under any Letter of Credit shall
(unless an event of the type described in clause (i) or (ii) of Section 8(f)
shall have occurred and be continuing with respect to the Borrower, in which
case the procedures specified in Section 3.4 for funding by L/C Participants
shall apply) constitute a request by the Borrower to the Administrative Agent
for a borrowing pursuant to Section 2.5 of Base Rate Loans in the amount of such
drawing. The Borrowing Date with respect to such borrowing shall be the date of
such drawing.
(b) The obligation of the Borrower to reimburse the Issuing Lender
for drawings honored under the Letters of Credit issued by it and to repay any
Revolving Credit Loans made by L/C Participants pursuant to Section 3.5 and the
obligations of L/C Participants under Section 3.4 shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms hereof under
all circumstances including any of the following circumstances: (i) any lack of
validity or enforceability of any Letter of Credit; (ii) the existence of any
claim, set-off, defense or other right which the Borrower or any L/C Participant
may have at any time against a beneficiary or any transferee of any Letter of
Credit (or any Persons for whom any such transferee may be acting), the Issuing
Lender, any L/C Participant or any other Person or, in the case of a L/C
Participant, against the Borrower, whether in connection herewith, the
transactions contemplated herein or any unrelated transaction (including any
underlying transaction between the Borrower or one of its Subsidiaries and the
beneficiary for which any Letter of Credit was
50
46
procured); (iii) any draft or other document presented under any 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; provided
that such draft or other document appeared on its face to comply with the
requirements of the Letter of Credit under which it was presented; (iv) payment
by Issuing Lender under any Letter of Credit against presentation of a draft or
other document which does not substantially comply with the terms of such Letter
of Credit, provided that such draft or other document appeared on its face to
comply with the requirements of the Letter of Credit under which it was
presented; (v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Borrower or any of
its Subsidiaries; (vi) any breach hereof or any other Loan Document by any party
thereto; (vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; provided that such draft or other document
appeared on its face to comply with the requirements of the Letter of Credit
under which it was presented; or (viii) the fact that an Event of Default or a
Default shall have occurred and be continuing; provided, in each case described
in the foregoing clause (i) through (vii), that payment by the Issuing Lender
under the applicable Letter of Credit shall not have constituted gross
negligence or willful misconduct of the Issuing Lender under the circumstances
in question (as determined by a final judgment of court of competent
jurisdiction).
(c) In addition to amounts payable as provided herein, the
Borrower hereby agrees to protect, indemnify, pay and save harmless the Issuing
Lender from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable fees, expenses and
disbursements of counsel and allocated costs of internal counsel) which the
Issuing Lender may incur or be subject to as a consequence, direct or indirect,
of (i) the issuance of any Letter of Credit by the Issuing Lender, other than as
a result of (1) the gross negligence or willful misconduct of the Issuing Lender
as determined by a final judgment of a court of competent jurisdiction, or (2)
the wrongful dishonor by the Issuing Lender of a proper demand for payment made
under any Letter of Credit issued by it, or (ii) the failure of the Issuing
Lender to honor a drawing under any such Letter of Credit as a result of any
governmental act.
3.6 Obligations Absolute.
The Borrower's obligations under this Section 3 shall be
absolute and unconditional under any and all circumstances and irrespective of
any setoff, counterclaim or defense to payment which the Borrower may have or
have had against the Issuing Lender, any beneficiary of a Letter of Credit or
any other Person. The Borrower also agrees with the Issuing Lender that the
Issuing Lender shall not be responsible for, and the Borrower's Reimbursement
Obligations under Section 3.5 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even though
such documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
any claims whatsoever of the Borrower against any beneficiary of such Letter of
Credit or any such transferee. The Issuing Lender shall not be liable for any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the Issuing Lender. The Borrower agrees that
any
51
47
action taken or omitted by the Issuing Lender under or in connection with any
Letter of Credit or the related drafts or documents, if done in the absence of
gross negligence or willful misconduct and in accordance with the standards or
care specified in the Uniform Commercial Code of the State of New York and/or
the Uniform Customs, shall be binding on the Borrower and shall not result in
any liability of the Issuing Lender to the Borrower.
3.7 Letter of Credit Payments.
If any draft shall be presented for payment under any Letter
of Credit, the Issuing Lender shall promptly notify the Borrower of the date and
amount thereof. The responsibility of the Issuing Lender to the Borrower in
connection with any draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment
appear on their face to be in accordance with the terms and conditions of such
Letter of Credit in conformity with such Letter of Credit.
3.8 Applications.
To the extent that any provision of any Application related to
any Letter of Credit is inconsistent with the provisions of this Section 3, the
provisions of this Section 3 shall apply.
3.9 Toastmaster or Sonex as Additional Account Parties.
Notwithstanding any other provision of this Agreement, the
Borrower may cause Toastmaster or Sonex International Corporation ("Sonex") to
execute and deliver Applications to an Issuing Lender and to request such
Issuing Lender to issue Letters of Credit for the account of Toastmaster (each
such Letter of Credit, a "Subsidiary Letter of Credit"). In respect of each
Subsidiary Letter of Credit and the Application related thereto, Toastmaster,
Sonex and the Issuing Lender shall have all rights, duties, obligations and
liabilities under this Agreement, and under applicable law, as the Borrower and
the relevant Issuing Lender, respectively, have in respect of Letters of Credit
issued for the Borrower's account and the related Applications. The Borrower
hereby irrevocably and unconditionally guarantees, as primary obligor, the
complete and timely performance by Toastmaster and Sonex of all its
indebtedness, liabilities and obligations in respect of each Subsidiary Letter
of Credit and the related Application, and all such indebtedness, liabilities
and obligations shall be deemed to be a part of the Obligations secured and
guaranteed pursuant to the Security Documents. Each Subsidiary Letter of Credit
shall constitute a Letter of Credit for all purposes of this Agreement and the
other Loan Documents.
3.10 Letters of Credit Denominated in Available Foreign Currencies.
Notwithstanding any other provision of this Section 3, in the
event that any Letter of Credit is denominated in any Available Foreign
Currency, the amount of the Reimbursement Obligation of the Borrower pursuant to
Section 3.5 in respect of such Letter of Credit shall bear interest as provided
in Section 3.5 with respect to amounts owing in Dollars; provided, that (i) the
interest rate on such amounts shall be the rate reasonably determined by the
relevant Issuing Lender to be the equivalent rates, in respect of the relevant
Available Foreign Currency, as the
52
48
applicable rates provided in Section 3.5 with respect to amounts denominated in
Dollars and (ii) if the Borrower fails to pay any such Reimbursement Obligation
required by Section 3.5 on or prior to the third Business Day following the date
of the drawing to which such Reimbursement Obligation relates, then, on the
fourth Business Day following such date of drawing, the relevant Issuing Lender,
in cooperation with the Administrative Agent, shall determine the U.S. Dollar
Equivalent of the amount of such Reimbursement Obligation, and the Borrower's
obligation in respect of such Reimbursement Obligation shall be converted to
such U.S. Dollar Equivalent, with interest thereon as provided in Section 3.5
(provided, that if the Application in respect of such Letter of Credit provides
for conversion of such amount into Dollars on any earlier date or at any other
conversion rate, the provisions of such Application shall control with respect
to such conversion).
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter
into this Agreement and to make the Loans and issue or participate in the
Letters of Credit, the Borrower hereby represents and warrants to the
Administrative Agent and each Lender that as of the Third Amendment and
Restatement Effective Date:
4.1 Financial Condition.
The audited consolidated balance sheets of the Borrower as at
June 27, 1998 , June 26, 1999 and July 1, 2000 and the related consolidated
statements of income and of cash flows for the fiscal years ended on such dates,
reported on by and accompanied by an unqualified report from Deloitte & Touche,
present fairly the consolidated financial condition of the Borrower as at such
dates, and the consolidated results of its operations and its consolidated cash
flows for the respective fiscal years then ended. All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by the aforementioned firm of accountants and disclosed
therein). Except as set forth on Schedule 4.1, the Borrower and its Subsidiaries
do not have any material Guarantee Obligations, contingent liabilities and
liabilities for taxes, or any long-term leases or unusual forward or long-term
commitments, including, without limitation, any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, which are not reflected in the most recent financial statements
referred to in this paragraph. During the period from July 1, 2000 to and
including the date hereof there has been no Disposition by the Borrower of any
material part of its business or Property.
4.2 No Change.
With respect to the Borrower and its Subsidiaries, since July
1, 2000 there has been no development or event which has had or could reasonably
be expected to have a Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law.
Each of the Borrower and its Restricted Subsidiaries (a) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the
53
49
corporate power and authority, and the legal right, to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements of
Law except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations.
Each Loan Party has the corporate power and authority, and the
legal right, to make, deliver and perform the Loan Documents to which it is a
party and, in the case of the Borrower, to borrow hereunder. Each Loan Party has
taken all necessary corporate action to authorize the execution, delivery and
performance of the Loan Documents to which it is a party and, in the case of the
Borrower, to authorize the borrowings on the terms and conditions of this
Agreement. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the Loan
Documents, except (i) consents, authorizations, filings and notices described in
Schedule 4.4, which consents, authorizations, filings and notices have been
obtained or made and are in full force and effect and (ii) the filings referred
to in Section 4.19. Each Loan Document has been duly executed and delivered on
behalf of each Loan Party thereto. This Agreement constitutes, and each other
Loan Document upon execution will constitute, a legal, valid and binding
obligation of each Loan Party party thereto, enforceable against each such Loan
Party in accordance with its 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).
4.5 No Legal Bar.
The execution, delivery and performance of this Agreement and
the other Loan Documents, the issuance of Letters of Credit, the borrowings
hereunder and the use of the proceeds thereof will not violate any Requirement
of Law or any Contractual Obligation of the Borrower or any of its Subsidiaries
and will not result in, or require, the creation or imposition of any Lien on
any of their respective properties or revenues pursuant to any Requirement of
Law or any such Contractual Obligation (other than the Liens created by the
Security Documents). No Requirement of Law or Contractual Obligation applicable
to the Borrower or any of its Subsidiaries could reasonably be expected to have
a Material Adverse Effect.
4.6 No Material Litigation.
Set forth in Schedule 4.6 is a description of certain
litigation to which the Borrower is a party. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
of its Subsidiaries or against any of their respective properties or revenues
(including the litigation described on Schedule 4.6) (a) with respect to any of
the Loan
54
50
Documents or any of the transactions contemplated hereby or thereby, or (b)
which could reasonably be expected to have a Material Adverse Effect.
4.7 No Default.
Neither the Borrower nor any of its Subsidiaries is in default
under or with respect to any of its Contractual Obligations in any respect which
could reasonably be expected to have a Material Adverse Effect. No Default or
Event of Default has occurred and is continuing.
4.8 Ownership of Property; Liens.
Each of the Borrower and its Restricted Subsidiaries has title
in fee simple to, or a valid leasehold interest in, all its real property, and
good title to, or a valid leasehold interest in, all its other Property, and
none of such Property is subject to any Lien except as permitted by Section 7.3.
Schedule 6.9(b) lists all parcels of real property owned in fee by the Borrower
or any Subsidiary (together with improvements thereon).
4.9 Intellectual Property.
Except as set forth on Schedule 4.9, the Borrower and each of
its Restricted Subsidiaries owns, or is licensed to use, all Intellectual
Property necessary for the conduct of its business as currently conducted, no
material claim has been asserted and is pending by any Person challenging or
questioning the use of any Intellectual Property or the validity or
effectiveness of any Intellectual Property, nor does the Borrower know of any
valid basis for any such claim, and the use of Intellectual Property by the
Borrower and its Restricted Subsidiaries does not infringe on the rights of any
Person in any material respect.
4.10 Taxes.
Except as set forth on Schedule 4.10, each of the Borrower and
each of its Restricted Subsidiaries has filed or caused to be filed all Federal,
state and other material tax returns which are required to be filed and has paid
all taxes shown to be due and payable on said returns or on any assessments made
against it or any of its Property and all other taxes, fees or other charges
imposed on it or any of its Property by any Governmental Authority (other than
any the amount or validity of which are currently being contested in good faith
by appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Borrower or its Restricted
Subsidiaries, as the case may be); no tax Lien has been filed, and, to the
knowledge of the Borrower, no claim is being asserted, with respect to any such
tax, fee or other charge.
4.11 Federal Regulations.
No part of the proceeds of any Loans will be used for any
purpose which violates the provisions of the Regulations of the Board. If
requested by any Lender or the Administrative Agent, the Borrower will furnish
to the Administrative Agent and each Lender a statement to the foregoing effect
in conformity with the requirements of Form FR U-1 or FR G-3, as applicable
referred to in Regulation U.
55
51
4.12 Labor Matters.
There are no strikes or other labor disputes against the
Borrower or any of its Restricted Subsidiaries pending or, to the knowledge of
the Borrower, threatened that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. Hours worked by and
payment made to employees of the Borrower and its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Requirement of
Law dealing with such matters that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. All payments due from
the Borrower or any of its Restricted Subsidiaries on account of employee health
and welfare insurance that (individually or in the aggregate) could reasonably
be expected to have a Material Adverse Effect if not paid have been paid or
accrued as a liability on the books of the Borrower or the relevant Restricted
Subsidiary.
4.13 ERISA.
Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan
which has resulted or could reasonably be expected to result in a material
liability under ERISA, and neither the Borrower nor any Commonly Controlled
Entity would become subject to any material liability under ERISA if the
Borrower or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the valuation date most closely preceding the date
on which this representation is made or deemed made. No such Multiemployer Plan
is in Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations.
No Loan Party is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended. No Loan Party is subject to regulation under
any Requirement of Law (other than Regulation X of the Board) which limits its
ability to incur Indebtedness.
4.15 Subsidiaries.
The Subsidiaries listed on Schedule 4.15 constitute all the
Subsidiaries of the Borrower at the date hereof. The aggregate book value of all
assets of the Subsidiaries of Toastmaster does not exceed $5,000,000.
56
52
4.16 Use of Proceeds.
The proceeds of the Term Loans will be used to repay term
loans outstanding under the Existing Credit Agreement on the Third Amendment and
Restatement Effective Date and for general corporate purposes. The proceeds of
the Revolving Credit Loans and the Letters of Credit have been used and shall be
used to finance working capital needs, including inventory, and for general
corporate purposes, including any Permitted Acquisition made in the ordinary
course of business.
4.17 Environmental Matters.
Except to the extent that the failure of the following
statements, either individually or in the aggregate, to be correct could not
reasonably be expected to have a Material Adverse Effect;
(a) The facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "Properties") do not contain, and have
not previously contained, any Materials of Environmental Concern in amounts or
concentrations or under circumstances which (i) constitute or constituted a
violation of, or (ii) could give rise to liability under, any Environmental Law.
(b) Properties and all operations at the Properties are in
material compliance, and have in the last five years been in material
compliance, with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by the
Borrower or any of its Subsidiaries (the "Business") which could materially
interfere with the continued operation of the Properties or materially impair
the fair saleable value thereof. Neither the Borrower nor any of its
Subsidiaries has assumed any liability of any other Person under Environmental
Laws.
(c) Neither the Borrower nor any of its Subsidiaries has received
or is aware of any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or compliance
with Environmental Laws with regard to any of the Properties or the Business,
nor does the Borrower have knowledge or reason to believe that any such notice
will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported
or disposed of from the Properties in violation of, or in a manner or to a
location which could give rise to liability under, any Environmental Law, nor
have any Materials of Environmental Concern been generated, treated, stored or
disposed of at, on or under any of the Properties in violation of, or in a
manner that could give rise to liability under, any applicable Environmental
Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be named as
a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business.
57
53
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could give rise to liability under Environmental
Laws.
4.18 Accuracy of Information, etc.
No statement or information contained in this Agreement, any
other Loan Document, the Confidential Information Memorandum, or any other
document, certificate or statement that has been prepared by or under the
direction of any Loan Party and made available to the Administrative Agent or
the Lenders or any of them, for use in connection with the transactions
contemplated by this Agreement or the other Loan Documents, contained as of the
date such statement, information, document or certificate was so furnished (or,
in the case of the Confidential Information Memorandum, as of the date of this
Agreement), any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. The projections and pro forma financial information
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of the Borrower to be reasonable at the
time made, it being recognized by the Lenders that such financial information as
it relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount. There is no
fact known to any Loan Party that could reasonably be expected to have a
Material Adverse Effect that has not been expressly disclosed herein, in the
other Loan Documents, in the Confidential Information Memorandum, or in any
other documents, certificates and statements furnished to the Administrative
Agent and the Lenders for use in connection with the transactions contemplated
hereby and by the other Loan Documents.
4.19 Security Documents.
The Guarantee and Collateral Agreement is effective to create
in favor of the Administrative Agent, for the benefit of the Lenders, a legal,
valid and enforceable security interest in the Collateral described therein and
proceeds thereof. In the case of the Pledged Stock described in the Guarantee
and Collateral Agreement, stock certificates representing such Pledged Stock
having been delivered to the Administrative Agent, and in the case of the other
Collateral described in the Guarantee and Collateral Agreement, financing
statements in appropriate form having been filed in the offices specified on
Schedule 4.19, the Guarantee and Collateral Agreement constitutes a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in such Collateral and the proceeds thereof, as security for
the Obligations (as defined in the Guarantee and Collateral Agreement), in each
case prior and superior in right to any other Person, subject to the Lien
permitted by Section 7.3(k).
4.20 Solvency.
Each Loan Party is, and after giving effect to the acquisition
described in the Acquisition Agreements and the incurrence of all Indebtedness
and obligations being incurred in connection herewith and therewith will be and
will continue to be, Solvent.
58
54
4.21 Senior Indebtedness.
The Obligations constitute "Senior Debt" of the Borrower and
its Subsidiaries, as such term is defined in the Seller Note and the Senior
Subordinated Note Indenture, and "Senior Indebtedness" of the Borrower and its
Subsidiaries, as such term is defined in the ▇▇▇▇▇▇▇ Subordination Agreement.
4.22 Representations and Warranties in Existing Credit Agreement.
The representations and warranties contained in Section 4 of
the Existing Credit Agreement were true and correct in all material respects on
and as of the dates when made pursuant to the Existing Credit Agreement.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit.
The occurrence of the Third Amendment and Restatement
Effective Date, and the agreement of each Lender to make the initial extension
of credit requested to be made by such Lender on the Third Amendment and
Restatement Effective Date, are subject to the satisfaction, prior to or
concurrently with the making of such extension of credit on the Third Amendment
and Restatement Effective Date, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received
(i) this Agreement, executed and delivered by a duly authorized officer of the
Borrower, (ii) the Guarantee and Collateral Agreement, executed and delivered by
a duly authorized officer of the Borrower and each Subsidiary Guarantor, (iii) a
Lender Addendum executed by each Lender and (iv) for the account of each
relevant Lender, Notes conforming to the requirements hereof and executed and
delivered by a duly authorized officer of the Borrower.
(b) Repayment of Existing Term Loans. All principal, accrued and
unpaid interest and prepayment fees in respect of the term loans outstanding
under the Existing Credit Agreement shall be paid in full on the Third Amendment
and Restatement Effective Date with a portion of the proceeds of the Term Loans.
(c) Financial Statements. The Lenders shall have received (i)
audited consolidated financial statements of the Borrower for the 1999 and 2000
fiscal years, and (ii) satisfactory unaudited interim consolidated financial
statements of the Borrower for each fiscal quarterly period ended subsequent to
the date of the latest applicable financial statements delivered pursuant to
clause (i) of this paragraph as to which such financial statements are
available, and such financial statements shall not, in the reasonable judgment
of the Lenders, reflect any material adverse change in the consolidated
financial condition of the Borrower and its consolidated Subsidiaries as
reflected in the financial statements or projections delivered by the Borrower
to the Administrative Agent prior to the date hereof.
(d) Approvals. All governmental and third party approvals
necessary, or in the discretion of the Administrative Agent, advisable in
connection with the continuing operations of
59
55
the Borrower and its Subsidiaries and the transactions contemplated hereby shall
have been obtained and be in full force and effect.
(e) Related Agreements. The Administrative Agent shall have
received (in a form reasonably satisfactory to the Administrative Agent), with a
copy for each Lender, true and correct copies, certified as to authenticity by
the Borrower, of the Acquisition Agreements, the Seller Note, the Senior
Subordinated Note Indenture, the Certificate of Designation in respect of the
Convertible Preferred Stock, and such other documents or instruments as may be
reasonably requested by the Administrative Agent, including, without limitation,
a copy of any other debt instrument, security agreement or other material
contract to which the Loan Parties may be a party.
(f) Fees. The Lenders and the Administrative Agent shall have
received all fees required to be paid, and all expenses for which invoices have
been presented, on or before the Third Amendment and Restatement Effective Date.
All such amounts will be paid with proceeds of Loans made on the Third Amendment
and Restatement Effective Date and will be reflected in the funding instructions
given by the Borrower to the Administrative Agent on or before the Third
Amendment and Restatement Effective Date.
(g) Business Plan. The Lenders shall have received a satisfactory
business plan of the Borrower for fiscal years 2001-2005.
(h) Environmental Affairs. The Administrative Agent shall be
satisfied with the environmental affairs of the Borrower and its Subsidiaries.
(i) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each Loan Party,
dated the Third Amendment and Restatement Effective Date, substantially in the
form of Exhibit D, with appropriate insertions and attachments.
(j) Borrowing Base Certificate. The Administrative Agent shall
have received, a Borrowing Base Certificate, dated the Third Amendment and
Restatement Effective Date, substantially in the form of Exhibit D, with
appropriate insertions and attachments.
(k) Legal Opinion. The Administrative Agent shall have received
the following executed legal opinion of ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel
to the Borrower and its Subsidiaries, substantially in the form of Exhibit H.
Such legal opinion shall cover such other matters incident to the transactions
contemplated by this Agreement as the Administrative Agent may reasonably
require.
(l) Pledged Stock; Stock Power; Pledged Notes. The Administrative
Agent shall have received (i) the certificates representing the shares of
Capital Stock pledged pursuant to the Guarantee and Collateral Agreement,
together with an undated stock power for each such certificate executed in blank
by a duly authorized officer of the pledgor thereof and (ii) each promissory
note pledged to the Administrative Agent for the benefit of the Lenders pursuant
to the Guarantee and Collateral Agreement endorsed (without recourse) in blank
(or accompanied by an executed transfer form in blank satisfactory to the
Administrative Agent) by the pledgor thereof.
60
56
(m) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by the Security Documents or under law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to create in
favor of the Administrative Agent, for the benefit of the Lenders, a perfected
Lien on the Collateral described therein, prior and superior in right to any
other Person (other than with respect to Liens expressly permitted by Section
7.3), shall be in proper form for filing, registration or recordation.
(n) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 5.3 of the
Guarantee and Collateral Agreement.
5.2 Conditions to Each Extension of Credit.
The agreement of each Lender to make any extension of credit
requested to be made by it on any date (including, without limitation, its
initial extension of credit) is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the representations
and warranties made by any Loan Party in or pursuant to the Loan Documents shall
be true and correct in all material respects on and as of such date as if made
on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
(c) Regulations of Board; Forms FR G-3 and FR U-1. If such Loan is
a Purpose Credit (as defined in Regulation U), each Lender shall be satisfied
that the Regulations of the Board shall not be violated. Each Lender shall have
received a duly completed and executed Form FR U-1 or FR G-3, as applicable, of
the Board, demonstrating such compliance.
(d) Borrowing Notice. The Administrative Agent shall have received
a Borrowing Notice, duly executed by the Borrower, substantially in the form of
Exhibit K.
(e) Borrowing Base Certificate. The Administrative Agent shall
have received a Borrowing Base Certificate, certified by a Responsible Officer
of the Borrower as reasonable estimates prepared in good faith, setting forth
the amount of Eligible Accounts and Eligible Inventory of the Borrower and the
Subsidiary Guarantors, in each case, as of the last day of the previous week,
attached to which shall be detailed information, including an aging schedule of
Accounts.
(f) Indenture Certification. In the case of the Loans and
Revolving Extensions of Credit to be made on the Closing Date, and in the case
of any Revolving Extensions of Credit to be made after the Closing Date if after
giving effect to such Revolving Extensions of Credit the Total Revolving
Extensions of Credit would exceed the Indenture Basket Amount, the
Administrative Agent shall have received a certificate of a Responsible Officer
to the effect that such Loans or Revolving Extensions of Credit are permitted by
the Senior Subordinated Note Indenture to be incurred. For purposes of this
paragraph, the "Indenture Basket Amount" shall be $80,000,000 less the aggregate
amount of Asset Sale proceeds that has been applied on or
61
57
prior to the date of such Extensions of Credit to permanently reduce the
Revolving Credit Commitments (and the revolving credit commitments under the
Existing Credit Agreement and any prior credit agreement in effect at any time
after December 16, 1998) as required by Section 4.10 of the Senior Subordinated
Note Indenture.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or any Agent hereunder, the Borrower shall and
shall cause each of its Restricted Subsidiaries to:
6.1 Financial Statements.
Furnish to the Administrative Agent and each Lender:
(a) as soon as available, but in any event within 90 days after
the end of each fiscal year of the Borrower, a copy of the audited consolidated
(and, in respect of any such period in which there is an Unrestricted
Subsidiary, unaudited consolidating) balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such year and the related audited
consolidated (and, in respect of any such period in which there is an
Unrestricted Subsidiary, unaudited consolidating) statements of income and of
cash flows for such year, setting forth in each case in comparative form the
figures for the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope of the
audit, by Deloitte & Touche or other independent certified public accountants of
nationally recognized standing;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal year
of the Borrower, the unaudited consolidated (and, in respect of any such period
in which there is an Unrestricted Subsidiary, unaudited consolidating) balance
sheet of the Borrower and its consolidated Subsidiaries as at the end of such
quarter and the related unaudited consolidated (and, in respect of any such
period in which there is an Unrestricted Subsidiary, unaudited consolidating)
statements of income and of cash flows for such quarter and the portion of the
fiscal year through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by a Responsible
Officer as being fairly stated in all material respects (subject to normal
year-end audit adjustments); and
(c) as soon as available, but in any event not later than 45 days
after the end of each month occurring during each fiscal year of the Borrower
(other than the third, sixth, ninth and twelfth such month), the unaudited
consolidated (and, in respect of any such period in which there is an
Unrestricted Subsidiary, unaudited consolidating) balance sheets of the Borrower
and its Subsidiaries as at the end of such month and the related unaudited
consolidated (and, in respect of any such period in which there is an
Unrestricted Subsidiary, unaudited consolidating) statements of income and of
cash flows for such month and the portion of the fiscal year through
62
58
the end of such month, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information.
Furnish to the Administrative Agent and each Lender, or, in
the case of clause (g), to the relevant Lender:
(a) concurrently with the delivery of the audited financial
statements referred to in Section 6.1(a), a certificate of the independent
certified public accountants reporting on such audited financial statements
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default arising from a violation of any of
the financial ratio covenants or other financial covenants set forth in Section
7, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer stating
that, to the best of each such Responsible Officer's knowledge, each Loan Party
during such period has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement and the
other Loan Documents to which it is a party to be observed, performed or
satisfied by it, and that such Responsible Officer has obtained no knowledge of
any Default or Event of Default except as specified in such certificate and (ii)
in the case of quarterly or annual financial statements, (x) a Compliance
Certificate containing all information necessary for determining compliance by
the Borrower and its Restricted Subsidiaries with the provisions of this
Agreement referred to therein as of the last day of the fiscal quarter or fiscal
year of the Borrower, as the case may be, and (y) to the extent not previously
disclosed to the Administrative Agent, a listing of any county or state within
the United States where any Loan Party keeps inventory or equipment and of any
material Intellectual Property acquired by any Loan Party since the date of the
most recent list delivered pursuant to this clause (y) (or, in the case of the
first such list so delivered, since the Third Amendment and Restatement
Effective Date);
(c) as soon as available, and in any event no later than 45 days
after the end of each fiscal year of the Borrower, a detailed consolidated
budget for the following fiscal year (including a projected consolidated balance
sheet of the Borrower and its Restricted Subsidiaries as of the end of the
following fiscal year, and the related consolidated statements of projected cash
flow, projected changes in financial position and projected income), and, as
soon as available, significant revisions, if any, of such budget and projections
with respect to such fiscal year (collectively, the "Projections"), which
Projections shall in each case be accompanied by a certificate of a Responsible
Officer stating that such Projections are based on reasonable
63
59
estimates, information and assumptions and that such Responsible Officer has no
reason to believe that such Projections are incorrect or misleading in any
material respect;
(d) within 45 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial condition and
results of operations of the Borrower and its Restricted Subsidiaries for such
fiscal quarter and for the period from the beginning of the then current fiscal
year to the end of such fiscal quarter, as compared to the portion of the
Projections covering such periods and to the comparable periods of the previous
year;
(e) within five days after the same are sent, copies of all
financial statements and reports which the Borrower sends to the holders of any
class of its debt securities or public equity securities and, within five days
after the same are filed, copies of all financial statements and reports which
the Borrower may make to, or file with, the Securities and Exchange Commission
or any successor or analogous Governmental Authority; and
(f) on the last Business Day of each calendar month (and, with
respect to each July, August and September, on the Business Day next following
the fifteenth calendar day of such month), a Borrowing Base Certificate,
certified by a Responsible Officer of the Borrower as reasonable estimates
prepared in good faith, setting forth (i) the amount of Eligible Accounts and
Eligible Inventory of the Borrower and the Subsidiary Guarantors and (ii) the
aggregate amount of cash or Cash Equivalents maintained by the Borrower and the
other Loan Parties in their main operating accounts, in each case, as of the
last day of the previous week, attached to which shall be detailed information,
including an aging schedule of Accounts.
(g) promptly, such additional financial and other information as
any Lender may from time to time reasonably request including such information
necessary to demonstrate any Loan Party's compliance with Section 6.10.
6.3 Payment of Obligations.
Pay, discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, all its material obligations
of whatever nature, except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP with respect thereto have been provided on the books of the
Borrower or its Restricted Subsidiaries, as the case may be.
6.4 Conduct of Business and Maintenance of Existence, etc.
(i) Preserve, renew and keep in full force and effect its
corporate existence and (ii) take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business, except, in each case, as otherwise permitted by Section 7.4 and
except, in the case of clause (ii) above, to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (b)
comply with all Contractual Obligations and Requirements of Law except to the
extent that failure to comply therewith could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect.
64
60
6.5 Maintenance of Property; Insurance.
(a) Keep all Property useful and necessary in its business in good
working order and condition, ordinary wear and tear excepted; and
(b) maintain with financially sound and reputable insurance
companies insurance on all its Property in at least such amounts and against at
least such risks (but including in any event public liability, product liability
and business interruption) as are usually insured against in the same general
area by companies engaged in the same or a similar business.
6.6 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which full, true
and correct entries in conformity with GAAP and all Requirements of Law shall be
made of all dealings and transactions in relation to its business and activities
and (b) permit representatives of any Lender to visit and inspect any of its
properties and examine and make abstracts from any of its books and records at
any reasonable time and as often as may reasonably be desired and to discuss the
business, operations, properties and financial and other condition of the
Borrower and its Subsidiaries with officers and employees of the Borrower and
its Subsidiaries and with its independent certified public accountants; provided
that the Lenders shall make reasonable efforts to coordinate with each other any
visits and discussions hereunder so as not to overly burden the Borrower.
6.7 Notices.
Promptly give notice to the Administrative Agent and each
Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the Borrower or
any of its Subsidiaries and any Governmental Authority, which in either case, if
not cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of
its Subsidiaries in a material manner in which the amount involved is $1,000,000
or more and not covered by insurance or in which injunctive or similar relief is
sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of the
PBGC or a Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or
the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal from,
or the termination, Reorganization or Insolvency of, any Plan; and
65
61
(e) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower or the relevant Subsidiary proposes to take
with respect thereto.
6.8 Environmental Laws.
(a) Comply in all material respects with, and ensure compliance in
all material respects by all tenants and subtenants, if any, with, all
applicable Environmental Laws, and obtain and comply in all material respects
with and maintain, and ensure that all tenants and subtenants obtain and comply
in all material respects with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
6.9 Additional Collateral, etc.
(a) With respect to any Property acquired after the Third
Amendment and Restatement Effective Date by the Borrower or any of its
Restricted Subsidiaries (other than (x) any Property described in paragraph (b),
(c) or (d) below and (y) any Property subject to a Lien expressly permitted by
Section 7.3(g)) or 7.3(l) as to which the Administrative Agent, for the benefit
of the Lenders, does not have a perfected Lien, promptly (i) execute and deliver
to the Administrative Agent such amendments to the Guarantee and Collateral
Agreement or such other documents as the Administrative Agent deems necessary or
advisable to grant to the Administrative Agent, for the benefit of the Lenders,
a security interest in such Property and (ii) take all actions necessary or
advisable to grant to the Administrative Agent, for the benefit of the Lenders,
a perfected first priority security interest in such Property, including without
limitation, the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Guarantee and Collateral Agreement or by
law or as may be requested by the Administrative Agent.
(b) With respect to:
(A) any fee interest in any real property having a
value (together with improvements thereof) of at least
$1,000,000 acquired after the Closing Date by the Borrower or
any of its Restricted Subsidiaries (other than any such real
property subject to a Lien expressly permitted by Section
7.3(g)),
(B) any Property designated on Schedule 6.9(b) which
is not disposed of within 60 days after the Third Amendment
and Restatement Effective Date,
then, promptly after the acquisition thereof (in the case of properties
described in the foregoing clause (A)), within 60 days after the Third Amendment
and Restatement Effective Date (in the
66
62
case of properties described in the foregoing clause (B)), the Borrower will (i)
execute and deliver a first priority Mortgage in favor of the Administrative
Agent, for the benefit of the Lenders, covering such real property, (ii) if
requested by the Administrative Agent, provide the Lenders with (x) title and
extended coverage insurance covering such real property in an amount at least
equal to the purchase price of such real estate (or such other amount as shall
be reasonably specified by the Administrative Agent) as well as a current ALTA
survey thereof, together with a surveyor's certificate and (y) any consents or
estoppels reasonably deemed necessary or advisable by the Administrative Agent
in connection with such mortgage or deed of trust, each of the foregoing in form
and substance reasonably satisfactory to the Administrative Agent (iii) a
Standard Flood Hazard Determination Form issued or certified by a Person
satisfactory to Administrative Agent for such real property that is located on
real estate covered by a Mortgage and (iv) if requested by the Administrative
Agent, deliver to the Administrative Agent (A) legal opinions relating to the
matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent and (B) a
satisfactory environmental audit with respect to such property. Further, in the
event such Standard Flood Hazard Determination Form evidences that the subject
structure or improvement is located in a special flood hazard, as defined by
FEMA, the Borrower shall deliver to the Administrative Agent and the Lenders
evidence of appropriate flood insurance in amounts and under such conditions as
identified in Section 6.2(b). At its own cost and expense, the Borrower shall
obtain and maintain during the term of this Agreement minimum flood insurance as
required by FEMA or any other government agency or when required by federal,
state or local law, statute, regulation or ordinance and as may be required by
the Agent and the Lenders.
(c) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary, and other than any Subsidiary formed solely for purposes of
consummating a Permitted Receivables Securitization) created or acquired after
the Closing Date (which, for the purposes of this paragraph, shall include any
existing Subsidiary that ceases to be an Excluded Foreign Subsidiary), by the
Borrower or any of its Restricted Subsidiaries, promptly (i) execute and deliver
to the Administrative Agent such amendments to the Guarantee and Collateral
Agreement as the Administrative Agent deems necessary or advisable to grant to
the Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in the Capital Stock of such new Subsidiary which is
owned by the Borrower or any of its Restricted Subsidiaries, (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers, in blank, executed and delivered by a duly authorized
officer of the Borrower or such Subsidiary, as the case may be, (iii) cause such
new Subsidiary, if it is a Restricted Subsidiary, (A) to become a party to the
Guarantee and Collateral Agreement and (B) to take such actions necessary or
advisable to grant to the Administrative Agent for the benefit of the Lenders a
perfected first priority security interest in the Collateral described in the
Guarantee and Collateral Agreement with respect to such new Subsidiary,
including, without limitation, the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and
Collateral Agreement or by law or as may be requested by the Administrative
Agent, and (iv) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
67
63
(d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by the Borrower or any of its Restricted
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative Agent
deems necessary or advisable in order to grant to the Administrative Agent, for
the benefit of the Lenders, a perfected first priority security interest in the
Capital Stock of such new Subsidiary which is owned by the Borrower or any of
its Subsidiaries (provided that in no event shall more than 65% of the total
outstanding Capital Stock of any such new Subsidiary be required to be so
pledged), (ii) deliver to the Administrative Agent the certificates representing
such Capital Stock, together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of the Borrower or such Restricted
Subsidiary, as the case may be, and take such other action as may be necessary
or, in the opinion of the Administrative Agent, desirable to perfect the Lien of
the Administrative Agent thereon, and (iii) if requested by the Administrative
Agent, deliver to the Administrative Agent legal opinions relating to the
matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.
6.10 Further Assurances.
In the case of the Borrower, from time to time execute and
deliver, or cause to be executed and delivered, such additional instruments,
certificates or documents, and take all such actions, as the Administrative
Agent may reasonably request, for the purposes of implementing or effectuating
the provisions of this Agreement and the other Loan Documents, or of more fully
perfecting or renewing the rights of the Administrative Agent and the Lenders
with respect to the Collateral (or with respect to any additions thereto or
replacements or proceeds thereof or with respect to any other property or assets
hereafter acquired by the Borrower which may be deemed to be part of the
Collateral) pursuant hereto or thereto. Upon the exercise by the Administrative
Agent or any Lender of any power, right, privilege or remedy pursuant to this
Agreement or the other Loan Documents which requires any consent, approval,
recording, qualification or authorization of any Governmental Authority, the
Borrower will execute and deliver, or will cause the execution and delivery of,
all applications, certifications, instruments and other documents and papers
that the Administrative Agent or such Lender may be required to obtain from the
Borrower or any of its Subsidiaries for such governmental consent, approval,
recording, qualification or authorization.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or any Agent hereunder, the Borrower shall not,
and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly:
7.1 Financial Condition Covenants.
(a) Net Average Total Debt Ratio. Permit the Net Average Total
Debt Ratio as at the last day of any period of four consecutive fiscal quarters
of the Borrower ending with any fiscal quarter set forth below to exceed the
ratio set forth opposite such fiscal quarter:
68
64
FISCAL QUARTER RATIO
FQ1 2001 through FQ4 2001 2.75 to 1
FQ1 2002 through FQ2 2002 2.50 to 1
FQ3 2002 through FQ2 2004 2.25 to 1
(b) Net Average Senior Debt Ratio. Permit the Net Average Senior
Debt Ratio as at the last day of any period of four consecutive fiscal quarters
of the Borrower to exceed 1.25 to 1.00.
(c) Consolidated Interest Coverage Ratio. Permit the Consolidated
Interest Coverage Ratio for any period of four consecutive fiscal quarters of
the Borrower to be less than 4.00 to 1.00.
(d) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed
Charge Coverage Ratio for any period of four consecutive fiscal quarters of the
Borrower ending with any fiscal quarter set forth below to be less than the
ratio set forth opposite such fiscal quarter:
FISCAL QUARTER RATIO
FQ1 2001 through FQ2 2001 1.10 to 1
FQ3 2001 1.20 to 1
FQ4 2001 through FQ2 2004 1.30 to 1
7.2 Limitation on Indebtedness.
Create, incur, assume or suffer to exist any Indebtedness,
except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of the Borrower to any Subsidiary and of any
Wholly Owned Subsidiary Guarantor to the Borrower or any other Subsidiary;
provided that any such Indebtedness of the Borrower or any Subsidiary Guarantor
to any Subsidiary which is not a Subsidiary Guarantor shall be subordinated, in
a manner satisfactory to the Administrative Agent, to the Obligations and any
other obligations of the Borrower or such Subsidiary Guarantor hereunder and
under the other Loan Documents;
(c) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 7.3(g) in an aggregate
principal amount not to exceed $15,000,000 at any one time outstanding;
69
65
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(d) and any refinancings, refundings, renewals or extensions thereof
(without any increase in the principal amount thereof or any shortening of the
maturity of any principal amount thereof);
(e) Guarantee Obligations made in the ordinary course of business
by the Borrower or any of its Restricted Subsidiaries of obligations of the
Borrower or any Subsidiary Guarantor;
(f) Indebtedness of the Borrower in respect of the Senior
Subordinated Notes and (ii) Guarantee Obligations of any Subsidiary Guarantor in
respect of such Indebtedness; provided that such Guarantee Obligations are
subordinated to the same extent as the obligations of the Borrower in respect of
the Senior Subordinated Notes;
(g) Indebtedness of the Borrower in respect of the Seller Note;
(h) Indebtedness of the Borrower in accordance with the terms
described in the ▇▇▇▇▇▇▇ Acquisition Agreement, the ▇▇▇▇▇▇▇▇▇▇ Acquisition
Agreement and the ▇▇▇▇▇▇▇▇ Acquisition Agreement, in each case in connection
with the acquisition permitted under Section 7.8(i); provided that (i) the
Indebtedness of the Borrower in connection with the ▇▇▇▇▇▇▇ Acquisition
Agreement shall be subordinated in accordance with the terms of the ▇▇▇▇▇▇▇
Subordination Agreement and (ii) the Indebtedness of the Borrower in connection
with the ▇▇▇▇▇▇▇▇▇▇ Acquisition Agreement and the ▇▇▇▇▇▇▇▇ Acquisition Agreement
shall be subordinated on terms reasonably satisfactory to the Administrative
Agent;
(i) Indebtedness of the Borrower or any of its Subsidiaries
pursuant to any Permitted Receivables Securitization;
(j) Indebtedness of the Borrower or any of its Subsidiaries
assumed or acquired in connection with any Permitted Acquisition which
Indebtedness is outstanding on the date of such Permitted Acquisition and is not
created in contemplation thereof in an aggregate principal amount not exceeding
$15,000,000 at any one time outstanding; and
(k) Indebtedness of the Borrower pursuant to Seller Subordinated
Debt in an aggregate principal amount not exceeding $10,000,000 at any time
outstanding.
7.3 Limitation on Liens.
Create, incur, assume or suffer to exist any Lien upon any of
its Property (other than any Restricted Margin Stock), whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its Restricted
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business which
are not overdue for a period of more than 30 days or which are being contested
in good faith by appropriate proceedings;
70
66
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case materially
detract from the value of the Property subject thereto or materially interfere
with the ordinary conduct of the business of the Borrower or any of its
Restricted Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule
7.3(f), securing Indebtedness permitted by Section 7.2(d), provided that no such
Lien is spread to cover any additional Property after the Third Amendment and
Restatement Effective Date and that the amount of Indebtedness secured thereby
is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Restricted Subsidiary incurred pursuant to Section 7.2(c) to finance the
acquisition of fixed or capital assets, provided that (i) such Liens shall be
created substantially simultaneously with the acquisition of such fixed or
capital assets, (ii) such Liens do not at any time encumber any Property other
than the Property financed by such Indebtedness and (iii) the purchase price of
such Property does not exceed 125% of the amount of Indebtedness secured
thereby.
(h) Liens created pursuant to the Security Documents;
(i) Liens created by precautionary filings of financing statements
in respect of equipment leased by the Borrower or its Restricted Subsidiaries in
the ordinary course of business;
(j) any interest or title of a lessor under any lease entered into
by the Borrower or any other Restricted Subsidiary in the ordinary course of its
business and covering only the assets so leased;
(k) the Lien created pursuant to the ▇▇▇▇▇▇▇ Security Agreement,
provided that such Lien does not at any time encumber any Property other than
the Property described in Section 4 of the ▇▇▇▇▇▇▇ Security Agreement as of the
Third Amendment and Restatement Effective Date;
(l) Liens created pursuant to and in accordance with any Permitted
Receivables Securitization, encumbering Accounts which are the subject of such
Permitted Receivables Securitization and the Capital Stock of any special
purpose subsidiary created in connection therewith; and
(m) Liens on Property of a Person acquired in any Permitted
Acquisition otherwise permitted hereunder, provided, that such Liens are
existing on the date of such Permitted Acquisition, are not created in
contemplation thereof, and do not spread to cover any other assets of the
Borrower or its Subsidiaries following such Permitted Acquisition.
71
67
7.4 Limitation on Fundamental Changes.
Enter into any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or Dispose of all or substantially all of its Property or
business, except that:
(a) any Restricted Subsidiary may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any Subsidiary Guarantor (provided that
the Subsidiary Guarantor shall be the continuing or surviving corporation); and
(b) any Restricted Subsidiary may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or any
Subsidiary Guarantor.
7.5 Limitation on Disposition of Property.
Dispose of any of its Property (including, without limitation,
receivables and leasehold interests, but excluding Restricted Margin Stock),
whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Restricted Subsidiary's Capital Stock to any
Person, except:
(a) the Disposition of obsolete or worn out property in the
ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Subsidiary Guarantor;
(e) the Disposition of other assets having a fair market value not
to exceed $500,000 in the aggregate during the term of this Agreement;
(f) any Asset Sale or Recovery Event, provided that the
requirements of Section 2.10(b) are complied with in connection therewith;
(g) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business of the Borrower or its Subsidiaries
in connection with the compromise or collection thereof in respect of obligors
the Borrower reasonably believes is not likely to pay all of substantially all
of its obligation; provided that the Borrower and its Subsidiaries shall not
sell or discount accounts receivable with an original stated amount of more than
$5,000,000 in any fiscal year;
(h) the Disposition of Toastmaster facilities as set forth on
Schedule 6.9(b) and Property related thereto located in Missouri as well as the
Disposition of any of its personal property relating to, and including, but not
limited to, machinery, tooling and equipment, the facilities at Macon, MO and
Laurinburg, NC; and
72
68
(i) the sale, transfer, or discount of Accounts in a Permitted
Receivables Securitization.
7.6 Limitation on Restricted Payments.
Declare or pay any dividend (other than dividends payable
solely in common stock of the Person making such dividend on), or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any Capital Stock of the Borrower or any Subsidiary, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower or
any Subsidiary (collectively, "Restricted Payments"), except that (a) any
Subsidiary may make Restricted Payments to the Borrower or any Subsidiary
Guarantor and (b) so long as no Default or Event of Default shall be continuing
or would exist following such repurchase, the Borrower may repurchase its
Capital Stock in an aggregate amount not to exceed $50,000,000.
7.7 Limitation on Capital Expenditures.
Make or commit to make any Capital Expenditure, except (a)
Capital Expenditures of the Borrower and its Restricted Subsidiaries in the
ordinary course of business not exceeding in any fiscal year an amount equal to
2.00% of the amount of net sales of the Borrower and its Restricted Subsidiaries
for such fiscal year, determined in accordance with GAAP and (b) Capital
Expenditures made with the proceeds of any Reinvestment Deferred Amount.
7.8 Limitation on Investments.
Make any advance, loan, extension of credit (by way of
guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting an ongoing business from, or make any other investment in, any
other Person (all of the foregoing, "Investments"), except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Investments arising in connection with the incurrence of
Indebtedness permitted by Section 7.2(b) and (e);
(d) loans and advances to employees of the Borrower or any
Restricted Subsidiaries of the Borrower in the ordinary course of business
(including, without limitation, for travel, entertainment and relocation
expenses) in an aggregate amount for the Borrower and Restricted Subsidiaries of
the Borrower not to exceed $100,000 at any one time outstanding;
(e) Investments existing on the Third Amendment and Restatement
Effective Date;
(f) Investments in assets useful in the Borrower's business made
by the Borrower or any of its Restricted Subsidiaries with the proceeds of any
Reinvestment Deferred Amount;
73
69
(g) Permitted Acquisitions;
(h) Investments in joint ventures and in minority interests in
other Persons, in an aggregate amount not exceeding $5,000,000, provided, that
the Person or joint venture in which such Investment is made shall be in the
same or a similar line of business, including the housewares business, as the
Borrower and its Subsidiaries;
(i) Investments (other than those relating to the incurrence of
Indebtedness permitted by Section 7.8(c)) by the Borrower or any of its
Restricted Subsidiaries in the Borrower or any Person that, prior to such
investment, is a Subsidiary Guarantor; and
(j) any Investment by the Borrower and its Subsidiaries which, in
the judgment of the Borrower, is reasonably necessary in connection with, and
pursuant to, any Permitted Receivables Securitization.
7.9 Limitation on Optional Payments and Modifications of Debt
Instruments, etc.
Make or offer to make any optional or voluntary payment,
prepayment, repurchase or redemption of, or otherwise voluntarily or optionally
defease, the Senior Subordinated Notes, the Seller Note, any Seller Subordinated
Debt or the obligations of the Borrower under any of the Acquisition Agreements,
(b) amend, modify or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, any of the terms of the ▇▇▇▇▇▇▇
Subordination Agreement, the Acquisition Agreements (or any subordination
provisions related thereto), the Senior Subordinated Notes, any Seller
Subordinated Debt or the Seller Note (other than any such amendment,
modification, waiver or other change which (i) would extend the maturity or
reduce the amount of any payment of principal thereof, reduce the rate or extend
the date for payment of interest thereon or relax any covenant or other
restriction applicable to the Borrower or any of its Subsidiaries and (ii) does
not involve the payment of a consent fee), (c) designate any Indebtedness (other
than the Obligations) as "Designated Senior Indebtedness" (or any equivalent
designation) for the purposes of the Senior Subordinated Note Indenture or (d)
amend its certificate of incorporation in any manner determined by the
Administrative Agent to be adverse to the Lenders.
7.10 Limitation on Transactions with Affiliates.
Enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property, the rendering of any service or
the payment of any management, advisory or similar fees, with any Affiliate
(other than the Borrower or any Subsidiary Guarantor) unless such transaction is
(a) otherwise permitted under this Agreement, (b) in the ordinary course of
business of the Borrower or such Restricted Subsidiary, as the case may be, and
(c) upon fair and reasonable terms no less favorable to the Borrower or such
Restricted Subsidiary, as the case may be, than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate; provided, that
the Borrower may pay customary director's fees to members of its Board of
Directors.
74
70
7.11 Limitation on Sales and Leasebacks.
Enter into any arrangement with any Person providing for the
leasing by the Borrower or any Restricted Subsidiary of real or personal
property which has been or is to be sold or transferred by the Borrower or such
Restricted Subsidiary to such Person or to any other Person to whom funds have
been or are to be advanced by such Person on the security of such property or
rental obligations of the Borrower or such Restricted Subsidiary.
7.12 Limitation on Changes in Fiscal Periods.
Permit the fiscal year of the Borrower to end on a day other
than the Saturday closest to June 30 or change the Borrower's method of
determining fiscal quarters.
7.13 Limitation on Negative Pledge Clauses.
Enter into or suffer to exist or become effective any
agreement which prohibits or limits the ability of the Borrower or any of its
Restricted Subsidiaries to create, incur, assume or suffer to exist any Lien
upon any of its Property or revenues, whether now owned or hereafter acquired,
to secure the Obligations or, in the case of any guarantor, its obligations
under the Guarantee and Collateral Agreement, other than (a) this Agreement and
the other Loan Documents and (b) any agreements governing any purchase money
Liens or Capital Lease Obligations otherwise permitted hereby or agreements in
connection with any Permitted Receivables Securitization (in which case, any
prohibition or limitation shall only be effective against the assets financed
thereby).
7.14 Limitation on Restrictions on Subsidiary Distributions.
Enter into or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (a) make Restricted Payments in respect of any Capital Stock of
such Subsidiary held by, or pay any Indebtedness owed to, the Borrower or any
other Restricted Subsidiary, (b) make Investments in the Borrower or any other
Restricted Subsidiary or (c) transfer any of its assets to the Borrower or any
other Restricted Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents and (ii) any restrictions with respect to a Restricted Subsidiary
imposed pursuant to an agreement which has been entered into in connection with
the Disposition of all or substantially all of the Capital Stock or assets of
such Restricted Subsidiary.
7.15 Limitation on Lines of Business.
Enter into any business, either directly or through any
Restricted Subsidiary, except for those businesses in which the Borrower and its
Restricted Subsidiaries are engaged on the date of this Agreement or which are
reasonably related thereto.
75
71
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or the
Borrower shall fail to pay any interest on any Loan or Reimbursement Obligation,
or any other amount payable hereunder or under any other Loan Document, within
five days after any such interest or other amount becomes due in accordance with
the terms hereof; or
(b) Any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such other Loan Document
shall prove to have been inaccurate in any material respect on or as of the date
made or deemed made; or
(c) (i) Any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of Section 6.4(a)
(with respect to the Borrower only), Section 6.7(a), Section 7 or Section 5 of
the Guarantee and Collateral Agreement or (ii) an "Event of Default" under and
as defined in any Mortgage shall have occurred and be continuing; or
(d) Any Loan Party shall default in the observance or performance
of any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and such
default shall continue unremedied for a period of 30 days; or
(e) The Borrower or any of its Restricted Subsidiaries shall (i)
default in making any payment of any principal of any Indebtedness (including,
without limitation, any Guarantee Obligation, but excluding the Loans) on the
scheduled or original due date with respect thereto; or (ii) default in making
any payment of any interest on any such Indebtedness beyond the period of grace,
if any, provided in the instrument or agreement under which such Indebtedness
was created; or (iii) default in the observance or performance of any other
agreement or condition (other than a Margin Stock Restriction) relating to any
such Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or beneficiary of such Indebtedness (or a trustee or agent on
behalf of such holder or beneficiary) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or (in
the case of any such Indebtedness constituting a Guarantee Obligation) to become
payable; provided, that a default, event or condition described in clause (i),
(ii) or (iii) of this paragraph (e) shall not at any time constitute an Event of
Default unless, at such time, one or more defaults, events or conditions of the
type described in clauses (i), (ii) and (iii) of this paragraph (e) shall have
occurred and be continuing with respect to Indebtedness the outstanding
principal amount of which exceeds in the aggregate $1,000,000; or
(f) (i) The Borrower or any of its Restricted Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or
76
72
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or the Borrower or any of its
Restricted Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or any of its
Restricted Subsidiaries any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against the Borrower or any of its Restricted Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) the Borrower or any of its
Restricted Subsidiaries shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) the Borrower or any of its Restricted
Subsidiaries shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan or any Lien
in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could, in the sole
judgment of the Required Lenders, reasonably be expected to have a Material
Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Restricted Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance as to which the relevant
insurance company has acknowledged coverage) of $1,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 30 days from the entry thereof; or
(i) Any of the Security Documents shall cease, for any reason
(other than the fault of the Administrative Agent or the Lenders), to be in full
force and effect, or any Loan Party or any Affiliate of any Loan Party shall so
assert, or any Lien created by any of the Security Documents
77
73
shall cease, for any reason (other than the fault of the Administrative Agent or
the Lenders), to be enforceable and of the same effect and priority purported to
be created thereby; or
(j) The guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force and effect
or any Loan Party or any Affiliate of any Loan Party shall so assert; or
(k) (i) Any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), excluding the Permitted Investors and members of executive
management of the Borrower, shall become, or obtain rights (whether by means or
warrants, options or otherwise) to become, the "beneficial owner" (as defined in
Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of
more than 30% of the outstanding common stock of the Borrower; (ii) the board of
directors of the Borrower shall cease to consist of a majority of Continuing
Directors; or (iii) a Specified Change of Control shall occur; or
(l) (i) The Seller Note shall cease, for any reason, to be validly
subordinated to the Obligations or (ii) the Senior Subordinated Notes or any
guarantees thereof shall cease, for any reason, to be validly subordinated to
the Obligations or the obligations of the Subsidiary Guarantors under the
Guarantee and Collateral Agreement, as the case may be, as provided in the
Senior Subordinated Note Indenture, or any Loan Party, any Affiliate of any Loan
Party, the trustee in respect of the Senior Subordinated Notes; or
(m) The Borrower shall default in the observance or performance of
any agreement contained in the ▇▇▇▇▇▇▇ Acquisition Agreement, the ▇▇▇▇▇▇▇
Subordination Agreement, the ▇▇▇▇▇▇▇ Security Agreement, the ▇▇▇▇▇▇▇▇▇▇
Acquisition Agreement or the ▇▇▇▇▇▇▇▇ Acquisition Agreement, or any of the
▇▇▇▇▇▇▇ Acquisition Agreement, the ▇▇▇▇▇▇▇ Security Agreement, the ▇▇▇▇▇▇▇
Subordination Agreement, the ▇▇▇▇▇▇▇▇▇▇ Acquisition Agreement or the ▇▇▇▇▇▇▇▇
Acquisition Agreement shall be amended, supplemented or otherwise modified
without the written consent of the Administrative Agent.
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Majority Revolving Credit Facility Lenders,
the Administrative Agent may, or upon the request of the Majority Revolving
Credit Facility Lenders, the Administrative Agent shall, by notice to the
Borrower declare the Revolving Credit Commitments to be terminated forthwith,
whereupon the Revolving Credit Commitments shall immediately terminate, and (ii)
with the consent of the Required Lenders, the Administrative Agent may, or upon
the request of the Required Lenders, the Administrative Agent shall, by notice
to the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents
(including, without limitation, all amounts of L/C Obligations, whether or not
the
78
74
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) to be due and payable forthwith, whereupon the
same shall immediately become due and payable. With respect to all Letters of
Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Borrower shall at
such time deposit in a cash collateral account opened by the Issuing Lender an
amount equal to the aggregate then undrawn and unexpired amount of such Letters
of Credit. Amounts held in such cash collateral account shall be applied by the
Issuing Lender to the payment of drafts drawn under such Letters of Credit, and
the unused portion thereof after all such Letters of Credit shall have expired
or been fully drawn upon, if any, shall be applied to repay other obligations of
the Borrower hereunder and under the other Loan Documents. After all such
Letters of Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other obligations of the Borrower
hereunder and under the other Loan Documents shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrower (or such other Person as may be lawfully entitled thereto).
SECTION 9. THE ADMINISTRATIVE AGENT
9.1 Appointment.
Each Lender hereby irrevocably designates and appoints the
Administrative Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall have no duties or responsibilities, except those
expressly set forth herein, or 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 Administrative Agent.
9.2 Delegation of Duties.
The Administrative Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.
9.3 Exculpatory Provisions.
Neither the Administrative Agent nor any of its respective
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except to the extent that any of the foregoing are found by a final and
79
75
nonappealable decision of a court of competent jurisdiction to have resulted
from its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any Loan Party or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Administrative Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.
9.4 Reliance by Administrative Agent.
The Administrative Agent shall be entitled to rely, and shall
be fully protected in relying, upon any instrument, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order 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, without
limitation, counsel to the Borrower or the Loan Parties), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, if so
specified by this Agreement, all Lenders), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
9.5 Notice of Default.
The Administrative Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
the Administrative Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
notice thereof to the Lenders and the Issuing Lender or Issuing Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or, if
so specified by this Agreement, all Lenders); provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking
80
76
such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
9.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates have made any representations or warranties to
it and that no act by the Administrative Agent hereinafter taken, including any
review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be
deemed to constitute any representation or warranty by the Administrative Agent
to any Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
9.7 Indemnification.
The Lenders agree to indemnify the Administrative Agent in its
capacity as such and each Issuing Lender in its capacity as such (to the extent
not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to their respective Aggregate Exposure
Percentages in effect on the date on which indemnification is sought under this
Section (or, if indemnification is sought after the date upon which the
Commitments shall have terminated and the Loans shall have been paid in full,
ratably in accordance with such Aggregate Exposure Percentages, or Revolving
Credit Commitments in the case of each Issuing Lender, immediately prior to such
date), from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Loans) be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages,
81
77
penalties, actions, judgments, suits, costs, expenses or disbursements which are
found by a final and nonappealable decision of a court of competent jurisdiction
to have resulted from the Administrative Agent's gross negligence or willful
misconduct. The agreements in this Section 9.7 shall survive the payment of the
Loans and all other amounts payable hereunder.
9.8 Administrative Agent in Its Individual Capacity.
The Administrative Agent and its affiliates may make loans to,
accept deposits from and generally engage in any kind of business with any Loan
Party as though the Administrative Agent was not the Administrative Agent. With
respect to its Loans made or renewed by it and with respect to any Letter of
Credit issued or participated in by it, the Administrative Agent shall have the
same rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not the Administrative Agent,
and the terms "Lender" and "Lenders" shall include the Administrative Agent in
its individual capacity.
9.9 Successor Administrative Agent.
The Administrative Agent may resign as Administrative Agent
upon 10 days' notice to the Lenders and the Borrower. If the Administrative
Agent shall resign as Administrative Agent under this Agreement and the other
Loan Documents, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall (unless an Event of
Default under Section 8(a) or Section 8(f) with respect to the Borrower shall
have occurred and be continuing) be subject to approval by the Borrower (which
approval shall not be unreasonably withheld or delayed), whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. If no successor agent has accepted appointment as
Administrative Agent by the date that is 10 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective, and the
Lenders shall assume and perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above. After any retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this Section 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.
9.10 Authorization to Release Liens.
The Administrative Agent is hereby irrevocably authorized by
each of the Lenders to release any Lien covering any Property of the Borrower or
any of its Subsidiaries that is the subject of a Disposition which is permitted
by this Agreement or which has been consented to in accordance with Section
10.1.
82
78
9.11 The Arranger; the Documentation Agent.
The Arranger and the Documentation Agent, in their respective
capacities as such, shall have no duties or responsibilities, and shall incur no
liability, under this Agreement and the other Loan Documents.
9.12 Release of Liens in Connection with Permitted Receivables
Securitization.
In connection with a Permitted Receivables Securitization, the
Borrower may deliver to the Administrative Agent a written request for release
identifying the relevant Accounts and the terms of such Permitted Receivables
Securitization in reasonable detail together with a certification by the
Borrower stating that such transaction is in compliance with the Agreement. The
Administrative Agent shall promptly execute and deliver to the Borrower (at the
sole cost and expense of the Borrower) all releases and other documents
(including, without limitation, Uniform Commercial Code partial release
statements) necessary or reasonably desirable for the release of the Liens
created by the Guarantee and Collateral Agreement on such Accounts as the
Borrower may reasonably request. Each of the Lenders hereby authorizes the
Administrative Agent to deliver such releases or other documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers.
Neither this Agreement, any other Loan Document, nor any terms
hereof or thereof may be amended, supplemented or modified except in accordance
with the provisions of this Section 10.1. The Required Lenders and each Loan
Party party to the relevant Loan Document may, or (with the written consent of
the Required Lenders) the Administrative Agent and each Loan Party party to the
relevant Loan Document may, from time to time, (a) enter into written
amendments, supplements or modifications hereto and to the other Loan Documents
for the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lenders or of the Loan
Parties hereunder or thereunder or (b) waive, on such terms and conditions as
the Required Lenders, or the Administrative Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall (i) forgive the principal amount or extend the final
scheduled date of maturity of any Loan, extend the scheduled date of any
amortization payment in respect of any Term Loan, reduce the stated rate or
amount of any interest or fee payable hereunder or extend the scheduled date of
any payment thereof, or increase the amount or extend the expiration date of any
Commitment of any Lender, in each case without the consent of each Lender
directly affected thereby; (ii) amend, modify or waive any provision of this
Section or reduce any percentage specified in the definition of Required Lenders
or Required Prepayment Lenders, consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement and the other
Loan Documents, release all or substantially all of the Collateral or release
all or substantially all of the Subsidiary Guarantors from their obligations
under the Guarantee and Collateral Agreement, in each case without the consent
of all Lenders; (iii) amend, modify or waive any condition precedent to any
extension of credit under the Revolving Credit Facility set forth in
83
79
Section 5.2 (including, without limitation, in connection with any waiver of an
existing Default or Event of Default) without the consent of the Majority
Revolving Credit Facility Lenders; (iv) reduce the percentage specified in the
definition of Majority Facility Lenders with respect to any Facility without the
written consent of all Lenders under such Facility; (v) amend, modify or waive
any provision of Section 9 without the consent of the Administrative Agent; (vi)
amend, modify or waive any provision of Section 2.16(a), (b) or (c) without the
consent of each Lender directly affected thereby; (vii) amend, modify or waive
any provision of Section 3, Section 9.6 (or any other term hereof affecting the
obligations or rights of any Issuing Lender), without the consent of such
Issuing Lender, (viii) change any Advance Rate without the written consent of
Lenders whose Aggregate Exposure Percentages constitute at least 66 2/3% or (ix)
amend, modify or waive any provision of Section 2.9 or 2.10 without the consent
of the Required Prepayment Lenders. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Loan Parties, the Lenders, the Administrative Agent and all
future holders of the Loans. In the case of any waiver, the Loan Parties, the
Lenders and the Administrative Agent shall be restored to their former position
and rights hereunder and under the other Loan Documents, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon. Any such waiver, amendment, supplement
or modification shall be effected by a written instrument signed by the parties
required to sign pursuant to the foregoing provisions of this Section; provided,
that delivery of an executed signature page of any such instrument by facsimile
transmission shall be effective as delivery of a manually executed counterpart
thereof.
10.2 Notices.
All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by telecopy), and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when delivered, or ten Business Days after being deposited in the
mail, postage prepaid, or, in the case of telecopy notice, when received,
addressed (a) in the case of the Borrower and the Administrative Agent, as
follows and (b) in the case of any Lender, as set forth in Schedule 1 to the
Lender Addendum, delivered by such Lender, or, in the case of a Lender which
becomes a party to this Agreement pursuant to an Assignment and Acceptance, in
such Assignment and Acceptance; or (c) in the case of any party, to such other
address as such party may hereafter notify to the other parties hereto:
The Borrower: Salton, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇
The Syndication Agent: Firstar Bank, N.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
84
80
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
The Administrative Agent: ▇▇▇▇▇▇ Commercial Paper Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
provided that any notice, request or demand to or upon the Administrative Agent
or any Lender shall not be effective until received.
10.3 No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part
of the Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder or under the other Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties.
All representations and warranties made hereunder, in the
other Loan Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the making of the Loans and other extensions of
credit hereunder.
10.5 Payment of Expenses.
The Borrower agrees (a) to pay or reimburse the Administrative
Agent and the Arranger for all their reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent, (b) to pay or reimburse
each Lender, the Issuing Lender, the Administrative Agent and the Arranger for
all its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including, without limitation, the fees and
disbursements of counsel (including the allocated fees and expenses of in-house
counsel) to each Lender and of counsel to the Administrative Agent, the Issuing
Lender, and the Arranger, (c) to pay, indemnify, and hold each Lender, the
Issuing Lender, and the Administrative Agent harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
85
81
resulting from any delay in paying, stamp, excise and other taxes, if any, which
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold each Lender, the
Administrative Agent, the Issuing Lender and the Arranger and their respective
officers, directors, employees, affiliates, agents and controlling persons
(each, an "Indemnitee") harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, any of the foregoing relating to the use of proceeds of the
Loans or the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of the Borrower any of its
Subsidiaries or any of the Properties (all the foregoing in this clause (d),
collectively, the "Indemnified Liabilities"), provided, that the Borrower shall
have no obligation hereunder to any Indemnitee with respect to Indemnified
Liabilities to the extent such Indemnified Liabilities are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such Indemnitee. Without
limiting the foregoing, and to the extent permitted by applicable law, the
Borrower agrees not to assert and to cause its Subsidiaries not to assert, and
hereby waives and agrees to cause its Subsidiaries so to waive, all rights for
contribution or any other rights of recovery with respect to all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature, under or related to Environmental Laws, that any of
them might have by statute or otherwise against any indemnitee. The agreements
in this Section shall survive repayment of the Loans and all other amounts
payable hereunder.
10.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit
of the Borrower, the Lenders, the Syndication Agents, the Administrative Agent,
all future holders of the Loans and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent and each Lender.
(b) Any Lender may, without the consent of the Borrower, in
accordance with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a "Participant") participating interests
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and the
Borrower and the Administrative Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and the other Loan Documents. In no event shall any Participant
under any such participation have any right to approve any amendment or waiver
of any provision of any Loan Document, or any consent to any departure by any
Loan Party therefrom, except to the
86
82
extent that such amendment, waiver or consent would reduce the principal of, or
interest on, the Loans or any fees payable hereunder, or postpone the date of
the final maturity of the Loans, in each case to the extent subject to such
participation. The Borrower agrees that if amounts outstanding under this
Agreement and the Loans are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 2.17, 2.18 and 2.19 with respect to its participation
in the Commitments and the Loans outstanding from time to time as if it was a
Lender; provided that, in the case of Section 2.18, such Participant shall have
complied with the requirements of said Section and provided, further, that no
Participant shall be entitled to receive any greater amount pursuant to any such
Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(c) Any Lender (an "Assignor") may, in accordance with applicable
law, at any time and from time to time assign to any Lender or any affiliate
thereof or, with the consent of the Borrower, the Issuing Lender (in the case of
assignments of Revolving Credit Commitments only) and the Administrative Agent
(which, in each case, shall not be unreasonably withheld or delayed) (provided
(x) that no such consent of the Borrower or the Administrative Agent need be
obtained by ▇▇▇▇▇▇ Commercial Paper Inc. for a period of 180 days following the
Third Amendment and Restatement Effective Date and (y) the consent of the
Borrower need not be obtained with respect to any assignment of funded Term
Loans), to an additional bank, financial institution or other entity (an
"Assignee") all or any part of its rights and obligations under this Agreement
pursuant to an Assignment and Acceptance, substantially in the form of Exhibit
G, executed by such Assignee and such Assignor (and, where the consent of the
Borrower, the Administrative Agent or the Issuing Lender is required pursuant to
the foregoing provisions, by the Borrower and such other Persons) and delivered
to the Administrative Agent for its acceptance and recording in the Register;
provided that no such assignment to an Assignee (other than any Lender or any
affiliate thereof) shall be in an aggregate principal amount of less than
$4,000,000 and result in the Assignor having aggregate Commitments of less than
$4,000,000 (other than in the case of an assignment of all of a Lender's
interests under this Agreement), in each case unless otherwise agreed by the
Borrower, and the Administrative Agent. Any such assignment need not be ratable
as among the Facilities. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with a Commitment and/or Loans as set
forth therein, and (y) the Assignor thereunder shall, to the extent provided in
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of an
Assignor's rights and obligations under this Agreement, such Assignor shall
cease to be a party hereto). Notwithstanding any provision of this Section, the
consent of the Borrower shall not be
87
83
required for any assignment which occurs at any time when any Event of Default
shall have occurred and be continuing.
(d) The Administrative Agent shall maintain at its address
referred to in Section 10.2 a copy of each Assignment and Acceptance delivered
to it and a register (the "Register") for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time. The entries in the Register shall
be conclusive, in the absence of manifest error, and the Borrower, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the owner of the Loans and any Notes evidencing such
Loans recorded therein for all purposes of this Agreement. Any assignment of any
Loan, whether or not evidenced by a Note, shall be effective only upon
appropriate entries with respect thereto being made in the Register (and each
Note shall expressly so provide). Any assignment or transfer of all or part of a
Loan evidenced by a Note shall be registered on the Register only upon surrender
for registration of assignment or transfer of the Note evidencing such Loan,
accompanied by a duly executed Assignment and Acceptance; thereupon one or more
new Notes in the same aggregate principal amount shall be issued to the
designated Assignee, and the old Notes shall be returned by the Administrative
Agent to the Borrower marked "canceled". The Register shall be available for
inspection by the Borrower or any Lender (with respect to entries relating to
such Lender's Loans) at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by
an Assignor and an Assignee (and, in any case where the consent of any other
Person is required by Section 10.6(c), by each such other Person) together with
payment to the Administrative Agent of a registration and processing fee of
$3,500 (except that no such registration and processing fee shall be payable (y)
in connection with an assignment by or to a ▇▇▇▇▇▇ Entity or (z) in the case of
an Assignee which is already a Lender or is an affiliate of a Lender or a Person
under common management with a Lender), the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders and
the Borrower. On or prior to such effective date, the Borrower, at its own
expense, upon request, shall execute and deliver to the Administrative Agent (in
exchange for the Revolving Credit Note and/or applicable Term Note, as the case
may be, of the assigning Lender) a new Revolving Credit Note and/or applicable
Term Notes, as the case may be, to the order of such Assignee in an amount equal
to the Revolving Credit Commitment and/or applicable Term Loans, as the case may
be, assumed or acquired by it pursuant to such Assignment and Acceptance and, if
the Assignor has retained a Revolving Credit Commitment and/or Term Loans, as
the case may be, upon request, a new Revolving Credit Note and/or Term Note, as
the case may be, to the order of the Assignor in an amount equal to the
Revolving Credit Commitment and/or applicable Term Loans, as the case may be,
retained by it hereunder. Such new Note or Notes shall be dated the Third
Amendment and Restatement Effective Date and shall otherwise be in the form of
the Note or Notes replaced thereby.
(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments of Loans
and Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests,
88
84
including, without limitation, any pledge or assignment by a Lender of any Loan
or Note to any Federal Reserve Bank in accordance with applicable law.
10.7 Adjustments; Set-off.
(a) Except to the extent that this Agreement provides for payments
to be allocated to a particular Lender or to the Lenders under a particular
Facility, if any Lender (a "Benefitted Lender") shall at any time receive any
payment of all or part of the Obligations owing to it, or receive any collateral
in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant
to events or proceedings of the nature referred to in Section 8(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's
Obligations, such Benefitted Lender shall purchase for cash from the other
Lenders a participating interest in such portion of each such other Lender's
Obligations, or shall provide such other Lenders with the benefits of any such
collateral, as shall be necessary to cause such Benefitted Lender to share the
excess payment or benefits of such collateral ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. (b) In addition to any rights and remedies of
the Lenders provided by law, each Lender and the Issuing Lender shall have the
right, without prior notice to the Borrower, any such notice being expressly
waived by the Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise), to set off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of the
Borrower, as the case may be. Each Lender agrees promptly to notify the Borrower
and the Administrative Agent after any such setoff and application made by such
Lender, provided that the failure to give such notice shall not affect the
validity of such setoff and application.
10.8 Counterparts.
This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
10.9 Severability.
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition
89
85
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration.
This Agreement and the other Loan Documents represent the
agreement of the Borrower, the Administrative Agent and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Lender relative
to subject matter hereof not expressly set forth or referred to herein or in the
other Loan Documents.
10.11 GOVERNING LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers.
The Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrower, as the case may be at its address set forth in Section 10.2 or at such
other address of which the Administrative Agent shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to ▇▇▇ in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
10.13 Acknowledgments.
The Borrower hereby acknowledges that:
90
86
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and the
Borrower, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Borrower and the Lenders.
10.14 Confidentiality.
Each of the Administrative Agent and the Lenders agrees to
keep confidential all non-public information provided to it by any Loan Party
pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent the Administrative
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any affiliate of any Lender, (b) to
any Participant or Assignee (each, a "Transferee") or prospective Transferee
which agrees to comply with the provisions of this Section, (c) any of its
employees, directors, agents, attorneys, accountants and other professional
advisors, (d) upon the request or demand of any Governmental Authority having
jurisdiction over it, (e) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (f) if requested or required to do so in connection with any
litigation or similar proceeding, (g) which has been publicly disclosed other
than in breach of this Section, (h) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment portfolio
in connection with ratings issued with respect to such Lender (i) in connection
with the exercise of any remedy hereunder or under any other Loan Document or
(j) to any direct or indirect contractual counterparty in swap agreements or
such contractual counterparty's professional advisor (so long as such
contractual counterparty or professional advisor to such contractual
counterparty agrees to be bound by the provisions of this Section 10.14).
10.15 Accounting Charges.
In the event that any "Accounting Change" (as defined below)
shall occur and such change results in a change in the method of calculation of
financial covenants, standards or terms in this Agreement, then the Borrower and
the Administrative Agent agree to enter into negotiations in order to amend such
provisions of this Agreement so as to equitably reflect such Accounting Changes
with the desired result that the criteria for evaluating the Borrower's
financial condition shall be the same after such Accounting Changes as if such
Accounting Changes had not been made. Until such time as such an amendment shall
have been executed and delivered by the Borrower, the Administrative Agent and
the Required Lenders, all financial covenants, standards and terms in this
Agreement shall continue to be calculated or construed as if such Accounting
Changes had not occurred. "Accounting Changes" refers to changes in
91
87
accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants or, if applicable, the
Securities and Exchange Commission (or successors thereto or agencies with
similar functions).
10.16 Restricted Subsidiaries.
On the Third Amendment and Restatement Effective Date, all
Subsidiaries shall be Restricted Subsidiaries. The Borrower may, at any time,
designate Salton Hong Kong as an Unrestricted Subsidiary if, after giving pro
forma effect to such designation (as if such designation had occurred on the
first day of each relevant fiscal period for purposes of calculating compliance
with financial covenants in Section 7), (i) the Borrower would have been in pro
forma compliance with the covenants in this Agreement if such designation had
occurred on the first day of four consecutive fiscal quarters most recently
ended and (ii) no Default or Event of Default shall be in existence.
10.17 WAIVERS OF JURY TRIAL.
THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
10.18 Delivery of Lender Addenda.
Each Lender that becomes a party to this Agreement on the
Third Amendment and Restatement Effective Date will become such a party by
delivering to the Administrative Agent and the Borrower a Lender Addendum duly
executed by such Lender, the Borrower, and the Administrative Agent. Each Lender
Addendum is deemed incorporated herein by this reference.
10.19 Effect of Amendment and Restatement of the Existing Credit
Agreement.
(a) On the Third Amendment and Restatement Date, the Existing
Credit Agreement shall be amended, restated and superseded in its entirety. The
parties hereto acknowledge and agree that (i) this Agreement and the other Loan
Documents, whether executed and delivered in connection herewith or otherwise,
do not constitute a novation, payment and reborrowing, or termination of the
"Obligations" (as defined in the Existing Credit Agreement) under the Existing
Credit Agreement as in effect prior to the Amendment and Restatement Effective
Date; (ii) such "Obligations" are in all respects continuing (as amended and
restated hereby); (iii) the Liens and security interests as granted under the
Security Documents securing payment of such "Obligations" are in all respects
continuing and in full force and effect; (iv) references in the Security
Documents to the "Credit Agreement" shall be deemed to be references to this
Agreement, and to the extent necessary to effect the foregoing, each such
Security Document is hereby deemed amended accordingly; and (v) the
participating interest of each Revolving Credit Lender in the Letters of Credit
and the L/C Obligations shall be such Revolving Credit Lender's
92
88
Revolving Credit Percentage (after giving effect to the amendments to the
Existing Credit Agreement effected hereby) of such amounts.
(b) On, or as soon as practicable after, the Third Amendment and
Restatement Effective Date, the Borrower shall make such borrowings and
repayments of Revolving Credit Loans (to the extent it can do so without
incurring any "breakage costs" pursuant to Section 2.19) such that, after giving
effect thereto, the amount of the Revolving Extensions of Credit of each
Revolving Credit Lender will equal such Revolving Credit Lender's Revolving
Credit Percentage of the Total Revolving Extensions of Credit, and all
borrowings and payments in respect of Revolving Credit Loans following the Third
Amendment and Restatement Effective Date shall be applied consistently with the
foregoing. To permit the borrowings and repayments described in the preceding
sentence to occur, the provisions of Section 2.16 shall be inapplicable thereto.
10.20 Effectiveness of Revolving Credit Commitment Increases.
On, or as soon as practicable after, the date of any increase
in any Lender's Revolving Credit Commitment pursuant to a Revolving Credit
Commitment Increase Supplement or of any new Revolving Credit Commitment
pursuant to a New Lender Supplement, the Borrower shall make such borrowings and
repayments of Revolving Credit Loans (to the extent it can do so without
incurring any "breakage costs" pursuant to Section 2.19) such that, after giving
effect thereto, the amount of the Revolving Extensions of Credit of each
Revolving Credit Lender will equal such Revolving Credit Lender's Revolving
Credit Percentage of the Total Revolving Extensions of Credit, and all
borrowings and payments in respect of Revolving Credit Loans following the date
of such increase in a Lender's Revolving Credit Commitment or of such new
Revolving Credit Commitment, as the case may be, shall be applied consistently
with the foregoing. To permit the borrowings and repayments described in the
preceding sentence to occur, the provisions of Section 2.16 shall be
inapplicable hereto.
93
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
SALTON, INC.
By:
----------------------------------
Name:
Title:
94
▇▇▇▇▇▇ BROTHERS INC., as Arranger
By:
----------------------------------
Name:
Title:
▇▇▇▇▇▇ COMMERCIAL PAPER INC., as
Administrative Agent
By:
----------------------------------
Name:
Title:
95
FLEET NATIONAL BANK, as an Issuing
Lender and as Documentation Agent
By:
----------------------------------
Name:
Title:
96
FIRSTAR BANK, N.A., as Syndication Agent
By:
-------------------------------------
Name:
Title:
97
LASALLE BANK NATIONAL
ASSOCIATION, as an Issuing Lender
By:
----------------------------------
Name:
Title: