SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 5, 1999
HOLMES PRODUCTS CORP.
(Exact Name of Registrant as Specified in Charter)
Massachusetts 333-44473 04-2768914
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
233 Fortune Boulevard, Milford, MA 01757
(Address of Principal Executive Officer) (Zip Code)
Registrant's telephone number, including area code: (508) 634-8050
Not applicable
(Former Name or Former Address, if changed since Last Report)
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Item 2. Acquisition or Disposition of Assets.
On February 5, 1999, Holmes Products Corp., a Massachusetts
corporation ("Holmes"), through its wholly-owned subsidiary, Moriarty
Acquisition Corp., a Delaware corporation ("Moriarty"), completed its
acquisition of The Rival Company, a Delaware corporation that designs,
manufactures and markets consumer products for use in the kitchen and
home, as well as industrial and building supply products ("Rival").
The acquisition was completed pursuant to a tender offer by Moriarty
for Rival's common stock at a price of $13.75 in cash per share, and a
subsequent merger pursuant to the short-form merger provisions of
Delaware law. Holmes financed the acquisition through debt and equity
transactions. Copies of the definitive financing documents from these
transactions are attached as Exhibits hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired
The required financial statements of The Rival Company are
incorporated herein by reference from The Rival Company's (1) Annual
Report on Form 10-K for the fiscal year ended June 30, 1998 and (2)
Quarterly Report on Form 10-Q for the quarterly period ended September
30, 1998, filed with the Commission on September 4, 1998 and November
2, 1998, respectively, pursuant to the Securities Exchange Act of
1934, as amended.
(b) Pro Forma Financial Information
The unaudited pro forma combined condensed financial statements of
Holmes as of September 30, 1998, for the year ended December 31, 1997,
for the nine months ended September 30, 1998 and for the twelve months
ended September 30, 1998 are attached as Exhibits hereto.
(c) Exhibits.
10.1 Investors Subscription Agreement dated February 5, 1999 by
and among Holmes Products Corp. and certain investors.
10.2 Indenture dated as of February 5, 1999 among Holmes Products
Corp., certain of its subsidiaries and State Street Bank
and Trust Company, as trustee.
10.3 Registration Rights Agreement dated as of February 5, 1999
by and among Holmes Products Corp., certain of its
subsidiaries and BancBoston Robertson Stephens Inc. and
Lehman Brothers Inc.
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10.4 Amended and Restated Revolving Credit and Term Loan
Agreement dated as of February 5, 1999 among Holmes
Products Corp., Moriarty Acquisition Corp., The Rival
Company, Holmes Products (Far East) Limited, Esteem
Industries Limited, Raider Motor Corporation, Holmes
Products (Europe) Limited, Bionaire International B.V.,
Patton Electric Hong Kong, Limited, and The Rival Company
of Canada, Ltd., BankBoston, N.A. and the other lending
institutions party thereto, BankBoston, N.A. as
Administrative Agent and Lehman Commercial Paper Inc. as
Documentation Agent, with BancBoston Robertson Stephens Inc.
as Syndication Agent and Arranger and Lehman Brothers Inc.
as Co-Arranger.
99.1 Unaudited pro forma combined condensed financial statements
of Holmes Products Corp. as of September 30, 1998, for the
year ended December 31, 1997, for the nine months ended
September 30, 1998 and for the twelve months ended
September 30, 1998.
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Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Holmes Products Corp.
(Registrant)
By: /s/ Ira B. Morgenstern
--------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
Date: February 10, 1999
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EXHIBIT INDEX
Exhibit Number Title
- -------------- -----
10.1 Investors Subscription Agreement dated February 5, 1999
by and among Holmes Products Corp. and certain investors.
10.2 Indenture dated as of February 5, 1999 among Holmes
Products Corp., certain of its subsidiaries and State
Street Bank and Trust Company, as trustee.
10.3 Registration Rights Agreement dated as of February 5, 1999
by and among Holmes Products Corp., certain of its
subsidiaries and BancBoston Robertson Stephens Inc. and
Lehman Brothers Inc.
10.4 Amended and Restated Revolving Credit and Term Loan
Agreement dated as of February 5, 1999 among Holmes Products
Corp., Moriarty Acquisition Corp., The Rival Company,
Holmes Products (Far East) Limited, Esteem Industries
Limited, Raider Motor Corporation, Holmes Products (Europe)
Limited, Bionaire International B.V., Patton Electric Hong
Kong, Limited, and The Rival Company of Canada, Ltd.,
BankBoston, N.A. and the other lending institutions party
thereto, BankBoston, N.A. as Administrative Agent and
Lehman Commercial Paper Inc. as Documentation Agent, with
BancBoston Robertson Stephens Inc. as Syndication Agent
and Arranger and Lehman Brothers Inc. as Co-Arranger.
99.1 Unaudited pro forma combined condensed financial statements
of Holmes Products Corp. as of September 30, 1998, for the
year ended December 31, 1997, for the nine months ended
September 30, 1998 and for the twelve months ended
September 30, 1998.
HOLMES PRODUCTS CORP.
INVESTORS SUBSCRIPTION AGREEMENT
This Investors Subscription Agreement (the "Agreement") is entered into
as of February 5, 1999, by and between HOLMES PRODUCTS CORP., a Massachusetts
corporation (the "Company") and each of the investors listed on Exhibit A
attached hereto (individually, an "Investor" and collectively, the "Investors").
WHEREAS, the Investors wish to purchase from the Company and the
Company wishes to issue and sell to such Investors, shares of the Company's
capital stock, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, the parties to this Agreement, intending to be legally bound,
mutually agree as follows:
ARTICLE I
Purchase and Sale of Shares
1.1 Sale and Issuance of Shares. Subject to the terms and conditions of
this Agreement, each Investor hereby subscribes for and agrees to purchase at
the Closing (as herein defined), and the Company does hereby agree to sell to
each Investor at the Closing, the aggregate number of shares of the Company's
Common Stock ("Common Stock") set forth opposite each Investor's name on Exhibit
A (the "Shares") at a purchase price of $5.03918 per share of Common Stock for
the total consideration set forth opposite its name in Exhibit A. Each Investor
hereby acknowledges that the number of Shares set forth opposite its name on
Exhibit A constitutes the full, entire and correct number of Shares to be
purchased by it pursuant to this Agreement for the amount of consideration set
forth next to the name of such Investor in Exhibit A.
1.2 Delivery of Purchase Price. In consideration of and in exchange for
the Shares to be purchased hereunder, each Investor shall deliver to the
Company, on the Closing Date (as hereinafter defined), the aggregate purchase
price set forth opposite its name on Exhibit A (the "Purchase Price"), payable
by wire transfer of immediately available funds.
1.3 Closing. The closing of the purchase and sale of the Shares (the
"Closing") shall occur at 9:00 A.M., Boston time, on February 5, 1999, at the
offices of Posternak, Blankstein & Lund, L.L.P., Boston, Massachusetts, or at
such other time and place as the Company and the
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Investors may agree (the "Closing Date"). In consideration of the purchase by
each Investor of the Shares and the payment of the Purchase Price therefor, the
Company shall deliver to each Investor at the Closing a certificate or
certificates evidencing the number of Shares purchased by each Investor, as set
forth on Exhibit A.
ARTICLE II
Representations and Warranties of the Company
The Company represents and warrants to each Investor that:
2.1 Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has all requisite corporate power and
authority to carry on its business as now conducted and as proposed to be
conducted.
2.2 Capitalization. The authorized capital of the Company consists of
(or will consist of at the Closing) 25,000,000 shares of Common Stock, $.001 par
value per share, of which 20,747,663 shares will be outstanding after giving
effect to the transactions contemplated hereby. There are no commitments for the
purchase or sale of, and no options, warrants or other rights to subscribe for
or purchase, any shares of capital stock of the Company, except as set forth on
Schedule 2.2. All of such outstanding shares of Common Stock have been duly
authorized and are or at the Closing shall be validly issued and outstanding,
and fully-paid and non-assessable.
2.3 Authorization. All corporate action on the part of the Company
necessary for the authorization, execution, delivery and performance of this
Agreement by the Company and for the authorization, issuance and delivery of the
Shares being sold under this Agreement, has been taken. This Agreement, when
executed and delivered by all parties hereto, shall constitute the valid and
legally binding obligation of the Company and shall be enforceable against the
Company in accordance with its terms, except to the extent enforceability may be
limited by bankruptcy laws, insolvency laws, reorganization laws, moratorium
laws or other laws affecting creditors' rights generally and except to the
extent enforceability may be limited by general equitable principles.
2.4 Validity of Shares. The Shares, when issued, sold and delivered in
accordance with the terms of this Agreement, shall be duly and validly issued,
fully paid and non-assessable and will not be subject to any pre-emptive or
similar rights, voting agreements or any rights of first refusal or other
similar rights in favor of any person or entity, except such rights as will have
been waived or terminated at or prior to the Closing.
2.5 Securities Act. The sale of Shares in accordance with the terms of
this Agreement (assuming the accuracy of the representations and warranties of
the Investors contained in Article III hereof) is exempt from the registration
requirements of the Securities Act of 1933, as amended (the "1933 Act") and
applicable state securities laws.
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2.6 Private Placement Memorandum. The Confidential Offering Memorandum
dated as of January 29, 1999, prepared by the Company in connection with the
sale of 9 7/8% Senior Subordinated Notes of the Company does not contain any
untrue statement of a material fact, or omit to state any material facts,
necessary to make the statements contained therein not misleading.
ARTICLE III
Representations, Warranties and
Agreements of the Investors
Each Investor represents and warrants, in each instance as to itself
only and not as to any other Investor, to the Company that:
3.1 Authorization. The execution and delivery by such Investor and the
consummation by such Investor of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of such Investor.
3.2 Enforceability. This Agreement, when executed and delivered by all
parties hereto, will constitute the valid and legally binding obligation of such
Investor, enforceable against such Investor in accordance with its terms, except
to the extent enforceability may be limited by bankruptcy laws, insolvency laws,
reorganization laws, moratorium laws or other laws affecting creditors' rights
generally and except to the extent enforceability may be limited by general
equitable principles.
3.3 Investment Representations.
(a) This Agreement is made in reliance upon such Investor's
representations to the Company, which by execution hereof each Investor hereby
confirms, that: (i) the Shares will be acquired by such Investor for investment
only, for its own account and not as a nominee or agent and not with a view to
the sale or distribution of any part thereof in violation of applicable federal
and state securities laws; and (ii) such Investor has no current intention of
selling, granting participation in or otherwise distributing the Shares in
violation of applicable federal and state securities laws. By executing this
Agreement, such Investor further represents that it does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person, or to any third person, with respect to any of the
Shares in violation of applicable federal and state securities laws.
(b) Such Investor understands that the Shares have not been
registered under the 1933 Act on the basis that the sale provided for in this
Agreement and the issuance of securities hereunder are exempt from registration
under the 1933 Act pursuant to Section 4(2) thereof and regulations issued
thereunder, and that the Company's reliance on such exemption is predicated on
the representations and warranties of each Investor set forth herein.
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(c) Such Investor represents that it has, either alone or
together with the assistance of a "purchaser representative" (as that term is
defined in Regulation D promulgated under the 1933 Act), such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment in the Company. Such Investor further
represents that it is familiar with the business and financial condition,
properties, operations and prospects of the Company and that it has had access,
during the course of the transactions contemplated hereby and prior to its
purchase of Shares, to the same kind of information that is specified in Part I
of a registration statement under the 1933 Act, and that it has had the
opportunity to ask questions of, and receive answers from, the Company
concerning the terms and conditions of the investment and to obtain additional
information (to the extent the Company possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify the
accuracy of any information furnished to such Investor or to which such Investor
has had access. Such Investor has made, either alone or together with its
advisors, such independent investigation of the Company as each Investor deems
to be, or its advisors deem to be, necessary or advisable in connection with
this investment. Such Investor understands that no federal or state agency has
passed upon this investment or upon the Company, nor has any such agency made
any finding or determination as to the fairness of this investment.
(d) Such Investor represents that it will not sell, transfer
or otherwise dispose of the Shares without registration under the 1933 Act and
applicable state securities laws, or an exemption therefrom. Such Investor
understands that, in the absence of an effective registration statement covering
the Shares or an available exemption from registration under the 1933 Act and
applicable state securities laws, the Shares must be held indefinitely. In
particular, such Investor acknowledges that it is aware that the Shares may not
be sold pursuant to Rule 144 promulgated under the 1933 Act unless all of the
conditions of such rule are met. Among the current conditions for use of Rule
144 by certain holders is the availability to the public of current information
about the Company. In the event that at some time in the future the Company
shall cease to be subject to the informational and reporting requirements of the
Securities Exchange Act of 1934, as amended, such Investor acknowledges that
such information will not be available. Such Investor represents that, in the
absence of an effective registration statement covering the Shares, it will
sell, transfer or otherwise dispose of the Shares only in a manner consistent
with its representations set forth herein and then only in accordance with the
Shareholders' Agreement referred to in Section 6.1.
(e) Such Investor represents that it (i) is capable of bearing
the economic risk of holding the unregistered Shares for an indefinite period of
time and has adequate means for providing for its current needs and
contingencies, (ii) can afford to suffer a complete loss of this investment and
(iii) understands all risk factors related to the purchase of the Shares.
(f) Such Investor understands that the purchase of the Shares
involves a high degree of risk, that there is no established market for the
Shares and that it is not likely that any public market for the Shares will
develop in the near future.
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(g) Such Investor represents that neither it nor anyone acting
on its behalf has paid any commission or other remuneration to any person in
connection with the purchase of the Shares.
(h) Independent of the additional restrictions on the transfer
of the shares of Common Stock contained in the Shareholders' Agreement referred
to in Section 6.1, such Investor agrees that it will not transfer, dispose of or
pledge any of the Shares other than pursuant to an effective registration
statement under the 1933 Act and applicable state securities laws, unless and
until (i) such Investor shall have notified the Company of the proposed
transfer, disposition or pledge and shall have furnished the Company with a
statement of the circumstances surrounding the proposed transfer, disposition or
pledge and (ii) if requested by the Company and at the expense of each Investor
or its transferee, such Investor shall have furnished to the Company an opinion
of counsel reasonably satisfactory (as to counsel and as to substance) to the
Company and its counsel that such proposed transfer, disposition or pledge may
be made without registration of such Shares under the 1933 Act and applicable
state securities laws.
3.4 Legends; Stop Transfer.
(a) Each Investor acknowledges that all certificates
evidencing the Shares shall bear the following legend:
"TRANSFER RESTRICTED
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold, offered for sale, pledged or hypothecated in
the absence of an effective registration statement as to the
securities under said Act, or unless and until (i) the
transferor shall have notified the Company of the proposed
transfer, disposition or pledge and shall have furnished the
Company with a statement of the circumstances surrounding the
proposed transfer, disposition or pledge and (ii) if requested
by the Company and at the expense of each transferor or its
transferee, such transferor shall have furnished to the
Company an opinion of counsel reasonably satisfactory (as to
counsel and as to substance) to the Company and its counsel
that such proposed transfer, disposition or pledge may be made
without registration of such Shares under the 1933 Act and
applicable state securities laws.
The securities represented by this certificate are subject to
the terms and conditions, including certain restrictions on
transfer, of a Shareholders' Agreement, dated as of November
26, 1997, as amended from time to time, and none of such
securities, or any interest therein, shall be transferred,
pledged, encumbered or otherwise disposed of except as
provided in that Agreement. A copy of the Shareholders'
Agreement, as amended, is on file with the Clerk of the
Company and will be mailed to any properly interested person
without charge within five (5) days after receipt of a written
request."
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(b) The certificates evidencing the Shares shall also bear any
legend required by any applicable state securities law.
(c) In addition, the Company shall make a notation regarding
the restrictions on transfer of the Shares in its stock books, and the
Shares shall be transferred on the books of the Company only if
transferred or sold pursuant to an effective registration statement
under the 1933 Act and applicable state securities laws covering such
Shares or pursuant to and in compliance with the provisions of Section
3.3(i) hereof. A copy of this Agreement, together with any amendments
thereto, shall remain on file with the Clerk of the Company and shall
be available for inspection to any properly interested person without
charge within five (5) days after the Company's receipt of a written
request therefor.
3.5 Brokers. No broker, investment banker, financial advisor or other
person or entity is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of any Investor
or any of its affiliates.
ARTICLE IV
Conditions to Obligations of the Investors at Closing
The obligations of each Investor under Article I of this Agreement are
subject to the fulfillment on or before the Closing Date of each of the
following conditions:
4.1 Representations and Warranties. The representations, warranties and
agreements of the Company contained in Article II hereof shall be true on and as
of the Closing Date with the same force and effect as if they had been made on
the Closing Date.
4.2 Performance by the Company. The Company shall have performed in all
material respects all of its obligations and shall have materially complied with
each and all of its covenants required to be performed or complied with by it on
or before the Closing Date.
4.3 Qualifications. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Shares pursuant to this Agreement shall have been duly obtained and shall be
effective on and as of the Closing Date.
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4.4 Legal Opinion. Each Investor shall have received a legal opinion
from Posternak, Blankstein & Lund, L.L.P, the Company's counsel in form and
substance satisfactory to counsel for the Investors.
ARTICLE V
Conditions to the Obligations of the Company at Closing
The obligations of the Company under Article I of this Agreement are
subject to the fulfillment on or before the Closing Date of each of the
following conditions:
5.1 Representations. The representations, warranties and agreements of
the Investors contained in Article III hereof shall be true on and as of the
Closing Date with the same force and effect as if they had been made on the
Closing Date.
5.2. Performance. Each Investor shall have performed in all material
respects all of its obligations and shall have materially complied with each and
all of its covenants required to be performed or complied with by it on or
before the Closing Date, including without limitation the execution and delivery
of any agreements and undertakings provided for in this Agreement.
5.3 Qualifications. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Shares pursuant to this Agreement shall have been duly obtained and shall be
effective on and as of the Closing Date.
ARTICLE VI
Mutual Conditions Precedent
The obligations of the Company and of each Investor under Article I of
this Agreement are subject to the fulfillment on or before the Closing Date of
the following conditions:
6.1 Shareholders' Agreement. The Company and each of the Investors
identified in Exhibit A shall, unless already a party thereto, have executed and
delivered a counterpart signature page to the Shareholders' Agreement, dated as
of November 26, 1997, by and among the Company and the Shareholders (as defined
therein), as amended to date and by Amendment No. 1 thereto substantially in the
form attached as Exhibit B hereto (the "Shareholders' Agreement").
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6.2 Simultaneous Purchase. Each Investor listed on Exhibit A hereto
shall have simultaneously purchased at the Closing the number of Shares set
forth opposite each Investor's name for the consideration specified.
6.3 Simultaneous Close. The Company shall have consummated its offer to
purchase shares of common stock of The Rival Company ("Rival") pursuant to the
terms of the Offer to Purchase, dated as of December 23, 1998, as amended in
accordance with its terms (the "Offer"), substantially simultaneously with the
Closing contemplated hereby.
ARTICLE VII
Other Agreements of the Parties
7.1 Berkshire Partners. The parties hereto acknowledge and agree that,
as compensation for consulting and advisory services in connection with the
Company's acquisition of Rival, the Company shall pay to Berkshire Partners, LLC
("Berkshire") a structuring fee of $2,000,000 on the Closing Date, and the
annual management fee payable to Berkshire shall be increased from $400,000 to
$500,000.
7.2 Costs, Expenses and Taxes. The Company shall pay the Company's and
each Investor's reasonable legal expenses incurred in connection with this
Agreement, any amendment or supplement to or modification hereto, and any and
all other documents furnished pursuant hereto or thereto or in connection
herewith. The Company shall pay any and all stamp, transfer and other similar
taxes payable or determined to be payable in connection with the execution and
delivery of this Agreement or the original issuance of the Shares but excluding
all federal, state and local income or similar taxes and shall save and hold
each Investor harmless from and against any and all liabilities with respect to
or resulting from any delay in paying, or omission to pay, such taxes. The
Company shall bear all expenses of shipping certificates evidencing the Shares
(including, without limitation, insurance expenses) from the location of the
Closing to such other places within the United States of America as the Investor
shall specify.
ARTICLE VIII
Miscellaneous
8.1 Termination. This Agreement may be terminated (as to the party
electing so to terminate it) at any time prior to the Closing Date:
(a) by an Investor if any of the conditions specified in
Article IV or VI of this Agreement have not been met or waived by it
pursuant to the terms of this Agreement by the Closing Date, or at such
earlier date that it becomes apparent that any such condition can no
longer be satisfied; or
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(b) by the Company if any of the conditions specified in
Article V or VI of this Agreement have not been met or waived by it
pursuant to the terms of this Agreement by the Closing Date or at such
earlier date that it becomes apparent that any such condition can no
longer be satisfied.
8.2 No Waiver; Modifications in Writing. No failure or delay on the
part of the Company or the Investors in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Company or each Investor at law or in
equity or otherwise. No waiver of or consent to any departure by the Company
from any provision of this Agreement shall be effective unless signed in writing
by the party entitled to the benefit thereof, provided that notice of any such
waiver shall be given to each party hereto as set forth below. This Agreement,
together with the Exhibits hereto, sets forth the entire understanding of the
parties and supersedes all prior agreements, arrangements and communications,
whether oral or written, with respect to the subject matter hereof. Except as
otherwise provided herein, no amendment, modification or termination of any
provision of this Agreement shall be effective unless signed in writing by or on
behalf of the Company and each Investor. Any amendment, supplement or
modification of or to any provision of this Agreement, any waiver of any
provision of this Agreement, and any consent to any departure by the Company
from the terms of any provision of this Agreement, shall be effective only in
the specific instance and for the specific purpose for which made or given.
Except where notice is specifically required by this Agreement, no notice to or
by or demand to or on the Company in any case shall entitle or obligate the
Company to any other or further notice or demand in similar or other
circumstances.
8.3 Notices. All notices and other communications necessary or
contemplated under this Agreement shall be in writing and shall be delivered in
the manner specified herein. All notices shall be deemed to have been duly given
upon confirmation by telecopy if delivered by telecopy or by hand, or one day
after sending by overnight delivery service, or five days after sending by
certified mail, postage prepaid, return receipt requested to the respective
addresses of the parties set forth below:
(a) for notices and communications to the Company:
Holmes Products Corp.
233 Fortune Boulevard
Milford, MA 01757
Telecopy: (508) 634-1847
Attn: Ira B. Morgenstern
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with a copy to:
Posternak, Blankstein & Lund, L.L.P.
100 Charles River Plaza
Boston, Massachusetts 02114
Telecopy: (617) 367-2315
Attention: Donald H. Siegel, P.C.
(b) for notices and communications to each Investor, to its
address as set forth under each Investor's name in Exhibit A.
By notice complying with the foregoing provisions of this Section 7.3, each
party shall have the right to change the notice address for future notices and
communications to such party.
8.4 Execution of Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto on separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which, taken together, shall constitute but one and the same
Agreement.
8.5 Binding Effect; Assignment. The rights and obligations of any or
all of the Investors under this Agreement may not be assigned to any other
person. Except as expressly provided in this Agreement, this Agreement shall not
be construed so as to confer any right or benefit upon any person other than the
parties to this Agreement, and their respective successors and assigns. This
Agreement shall be binding upon the Company and each of the Investors, and their
respective successors and assigns.
8.6 WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND THE INVESTORS HEREBY
EXPRESSLY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE SHARES OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT. THE COMPANY AND
THE INVESTORS ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH
MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY PARTY. THE SCOPE OF THIS WAIVER
IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN
ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. THE COMPANY AND THE INVESTORS FURTHER
WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL,
AND THAT EACH VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. THIS WAVIER IS IRREVOCABLE AND MAY ONLY BE MODIFIED EITHER
ORALLY OR IN AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT, ANY OTHER PURCHASE DOCUMENT OR THE SHARES. IN THE EVENT
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OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
(WITHOUT A JURY) BY THE COURT.
8.7 GOVERNING LAW. THIS AGREEMENT, INCLUDING THE VALIDITY HEREOF AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN SUCH STATE (WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF). EACH OF THE PARTIES
HERETO AGREES THAT ANY ACTION OR PROCEEDING BROUGHT TO ENFORCE THE RIGHTS OR
OBLIGATIONS OF ANY PARTY HERETO UNDER THIS AGREEMENT MAY BE COMMENCED AND
MAINTAINED IN ANY COURT OF COMPETENT JURISDICTION LOCATED IN THE COMMONWEALTH OF
MASSACHUSETTS. EACH OF THE PARTIES HERETO FURTHER AGREES THAT PROCESS MAY BE
SERVED UPON IT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED AS MORE
GENERALLY PROVIDED IN SECTION 8.3 HEREOF, AND CONSENTS TO THE EXERCISE OF
JURISDICTION OVER IT AND ITS PROPERTIES WITH RESPECT TO ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THE ENFORCEMENT OF ANY RIGHTS UNDER THIS
AGREEMENT.
8.8 Severability of Provisions. 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 or
affecting the validity or enforceability of such provision in any other
jurisdiction.
8.9 Exhibits and Headings. The Exhibit(s) to this Agreement shall be
deemed to be a part of this Agreement. The Article and Section headings used or
contained in this Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
8.10 Injunctive Relief. Each of the parties to this Agreement hereby
acknowledges that in the event of a breach by any of them of any material
provision of this Agreement, the aggrieved party may be without an adequate
remedy at law. Each of the parties therefore agrees that, in the event of a
breach of any material provision of this Agreement, the aggrieved party may
elect to institute and prosecute proceedings to enforce specific performance or
to enjoin the continuing breach of such provision, as well as to obtain damages
for breach of this Agreement. By seeking or obtaining any such relief, the
aggrieved party will not be precluded from seeking or obtaining any other relief
to which it may be entitled.
8.11 Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
11
<PAGE>
8.12 Survival of Agreements, Representations and Warranties. All
agreements, representations and warranties contained herein or made in writing
by or on behalf of the Company or each Investor, as the case may be, in
connection with the transactions contemplated by this Agreement shall survive
the execution and delivery of this Agreement and the sale and purchase of the
Shares of payment therefor.
* * * * * *
12
<PAGE>
HOLMES PRODUCTS CORP.
INVESTORS SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
HOLMES PRODUCTS CORP.
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
S-1
<PAGE>
HOLMES PRODUCTS CORP.
INVESTORS SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
INVESTORS:
Berkshire Fund IV Investment Corp.
/s/ Richard K. Lubin
--------------------------------
By: Richard K. Lubin
Its: President
S-2
<PAGE>
HOLMES PRODUCTS CORP.
INVESTORS SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
INVESTORS:
Berkshire Fund V Investment Corp.
/s/ Richard K. Lubin
--------------------------------
By: Richard K. Lubin
Its: President
S-3
<PAGE>
HOLMES PRODUCTS CORP.
INVESTORS SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
INVESTORS:
Berkshire Investors, LLC
/s/ Richard K. Lubin
--------------------------------
By: Richard K. Lubin
Its: Managing Member
S-4
<PAGE>
HOLMES PRODUCTS CORP.
INVESTORS SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
INVESTORS:
/s/ Jordan A. Kahn
--------------------------------
Jordan A. Kahn
S-5
<PAGE>
HOLMES PRODUCTS CORP.
INVESTORS SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
INVESTORS:
/s/ Tommy Liu
--------------------------------
Woon Fai (Tommy) Liu
S-6
<PAGE>
HOLMES PRODUCTS CORP.
INVESTORS SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
INVESTORS:
Sunapee Securities, Inc.
/s/ Gary Wilkinson
--------------------------------
By: Gary Wilkinson, Treasurer
S-7
<PAGE>
HOLMES PRODUCTS CORP.
INVESTORS SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
INVESTORS:
Squam Lake Investors, II, L.P.
By: /s/ Gary Wilkinson
--------------------------------
Gary Wilkinson, Treasurer of
GPI, Inc., Its General Partner
S-8
<PAGE>
HOLMES PRODUCTS CORP.
INVESTORS SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
INVESTORS:
Squam Lake Investors, III, L.P.
By: /s/ Gary Wilkinson
--------------------------------
Gary Wilkinson, Treasurer of
GPI, Inc. its General Partner
S-9
<PAGE>
HOLMES PRODUCTS CORP.
INVESTORS SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
INVESTORS:
FSC Corp.
/s/ Mary Josephs Reilly
--------------------------------
By: Mary Josephs Reilly
S-10
<PAGE>
HOLMES PRODUCTS CORP.
INVESTORS SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
INVESTORS:
The Pangea Group, Inc.
/s/ Darren Spangler
--------------------------------
By: Darren Spangler
Its: Vice President
S-11
<PAGE>
HOLMES PRODUCTS CORP.
INVESTORS SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
INVESTORS:
/s/ Thomas K. Manning
--------------------------------
Thomas K. Manning
S-12
<PAGE>
EXHIBIT A -- INVESTORS STOCK SUBSCRIPTION AGREEMENT
Number of Shares Purchased By Each Investor
-------------------------------------------
<TABLE>
<CAPTION>
Number of Shares of Aggregate
Investor: Name and Address Common Stock Purchase Price
- -------------------------- ------------ --------------
<S> <C> <C>
Berkshire Fund IV Investment Corp. 4,021,470 $20,264,925
One Boston Place, Suite 3300
Boston, MA 02108
Berkshire Fund V Investment Corp. 4,021,470 20,264,925
One Boston Place, Suite 3300
Boston, MA 02108
Berkshire Investors LLC 804,294 4,052,980
One Boston Place, Suite 3300
Boston, MA 02108
Jordan A. Kahn 396,890 2,000,000
233 Fortune Boulevard
Milford, MA 01757
Woon Fai (Tommy) Liu 19,844 100,000
c/o Holmes Products (Far East) Limited
No. 9 Wing Hong Street
Kowloon, Hong Kong
Sunapee Investors LLC 81,362 410,000
c/o Bain & Company, Inc.
Two Copley Place
Boston, MA 02116
Squam Lake Investors II LP 137,919 695,000
c/o Bain & Company, Inc.
Two Copley Place
Boston, MA 02116
Squam Lake Investors III LP 137,919 695,000
c/o Bain & Company, Inc.
Two Copley Place
Boston, MA 02116
FSC Corp. 198,445 1,000,000
BancBoston Capital Inc.
175 Federal Street
Boston, MA 02110
Att: Mary Josephs Reilly
Pangea Group, Inc. 2,630 13,252
International Trade and Consulting
358 Chestnut Hill Ave., Suite 303
Brighton, MA 02135
Thomas K. Manning 100,000 503,918
c/o The Rival Company
800 East 101st Terrace
Kansas City, MO
TOTALS: 9,922,243 $50,000,000
</TABLE>
<PAGE>
EXHIBIT B -- AMENDMENT TO SHAREHOLDERS AGREEMENT
<PAGE>
Schedule 2.2
As of February 1, 1999, the following warrants, options, etc. were
outstanding:
(1) Asco Investments, Ltd. -- Warrant to purchase up to 500,317
shares of Common Stock.
(2) Employees of the Company -- Options or rights to purchase up
to 1,502,723 shares of Common Stock, 114,671 shares of which
are vested and exercisable.
(3) Commitments from the Investors to purchase the shares of
Common Stock set forth on Exhibit A above.
================================================================================
HOLMES PRODUCTS CORP.
SERIES C AND SERIES D
9 7/8% SENIOR SUBORDINATED NOTES DUE 2007
INDENTURE
------------------------
Dated as of February 5, 1999
------------------------
State Street Bank and Trust Company
Trustee
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Indenture Section
Act Section
<S> <C>
310 (a)(1)................................................................................... 7.10
(a)(2) ...................................................................................... 7.10
(a)(3)....................................................................................... N.A.
(a)(4)....................................................................................... N.A.
(a)(5)....................................................................................... 7.10
(i)(b)....................................................................................... 7.10
(ii)(c)...................................................................................... N.A.
311(a)....................................................................................... 7.11
(b).......................................................................................... 7.11
(iii(c)...................................................................................... N.A.
312 (a)...................................................................................... 2.05
(b).......................................................................................... 11.03
(iv)(c)...................................................................................... 11.03
313(a)....................................................................................... 7.06
(b)(1)....................................................................................... 10.03
(b)(2)....................................................................................... 7.07
(v)(c)....................................................................................... 7.06;
11.02
(vi)(d)...................................................................................... 7.06
314(a)....................................................................................... 4.03;
11.02
(A)(b)....................................................................................... 10.02
(c)(1)....................................................................................... 11.04
(c)(2)....................................................................................... 11.04
(c)(3)....................................................................................... N.A.
(d).......................................................................................... 10.03,
10.04, 10.05
(vii)(e)..................................................................................... 11.05
(f).......................................................................................... NA
315 (a)...................................................................................... 7.01
(b).......................................................................................... 7.05,
11.02
(B)(c)....................................................................................... 7.01
(d).......................................................................................... 7.01
(e).......................................................................................... 6.11
316 (a)(last sentence)....................................................................... 2.09
(a)(1)(A).................................................................................... 6.05
(a)(1)(B).................................................................................... 6.04
(a)(2)....................................................................................... N.A.
(b).......................................................................................... 6.07
(C)(c)....................................................................................... 2.12
317 (a)(1)................................................................................... 6.08
(a)(2)....................................................................................... 6.09
(b).......................................................................................... 2.04
318 (a)...................................................................................... 11.01
(b).......................................................................................... N.A.
(c).......................................................................................... 11.01
N.A. means not applicable.
</TABLE>
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.............................................................1
SECTION 1.01. DEFINITIONS................................................................................1
SECTION 1.02. OTHER DEFINITIONS.........................................................................14
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.........................................15
SECTION 1.04. RULES OF CONSTRUCTION.....................................................................15
ARTICLE 2. THE NOTES.............................................................................................17
SECTION 2.01. FORM AND DATING...........................................................................17
SECTION 2.02. EXECUTION AND AUTHENTICATION..............................................................18
SECTION 2.03. REGISTRAR AND PAYING AGENT................................................................18
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.......................................................19
SECTION 2.05. HOLDER LISTS..............................................................................19
SECTION 2.06. TRANSFER AND EXCHANGE.....................................................................19
SECTION 2.07. REPLACEMENT NOTES.........................................................................30
SECTION 2.08. OUTSTANDING NOTES.........................................................................31
SECTION 2.09. TREASURY NOTES............................................................................31
SECTION 2.10. TEMPORARY NOTES...........................................................................31
SECTION 2.11. CANCELLATION..............................................................................31
SECTION 2.12. DEFAULTED INTEREST........................................................................32
ARTICLE 3. REDEMPTION AND PREPAYMENT.............................................................................33
SECTION 3.01. NOTICES TO TRUSTEE........................................................................33
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.........................................................33
SECTION 3.03. NOTICE OF REDEMPTION......................................................................33
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION............................................................34
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE...............................................................34
SECTION 3.06. NOTES REDEEMED IN PART....................................................................34
SECTION 3.07. OPTIONAL REDEMPTION.......................................................................34
SECTION 3.08. MANDATORY REDEMPTION......................................................................35
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.......................................35
ARTICLE 4. COVENANTS.............................................................................................37
SECTION 4.01. PAYMENT OF NOTES..........................................................................37
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY...........................................................37
SECTION 4.03. REPORTS...................................................................................38
SECTION 4.04. COMPLIANCE CERTIFICATE....................................................................38
SECTION 4.05. TAXES.....................................................................................39
SECTION 4.06. STAY, EXTENSION AND USURY LAWS............................................................39
SECTION 4.07. RESTRICTED PAYMENTS.......................................................................39
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES............................41
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK................................42
SECTION 4.10. ASSET SALES...............................................................................43
SECTION 4.11. TRANSACTIONS WITH AFFILIATES..............................................................44
SECTION 4.12. LIENS.....................................................................................45
SECTION 4.13. CORPORATE EXISTENCE.......................................................................45
SECTION 4.14. OFFER TO REPURCHASE UPON CHANGE OF CONTROL................................................45
SECTION 4.15. LIMITATION ON OTHER SENIOR SUBORDINATED DEBT..............................................46
SECTION 4.16. PAYMENTS FOR CONSENT......................................................................46
SECTION 4.17. ADDITIONAL NOTE GUARANTEES................................................................46
i
<PAGE>
ARTICLE 5. SUCCESSORS............................................................................................46
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS..................................................46
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.........................................................47
ARTICLE 6. DEFAULTS AND REMEDIES.................................................................................47
SECTION 6.01. EVENTS OF DEFAULT.........................................................................47
SECTION 6.02. ACCELERATION..............................................................................49
SECTION 6.03. OTHER REMEDIES............................................................................50
SECTION 6.04. WAIVER OF PAST DEFAULTS...................................................................50
SECTION 6.05. CONTROL BY MAJORITY.......................................................................50
SECTION 6.06. LIMITATION ON SUITS.......................................................................50
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.............................................51
SECTION 6.08. COLLECTION SUIT BY TRUSTEE................................................................51
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM..........................................................51
SECTION 6.10. PRIORITIES................................................................................52
SECTION 6.11. UNDERTAKING FOR COSTS.....................................................................52
ARTICLE 7. TRUSTEE...............................................................................................52
SECTION 7.01. DUTIES OF TRUSTEE.........................................................................52
SECTION 7.02. RIGHTS OF TRUSTEE.........................................................................53
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE..............................................................54
SECTION 7.04. TRUSTEE'S DISCLAIMER......................................................................54
SECTION 7.05. NOTICE OF DEFAULTS........................................................................54
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES................................................54
SECTION 7.07. COMPENSATION AND INDEMNITY................................................................55
SECTION 7.08. REPLACEMENT OF TRUSTEE....................................................................55
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC..........................................................56
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.............................................................56
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.........................................57
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE..............................................................57
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE..................................57
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE............................................................57
SECTION 8.03. COVENANT DEFEASANCE.......................................................................57
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE................................................58
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS
PROVISIONS..............................................................................................59
SECTION 8.06. REPAYMENT TO COMPANY......................................................................60
SECTION 8.07. REINSTATEMENT.............................................................................60
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER......................................................................60
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.......................................................60
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES..........................................................61
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.......................................................62
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.........................................................62
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES..........................................................62
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC...........................................................63
ARTICLE 10. SUBORDINATION........................................................................................63
SECTION 10.01. AGREEMENT TO SUBORDINATE.................................................................63
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.....................................................63
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT........................................................63
SECTION 10.04. ACCELERATION OF SECURITIES...............................................................64
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER......................................................64
<PAGE>
SECTION 10.06. NOTICE BY COMPANY........................................................................65
SECTION 10.07. SUBROGATION..............................................................................65
SECTION 10.08. RELATIVE RIGHTS..........................................................................65
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.............................................65
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.................................................66
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.......................................................66
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION....................................................66
SECTION 10.13. AMENDMENTS...............................................................................66
ARTICLE 11. NOTE GUARANTEES......................................................................................67
SECTION 11.01. GUARANTEE................................................................................67
SECTION 11.02. SUBORDINATION OF NOTE GUARANTEE..........................................................67
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY........................................................68
SECTION 11.04. EXECUTION AND DELIVERY OF NOTE GUARANTEE.................................................68
SECTION 11.05. CONSOLIDATION, ETC. BY GUARANTORS......................................................68
SECTION 11.06 RELEASES FOLLOWING SALE OF ASSETS........................................................69
ARTICLE 12. MISCELLANEOUS........................................................................................69
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.............................................................69
SECTION 12.02. NOTICES..................................................................................69
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES............................70
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.......................................71
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION............................................71
SECTION 12.06. RULES BY TRUSTEE AND AGENTS..............................................................71
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS.................71
SECTION 12.08. GOVERNING LAW............................................................................72
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS............................................72
SECTION 12.10. SUCCESSORS...............................................................................72
SECTION 12.11. SEVERABILITY.............................................................................72
SECTION 12.12. COUNTERPART ORIGINALS....................................................................72
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.........................................................72
EXHIBITS
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF CERTIFICATE OF TRANSFER
EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE
EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
EXHIBIT E FORM OF NOTATION OF GUARANTEE
EXHIBIT F FORM OF SUPPLEMENTAL INDENTURE
</TABLE>
<PAGE>
INDENTURE dated as of February 5, 1999 among Holmes Products
Corp., a Massachusetts corporation, (the "Company"), Holmes Manufacturing Corp.,
Holmes Air (Taiwan) Corp., Holmes Motor Corporation, The Rival Company, Patton
Electric Company, Inc., Patton Building Products, Inc., Rival Consumer Sales
Corporation (together, the "Guarantors") and State Street Bank and Trust
Company, as trustee (the "Trustee").
The Company, the Guarantors and the Trustee agree as follows
for the benefit of each other and for the equal and ratable benefit of the
Holders of the 9 7/8% Series C Senior Subordinated Notes due 2007 (the "Series C
Notes") and the 9 7/8% Series D Senior Subordinated Notes due 2007 (the "Series
D Notes" and, together with the Series C Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means a global note in the form of Exhibit
A-1 hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"1997 Indenture" means the Indenture, dated November 26, 1997,
by and among the Company, the guarantors named therein and State Street Bank and
Trust Company, as trustee.
"Acquired Debt" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with or in contemplation
of, such other Person merging with or into or becoming a Subsidiary of such
specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale or leaseback), excluding sales of inventory in the ordinary course of
business consistent with past practices (provided that the sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company and its Restricted Subsidiaries
1
<PAGE>
taken as a whole shall be governed by Sections 4.14 and 5.01 hereof and not by
Section 4.10 hereof), and (ii) the issue or sale by the Company or any of its
Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in the
case of either clause (i) or (ii), whether in a single transaction or a series
of related transactions (a) that have a fair market value in excess of $1.0
million or (b) for net proceeds in excess of $1.0 million. Notwithstanding the
foregoing: (i) a transfer of assets by the Company to a Wholly Owned Restricted
Subsidiary or by a Wholly Owned Restricted Subsidiary to the Company or to
another Wholly Owned Restricted Subsidiary, (ii) an issuance of Equity Interests
by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly
Owned Restricted Subsidiary and (iii) a Restricted Payment that is permitted by
Section 4.07 hereof shall not be deemed to be Asset Sales.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the
Company or, any authorized committee thereof; provided that "Board of Directors"
shall not include any authorized committee of the Company's Board of Directors
for purposes of the definition of Change of Control.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distribution of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued by or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
not more than six months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of six months or less from
the date of acquisition, bankers' acceptances with maturities not exceeding six
months and overnight bank deposits, in each case with any domestic commercial
bank having capital and surplus in excess of $500.0 million and a Thompson or
Keefe Bank Watch Rating of "B" or better, (iv) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Corporation and in each case maturing within
six months after the date of acquisition and (vi) money market deposit accounts
all of the investments of which consist of cash or Cash Equivalents of the type
described in clauses (i) through (v) above.
"Cedel" means Cedel Bank, SA.
"Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Restricted Subsidiaries, taken as a whole, other than to the Principals; (ii)
the adoption of a plan for the liquidation
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or dissolution of the Company; (iii) prior to the consummation of an Initial
Public Offering, the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that the
Principals fail to be the "beneficial owners" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of at
least 51% of the aggregate voting power of the outstanding Voting Stock of the
Company; (iv) following the consummation of an Initial Public Offering, the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" or "group" (as such
terms are used in Section 13(d)(3) of the Exchange Act), other than the
Principals, becomes the "beneficial owner" (as such term is defined in Rule
13-d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of (a)
more than 35% of the aggregate voting power of the outstanding Voting Stock of
the Company or (b) more of the voting power of the outstanding Voting Stock of
the Company than the aggregate of that beneficially owned by the Principals; or
(v) the first day on which more than a majority of the members of the Board of
Directors are not Continuing Directors.
"Closing Date" means November 26, 1997.
"Company" means Holmes Products Corp., a Massachusetts
corporation, and any and all successors thereto.
"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period plus, to
the extent deducted in computing such Consolidated Net Income, (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale, (ii) provision for taxes based on income or profits, (iii)
consolidated interest expense whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations),
excluding, however, amortization of debt issuance costs relating to Indebtedness
incurred in connection with the Transactions (as defined in the Offering
Memorandum), (iv) depreciation and amortization (including amortization of
goodwill and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period), (v) any compensation expense
resulting from the payment of cash bonuses as a result of the Transactions as
described in the Offering Memorandum under the caption "Management-Employment
Agreements" and (vi) any non-cash compensation expense resulting from
compensation paid in Equity Interests (other than Disqualified Stock) of the
Company, in each case, on a consolidated basis and determined in accordance with
GAAP. Notwithstanding the foregoing, the provision for taxes based on the income
or profits of, and the depreciation and amortization of, a Restricted Subsidiary
of a Person shall be added to Consolidated Net Income to compute Consolidated
Cash Flow only to the extent (and in the same proportion) that the Net Income of
such Restricted Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior approval (that has not been obtained) pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such
Restricted Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that (i) the Net Income (but not loss) of any
Person that is not a Restricted Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the extent of the amount
of dividends or distributions paid in cash to
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the referent Person or a Wholly Owned Restricted Subsidiary thereof, (ii) the
Net Income of any Restricted Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Restricted
Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded, (iv) the
cumulative effect of a change in accounting principles shall be excluded and (v)
the Net Income (but not loss) of any Unrestricted Subsidiary shall be excluded,
whether or not distributed to the Company or one of its Restricted Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as
of any date, the sum of (i) the consolidated equity of the common stockholders
of such Person and its consolidated Restricted Subsidiaries as of such date,
plus (ii) the respective amounts reported on such Person's balance sheet as of
such date with respect to any series of preferred stock (other than Disqualified
Stock) that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (a) all
write-ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made within 12 months
after the acquisition of such business) subsequent to the Closing Date in the
book value of any asset owned by such Person or a consolidated Restricted
Subsidiary of such Person, (b) all investments (other than Permitted
Investments) as of such date in unconsolidated Subsidiaries and in Persons that
are not Restricted Subsidiaries and (c) all unamortized debt discount and
expense and unamortized deferred charges as of such date, in each case,
determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors who (i) was a member of such Board of
Directors on the Closing Date or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board of Directors at the time of such
nomination or election.
"Credit Facility" means that certain credit agreement, dated
as of the Closing Date, by and among the Company, each Subsidiary of the Company
party thereto, the lenders party thereto and BankBoston, N.A., as Agent, as
amended, restated, modified, renewed, refunded, replaced, substituted,
restructured or refinanced in whole or in part from time to time, whether with
the present lenders or any other lenders, including any Guarantees thereof.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 12.02 hereof or such other address
as to which the Trustee may give notice to the Company.
"Custodian" means the Trustee, as custodian with respect to
the Notes in global form, or any successor entity thereto.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the
name of the Holder thereof and issued in accordance with Section 2.06 hereof, in
the form of Exhibit A-1 hereto except that such Note shall not bear the Global
Note Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Note" attached thereto.
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"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to the Notes, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Designated Senior Debt" means (i) any Indebtedness and other
obligations outstanding under the Credit Facility (and any guarantees thereof)
and (ii) any other Senior Debt permitted under this Indenture the principal
amount of which is $10.0 million or more and that has been designated in writing
to the Trustee by the Company, and, so long as the Credit Facility is in effect,
the Agent (as defined therein) thereunder, as "Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the Holder thereof, in whole or in part, on or
prior to the date that is 91 days after the date on which the Notes mature.
"Domestic Restricted Subsidiary" means a Restricted Subsidiary
that is organized pursuant to the laws of any state or other jurisdiction in the
United States.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Notes issued in the Exchange Offer
pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set
forth in the Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness in existence on the
Closing Date (other than Indebtedness under the Credit Facility), until such
Indebtedness is repaid.
"Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person and its Restricted Subsidiaries for
such period. In the event that the Company or any of its Restricted Subsidiaries
incurs, assumes, guarantees, repays or redeems any Indebtedness (other than
revolving credit borrowings) or issues or redeems preferred stock subsequent to
the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee, repayment or redemption of
Indebtedness, or such issuance or redemption of preferred stock, as if the same
had occurred at the beginning of the applicable four-quarter reference period.
In addition,
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for purposes of making the computation referred to above, (i) acquisitions that
have been made by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period (including any
pro forma expense and cost reductions) and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income, (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges shall
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
"Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) the consolidated interest expense
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations),
excluding, however, amortization of debt issuance costs relating to Indebtedness
incurred in connection with the Transactions, (ii) the consolidated interest
expense of such Person and its Restricted Subsidiaries that was capitalized
during such period, (iii) any interest expense on Indebtedness of another Person
that is Guaranteed by such Person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such Person or one of its Restricted Subsidiaries
(whether or not such Guarantee or Lien is called upon) and (iv) the product of
(a) all dividend payments, whether or not in cash, on any series of preferred
stock of such Person or any of its Restricted Subsidiaries, other than dividend
payments on Equity Interests payable solely in Equity Interests of the Company,
times (b) a fraction, the numerator of which is one and the denominator of which
is one minus the then current combined federal, state and local statutory tax
rate of such Person, expressed as a decimal, in each case, on a consolidated
basis and in accordance with GAAP.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect as of the Closing Date.
"Global Notes" means, individually and collectively, each of
the Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A-1 hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii) and, if applicable, Section 2.06(g)(iii), which are required to be
placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America, and the payment for
which the United States pledges its full faith and credit.
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"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Guarantor" means each Person named as a Guarantor in the
preamble to this Indenture, any Domestic Restricted Subsidiary that executes a
Note Guarantee in accordance with the provisions of this Indenture, and all
successors and assigns of each of the foregoing.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or currency exchange rates.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the global Note in the form of Exhibit
A-1 hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.
"Indebtedness" means, with respect to any Person, without
duplication, (i) any indebtedness of such Person, whether or not contingent, in
respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing Capital Lease Obligations or
the balance deferred and unpaid of the purchase price of any property or
representing any Hedging Obligations, except any such balance that constitutes
an accrued expense or trade payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit and Hedging Obligations) would appear
as a liability upon a balance sheet of such Person prepared in accordance with
GAAP, (ii) all indebtedness of others secured by a Lien on any asset of such
Person (whether or not such indebtedness is assumed by such Person) up to the
fair market value of such asset and (iii) to the extent not otherwise included,
the Guarantee by such Person of any indebtedness of any other Person.
Notwithstanding the foregoing, Indebtedness shall not include payment,
performance or surety bonds or standby letters of credit issued in the ordinary
course of business.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Initial Purchasers" means BancBoston Robertson Stephens Inc.
and Lehman Brothers Inc.
"Initial Public Offering" means one or more underwritten
public offerings of the common stock of the Company registered under the
Securities Act.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act, who are not also QIBs.
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"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including guarantees of Indebtedness or other
obligations), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP. If the Company or any Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Subsidiary of the
Company such that, after giving effect to any such sale or disposition, such
Person is no longer a Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Subsidiary not sold or
disposed of in an amount determined as provided in the third full paragraph of
Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York, New York or Boston, Massachusetts
or at a place of payment are authorized by law, regulation or executive order to
remain closed. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue on such payment for the intervening
period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"Management Agreement" means that certain agreement dated the
Closing Date between the Company and Berkshire Partners (or any of its
affiliates), as amended, modified, renewed or extended from time to time.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions) or
(b) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
severance, termination, closing, relocation or similar
8
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expenses incurred as a result thereof, taxes paid or payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements), amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such Asset Sale and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness: (i) as to which
neither the Company nor any of its Restricted Subsidiaries (a) provides credit
support of any kind (including any undertaking, agreement or instrument that
would constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise) or (c) constitutes the lender; (ii) no default with
respect to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes) of the Company or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its Restricted Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Guarantee" means the Guarantee by each Guarantor of the
Company's payment obligations under this Indenture and the Notes, executed
pursuant to the provisions of this Indenture.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest (including
Post-Petition Interest), penalties, fees, expenses, indemnifications,
reimbursements, damages and other liabilities payable under the documentation
governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum, dated
January 29, 1999, relating to the Notes.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf
of the Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee, that meets the requirements of Sections
12.04 and 12.05 hereof. The counsel may be an employee of or counsel to the
Company, any Subsidiary of the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear
or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
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"Permitted Investments" means (i) any Investment in the
Company or in a Wholly Owned Restricted Subsidiary of the Company; (ii) any
Investment in Cash Equivalents; (iii) any Investment by the Company or any
Restricted Subsidiary of the Company in a Person, if as a result of such
Investment (a) such Person becomes a Wholly Owned Restricted Subsidiary of the
Company and a Guarantor or (b) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly Owned Restricted
Subsidiary of the Company; (iv) any Restricted Investment made as a result of
the receipt of non-cash consideration from an Asset Sale that was made pursuant
to and in compliance with Section 4.10 hereof; (v) any acquisition of an
Investment solely in exchange for the issuance of Equity Interests (other than
Disqualified Stock) of the Company; (vi) advances to employees in the ordinary
course of business; and (vii) other Investments in any Person (measured on the
date each such Investment was made and without giving effect to subsequent
changes in value), when taken together with all other Investments made pursuant
to this clause (vii) and all Investments made before the date of this Indenture
pursuant to clause (vii) of the definition of "Permitted Investments" set forth
in the 1997 Indenture that are at the time outstanding, not to exceed $5.0
million.
"Permitted Junior Securities" means Equity Interests in the
Company or debt securities that (i) are subordinated to all Senior Debt (and any
debt securities issued in exchange for Senior Debt) to substantially the same
extent as, or to a greater extent than, the Notes are subordinated to Senior
Debt pursuant to Article 10 hereof and (ii) have a maturity no earlier than the
maturity of the Notes and a weighted Average Life to Maturity no shorter than
the weighted Average Life to Maturity of the Notes.
"Permitted Liens" means (i) Liens securing Senior Debt of the
Company and its Restricted Subsidiaries that was permitted by the terms of this
Indenture or the 1997 Indenture to be incurred; (ii) Liens in favor of the
Company or any of its Restricted Subsidiaries; (iii) Liens on property of a
Person existing at the time such Person is merged into or consolidated with the
Company or any Restricted Subsidiary of the Company; provided that such Liens
were in existence prior to the contemplation of such merger or consolidation and
do not extend to any assets other than those of the Person merged into or
consolidated with the Company; (iv) Liens on property existing at the time of
acquisition thereof by the Company or any Restricted Subsidiary of the Company,
provided that such Liens were in existence prior to the contemplation of such
acquisition; (v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vi) Liens existing, or created
pursuant to obligations existing, on the Closing Date; (vii) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefore; (viii) statutory or common law Liens of landlords, and
Liens of carriers, warehousemen, mechanics and materialmen, and other Liens
imposed by law created in the ordinary course of business for amounts not yet
due or which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves are being maintained; (ix) Liens
incurred or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security; (x) easements, rights of way and other similar Liens not materially
interfering with the ordinary conduct of the business of the Company and its
Restricted Subsidiaries or any of their respective properties; (xi) Liens with
respect to obligations that do not exceed $2.0 million at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Company or such Restricted Subsidiary; (xii) Liens
incurred in the ordinary course of business consistent with past practices in
favor of a Person providing insurance of collection of certain of the Company's
accounts
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receivable, provided such Liens cover only those receivables so insured; and
(xiii) extensions, renewals or replacements of any Lien referred to in clauses
(i) through (xii) of this paragraph, provided that the principal amount of the
Indebtedness or Obligation secured thereby is not increased and that any such
extension, renewal or replacement is limited to the property originally
encumbered by the Lien being extended, renewed or replaced.
"Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus accrued interest on, the Indebtedness
so extended, refinanced, renewed, replaced, defeased or refunded (plus the
amount of reasonable expenses incurred in connection therewith); (ii) such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness is subordinated in right of payment to the Notes on terms at least
as favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary that is an obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Permitted Transferee" means each person or entity to whom
Jordan A. Kahn may transfer shares of common stock of the Company pursuant to
Section 4.1 of the Stock Purchase Agreement, dated as of October 27, 1997,
between Jordan A. Kahn and Homes Acquisition LLC, as in effect on the Closing
Date.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Post-Petition Interest" means, with respect to any Senior
Debt after the commencement of any liquidation or dissolution of the Company,
any bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property, any assignment for the benefit of
creditors or any marshaling of the Company's assets and liabilities, interest at
the rate specified in the documents governing such Senior Debt, whether or not a
claim therefor would be allowed in any such proceeding.
"Principals" means Berkshire Partners LLC, Berkshire Fund IV
L.P., Berkshire Fund IV Investment Corp., Berkshire Investors LLC and any of
their respective Affiliates, Jordan A. Kahn and his Affiliates, Stanley
Rosenzweig and Gregory F. White; provided, however, that for purposes of the
provisions of this Indenture set forth under Section 4.14 and the definition of
"Change of Control" set forth in this Section 1.01, any shares of Capital Stock
of the Company owned by a Permitted Transferee on the Closing Date, and any
shares of Capital Stock of the Company owned by Jordan A. Kahn on the Closing
Date but that subsequently are transferred to a Permitted Transferee, will in
each case be deemed to be owned by Jordan A. Kahn.
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"Private Placement Legend" means the legend set forth in
Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of February 5, 1999, by and among the Company, the
Guarantors and the Initial Purchasers as such agreement may be amended, modified
or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Regulation S Global Note" means the Regulation S Permanent
Global Note or the Regulation S Temporary Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global
Note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the
Private Placement Legend and deposited with or on behalf of and registered in
the name of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global
Note in the form of Exhibit A-2 hereto bearing the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee, issued in a denomination equal to the outstanding principal amount
of the Notes initially sold in reliance on Rule 903 of Regulation S.
"Representative" means the indenture trustee or other trustee,
agent or representative for the holders of any Senior Debt.
"Responsible Officer," when used with respect to the Trustee,
means any officer within the Corporate Trust Department of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing
the Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the
Private Placement Legend.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Restricted Period" means the 40-day restricted period as
defined in Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of
the referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities
Act.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
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"Rule 903" means Rule 903 promulgated under the Securities
Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" of a Person means (i) all Obligations of such
Person outstanding under the Credit Facility, (ii) any other Indebtedness of
such Person permitted to be incurred under the terms of this Indenture, unless
the instrument under which such Indebtedness is incurred expressly provides that
it is subordinated in right of payment to any Senior Debt of such Person and
(iii) all Obligations of such Person with respect to the foregoing.
Notwithstanding anything to the contrary in the foregoing, Senior Debt of a
Person shall not include (a) any liability for federal, state, local or other
taxes owed or owing by such Person, (b) any Indebtedness of such Person to any
of its Subsidiaries or other Affiliates, (c) any trade payables or (d) any
Indebtedness that is incurred in violation of this Indenture.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect
on the date hereof.
"Stated Maturity" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be redeemed or paid in the
original documentation governing such Indebtedness, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.ss.ss.)
as in effect on the date on which this Indenture is qualified under the TIA.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive
Notes that do not bear and are not required to bear the Private Placement
Legend.
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"Unrestricted Global Note" means a permanent Global Note in
the form of Exhibit A-1 attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means (i) any Subsidiary that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
board resolution, but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not a party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company, (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (1) to subscribe for additional Equity Interests or (2) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries; and (e) has at least one
executive officer that is not a director or executive officer of the Company or
any of its Restricted Subsidiaries.
"Voting Stock" of any Person as of any date means Capital
Stock of such Person that is at the time entitled to vote in the election of the
Board of Directors.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Term Defined in
Section
<S> <C>
"Affiliate Transaction".................................................... 4.11
"Asset Sale Offer"......................................................... 4.10
"Authentication Order"..................................................... 2.02
"Change of Control Offer".................................................. 4.14
"Change of Control Payment"................................................ 4.14
"Change of Control Payment Date" .......................................... 4.14
"Covenant Defeasance"...................................................... 8.03
"Event of Default"......................................................... 6.01
"Excess Proceeds".......................................................... 4.10
"incur".................................................................... 4.09
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"Legal Defeasance" ........................................................ 8.02
"Offer Amount"............................................................. 3.09
"Offer Period"............................................................. 3.09
"Paying Agent"............................................................. 2.03
"Payment Default" ......................................................... 6.01
"Payment Blockage Notice" ................................................. 10.03
"Permitted Debt"........................................................... 4.09
"Purchase Date"............................................................ 3.09
"Registrar"................................................................ 2.03
"Restricted Payments"...................................................... 4.07
</TABLE>
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the Notes and the Note Guarantees means the
Company and the Guarantors, respectively, and any successor obligor upon the
Notes and the Note Guarantees, respectively.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined
has the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the
plural, and in the plural include the singular;
(5) provisions apply to successive
events and transactions; and
(6) references to sections of or rules under
the Securities Act shall be deemed to include substitute,
replacement of successor sections or rules adopted by the SEC
from time to time.
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ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A-1 hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company, the Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and agree to be bound
thereby. However, to the extent any provision of any Note conflicts with the
express provisions of this Indenture, the provisions of this Indenture shall
govern and be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibits A-1 or A-2, as applicable, attached hereto (including the
Global Note Legend thereon and the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Notes issued in definitive form shall be
substantially in the form of Exhibit A-1 attached hereto (but without the Global
Note Legend thereon and without the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate principal amount of outstanding Notes from time to
time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S Temporary
Global Note, which shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, as custodian for the Depositary, and
registered in the name of the Depositary or the nominee of the Depositary for
the accounts of designated agents holding on behalf of Euroclear or Cedel, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The Restricted Period shall be terminated upon the receipt by the
Trustee of (i) a written certificate from the Depositary, together with copies
of certificates from Euroclear and Cedel certifying that they have received
certification of non-United States beneficial ownership of 100% of the aggregate
principal amount of the Regulation S Temporary Global Note (except to the extent
of any beneficial owners thereof who acquired an interest therein during the
Restricted Period pursuant to another exemption from registration under the
Securities Act and who will take delivery of a beneficial ownership interest in
a 144A Global Note or an IAI Global Note bearing a Private Placement Legend, all
as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers'
Certificate from the Company. Following the termination of the Restricted
Period, beneficial interests in the Regulation S Temporary Global Note shall be
exchanged for beneficial interests in the Regulation S Permanent Global Note
pursuant to the Applicable Procedures. Simultaneously with the authentication of
the Regulation S Permanent Global Note, the Trustee shall cancel the Regulation
S Temporary Global Note. The aggregate principal amount of the Regulation S
Temporary Global Note and the Regulation S Permanent Global Notes may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee, as the case may be, in connection
with transfers of interest as hereinafter provided.
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(d) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" of Euroclear and the "General Terms and Conditions
of Cedel Bank" and "Customer Handbook" of Cedel shall be applicable to transfers
of beneficial interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by Participants through
Euroclear or Cedel.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by two Officers (an "Authentication Order"), authenticate Notes for original
issue up to the aggregate principal amount stated in paragraph 4 of the Notes.
The aggregate principal amount of Notes outstanding at any time may not exceed
such amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Custodian with respect to the Global
Notes.
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SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that such Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium or Liquidated Damages, if any, or interest on the
Notes, and will notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
seven Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, by the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. All Global Notes will be exchanged by the
Company for Definitive Notes if (i) the Company delivers to the Trustee notice
from the Depositary that it is no longer willing or able to act as Depositary or
that it is no longer a clearing agency registered under the Exchange Act and, in
either case, a successor Depositary is not appointed by the Company within 90
days after the date of such notice from the Depositary or (ii) the Company in
its sole discretion determines that the Global Notes (in whole but not in part)
should be exchanged for Definitive Notes and delivers a written notice to such
effect to the Trustee; provided that in no event shall the Regulation S
Temporary Global Note be exchanged by the Company for Definitive Notes prior to
(x) the expiration of the Restricted Period and (y) the receipt by the Registrar
of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the
Securities Act.
Upon the occurrence of either of the preceding events in (i)
or (ii) above, Definitive Notes shall be issued in such names as the Depositary
shall instruct the Trustee. Global Notes also may be exchanged or replaced, in
whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or any
portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof,
shall be authenticated and delivered in the form of, and shall be, a Global
Note. A Global Note may not be exchanged for another Note other than as provided
in this Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.
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(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred
to Persons who take delivery thereof through the Depositary in the form
of a beneficial interest in the same Restricted Global Note in
accordance with the transfer restrictions set forth in the Private
Placement Legend; provided, however, that prior to the expiration of
the Restricted Period, transfers of beneficial interests in the
Temporary Regulation S Global Note may not be made to a U.S. Person or
for the account or benefit of a U.S. Person (other than the Initial
Purchasers) Beneficial interests in any Unrestricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders
or instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above,
the transferor of such beneficial interest must deliver to the
Registrar either (A) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to credit or cause to be
credited a beneficial interest in another Global Note in an amount
equal to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be credited
with such increase or (B) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary
to the Registrar containing information regarding the Person in whose
name such Definitive Note shall be registered to effect the transfer or
exchange referred to in (1) above; provided that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the
Registrar of any certificates required pursuant to Rule 903 under the
Securities Act. Upon consummation of an Exchange Offer by the Company
in accordance with Section 2.06(f) hereof, the requirements of this
Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt
by the Registrar of the instructions contained in the Letter of
Transmittal delivered by the Holder of such beneficial interests in the
Restricted Global Notes. Upon satisfaction of all of the requirements
for transfer or exchange of beneficial interests in Global Notes
contained in this Indenture and the Notes or otherwise applicable under
the Securities Act, the Trustee shall adjust the principal amount of
the relevant Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof through the
Depositary in the form of a beneficial interest in another Restricted
Global Note if the transfer complies with the requirements of Section
2.06(b)(ii) above and the Registrar receives the following:
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(A) if the transferee will take delivery in the form
of a beneficial interest in the 144A Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form
of a beneficial interest in the Regulation S Temporary Global
Note or the Regulation S Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form
of a beneficial interest in the IAI Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications and certificates and
Opinion of Counsel required by item (3) thereof, if
applicable.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted
Global Note. A beneficial interest in any Restricted Global Note may be
exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Note or transferred to a Person who takes delivery
thereof through the Depositary in the form of a beneficial interest in
an Unrestricted Global Note if the exchange or transfer complies with
the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3)
a Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
beneficial interest in an Unrestricted Global Note, a certificate from such
holder in the form of Exhibit C hereto, including the certifications in item
(1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest to a Person
who shall take delivery thereof through the Depositary in the form of a
beneficial interest in an Unrestricted Global Note, a certificate from such
holder in the form of Exhibit B hereto, including the certifications in item (4)
thereof; and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement Legend
are no longer required in order to maintain compliance with the Securities Act.
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If any such transfer is effected pursuant to subparagraph (B)
or (D) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any holder of a beneficial interest in
a Restricted Global Note proposes to exchange such beneficial interest
for a Restricted Definitive Note or to transfer such beneficial
interest to a Person who takes delivery thereof from the Trustee in the
form of a Restricted Definitive Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A under the Securities
Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred
to a Non-U.S. Person in an offshore transaction in accordance
with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(a)
thereof;
(E) if such beneficial interest is being transferred
to an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the Securities
Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B
hereto, including the certifications, certificates and Opinion
of Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred
to the Company or any of its Subsidiaries, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(c)
thereof, the Trustee shall
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cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h)
hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal
amount. Any Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c)(i) shall be registered in such name or
names and in such authorized denomination or denominations as
the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Trustee shall deliver
such Definitive Notes to the Persons in whose names such Notes
are so registered. Any Definitive Note issued in exchange for
a beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c)(i) shall bear the Private Placement
Legend and shall be subject to all restrictions on transfer
contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not
be exchanged for a Definitive Note or transferred to a Person who takes
delivery thereof in the form of a Definitive Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the
Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act, except in the case of a
transfer pursuant to an exemption from the registration requirements of
the Securities Act other than Rule 903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest
to a Person who takes delivery thereof from the Trustee in the form of
an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the
case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating
in the distribution of the Exchange Notes or (3) a Person who
is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial
interest in a Restricted Global Note proposes to exchange such
beneficial interest for a Definitive Note that does not bear
the Private Placement Legend, a certificate from such holder
in the form of Exhibit C hereto, including the certifications
in item (1)(b) thereof; or
(2) if the holder of such beneficial
interest in a Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery
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thereof from the Trustee in the form of a Definitive Note that
does not bear the Private Placement Legend, a certificate from
such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest
in an Unrestricted Global Note proposes to exchange such beneficial
interest for a Definitive Note or to transfer such beneficial interest
to a Person who takes delivery thereof from the Trustee in the form of
a Definitive Note, then, upon satisfaction of the conditions set forth
in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate
principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Company shall
execute and, upon receipt of an Authentication Order, the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iv) shall be registered in such name or names and in
such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Notes to the Persons in whose
names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest pursuant to this Section 2.06(c)(iv)
shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive Notes
to a Person who takes delivery thereof in the form of a beneficial
interest in a Restricted Global Note, then, upon surrender of
Restricted Definitive Notes to the Trustee and receipt by the Registrar
of the following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(2)(b) thereof;
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1)
thereof;
(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with
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Rule 144 under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(E) if such Restricted Definitive Note is being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration requirements of
the Securities Act other than those listed in subparagraphs
(B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable;
(F) if such Restricted Definitive Note is being
transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or
cause to be increased the aggregate principal amount of, in the case of
clause (A) above, the appropriate Restricted Global Note, in the case
of clause (B) above, the 144A Global Note, in the case of clause (C)
above, the Regulation S Global Note, and in all other cases, the IAI
Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof from the Trustee in the form of a beneficial interest
in an Unrestricted Global Note upon surrender of the Restricted
Definitive Notes only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes
proposes to exchange such Notes for a beneficial interest in
the Unrestricted Global Note, a certificate from such Holder
in the form of Exhibit C hereto, including the certifications
in item (1)(c) thereof; or
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(2) if the Holder of such Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Definitive Notes to a Person who takes
delivery thereof from the Trustee in the form of a beneficial interest
in an Unrestricted Global Note at any time. Upon receipt of a request
for such an exchange or transfer and surrender of the Unrestricted
Definitive Note, the Trustee shall cancel the applicable Unrestricted
Definitive Note and increase or cause to be increased the aggregate
principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present and surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his or her attorney, duly authorized in writing. In addition, the requesting
Holder shall provide any additional certifications, documents and information,
as applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive
Notes. Any Restricted Definitive Note may be transferred to and
registered in the name of Persons who take delivery thereof from the
Trustee in the form of a Restricted Definitive Note if the Registrar
receives the following:
(A) if the transfer will be made pursuant to Rule
144A under the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
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(B) if the transfer will be made pursuant to Rule 903
or Rule 904, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in
item (2) thereof; and
(C) if the transfer will be made pursuant to any
other exemption from the registration requirements of the
Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person
or Persons who take delivery thereof from the Trustee in the form of an
Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted
Definitive Notes proposes to exchange such Notes for an
Unrestricted Definitive Note, a certificate from such Holder
in the form of Exhibit C hereto, including the certifications
in item (1)(d) thereof; or
(2) if the Holder of such Restricted
Definitive Notes proposes to transfer such Notes to a Person
who shall take delivery thereof from the Trustee in the form
of an Unrestricted Definitive Note, a certificate from such
Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person who takes delivery thereof from the Trustee in the
form of an Unrestricted Definitive Note. Upon receipt of a request to
register such a transfer, the Registrar shall register the Unrestricted
Definitive Notes pursuant to the instructions from the Holder thereof.
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(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below,
each Global Note and each Definitive Note (and all Notes
issued in exchange therefor or substitution thereof) shall
bear the legend in substantially the following form:
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933 AS AMENDED (THE "SECURITIES ACT"),
AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A AND REGULATION S. THE HOLDER OF THIS SECURITY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT, AND IN EACH CASE, IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAW OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION AND (B) THE PURCHASER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY SUBSEQUENT PURCHASER FROM
IT OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
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(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv),
(c)(ii), (c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f)
to this Section 2.06 (and all Notes issued in exchange
therefor or substitution thereof) shall not bear the Private
Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF
THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT
IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL
NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY."
(iii) Regulation S Temporary Global Note Legend The Regulation
S Temporary Global Note shall bear a legend in substantially the
following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED
NOTES, ARE AS SPECIFIED IN THE INDENTURE. NEITHER THE HOLDER NOR THE
BENEFICIAL OWNER OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE
ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes
and Definitive Notes upon the Company's order or at the Registrar's
request.
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(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive
Note for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.14
and 9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such registration
of transfer or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period
beginning at the opening of business 15 days before the day of any
selection of Notes for redemption under Section 3.02 hereof and ending
at the close of business on the day of selection, (B) to register the
transfer of or to exchange any Note so selected for redemption in whole
or in part, except the unredeemed portion of any Note being redeemed in
part or (c) to register the transfer of or to exchange a Note between a
record date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and
none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02
hereof.
(viii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this
Section 2.06 to effect a registration of transfer or exchange may be
submitted by facsimile.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon receipt of an Authentication Order, shall authenticate a replacement Note
if the Trustee's requirements are met. If required by the Trustee or the
Company, an indemnity bond must be supplied by the Holder that is sufficient in
the judgment of the Trustee and the Company to protect the Company, the Trustee,
any Agent and any authenticating agent from any loss that any of them may suffer
if a Note is replaced. The Company may charge for its expenses in replacing a
Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
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SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Note effected
by the Trustee in accordance with the provisions hereof and those described in
this Section 2.08 as not outstanding. Except as set forth in Section 2.09
hereof, a Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee knows are so owned
shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until certificates representing Notes are ready for delivery,
the Company may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of certificated Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
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SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
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ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed or purchased
in an offer to purchase at any time, the Trustee shall select the Notes to be
redeemed or purchased among the Holders of the Notes in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot
or in accordance with any other method the Trustee considers fair and
appropriate; provided that no Notes of $1,000 or less shall be redeemed in part.
In the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
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(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
One Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company
shall issue and, upon receipt of an Authentication Order, the Trustee shall
authenticate for the Holder, at the expense of the Company, a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the Notes
shall not be redeemable at the Company's option prior to November 15, 2002.
Thereafter, the Notes shall be subject to redemption at any time at the option
of the Company, in whole or in part, upon not less than 30 nor more than 60
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days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on November 15 of the years indicated below:
Year Percentage
---- ----------
2002.............................................104.938%
2003.............................................103.292%
2004.............................................101.646%
2005 and thereafter..............................100.000%
(b) Notwithstanding the provisions of clause (a) of this Section
3.07, prior to November 15, 2000, the Company may redeem up to an aggregate of
33% of the principal amount of Notes at the redemption price of 109.875% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the redemption date, with the net cash proceeds of
one or more offerings of Equity Interests (other than Disqualified Stock) of the
Company, provided that (i) at least 67% of the principal amount of the Notes
originally issued under this Indenture remains outstanding immediately after the
occurrence of each such redemption and (ii) notice of such redemption shall be
given within 90 days of the date of the consummation of each such public
offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth in Sections 4.10 and 4.14 hereof, the
Company shall not be required to make mandatory redemption payments with respect
to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the
Company shall be required to commence an Asset Sale Offer, it shall follow the
procedures specified below.
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount")
or, if less than the Offer Amount has been tendered, all Notes tendered in
response to the Asset Sale Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to each of the Holders, with a copy to
the Trustee. The notice shall contain all instructions and materials necessary
to enable such Holders to tender Notes pursuant to the
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Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice,
which shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Trustee shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating that
such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.09. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a new
Note, and the Trustee, upon written request from the Company, shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal to
any unpurchased portion of the Note surrendered. Any Note not so accepted shall
be promptly mailed or delivered by the Company to the Holder thereof. The
Company shall publicly announce the results of the Asset Sale Offer on the
Purchase Date.
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The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
purchase of Notes in connection with an Asset Sale Offer.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary thereof, holds as of 10:00 a.m. New York Time on the due date
money deposited by the Company in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1% per annum in excess of the then applicable interest rate on the
Notes to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Liquidated Damages (without regard to any applicable grace period)
at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
the Company shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.03.
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SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to Trustee and the
Holders of Notes, (i) all quarterly and annual financial information (excluding
exhibits and financial schedules) that would be required to be contained in a
filing with the SEC on Forms 10-Q and 10-K if the Company were required to file
such Forms, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" that describes the financial condition and
results of operations of the Company and its consolidated Subsidiaries (showing
in reasonable detail, either on the face of the financial statements or in the
footnotes thereto, the consolidated financial condition and results of
operations of the Company and its Restricted Subsidiaries separate from the
financial information and results of operations of the Unrestricted Subsidiaries
of the Company) and, with respect to the annual information only, a report
thereon by the Company's certified independent accountants and (ii) all current
reports that would be required to be filed with the SEC on Form 8-K if the
Company were required to file such reports. In addition, whether or not required
by the rules and regulations of the SEC, the Company shall file a copy of all
such information and reports with the SEC for public availability (unless the
SEC will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. The Company shall at
all times comply with TIA ss. 314(a).
(b) For so long as any Notes remain outstanding, the Company and its
Restricted Subsidiaries shall furnish to the Holders and to securities analysts
and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company and each Guarantor (to the extent that such Guarantor
is so required under the TIA) shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company or such Guarantor, as applicable, have kept,
observed, performed and fulfilled its obligations under this Indenture and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge the Company and the Guarantors have kept, observed,
performed and fulfilled each and every covenant contained in this Indenture and
is not in default in the performance or observance of any of the terms,
provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company or such
Guarantor, as applicable, is taking or proposes to take with respect thereto)
and that to the best of his or her knowledge, no event has occurred and remains
in existence by reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company or such Guarantor, as
applicable, is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) hereof shall be accompanied by
a written statement of the Company's independent public accountants (who shall
be a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
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(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and each of the Guarantors covenant (to the extent
that they may lawfully do so) that they shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Indenture;
and the Company and each of the Guarantors (to the extent that they may lawfully
do so) hereby expressly waives all benefit or advantage of any such law, and
covenants that they shall not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the Company's
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Company) or to any direct or indirect
holders of the Company's Equity Interests in their capacity as such (other than
dividends or distributions (a) payable in Equity Interests (other than
Disqualified Stock) of the Company or (b) to the Company or any Wholly Owned
Restricted Subsidiary of the Company; (ii) purchase, redeem or otherwise acquire
or retire for value (including, without limitation, in connection with any
merger or consolidation involving the Company) any Equity Interests of the
Company or any direct or indirect parent of the Company (other than any such
Equity Interests owned by the Company or any Wholly Owned Restricted Subsidiary
of the Company); (iii) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any Indebtedness of the
Company or any Restricted Subsidiary that is subordinated to the Notes or any
Note Guarantee, except a payment of interest or principal at Stated Maturity; or
(iv) make any Restricted Investment (all such payments and other actions set
forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment has been made at
the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof; and
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(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the Closing Date (excluding Restricted Payments permitted by clause (ii)
through (iv) of the next succeeding paragraph), is less than the sum of (i) 50%
of the Consolidated Net Income of the Company for the period (taken as one
accounting period) from January 1, 1998 to the end of the Company's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such deficit), plus (ii) 100%
of the aggregate net cash proceeds received by the Company from the issue or
sale since the Closing Date of Equity Interests of the Company (other than
Disqualified Stock) or of Disqualified Stock or debt securities of the Company
that have been converted into such Equity Interests (other than Equity Interests
(or Disqualified Stock or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or convertible debt securities
that have been converted into Disqualified Stock), plus (iii) 50% of any
dividends received by the Company or a Wholly Owned Restricted Subsidiary of the
Company after the Closing Date from an Unrestricted Subsidiary of the Company,
to the extent that such dividends that were not otherwise included in
Consolidated Net Income of the Company for such period.
The foregoing provisions shall not prohibit (i) the payment of
any dividend within 60 days after the date of declaration thereof, if at the
date of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
or any Restricted Subsidiary in exchange for, or out of the net cash proceeds of
the substantially concurrent sale (other than to a Subsidiary of the Company)
of, other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement, defeasance or other acquisition shall
be excluded from clause (c)(ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness; (iv) payments pursuant to the Transactions as
described under the caption "The Transactions; Use of Proceeds" and
"Management--Employment Agreements" in the Offering Memorandum; (v) so long as
no Default or Event of Default shall have occurred and be continuing immediately
after such transaction, the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Company or any Restricted
Subsidiary of the Company held by any member of the Company's (or any of its
Restricted Subsidiaries') management or Board of Directors pursuant to any
management equity subscription agreement, stock option agreement or other
similar agreement; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed the
sum of (a) $500,000 in any twelve-month period plus (b) the aggregate net
proceeds received by the Company from the issuance after the Closing Date of
Equity Interests (other than Disqualified Stock) of the Company to members of
management or the Board of Directors of the Company or any of its Restricted
Subsidiaries; provided that the amount of any such net cash proceeds that are
utilized for any such repurchase, redemption or other acquisition or retirement
shall be excluded from clause (c)(ii) of the preceding paragraph), and, (vi)
payments to Berkshire Partners LLC pursuant to the Management Agreement in an
amount not to exceed $400,000 in any calendar year; provided that any such
payments that could have been made in a calendar year pursuant to this clause
(vi) but that are not so made, may be made in any subsequent calendar year.
The amount of all Restricted Payments (other than cash) shall
be the fair market value on the date of the Restricted Payment of the asset(s)
or securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined in
good faith by the Board of Directors whose resolution with respect thereto shall
be delivered to the Trustee. Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officers' Certificate
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stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by this Section 4.07 were computed.
The Board of Directors may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if such designation would not cause a Default.
For purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated shall be deemed to be Restricted Payments at the
time of such designation and shall reduce the amount available for Restricted
Payments under the first paragraph of this Section 4.07. All such outstanding
Investments shall be deemed to constitute Investments in an amount equal to the
greatest of (i) the net book value of such Investments at the time of such
designation, (ii) the fair market value of such Investments at the time of such
designation and (iii) the original fair market value of such Investments at the
time they were made. Such designation shall only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
Any such designation by the Board of Directors shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
board resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions. If, at
any time, any Unrestricted Subsidiary would fail to meet the definition of an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of such Section). The Board of Directors may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under Section 4.09 hereof, calculated on a pro forma basis as if
such designation had occurred at the beginning of the four-quarter reference
period, and (ii) no Default or Event of Default would be in existence
immediately following such designation.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (a)(i) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (A) on its
Capital Stock or (B) with respect to any other interest or participation in, or
measured by, its profits or (ii) pay any indebtedness owed to the Company or any
of its Restricted Subsidiaries, (b) make loans or advances to the Company or any
of its Restricted Subsidiaries or (c) transfer any of its properties or assets
to the Company or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (i) Existing
Indebtedness as in effect on the Closing Date, (ii) the Credit Facility as in
effect as of the Closing Date, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the Credit Facility as in effect on the Closing Date, (iii)
this Indenture, the Notes and the Note Guarantees, (iv) applicable law, (v) any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any
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Person, other than the Person, or the property or assets of the Person, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred, (vi) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of businesses, (vii) purchase money obligations for property acquired in
the ordinary course of business that impose restrictions of the nature described
in clause (c) above on the property so acquired, (viii) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive than
those contained in the agreements governing the Indebtedness being refinanced,
or (ix) restrictions with respect to a Subsidiary of the Company imposed
pursuant to a binding agreement which has been entered into for the sale or
disposition of all of the Capital Stock or all or substantially all of the
assets of such Subsidiary .
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
Following the Closing Date, the Company shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt) and that the Company shall not permit any
of its Restricted Subsidiaries to issue any shares of preferred stock (other
than to the Company or another Restricted Subsidiary); provided, however, that
the Company and its Restricted Subsidiaries may incur Indebtedness (including
Acquired Debt) and the Company's Restricted Subsidiaries may issue shares of
preferred stock if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such preferred stock is issued would have been at
least 2.0 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred or the preferred stock had been issued at the beginning of
such four-quarter period.
The provisions of the first paragraph of this Section 4.09
shall not apply to the incurrence of any of the following (collectively,
"Permitted Debt");
(i) the incurrence by the Company and its Restricted
Subsidiaries of Indebtedness under the Credit Facility; in an aggregate
amount not to exceed the greater of (a) $100.0 million at any time
outstanding, less the aggregate amount of all Net Proceeds of Asset
Sales applied to repay any such Indebtedness pursuant to clause (a) of
the second paragraph of Section 4.10 or (b) the sum of 80% of the
accounts receivable plus 50% of the inventory, in each case of the
Company and its Restricted Subsidiaries, net of reserves, as shown on
the most recent balance sheet of the Company and its Restricted
Subsidiaries ;
(ii) the incurrence by the Company and the Guarantors of
Indebtedness represented by the Notes and the Note Guarantees;
(iii) the incurrence by the Company and its Restricted
Subsidiaries of the Existing Indebtedness;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund, refinance or replace
Indebtedness that was permitted to be incurred by the first paragraph,
or by clauses (ii) through (viii) of the second paragraph of this
Section 4.09;
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(v) the incurrence of Indebtedness between or among the
Company and any of its Wholly Owned Restricted Subsidiaries; provided,
however, that (a) if the Company is the obligor on such Indebtedness,
such Indebtedness is expressly subordinated to the prior payment in
full of all Obligations with respect to the Notes and (b) any
subsequent issuance or transfer of Equity Interests that results in any
such Indebtedness being held by a Person other than the Company or a
Wholly Owned Restricted Subsidiary, and any sale or other transfer of
any such Indebtedness to a Person that is not either the Company or a
Wholly Owned Restricted Subsidiary, shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose
of fixing or hedging interest rate risk with respect to any floating
rate Indebtedness that is permitted by the terms of this Indenture to
be outstanding;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate amount not to
exceed $15.0 million at any time; and
(viii) the guarantee by the Company or any of the Guarantors
of Indebtedness that was permitted to be incurred by another provision
of this Section 4.09.
For purposes of determining compliance with this Section 4.09,
in the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Debt described in clauses (i) through (viii) above
or is entitled to be incurred pursuant to the first paragraph of this Section
4.09, the Company shall, in its sole discretion, classify such item of
Indebtedness in any manner that complies with this Section 4.09 and such item of
Indebtedness will be treated as having been incurred pursuant to only one of
such clauses or pursuant to the first paragraph hereof. Accrual of interest, the
accretion of accreted value and the payment of interest in the form of
additional Indebtedness shall not be deemed to be an incurrence of Indebtedness
for purposes of this Section 4.09.
SECTION 4.10. ASSET SALES
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or
such Restricted Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash or
Cash Equivalents; provided that the amount of (a) any liabilities (as shown on
the Company's or such Restricted Subsidiary's most recent balance sheet) of the
Company or such Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any Note
Guarantee thereof) that are assumed by the transferee of any such assets
pursuant to a customary novation agreement that releases the Company or such
Restricted Subsidiary from further liability and (b) any securities, notes or
other obligations received by the Company or such Restricted Subsidiary from
such transferee that are immediately converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received) shall be deemed to be
cash for purposes of this provision.
Within 360 days of the receipt of any Net Proceeds from an
Asset Sale, the Company or any of its Restricted Subsidiaries may apply such Net
Proceeds, at its option, (a) to repay Senior Debt of the Company or any of its
Restricted Subsidiaries or to provide cash collateral with respect to any
letters of credit outstanding under the Credit Facility and, in each case, to
correspondingly reduce commitments
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with respect thereto in the case of revolving borrowings or (b) to the
acquisition of a controlling interest in another business, the making of a
capital expenditure or the acquisition of other long-term assets. Pending the
final application of any such Net Proceeds, the Company may temporarily reduce
Senior Debt or otherwise invest such Net Proceeds in any manner that is not
prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph shall be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company shall be required to make an offer to
all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the principal amount thereof; plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of purchase, in accordance with the procedures set forth in this Indenture. To
the extent that the aggregate principal amount of Notes tendered pursuant to an
Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro
rata basis. Upon completion of an Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (a) such Affiliate Transaction is on terms that are no less favorable to
the Company or such Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (b) the Company delivers to the Trustee
(i) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (a) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (ii) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the fairness
to the Company of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing.
The foregoing provisions shall not apply to: (i) any
employment agreement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business; (ii) transactions between or
among the Company and/or its Restricted Subsidiaries; and (iii) any Restricted
Payment that is permitted by Section 4.07 hereof.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien securing Indebtedness or trade payables on any asset
now owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except Permitted Liens.
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SECTION 4.13. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other existence of
each of its Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Subsidiary and (ii) the rights (charter and statutory), licenses and
franchises of the Company and its Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Subsidiaries, if
the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Notes.
SECTION 4.14. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company shall make
an offer (a "Change of Control Offer") to each Holder to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes at
an offer price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon, to the date
of purchase (the "Change of Control Payment"). Within 30 days following a Change
of Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and stating:
(1) that the Change of Control Offer is being made pursuant to this Section 4.14
and that all Notes tendered will be accepted for payment; (2) the purchase price
and the purchase date, which date shall be no earlier than 30 days and no later
than 60 days from the date such notice is mailed (the "Change of Control Payment
Date"); (3) that any Note not tendered will continue to accrue interest; (4)
that, unless the Company defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date; (5)
that Holders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a statement that such Holder is
withdrawing his election to have the Notes purchased; and (7) that Holders whose
Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an integral
multiple thereof. The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes in connection with a Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such
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new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. Prior to complying with the provisions of this Section 4.14, but in any
event within 90 days following a Change of Control, the Company shall either
repay all outstanding Senior Debt or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt to permit the repurchase
of Notes required by this Section 4.14. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
(c) Notwithstanding anything to the contrary in this Section 4.14, the
Company shall not be required to make a Change of Control Offer following a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 4.14 and Section 3.09 hereof and purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer.
SECTION 4.15. LIMITATION ON OTHER SENIOR SUBORDINATED DEBT.
Notwithstanding the provisions of Section 4.09 hereof, neither
the Company nor any Guarantor shall directly or indirectly incur any
Indebtedness that is subordinate or junior in right of payment to any Senior
Debt of the Company or such Guarantor, as the case may be, and senior in any
respect in right of payment to the Notes or such Guarantor's Note Guarantee.
SECTION 4.16. PAYMENTS FOR CONSENT.
Neither the Company nor any of Restricted Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
or is paid to all Holders of the Notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 4.17. ADDITIONAL NOTE GUARANTEES.
If the Company or any Guarantor shall acquire or create
another Domestic Restricted Subsidiary after the date of this Indenture, or any
Unrestricted Subsidiary shall cease to be an Unrestricted Subsidiary and shall
become a Domestic Restricted Subsidiary, then such Subsidiary shall execute a
guarantee of the Notes and deliver an Opinion of Counsel in accordance with the
terms of this Indenture.
ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
Neither the Company nor any Guarantor shall consolidate or
merge with or into (whether or not the Company or such Guarantor, as the case
may be, is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another corporation, Person or entity
unless (i) the Company or such Guarantor, as the case may be, is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company or such Guarantor) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (ii) the
entity or Person formed by or surviving any such consolidation or merger (if
other than
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the Company or such Guarantor) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the obligations of the Company or such Guarantor, as the case
may be, under the Notes or such Guarantor's Note Guarantee thereof and this
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee; (iii) immediately after such transaction no Default or Event of
Default exists; and (iv) except in the case of a merger of the Company or a
Guarantor with or into the Company or a Wholly Owned Restricted Subsidiary of
the Company, the Company, such Guarantor or the entity or Person formed by or
surviving any such consolidation or merger (if other than the Company or such
Guarantor), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (a) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
worth of the Company immediately preceding the transaction and (b) will, at the
time of such transaction and after giving pro forma effect thereto (including
pro forma expense and cost reductions) as if such transaction had occurred at
the beginning of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company or any Guarantor in accordance with Section 5.01
hereof, the successor corporation formed by such consolidation or into or with
which the Company, or such Guarantor is merged or to which such sale,
assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company," or such "Guarantor"
shall refer instead to the successor corporation and not to the Company, or such
Guarantor), and may exercise every right and power of the Company or such
Guarantor under this Indenture with the same effect as if such successor Person
had been named as the Company, or such Guarantor herein; provided, however, that
the predecessor Company or Guarantor shall not be relieved from the obligation
to pay the principal of and interest on the Notes except in the case of a sale
of all of the Company's or any Guarantor's assets that meets the requirements of
Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES.
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, the Notes (whether or not
prohibited by Article 10 hereof) and such default continues for a period of 30
days;
(b) the Company defaults in the payment when due of the principal of or
premium, if any, on the Notes (whether or not prohibited by Article 10 hereof);
(c) the Company or any of its Restricted Subsidiaries fails to comply
with any of the provisions of Section 4.07, 4.09, 4.10, 4.14 or 5.01 hereof;
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(d) the Company or any of its Restricted Subsidiaries fails to comply
with any of its other agreements in this Indenture or the Notes for 60 days
after written notice of such failure to comply by the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Notes;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or
is created after the Closing Date, which default (i) is caused by a failure to
pay principal of or premium, if any, or interest on such Indebtedness at final
maturity (a "Payment Default") or (ii) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $5.0 million or more.
(f) the Company or any of its Restricted Subsidiaries fails to pay
final judgments aggregating in excess of $5.0 million, entered by a court or
courts of competent jurisdiction against the Company or any of its Restricted
Subsidiaries, and either (i) any creditor commences enforcement proceedings upon
any such judgment or (ii) such judgments are not paid, discharged or stayed for
a period of 60 days;
(g) the Company, any of its Restricted Subsidiaries that
constitutes a Significant Subsidiary or any group of Restricted Subsidiaries of
the Company that, taken together, would constitute a Significant Subsidiary
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due;
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company, any of its Restricted
Subsidiaries that constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries of the Company that, taken together, would
constitute a Significant Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company, any of its
Restricted Subsidiaries that constitutes a Significant Subsidiary or
any group of Restricted Subsidiaries of the Company that, taken
together, would constitute a Significant Subsidiary or is for all or
substantially all of the property of the Company, any of its Restricted
Subsidiaries that constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries of the Company that, taken together, would
constitute a Significant Subsidiary; or
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(iii) orders the liquidation of the Company, any of its
Restricted Subsidiaries that constitute Significant Subsidiary or any
group of Restricted Subsidiaries of the Company, that, taken together,
would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days; or
(iv) except as permitted by this Indenture, any Note Guarantee is held
in any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guarantor, or any Person acting on
behalf of any Guarantor, shall deny or disaffirm its obligations under its Note
Guarantee.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default
specified in clause (g) or (h) of Section 6.01 hereof occurs and is continuing,
the Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately,
provided, that so long as any Indebtedness permitted to be incurred pursuant to
the Credit Facility shall be outstanding, no such acceleration shall be
effective until the earlier of (i) acceleration of any Indebtedness under the
Credit Facility or (ii) five business days after the giving of written notice of
such acceleration to the Company and the Credit Facility Representative (as
defined in the Credit Facility). Notwithstanding the foregoing, if an Event of
Default specified in clause (g) or (h) of Section 6.01 hereof occurs with
respect to the Company, any of its Restricted Subsidiaries that constitute
Significant Subsidiary or any group of Restricted Subsidiaries of the Company
that, taken together, would constitute a Significant Subsidiary, all outstanding
Notes shall be due and payable immediately without further action or notice.
Holders of the Notes may not enforce this Indenture or the Notes except as
provided herein. The Holders of a majority in aggregate principal amount of the
then outstanding Notes by written notice to the Trustee may on behalf of all of
the Holders rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived.
If an Event of Default occurs on or after November 15, 2002 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to November 15,
2002 by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, a premium shall also become and be immediately due and payable so that
the Company shall be obligated to pay an amount (expressed as percentages of
principal amount), for each of the years beginning on November 15 of the years
as set forth below;
Year Percentage
---- ----------
1999 109.876%
2000 108.230%
2001 106.584%
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SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal
amount of the then outstanding Notes by notice to the Trustee may on behalf of
the Holders of all of the Notes waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, or premium, interest and Liquidated Damages,
if any, on the Notes (including in connection with an offer to purchase);
provided, however, that the Holders of a majority in aggregate principal amount
of the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration. Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture, the Notes, or the Note Guarantees only if:
(a) the Holder of a Note gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the provision
of indemnity; and
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(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Note, on or after the respective
due dates expressed in the Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders of the Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes), its creditors or its property and
shall be entitled and empowered to collect, receive and distribute any money or
other property payable or deliverable on any such claims and any custodian in
any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:
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First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium and Liquidated Damages, if
any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE.
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and
no others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
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(i) this paragraph does not limit the effect of paragraph (b)
of this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), (c), (e) and (f) of this Section 7.01 and Section 7.02 hereof.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
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SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company, the
Guarantors, or any Affiliate of the Company or the Guarantors with the same
rights it would have if it were not Trustee. However, in the event that the
Trustee acquires any conflicting interest it must eliminate such conflict within
90 days, apply to the SEC for permission to continue as trustee or resign. Any
Agent may do the same with like rights and duties. The Trustee is also subject
to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, the Notes or
the Note Guarantees, it shall not be accountable for the Company's use of the
proceeds from the Notes or any money paid to the Company or upon the Company's
direction under any provision of this Indenture, it shall not be responsible for
the use or application of any money received by any Paying Agent other than the
Trustee, and it shall not be responsible for any statement or recital herein or
any statement in the Notes or any other document in connection with the sale of
the Notes or pursuant to this Indenture other than its certificate of
authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the SEC and each
stock exchange on which the Notes are listed in accordance with TIA ss. 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company and the Guarantors shall pay to the Trustee from
time to time reasonable compensation for its acceptance of this Indenture and
services hereunder. The Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Company and the Guarantors
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances
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and expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel.
The Company and the Guarantors shall indemnify the Trustee
against any and all losses, liabilities or expenses incurred by it arising out
of or in connection with the acceptance or administration of its duties under
this Indenture, including the costs and expenses of enforcing this Indenture
against the Company and the Guarantors (including this Section 7.07) and
defending itself against any claim (whether asserted by the Company, any
Guarantor or any Holder or any other person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder, except to the
extent any such loss, liability or expense may be solely attributable to its
negligence or bad faith. The Trustee shall notify the Company and the Guarantors
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company and the Guarantors shall not relieve the Company and the
Guarantors of their obligations hereunder. The Company and the Guarantors shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee may
have separate counsel and the Company and the Guarantors shall pay the
reasonable fees and expenses of such counsel. The Company and the Guarantors
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
The obligations of the Company and the Guarantors under this
Section 7.07 shall survive the satisfaction and discharge of this Indenture.
To secure the Company's and the Guarantors' payment
obligations in this Section 7.07, the Trustee shall have a Lien prior to the
Notes on all money or property held or collected by the Trustee, except that
held in trust to pay principal and interest on particular Notes. Such Lien shall
survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss.
313(b)(2) to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of Notes of a majority in principal amount of the then outstanding Notes
may remove the Trustee by so notifying the Trustee and the Company in writing.
The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or
its property; or
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(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note
who has been a Holder of a Note for at least six months, fails to comply with
Section 7.10 hereof, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's and the Guarantors' obligations under
Section 7.07 hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $100.0 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
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ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company and each Guarantor shall,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
be deemed to have been discharged from their obligations with respect to all
outstanding Notes and Note Guarantees on the date the conditions set forth below
are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
Defeasance means that the Company and each Guarantor shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding Notes
and Note Guarantees, which shall thereafter be deemed to be "outstanding" only
for the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all of their other
obligations under such Notes and Note Guarantees and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of outstanding Notes to receive payments in respect of the principal
of and premium, interest and Liquidated Damages, if any, on the Notes when such
payments are due solely from the trust fund described in Section 8.04 hereof,
and as more fully set forth in such Section, (b) the Company's obligations with
respect to the Notes under Article 2 and Section 4.02 hereof, (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and the Company's
and the Guarantors' obligations in connection therewith and (d) this Article 8.
Subject to compliance with this Article 8, the Company may exercise their option
under this Section 8.02 notwithstanding the prior exercise of its option under
Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company and each Guarantor shall,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
be released from their obligations under the covenants contained in Sections
4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.17 hereof with
respect to the outstanding Notes and Note Guarantees on and after the date the
conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes and Note Guarantees shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder (it being understood that such Notes and Note Guarantees shall not be
deemed outstanding for accounting purposes). For this purpose, "Covenant
Defeasance" means that, with respect to the outstanding Notes and Note
Guarantees, the Company and Guarantors may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture, such
Notes and Note Guarantees shall be unaffected thereby. In addition, upon the
Company's exercise under Section
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8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(d) through 6.01(f) hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes and Note Guarantees:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Notes, cash in U. S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of and premium, interest and Liquidated
Damages, if any, on the outstanding Notes on the stated maturity or on the
applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the Closing Date, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based thereon
such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit) or insofar
as Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period
ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
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(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or non-callable Government Securities held by
it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, premium,
interest and Liquidated Damages, if any, on any Note and remaining unclaimed for
two years after such principal, and premium, if any, or interest has become due
and payable shall be paid to the Company on its request or (if then held by the
Company) and shall be discharged from such trust; and the Holder of such Note
shall thereafter, as a secured creditor, look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
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SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any U. S.
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and the Guarantors' obligations under this
Indenture, the Notes and the Note Guarantees shall be revived and reinstated as
though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; provided,
however, that, if the Company makes any payment of principal of, premium, if
any, or interest on any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, a
Guarantor (with respect to a Note Guarantee) and the Trustee may amend or
supplement this Indenture, the Notes or any Note Guarantee without the consent
of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(c) to provide for the assumption of the Company's or any Guarantor's
obligations to the Holders of the Notes in the case of a merger or consolidation
pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the legal
rights hereunder of any such Holder; or
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company and
the Guarantors in the execution of any amended or supplemental Indenture
authorized or permitted by the terms of this Indenture and to make any further
appropriate agreements and stipulations that may be therein contained, but the
Trustee shall not be obligated to enter into such amended or supplemental
Indenture that affects its own rights, duties or immunities under this Indenture
or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company,
the Guarantors and the Trustee may amend or supplement this Indenture (including
Sections 3.09, 4.10 and 4.14 hereof), the Note Guarantees and the Notes with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding (including, without limitation, consents obtained in connection
with a
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purchase of, or tender offer or exchange offer for, Notes), and, subject
to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default or
compliance with any provision of this Indenture, the Note Guarantees or the
Notes may be waived with the consent of the Holders of a majority in principal
amount of the then outstanding Notes (including consents obtained in connection
with a tender offer or exchange offer for Notes).
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid,
and upon receipt by the Trustee of the documents described in Section 7.02
hereof, the Trustee shall join with the Company and the Guarantors in the
execution of such amended or supplemental Indenture unless such amended or
supplemental Indenture directly affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall not be necessary for the consent of the Holders of
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance in a particular instance by the Company or the
Guarantors with any provision of this Indenture, the Notes or the Note
Guarantees. However, without the consent of each Holder affected, an amendment
or waiver under this Section 9.02 may not (with respect to any Notes or Note
Guarantees held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes, except with
respect to Sections 3.09, 4.10 and 4.14 hereof;
(c) reduce the rate of or change the time for payment of interest
on any Note;
(d) waive a Default or Event of Default in the payment of principal of
or premium, interest or Liquidated Damages, if any, on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment default that
resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, interest or Liquidated Damages, if any, on the
Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Section 3.09, 4.10, or 4.14 hereof);
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(h) release any Guarantor from any of its obligations under its Note
Guarantee, except in accordance with the terms of this Indenture; or
(i) make any change in the foregoing amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture, the Notes or
the Note Guarantees shall be set forth in a amended or supplemental Indenture
that complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company may issue and the Trustee shall, upon receipt of an Authentication
Order, authenticate new Notes in exchange for all Notes that reflect the
amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental Indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 12.04 hereof, an Officers' Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10.
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company and the Guarantors agree for themselves and their
respective successors, and each Holder by accepting a Note agrees, that the
Indebtedness evidenced by the Notes and the Note Guarantees is subordinated in
right of payment, to the extent and in the manner provided in this Article 10
and Section 11.02, to the prior payment in full in cash or Cash Equivalents of
all Senior Debt of the Company and the Guarantors, (in each case, whether
outstanding on the Closing Date or hereafter
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created, incurred, assumed or guaranteed), as applicable, and that the
subordination is for the benefit of the holders of Senior Debt.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company or any
Guarantor in a liquidation or dissolution of the Company or such Guarantor or in
a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or such Guarantor, or its property, in an assignment for
the benefit of creditors or any marshaling of the Company's or such Guarantor's
assets and liabilities:
(a) holders of Senior Debt of the Company or such Guarantor shall be
entitled to receive payment in full in cash or Cash Equivalents of all
Obligations due in respect of such Senior Debt (including Post-Petition
Interest) before the Holders of Notes shall be entitled to receive any payment
with respect to the Notes (except that Holders may receive (i) Permitted Junior
Securities and (ii) payments and other distributions made from any defeasance
trust created pursuant to Section 8.01 hereof); and
(b) until all Obligations with respect to Senior Debt (as provided in
subsection (1) above) are paid in full in cash or Cash Equivalents, any
distribution to which the Holders of Notes would be entitled but for this
Article 10 shall be made to holders of Senior Debt (except that Holders of Notes
may receive (i) Permitted Junior Securities and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof), as their interests may appear.
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company and the Guarantors may not make any payment or
distribution to the Trustee or any Holder upon or in respect of the Notes or to
repurchase or to redeem any of the Notes (including pursuant to Section 3.07,
3.09, 4.10 or 4.14 hereof) (other than, in each case, (i) Permitted Junior
Securities and (ii) payments and other distributions made from any defeasance
trust created pursuant to Section 8.01 hereof) if:
(a) a default in the payment of the principal of or premium or interest
on any Designated Senior Debt occurs and is continuing beyond any applicable
period of grace; or
(b) any other default occurs and is continuing with respect to any
Designated Senior Debt that permits holders of the Designated Senior Debt
as to which such default relates to accelerate its maturity and the Trustee
receives a notice of default (a "Payment Blockage Notice") from the Company
or the agent under (in the case of the Credit Facility) or the holders of
such Designated Senior Debt. If the Trustee receives any such Payment
Blockage Notice, no subsequent Payment Blockage Notice shall be effective
for purposes of this Section unless and until 360 days shall have elapsed
since the effectiveness of the immediately prior Payment Blockage Notice.
No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice unless such
default shall have been cured or waived for a period of at least 30 days.
The Company and the Guarantors may and shall resume payments
on the Notes and the Note Guarantees:
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(1) in the case of a payment default, upon the date on which
such default is cured or waived pursuant to the terms of such Designated Senior
Debt, and
(2) in the case of a nonpayment default, the earlier of the
date on which such nonpayment default is cured or waived or 179 days after the
date on which the applicable Payment Blockage Notice is received, unless the
maturity of any Designated Senior Debt has been accelerated,
if this Article 10 otherwise permits the payment.
SECTION 10.04. ACCELERATION OF SECURITIES.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any
payment of any Obligations with respect to the Notes or the Note Guarantees at a
time when the Trustee or such Holder, as applicable, has actual knowledge that
such payment is prohibited by Section 10.03 hereof, such payment shall be held
by the Trustee or such Holder, in trust for the benefit of, and, to the extent
such payment is in cash or Cash Equivalents shall, be paid forthwith over and
delivered, upon written request, to (otherwise to be held as cash collateral),
the holders of Senior Debt of the Company as their interests may appear or their
Representative under this Indenture or other agreement (if any) pursuant to
which such Senior Debt may have been issued, as their respective interests may
appear, for application to the payment of all Obligations with respect to such
Senior Debt remaining unpaid to the extent necessary to pay such Obligations in
full in accordance with their terms, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Debt.
With respect to the holders of Senior Debt of the Company and
the Guarantors, the Trustee undertakes to perform only such obligations on the
part of the Trustee as are specifically set forth in this Article 10, and no
implied covenants or obligations with respect to the holders of such Senior Debt
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of such Senior Debt, and shall
not be liable to any such holders if the Trustee shall pay over or distribute to
or on behalf of Holders or the Company or any other Person money or assets to
which any holders of such Senior Debt shall be entitled by virtue of this
Article 10, except if such payment is made as a result of the willful misconduct
or gross negligence of the Trustee.
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to it that would cause a payment of any Obligations
with respect to the Notes to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt of the
Company as provided in this Article 10.
SECTION 10.07. SUBROGATION.
After all Senior Debt of the Company and the Guarantors is
paid in full in cash or Cash Equivalents and until the Notes are paid in full,
Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of such Senior
Debt to receive distributions applicable to such Senior Debt to the extent that
distributions otherwise payable to
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the Holders of Notes have been applied to the payment of such Senior Debt. A
distribution made under this Article 10 to holders of Senior Debt of the Company
that otherwise would have been made to Holders of Notes is not, as between the
Company and Holders, a payment by the Company on the Notes.
SECTION 10.08. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of
Notes and holders of Senior Debt of the Company. Nothing in this Indenture
shall:
(1) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and
creditors of the Company other than their rights in relation to holders of
Senior Debt of the Company; or
(3) prevent the Trustee or any Holder of Notes from exercising
its available remedies upon a Default or Event of Default, subject to the rights
of holders and owners of Senior Debt of the Company to receive distributions and
payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay
principal of or interest on a Note on the due date, the failure is still a
Default or Event of Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt of the Company or any
Guarantor to enforce the subordination of the Indebtedness evidenced by the
Notes shall be impaired by any act or failure to act by the Company, such
Guarantor or any Holder or by the failure of the Company, such Guarantor or any
Holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to
holders of Senior Debt of the Company the distribution may be made and the
notice given to their Representative.
Upon any payment or distribution of assets of the Company
referred to in this Article 10, the Trustee and the Holders of Notes shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders of Notes for the purpose of ascertaining the Persons
entitled to participate in such distribution, the holders of the Senior Debt of
the Company and other Indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that
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would cause the payment of any Obligations with respect to the Notes to violate
this Article 10. Only the Company or a Representative may give the notice.
Nothing in this Article 10 shall impair the claims of, or payments to, the
Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold
Senior Debt of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof,
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination as provided
in this Article 10, and appoints the Trustee to act as such Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.09 hereof at least 30 days before the expiration of the
time to file such claim, a Representative of Designated Senior Debt is hereby
authorized to file an appropriate claim for and on behalf of the Holders of the
Notes.
SECTION 10.13. AMENDMENTS.
The provisions of this Article 10 shall not be amended or
modified without the written consent of the holders of all Senior Debt of the
Company. Notwithstanding the foregoing, any amendment to the provisions of this
Article 10 shall require the consent of the Holders of at least 75% in aggregate
principal amount of the Notes then outstanding if such amendment would adversely
affect the rights of Holders of Notes.
ARTICLE 11.
NOTE GUARANTEES
SECTION 11.01. GUARANTEE.
Subject to this Article 11, each of the Guarantors hereby,
jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, the Notes or the Obligations of the Company hereunder or
thereunder, that: (a) the principal of and premium, interest and Liquidated
Damages, if any, on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of premium, interest (to the extent permitted by law) and Liquidated
Damages, if any, on the Notes, if any, if lawful, and all other Obligations of
the Company to the Holders or the Trustee hereunder or thereunder will be
promptly paid in full or performed, all in accordance with the terms hereof and
thereof; and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other Obligations, the same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise. Failing payment when
due of any amount so guaranteed or any performance so guaranteed for whatever
reason, the Guarantors shall be jointly and severally obligated to pay the same
immediately. Each Guarantor agrees that this is a guarantee of payment and not a
guarantee of collection.
The Guarantors hereby agree that their Obligations hereunder
shall be unconditional, irrespective of the absence of any action to enforce the
Notes or this Indenture, any waiver or consent by any Holder of the Notes with
respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
Guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or
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bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenant that this Note
Guarantee shall not be discharged except by complete performance of the
Obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Guarantors, any amount paid by either to the Trustee or such Holder, this
Note Guarantee, to the extent theretofore discharged, shall be reinstated in
full force and effect.
Each Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any Obligations
guaranteed hereby until payment in full of all Obligations guaranteed hereby.
Each Guarantor further agrees that, as between the Guarantors, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
Obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such Obligations as provided in Article 6 hereof, such Obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Note Guarantee. The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the Note Guarantee.
SECTION 11.02. SUBORDINATION OF NOTE GUARANTEE.
The Obligations of each Guarantor under its Note Guarantee
pursuant to this Article 11 shall be subordinated to the Senior Debt of such
Guarantor on the same basis as the Notes are subordinated to Senior Debt of the
Company. For the purposes of the foregoing sentence, the Trustee and the Holders
shall have the right to receive and/or retain payments by any of the Guarantors
only at such times as they may receive and/or retain payments in respect of the
Notes pursuant to this Indenture, including Article 10 hereof.
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Notes, each Holder,
hereby confirms that it is the intention of all such parties that the Note
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Note Guarantee. To effectuate the foregoing intention,
the Trustee, the Holders and the Guarantors hereby irrevocably agree that the
obligations of such Guarantor under its Note Guarantee and this Article 11 shall
be limited to the maximum amount as will, after giving effect to such maximum
amount and all other contingent and fixed liabilities of such Guarantor that are
relevant under such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under this
Article 11, result in the obligations of such Guarantor under its Note Guarantee
not constituting a fraudulent transfer or conveyance.
SECTION 11.04. EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence its Note Guarantee set forth in Section 11.01,
each Guarantor hereby agrees that a notation of such Note Guarantee
substantially in the form included in Exhibit E shall be endorsed
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by an Officer of such Guarantor on each Note authenticated and delivered by the
Trustee and that this Indenture shall be executed on behalf of such Guarantor by
an Officer of such Guarantor.
Each Guarantor hereby agrees that its Note Guarantee set forth
in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the
Note Guarantee no longer holds that office at the time the Trustee authenticates
the Note on which a Note Guarantee is endorsed, the Note Guarantee shall be
valid nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Note
Guarantee set forth in this Indenture on behalf of the Guarantors.
In the event that the Company or any of its Domestic
Restricted Subsidiaries creates or acquires another Domestic Restricted
Subsidiary subsequent to the date of this Indenture or any Unrestricted
Subsidiary shall cease to be an Unrestricted Subsidiary and shall become a
Domestic Restricted Subsidiary, if required by Section 4.17 hereof, the Company
shall cause such Subsidiaries to execute supplemental indentures to this
Indenture and Note Guarantees in accordance with Section 4.17 hereof and this
Article 11, to the extent applicable.
SECTION 11.05. CONSOLIDATION, ETC. BY GUARANTORS.
In case of any consolidation, merger, sale or conveyance by
any Guarantor in accordance with Section 5.01 hereof and upon the assumption by
the successor Person, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the Note Guarantee endorsed
upon the Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Guarantor, such successor
Person shall succeed to and be substituted for the Guarantor with the same
effect as if it had been named herein as a Guarantor. Such successor Person
thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.
SECTION 11.06 RELEASES FOLLOWING SALE OF ASSETS.
In the event of a sale or other disposition of all of the
assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition of all of the capital stock of any Guarantor (other than to
the Company or another Domestic Restricted Subsidiary), or in the case the
Company designates a Guarantor to be an Unrestricted Subsidiary in accordance
with this Indenture, then such Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of all of the capital
stock of such Guarantor) or the corporation acquiring the property (in the event
of a sale or other disposition of all or substantially all of the assets of such
Guarantor) shall be released and relieved of any obligations under its Note
Guarantee; provided that the Net Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of this Indenture,
including, without limitation, Section 4.10 hereof. Upon delivery by the Company
to the Trustee of an Officers' Certificate and an Opinion of Counsel to the
effect that such sale or other disposition was made by the Company in accordance
with the applicable provisions of this Indenture, including without limitation
Section 4.10
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hereof, the Trustee shall execute any documents reasonably required in order to
evidence the release of any Guarantor from its obligations under its Note
Guarantee.
Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 10.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA ss. 318(c), the imposed duties shall
control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company, any Guarantor or
the Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address
If to the Company and/or any Guarantor:
Holmes Products Corp.
233 Fortune Boulevard
Milford, Massachusetts 01757
Telecopier No.: (508) 634-1847
Attention: Ira B. Morgenstern
Senior Vice President - Finance
With copies to:
Posternak, Blankstein & Lund, L.L.P.
100 Charles River Plaza
Boston, Massachusetts 02114
Telecopier No.: (617) 367-2315
Attention: Donald H. Siegel, P.C.
If to the Trustee:
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Telecopier No.: (617) 664-5150
Attention: Corporate Trust Department
The Company, any Guarantor, or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices or
communications.
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All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA ss. 313(c), to the extent required by the
TIA. Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
69
<PAGE>
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of
the Company or any Guarantor, as such, shall have any liability for any
obligations of the Company or such Guarantor under the Notes, the Note
Guarantees, or this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 12.10. SUCCESSORS.
All agreements of the Company and the Guarantors in this
Indenture, the Notes and the Note Guarantees shall bind their successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture, the Notes or the Note
Guarantees shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
70
<PAGE>
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
71
<PAGE>
SIGNATURES
DATED AS OF FEBRUARY 5, 1999
HOLMES PRODUCTS CORP.
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
HOLMES MANUFACTURING CORP.
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
HOLMES AIR (TAIWAN) CORP.
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
STATE STREET BANK AND TRUST COMPANY,
as Trustee HOLMES MOTOR CORPORATION
BY: /s/ Andrew M. Sinasky BY: /s/ Ira B. Morgenstern
-------------------------------- --------------------------------
Name: Andrew M. Sinasky Name: Ira B. Morgenstern
Title: Assistant Vice President Title: Senior Vice President-Finance
THE RIVAL COMPANY
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
<PAGE>
PATTON ELECTRIC COMPANY, INC.
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
PATTON BUILDING PRODUCTS, INC.
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
RIVAL CONSUMER SALES CORPORATION
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
<PAGE>
EXHIBIT A-1
(Face of Global Note)
CUSIP/CINS 43641PAC3
9 7/8% Series C Senior Subordinated Notes due 2007
No. 1 $
-------------
HOLMES PRODUCTS CORP.
promise to pay to Cede & Co.
or registered assigns,
the principal sum of
-----------------------------------------------------------
Dollars on November 15, 2007.
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
DATED: FEBRUARY 5, 1999
HOLMES PRODUCTS CORP.
BY:
--------------------------
Name:
Title:
BY:
--------------------------
Name:
Title:
This is one of the Global Notes referred to
in the within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
---------------------------------------
A1-1
<PAGE>
(Back of Note)
9 7/8% Series C Senior Subordinated Notes due 2007
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933 AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A AND REGULATION S. THE HOLDER OF THIS
SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A UNDER THE SECURITIES ACT, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S.
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE
COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, AND IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAW OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE PURCHASER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY SUBSEQUENT PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH
IN (A) ABOVE.
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Holmes Products Corp., a Massachusetts
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at 9 7/8% per annum from February 5, 1999 until maturity and shall pay
the Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on May 15 and November 15 of each year, or if any such day
is not a Business Day, on the next succeeding Business Day (each an "Interest
Payment Date"). Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is
A1-2
<PAGE>
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be May 15, 1999. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the
Notes (except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the May 1 or November 1
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest. The Notes
will be payable as to principal, premium and Liquidated Damages, if any, and
interest at the office or agency of the Company maintained for such purpose
within or without the City and State of New York, or, at the option of the
Company, payment of interest and Liquidated Damages may be made by check mailed
to the Holders at their addresses set forth in the register of Holders; provided
that all payment of principal, premium, interest and Liquidated Damages, if any,
with respect to Notes the Holders of which have given wire transfer instructions
to the Trustee will be required to be made by wire transfer of immediately
available funds to the accounts specified by the Holders thereof. Such payment
shall be in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank
and Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture
dated as of February 5, 1999 (the "Indenture") among the Company, the guarantors
named on the signature pages thereto (the "Guarantors") and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code ss.ss. 77aaa-77bbbb) (the "TIA"). The Notes are subject to all such
terms, and Holders are referred to the Indenture and the TIA for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are general, unsecured obligations of the Company limited
to $136,250,000 in aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph
5, the Notes shall not be redeemable at the Company's option prior to November
15, 2002. Thereafter, the Notes shall be subject to redemption at any time at
the option of the Company, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on November 15 of the years
indicated below:
A1-3
<PAGE>
Year Percentage
---- ----------
2002........................................................ 104.938%
2003........................................................ 103.292%
2004........................................................ 101.646%
2005 and thereafter......................................... 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, prior to November 15, 2002, the Company may redeem up to an
aggregate of 33% of the principal amount of Notes at a redemption price of
109.875% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date, with the net cash
proceeds of one or more offerings of Equity Interests (other than Disqualified
Stock) of the Company; provided that (i) at least 67% of the principal amount of
Notes originally issued under the Indenture remains outstanding immediately
after the occurrence of each such redemption and (ii) notice of such redemption
shall be given within 90 days of the date of the consummation of such public
offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall
not be required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, the Company
shall be obligated to make an offer (a "Change of Control Offer") to each Holder
of Notes to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes at an offer price in cash equal to 101% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase (the "Change of Control
Payment"). Within 30 days following a Change of Control, the Company shall mail
a notice to each Holder setting forth the procedures governing the Change of
Control Offer as required by the Indenture.
(b) If the Company or any of its Restricted Subsidiaries
consummates an Asset Sale, within five days of each date on which the aggregate
amount of Excess Proceeds exceeds $5 million, the Company shall commence an
offer to all Holders of Notes (an "Asset Sale Offer") pursuant to Section 3.09
of the Indenture to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the date of purchase in accordance
with the procedures set forth in the Indenture. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Holders of Notes that are the
subject of an offer to purchase will receive an Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed
by first class mail at least 30 days but not more than 60 days before the
redemption date to each Holder of Notes to be redeemed at its registered
address. Notes in denominations larger than $1,000 may be redeemed in part but
only in whole multiples of $1,000, unless all of the Notes held by a Holder are
to be redeemed. On and after the redemption date interest ceases to accrue on
Notes or portions thereof called for redemption.
A1-4
<PAGE>
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Company need not exchange or register the transfer of any Notes
for a period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
10. SUBORDINATION. Each Holder by accepting a Note agrees that
the payment of principal of and premium, interest and Liquidated Damages, if
any, on each Note is subordinated in right of payment, to the extent and in the
manner provided in Article 10 of the Indenture, to the prior payment in full of
all Senior Debt of the Company (whether outstanding on the Closing Date or
thereafter incurred, assumed or guaranteed), and the subordination is for the
benefit of the holders of such Senior Debt.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may
be treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture, the Note Guarantees or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding, and any existing default or compliance
with any provision of the Indenture, the Notes or the Note Guarantees may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes. Without the consent of any Holder of Notes, the Company,
a Guarantor and the Trustee may amend or supplement the Indenture, the Notes or
any Note Guarantee to cure any ambiguity, defect or inconsistency, to provide
for uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's or any Guarantor's obligations to
Holders of the Notes in case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders of the Notes
or that does not adversely affect the legal rights under the Indenture of any
such Holder, or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the TIA.
13. DEFAULTS AND REMEDIES. Events of Default include: (i)
default for 30 days in the payment when due of interest on, or Liquidated
Damages, if any, with respect to, the Notes (whether or not prohibited by
Article 10 of the Indenture); (ii) default in payment when due of principal of
or premium, if any, on the Notes (whether or not prohibited by Article 10 of the
Indenture); (iii) failure by the Company or any of its Restricted Subsidiaries
to comply with Section 4.07, 4.09, 4.10, 4.14 or 5.01 of the Indenture; (iv)
failure by the Company or any of its Restricted Subsidiaries for 60 days after
written notice by the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Notes to comply with any of its other agreements in the
Indenture or the Notes; (v) default under certain other agreements relating to
Indebtedness of the Company which default (a) is caused by a failure to pay
principal of or premium, if any, or interest on such Indebtedness at final
maturity (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the
A1-5
<PAGE>
principal amount of any such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $5.0
million or more; (vi) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess of $5.0 million and
either (a) any creditor commences enforcement proceedings upon any such judgment
or (b) such judgments are not paid, discharged or stayed for a period of 60
days; (vii) except as permitted by the Indenture, any guarantee of the Notes
shall be held in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or any Guarantor, or any
Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Note Guarantee; and (viii) certain events of bankruptcy or
insolvency with respect to the Company, any of its Restricted Subsidiaries that
constitutes a Significant Subsidiary or any group of Restricted Subsidiaries
that, taken together, would constitute a Significant Subsidiary. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately; provided that so long as any Indebtedness permitted
to be incurred pursuant to the Credit Facility shall be outstanding, no such
acceleration shall be effective until the earlier of (A) acceleration of any
Indebtedness under the Credit Facility or (ii) five business days after the
giving of written notice of such acceleration to the Company. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes will become due and payable
without further action or notice. Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required, upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder of the Company or any Guarantor, as such, shall not
have any liability for any obligations of the Company or such Guarantor under
the Notes, the Indenture, the Note Guarantees or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
16. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
A1-6
<PAGE>
18. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES
AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders
of Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of February 5, 1999, among the Company, the Guarantors and
the parties named on the signature pages thereof (the "Registration Rights
Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Holmes Products Corp.
233 Fortune Boulevard
Milford, Massachusetts 01757
Attention: Chief Financial Officer
A1-7
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
---------------------
Your Signature:
----------------------------
(Sign exactly as your name
appears on the Note)
Signature Guarantee.
A1-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.14
If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state
the amount you elect to have purchased: $________
Date: Your Signature:
------------- ----------------------------
(Sign exactly as your name
appears on the Note)
Tax Identification No:
---------------------
Signature Guarantee.
A1-9
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Principal Amount of
Amount of decrease in Amount of increase in this Global Note Signature of
Principal Amount Principal Amount following such authorized officer
of this Global of decrease (or of Trustee or Note
Date of Exchange Note this Global Note increase) Custodian
---------------- --------------------- --------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
</TABLE>
A1-10
<PAGE>
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
CUSIP/CINS U38273AB1
9 7/8% Series C Senior Subordinated Notes due 2007
No. $
----- ---------
HOLMES PRODUCTS CORP.
promise to pay to Cede & Co.
or registered assigns,
the principal sum of
------------------------------------------------------------
Dollars on November 15, 2007.
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
DATED: FEBRUARY 5, 1999
HOLMES PRODUCTS CORP.
BY:
-------------------------
Name:
Title:
BY:
-------------------------
Name:
Title:
This is one of the Global Notes referred to
in the within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: _____________________________
A2-1
<PAGE>
(Back of Regulation S Temporary Global Note)
9 7/8% Series C Senior Subordinated Notes due 2007
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933 AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A AND REGULATION S. THE HOLDER OF THIS
SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A UNDER THE SECURITIES ACT, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S.
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE
COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, AND IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAW OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE PURCHASER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY SUBSEQUENT PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH
IN (A) ABOVE.
A2-2
<PAGE>
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Holmes Products Corp., a Massachusetts
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at 9 7/8% per annum from February 5, 1999 until maturity and shall pay
the Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on May 15 and November 15 of each year, or if any such day
is not a Business Day, on the next succeeding Business Day (each an "Interest
Payment Date"). Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be May 15, 1999. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for
one or more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Notes under the Indenture.
2. METHOD OF PAYMENT. The Company will pay interest on the
Notes (except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the May 1 or November 1
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest. The Notes
will be payable as to principal, premium and Liquidated Damages, if any, and
interest at the office or agency of the Company maintained for such purpose
within or without the City and State of New York, or, at the option of the
Company, payment of interest and Liquidated Damages may be made by check mailed
to the Holders at their addresses set forth in the register of Holders; provided
that all payment of principal, premium, interest and Liquidated Damages, if any,
with respect to Notes the Holders of which have given wire transfer instructions
to the Trustee will be required to be made by wire transfer of immediately
available funds to the accounts specified by the Holders thereof. Such payment
shall be in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank
and Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture
dated as of February 5, 1999 (the "Indenture") among the Company, the guarantors
named on the signature pages thereto (the "Guarantors") and the Trustee. The
terms of the Notes include those stated in the Indenture
A2-3
<PAGE>
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb) (the "TIA"). The Notes are
subject to all such terms, and Holders are referred to the Indenture and the TIA
for a statement of such terms. To the extent any provision of this Note
conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling. The Notes are general, unsecured
obligations of the Company limited to $136,250,000 in aggregate principal
amount.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph
5, the Notes shall not be redeemable at the Company's option prior to November
15, 2002. Thereafter, the Notes shall be subject to redemption at any time at
the option of the Company, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on November 15 of the years
indicated below:
Year Percentage
---- ----------
2002........................................................ 104.938%
2003........................................................ 103.292%
2004........................................................ 101.646%
2005 and thereafter......................................... 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, prior to November 15, 2002, the Company may redeem up to an
aggregate of 33% of the principal amount of Notes at a redemption price of
109.875% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date, with the net cash
proceeds of one or more offerings of Equity Interests (other than Disqualified
Stock) of the Company; provided that (i) at least 67% of the principal amount of
Notes originally issued under the Indenture remains outstanding immediately
after the occurrence of each such redemption and (ii) notice of such redemption
shall be given within 90 days of the date of the consummation of such public
offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall
not be required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, the Company
shall be obligated to make an offer (a "Change of Control Offer") to each Holder
of Notes to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes at an offer price in cash equal to 101% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase (the "Change of Control
Payment"). Within 30 days following a Change of Control, the Company shall mail
a notice to each Holder setting forth the procedures governing the Change of
Control Offer as required by the Indenture.
A2-4
<PAGE>
(b) If the Company or any of its Restricted Subsidiaries
consummates an Asset Sale, within five days of each date on which the aggregate
amount of Excess Proceeds exceeds $5 million, the Company shall commence an
offer to all Holders of Notes (an "Asset Sale Offer") pursuant to Section 3.09
of the Indenture to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the date of purchase in accordance
with the procedures set forth in the Indenture. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Holders of Notes that are the
subject of an offer to purchase will receive an Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed
by first class mail at least 30 days but not more than 60 days before the
redemption date to each Holder of Notes to be redeemed at its registered
address. Notes in denominations larger than $1,000 may be redeemed in part but
only in whole multiples of $1,000, unless all of the Notes held by a Holder are
to be redeemed. On and after the redemption date interest ceases to accrue on
Notes or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Company need not exchange or register the transfer of any Notes
for a period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in
whole or in part for one or more Global Notes only (i) on or after the
termination of the 40-day restricted period (as defined in Regulation S) and
(ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if
applicable) required by Article 2 of the Indenture. Upon exchange of this
Regulation S Temporary Global Note for one or more Global Notes, the Trustee
shall cancel this Regulation S Temporary Global Note.
10. SUBORDINATION. Each Holder by accepting a Note agrees that
the payment of principal of and premium, interest and Liquidated Damages, if
any, on each Note is subordinated in right of payment, to the extent and in the
manner provided in Article 10 of the Indenture, to the prior payment in full of
all Senior Debt of the Company (whether outstanding on the Closing Date or
thereafter incurred, assumed or guaranteed), and the subordination is for the
benefit of the holders of such Senior Debt.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may
be treated as its owner for all purposes.
A2-5
<PAGE>
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture, the Note Guarantees or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding, and any existing default or compliance
with any provision of the Indenture, the Notes or the Note Guarantees may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes. Without the consent of any Holder of Notes, the Company,
a Guarantor and the Trustee may amend or supplement the Indenture, the Notes or
any Note Guarantee to cure any ambiguity, defect or inconsistency, to provide
for uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's or any Guarantor's obligations to
Holders of the Notes in case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders of the Notes
or that does not adversely affect the legal rights under the Indenture of any
such Holder, or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the TIA.
13. DEFAULTS AND REMEDIES. Events of Default include: (i)
default for 30 days in the payment when due of interest on, or Liquidated
Damages, if any, with respect to, the Notes (whether or not prohibited by
Article 10 of the Indenture); (ii) default in payment when due of principal of
or premium, if any, on the Notes (whether or not prohibited by Article 10 of the
Indenture); (iii) failure by the Company or any of its Restricted Subsidiaries
to comply with Section 4.07, 4.09, 4.10, 4.14 or 5.01 of the Indenture; (iv)
failure by the Company or any of its Restricted Subsidiaries for 60 days after
written notice by the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Notes to comply with any of its other agreements in the
Indenture or the Notes; (v) default under certain other agreements relating to
Indebtedness of the Company which default (a) is caused by a failure to pay
principal of or premium, if any, or interest on such Indebtedness at final
maturity (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness under which there has been a Payment Default or
the maturity of which has been so accelerated, aggregates $5.0 million or more;
(vi) failure by the Company or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $5.0 million and either (a) any creditor
commences enforcement proceedings upon any such judgment or (b) such judgments
are not paid, discharged or stayed for a period of 60 days; (vii) except as
permitted by the Indenture, any guarantee of the Notes shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect or any Guarantor, or any Person acting on behalf
of any Guarantor, shall deny or disaffirm its obligations under its Note
Guarantee; and (viii) certain events of bankruptcy or insolvency with respect to
the Company, any of its Restricted Subsidiaries that constitutes a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken together, would
constitute a Significant Subsidiary. If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately; provided that so long as any Indebtedness permitted to be incurred
pursuant to the Credit Facility shall be outstanding, no such acceleration shall
be effective until the earlier of (A) acceleration of any Indebtedness under the
Credit Facility or (ii) five business days after the giving of written notice of
such acceleration to the Company. Notwithstanding the foregoing, in the case of
an Event of Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes will become due and payable without further action or notice.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the
A2-6
<PAGE>
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes. The Company is required to deliver
to the Trustee annually a statement regarding compliance with the Indenture, and
the Company is required, upon becoming aware of any Default or Event of Default,
to deliver to the Trustee a statement specifying such Default or Event of
Default.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder of the Company or any Guarantor, as such, shall not
have any liability for any obligations of the Company or such Guarantor under
the Notes, the Indenture, the Note Guarantees or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
16. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES
AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders
of Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of February 5, 1999, among the Company, the Guarantors and
the parties named on the signature pages thereof (the "Registration Rights
Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Holmes Products Corp.
233 Fortune Boulevard
Milford, Massachusetts 01757
Attention: Chief Financial Officer
A2-7
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
---------------------
Your Signature:
--------------------------
(Sign exactly as your name
appears on the Note)
Signature Guarantee.
A2-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.14
If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state
the amount you elect to have purchased: $________
Date: Your Signature:
------------- --------------------------
(Sign exactly as your name
appears on the Note)
Tax Identification No:
Signature Guarantee.
A2-9
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S
Temporary Global Note for an interest in another Global Note, or of other
Restricted Global Notes for an interest in this Regulation S Temporary Global
Note, have been made:
<TABLE>
<CAPTION>
Amount of Principal Amount
decrease in Amount of increase in of this Signature of
Principal Amount Principal Amount Global Note authorized officer
of of following such of Trustee or
Date of Exchange this Global Note this Global Note decrease (or increase) Custodian
---------------- ---------------- --------------------- --------------------- -------------------
<S> <C> <C> <C> <C>
</TABLE>
A2-10
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Holmes Products Corp.
233 Fortune Boulevard
Boston, Massachusetts 02116
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Re: 9 7/8% Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of
February 5, 1999 (the "Indenture"), among Holmes Products Corp. (the "Company"),
the Guarantors party thereto and State Street Bank and Trust Company, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
______________, (the "Transferor") owns and proposes to
transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in
the principal amount of $___________ in such Note[s] or interests (the
"Transfer"), to __________ (the "Transferee"), as further specified in Annex A
hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] Check if Transferee will take delivery of a beneficial interest in the
144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [ ] Check if Transferee will take delivery of a beneficial interest in the
Temporary Regulation S Global Note, the Regulation S Global Note or a Definitive
Note pursuant to Regulation S. The Transfer is being effected pursuant to and in
accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly,
the Transferor hereby further certifies that (i) the Transfer is not being made
to a person in the United States and (x) at the time the buy order was
originated, the Transferee was outside the United States or such Transferor and
any Person acting on its behalf reasonably believed and believes that the
Transferee was outside the United States or (y) the transaction
B-1
<PAGE>
was executed in, on or through the facilities of a designated offshore
securities market and neither such Transferor nor any Person acting on its
behalf knows that the transaction was prearranged with a buyer in the United
States, (ii) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities
Act, (iii) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act and (iv) if the proposed
transfer is being made prior to the expiration of the Restricted Period, the
transfer is not being made to a U.S. Person or for the account or benefit of a
U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed
transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
Transfer enumerated in the Private Placement Legend printed on the Regulation S
Global Note, the Temporary Regulation S Global Note and/or the Definitive Note
and in the Indenture and the Securities Act.
3. [ ] Check and complete if Transferee will take delivery of a beneficial
interest in the IAI Global Note or a Definitive Note pursuant to any provision
of the Securities Act other than Rule 144A or Regulation S. The Transfer is
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes
and pursuant to and in accordance with the Securities Act and any applicable
blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company;
or
(c) [ ] such Transfer is being effected pursuant to an
effective registration statement under the Securities Act and in compliance with
the prospectus delivery requirements of the Securities Act;
or
(d) [ ] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904,
and the Transferor hereby further certifies that it has not engaged in any
general solicitation within the meaning of Regulation D under the Securities Act
and the Transfer complies with the transfer restrictions applicable to
beneficial interests in a Restricted Global Note or Restricted Definitive Notes
and the requirements of the exemption claimed, which certification is supported
by (1) a certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) if such Transfer is in respect of a principal amount of Notes
at the time of transfer of less than $250,000, an Opinion of Counsel provided by
the Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the IAI Global Note and/or the Definitive Notes and
in the Indenture and the Securities Act.
B-2
<PAGE>
4. [ ] Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) [ ] Check if Transfer is pursuant to Rule 144. (i) The
Transfer is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) [ ] Check if Transfer is Pursuant to Regulation S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [ ] Check if Transfer is Pursuant to Other Exemption. (i)
The Transfer is being effected pursuant to and in compliance with an exemption
from the registration requirements of the Securities Act other than Rule 144,
Rule 903 or Rule 904 and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.
---------------------------------------
[Insert Name of Transferor]
By:
-----------------------------------
Name:
Title:
Dated: ,
------------ -------
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ________), or
(ii) [ ] Regulation S Global Note (CUSIP _________), or
(iii) [ ] IAI Global Note (CUSIP ________); or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ________), or
(ii) [ ] Regulation S Global Note (CUSIP ________), or
(iii) [ ] IAI Global Note (CUSIP ________); or
(iv) [ ] Unrestricted Global Note (CUSIP ________); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
(CUSIP______________)
Holmes Products Corp.
233 Fortune Boulevard
Boston, Massachusetts 02116
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Re: 9 7/8% Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of
February 5, 1999 (the "Indenture"), among Holmes Products Corp. (the "Company"),
the Guarantors party thereto and State Street Bank and Trust Company, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note
(a) [ ] Check if Exchange is from beneficial interest in a
Restricted Global Note to beneficial interest in an Unrestricted Global Note. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(b) [ ] Check if Exchange is from beneficial interest in a
Restricted Global Note to Unrestricted Definitive Note. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Definitive Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
C-1
<PAGE>
(c) [ ] Check if Exchange is from Restricted Definitive Note
to beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [ ] Check if Exchange is from Restricted Definitive Note
to Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted
Global Notes for Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes
(a) [ ] Check if Exchange is from beneficial interest in a
Restricted Global Note to Restricted Definitive Note. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
(b) [ ] Check if Exchange is from Restricted Definitive Note
to beneficial interest in a Restricted Global Note. In connection with the
Exchange of the Owner's Restricted Definitive Note for a beneficial interest in
the [CHECK ONE] "144A Global Note," Regulation S Global Note, "IAI Global Note
with an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer and (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
C-2
<PAGE>
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.
-----------------------------------
[Insert Name of Owner]
By:
-------------------------------
Name:
Title:
Dated: ________________, ____
<PAGE>
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Holmes Products Corp.
233 Fortune Boulevard
Boston, Massachusetts 02116
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Re: 9 7/8% Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of
February 5, 1999 (the "Indenture"), among Holmes Products Corp. (the "Company"),
the Guarantors party thereto and State Street Bank and Trust Company, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
In connection with our proposed purchase of $____________
aggregate principal amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or
any interest therein is subject to certain restrictions and conditions set forth
in the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Notes or any
interest therein, we will do so only (A) to the Company or any Restricted
Subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to
a "qualified institutional buyer" (as defined therein), (c) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and, if such
transfer is in respect of a principal amount of Notes, at the time of transfer
of less than $250,000, an Opinion of Counsel in form reasonably acceptable to
the Company to the effect that such transfer is in compliance with the
Securities Act, (D) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (E) pursuant to the provisions of
D-1
<PAGE>
Rule 144(k) under the Securities Act or (F) pursuant to an effective
registration statement under the Securities Act, and we further agree to provide
to any person purchasing the Definitive Note or beneficial interest in a Global
Note from us in a transaction meeting the requirements of clauses (A) through
(E) of this paragraph a notice advising such purchaser that resales thereof are
restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or beneficial interest therein acquired
by us must be effected through one of the Placement Agents.
4. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
------------------------------------------
[Insert Name of Accredited Investor]
By:
--------------------------------------
Name:
Title:
Dated: __________________, ____
D-2
<PAGE>
EXHIBIT E
FORM OF NOTATION OF GUARANTEE
For value received, each Guarantor (which term includes any
successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and subject
to the provisions in the Indenture dated as of February 5, 1999 (the
"Indenture") among Holmes Products Corp. (the "Company"), Holmes Manufacturing
Corp., Holmes Air (Taiwan) Corp., Holmes Motor Corporation, The Rival Company,
Patton Electric Company, Inc., Patton Building Products, Inc., Rival Consumer
Sales Corporation (together, the "Guarantors") and State Street Bank and Trust
Company, as trustee (the "Trustee"), that (a) the principal of and premium,
interest and Liquidated Damages, if any, on the Notes will be promptly paid in
full when due, whether at maturity, by acceleration, redemption or otherwise,
and interest on the overdue principal of premium, interest (to the extent
permitted by law) and Liquidated Damages, if any, on the Notes, if any, if
lawful, and all other Obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other Obligations, the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise. The Obligations of the Guarantors to the Holders of Notes and to
the Trustee pursuant to the Note Guarantee and the Indenture are expressly set
forth in Article 11 of the Indenture and reference is hereby made to the
Indenture for the precise terms of the Note Guarantee. Each Holder of a Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee, on behalf of such Holder, to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such
Holder for such purpose; provided, however, that the Indebtedness evidenced by
this Note Guarantee shall cease to be so subordinated and subject in right of
payment upon any defeasance of this Note in accordance with the provisions of
the Indenture.
E-1
<PAGE>
HOLMES MANUFACTURING CORP.
By:
-------------------------------------
Name:
Title:
HOLMES AIR (TAIWAN) CORP.
By:
-------------------------------------
Name:
Title:
HOLMES MOTOR CORPORATION
By:
-------------------------------------
Name:
Title:
THE RIVAL COMPANY
By:
-------------------------------------
Name:
Title:
PATTON ELECTRIC COMPANY, INC.
By:
-------------------------------------
Name:
Title:
PATTON BUILDING PRODUCTS, INC.
By:
-------------------------------------
Name:
Title:
RIVAL CONSUMER SALES CORPORATION.
By:
-------------------------------------
Name:
Title:
E-2
<PAGE>
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated
as of ________________, among __________________ (the "Guaranteeing Restricted
Subsidiary"), a Domestic Restricted Subsidiary of Holmes Products Corp. (or its
permitted successor), a Massachusetts corporation (the "Company"), the other
Guarantors (as defined in the Indenture referred to herein) and State Street
Bank and Trust Company, as trustee under the indenture referred to below (the
"Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to
the Trustee an indenture (the "Indenture"), dated as of February 5, 1999
providing for the issuance of an aggregate principal amount of up to
$136,250,000 of 9 7/8% Senior Subordinated Notes due 2007 (the "Notes");
WHEREAS, the Indenture provides that under certain
circumstances the Guaranteeing Restricted Subsidiary shall execute and deliver
to the Trustee a supplemental indenture pursuant to which the Guaranteeing
Restricted Subsidiary shall unconditionally guarantee all of the Company's
Obligations under the Notes and the Indenture on the terms and conditions set
forth herein (the "Note Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the
Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Guaranteeing Restricted Subsidiary and the Trustee mutually covenant and
agree for the equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Restricted
Subsidiary hereby agrees as follows:
(a) Along with all the Guarantors named in the Indenture,
to jointly and severally Guarantee to each Holder of
a Note authenticated and delivered by the Trustee and
to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of
the Indenture, the Notes or the obligations of the
Company hereunder or thereunder, that:
(i) the principal of and premium, interest and
Liquidated Damages, if any, on the Notes
will be promptly paid in full when due,
whether at maturity, by acceleration,
redemption or otherwise, and interest on the
overdue principal of, premium, interest and
Liquidated Damages, if any, on the Notes, if
any, if lawful, and all other obligations of
the Company to the Holders or the Trustee
hereunder or thereunder will be promptly
paid in full or performed, all in accordance
with the terms hereof and thereof; and
F-1
<PAGE>
(ii) in case of any extension of time of payment
or renewal of any Notes or any of such other
Obligations, the same will be promptly paid
in full when due or performed in accordance
with the terms of the extension or renewal,
whether at stated maturity, by acceleration
or otherwise. Failing payment when due of
any amount so guaranteed or any performance
so guaranteed for whatever reason, the
Guarantors shall be jointly and severally
obligated to pay the same immediately.
(b) The obligations hereunder shall be unconditional,
irrespective of the validity, regularity or
enforceability of the Notes or the Indenture, the
absence of any action to enforce the same, any waiver
or consent by any Holder of the Notes with respect to
any provisions hereof or thereof, the recovery of any
judgment against the Company, any action to enforce
the same or any other circumstance which might
otherwise constitute a legal or equitable discharge
or defense of a Guarantor.
(c) The following is hereby waived: diligence,
presentment, demand of payment, filing of claims with
a court in the event of insolvency or bankruptcy of
the Company, any right to require a proceeding first
against the Company, protest, notice and all demands
whatsoever.
(d) This Note Guarantee shall not be discharged except by
complete performance of the Obligations contained in
the Notes and the Indenture.
(e) If any Holder or the Trustee is required by any court
or otherwise to return to the Company, the
Guarantors, or any custodian, trustee, liquidator or
other similar official acting in relation to either
the Company or the Guarantors, any amount paid by
either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.
(f) The Guaranteeing Restricted Subsidiary shall not be
entitled to any right of subrogation in relation to
the Holders in respect of any obligations guaranteed
hereby until payment in full of all Obligations
guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the
maturity of the Obligations guaranteed hereby may be
accelerated as provided in Article 6 of the Indenture
for the purposes of this Note Guarantee,
notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect
of the Obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such
Obligations as provided in Article 6 of the
Indenture, such Obligations (whether or not due and
payable) shall forthwith become due and payable by
the Guarantors for the purpose of this Note
Guarantee.
F-2
<PAGE>
(h) The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as
the exercise of such right does not impair the rights
of the Holders under the Note Guarantee.
(i) Pursuant to Section 11.03 of the Indenture, after
giving effect to any maximum amount and any other
contingent and fixed liabilities that are relevant
under any applicable Bankruptcy or fraudulent
conveyance laws, and after giving effect to any
collections from, rights to receive contribution from
or payments made by or on behalf of any other
Guarantor in respect of the Obligations of such other
Guarantor under Article 11 of the Indenture the
Obligations of the Guarantors shall be limited to the
maximum amount as shall result in the Obligations of
such Guarantor under its Note Guarantee not
constituting a fraudulent transfer or conveyance.
3. EXECUTION AND DELIVERY. Each Guaranteeing Restricted
Subsidiary agrees that the Note Guarantees shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such Note
Guarantee.
4. GUARANTEEING RESTRICTED SUBSIDIARY MAY CONSOLIDATE, ETC.
ON CERTAIN TERMS.
(a) The Guaranteeing Restricted Subsidiary may not consolidate
with or merge with or into (whether or not such Guarantor is
the surviving Person) another corporation, Person or entity
whether or not affiliated with such Guarantor unless:
(i) subject to Section 11.05 of the Indenture, the Person
formed by or surviving any such consolidation or
merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such
Guarantor, pursuant to a supplemental indenture in
form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Note
Guarantee on the terms set forth herein or therein;
and
(ii) immediately after giving effect to such transaction,
no Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor corporation, by
supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of the Note Guarantee
endorsed upon the Notes and the due and punctual performance
of all of the covenants and conditions of the Indenture to be
performed by the Guarantor, such successor corporation shall
succeed to and be substituted for the Guarantor with the same
effect as if it had been named herein as a Guarantor. Such
successor corporation thereupon may cause to be signed any or
all of the Note Guarantees to be endorsed upon all of the
Notes issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee. All the
Note Guarantees so issued shall in all respects have the same
legal rank and benefit under the Indenture as the Note
Guarantees theretofore and thereafter issued in accordance
with the terms of the Indenture as though all of such Note
Guarantees had been issued at the date of the execution
hereof.
F-3
<PAGE>
(c) Except as set forth in Articles 4 and 5 of the Indenture,
and notwithstanding clauses (a) and (b) above, nothing contained in the
Indenture or in any of the Notes shall prevent any consolidation or merger of a
Guarantor with or into the Company or another Guarantor, or shall prevent any
sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.
5. RELEASES.
(a) In the event of a sale or other disposition of all of the
assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the
capital stock of any Guarantor (other than to the Company or
another Domestic Restricted Subsidiary), or in the case the
Company designates a Guarantor to be an Unrestricted
Subsidiary in accordance with the Indenture, then such
Guarantor (in the event of a sale or other disposition, by way
of merger, consolidation or otherwise, of all of the capital
stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all
or substantially all of the assets of such Guarantor) shall be
released and relieved of any obligations under its Note
Guarantee; provided that the Net Proceeds of such sale or
other disposition are applied in accordance with the
applicable provisions of the Indenture, including, without
limitation, Section 4.10 of the Indenture. Upon delivery by
the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the
provisions of the Indenture, including without limitation
Section 4.10 of the Indenture, the Trustee shall execute any
documents reasonably required in order to evidence the release
of any Guarantor from its obligations under its Note
Guarantee.
(b) Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal
of and interest on the Notes and for the other obligations of
any Guarantor under the Indenture as provided in Article 10 of
the Indenture.
6. NO RECOURSE AGAINST OTHERS. No past, present or future
director, officer, employee, incorporator, stockholder or agent of the
Guaranteeing Restricted Subsidiary, as such, shall have any liability for any
obligations of the Company or any Guarantor under the Notes, any Note
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of the Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the SEC that such a waiver is against
public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
8. COUNTERPARTS The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
F-4
<PAGE>
9. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Restricted Subsidiary
and the Company.
F-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
Dated: _______________, ____
[Guaranteeing Restricted Subsidiary]
By:
--------------------------------------
Name:
Title:
HOLMES PRODUCTS CORP.
By:
--------------------------------------
Name:
Title:
[EXISTING GUARANTORS]
By:
--------------------------------------
Name:
Title
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
--------------------------------------
Name:
Title:
F-6
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of February 5, 1999
by and among
Holmes Products Corp.,
the Guarantors Named on the Signature Pages Hereto
and
BancBoston Robertson Stephens Inc.,
Lehman Brothers Inc.
================================================================================
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and
entered into as of February 5, 1999 by and among Holmes Products Corp., a
Massachusetts corporation (the "Company"), Holmes Manufacturing Corp., Holmes
Air (Taiwan) Corp., Holmes Motor Corporation (together, the "Guarantors"), and
BancBoston Robertson Stephens Inc. and Lehman Brothers Inc. (together, the
"Initial Purchasers"), who have agreed to purchase the Company's 9 7/8% Series C
Senior Subordinated Notes due 2007 (the "Series C Notes") pursuant to the
Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated
January 29, 1999 (the "Purchase Agreement"), by and among the Company, the
Guarantors and the Initial Purchasers. In order to induce the Initial Purchasers
to purchase the Series C Notes, the Company and the Guarantors have agreed to
provide the registration rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the obligations of the Initial
Purchasers set forth in Section 8 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Acquisition: The acquisition by the Company of Rival pursuant to the
Merger Agreement.
Act: The Securities Act of 1933, as amended.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series D Notes to be issued in the Exchange Offer, (b) the
maintenance of such Registration Statement as continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof, and (c) the delivery by the Company to
the Registrar under the Indenture of Series D Notes in the same aggregate
principal amount as the aggregate principal amount of Series C Notes that were
tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series C Notes, each
Interest Payment Date.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
1
<PAGE>
Exchange Offer: The registration by the Company under the Act of the
Series D Notes pursuant to the Exchange Offer Registration Statement pursuant to
which the Company offers the Holders of all outstanding Transfer Restricted
Securities the opportunity to exchange all such outstanding Transfer Restricted
Securities held by such Holders for Series D Notes in an aggregate principal
amount equal to the aggregate principal amount of the Transfer Restricted
Securities tendered in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Series C Notes to (a) certain other "qualified institutional
buyers," as such term is defined in Rule 144A under the Act and (b) non-U.S.
persons outside the United States in reliance upon Regulation S under the Act.
Holders: As defined in Section 2(b) hereof.
Indenture: The Indenture, dated as of February 5, 1999, among the
Company, the Guarantors and State Street Bank and Trust Company, as trustee (the
"Trustee"), pursuant to which the Notes are to be issued, as such Indenture is
amended or supplemented from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and the Notes.
Merger Agreement: Agreement and Plan of Merger, dated as of December
17, 1998, among the Company, Moriarty Acquisition Corp., a wholly owned
subsidiary of the Company, and Rival.
NASD: National Association of Securities Dealers, Inc.
Notes: The Series C Notes and the Series D Notes.
Person: An individual, partnership, corporation, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date relating to
Notes, each Person who is a Holder of Notes as listed on the books of the
Trustee as of the close of business on the record date with respect to the
Interest Payment Date corresponding to such Damages Payment Date.
Registration Default: As defined in Section 5 hereof.
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Registration Statement: Any registration statement of the Company
relating to (a) an offering of Series D Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, which is filed pursuant to the provisions of
this Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
Series D Notes: The Company's 9 7/8% Series B Senior Subordinated Notes
due 2007 to be issued pursuant to the Indenture (a) in the Exchange Offer or (b)
pursuant to a Shelf Registration Statement, in each case, in exchange for Series
C Notes.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939, as amended (15 U.S.C. Section
77aaa-77bbbb), as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur
of (a) the date on which such Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Act, (b) the date on which such Note
has been effectively registered under the Act and disposed of in accordance with
a Shelf Registration Statement and (c) the date on which such Note is first
eligible to be distributed to the public pursuant to Rule 144 under the Act or
by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including delivery of the Prospectus
contained therein).
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to be
a holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), the Company and the Guarantors shall (i) cause to be
filed with the Commission on or prior to 90 days after the Closing Date, the
Exchange Offer Registration Statement, (ii) use their best efforts to cause such
Exchange Offer Registration Statement to become effective on or prior to 150
days after the Closing Date, (iii) in connection with the foregoing, file (A)
all pre-effective
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amendments to such Exchange Offer Registration Statement as may he necessary in
order to cause such Exchange Offer Registration Statement to become effective,
(B) if applicable, a post-effective amendment to such Exchange Offer
Registration Statement pursuant to Rule 430A under the Act and (C) cause all
necessary filings in connection with the registration and qualification of the
Series D Notes to be made under the Blue Sky laws of such jurisdictions as are
necessary to permit Consummation of the Exchange Offer, and (iv) upon the
effectiveness of such Exchange Offer Registration Statement, commence and
Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate
form permitting registration of the Series D Notes to be offered in exchange for
the Transfer Restricted Securities and to permit resales of Notes held by
Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall cause the Exchange Offer Registration Statement
to be effective continuously and shall keep the Exchange Offer open for a period
of not less than the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; provided, however, that in no
event shall such period be less than 20 business days. The Company shall cause
the Exchange Offer to comply with all applicable federal and state securities
laws. No securities other than the Notes shall be included in the Exchange Offer
Registration Statement. The Company shall use its best efforts to cause the
Exchange Offer to be Consummated on or prior to 30 business days after the
Exchange Offer Registration Statement has become effective.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Series C Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company) may exchange such
Series C Notes pursuant to the Exchange Offer; however, such Broker-Dealer may
be deemed to be an "underwriter" within the meaning of the Act and must,
therefore, deliver a prospectus meeting the requirements of the Act in
connection with any resales of the Series D Notes received by such Broker-Dealer
in the Exchange Offer, which prospectus delivery requirement may be satisfied by
the delivery by such Broker-Dealer of the Prospectus contained in the Exchange
Offer Registration Statement. Such "Plan of Distribution" section shall also
contain all other information with respect to such resales by Broker-Dealers
that the Commission may require in order to permit such resales pursuant
thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer
or disclose the amount of Notes held by any such Broker-Dealer except to the
extent required by the Commission as a result of a change in policy after the
date of this Agreement.
The Company and the Guarantors shall use their best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented and
amended as required by the provisions of Section 6(c) below to the extent
necessary to ensure that it is available for resales of Notes acquired by
Broker-Dealers for their own accounts as a result of market-making activities or
other trading activities, and to ensure that it conforms with the requirements
of this Agreement, the Act and the policies, rules and regulations of the
Commission as announced from
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time to time, for a period of one year from the date on which the Exchange Offer
Registration Statement is declared effective.
The Company shall provide sufficient copies of the latest version of
such Prospectus to Broker-Dealers promptly upon request at any time during such
one-year period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company and the Guarantors are not
required to file an Exchange Offer Registration Statement or permitted to
consummate the Exchange Offer because the Exchange Offer is not permitted by
applicable law or Commission policy (after the procedures set forth in Section
6(a) below have been complied with) or (ii) if any Holder of Transfer Restricted
Securities notifies the Company on or prior to the 20th business day following
the Consummation of the Exchange Offer (A) that such Holder is prohibited by
applicable law or Commission policy from participating in the Exchange Offer, or
(B) that such Holder may not resell the Series D Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and that the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder, or (C) that such
Holder is a Broker-Dealer and holds Series C Notes acquired directly from the
Company or one of its affiliates, then the Company and the Guarantors shall:
(x) Use their best efforts to file a shelf registration
statement with the Commission pursuant to Rule 415 under the Act, which
may be an amendment to the Exchange Offer Registration Statement (in
any event, the "Shelf Registration Statement") on or prior to the
earliest to occur of (1) the 90th day after the date on which the
Company and the Guarantors determine that they are not required to file
the Exchange Offer Registration Statement and (2) the 90th day after
the date on which the Company receives notice from a Holder of Transfer
Restricted Securities as contemplated by clause (ii) above (such
earliest date being the "Shelf Filing Deadline"), which Shelf
Registration Statement shall provide for resales of all Transfer
Restricted Securities the Holders of which shall have provided the
information required pursuant to) Section 4(b) hereof; and
(y) Cause such Shelf Registration Statement to be declared
effective by the Commission on or prior to the 150th day after the
Shelf Filing Deadline.
The Company and the Guarantors shall use their best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for resales of Notes by the Holders of
Transfer Restricted Securities entitled to the benefit of this Section 4(a), and
to ensure that it conforms with the requirements of this Agreement, the Act and
the policies, rules and regulations of the Commission as announced from time to
time, until the earlier to occur of (i) the date all of the Transfer Restricted
Securities registered under such Shelf Registration Statement have been sold and
(ii) the second anniversary following the Closing Date.
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(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 business days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have used its best efforts to provide all such reasonably
requested information. Each Holder of Notes as to which any Shelf Registration
Statement is being effected, by its participation in the Shelf Registration
Statement, shall be deemed to agree to furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (a) any of the Registration Statements required by this Agreement is
not filed with the Commission on or prior to the date specified for such filing
in this Agreement, (b) any of such Registration Statements has not been declared
effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (c) the
Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (d) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself immediately declared effective (each such event referred to
in clauses (a) through (d), a "Registration Default"), as the sole remedy for
such Registration Defaults, the Company and the Guarantors hereby jointly and
severally agree to pay liquidated damages to each Holder of Transfer Restricted
Securities affected thereby with respect to the first 90-day period immediately
following the occurrence of the first Registration Default, in an amount equal
to $.05 per week per $1,000 principal amount of Transfer Restricted Securities
held by such Holder for each week or portion thereof that the Registration
Default continues. The amount of the liquidated damages shall increase by an
additional $.05 per week per $1,000 principal amount of Transfer Restricted
Securities with respect to each subsequent 90-day period until all Registration
Defaults affecting such Holder have been cured, up to a maximum amount of
liquidated damages of $.50 per week per $1,000 principal amount of Transfer
Restricted Securities for each week or portion thereof that the Registration
Default continues. All accrued liquidated damages shall be paid by the Company
on each Damages Payment Date to Record Holders by wire transfer of immediately
available funds or by federal funds check and to Holders of Certificated
Securities by wire transfers to the accounts specified by them or by mailing
checks to their registered addresses if no such accounts have been specified on
each Damages Payment Date, as provided in the Indenture. Following the cure of
all Registration Defaults relating to any particular Transfer Restricted
Securities, the accrual of liquidated damages with respect to such Transfer
Restricted Securities will cease.
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All obligations of the Company and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company and the Guarantors shall comply with all of the
provisions of Section 6(c) below, shall use their best efforts to effect such
exchange to permit the sale of Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:
(i) If in the reasonable opinion of counsel to the Company
there is a question as to whether the Exchange Offer is permitted by
applicable law, the Company and the Guarantors hereby agree to seek a
no-action letter or other favorable decision from the Commission
allowing the Company and the Guarantors to Consummate an Exchange Offer
for such Series C Notes. Each of the Company and the Guarantors hereby
agrees to pursue the issuance of such a decision to the Commission
staff level but shall not be required to take commercially unreasonable
action to effect a change of Commission policy. Each of the Company and
the Guarantors hereby agrees, however, to (A) participate in telephonic
conferences with the Commission, (B) deliver to the Commission staff an
analysis prepared by counsel to the Company setting forth the legal
bases, if any, upon which such counsel has concluded that such an
Exchange Offer should be permitted and (C) diligently pursue a
resolution (which need not be favorable) by the Commission staff of
such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the Consummation thereof, a written representation to the
Company (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the
effect that (A) it is not an affiliate of the Company or any Guarantor,
(B) it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the Series D Notes to be issued in the Exchange Offer
and (C) it is acquiring the Series D Notes in its ordinary course of
business. In addition, all such Holders of Transfer Restricted
Securities shall otherwise cooperate in the Company's preparations for
the Exchange Offer. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be acquired in the
Exchange Offer (1) could not under Commission policy as in effect on
the date of this Agreement rely on the position of the Commission
enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and
Exxon Capital Holdings Corporation (available May 13, 1988), as
interpreted in the Commission's letter to Shearman & Sterling dated
July 2, 1993, and similar no-action letters (including any no-action
letter obtained pursuant to clause (i) above), and (2) must comply with
the registration and prospectus delivery requirements of the Act in
connection with a secondary resale transaction and that such a
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secondary resale transaction should be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K if the resales are of Series D Notes obtained by such Holder in
exchange for Series C Notes acquired by such Holder directly from the
Company.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company and the Guarantors shall provide a
supplemental letter to the Commission (A) stating that the Company and
the Guarantors are registering the Exchange Offer in reliance on the
position of the Commission enunciated in Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan Stanley and Co., Inc.
(available June 5, 1991) and, if applicable, any no-action letter
obtained pursuant to clause (i) above and (B) including a
representation that neither the Company nor any of the Guarantors has
entered into any arrangement or understanding with any Person to
distribute the Series D Notes to be received in the Exchange Offer and
that, to the best of the Company's and the Guarantors' information and
belief, each Holder participating in the Exchange Offer is acquiring
the Series D Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the Series D Notes received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall use their best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Company will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof.
(c) General Provisions. In connection with any Registration Statement
and any Prospectus required by this Agreement to permit the sale or resale of
Transfer Restricted Securities (including, without limitation, any Registration
Statement and the related Prospectus required to permit resales of Notes by
Broker-Dealers), the Company and the Guarantors shall:
(i) use their best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements
(including, if required by the Act or any regulation thereunder,
financial statements of the Guarantors) for the period specified in
Section 3 or 4 hereof, as applicable; upon the occurrence of any event
that would cause any such Registration Statement or the Prospectus
contained therein (A) to contain a material misstatement or omission or
(B) not to be effective and usable for resale of Transfer Restricted
Securities during the period required by this Agreement, the Company
shall file promptly an appropriate amendment to such Registration
Statement, in the case of clause (A), correcting any such misstatement
or omission, and, in the case of either clause (A) or (B), use their
best efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for
their intended purpose(s) as soon as practicable thereafter;
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(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as applicable, or
such shorter period as will terminate when all Transfer Restricted
Securities covered by such Registration Statement have been sold; cause
the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Act, and to comply fully with the applicable provisions of
Rules 424 and 430A under the Act in a timely manner; and comply with
the provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
(in the case of a Shelf Registration Statement) promptly and, if
requested by such Persons, to confirm such advice in writing, (A) when
the Prospectus or any Prospectus supplement or post-effective amendment
has been filed, and, with respect to any Registration Statement or any
post-effective amendment thereto, when the same has become effective,
(B) of any request by the Commission for amendments to the Registration
Statement or amendments or supplements to the Prospectus or for
additional information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation
of any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making
of any additions to or changes in the Registration Statement in order
to make the statements therein not misleading, or that requires the
making of any additions to or changes in the Prospectus in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities
under state securities or Blue Sky laws, the Company and the Guarantors
shall use their reasonable best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(iv) furnish to each of the selling Holders and each of the
underwriter(s), if any, before filing with the Commission, copies of
any Shelf Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review and comment of such Holders and underwriter(s),
if any, for a period of at least three business days, and the Company
will not file any such Registration Statement or Prospectus or any
amendment or supplement to any such Registration Statement or
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Prospectus (including all such documents incorporated by reference) to
which a selling Holder of Transfer Restricted Securities covered by
such Registration Statement or the underwriter(s), if any, shall
reasonably object within three business days after the receipt thereof.
An objection from a selling Holder or underwriter, if any, shall be
deemed to be reasonable if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed,
contains a material misstatement or omission or fails to comply with
the applicable requirements of the Act;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Shelf Registration Statement or
Prospectus, provide copies of such document to the selling Holders and
to the underwriter(s), if any, make the Company's representatives
available (and representatives of the Guarantors) for discussion of
such document and other customary due diligence matters, and include
such information in such document prior to the filing thereof as such
selling Holders or underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney or accountant
retained by such selling Holders or any of the underwriter(s), all
financial and other records, pertinent corporate documents and
properties of the Company and the Guarantors and cause the Company's
and the Guarantors' officers, directors and employees to supply all
information reasonably requested by any such Holder, underwriter,
attorney or accountant in connection with such Registration Statement
subsequent to the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the
underwriter(s), if any, promptly include in any Registration Statement
or Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such selling Holders and underwriter(s),
if any, may reasonably request to have included therein, including,
without limitation, information relating to the "Plan of Distribution"
of the Transfer Restricted Securities, information with respect to the
principal amount of Transfer Restricted Securities being sold to such
underwriter(s), the purchase price being paid therefor and any other
terms of the offering of the Transfer Restricted Securities to be sold
in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate
principal amount of Notes covered thereby or the underwriter(s), if
any;
(ix) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the Shelf
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by
reference);
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(x) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Company
and the Guarantors hereby consent to the use of the Prospectus and any
amendment or supplement thereto by each of the selling Holders and each
of the underwriter(s), if any, in connection with the offering and the
sale of the Transfer Restricted Securities covered by the Prospectus or
any amendment or supplement thereto;
(xi) enter into such agreements (including an underwriting
agreement on customary terms), and make such representations and
warranties, and take all such other actions in connection therewith in
order to expedite or facilitate the disposition of the Transfer
Restricted Securities pursuant to any Shelf Registration Statement
contemplated by this Agreement, all to such extent as may be reasonably
requested by the Initial Purchasers or by any Holder of Transfer
Restricted Securities or underwriter in connection with any sale or
resale pursuant to any Shelf Registration Statement contemplated by
this Agreement: and whether or not an underwriting agreement is entered
into and whether or not the registration is an Underwritten
Registration, in connection with any Shelf Registration Statement, the
Company and the Guarantors shall:
(A) furnish to each selling Holder and each
underwriter, if any, in such substance and scope as they may
request and as are customarily made by issuers to underwriters
in primary underwritten offerings, upon the date of the
effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date of
effectiveness of the Shelf Registration Statement,
signed by (x) the President or any Vice President and
(y) a principal financial or accounting officer of
each of the Company and the Guarantors, confirming,
as of the date thereof, the matters set forth in
paragraphs (a), (b), (c) and (d) of Section 8 of the
Purchase Agreement and such other matters as such
parties may reasonably request;
(2) an opinion, dated the date of
effectiveness of the Shelf Registration Statement, of
counsel for the Company and the Guarantors, covering
the matters set forth in the opinion rendered
pursuant to paragraph (f) of Section 8 of the
Purchase Agreement, as applicable, and such other
matters as such parties may reasonably request, and
in any event including a statement to the effect that
such counsel has participated in conferences with
officers and other representatives of the Company and
the Guarantors, representatives of the independent
public accountants for the Company, the Initial
Purchasers' representatives and the Initial
Purchasers' counsel in connection with the
preparation of such Shelf Registration Statement and
the related Prospectus and have considered the
matters required to be stated therein and the
statements contained therein,
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although such counsel has not independently verified
the accuracy, completeness or fairness of such
statements; and that such counsel advises that, on
the basis of the foregoing (relying as to materiality
to the extent such counsel deems appropriate upon
facts provided to such counsel by officers and other
representatives of the Company and the Guarantors and
without independent verification of such facts), no
facts came to such counsel's attention that caused
such counsel to believe that the applicable Shelf
Registration Statement, at the time such Shelf
Registration Statement or any post-effective
amendment thereto became effective, contained an
untrue statement of a material fact or omitted to
state a material fact required to be stated therein
or necessary to make the statements therein not
misleading, or that the Prospectus contained in such
Shelf Registration Statement as of its date,
contained an untrue statement of a material fact or
omitted to state a material fact necessary in order
to make the statements therein, in light of the
circumstances under which they were made, not
misleading. Without limiting the foregoing, such
counsel may state further that such counsel assumes
no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of
the financial statements, notes and schedules and
other financial data included in any Shelf
Registration Statement contemplated by this Agreement
or the related Prospectus; and
(3) a customary comfort letter, dated as of
the date of effectiveness of the Shelf Registration
Statement from the Company's independent accountants,
in the customary form and covering matters of the
type customarily covered in comfort letters by
underwriters in connection with primary underwritten
offerings, and affirming the matters set forth in the
comfort letters delivered pursuant to Section 8 of
the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in
the underwriting agreement, if any, the indemnification
provisions and procedures of Section 8 hereof with respect to
all parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as
may be reasonably requested by such parties to evidence
compliance with clause (A) above and with any customary
conditions contained in the underwriting agreement or other
agreement entered into by the Company pursuant to this clause
(xi), if any.
If at any time the representations and warranties of the Company and
the Guarantors contemplated in clause (A)(l) above cease to be true and correct,
the Company or the Guarantors shall so advise the underwriter(s), if any, and
each selling Holder promptly and, if requested by such Persons, shall confirm
such advice in writing;
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(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if
any, and their respective counsel in connection with the registration
and qualification of the Transfer Restricted Securities under the
securities or Blue Sky laws of such jurisdictions as the selling
Holders or underwriter(s) may request and do any and all other acts or
things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
Shelf Registration Statement; provided, however, that neither the
Company nor any of the Guarantors shall be required to register or
qualify as a foreign corporation where it is not now so qualified or to
take any action that would subject it to the service of process in
suits or to taxation, other than as to matters and transactions
relating to the Registration Statement, in any jurisdiction where it is
not now so subject;
(xiii) shall issue, upon the request of any Holder of Series C
Notes covered by the Shelf Registration Statement, Series D Notes,
having an aggregate principal amount equal to the aggregate principal
amount of Series C Notes surrendered to the Company by such Holder in
exchange therefor or being sold by such Holder; such Series D Notes to
be registered in the name of such Holder or in the name of the
purchaser(s) of such Notes, as the case may be; in return, the Series C
Notes held by such Holder shall be surrendered to the Company for
cancellation;
(xiv) cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and enable such
Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders or the underwriter(s), if any,
may request at least two business days prior to any sale of Transfer
Restricted Securities made by such underwriter(s);
(xv) use their reasonable best efforts to cause the Transfer
Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof
or the underwriter(s), if any, to consummate the disposition of such
Transfer Restricted Securities, subject to the proviso contained in
clause (viii) above;
(xvi) if any fact or event contemplated by clause (c)(iii)(D)
above shall exist or have occurred, prepare a supplement or
post-effective amendment to the Registration Statement or related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration
Statement and provide the Trustee under the Indenture with printed
certificates for the Transfer Restricted Securities which are in a form
eligible for deposit with the Depositary Trust Company;
13
<PAGE>
(xviii) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD, and use its reasonable best efforts
to cause such Registration Statement to become effective and approved
by such governmental agencies or authorities as may be necessary to
enable the Holders selling Transfer Restricted Securities to consummate
the disposition of such Transfer Restricted Securities;
(xix) otherwise use their best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) for the twelve-month period (A) commencing
at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to underwriters in a firm or best efforts
Underwritten Offering or (B) if not sold to underwriters in such an
offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Registration
Statement;
(xx) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement, and, in connection therewith, cooperate
with the Trustee and the Holders of Notes to effect such changes to the
Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use their best
efforts to cause the Trustee to execute, all documents that may be
required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be
so qualified in a timely manner; and
(xxi) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on
which similar securities issued by the Company are then listed if
requested by the Holders of a majority in aggregate principal amount of
Series C Notes or the managing underwriter(s), if any.
Each Holder shall be deemed to agree by acquisition of a Transfer
Restricted Security that, upon receipt of any notice from the Company of the
existence of any fact of the kind described in Section 6(c)(iii)(D) hereof, such
Holder will forthwith discontinue disposition of Transfer Restricted Securities
pursuant to the applicable Registration Statement until such Holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xvi) hereof, or until it is advised in writing (the "Advice") by the
Company that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings that are incorporated by reference in
the Prospectus. If so directed by the Company, each Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities that was current at the time of receipt of such notice. In
the event the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
6(c)(iii)(D) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or
shall have received the Advice.
14
<PAGE>
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's or the Guarantors'
performance of or compliance with this Agreement will be borne by the Company
and the Guarantors, regardless of whether a Registration Statement becomes
effective, including without limitation: (i) all registration and filing fees
and expenses (including filings made by any Initial Purchasers or Holder with
the NASD (and, if applicable, the fees and expenses of any "qualified
independent underwriter" and its counsel that may be required by the rules and
regulations of the NASD)); (ii) all fees and expenses of compliance with federal
securities and state Blue Sky or securities laws; (iii) all expenses of printing
(including printing certificates or the Series D Notes to be issued in the
Exchange Offer and printing of Prospectuses), messenger and delivery services
and telephone; (iv) all fees and disbursements of counsel for the Company, the
Guarantors and, subject to Section 7(b) below, the Holders of Transfer
Restricted Securities; (v) all application and filing fees in connection with
listing Notes on a national securities exchange or automated quotation system
pursuant to the requirements hereof; and (vi) all fees and disbursements of
independent certified public accountants of the Company and the Guarantors
(including the expenses of any special audit and comfort letters required by or
incident to such performance); provided, however, the foregoing shall exclude
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of the Notes by a Holder.
The Company and the Guarantors will, in any event, bear their internal
expenses (including, without limitation, all salaries and expenses of their
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company.
(b) In connection with any Shelf Registration Statement required by
this Agreement, the Company and the Guarantors will reimburse the Initial
Purchasers and the Holders of Transfer Restricted Securities being registered
pursuant to the Shelf Registration Statement for the reasonable fees and
disbursements of not more than one counsel, who shall be Latham & Watkins or
such other counsel as may be chosen by the Holders of a majority in aggregate
principal amount of the Transfer Restricted Securities for whose benefit such
Shelf Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) each Holder, (ii) each person, if any, who
controls any Holder within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act and (iii) the respective officers, directors, partners,
employees, representatives and agents of each Holder or any controlling person
to the fullest extent lawful, from and against any and all losses, liabilities,
claims, damages and expenses whatsoever (including but not limited to reasonable
attorneys' fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any investigation or litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or
15
<PAGE>
are based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement or Prospectus, or in any supplement
thereto or amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to) make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
will not be liable in any such case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
information relating to any Holder furnished to the Company in writing by or on
behalf of such Holder expressly for use therein. This indemnity agreement will
be in addition to any liability which the Company and the Guarantors may
otherwise have, including under this Agreement. The indemnification contained in
this paragraph (a) with respect to any Registration Statement or Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) shall not inure to the benefit of any Holder (or to the
benefit of any person controlling such Holder) on account of any such loss,
liability, claim, damage or expense (i) arising from the sale of the Notes by
such Holder to any person if a copy of the Registration Statement shall not have
been delivered or sent to such person, at or prior to the written confirmation
of such sale, and the untrue statement or alleged untrue statement or omission
or alleged omission of a material fact contained in the Registration Statement
or Prospectus was corrected in the Registration Statement or Prospectus (as
amended or supplemented), provided that the Company has delivered the
Registration Statement or Prospectus (as amended or supplemented) to the Holders
in requisite quantity on a timely basis to permit such delivery or sending or
(ii) resulting from the use by such Holder of any Registration Statement or
Prospectus, or any amendment or supplement thereto, when, under Section 6 hereof
such Holder was not permitted to do so; provided that the exceptions in clauses
(i) and (ii) shall not affect the indemnity with respect to any other Holder not
otherwise subject to such exceptions.
(b) Each Holder, by its participation in the Exchange Offer or Shelf
Registration Statement, shall be deemed to acknowledge and agree, severally and
not jointly, to indemnify and hold harmless (i) the Company and the Guarantors,
(ii) each person, if any, who controls the Company and the Guarantors within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (iii)
the respective officers, directors, partners, employees, representatives and
agents of each of them, or any controlling person, against any losses,
liabilities, claims, damages and expenses whatsoever (including but not limited
to) reasonable attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any investigation or litigation,
commenced or threatened, or any claim whatsoever and any and all amounts paid in
settlement of any claim or litigation), joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or otherwise, insofar
as such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that any such loss,
16
<PAGE>
liability, claim, damage or expense arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with information relating to any
Holder furnished to the Company in writing by or on behalf of such Holder
expressly for use therein; provided, however, that in no case shall any Holder
be liable or responsible for any amount in excess of the dollar amount of the
proceeds received by such Holder upon the sale of the Notes giving rise to such
indemnification obligation. This indemnity will be in addition to any liability
which any Holder may otherwise have, including under this Agreement.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent that it has been prejudiced
in any material respect by such failure or from any liability which it may
otherwise have). In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of such
action, (ii) the indemnifying parties shall not have employed counsel to take
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded, based upon the advice of counsel, that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying party or parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events such fees and expenses of counsel shall be borne by the indemnifying
parties; provided, however, that the indemnifying party under subsection (a) or
(b) above shall only be liable for the legal expenses of one counsel (in
addition to any local counsel) for all indemnified parties in each jurisdiction
in which any claim or action is brought. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its prior written consent;
provided, however, that such consent was not unreasonably withheld.
(d) In order to provide for contribution in circumstances in which the
indemnification provided for in this Section 8 is for any reason held to be
unavailable or is insufficient to hold harmless a party indemnified hereunder,
the Company and the Guarantors, on the one hand, and each Holder (who shall be
deemed to agree to these terms by its participation in the Exchange Offer or the
Shelf Registration Statement), on the other hand, shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such
17
<PAGE>
indemnification provision (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting in the case of
losses, claims, damages, liabilities and expenses suffered by the Company and
the Guarantors, any contribution received by the Company and the Guarantors from
persons, other than the Holders, who may also be liable for contribution,
including persons who control the Company and the Guarantors within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act) to which the
Company, the Guarantors and such Holder may he subject, in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors, on one hand, and such Holder, on the other hand, if such allocation
is not permitted by applicable law or indemnification is not available as a
result of the indemnifying party not having received notice as provided in this
Section 8, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company and the
Guarantors, on the one hand, and such Holder, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Guarantors, on one hand,
and each Holder, on the other hand, shall be deemed to be in the same proportion
as (i) the total proceeds from the offering of the Notes (net of discounts but
before deducting expenses) received by the Company and the Guarantors and (ii)
the total proceeds received by such Holder upon the sale of the Notes giving
rise to) such indemnification obligation. The relative fault of the Company and
the Guarantors, on the one hand, and of each Holder, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, the Guarantors
or such Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Guarantors agree and the Holders shall be deemed to agree by
their participation in the Exchange Offer or the Shelf Registration Statement
that it would not be just and equitable if contribution pursuant to this Section
8(d) were determined by pro rota allocation or by any other method of allocation
which does not take into account the equitable considerations referred to above.
Notwithstanding the provisions of this Section 8(d), (i) in no case shall any
Holder be required to contribute any amount in excess of the dollar amount by
which the proceeds received by such Holder upon the sale of the Notes exceeds
the amount of any damages which such Holder has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission and (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8(d), (A) each person, if any, who controls any Holder within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B)
the respective officers, directors, partners, employees, representatives and
agents of each Holder or any controlling person shall have the same rights to
contribution as such Holder, and each person, if any, who controls the Company
and the Guarantors within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act shall have the same rights to contribution as the Company
and the Guarantors, subject in each case to clauses (i) and (ii) of this Section
8(d). Any party entitled to contribution will, promptly after receipt of notice
of commencement of any action, suit or proceeding against such party in respect
of which a claim for contribution may be made
18
<PAGE>
against another party or parties under this Section 8(d) notify such party or
parties from whom contribution may be sought, but the failure to so notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under this Section 8(d) or
otherwise. No party shall be liable for contribution with respect to any action
or claim settled without its prior written consent; provided, however, that such
written consent was not unreasonably withheld.
SECTION 9. RULE 144A
The Company and the Guarantors hereby agree with each Holder, for so
long as any Transfer Restricted Securities remain outstanding, to make available
to any Holder or beneficial owner of Transfer Restricted Securities in
connection with any sale thereof and any prospective purchaser of such Transfer
Restricted Securities from such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by a Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
SECTION 12. CUSIP NUMBER
In the event that the Company can obtain a single CUSIP number for the
Series D Notes without (a) failing to comply with any of its obligations under
the United States Internal Revenue Code of 1986, as amended, and (b) imposing an
undue financial burden on the Company, the Company shall use commercially
reasonable efforts to obtain a single CUSIP number from the CUSIP Service Bureau
for the Series D Notes. This Section 12 shall not be deemed to require the
Company to seek a ruling or a determination from the Internal Revenue Service.
The Initial Purchasers shall give reasonable assistance to the Company in
complying with its obligations under this Section 12.
19
<PAGE>
SECTION 13. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors agree that monetary
damages (including the liquidated damages contemplated hereby) would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agree to waive the defense in any action
for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company and the Guarantors will
not, on or after the date of this Agreement, enter into any agreement with
respect to their respective securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. As of the date hereof, there is no agreement in effect
wherein the Company or any of the Guarantors has granted registration rights
with respect to its securities to any Person that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Notes. Neither the Company nor any
Guarantor will take any action, or permit any change to occur, with respect to
the terms of the Notes that would materially and adversely affect the ability of
the Holders to Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not he given unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall he made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under
the Indenture; and
(ii) if to the Company or any of the Guarantors:
Holmes Products Corp.
233 Fortune Boulevard
Milford, Massachusetts 01757
Telecopy No.: (508) 634-1847
Attention: Ira B. Morgenstern
Senior Vice President - Finance
20
<PAGE>
With copies to:
Posternak, Blankstein & Lund, L.L.P.
100 Charles River Plaza
Boston, Massachusetts 02114
Telecopy No.: (617) 367-2315
Attention: Donald H. Siegel, P.C.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
21
<PAGE>
(k) Entire Agreement. This Agreement, together with the other Operative
Documents (as defined in the Purchase Agreement), is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Transfer Restricted Securities. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
[signature page follows]
22
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
HOLMES PRODUCTS CORP.
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
HOLMES MANUFACTURING CORP.
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
HOLMES AIR (TAIWAN) CORP.
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
HOLMES MOTOR CORPORATION
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
THE RIVAL COMPANY
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
<PAGE>
PATTON ELECTRIC COMPANY, INC.
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
PATTON BUILDING PRODUCTS, INC.
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
RIVAL CONSUMER SALES CORPORATION
By: /s/ Ira B. Morgenstern
--------------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
<PAGE>
BANCBOSTON ROBERTSON STEPHENS INC.
By: /s/ David N. Weinstein
--------------------------------
Name: David N. Weinstein
Title: Managing Director
LEHMAN BROTHERS INC.
By: /s/ John Russell
--------------------------------
Name: John Russell
Title: Managing Director
AMENDED AND RESTATED REVOLVING CREDIT
-------------------------------------
AND TERM LOAN AGREEMENT
-----------------------
dated as of February 5, 1999
among
HOLMES PRODUCTS CORP.,
MORIARTY ACQUISITION CORP.,
THE RIVAL COMPANY,
HOLMES PRODUCTS (FAR EAST) LIMITED,
ESTEEM INDUSTRIES LIMITED,
RAIDER MOTOR CORPORATION,
HOLMES PRODUCTS (EUROPE) LIMITED,
BIONAIRE INTERNATIONAL B.V.,
PATTON ELECTRIC HONG KONG, LIMITED, AND
THE RIVAL COMPANY OF CANADA, LTD.
BANKBOSTON, N.A.
and the other lending institutions set forth on Schedule 1 attached hereto,
BANKBOSTON, N.A.
as Administrative Agent
and
LEHMAN COMMERCIAL PAPER INC.
as Documentation Agent
with
BANCBOSTON ROBERTSON STEPHENS INC.
as Syndication Agent and Arranger
and
LEHMAN BROTHERS INC.
as Co-Arranger
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
1. DEFINITIONS AND RULES OF INTERPRETATION.......................................................................2
1.1. Definitions..........................................................................................2
1.2. Rules of Interpretation..............................................................................30
2. THE REVOLVING CREDIT FACILITY.................................................................................32
2.1. Commitment to Lend...................................................................................32
2.1.1. Revolving Credit Loans to Domestic Borrowers................................................32
2.1.2. Multicurrency Loans to Subsidiary Borrowers.................................................32
2.1.3. Canadian Loans to Rival Canada..............................................................33
2.2. Commitment Fee.......................................................................................34
2.3. Reduction of Total Commitment........................................................................34
2.4. The Revolving Credit Notes; Loan Accounts............................................................34
2.5. Interest on Revolving Credit Loans...................................................................35
2.6. Requests for Revolving Credit Loans..................................................................35
2.6.1. General.....................................................................................35
2.6.2. Swing Line..................................................................................36
2.7. Conversion Options...................................................................................36
2.7.1. Conversion to Different Type of Revolving Credit Loan.......................................36
2.7.2. Continuation of Type of Revolving Credit Loan...............................................37
2.7.3. Eurocurrency Rate Loans.....................................................................37
2.8. Funds for Revolving Credit Loans.....................................................................37
2.8.1. Funding Procedures for Revolving Credit Loans to Domestic Borrowers.........................37
2.8.2. Advances by Agent for Revolving Credit Loans to Domestic Borrowers..........................38
2.8.3. Funding Procedures for Revolving Credit Loans Denominated in Dollars to Subsidiary
Borrowers..........................................................................................38
2.8.4. Advances by Agent for Revolving Credit Loans Denominated in Dollars to Subsidiary
Borrowers...................................................................................39
2.8.5. Funding Procedures for Revolving Credit Loans Denominated in an Optional Currency
to Subsidiary Borrowers.....................................................................39
2.8.6. Advances by Agent for Revolving Credit Loans Denominated in Optional Currency
to Subsidiary Borrowers.....................................................................40
2.8.7. Funding Procedures for Revolving Credit Loans to Rival Canada...............................40
2.9. Optional Currencies/ Canadian Loans..................................................................40
2.9.1. Request for Optional Currency...............................................................40
2.9.2. Exchange Rate...............................................................................41
2.9.3. Multiple Denominations......................................................................41
2.9.4. Repayment...................................................................................41
2.9.5. Funding.....................................................................................42
2.10. Fronting Provisions.................................................................................42
</TABLE>
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<TABLE>
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2.10.1. Application of Interest Payments for Multicurrency Loans and Canadian
Loans..............................................................................................42
2.10.2. Currency Conversions and Contingent Funding Agreement......................................43
2.10.3. Fronting Fee...............................................................................47
2.10.4. Resignation of Fronting Bank and Canadian Fronting Bank....................................47
2.11. Settlements.........................................................................................48
2.11.1. General....................................................................................48
2.11.2. Failure to Make Funds Available............................................................48
2.11.3. No Effect on Other Banks...................................................................49
2.12. Repayment of Revolving Credit Loans.................................................................49
2.12.1. Maturity...................................................................................49
2.12.2. Mandatory Repayments of Revolving Credit Loans.............................................49
2.13. Optional Repayments of Revolving Credit Loans.......................................................50
2A. BANKERS'ACCEPTANCES..........................................................................................51
2A.1. Acceptance and Purchase.............................................................................51
2A.2. Refunding Bankers'Acceptances.......................................................................53
2A.3. Acceptance Fee......................................................................................54
2A.4. Circumstances Making Bankers' Acceptances Unavailable...............................................54
2A.5 Cash Payments with respect to Outstanding Bankers' Acceptances......................................54
2A.6 Indemnification in respect of Bankers'Acceptances...................................................55
3. THE TERM LOANS................................................................................................56
3.1. Commitment to Lend...................................................................................56
3.1.1. Term Loan A.................................................................................56
3.1.2. Term Loan B.................................................................................56
3.2. The Term Notes.......................................................................................56
3.2.1. Term Loan A and Term Loan B.................................................................56
3.3. Mandatory Payments of Principal of Term Loans........................................................56
3.3.1. Term Loan A.................................................................................56
3.3.2. Term Loan B.................................................................................57
3.3.3. Annual Excess Cash Flow Recapture...........................................................57
3.3.4. Net Cash Proceeds; Net Cash Sale Proceeds...................................................58
3.4. Optional Prepayment of Term Loans....................................................................58
3.5. Interest on Term Loans...............................................................................59
3.5.1. Interest Rates..............................................................................59
3.5.2. Conversion Options..........................................................................59
3.5.3. Amounts, etc................................................................................60
3.6. Funds for Term Loans A and B.........................................................................60
3.7. Application of Interest Payments for Term Loans......................................................60
4. LETTERS OF CREDIT.............................................................................................60
4.1. Letter of Credit Commitments.........................................................................60
4.1.1. Commitment to Issue Letters of Credit.......................................................60
4.1.2. Letter of Credit Applications...............................................................61
4.1.3. Terms of Letters of Credit..................................................................61
</TABLE>
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4.1.4. Reimbursement Obligations of Banks..........................................................61
4.1.5. Participations of Banks.....................................................................62
4.2. Reimbursement Obligation of the Borrowers............................................................62
4.3. Letter of Credit Payments............................................................................62
4.4. Obligations Absolute.................................................................................63
4.5. Reliance by Issuer...................................................................................63
4.6. Letter of Credit Fee.................................................................................64
5. CERTAIN GENERAL PROVISIONS....................................................................................64
5.1. Closing Fees.........................................................................................64
5.2. Agent's Fee..........................................................................................64
5.3. Funds for Payments...................................................................................64
5.3.1. Payments to Agent...........................................................................64
5.3.2. No Offset, etc. ............................................................................65
5.3.3. Currency Matters............................................................................65
5.3.3.1. Currency of Account................................................................65
5.3.3.2. Currency Fluctuations..............................................................66
5.4. Computations.........................................................................................67
5.5. Inability to Determine Eurocurrency Rate.............................................................67
5.6. Illegality...........................................................................................68
5.7. Additional Costs, etc. ..............................................................................68
5.8. Capital Adequacy.....................................................................................69
5.9. Certificate..........................................................................................70
5.10. Indemnity...........................................................................................70
5.11. Interest After Default..............................................................................70
5.11.1. Overdue Amounts............................................................................70
5.11.2. Amounts Not Overdue........................................................................70
5.12. European Monetary Union.............................................................................71
5.13. Concerning Joint and Several Liability of the Domestic Borrowers....................................73
6. COLLATERAL SECURITY AND GUARANTIES............................................................................74
6.1. Security of Borrowers................................................................................74
6.2. Guaranties and Security of Subsidiaries..............................................................74
6.3. Guaranty by the Domestic Borrowers of the Obligations................................................75
6.3.1. Guaranty....................................................................................75
6.3.2. Guaranty Absolute...........................................................................75
6.3.3. Effectiveness; Enforcement..................................................................76
6.3.4. Waiver......................................................................................77
6.3.5. Subordination; Subrogation..................................................................77
6.3.6. Payments....................................................................................78
6.3.7. Receipt of Information......................................................................78
7. REPRESENTATIONS AND WARRANTIES................................................................................78
7.1. Corporate Authority..................................................................................78
7.1.1. Incorporation; Good Standing................................................................78
7.1.2. Authorization...............................................................................79
7.1.3. Enforceability..............................................................................79
7.2. Governmental Approvals...............................................................................79
7.3. Title to Properties; Leases..........................................................................79
</TABLE>
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<TABLE>
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7.4. Financial Statements and Projections.................................................................80
7.4.1. Fiscal Year.................................................................................80
7.4.2. Financial Statements........................................................................80
7.4.3. Projections.................................................................................80
7.4.4. Solvency....................................................................................80
7.5. No Material Changes, etc. ...........................................................................80
7.6. Franchises, Patents, Copyrights, etc. ...............................................................81
7.7. Litigation...........................................................................................81
7.8. No Materially Adverse Contracts, etc. ...............................................................81
7.9. Compliance with Other Instruments, Laws, etc. .......................................................81
7.10. Tax Status..........................................................................................81
7.11. No Event of Default.................................................................................82
7.12. Holding Company and Investment Company Acts.........................................................82
7.13. Absence of Financing Statements, etc. ..............................................................82
7.14. Perfection of Security Interest.....................................................................82
7.15. Certain Transactions................................................................................82
7.16. Employee Benefit Plans..............................................................................82
7.16.1. In General.................................................................................82
7.16.2. Terminability of Welfare Plans.............................................................83
7.16.3. Guaranteed Pension Plans...................................................................83
7.16.4. Multiemployer Plans........................................................................84
7.17. Use of Proceeds.....................................................................................84
7.17.1. General....................................................................................84
7.17.2. Regulations U and X........................................................................84
7.17.3. Ineligible Securities......................................................................84
7.18. Environmental Compliance............................................................................84
7.19. Subsidiaries, etc. .................................................................................86
7.20. Bank Accounts.......................................................................................86
7.21. Disclosure..........................................................................................86
7.22. Status of Loans as Senior Debt......................................................................86
7.23. Subordinated Debt Documents; Tender Offer Documents and Merger Documents............................86
7.24. No Other Senior Debt................................................................................87
7.25. No Withholding......................................................................................87
7.26. No Filings Required.................................................................................87
7.27. Chief Executive Office..............................................................................87
7.28. Insurance...........................................................................................87
8. AFFIRMATIVE COVENANTS OF THE BORROWERS........................................................................87
8.1. Punctual Payment.....................................................................................87
8.2. Maintenance of Office................................................................................88
8.3. Records and Accounts.................................................................................88
8.4. Financial Statements, Certificates and Information...................................................88
8.5. Notices..............................................................................................90
8.5.1. Defaults....................................................................................90
8.5.2. Environmental Events........................................................................90
8.5.3. Notification of Claim against Collateral....................................................90
8.5.4. Notice of Litigation and Judgments..........................................................90
8.6. Corporate Existence; Maintenance of Properties.......................................................91
</TABLE>
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<TABLE>
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8.7. Insurance............................................................................................91
8.8. Taxes................................................................................................91
8.9. Inspection of Properties and Books, etc. ............................................................92
8.9.1. General.....................................................................................92
8.9.2. Appraisals..................................................................................92
8.10. Compliance with Laws, Contracts, Licenses, and Permits..............................................92
8.11. Employee Benefit Plans..............................................................................92
8.12. Use of Proceeds.....................................................................................93
8.13. Additional Mortgaged Property.......................................................................93
8.14. Fair Labor Standards Act............................................................................93
8.15. Guarantors..........................................................................................93
8.16. Subordinated Guarantees.............................................................................93
8.17. Status of Loans as Senior Debt......................................................................94
8.18. Additional Subsidiaries.............................................................................94
8.19. Landlord Consents. .................................................................................94
8.20. Interest Rate Protection. ..........................................................................94
8.21. Year 2000 Problem. .................................................................................94
8.22. Consummation of Merger. ............................................................................94
8.23. Further Assurances. ................................................................................94
9. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS...................................................................95
9.1. Restrictions on Indebtedness.........................................................................95
9.2. Restrictions on Liens................................................................................96
9.3. Restrictions on Investments..........................................................................98
9.4. Distributions and Restricted Payments................................................................99
9.5. Merger, Consolidation and Disposition of Assets......................................................99
9.5.1. Mergers and Acquisitions....................................................................99
9.5.2. Disposition of Assets.......................................................................102
9.6. Sale and Leaseback...................................................................................103
9.7. Compliance with Environmental Laws...................................................................103
9.8. Subordinated Debt....................................................................................103
9.9. Employee Benefit Plans...............................................................................103
9.10. Business Activities.................................................................................104
9.11. Fiscal Year.........................................................................................104
9.12. Transactions with Affiliates........................................................................104
9.13. Modification of Documents and Charter...............................................................104
9.14. Upstream Limitations................................................................................104
9.15. Inconsistent Agreements.............................................................................104
9.16. Senior Debt.........................................................................................105
9.17. Limitations on Foreign Exchange Arrangements........................................................105
10. FINANCIAL COVENANTS OF THE BORROWERS.........................................................................105
10.1. Leverage Ratio......................................................................................105
10.2. Interest Coverage Ratio.............................................................................105
10.3. Fixed Charge Coverage Ratio.........................................................................106
10.4. Capital Expenditures................................................................................106
11. CLOSING CONDITIONS...........................................................................................107
11.1. Loan Documents, etc. ...............................................................................107
</TABLE>
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11.1.1. Loan Documents.............................................................................107
11.1.2. Tender Offer Documents.....................................................................107
11.1.3. Merger Documents...........................................................................107
11.1.4. Subordinated Debt Documents................................................................107
11.2. Certified Copies of Charter Documents...............................................................107
11.3. Corporate Action....................................................................................107
11.4. Incumbency Certificate..............................................................................107
11.5. Validity of Liens...................................................................................108
11.6. Perfection Certificates and UCC Search Results......................................................108
11.7. Certificates of Insurance...........................................................................108
11.8. Hazardous Waste Assessments.........................................................................108
11.9. Solvency Opinion....................................................................................108
11.10. Opinions of Counsel................................................................................108
11.11. Payment of Fees....................................................................................109
11.12. Payoff Letter......................................................................................109
11.13. Disbursement Instructions..........................................................................109
11.14. Capitalization.....................................................................................109
11.15. Consents and Approvals.............................................................................109
11.16. Closing Date Leverage Ratio........................................................................109
11.17. Availability.......................................................................................109
11.18. Tender Offer/Merger................................................................................109
11.19. Conditions to Funding to Foreign Borrowers.........................................................109
11.20. Survey and Taxes...................................................................................110
11.21. Title Insurance....................................................................................110
12. CONDITIONS TO ALL BORROWINGS.................................................................................110
12.1. Representations True; No Event of Default...........................................................110
12.2. No Legal Impediment.................................................................................110
12.3. Governmental Regulation.............................................................................110
12.4. Proceedings and Documents...........................................................................111
12.5. Exchange Limitations................................................................................111
12.6. Indenture Compliance................................................................................111
13. EVENTS OF DEFAULT; ACCELERATION; ETC. .......................................................................111
13.1. Events of Default and Acceleration..................................................................111
13.2. Termination of Commitments..........................................................................114
13.3. Remedies............................................................................................115
13.4. Exchange Rate.......................................................................................115
13.5. Distribution of Collateral Proceeds.................................................................115
14. SETOFF.......................................................................................................116
15. THE AGENT....................................................................................................117
15.1. Authorization......................................................................................117
15.2. Employees and Agents...............................................................................117
15.3. No Liability.......................................................................................118
15.4. No Representations.................................................................................119
15.4.1. General....................................................................................119
15.4.2. Closing Documentation, etc. ...............................................................119
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15.5. Payments............................................................................................120
15.5.1. Payments to Agent..........................................................................120
15.5.2. Distribution by Agent......................................................................120
15.5.3. Delinquent Banks...........................................................................120
15.6. Holders of Notes....................................................................................121
15.7. Indemnity...........................................................................................121
15.8. Agent as Bank.......................................................................................121
15.9. Resignation.........................................................................................121
15.10. Notification of Defaults and Events of Default.....................................................121
15.11. Duties in the Case of Enforcement..................................................................121
15.12. Special Covenant to Pay............................................................................122
15.13. Duties of Documentation Agent and Arranger.........................................................122
16. EXPENSES AND INDEMNIFICATION.................................................................................122
16.1. Expenses............................................................................................122
16.2. Indemnification.....................................................................................123
16.3. Survival............................................................................................123
17. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION................................................................123
17.1. Sharing of Information with Section 20 Subsidiary...................................................123
17.2. Confidentiality.....................................................................................124
17.3. Prior Notification..................................................................................124
17.4. Other...............................................................................................124
18. SURVIVAL OF COVENANTS, ETC. .................................................................................125
19. ASSIGNMENT AND PARTICIPATION.................................................................................125
19.1. Conditions to Assignment by Banks...................................................................125
19.2. Certain Representations and Warranties; Limitations, Covenants......................................126
19.3. Register............................................................................................127
19.4. New Notes...........................................................................................127
19.5. Participations......................................................................................127
19.6. Disclosure..........................................................................................127
19.7. Assignee or Participant Affiliated with any Borrower................................................128
19.8. Miscellaneous Assignment Provisions.................................................................128
19.9. Assignment by Borrowers.............................................................................128
20. NOTICES, ETC. ...............................................................................................129
21. GOVERNING LAW................................................................................................129
22. HEADINGS.....................................................................................................129
23. COUNTERPARTS.................................................................................................130
24. ENTIRE AGREEMENT, ETC. ......................................................................................130
25. WAIVER OF JURY TRIAL.........................................................................................130
26. CONSENTS, AMENDMENTS, WAIVERS, ETC. .........................................................................130
</TABLE>
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27. SEVERABILITY. ...............................................................................................131
28. TRANSITIONAL ARRANGEMENTS. ..................................................................................131
28.1. Original Credit Agreement Superseded. ..............................................................131
28.2. Return and Cancellation of Revolving Credit Notes. .................................................131
28.3. Interest and Fees Under Superseded Agreement. ......................................................131
</TABLE>
<PAGE>
AMENDED AND RESTATED REVOLVING CREDIT
-------------------------------------
AND TERM LOAN AGREEMENT
-----------------------
This AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT is made
as of February 5, 1999, by and among (a) HOLMES PRODUCTS CORP. (the "Company"),
a Massachusetts corporation having its principal place of business at 233
Fortune Boulevard, Milford, Massachusetts 01757, (b), MORIARTY ACQUISITION CORP.
("Moriarty Acquisition Corp." or "MAC"), a Delaware corporation having its
principal place of business at c/o The Corporation Trust Company, Corporation
Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, (c) THE RIVAL
COMPANY ("Rival"), a Delaware corporation having its principal place of business
at 800 E. 101st Terrace, Kansas City, Missouri 64131, (together with Company and
MAC, the "Domestic Borrowers"), (d) HOLMES PRODUCTS (FAR EAST) LIMITED ("Holmes
Far East"), a Bahamas corporation having an address in care of Esteem at 9th
Floor, 9 Wing Hong Street, Cheung Sha Wan, Kowloon Hong Kong, (e) ESTEEM
INDUSTRIES LIMITED ("Esteem"), a corporation organized under the laws of Hong
Kong and having its principal place of business at 9th Floor, 9 Wing Hong
Street, Cheung Sha Wan, Kowloon, Hong Kong, (f) RAIDER MOTOR CORPORATION
("Raider"), a Bahamas corporation having an address in care of Esteem at 9th
Floor, 9 Wing Hong Street, Cheung Sha Wan, Kowloon Hong Kong, (g) HOLMES
PRODUCTS (EUROPE) LIMITED ("Holmes UK"), a corporation organized under the laws
of the United Kingdom have its principal place of business at Unit 14, the Piper
Centre, Carnwath Road, London England SW6, (h) BIONAIRE INTERNATIONAL B.V.
("Bionaire B.V."), a private company with limited liability incorporated under
the laws of the Netherlands and having its business address at Mechelaarstraat
22, 4903 RE Oosterhout, Netherlands, (i) PATTON ELECTRIC (HONG KONG) LTD.
("Patton HK", and collectively with Holmes Far East, Esteem, Raider, Holmes UK,
and Bionaire B.V., the "Subsidiary Borrowers"), a corporation organized under
the laws of Hong Kong and having its principal place of business at Sie 1001,
Tower 1, 33 Canton Road, Taimshatsui, Howloon, Hong Kong, (j) THE RIVAL COMPANY
OF CANADA, LTD. ("Rival Canada", and, collectively with the Subsidiary
Borrowers, the "Foreign Borrowers" and together with the Domestic Borrowers and
the Subsidiary Borrowers, the "Borrowers" and each individually, a "Borrower"),
a corporation organized under the laws of Canada and having its principal place
of business at 6385 Shawson Drive, Mississauga Ontario, Canada L5T 2H7, (k)
BANKBOSTON, N.A., a national banking association and the other lending
institutions listed on Schedule 1 (collectively, the "Banks"), (l) BANKBOSTON,
N.A. as administrative agent for itself and such other lending institutions, (m)
LEHMAN COMMERCIAL PAPER INC., as Documentation Agent, (n) BANKBOSTON, N.A.,
acting through its Hong Kong and London branches as fronting bank for the Banks,
(o) BANCBOSTON ROBERTSON STEPHENS INC., as the syndication agent and arranger
for the Banks, and (p) LEHMAN BROTHERS INC. as co-arranger for such lending
institutions.
WHEREAS, pursuant to a Revolving Credit Agreement dated as of November 26,
1997 (as amended from time to time, the "Original Credit Agreement") by and
among certain of the Borrowers, the Guarantors, BankBoston, N.A. and certain
lending institutions (collectively, the "Original Banks") and the Agent, the
Original Banks made available loans and other extensions of credit to certain of
the Borrowers; and
WHEREAS, the Borrowers have requested that the Agent and the Banks amend
and restate the Original Credit Agreement, to provide additional financing for
the acquisition of 100% of the capital stock of Rival through the Tender Offer
and the Merger (the "Acquisition"), to
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refinance certain indebtedness of the Borrowers, and for working capital,
capital expenditures, permitted acquisitions and general corporate purposes
following the Acquisition, and each of the Banks and the Agent are willing to
amend and restate the Original Credit Agreement and to provide such additional
financing on the terms and conditions set forth herein; and
NOW, THEREFORE, the Borrowers, the Guarantors, the Banks and the Agent
agree that on the Closing Date the Original Credit Agreement is hereby amended
and restated in its entirety and shall remain in full force and effect only as
set forth herein.
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. Definitions. The following terms shall have the meanings set
forth in this ss.1 or elsewhere in the provisions of this Credit Agreement
referred to below:
Acceptance Fee. See ss.2A.3.
Accounts Receivable. All rights of the Borrowers or any of their
Subsidiaries to payment for goods sold, leased or otherwise marketed in the
ordinary course of business and all rights of the Borrowers or any of their
Subsidiaries to payment for services rendered in the ordinary course of business
and all sums of money or other proceeds due thereon pursuant to transactions
with account debtors, except for that portion of the sum of money or other
proceeds due thereon that relate to sales, use or property taxes in conjunction
with such transactions, recorded on books of account in accordance with
generally accepted accounting principles.
Acquisition. See Recitals.
Additional Investors. See ss.2.12.2.
Adjustment Date. The first day of the month immediately following the month
in which a Compliance Certificate is to be delivered by the Company pursuant to
ss.8.4(d) hereof.
Affiliate. Any Person that would be considered to be an affiliate of the
Company under Rule 144(a) of the Rules and Regulations of the Securities and
Exchange Commission, as in effect on the date hereof, if the Company were
issuing securities.
Agent's Head Office. The Agent's head office located at 100 Federal Street,
Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.
Agent. BankBoston, N.A. acting as administrative agent for the Banks.
Agent's Special Counsel. Bingham Dana LLP or such other counsel as may be
approved by the Agent.
Agreement of Pledge of Assets and Receivables. The Agreement of Pledge of
Assets and Receivables, dated prior to or as of the Closing Date, between
Bionaire B.V. and the Agent.
Annualized Reference Period. The period of (a) four (4) consecutive fiscal
quarters of the Company ending on the relevant date or (b) until four (4) full
fiscal quarters of the Company have elapsed from the Closing Date, such shorter
period of one (1), two (2) or three (3) full fiscal quarters elapsed since the
Closing Date, with the relevant amount applicable to such shorter period
annualized for the four (4) consecutive fiscal quarters for which the applicable
covenant or
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test calculation is being performed by multiplying such relevant amount by a
fraction whose numerator is four and whose denominator is the actual number of
elapsed full fiscal quarters, provided, however, notwithstanding anything to the
contrary contained in this definition, for purposes of this definition when used
in calculating Consolidated Total Interest Expense, the Consolidated Total
Interest Expense for the first month of the first fiscal quarter of 1999 shall
be equal to $2,676,000.
Applicable Acceptance Fee Rate. A rate per annum equal to the Applicable
Margin with respect to Eurocurrency Rate Loans.
Applicable BA Discount Rate. With respect to any Bankers' Acceptance being
purchased by a BA Lender on any Business Day, the average Bankers' Acceptance
discount rate for Schedule I (Bank Act (Canada)) banks named in, and for the
term and face amount of such Bankers' Acceptance as quoted on Reuters Service
Page CDOR at or about 10:00 a.m. (Toronto, Ontario time) on such Business Day,
or if for any reason such BA Lender shall have determined (which determination
shall be conclusive, absent manifest error) that it is unable to ascertain such
CDOR discount rate for any reason, including without limitation, the inability
or failure of such BA Lender to obtain sufficient bids or publications in
accordance with the terms hereof, the "Applicable BA Discount Rate" shall be the
rate calculated in the manner described above for the most recent business day
that such rate is available until the circumstances giving rise to such
inability no longer exist.
Applicable Margin. For each period commencing on an Adjustment Date through
the date immediately preceding the next Adjustment Date (each a "Rate Adjustment
Period"), the Applicable Margin shall be the applicable margin set forth below
with respect to the Leverage Ratio, as determined for the period ending on the
fiscal quarter ended immediately preceding the applicable Rate Adjustment
Period.
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<TABLE>
<CAPTION>
==========================================================================================================================
BASE RATE EUROCURRENCY COMMITMENT FEE
LEVEL LEVERAGE RATIO LOANS RATE LOANS RATE
- ------------ --------------------------------------- ------------------- ---------------------- --------------------------
- ------------ --------------------------------------- ------------------- ---------------------- --------------------------
<S> <C> <C> <C> <C>
I Greater than or equal to
4.75:1.00 1.25% 3.00% 0.500%
- ------------ --------------------------------------- ------------------- ---------------------- --------------------------
- ------------ --------------------------------------- ------------------- ---------------------- --------------------------
II Less than 4.75:1.00 but greater
than or equal to 4.25:1.00 1.00% 2.75% 0.500%
- ------------ --------------------------------------- ------------------- ---------------------- --------------------------
- ------------ --------------------------------------- ------------------- ---------------------- --------------------------
III Less than 4.25:1.00 but greater
than or equal to 3.75:1.00 0.75% 2.50% 0.500%
- ------------ --------------------------------------- ------------------- ---------------------- --------------------------
- ------------ --------------------------------------- ------------------- ---------------------- --------------------------
IV Less than 3.75:1.00 but greater
than or equal to 3.25:1.00 0.50% 2.25% 0.375%
- ------------ --------------------------------------- ------------------- ---------------------- --------------------------
- ------------ --------------------------------------- ------------------- ---------------------- --------------------------
V Less than 3.25:1.00 0.50% 2.00% 0.375%
==========================================================================================================================
</TABLE>
Notwithstanding the foregoing, (a) for Revolving Credit Loans and Term Loan
A outstanding, the Letter of Credit Fees and the commitment fees payable during
the period commencing on the Closing Date through the date immediately preceding
the first Adjustment Date to occur after the Company's delivery of a Compliance
Certificate for the quarter ending June 30, 1999, the Applicable Margin shall be
Level I set forth above, and (b) if the Company fails to deliver any Compliance
Certificate pursuant to ss.8.4(d) hereof then, for the period commencing on the
next Adjustment Date to occur subsequent to such failure through the date
immediately following the date on which such Compliance Certificate is
delivered, the Applicable Margin shall be the highest Applicable Margin set
forth above.
Arranger. BancBoston Robertson Stephens Inc.
Asset Sale. Any one or series of related transactions in which any
applicable Person conveys, sells, transfers or otherwise disposes of, directly
or indirectly, any of its properties, businesses or assets (including the sale
or issuance of capital stock of a Subsidiary), whether owned on the Closing Date
or thereafter acquired.
Assignment and Acceptance. See ss.19.1.
BA Discount Proceeds. With respect to any Bankers' Acceptance to be
accepted and purchased by a BA Lender, an amount (rounded to the nearest whole
Canadian cent, and with one-half of one Canadian cent being rounded up)
calculated on such day by multiplying (a) the face amount of such Bankers'
Acceptance times (b) the quotient equal to (such quotient being rounded up or
down to the nearest fifth decimal place and .000005 being rounded up) (i) one
divided by (ii) the sum of (A) one plus (B) the product of (1) the Applicable BA
Discount Rate (expressed as a decimal) applicable to such Bankers' Acceptance
times (2) the quotient equal to (aa) the number of days remaining in the term of
such Bankers' Acceptance divided by (bb) 365.
BA Lenders. See ss.2A.1.
Balance Sheet Date. September 30, 1998.
Bankers' Acceptances. A bill of exchange denominated in Canadian Dollars
drawn on, and accepted by, the Canadian Fronting Bank pursuant to ss.2A hereof.
<PAGE>
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Bankers' Acceptance Notice. See ss.2A.1.
Banks. BKB and the other lending institutions listed on Schedule 1 hereto
and any other Person who becomes an assignee of any rights and obligations of a
Bank pursuant to ss.19 and, unless the context otherwise requires, the Fronting
Bank.
Base Rate. The higher of (a) the annual rate of interest announced from
time to time by BKB at its head office in Boston, Massachusetts, as its "base
rate" and (b) one-half of one percent (1/2%) above the Federal Funds Effective
Rate. For the purposes of this definition, "Federal Funds Effective Rate" shall
mean for any day, the rate per annum equal to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three (3) funds brokers of recognized
standing selected by the Agent.
Base Rate Loans. Collectively, (a) Loans denominated in Dollars bearing
interest calculated by reference to the Base Rate and (b) Loans to Rival Canada
denominated in Canadian Dollars bearing interest calculated by reference to the
Canadian Base Rate.
Berkshire Fund IV. Berkshire Fund IV, L.P., a Massachusetts limited
partnership.
Berkshire Fund V. Berkshire Fund V, L.P., a Massachusetts limited
partnership.
Berkshire Fund IV Investment Corp. Berkshire Fund IV Investment Corp., a
Massachusetts corporation.
Berkshire Fund V Investment Corp. Berkshire Fund V Investment Corp., a
Massachusetts corporation.
Berkshire Investors LLC. Berkshire Investors LLC, a Massachusetts limited
liability company.
Berkshire Partners. Berkshire Partners LLC, a Massachusetts limited
liability company.
Bionaire B.V. As defined in the preamble hereto.
BKB. BankBoston, N.A., a national banking association, in its individual
capacity.
Borrowers. As defined in the preamble hereto.
Business Day. Any day on which banking institutions in Boston,
Massachusetts, are open for the transaction of banking business and, in
addition, (a) if Eurocurrency Rate Loans denominated in Dollars are involved, a
day which is also a day in which commercial banks are open for international
business (including dealings in Dollar deposits) in London or such other
eurodollar interbank market as may be selected by the Agent in its sole
discretion acting in good faith; (b) if Eurocurrency Rate Loans denominated in
an Optional Currency are involved, a day on which dealings and exchange in
Dollars and the relevant Optional Currency can be carried on in the relevant
Eurocurrency Interbank Market and Dollar settlements of such dealings may be
effected in New York, New York and London, and also a day on which dealings and
exchange in
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Dollars and in the relevant Optional Currency can be carried on in the principal
financial center of the country in which such currency is legal tender and in
London, England; and (c) in the case of the Revolving Credit Loans made to Rival
Canada and Bankers' Acceptances, also a day in which banking institutions in
Toronto, Canada are open for the transaction of banking business.
Canadian Base Rate. The higher of (a) the annual rate of interest announced
from time to time by the Canadian Fronting Bank as its "prime rate" for
commercial loans in Canadian Dollars to borrowers in Canada (it being understood
that such rate is a reference rate and not necessarily the lowest rate of
interest charged by the Canadian Fronting Bank) plus a rate to be negotiated
(but not to exceed one-half of one percent (1/2%)), and (b) one percent (1%)
above the one-month acceptance rate quoted by the Canadian Fronting Bank at
10:00 a.m. (Toronto time) that appears on the Reuters Screen CDOR page on such
day as its rate for acceptance in Canada.
Canadian Dollars or C$. Dollars designated as lawful currency in Canada.
Canadian Dollar Equivalent. On any particular date, with respect to an
amount of Dollars on any date, the amount of Canadian Dollars that may be
purchased with such amount of Dollars at the Exchange Rate with respect to
Dollars on such date.
Canadian Exchange Rate. With respect to any amount in Dollars the rate of
exchange as quoted by the Bank of Canada as the noon rate of Canadian Dollars
for Dollars on or about 12:00 p.m. (noon) Toronto time on the Business Day on
which the determination is required to be made or, if such rate is for any
reason not available, the spot rate quoted for wholesale transactions by the
Canadian Fronting Bank of Canadian Dollars for Dollars on or about 12:00 p.m.
(noon) Toronto time on the Business Day on which the determination is required
to be made.
Canadian Fronting Bank. A Lender approved by the Agent and the Borrowers to
act as fronting bank with respect to the Canadian Loans and Bankers' Acceptances
which is a bank named in Schedule I or Schedule II to the Bank Act (Canada)
having total assets in excess of $50,000,000, provided, that in the event the
Canadian Fronting Bank is also a Bank, such Person's funding requirements as
Canadian Fronting Bank shall not include its independent requirement in its
individual capacity to fund as a Bank.
Canadian Loans. Revolving Credit Loans made or to be made by the Canadian
Fronting Bank to Rival Canada pursuant to ss.2.1 hereof.
Capital Assets. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery, equipment and all other assets which are treated as capital
assets in accordance with generally accepted accounting principles) and
intangible (such as patents, copyrights, trademarks, franchises and good will);
provided that Capital Assets shall not include any item customarily charged
directly to expense or depreciated over a useful life of twelve (12) months or
less in accordance with generally accepted accounting principles.
Capital Expenditures. Amounts paid or Indebtedness incurred by the Company
or any of its Subsidiaries in connection with (a) the purchase or lease by the
Company or any of its Subsidiaries of Capital Assets that would be required to
be capitalized and shown on the balance sheet of such Person in accordance with
generally accepted accounting principles or (b) the lease of any assets by the
Company or any of its Subsidiaries as lessee under any synthetic lease referred
to in clause (f) of the definition of the term "Indebtedness" to the extent that
such assets would have been Capital Assets had the synthetic lease been treated
for accounting purposes as a
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Capitalized Lease, provided, for purposes of this definition, to the extent the
Company makes a Capital Expenditure in connection with the purchase of the real
property in Milford, Massachusetts, and subsequently sells such real property,
the Company shall be entitled to a credit of such Capital Expenditure in the
period so made in an amount which is the lesser of (a) the amount of such
initial Capital Expenditure or (b) the cash sales price for such real property.
Capitalization Documents. Collectively, the Stockholders Agreement and the
articles of organization or comparable charter documents, as the case may be, of
the Company and its Subsidiaries.
Capitalized Leases. Leases under which the Company or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with generally accepted accounting
principles.
CERCLA. See ss.7.18(a).
Charges Over Shares. Collectively, the Charge Over Shares, dated as of
December 15, 1997, and amended as of the Closing Date, between Holmes Far East,
Raider and the Agent and amended as of the Closing Date, the several Charges
Over Shares, dated as of the Closing Date between Holmes Far East, Holmes UK and
the Agent, and each in form and substance satisfactory to the Banks and the
Agent.
Closing Date. The first date on which the conditions set forth in ss.ss.11
and ss.12 have been satisfied, the outstanding Loans under the Original Credit
Agreement are converted to Loans hereunder, and any Loans are to be made or any
Letter of Credit is to be issued hereunder.
Code. The Internal Revenue Code of 1986, as amended.
Collateral. All of the property, rights and interests of the Company and
its Subsidiaries that are or are intended to be subject to the security
interests and mortgages created by the Security Documents.
Commitment. With respect to each Bank, the amount set forth on Schedule 1
hereto as the amount of such Bank's commitment to make Revolving Credit Loans to
the Company and to purchase a risk participation from the Fronting Bank or the
Canadian Fronting Bank, as the case may be, for Multicurrency Loans made to the
Subsidiary Borrowers by the Fronting Bank pursuant to ss.2.10 hereof and
Canadian Loans made to Rival Canada and Bankers' Acceptances issued for the
account of Rival Canada by the Canadian Fronting Bank pursuant to ss.ss.2.10 and
2A hereof, and to participate in the issuance, extension and renewal of Letters
of Credit for the account of, the Borrowers, as the same may be reduced from
time to time; or if such commitment is terminated pursuant to the provisions
hereof, zero.
Commitment Fee Rate. The applicable rate per annum set forth in the chart
contained in the definition of Applicable Margin under the heading "Commitment
Fee Rate".
Commitment Percentage. With respect to each Bank, the percentage set forth
on Schedule 1 hereto as such Bank's percentage of the aggregate Commitments of
all of the Banks.
Company. As defined in the preamble hereto.
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-8-
Compliance Certificate. See ss.8.4(d).
Consolidated or consolidated. With reference to any term defined herein,
shall mean that term as applied to the accounts of the Company and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
Consolidated Excess Cash Flow. With respect to the Borrowers, on a
consolidated basis, and for any fiscal year ending on or after December 31,
1999, an amount equal to Consolidated Operating Cash Flow for such fiscal year,
less (a) the sum of (i) Consolidated Total Interest Expense for such fiscal year
plus (ii) any mandatory permanent repayments (whether scheduled or otherwise) of
principal on any Indebtedness of the Borrowers or any of their Subsidiaries paid
or due and payable during such period (other than such payments in any year in
respect of the Consolidated Excess Cash Flow for the prior year), plus (iii)
cash Integration Expenses added to EBITDA in such fiscal year.
Consolidated Net Income (or Deficit). The consolidated net income (or loss)
of the Company and its Subsidiaries, determined in accordance with generally
accepted accounting principles and before any reduction in respect of preferred
stock dividends, excluding, however, (a) any gain (but not loss), together with
any related provision for taxes on such gain (but not loss) realized in
connection with (i) any Asset Sale (including, without limitation, dispositions
pursuant to sale and leaseback transactions) or (ii) the disposition of any
securities by the Company or any of its Subsidiaries or the extinguishment of
any Indebtedness of the Company or any of its Subsidiaries and (b) any
extraordinary or nonrecurring gain (but not loss), together with any related
provision for taxes on such extraordinary or nonrecurring gain (but not loss);
provided that (1) the Consolidated Net Income (but not loss) of any Subsidiary
that is accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid in cash to the
Company or another Subsidiary thereof; (2) the net income of any Subsidiary
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary of that net income is not at the date
of determination permitted without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary or its stockholders; (3)
the net income of any Person acquired in a pooling of interest transaction for
any period prior to the date of such acquisition shall be excluded; (4) the
cumulative effect of a change in accounting principles shall be excluded; and
(5) cash restructuring and integration expenses resulting from the disposition
of the Borrowers' commercial, industrial or pump lines of business as permitted
under ss.9.5.2 and paid from the proceeds of such disposition shall not be
deducted in calculating Consolidated Net Income, provided, however, solely for
purposes of determining the Leverage Ratio for purposes of the Applicable
Margin, Consolidated Net Income shall exclude any effect of the PRC Reserve up
to an aggregate amount of $600,000 in any fiscal year.
Consolidated Operating Cash Flow. For any period, an amount equal to (a)
the sum of (i) EBITDA plus (ii) if applicable, in-flows resulting from Net
Working Capital Changes for such period, less (b) the sum of (i) cash payments
for all taxes paid during such period, plus (ii) to the extent not already
deducted in the determination of EBITDA, Capital Expenditures made during such
period to the extent permitted by ss.10.4, plus (iii) if applicable, out-flows
resulting from Net Working Capital Changes for such period.
Consolidated Total Interest Expense. For any period, the aggregate amount
of interest required to be paid or accrued by the Company and its Subsidiaries
during such period on all
<PAGE>
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Indebtedness of the Company and its Subsidiaries outstanding during all or any
part of such period, whether such interest was or is required to be reflected as
an item of expense or capitalized, including payments consisting of interest in
respect of any Capitalized Lease, or any synthetic lease referred to in clause
(f) of the definition of the term "Indebtedness," and including commitment fees,
agency fees, facility fees, balance deficiency fees and similar fees or expenses
in connection with the borrowing of money but excluding payments consisting of
reasonable closing fees and expenses incurred by the Company and its
Subsidiaries in connection with the Acquisition or incurred hereunder.
Continuing Directors. As of any date of determination, any member of the
Board of Directors of the Company who (a) was a member of such Board of
Directors on the Closing Date or (b) was nominated for election or elected to
such Board of Directors with the approval of the majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election.
Conversion Request. A notice given by the applicable Borrower to the Agent
of such Borrower's election to convert or continue a Loan in accordance with
ss.2.7 (in the case of Revolving Credit Loans) or ss.3.5.2 (in the case of Term
Loans).
Credit Agreement. This Amended and Restated Revolving Credit and Term Loan
Agreement, including the Schedules and Exhibits hereto.
Debentures. Collectively, (a) the Debenture, dated as of December 15, 1997
and amended as of the Closing Date, between Esteem and the Agent, (b) the
Debenture, dated as of the Closing Date between Patton HK and the Agent and (c)
the Debenture, dated as of the Closing Date and between Holmes UK and the Agent,
each in form and substance satisfactory to the Banks and the Agent.
Default. See ss.13.1.
Delinquent Bank. See ss.15.5.3.
Delivered Pro Forma Results. As defined in the definition of "Historical
Pro Forma Results".
Distribution. The declaration or payment of any dividend on or in respect
of any shares of any class of capital stock of the Company, other than dividends
payable solely in shares of common stock of the Company; the purchase,
redemption, or other retirement of any shares of any class of capital stock of
the Company, directly or indirectly through a Subsidiary of the Company or
otherwise; the return of capital by the Company to its shareholders as such; or
any other distribution on or in respect of any shares of any class of capital
stock of the Company.
Documentation Agent. Lehman Commercial Paper Inc., in its capacity as
documentation agent for the Banks.
Dollar Equivalent. On any particular date, with respect to any amount
denominated in Dollars, such amount of Dollars, and with respect to any amount
denominated in a currency other than Dollars, the amount (as conclusively
ascertained by the Agent absent manifest error) of Dollars which could be
purchased by the Agent (in accordance with its normal banking practices)
<PAGE>
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in the London foreign currency deposit markets with such amount of such currency
at the spot rate of exchange prevailing at or about 11:00 a.m. (London time) on
such date.
Dollars or $. Dollars in lawful currency of the United States of America.
Domestic Borrowers. See preamble.
Domestic Lending Office. Initially, the office of each Bank designated as
such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
located within the United States that will be making or maintaining Base Rate
Loans.
Domestic Subsidiary. Any Subsidiary which is not a Foreign Subsidiary.
Drawdown Date. The date on which any Revolving Credit Loan is made or is to
be made, and the date on which any Revolving Credit Loan is converted or
continued in accordance with ss.2.7.
EBITDA. With respect to the Company and its Subsidiaries and any fiscal
period, an amount equal to Consolidated Net Income for such period, plus, to the
extent deducted in the calculation of Consolidated Net Income and without
duplication, (a) depreciation and amortization for such period, plus (b) other
noncash charges for such period, plus (c) income tax expense for such period,
plus (d) Consolidated Total Interest Expense paid or accrued during such period,
plus (e) Integration Expenses paid or accrued during such period, provided,
however, such Integration Expenses shall only be included to the extent such
Integration Expenses are paid or accrued prior to the second anniversary of the
Closing Date, all as determined on a Pro Forma Basis and in accordance with
generally accepted accounting principles. For purposes of this Credit Agreement,
EBITDA for the fiscal quarters ended September 30, 1998, December 31, 1998 and
March 31, 1999 shall be $18,450,000 for each such quarter.
Eligible Assignee. Any of (a)(i) a commercial bank, insurance company or
commercial finance company or other financial institution organized under the
laws of the United States, or any State thereof or the District of Columbia, and
having total assets in excess of $1,000,000,000; (ii) a savings and loan
association or savings bank organized under the laws of the United States, or
any State thereof or the District of Columbia, and having a net worth of at
least $100,000,000, calculated in accordance with generally accepted accounting
principles; (iii) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development (the "OECD"), or a political subdivision of any such country, and
having total assets in excess of $1,000,000,000, provided that such bank is
acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (iv) the
central bank of any country which is a member of the OECD; (v) any investment
company, investment fund, financial institution or other institutional lender
(other than any financial institution which, but for the amount of its total
assets, would have been an Eligible Assignee under clauses (a)(i) through
(a)(iv) above) having total assets in excess of $100,000,000 (or with respect to
a Bank that is a holder of Term Loan B, such lower amount as shall be reasonably
approved by the Company and the Agent); and (vi) if, but only if, any Event of
Default has occurred and is continuing, any other bank, insurance company,
commercial finance company or other financial institution or other Person
approved by the Agent, such approval not to be unreasonably withheld and (b) any
Bank and any Affiliate of any Bank and, with respect to any Bank that is a fund
that invests in loans, any other fund that invests in loans and is managed by
the same investment advisor of such Bank or by an Affiliate of
<PAGE>
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such investment advisor (and treating all such funds so managed as a single
Eligible Assignee); provided that no Affiliate of any Borrower shall be an
Eligible Assignee.
Employee Benefit Plan. Any employee benefit plan within the meaning of
ss.3(3) of ERISA maintained or contributed to by any Borrower or any Subsidiary
of any Borrower, other than a Guaranteed Pension Plan or a Multiemployer Plan,
and with respect to Rival Canada, all employee benefit programs relating to
employees of Rival Canada other than pension plans, but including profit
sharing, deferred compensation, incentive, severance, change of control, phantom
stock, stock option, stock purchase, bonus, health or insurance plans and
arrangements (in each case, oral or written).
EMU. The third stage of the economic and monetary union formed pursuant to
the EU Treaties.
Environmental Laws. See ss.7.18(a).
EPA. See ss.7.18(b).
Equity Issuance. The sale or issuance by the Company or any of its
Subsidiaries of any of its capital stock or equity interests or any warrants,
rights or options to acquire its capital stock or equity interests.
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA Affiliate. Subsidiaries of the Borrowers and, other than for purposes
of ss.7.16, clause (i) of ss.8.11 and ss.9.9(e), any Person which is treated as
a single employer with any Borrower under ss.414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of ss.4043 of ERISA and the regulations
promulgated thereunder.
Esteem. As defined in the preamble hereto.
EU Treaties. The Treaty Establishing the European Economic Community, as
amended by the Treaty on the European Union (the Maastricht Treaty).
Euro or e. The currency introduced during the third stage of the EMU.
Eurocurrency Interbank Market. Any lawful recognized market in which
deposits of Dollars and the relevant Optional Currencies are offered by
international banking units of United States banking institutions and by foreign
banking institutions to each other and in which foreign currency and exchange
operations or eurocurrency funding operations are customarily conducted.
Euro Interbank Rate. With respect to any Loan denominated or to be
denominated in Euros, the rate of interest at which the Reference Bank is able
to obtain deposits for comparable amounts in Euros for the relevant Interest
Period in the Euro interbank market for a period comparable to the duration of
such Interest Period, as determined by the Reference Bank.
Eurocurrency Lending Office. Initially, the office of each Bank designated
as such in Schedule 1 hereto; thereafter, such other office of such Bank, if
any, that shall be making or maintaining Eurocurrency Rate Loans.
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Eurocurrency Offered Rate. With respect to the Interest Period for any
Eurocurrency Rate Loan denominated in a currency other than Dollars, the rate
per annum (rounded upwards to the nearest 1/16 of one percent) equal to the rate
at which the Reference Bank is offered deposits in Dollars or the relevant
Optional Currency, as the case may be, two (2) Business Days prior to the
beginning of such Interest Period in the Eurocurrency Interbank Market where the
foreign currency and exchange operations or eurocurrency funding operations of
the Agent are customarily conducted at or about 10:00 a.m. (London time) for
delivery on the first day of such Interest Period and for the number of days
comprised therein and in an amount equal (as nearly as may be) to the Reference
Bank's Commitment Percentage of such Eurocurrency Rate Loan to which such
Interest Period applies.
Eurocurrency Rate. With respect to amounts denominated in Dollars, the
Eurodollar Rate, and with respect to amounts denominated in any currency other
than Dollars, the International Eurocurrency Rate.
Eurocurrency Rate Loans. Loans bearing interest calculated by reference to
a Eurocurrency Rate.
Eurocurrency Reserve Rate. For any day with respect to (i) a Eurocurrency
Rate Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate and
(ii) a Canadian Dollar Eurocurrency Rate Loan, the rate at which such lender
would be required to maintain reserves with respect to such Canadian Dollar
Eurocurrency Rate Loan.
Eurodollar Rate. For any Interest Period with respect to a Eurocurrency
Rate Loan denominated in Dollars, the rate of interest equal to (a) the rate per
annum (rounded upwards to the nearest 1/16 of one percent) at which the
Reference Bank's Eurocurrency Lending Office is offered Dollar deposits two (2)
Business Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations of such Eurocurrency Lending Office are customarily conducted, for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of the Eurocurrency
Rate Loan denominated in Dollars of the Reference Bank to which such Interest
Period applies, divided by (b) a number equal to 1.00 minus the Eurocurrency
Reserve Rate, if applicable.
Event of Default. See ss.13.1.
Exchange Offer. The offer by the Company and those certain Domestic
Subsidiaries of the Company party to the Subordinated Guarantee to exchange the
Subordinated Notes issued on or prior to the Closing Date for a new issue of
Subordinated Notes (with terms substantially identical to those of the New
Subordinated Notes issued on the Closing Date) pursuant to a registration
statement to be filed with the Securities and Exchange Commission within ninety
(90) days after the Closing Date (the "Registration Statement").
Fee Letter. The fee letter, dated on or prior to the Closing Date, between
the Company and the Agent, as the same may be amended, modified or supplemented
from time to time.
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Fixed Charge Coverage Ratio. As at any date of determination, the ratio of
(a) EBITDA for the Reference Period most recently ended on such date (or, if
such date is not a fiscal quarter end date, the period of four consecutive
fiscal quarters most recently ended) less the aggregate amount of all Capital
Expenditures made in such period, other than (i) Capital Expenditures made prior
to the second anniversary of the Closing Date consisting of systems and upgrade
expenses up to an aggregate amount not to exceed $5,000,000, and (ii) Capital
Expenditures in respect of restructuring and integration resulting from the
sales of the Borrowers' commercial, industrial and/or pump lines of business
funded with up to 10% of the proceeds of such sales, less the aggregate amount
of taxes paid in cash in such period to (b) the Fixed Charges of the Company and
its Subsidiaries for such Reference Period (or, in the case of the Consolidated
Total Interest Expense component of Fixed Charges, the Annualized Reference
Period).
Fixed Charges. For any period, all scheduled mandatory payments of
principal on Indebtedness of the Company and its Subsidiaries made or required
to be made in such period, plus the Consolidated Total Interest Expense of the
Company and its Subsidiaries for such period, less non-cash interest expense and
amortization in such period or write-off of fees and expenses in such period
relating to financing activities.
Foreign Guarantees. Those certain guarantee agreements, each dated either
as of the Original Closing Date and amended as of the Closing Date or dated as
of the Closing Date, from each of the Foreign Guarantors, each in form and
substance satisfactory to the Banks and the Agent.
Foreign Borrowers. As defined in the preamble hereto.
Foreign Guarantors. Esteem, Holmes Far East, Raider, Rival Canada, Bionaire
B.V., Patton HK and Holmes UK.
Foreign Security Documents. Collectively, each of the Foreign Guarantees
the Debentures, the Share Security Deeds and the Charges Over Shares.
Foreign Subsidiary. Any Subsidiary which conducts substantially all of its
business in countries other than the United States of America and that is
organized under the laws of a jurisdiction other than the United States of
America and the States (or the District of Columbia) thereof.
Fronted Loans. That portion of the Revolving Credit Loans which is funded
by the Fronting Bank or the Canadian Fronting Bank, as the case may be, and is
not funded by another Bank.
Fronting Bank. BankBoston, N.A., acting through its Hong Kong or United
Kingdom branches, as fronting bank and any other Person who replaces BankBoston,
N.A. as Fronting Bank pursuant to the provisions of ss.2.10.4 hereof, provided,
for purposes of this Credit Agreement, in the event the Fronting Bank is also a
Bank, such Person's funding requirements in its capacity as Fronting Bank shall
not include its independent requirement in its individual capacity to fund as a
Bank.
Fronting Loan Event. A Fronting Loan Event shall be deemed to occur if at
any time it should become illegal or would violate any law, order, regulation or
policy (including without
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limitation any internal banking or other lending policy of the Fronting Bank) or
would otherwise not be practicable for the Fronting Bank to hold the Fronted
Loans.
GE Joint Venture. Those certain joint venture arrangements between the
Company and certain of its Subsidiaries and General Electric Company and certain
of its subsidiaries (collectively, "GE"), pursuant to which (a) one or more of
the Company's Foreign Subsidiaries and GE will co-own certain joint venture
entities, with the Foreign Subsidiary holding not less than 49% ownership
interest (the "HK JV") and (b) Holmes Motor Corporation owns not less than 49%
of a joint venture entity (the "US JV" and, collectively with the HK JV, the
"JV") and GE owns the balance of the US JV, with the JV purchasing, among other
things, certain motors from certain Subsidiaries of the Company and GE
providing, among other things, selling, management and administrative support to
the JV, all on such terms as disclosed in writing to the Agent and set forth in
more detail in an Organization Agreement and related documentation.
generally accepted accounting principles. (a) When used in ss.10, whether
directly or indirectly through reference to a capitalized term used therein,
means (i) principles that are consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, in
effect for the fiscal year ended on the Balance Sheet Date, and (ii) to the
extent consistent with such principles, the accounting practice of the Company
reflected in its financial statements for the year ended on the Balance Sheet
Date, and (b) when used in general, other than as provided above, means
principles that are (i) consistent with the principles promulgated or adopted by
the Financial Accounting Standards Board and its predecessors, as in effect from
time to time, and (ii) consistently applied with past financial statements of
the Company adopting the same principles, provided that in each case referred to
in this definition of "generally accepted accounting principles" a certified
public accountant would (but for the absence of footnotes and year-end
adjustments for interim financial statements), insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles have
been properly applied.
Guaranteed Obligations. See ss.6.3.1 hereof.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of ss.3(2) of ERISA maintained or contributed to by any Borrower or any
Subsidiary of any Borrower or (except for purposes of ss.7.16, clause (i) of
ss.8.11 and ss.9.9(e)) any ERISA Affiliate, the benefits of which are guaranteed
on termination in full or in part by the PBGC pursuant to Title IV of ERISA,
other than a Multiemployer Plan, and with respect to Rival Canada, all pension
and retirement plans relating to the current and former employees of Rival
Canada, whether registered or unregistered, funded or unfunded and written or
oral.
Guarantors. Each Domestic Subsidiary of the Company existing on the Closing
Date and each other Person which is required to be or become a guarantor from
time to time pursuant to ss.8.15 hereof.
Guaranty. The Guaranty, dated as of the Original Closing Date and as
amended as of the Closing Date, made jointly and severally by each Domestic
Subsidiary of the Company in favor of the Banks and the Agent pursuant to which
each Domestic Subsidiary of the Company guaranties to the Banks and the Agent
the payment and performance of the Obligations, in form and substance
satisfactory to the Banks and the Agent.
<PAGE>
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Hazardous Substances. See ss.7.18(b).
Historical Pro Forma Results. The pro forma historical financial results of
the Company and its Subsidiaries (including Rival and its Subsidiaries as if the
Acquisition had occurred at the beginning of such period) on a consolidated
basis for the two consecutive fiscal quarters ended September 30, 1998 delivered
to the Agent on or prior to the Closing Date (the "Delivered Pro Forma Results")
together with the pro forma historical financial results of the Company and its
Subsidiaries (including Rival and its Subsidiaries) for the fiscal quarters
ending December 31, 1998 and March 31, 1999, which are prepared in a manner
consistent with the Delivered Pro Forma Results and which are otherwise
reasonably satisfactory to the Agent.
Holmes Far East. As defined in the preamble hereto.
Holmes UK. As defined in the preamble hereto.
Indebtedness. As to any Person and whether recourse is secured by or is
otherwise available against, all or only a portion of the assets of such Person
and whether or not contingent, but without duplication:
(a) every obligation of such Person for money borrowed,
(b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses,
(c) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for
the account of such Person,
(d) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including securities
repurchase agreements but excluding (i) trade accounts payable or accrued
liabilities arising to third parties or the JV in the ordinary course of
business and (ii) intercompany accounts payable of the Company or any of
its Subsidiaries to the Company or any of its Subsidiaries, as the case may
be, arising in the ordinary course of business, priced consistent with past
practices and provided that (1) such Subsidiary agrees on terms acceptable
to the Agent that, if any Default or Event of Default shall have occurred
and be continuing, no payment shall be made or received on such account
payable prior to performance and payment in full, in cash, of all
Obligations to the Banks and the Agent; and (2) the transaction giving rise
to such account payable was either conducted on an arms-length basis for
fair market value or is on terms favorable to the Company or any Guarantor
(the "Intercompany Accounts"),
(e) every obligation of such Person under any Capitalized Lease,
(f) every obligation of such Person under any lease (a "synthetic
lease") treated as an operating lease under generally accepted accounting
principles and as a loan or financing for U.S. income tax purposes,
(g) all sales by such Person of (i) accounts or general intangibles
for money due or to become due, (ii) chattel paper, instruments or
documents creating or evidencing
<PAGE>
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a right to payment of money or (iii) other receivables (collectively
"receivables"), whether pursuant to a purchase facility or otherwise, other
than in connection with the disposition of the business operations of such
Person relating thereto or a disposition of doubtful, bad, overdue or
defaulted receivables for collection or sale and not as a financing
arrangement, and together with any obligation of such Person to pay any
discount, interest, fees, indemnities, penalties, recourse, expenses or
other amounts in connection therewith,
(h) every obligation of such Person (an "equity related purchase
obligation") to purchase, redeem, retire or otherwise acquire for value any
shares of capital stock of any class issued by such Person, any warrants,
options or other rights to acquire any such shares, or any rights measured
by the value of such shares, warrants, options or other rights other than
equity related purchase obligations which by their terms are not payable
until such time as all Obligations have been indefeasibly repaid in full in
cash,
(i) every obligation of such Person under any forward contract,
futures contract, swap, option or other financing agreement or arrangement
(including, without limitation, caps, floors, collars and similar
agreements), the value of which is dependent upon interest rates, currency
exchange rates, commodities or other indices,
(j) every obligation in respect of Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to
the extent that such Person is liable therefor as a result of such Person's
ownership interest in or other relationship with such entity, except to the
extent that the terms of such Indebtedness provide that such Person is not
liable therefor and such terms are enforceable under applicable law,
(k) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of clauses
(a) through (j) (the "primary obligation") of another Person (the "primary
obligor"), in any manner, whether directly or indirectly, and including,
without limitation, any obligation of such Person (i) to purchase or pay
(or advance or supply funds for the purchase of) any security for the
payment of such primary obligation, (ii) to purchase property, securities
or services for the purpose of assuring the payment of such primary
obligation, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (u) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (v) any Capitalized Lease shall be the principal
component of the aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to termination by the
lessee, (w) any interest rate or exchange rate protection arrangements shall be
the net liability of such Person under such arrangement at such time, calculated
on a basis satisfactory to the Agent in accordance with accepted practices, (x)
any sale of receivables shall be the amount of unrecovered capital or principal
investment of the purchaser (other than the Company or any of its wholly-owned
Subsidiaries) thereof, excluding amounts representative of yield or interest
earned on such investment, (y) any synthetic lease shall be the stipulated loss
value, termination value or other equivalent amount and (z) any equity related
purchase obligation shall be the maximum fixed redemption or purchase price
<PAGE>
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thereof inclusive of any accrued and unpaid dividends to be comprised in such
redemption or purchase price.
Indenture Trustee. State Street Bank and Trust Company.
Ineligible Securities. Securities which may not be underwritten or dealt in
by member banks of the Federal Reserve System under Section 16 of the Banking
Act of 1993 (12 U.S.C. ss.24, Seventh), as amended.
Initial Public Offering. The initial underwritten public offering of the
common stock of the Company registered under the Securities Act of 1933.
Instrument of Adherence. See ss.9.5.1.
Intercompany Accounts. As defined in the definition of "Indebtedness".
Integration Expenses. Collectively, those expenses incurred by the Company
or any of its Subsidiaries in connection with systems costs, severance costs and
expenses and similar arrangements, and consolidation and integration costs
including without limitation related consulting fees and expenses incurred in
connection with, or as a result of, the Acquisition, up to an aggregate amount
of not more than $7,800,000; provided that not more than $5,800,000 shall be
incurred from the Closing Date through and until the first anniversary of the
Closing Date and provided further that $3,000,000 of such costs and expenses not
incurred in such first year may be carried over and incurred in the next year.
Interest Coverage Ratio. As at any date of determination, the ratio of (a)
the EBITDA of the Company and its Subsidiaries for the Reference Period ending
on such date (or, if such date is not a fiscal quarter end date, the period of
four consecutive fiscal quarters most recently ended) to (b) Consolidated Total
Interest Expense for the Annualized Reference Period then ended, less, to the
extent included in such Consolidated Total Interest Expense, non-cash interest
expense and amortization or write-off of fees and expenses relating to financing
activities.
Interest Payment Date. (a) As to any Base Rate Loan, the last day of the
calendar quarter with respect to interest accrued during such calendar quarter,
including, without limitation, the calendar quarter which includes the Drawdown
Date of such Base Rate Loan; and (b) as to any Eurocurrency Rate Loan in respect
of which the Interest Period is (i) three (3) months or less, the last day of
such Interest Period and (ii) more than three (3) months, the date that is three
(3) months from the first day of such Interest Period and, in addition, the last
day of such Interest Period.
Interest Period. With respect to each Revolving Credit Loan or all or any
relevant portion of the Term Loans, (a) initially, the period commencing on the
Drawdown Date of such Loan and ending on the last day of one of the periods set
forth below, as selected by the applicable Borrower in a Loan Request or as
otherwise required by the terms of this Credit Agreement (i) for any Base Rate
Loan, the last day of the calendar quarter; and (ii) for any Eurocurrency Rate
Loan, 1, 2, 3, or 6 months; and (b) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to such Revolving
Credit Loan or all or any relevant portion of the Term Loans and ending on the
last day of one of the periods set forth above, as selected by the applicable
Borrower in a Conversion Request; provided that all of the foregoing provisions
relating to Interest Periods are subject to the following:
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(a) if any Interest Period with respect to a Eurocurrency Rate Loan
would otherwise end on a day that is not a Business Day, that 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;
(b) if any Interest Period with respect to a Base Rate Loan would
end on a day that is not a Business Day, that Interest Period shall end on
the next succeeding Business Day;
(c) if the applicable Borrower shall fail to give notice as provided
in ss.2.7, (i) for Eurocurrency Rate Loans denominated in Dollars or
Canadian Dollars, the applicable Borrower shall be deemed to have requested
a conversion of the affected Eurocurrency Rate Loan to a Base Rate Loan and
the continuance of all Base Rate Loans as Base Rate Loans on the last day
of the then current Interest Period with respect thereto and (ii) for
Eurocurrency Rate Loans denominated in an Optional Currency, the relevant
Borrower shall repay such Eurocurrency Rate Loan on the last day of the
then current Interest Period with respect thereto;
(d) any Interest Period relating to any Eurocurrency Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of a calendar
month; and
(e) any Interest Period relating to any Eurocurrency Rate Loan that
would otherwise extend beyond the Revolving Credit Loan Maturity Date (if
comprising a Revolving Credit Loan), the Term Loan A Maturity Date (if
comprising a Term Loan A or a portion thereof) or the Term Loan B Maturity
Date (if comprising a Term Loan B or a portion thereof) shall end on the
Revolving Credit Loan Maturity Date, the Term Loan A Maturity Date or the
Term Loan B Maturity Date, as the case may be.
International Eurocurrency Rate. With respect to all Eurocurrency Rate
Loans denominated in an Optional Currency for any Interest Period, the annual
rate of interest, rounded to the nearest 1/16th of one percent (1/16%),
determined by the Agent for such Interest Period in accordance with the
following formula:
Eurocurrency Offered Rate
-------------------------
International Eurocurrency Rate= 1 - Eurocurrency Reserve Rate
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person; provided, however, Intercompany
Accounts shall not be considered Investments. In determining the aggregate
amount of Investments outstanding at any particular time: (a) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (b) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(c) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating
<PAGE>
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distribution); (d) there shall not be deducted in respect of any Investment any
amounts received as earnings on such Investment, whether as dividends, interest
or otherwise, except that accrued interest included as provided in the foregoing
clause (b) may be deducted when paid; and (e) there shall not be deducted from
the aggregate amount of Investments any decrease in the value thereof.
Kahn Permitted Transferee. Each Person to whom Jordan A. Kahn had the right
to transfer shares of the common stock of the Company pursuant to Section 4.1 of
the Stock Purchase Agreement dated as of October 27, 1997 between Jordan A. Kahn
and Holmes Acquisition LLC.
Letter of Credit. See ss.4.1.1.
Letter of Credit Application. See ss.4.6.
Letter of Credit Fee. See ss.4.1.1.
Letter of Credit Participation. See ss.4.1.4.
Leverage Ratio. As at any date of determination, the ratio of (a) Total
Funded Indebtedness of the Company and its Subsidiaries outstanding on such date
to (b) EBITDA of the Company and its Subsidiaries for the Reference Period ended
on such date (or, if such date is not a fiscal quarter end date the period of
four consecutive fiscal quarters most recently ended), to be calculated on a Pro
Forma Basis.
Loans. The Revolving Credit Loans and Term Loans.
Loan Account Record. See ss.2.4.
Loan Documents. This Credit Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit, the Bankers' Acceptances, the Fee Letter
and the Security Documents.
Loan Request. See ss.2.6.
Majority Banks. As of any date, the Banks having Total Percentages
aggregating to at least fifty-one percent (51 %) on such date.
Management Agreement. That Management Agreement dated as of November 26,
1997, as amended on or prior to the Closing Date between Berkshire Partners and
the Company, in the form delivered to the Banks and the Agent on or prior to the
Closing Date.
Material Adverse Effect. A material adverse effect on (a) the business,
condition (financial or otherwise), operations, performance or properties of the
Domestic Borrowers and the Guarantors, taken as a whole, or the Domestic
Borrowers and their Subsidiaries taken as a whole, or the Collateral, (b) the
rights and remedies of the Agent or any Bank under any Loan Document or (c) the
ability of the Borrowers or any of their Subsidiaries to perform their
obligations under the Loan Documents.
Maximum Drawing Amount. The maximum aggregate amount that the beneficiaries
may at any time draw under outstanding Letters of Credit, as such aggregate
amount may be reduced from time to time pursuant to the terms of the Letters of
Credit.
<PAGE>
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Merger. The merger of Moriarty Acquisition Corp. with and into Rival as
contemplated by the Merger Documents.
Merger Agreement. The Agreement and Plan of Merger, dated December 17, 1998
among Rival, the Company, and Moriarty Acquisition Corp., together with all
schedules, exhibits and annexes thereto.
Merger Documents. The Merger Agreement and all agreements and documents
required to be entered into and delivered pursuant to the Merger Agreement or in
connection with the Merger.
Merger Effective Date. The Effective Date of the Merger, as such term is
defined in the Merger Agreement.
Moriarty Acquisition Corp. or MAC. As defined in the preamble hereto.
Mortgaged Property. Any Real Estate which is subject to any Mortgage.
Mortgages. The several mortgages and/or deeds of trust, dated or to be
dated on or prior to the Closing Date, from the Domestic Borrowers and their
Domestic Subsidiaries to the Agent with respect to the fee interests of the
Domestic Borrowers and the Domestic Subsidiaries in the Real Estate and in form
and substance satisfactory to the Banks and the Agent.
Multicurrency Loans. Revolving Credit Loans made or to be made by the
Fronting Bank to the Subsidiary Borrowers pursuant to ss.2.1 hereof.
Multiemployer Plan. Any multiemployer plan within the meaning of ss.3(37)
of ERISA maintained or contributed to by any Borrower or any Subsidiary of any
Borrower, or (except for ss.7.16) any ERISA Affiliate.
Net Cash Proceeds. With respect to any Equity Issuance, the excess of the
gross cash proceeds received by such Person from such Equity Issuance after
deduction of reasonable and customary transaction expenses (including without
limitation, underwriting discounts and commissions) actually incurred in
connection with the Equity Issuance.
Net Cash Sale Proceeds. The net cash proceeds received by the Company and
its Subsidiaries in respect of any Asset Sale, less the sum of (a) all
reasonable out-of-pocket fees, commissions and other expenses incurred in
connection with such Asset Sale, including the amount (estimated in good faith
by such Person) of income, franchise, sales and other applicable taxes required
to be paid by such Person in connection with such Asset Sale and (b) the
aggregate amount of cash so received by such Person which is used to retire (in
whole or in part) any Indebtedness (other than under the Loan Documents) of such
Person permitted by this Credit Agreement that was secured by a lien or security
interest (if any) permitted by this Credit Agreement having priority over the
liens and security interests (if any) of the Agent (for the benefit of the
Banks) with respect to such assets transferred, and which is required to be
repaid in whole or in part (which repayment, in the case of any other revolving
credit arrangements or multiple advance arrangements, reduces the commitment
thereunder) in connection with such Asset Sale.
<PAGE>
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Net Working Capital Changes. For any fiscal period, the net change from the
last day of the immediately preceding like fiscal period to the last day of such
fiscal period in (a) both billed and unbilled Accounts Receivable, (b) current
accounts payable of the Borrowers and their Subsidiaries, (c) current accruals
and accretions (exclusive of interest accruals and accretions) of the Borrowers
and their Subsidiaries and (d) inventory of the Borrowers and their
Subsidiaries. For the fiscal period ending December 31, 1999, Net Working
Capital Changes shall be calculated from the opening balance sheet as at the
Closing Date.
New Subordinated Notes. The 9 7/8% Senior Subordinated Notes due 2007
issued by the Company in the aggregate principal amount of $31,250,000 issued
pursuant to the Subordinated Indenture, and any such documents, instruments or
agreements issued in exchange therefor pursuant to the Exchange Offer.
Notarial Deed of Pledge of Shares. The Notarial Deed of Pledge of Shares
dated prior to or as of the Closing Date, among Bionaire B.V., Rival and the
Agent.
Notes. The Revolving Credit Notes and Term Notes.
Obligations. All indebtedness, obligations and liabilities of any of the
Borrowers and their respective Subsidiaries to any of the Banks and the Agent,
individually or collectively, existing on the date of this Credit Agreement or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Credit Agreement or any of the other Loan Documents or in
respect of any of the Loans made or Reimbursement Obligations incurred or any of
the Notes, Letter of Credit Applications, Letters of Credit or Bankers'
Acceptances, or arising or incurred in connection with any interest rate,
foreign exchange and/or currency risk protection arrangements entered into with
any of the Banks, or any documents, agreements or instruments executed in
connection therewith, or other instruments at any time evidencing any thereof.
OC Notice. See ss.2.9.
Optional Currency. Hong Kong Dollars, Pounds Sterling, Dutch Guilders and
the Euro, so long as such currency is freely convertible into Dollars and which
is traded on any recognized Eurocurrency Interbank Market selected by the Agent
in good faith.
Original Banks. See preamble.
Original Closing Date. November 26, 1997.
Original Credit Agreement . See preamble.
outstanding. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
Overnight Rate. For any day, (a) as to Loans denominated in Dollars, the
weighted average interest rate paid by the Agent for federal funds acquired by
the Agent, and (b) as to Loans denominated in an Optional Currency, the rate of
interest per annum at which overnight deposits in the applicable Optional
Currency, in an amount approximately equal to the amount
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with respect to which such rate is being determined, would be offered for such
day by the Agent to major banks in the London interbank market.
participating member state. Each state described as a "participating member
state" in the EU Treaties.
Patent Assignments. The several Patent Assignments, dated as of the Closing
Date or as of the Original Closing Date and amended as of the Closing Date, made
by certain Borrowers in favor of the Agent and in form and substance
satisfactory to the Banks and the Agent.
Patton HK. As defined in the preamble hereto.
Patton HK Letters of Credit. Those certain letters of credit issued prior
to the Original Closing Date for the account of Patton HK and Rival and more
fully described on Schedule 1.1(b) hereto.
PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of ERISA
and any successor entity or entities having similar responsibilities.
Perfection Certificates. The Perfection Certificates as defined in the
Security Agreements.
Permitted Acquisition. As defined in ss.9.5.1 (b) hereto, and any other
stock or asset acquisition consented to in writing by the Majority Banks.
Permitted Liens. Liens, security interests and other encumbrances permitted
by ss.9.2.
Person. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
PRC Reserve. The amount of the reserve imposed by the appropriate
governmental or other regulatory authority of the People's Republic of China
which any Subsidiary organized under the laws of the People's Republic of China
is required to take to protect against repatriation of funds from the People's
Republic of China.
Principal Affiliate. Any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with a Principal. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling", "controlled by" and "under common control with"), as
used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of ten percent (10%)
or more of the Voting Stock of a Person shall be deemed to be control.
Principals. Collectively, Berkshire Partners, Berkshire Fund IV, Berkshire
Fund IV Investment Corp., Berkshire Fund V, Berkshire Fund V Investment Corp.,
Berkshire Investors LLC and any of their respective Principal Affiliates, Jordan
A. Kahn and his Principal Affiliates, Stanley Rosenzweig and Gregory F. White,
provided, however, for purposes of this Credit Agreement, any shares of the
capital stock of the Company owned by a Kahn Permitted Transferee on the Closing
Date will be deemed to be owned by Jordan A. Kahn.
<PAGE>
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Pro Forma Basis. In connection with any proposed Permitted Acquisition
after the Closing Date, the calculation of compliance with the financial
covenants described in ss.ss.9.5.1 and 10 hereof by the Company and its
Subsidiaries (including the Person to be acquired) with reference to either (a)
the audited historical financial results of the Person so acquired together with
any interim financial results of such Person prepared since the date of the last
audited financial statements and prepared in a manner consistent with past
practices or (b) to the extent such Person to be acquired has no audited
historical financial results, the management prepared financial results of such
Person, with such results to be in form and substance reasonably acceptable to
the Agent, and the Company and its Subsidiaries for the applicable Test Period
after giving effect on a pro forma basis to such Permitted Acquisition in the
manner described in (i), (ii) and (iii) below; and, following a Permitted
Acquisition, the calculation of compliance with the financial covenants
contained in ss.10 for the fiscal quarter in which such Permitted Acquisition
occurred and each of the three fiscal quarters immediately following such
Permitted Acquisition with reference to either (a) the audited historical
financial results of the Person so acquired together with any interim financial
results of such Person prepared since the date of the last audited financial
statements and prepared in a manner consistent with past practices or (b) to the
extent such Person to be acquired has no audited historical financial results,
the management prepared financial results of such Person, with such results to
be in form and substance reasonably acceptable to the Agent (which may include,
at the Agent's request, review by independent certified public accountants
reasonably satisfactory to the Agent) and the Company and its Subsidiaries for
the applicable Test Period after giving effect on a pro forma basis to such
Permitted Acquisition in the manner described in (i), (ii) and (iii) below,
provided, however, that, in each case, in the event that no historical financial
results are available with respect to the Person or assets to be acquired, such
calculations shall be made with reference to reasonable estimates of such past
performance made by the Company based on existing data and other available
information, such estimates to be acceptable to the Agent:
(i) all Total Funded Indebtedness (whether under this Credit
Agreement or otherwise) and any other balance sheet adjustments incurred or
made in connection with the Permitted Acquisition shall be deemed to have
been incurred or made on the first day of the Test Period, and all
Indebtedness of the Person acquired or to be acquired in such Permitted
Acquisition which was or will have been repaid in connection with the
consummation of the Permitted Acquisition shall be deemed to have been
repaid concurrently with the deemed incurrence of the Indebtedness incurred
in connection with the Permitted Acquisition;
(ii) all Total Funded Indebtedness assumed to have been incurred
pursuant to the preceding clause (i) shall be deemed to have borne interest
at the sum of (a) the arithmetic mean of (x) the Eurodollar Rate for
Eurocurrency Rate Loans denominated in Dollars having an Interest Period of
one month in effect on the first day of the Test Period and (y) the
Eurodollar Rate for Eurocurrency Rate Loans denominated in Dollars having
an Interest Period of one month in effect on the last day of the Test
Period plus (b) the Applicable Margin for the applicable Type of Loans then
in effect (after giving effect to the Permitted Acquisition on a Pro Forma
Basis); and
(iii) other reasonable cost savings, expenses and other income
statement or operating statement adjustments which are attributable to the
change in ownership and/or management resulting from such Permitted
Acquisition as may be approved by the Agent in writing (which approval
shall not be unreasonably withheld) shall be deemed to have been realized
on the first day of the Test Period; provided, however, adequately
<PAGE>
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documented reductions in management compensation and rental expenses which
will be effective upon the consummation of such Permitted Acquisition shall
not require the approval of the Agent.
Raider. As defined in the preamble hereto.
Rate Adjustment Period. See the definition of Applicable Margin.
RCRA. See ss.7.18(a).
Real Estate. All real property at any time owned or leased (as lessee or
sublessee) by the Company or any of its Subsidiaries.
Record. The grid attached to a Note, or the continuation of such grid, or
any other similar record, including computer records, maintained by any Bank
with respect to any Loan referred to in such Note.
Reference Bank. BankBoston, N.A.
Reference Period. The period of the four (4) consecutive fiscal quarters of
the Company ending on the relevant date (or, if such date is not a fiscal
quarter end date, the period of four (4) consecutive fiscal quarters most
recently ended) or if the relevant date occurs prior to the end of the fiscal
quarter ending March 31, 1999, the Reference Period for any calculations made as
of (i) March 31, 1999 shall be for the period of the four (4) consecutive fiscal
quarters ending on such date based on the Historical Pro Forma Results for such
four quarters; (ii) June 30, 1999 shall be the actual financial results for the
fiscal quarter ending June 30, 1999 plus the Historical Pro Forma Results for
the immediately preceding three fiscal quarters; (iii) September 30, 1999 shall
be the actual financial results for the two consecutive fiscal quarters ending
September 30, 1999 plus the Historical Pro Forma Results of the two consecutive
fiscal quarters ended March 31, 1999; and (iv) December 31, 1999 shall be the
actual financial results for the three consecutive fiscal quarters ending
December 31, 1999 plus the Historical Pro Forma Results financial results of the
fiscal quarter ended March 31, 1999.
Refunding Bankers' Acceptance. See ss.2A.2 hereof.
Register. See ss.19.3.
Registration Rights Agreement. That certain Registration Rights Agreement
with respect to the New Subordinated Notes dated as of February __, 1999 by and
among the Company, certain Domestic Subsidiaries of the Company party to the
Subordinated Guarantee, BancBoston Robertson Stephens Inc. and Lehman Brothers
Inc., as initial purchasers, and in the form delivered to the Agent and the
Banks on or prior to the Closing Date.
Reimbursement Obligation. The applicable Borrower's obligation to reimburse
the Agent and the Banks on account of any drawing under any Letter of Credit as
provided, in ss.4.2.
Restricted Payment. In relation to the Company and its Subsidiaries, any
(a) Distribution or (b) payment by the Company or any of its Subsidiaries to any
Affiliate of the Company that is not a Borrower or Guarantor other than for
goods and services in the ordinary course of business on terms equivalent to
those obtainable in arms length transactions.
<PAGE>
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Restructuring. Rival's previously announced plan to restructure certain of
its operations and facilities to increase efficiencies and reduce costs,
pursuant to which it has or will close its Montreal, Canada production and
shipping facility and combined certain Canadian administrative functions, and
has or will close three facilities in Indiana and North Carolina and sell its
real property at which such facilities are located. In addition, Rival plans to
expand its Missouri facilities to accommodate certain operations transferred
from the closed facilities.
Revolving Credit Loan Maturity Date. February 5, 2005.
Revolving Credit Loans. Revolving credit loans made or to be made by the
Banks to the Borrowers pursuant to ss.2 hereof (including, without limitation,
all Multicurrency Loans and the creation and purchase of Bankers' Acceptances).
Revolving Credit Notes. See ss.2.4.
Rival. The Rival Company, a Delaware corporation, and, from and after the
Merger Effective Date, shall refer to the surviving entity in the Merger.
Rival Canada. As defined in the preamble hereto.
Rival Letters of Credit. Those certain letters of credit issued prior to
the Original Closing Date for the account of Rival and more fully described on
Schedule 1.1(a) hereto.
SARA. See ss.7.18(a).
Same Day Funds. With respect to disbursements and payments in (a) Dollars,
immediately available funds, and (b) an Optional Currency, same day or other
funds as may be determined by the Agent to be customary in the place of
disbursement or payment for the settlement of international banking transactions
in the relevant Optional Currency.
Section 20 Subsidiary. A Subsidiary of the bank holding company controlling
any Bank, which Subsidiary has been granted authority by the Federal Reserve
Board to underwrite and deal in certain Ineligible Securities.
Security Agreements. The several Security Agreements, dated or to be dated
on or prior to the Closing Date, and as may be amended as of the Closing Date,
between the Company and certain of its Subsidiaries and the Agent, and in form
and substance satisfactory to the Banks and the Agent.
Security Documents. The Guaranty, the Security Agreements, the Debentures,
the Patent Assignments, the Trademark Assignments, the Share Security Deeds, the
Charges Over Shares, the Foreign Guarantees, the Stock Pledge Agreement, the
Agreement of Pledge of Assets and Receivables, the Notarial Deed of Pledge of
Shares, the Mortgages, the Assignment of Interest by Esteem as assignor of its
interest in Dongguan Huixum Electrical Products Company, Ltd., the Assignment of
Interest by Raider as assignor of its interest in Dongguan Raider Motor
Corporation, Ltd. and all other instruments and documents, including without
limitation Uniform Commercial Code financing statements, required to be executed
or delivered pursuant to any Security Document.
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Settlement. The making or receiving of payments, in immediately available
funds, by the Banks, to the extent necessary to cause each Bank's actual share
of the outstanding amount of Revolving Credit Loans (after giving effect to any
Loan Request) to be equal to such Bank's Commitment Percentage of the
outstanding amount of such Revolving Credit Loans (after giving effect to any
Loan Request), in any case where, prior to such event or action, the actual
share is not so equal.
Settlement Amount. See ss.2.11.1.
Settlement Date. (a) The Drawdown Date relating to any Loan Request, (b)
Friday of each week, or if a Friday is not a Business Day, the Business Day
immediately following such Friday, (c) at the option of the Agent, on any
Business Day following a day on which the account officers of the Agent active
upon the Borrower's account become aware of the existence of an Event of
Default, (d) any Business Day on which the amount of Revolving Credit Loans
outstanding from the Swing Line Bank plus the Swing Line Bank's Commitment
Percentage of the sum of the Maximum Drawing Amount and any Unpaid Reimbursement
Obligations is equal to or greater than the Swing Line Bank's Commitment
Percentage of the Total Commitment, (e) the Business Day immediately following
any Business Day on which the amount of Revolving Credit Loans outstanding
increases or decreases by more than $8,000,000 as compared to the previous
Settlement Date, (f) any day on which any conversion of a Base Rate Loan to a
Eurocurrency Rate Loan occurs, or (g) any Business Day on which (i) the amount
of outstanding Revolving Credit Loans decreases and (ii) the amount of the
Agent's Revolving Credit Loans outstanding equals zero Dollars ($0).
Settling Bank. See ss.2.11.1.
Share Security Deeds. Collectively, the Share Security Deed, dated as of
December 15, 1997 and amended as of the Closing Date, among Far East, Esteem and
the Agent and the Share Security Deed, dated prior to or as of the Closing Date,
among Patton Electric Company, Inc., Patton HK and the Agent.
Stockholders Agreement. The Stockholders Agreement dated as of November 26,
1997, and amended as of the Closing Date, among the Company and certain
stockholders party thereto and in the form delivered to the Agent on the Closing
Date.
Stock Option Plan. The 1997 Stock Option Plan, as amended, a copy of which
has been delivered to the Agent on or prior to the Closing Date.
Stock Pledge Agreements. The several Stock Pledge Agreements, dated or to
be dated on or prior to the Closing Date, and as may be amended as of the
Closing Date between the Agent and each of the Company, Rival and Patton
Electric Company, Inc., as the case may be, and in form and substance
satisfactory to the Agent.
Subordinated Debt. Unsecured Indebtedness of the Company or any of its
Subsidiaries that is expressly subordinated and made junior to the payment and
performance in full of the Obligations on terms satisfactory to the Agent and
the Banks and evidenced as such by the Subordinated Debt Documents.
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Subordinated Debt Documents. The Subordinated Note Purchase Agreement, the
Subordinated Indenture, the Subordinated Guarantees, the Registration Rights
Agreement and the Subordinated Notes, each in the form delivered to the Agent
prior to the Closing Date.
Subordinated Guarantees. The guarantees entered into or to be entered into
by certain of the Company's Domestic Subsidiaries pursuant to the Subordinated
Indenture, which shall be in form and substance satisfactory to the Agent and
the Banks.
Subordinated Indenture. The collective reference to the Indenture dated as
of November 26, 1997 between the Company and the Indenture Trustee and the
Indenture dated as of February 5, 1999 between the Company and the Indenture
Trustee, and any such documents, instruments or agreements issued in exchange
pursuant to the Exchange Offer.
Subordinated Notes. (a) The 9 7/8% Senior Subordinated Notes due 2007
issued by the Company in the aggregate principal amount of $105,000,000 pursuant
to the Subordinated Indenture, (b) the New Subordinated Notes and (c) any such
documents, instruments or agreements issued in exchange therefor pursuant to the
Exchange Offer.
Subordinated Note Purchase Agreement. The Purchase Agreement, dated as of a
date on or prior to the Closing Date, among the Company, BancBoston Robertson
Stephens Inc. and Lehman Brothers Inc.
Subsidiary. Any corporation, association, trust, limited liability company,
partnership or other business entity of which the designated parent shall at any
time own directly or indirectly through a Subsidiary or Subsidiaries at least a
majority (by number of votes) of the outstanding Voting Stock.
Subsidiary Borrowers. As defined in the preamble hereto.
Survey. The most recent survey conducted on each Mortgaged Property
existing at the time of the Closing Date, and in relation to each Mortgaged
Property acquired after the Closing Date, an instrument survey of such Mortgaged
Property which shall show the location of all buildings, structures, easements
and utility lines on such Mortgaged Property, shall be sufficient to remove the
survey exception from the Title Policy, shall show that all buildings and
structures are within the lot lines of such Mortgaged Property, shall not show
any encroachments by others, shall show the zoning district or districts in
which such Mortgaged Property is located in a flood hazard district as
established by the Federal Emergency Management Agency or any successor agency
or is located in any flood plain, flood hazard or wetland protection district
established under federal, state or local law.
Surveyor Certificate. In relation to each Mortgaged Property for which a
Survey has been conducted, a certificate executed by the surveyor who prepared
such Survey dated as of a recent date and containing such information relating
to such Mortgaged Property as the Agent or the Title Insurance Company may
require, such certificate to be satisfactory to the Agent in form and substance.
Swing Line Bank. The Agent, or any other lending institution which replaces
the Agent as the lending institution providing Swing Line Loans pursuant to
ss.2.6.2.
Swing Line Loans. Loans advanced by the Swing Line Bank under ss.2.6.2.
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Tender Offer. The Offer to Purchase for cash all outstanding shares of
common stock of The Rival Company made by MAC on December 23, 1998, pursuant to
the Tender Offer Documents.
Tender Offer Documents. The Offer to Purchase for Cash All Outstanding
Shares of Common Stock of The Rival Company at $13.75 Net Per Share, dated
December 23, 1998, and the related Letter of Transmittal, Notice of Guaranteed
Delivery, and Schedule 14D-9 Solicitation/Recommendation Statement, each in the
form delivered to the Agent prior to the Closing Date.
Term Loans. The Term Loan A and Term Loan B.
Term Loan A. The term loan made or to be made by the Banks to the Borrowers
on the Closing Date in the aggregate principal amount of $40,000,000 pursuant to
ss.3.1.1 hereof.
Term Loan A Commitment. With respect to each Bank, the amount set forth on
Schedule 1 hereto as the amount of such Bank's commitment to make Term Loan A to
the Borrowers.
Term Loan A Commitment Percentage. With respect to each Bank, the
percentage set forth on Schedule 1 hereto as such Bank's percentage of Term Loan
A.
Term Loan A Maturity Date. February 5, 2005.
Term Loan B. The term loan made or to be made by the Banks to the Borrowers
on the Closing Date in the aggregate principal amount of $85,000,000 pursuant to
ss.3.1.2 hereof.
Term Loan B Commitment. With respect to each Bank, the amount set forth on
Schedule 1 hereto as the amount of such Bank's commitment to make Term Loan B to
the Borrowers.
Term Loan B Commitment Percentage. With respect to each Bank, the
percentage set forth on Schedule 1 hereto as such Bank's percentage of Term Loan
B.
Term Loan B Maturity Date. February 5, 2007.
Term Notes. See ss.3.2.
Test Period. The period of all fiscal quarters (and any portion of a fiscal
quarter) included in any covenant calculation and occurring prior to the date of
such Permitted Acquisition as set forth in the definition of Pro Forma Basis.
Title Insurance Company. Lawyers Title Insurance Company.
Title Policy. In relation to each Mortgaged Property, an ALTA standard form
title insurance policy issued by the Title Insurance Company (with such
reinsurance or co-insurance as the Agent may require, any such reinsurance to be
with direct access endorsements) in such amount as may, be determined by the
Agent insuring the priority of the Mortgage of such Mortgaged Property and that
the Domestic Borrowers or one of their Domestic Subsidiaries holds marketable
fee simple title to such Mortgaged Property, subject only to the encumbrances
permitted by such Mortgage and which shall not contain exceptions for mechanics
liens, persons in occupancy (except as may be permitted by such Mortgage), shall
not insure over any matter except to the extent that any such affirmative
insurance is acceptable to the Agent in its sole
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discretion, and shall contain such endorsements and affirmative insurance as the
Agent in its discretion may reasonably require, including but not limited to (i)
comprehensive endorsement, (ii) variable rate of interest endorsement, (iii)
usury endorsement, (iv) revolving credit endorsement, (v) tie-in endorsement
(vi) doing business endorsement, (vii) anti-taint endorsement and (viii) last
dollar endorsement.
Total Commitment. The sum of the Commitments of the Banks, as in effect
from time to time.
Total Funded Indebtedness. All Indebtedness of the Company and its
Subsidiaries for borrowed money (including, without limitation, all guarantees
by such Person of Indebtedness of others for borrowed money), purchase money
Indebtedness, with respect to Capitalized Leases and synthetic leases,
determined on a consolidated basis in accordance with generally accepted
accounting principles; provided, however, for purposes of calculating the
Leverage Ratio, Total Funded Indebtedness shall not include (a) the Maximum
Drawing Amount of any issued, outstanding but undrawn documentary Letters of
Credit and (b) the maximum aggregate amount that the beneficiaries may at any
time draw under the Rival Letters of Credit and Patton HK Letters of Credit, as
such aggregate amount may be reduced from time to time pursuant to the terms of
such Rival Letters of Credit or Patton HK Letters of Credit; and provided,
further, that for purposes of calculating Indebtedness of the Borrowers under
the Revolving Credit Loans for any period, the amount shall be the average
amount of Revolving Credit Loans outstanding on the last day of any calendar
month for the last twelve (12) calendar months (or such shorter period as has
elapsed from the Closing Date) divided by twelve (or the applicable number of
shorter months as has elapsed from the Closing Date), provided that
notwithstanding anything to the contrary contained in this definition, for
purposes of calculating Indebtedness of the Borrowers under the Revolving Credit
Loans for the month ended January 31, 1999, such amount shall be $89,500,000.
Total Percentage. With respect to each Bank, on any date of determination,
the sum of (a) such Bank's Commitment (or, if the Commitment is terminated,
outstanding Revolving Credit Loans, Letter of Credit Participations in Unpaid
Reimbursement Obligations and participating interests in the risk relating to
outstanding Letters of Credit and Fronted Loans), (b) the outstanding principal
amount of such Bank's Term Loan A and (c) the outstanding principal amount of
such Bank's Term Loan B.
Trademark Assignment. The several Trademark Assignments, dated as of the
Closing Date or as of the Original Closing Date and amended as of the Closing
Date, made by certain Borrowers in favor of the Agent and in form and substance
satisfactory to the Banks and the Agent.
Type. As to any Loan, its nature as a Base Rate Loan or a Eurocurrency Rate
Loan.
Uniform Customs. With respect to any Letter of Credit, the Uniform Customs
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 or any successor version thereto adopted by the
Agent in the ordinary course of its business as a letter of credit issuer and in
effect at the time of issuance of such Letter of Credit.
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Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which the
applicable Borrower does not reimburse the Agent and the Banks on the date
specified in, and in accordance with, ss.4.2.
Voting Stock. Stock or similar interests, of any class or classes (however
designated), the holders of which are at the time entitled, as such holders, to
vote for the election of a majority of the directors (or persons performing
similar functions) of the corporation, association, limited liability company,
partnership, trust or other business entity involved, whether or not the right
so to vote exists by reason of the happening of a contingency.
1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have the
meanings assigned to them therein, with the term "instrument" being that
defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "ss." refers to that section of this
Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Credit Agreement as a whole and not to any
particular section or subdivision of this Credit Agreement.
(j) Unless otherwise expressly indicated, in the computation of
periods of time from a specified date to a later specified date, the word
"from" means "from and including," the words "to" and "until" each mean "to
but excluding," and the word "through" means "to and including."
(k) This Credit Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the same
or similar matters. All
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such limitations, tests and measurements are, however, cumulative and are
to be performed in accordance with the terms thereof.
(l) This Credit Agreement and the other Loan Documents are the
result of negotiation among, and have been reviewed by counsel to, among
others, the Agent and the Borrowers and are the product of discussions and
negotiations among all parties. Accordingly, this Credit Agreement and the
other Loan Documents are not intended to be construed against the Agent or
any of the Banks merely on account of the Agent's or any Bank's involvement
in the preparation of such documents.
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2. THE REVOLVING CREDIT FACILITY.
2.1. Commitment to Lend.
2.1.1. Revolving Credit Loans to Domestic Borrowers. Subject
to the terms and conditions set forth in this Credit Agreement, each
of the Banks severally agrees to lend to the Domestic Borrowers and
the Domestic Borrowers may borrow, repay, and reborrow from time to
time from the Closing Date up to but not including the Revolving
Credit Loan Maturity Date upon notice by the Domestic Borrowers to
the Agent given in accordance with ss.2.6, such sums in Dollars as
are requested by the Domestic Borrowers up to a maximum aggregate
amount outstanding (after giving effect to all amounts requested by
any Borrower) at any one time equal to such Bank's Commitment minus
such Bank's Commitment Percentage of the sum of the Maximum Drawing
Amount, all Unpaid Reimbursement Obligations and Bankers'
Acceptances then outstanding, provided that the sum of the
outstanding amount of the Revolving Credit Loans (after giving
effect to all amounts requested), plus the Maximum Drawing Amount,
all Unpaid Reimbursement Obligations and the aggregate face amount
of all outstanding Bankers' Acceptances shall not at any time exceed
the Total Commitment. The Revolving Credit Loans shall be made pro
rata in accordance with each Bank's Commitment Percentage. Each
request for a Revolving Credit Loan hereunder shall constitute a
representation and warranty by the Domestic Borrowers that the
conditions set forth in ss.11 (other than ss.11.19) and ss.12, in
the case of the initial Revolving Credit Loans to be made on the
Closing Date, and ss.12, in the case of all other Revolving Credit
Loans, have been satisfied on the date of such request. Each Base
Rate Loan to the Domestic Borrowers shall be denominated in Dollars.
Each Eurocurrency Rate Loan to the Domestic Borrowers shall be
denominated in Dollars.
2.1.2. Multicurrency Loans to Subsidiary Borrowers. Subject
to the terms and conditions set forth in this Credit Agreement, each
of the Banks severally agrees to lend to the Subsidiary Borrowers
and the Subsidiary Borrowers may borrow, repay, and reborrow from
time to time from the Closing Date up to but not including the
Revolving Credit Loan Maturity Date upon notice by the applicable
Subsidiary Borrower to the Agent given in accordance with ss.2.6,
such sums in Dollars and/or at the applicable Subsidiary Borrower's
option from time to time, subject to ss.2.9 hereof, in an Optional
Currency, as are requested by the applicable Subsidiary Borrower up
to a maximum aggregate amount outstanding (after giving effect to
all amounts requested) at any one time equal to such Bank's
Commitment minus such Bank's Commitment Percentage of the sum of the
Maximum Drawing Amount and all Unpaid Reimbursement Obligations,
provided that the sum of the outstanding amount of the Revolving
Credit Loans (after giving effect to all amounts requested), plus
the Maximum Drawing Amount, all Unpaid Reimbursement Obligations and
the aggregate face amount of all outstanding Bankers' Acceptances
shall not at any time exceed the Total Commitment, and, provided
further, that (a) the sum of the outstanding amount of all Revolving
Credit Loans (after giving effect to all amounts requested) advanced
to the Subsidiary Borrowers shall not at any time exceed
$20,000,000, with the sum of the outstanding amount of all Revolving
Credit
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Loans (after giving effect to all amounts requested) advanced to
Holmes Far East, Esteem, Raider and Patton HK not to at any time
exceed $10,000,000 and the sum of the outstanding amount of all
Revolving Credit Loans (after giving effect to all amounts
requested) advanced to Holmes UK and Bionaire B.V. not to at any
time exceed $10,000,000, and (b) the sum of the outstanding amount
of all Revolving Credit Loans (after giving effect to all amounts
requested) advanced to the Subsidiary Borrowers plus the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations shall not at
any time exceed $45,000,000. The Revolving Credit Loans shall be
made pro rata in accordance with each Bank's Commitment Percentage,
provided, however, that notwithstanding anything to the contrary
contained herein, with respect to any Revolving Credit Loan
denominated in an Optional Currency, the Commitment Percentage of
each Bank shall be fronted by the Fronting Bank (with each Bank
hereby agreeing to participate in the risk associated with such
Multicurrency Loan in accordance with ss.2.10 hereof), with each
Bank having no obligation or commitment to fund in any Optional
Currency. Each request for a Revolving Credit Loan hereunder shall
constitute a representation and warranty by the requesting
Subsidiary Borrower that the conditions set forth in ss.11 and
ss.12, in the case of the initial Revolving Credit Loans to be made
on the Closing Date, and ss.12, in the case of all other Revolving
Credit Loans, have been satisfied on the date of such request. Each
Eurocurrency Rate Loan to the Subsidiary Borrowers shall be
denominated in Dollars, or, subject to ss.2.9 hereof, in an Optional
Currency.
2.1.3. Canadian Loans to Rival Canada. Subject to the terms
and conditions set forth in this Credit Agreement, the Canadian
Fronting Bank agrees to lend to Rival Canada and Rival Canada may
borrow, repay and reborrow from time to time from the Closing Date
up to but not including the Revolving Credit Loan Maturity Date such
sums in Canadian Dollars as are requested by Rival Canada either (i)
as Canadian Base Rate Loans or (ii) as Bankers' Acceptances, upon
notice by Rival Canada to the Agent and the Canadian Fronting Bank
given in accordance with ss.2.6 or ss.2A, as applicable, provided
that the sum of the outstanding amount of the Revolving Credit Loans
including the aggregate face amount of all Bankers' Acceptances
(after giving effect to all amounts requested), plus the Maximum
Drawing Amount, all Unpaid Reimbursement Obligations shall not at
any time exceed the Total Commitment, and, provided further, that
the sum of the outstanding amount of all Revolving Credit Loans
(after giving effect to all amounts requested) advanced to Rival
Canada including the aggregate face amount of all outstanding
Bankers' Acceptances plus the Maximum Drawing Amount and all Unpaid
Reimbursement Obligations issued on account of Rival Canada shall
not at any time exceed $15,000,000. In connection with such Canadian
Loans, the Commitment Percentage of each Bank shall be fronted by
the Canadian Fronting Bank (with each Bank hereby agreeing to
participate in the risk associated with such Canadian Loan in
accordance with ss.2.10 hereof) with each Bank having no obligation
or commitment to fund in Canadian Dollars. Each request for a
Revolving Credit Loan hereunder shall constitute a representation
and warranty by Rival Canada that the conditions set forth in ss.11
and ss.12, in the case of the initial Revolving Credit Loans to be
made on the Closing Date, and ss.12, in the case of all other
Revolving Credit Loans, have been satisfied on the date of such
request.
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2.2. Commitment Fee. The Domestic Borrowers agree to pay to the
Agent for the accounts of the Banks based on the amount by which each
Bank's Commitment exceeds the sum of such Bank's daily average outstanding
Revolving Credit Loans (including its Commitment Percentage of Bankers'
Acceptances, Canadian Loans and Multicurrency Loans) plus its Commitment
Percentage of the sum of the Maximum Drawing Amount and the Unpaid
Reimbursement Obligations a commitment fee calculated at the rate of the
Commitment Fee Rate per annum on the average daily amount during each
calendar quarter or portion thereof from the Closing Date to the Revolving
Credit Loan Maturity Date by which the Total Commitment minus the sum of
(a) the Maximum Drawing Amount and all Unpaid Reimbursement Obligations
plus (b) the aggregate face amount of all outstanding Bankers' Acceptances
exceeds the outstanding amount of Revolving Credit Loans during such
calendar quarter. The commitment fee shall be payable quarterly in arrears
on the first day of each calendar quarter for the immediately preceding
calendar quarter commencing on the first such date following the date
hereof, with a final payment on the Revolving Credit Maturity Date or any
earlier date on which the Commitments shall terminate.
2.3. Reduction of Total Commitment. The Company shall have the right
at any time and from time to time upon seven (7) Business Days prior
written notice to the Agent to reduce by $5,000,000 or an integral multiple
of $1,000,000 in excess thereof or terminate entirely the Total Commitment,
whereupon the Commitments of the Banks shall be reduced pro rata in
accordance with their respective Commitment Percentages of the amount
specified in such notice or, as the case may be, terminated. Promptly after
receiving any notice of the Company delivered pursuant to this ss.2.3, the
Agent will notify the Banks of the substance thereof. Upon the effective
date of any such reduction or termination, the Domestic Borrowers shall pay
to the Agent for the respective accounts of the Banks the full amount of
any commitment fee then accrued on the amount of the reduction. No
reduction or termination of the Commitments may be reinstated.
2.4. The Revolving Credit Notes; Loan Accounts. The Revolving Credit
Loans shall be evidenced by separate promissory notes of the Domestic
Borrowers in substantially the form of Exhibit A hereto (each a "Revolving
Credit Note"), dated as of the Closing Date and completed with appropriate
insertions. The obligations of each of the Foreign Borrowers to repay all
amounts borrowed by it as Revolving Credit Loans, all interest thereon and
all other amounts payable by it in respect thereof shall be evidenced by
this Credit Agreement, it being the intention of the parties hereto that
each Foreign Borrower's obligations with respect to the Revolving Credit
Loans owed by it is evidenced only as stated herein and not by separate
promissory notes or other instruments. One Revolving Credit Note shall be
payable to the order of each Bank in a principal amount equal to such
Bank's Commitment or, if less, the outstanding amount of all Revolving
Credit Loans made by such Bank, plus interest accrued thereon, as set forth
below. Each of the Borrowers irrevocably authorizes each Bank to make or
cause to be made, at or about the time of the Drawdown Date of any
Revolving Credit Loan or at the time of receipt of any payment of principal
on such Bank's Revolving Credit Note or loan account, as the case may be,
an appropriate notation on such Bank's Record or record pertaining to the
loan account (the "Loan Account Record"), as the case may be, reflecting
the making of such Revolving Credit Loan or (as the case may be) the
receipt of such payment. The outstanding amount of the Revolving Credit
Loans set forth on such Bank's Record and Loan Account Record shall be
prima facie evidence of the principal amount thereof owing and unpaid to
such Bank, but the failure to record, or any
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error in so recording, any such amount on such Bank's Record or Loan
Account Record, as the case may be, shall not limit or otherwise affect the
obligations of the Borrowers hereunder or under any Revolving Credit Note
to make payments of principal of or interest on any Revolving Credit Note
or loan account when due.
2.5. Interest on Revolving Credit Loans. Except as otherwise
provided in ss.5.11,
(a) Each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum equal to the
Base Rate (or, in the case of the Canadian Loans, the Canadian Base Rate)
plus the Applicable Margin with respect to Base Rate Loans as in effect
from time to time.
(b) Each Eurocurrency Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum equal to the
Eurodollar Rate determined for such Interest Period plus the Applicable
Margin with respect to Eurocurrency Rate Loans as in effect from time to
time.
(c) Each Borrower promises to pay interest on each Revolving Credit
Loan requested by such Borrower in arrears on each Interest Payment Date
with respect thereto.
2.6. Requests for Revolving Credit Loans.
2.6.1. General. The applicable Borrower shall give to the
Agent, and in the case of Rival Canada, to the Fronting Bank,
written notice in the form of Exhibit B hereto (or telephonic notice
confirmed in a writing in the form of Exhibit B hereto) of each
Revolving Credit Loan requested hereunder (a "Loan Request") no
later than (a) one (1) Business Day prior to the proposed Drawdown
Date of any Base Rate Loan and (b) three (3) Business Days prior to
the proposed Drawdown Date of any Eurocurrency Rate Loan, provided
that any such notice by a Subsidiary Borrower requesting a Revolving
Credit Loan denominated in an Optional Currency must comply with the
requirements of this ss.2.6 and the requirements of an OC Notice
pursuant to ss.2.9.1. Each such notice shall specify (i) the
principal amount of the Revolving Credit Loan requested, stated
either in Dollars, Canadian Dollars or, subject to ss.2.9 hereof, in
an Optional Currency, (ii) the proposed Drawdown Date of such
Revolving Credit Loan, (iii) the Interest Period for such Revolving
Credit Loan, and (iv) the Type of such Revolving Credit Loan.
Promptly upon receipt of any such notice (but in any event on the
day the Agent receives a request for a Revolving Credit Loan by the
Domestic Borrowers and by the day following the date the Agent
receives a request for a Revolving Credit Loan by a Subsidiary
Borrower), the Agent shall notify each of the Banks thereof. Each
Loan Request shall be irrevocable and binding on the Borrowers and
shall obligate the requesting Borrower to accept the Revolving
Credit Loan requested from the Banks on the proposed Drawdown Date.
Each Loan Request shall be in a minimum aggregate amount of $500,000
or an integral multiple of $100,000 in excess thereof.
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2.6.2. Swing Line. Notwithstanding the notice and minimum
amount requirements set forth in ss.2.6.1 but otherwise in
accordance with the terms and conditions of this Credit Agreement,
the Swing Line Bank may, in its sole discretion and without
conferring with the Banks, make Revolving Credit Loans to the
Domestic Borrowers (a) by entry of credits to the Domestic
Borrowers' operating account (the "Operating Account') maintained
with the Agent to cover checks or other charges which the Domestic
Borrowers have drawn or made against such account or (b) in an
amount as otherwise requested by any of the Domestic Borrowers,
provided, however, that the aggregate amount of all advances made
pursuant to this ss.2.6.2 shall not exceed $10,000,000 at any time
outstanding (each a "Swing Line Loan"). Each Domestic Borrower
hereby requests and authorizes the Swing Line Bank to make from time
to time such Swing Line Loans by means of appropriate entries of
such credits sufficient to cover checks and other charges then
presented for payment from the Operating Account or as otherwise so
requested. Each Domestic Borrower acknowledges and agrees that the
making of such Swing Line Loans shall, in each case, be subject in
all respects to the provisions of this Credit Agreement as if they
were Revolving Credit Loans covered by a Loan Request including,
without limitation, the limitations set forth in ss.2.1 and the
requirements that the applicable provisions of ss.11 (in the case of
Swing Line Loans made on the Closing Date) and ss.12 be satisfied.
All actions taken by the Swing Line Bank pursuant to the provisions
of this ss.2.6.2 shall be conclusive and binding on the Domestic
Borrowers and the Banks absent the Swing Line Bank's gross
negligence or willful misconduct. Swing Line Loans made pursuant to
this ss.2.6.2 shall be Base Rate Loans denominated in Dollars until
converted in accordance with the provisions of the Credit Agreement
and, prior to a Settlement, such interest shall be for the account
of the Swing Line Bank.
2.7. Conversion Options.
2.7.1. Conversion to Different Type of Revolving Credit Loan.
The Borrowers may elect from time to time to convert any outstanding
Revolving Credit Loan denominated in Dollars or Canadian Dollars to
a Revolving Credit Loan of another Type denominated in Dollars or
Canadian Dollars, as the case may be, provided that (a) with respect
to any such conversion of a Revolving Credit Loan to a Base Rate
Loan, the applicable Borrower shall give the Agent at least one (1)
Business Day prior written notice of such election; (b) with respect
to any such conversion of a Base Rate Loan to a Eurocurrency Rate
Loan, the applicable Borrower shall give the Agent at least three
(3) Business Days prior written notice of such election; (c) with
respect to any such conversion of a Eurocurrency Rate Loan into a
Revolving Credit Loan of another Type, such conversion shall only be
made on the last day of the Interest Period with respect thereto and
(d) no Revolving Credit Loan may be converted into a Eurocurrency
Rate Loan when any Default or Event of Default has occurred and is
continuing. The Agent shall promptly notify the Banks of such
election (but in any event on the day the Agent receives an election
by the Domestic Borrowers or Rival Canada and by the day following
the date the Agent receives an election by any Foreign Borrower). On
the date on which such conversion is being made each Bank shall take
such action as is necessary to transfer its Commitment Percentage of
such Revolving Credit Loans to its Domestic Lending Office or its
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Eurocurrency Lending Office, as the case may be. All or any part of
outstanding Revolving Credit Loans denominated in Dollars or
Canadian Dollars of any Type may be converted into a Revolving
Credit Loan of another Type as provided herein, provided that any
partial conversion shall be in an aggregate principal amount of
$500,000 or an integral multiple of $100,000 in excess thereof. Each
Conversion Request relating to the conversion of a Revolving Credit
Loan to a Eurocurrency Rate Loan shall be irrevocable by the
applicable Borrower.
2.7.2. Continuation of Type of Revolving Credit Loan. Any
Revolving Credit Loan of any Type may be continued as a Revolving
Credit Loan of the same Type upon the expiration of an Interest
Period with respect thereto by compliance by the applicable Borrower
with the notice provisions contained in ss.2.7.1; provided that (a)
as to any Eurocurrency Rate Loans denominated in Dollars or Canadian
Dollars, no such Eurocurrency Rate Loan may be continued as such
when any Default or Event of Default has occurred and is continuing,
but shall be automatically converted to a Base Rate Loan in the
applicable currency on the last day of the first Interest Period
relating thereto ending during the continuance of any Default or
Event of Default of which officers of the Agent active upon the
Company's account have actual knowledge; and (b) as to any
Eurocurrency Rate Loan denominated in an Optional Currency, no such
Eurocurrency Rate Loan may be continued as such when a Default or
Event of Default has occurred or is continuing or the provisions of
ss.2.9 hereof have not or cannot be met at the time of such
continuation, but shall be repaid by the relevant Subsidiary
Borrower on the last day of the Interest Period relating thereto. In
the event that the applicable Borrower fails to provide any such
notice with respect to the continuation of any Eurocurrency Rate
Loan as such, then (a) such Eurocurrency Rate Loan denominated in
Dollars or Canadian Dollars shall be automatically converted to a
Base Rate Loan on the last day of the first Interest Period relating
thereto; and (b) as to any Eurocurrency Rate Loan denominated in an
Optional Currency, shall be repaid on the last day of the Interest
Period relating thereto. The Agent shall notify the Banks promptly
when any such automatic conversion contemplated by this ss.2.7 is
scheduled to occur.
2.7.3. Eurocurrency Rate Loans. Any conversion to or from
Eurocurrency Rate Loans shall be in such amounts and be made
pursuant to such elections so that, after giving effect thereto, the
aggregate principal amount of all Eurocurrency Rate Loans having the
same Interest Period shall not be less than $500,000 or a whole
multiple of $100,000 (or, in the case of a Eurocurrency Rate Loan
denominated in an Optional Currency or in Canadian Dollars, that
whole number which is nearest to the Dollar Equivalent of $500,000,
rounded to the nearest one thousand) in excess thereof.
2.8. Funds for Revolving Credit Loans.
2.8.1. Funding Procedures for Revolving Credit Loans to
Domestic Borrowers. Not later than 1:00 p.m. (Boston time) on the
proposed Drawdown Date of any Revolving Credit Loans to be made to
the Domestic Borrowers, each of the Banks will make available to the
Agent to credit to the applicable Domestic Borrower's account in
Same Day Funds, the amount of such Bank's Commitment Percentage of
the amount of the requested Revolving Credit Loans
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at the Agent's Head Office. Upon receipt from each Bank of such
amount, and upon receipt of the documents required by ss.11 and
ss.12 and the satisfaction of the other conditions set forth
therein, to the extent applicable, the Agent will make available to
the applicable Domestic Borrower the aggregate amount of such
Revolving Credit Loans made available to the Agent by the Banks. The
failure or refusal of any Bank to make available to the Agent at the
aforesaid time and place on any Drawdown Date the amount of its
Commitment Percentage of the requested Revolving Credit Loans shall
not relieve any other Bank from its several obligation hereunder to
make available to the Agent the amount of such other Bank's
Commitment Percentage of any requested Revolving Credit Loans.
2.8.2. Advances by Agent for Revolving Credit Loans to
Domestic Borrowers. The Agent may, unless notified to the contrary
by any Bank prior to a Drawdown Date, assume that such Bank has made
available to the Agent on such Drawdown Date the amount of such
Bank's Commitment Percentage of the Revolving Credit Loans to be
made on such Drawdown Date, and the Agent may (but it shall not be
required to), in reliance upon such assumption, make available to
the applicable Domestic Borrower a corresponding amount. If any Bank
makes available to the Agent such amount on a date after such
Drawdown Date, such Bank shall pay to the Agent on demand an amount
equal to the product of (a) the average computed for the period
referred to in clause (c) below, of the Overnight Rate for each day
included in such period, times (b) the amount of such Bank's
Commitment Percentage of such Revolving Credit Loans, times (c) a
fraction, the numerator of which is the number of days that elapse
from and including such Drawdown Date to the date on which the
amount of such Bank's Commitment Percentage of such Revolving Credit
Loans shall become immediately available to the Agent, and the
denominator of which is 365. A statement of the Agent submitted to
such Bank with respect to any amounts owing under this paragraph
shall be prima facie evidence of the amount due and owing to the
Agent by such Bank. If the amount of such Bank's Commitment
Percentage of such Revolving Credit Loans is not made available to
the Agent by such Bank within three (3) Business Days following such
Drawdown Date, the Agent shall be entitled to recover such amount
from the Domestic Borrowers on demand, with interest thereon at the
rate per annum applicable to the Revolving Credit Loans made on such
Drawdown Date.
2.8.3. Funding Procedures for Revolving Credit Loans
Denominated in Dollars to Subsidiary Borrowers. Not later than 11:00
a.m. (local time with respect to the applicable Subsidiary Borrower)
on the proposed Drawdown Date of any Revolving Credit Loans
requested by the applicable Subsidiary Borrower and which is
denominated in Dollars, each of the Banks will make available to the
Agent to credit to the applicable Subsidiary Borrower's account in
Same Day Funds, the amount of such Bank's Commitment Percentage of
the amount of the requested Revolving Credit Loans at either the
Agent's local branch located at Jardine House, Suites 801-809, One
Connaught Place, Central Hong Kong, or the Agent's local branch
located at 39 Victoria Street, London SW1H OEE, England, as the case
may be. Upon receipt from each Bank of such amount, and upon receipt
of the documents required by ss.11 and ss.12 and the satisfaction of
the other conditions set forth therein, to the extent applicable,
the Agent will make available to the applicable Subsidiary Borrower
the aggregate amount of such
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Revolving Credit Loans made available to the Agent by the Banks. The
failure or refusal of any Bank to make available to the Agent at the
aforesaid time and place on any Drawdown Date the amount of its
Commitment Percentage of the requested Revolving Credit Loans shall
not relieve any other Bank from its several obligation hereunder to
make available to the Agent the amount of such other Bank's
Commitment Percentage of any requested Revolving Credit Loans.
2.8.4. Advances by Agent for Revolving Credit Loans
Denominated in Dollars to Subsidiary Borrowers. The Agent may,
unless notified to the contrary by any Bank prior to a Drawdown
Date, assume that such Bank has made available to the Agent on such
Drawdown Date the amount of such Bank's Commitment Percentage of the
Revolving Credit Loans to be made in Dollars to the applicable
Subsidiary Borrower on such Drawdown Date, and the Agent may (but it
shall not be required to), in reliance upon such assumption, make
available to the applicable Subsidiary Borrower a corresponding
amount. If any Bank makes available to the Agent such amount on a
date after such Drawdown Date, such Bank shall pay to the Agent on
demand an amount equal to the product of (a) the average computed
for the period referred to in clause (c) below, of the Overnight
Rate for each day included in such period, times (b) the amount of
such Bank's Commitment Percentage of such Revolving Credit Loans,
times (c) a fraction, the numerator of which is the number of days
that elapse from and including such Drawdown Date to the date on
which the amount of such Bank's Commitment Percentage of such
Revolving Credit Loans shall become immediately available to the
Agent, and the denominator of which is 365. A statement of the Agent
submitted to such Bank with respect to any amounts owing under this
paragraph shall be prima facie evidence of the amount due and owing
to the Agent by such Bank. If the amount of such Bank's Commitment
Percentage of such Revolving Credit Loans is not made available to
the Agent by such Bank within three (3) Business Days following such
Drawdown Date, the Agent shall be entitled to recover such amount
from the applicable Subsidiary Borrower on demand, with interest
thereon at the rate per annum applicable to the Revolving Credit
Loans made on such Drawdown Date.
2.8.5. Funding Procedures for Revolving Credit Loans
Denominated in an Optional Currency to Subsidiary Borrowers. Not
later than 11:00 a.m. (local time with respect to the applicable
Subsidiary Borrower) on the proposed Drawdown Date of any Revolving
Credit Loans which is denominated in an Optional Currency to any
Subsidiary Borrower, the Fronting Bank shall make available to the
Agent at either its local office at Jardine House, Suites 801-809,
One Connaught Place, Central Hong Kong, or the Agent's local branch
located at 39 Victoria Street, London SW1H OEE, England, as the case
may be, the amount of such Revolving Credit Loans made or to be made
on such date corresponding to the aggregate Commitment Percentages
of the Banks. Upon receipt from the Fronting Bank of such amount,
and upon receipt of the documents required by ss.11 and ss.12 and
the satisfaction of the other conditions set forth therein, to the
extent applicable, the Agent will make available to the applicable
Subsidiary Borrower the aggregate amount of such Revolving Credit
Loans made available to the Agent by the Fronting Bank.
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2.8.6. Advances by Agent for Revolving Credit Loans
Denominated in Optional Currency to Subsidiary Borrowers. The Agent
may, unless notified to the contrary by the Fronting Bank prior to a
Drawdown Date, assume that the Fronting Bank has made available to
the Agent on such Drawdown Date the amount of the aggregate
Commitment Percentages of the Banks of such Revolving Credit Loans
to be made on such Drawdown Date, and the Agent may (but it shall
not be required to), in reliance upon such assumption, make
available to the applicable Subsidiary Borrower a corresponding
amount. If the Fronting Bank makes available to the Agent such
amount on a date after such Drawdown Date, the Fronting Bank shall
pay to the Agent on demand an amount equal to the product of (a) the
average computed for the period referred to in clause (c) below, of
the Overnight Rate for each day included in such period, times (b)
the aggregate Commitment Percentages of the Banks of such Revolving
Credit Loans, times (c) a fraction, the numerator of which is the
number of days that elapse from and including such Drawdown Date to
the date on which the amount of the aggregate Commitment Percentages
of all the Banks of such Revolving Credit Loans shall become
immediately available to the Agent, and the denominator of which is
365. A statement of the Agent submitted to the Fronting Bank with
respect to any amounts owing under this paragraph shall be prima
facie evidence of the amount due and owing to the Agent by such
Bank. If the amount of the aggregate Commitment Percentages of all
Banks of such Revolving Credit Loans is not made available to the
Agent by the Fronting Bank within three (3) Business Days following
such Drawdown Date, the Agent shall be entitled to recover such
amount from the applicable Subsidiary Borrower on demand, with
interest thereon at the rate per annum applicable to the Revolving
Credit Loans made on such Drawdown Date.
2.8.7. Funding Procedures for Revolving Credit Loans to Rival
Canada. Upon receipt of the documents required by ss.11 and ss.12
and the satisfaction of the other conditions set forth therein and,
to the extent such documents are received by 10:00 a.m. (local time)
on the proposed Drawdown Date, then not later than 11:00 a.m. (local
time) on the proposed Drawdown Date of any Canadian Loan, the
Canadian Fronting Bank shall make available to Rival Canada, at the
Canadian Fronting Bank's office set forth on Schedule 1 hereto or as
otherwise designed in writing to Rival Canada by the Canadian
Fronting Bank from time to time, in immediately available funds, the
amount of such requested Canadian Loan. Promptly following the
making of each Canadian Loan, the Canadian Fronting Bank shall
provide notice to the Agent of the date of funding and the amount
thereof.
2.9. Optional Currencies/ Canadian Loans.
2.9.1. Request for Optional Currency. Subject to the
limitations set forth in ss.2.1., any Subsidiary Borrower may, upon
at least three (3) Business Days' notice to the Agent (an "OC
Notice"), request that one or more Revolving Credit Loans be made in
an Optional Currency, provided that any Revolving Credit Loan
proposed to be made under this ss.2.9.1 shall be in an amount not
less than $250,000, or a greater amount which is an integral
multiple of $100,000, or the Dollar Equivalent in an Optional
Currency. Each OC Notice requesting a Revolving Credit Loan in an
Optional Currency shall be by written notice (or
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telephonic notice confirmed in writing by the applicable Subsidiary
Borrower), specifying (a) the Revolving Credit Loan to be made, (b)
the requested Drawdown Date of the proposed borrowing of such
Revolving Credit, (c) the requested Optional Currency in which the
Revolving Credit Loan is to be made, and (d) the initial Interest
Period for the Revolving Credit Loan to be borrowed. If the Fronting
Bank, on or prior to any Drawdown Date, determines (which
determination shall be conclusive) that the requested Optional
Currency is not freely transferable and convertible into Dollars or
that it will be impracticable for such Bank to fund the Revolving
Credit Loan in such Optional Currency, then such Bank shall
immediately so notify the Agent, which notification shall be given
immediately by the Agent to the applicable Subsidiary Borrower, and
such Bank's portion of the requested Revolving Credit Loan shall
instead be denominated in Dollars. In the event that the applicable
Subsidiary Borrower repays such portion of a Revolving Credit Loan
denominated in Dollars in accordance with ss.3 hereof and such
repayment, and the fluctuation of currency exchange rates, results
in Revolving Credit Loans being then outstanding that are not in
Dollar Equivalent amounts held pro rata in accordance with the
Commitment Percentages, then all subsequent principal repayments
denominated in the Optional Currency which the applicable Bank did
not advance shall be made by the applicable Subsidiary Borrower to
the Agent for the respective accounts of the Banks other than such
Bank on a pro rata basis until such time as the Revolving Credit
Loans are outstanding on a pro rata basis. Subject to the foregoing
and to the satisfaction of the terms and conditions of ss.11 (in the
case of such Revolving Credit Loans to be made on the Closing Date)
and ss.12, each Revolving Credit Loan requested to be made in an
Optional Currency will be made on the Drawdown Date specified
therefor in the OC Notice, in the currency requested in the OC
Notice and, upon being so made, will have the Interest Period
requested in the OC Notice.
2.9.2. Exchange Rate. For purposes of this Credit Agreement
the amount in one Optional Currency which shall be equivalent on any
particular date to a specified amount in another Optional Currency
shall be that amount (as conclusively ascertained by the Agent by
its normal banking practices, absent manifest error) in the first
Optional Currency which is or could be purchased by the Agent (in
accordance with normal banking practices) with such specified amount
in the second Optional Currency in any recognized Eurocurrency
Interbank Market selected by the Agent in good faith for delivery on
such date at the spot rate of exchange prevailing at 10:00 a.m.
(London time) (or as soon thereafter as practicable) on such date.
2.9.3. Multiple Denominations. In the event that any portion
of the funds available under the terms of this Credit Agreement is
denominated in one or more Optional Currencies, the Dollar
Equivalent of such portion of the funds shall be calculated pursuant
to the definition of "Dollar Equivalent". The amount so determined
shall then be added to the amount already outstanding in Dollars for
the purpose of determining the remaining availability of funds under
ss.2.1 and ss.2.9.1 hereof and any required repayments under the
following ss.2.9.4.
2.9.4. Repayment. If at any time prior to the Revolving
Credit Loan Maturity Date, the Dollar Equivalent of the aggregate
principal amount
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outstanding of all Revolving Credit Loans hereunder shall exceed the
Total Commitment as a result of fluctuations in respective currency
conversion rates for three (3) or more consecutive Business Days,
the applicable Foreign Borrower shall pay or cause to be paid
immediately, upon demand made by the Agent, such amounts as are
sufficient to eliminate such excess and to reduce the aggregate
principal amount outstanding to the Dollar Equivalent in the
applicable currencies of the Total Commitment. In the event there
are any Revolving Credit Loans outstanding which are denominated in
an Optional Currency or Canadian Dollars, the Agent shall provide
the Banks and Foreign Borrowers with calculations on the last day of
each calendar month in which such Revolving Credit Loans in Optional
Currencies and Canadian Dollars are outstanding as to the amount in
Dollar Equivalents of such Revolving Credit Loans.
2.9.5. Funding. The Fronting Bank or the Canadian Fronting
Bank, as the case may be, (or, after a Bank has purchased its
interest in any Fronted Loan, such Bank) may make any Revolving
Credit Loan denominated in an Optional Currency or Canadian Dollars
by causing its Eurocurrency Lending Office or any of its foreign
branches or foreign affiliate to make such Revolving Credit Loan
(whether or not such lending office, branch or affiliate is named as
a lending office on the signature pages hereof); provided that in
such event the obligation of the applicable Foreign Borrower to
repay such Revolving Credit Loan shall nevertheless be to such Bank
and shall, for all purposes of this Credit Agreement (including
without limitation for purposes of the definition of the term
"Majority Banks") be deemed made by such Bank to the extent of such
Revolving Credit Loan, for the account of such applicable lending
office, branch or affiliate.
2.10. Fronting Provisions.
2.10.1. Application of Interest Payments for Multicurrency
Loans and Canadian Loans. (a) As promptly as is practicable
following each date upon which the Agent receives a payment of
interest under this Credit Agreement on account of any Revolving
Credit Loans denominated in Dollars made to any Subsidiary Borrower,
the Agent shall distribute such amount to the Banks in accordance
with their respective Commitment Percentages.
(b) As promptly as is practicable following each date upon
which the Agent receives a payment of interest under this Credit
Agreement on account of any Multicurrency Loans denominated in an
Optional Currency, the Agent shall distribute to the Fronting Bank
such amount. Promptly upon receipt of such amount, the Fronting Bank
shall convert into Dollars (based upon the actual exchange rate then
applicable to the Fronting Bank) the amount equal to the portion of
such interest payment which constitutes the Applicable Margin
thereof (or, with respect to each Bank which funded the purchase of
a participating interest in such Multicurrency Loan pursuant to
ss.2.10.2, such Bank's Commitment Percentage of the full amount of
such interest payment applicable to the period commencing upon such
funding). In consideration of the agreement of the Banks to purchase
participating interests in the Revolving Credit Loans denominated in
an Optional Currency, the Fronting Bank hereby agrees to pay to the
Agent, for the ratable accounts of each Bank, a risk participation
fee in an amount equal to the proceeds received by the Fronting Bank
from such
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conversion to Dollars (other than any such proceeds payable for the
account of any Delinquent Bank, which proceeds shall be retained by
the Fronting Bank for its own account); provided, however, that with
respect to each Bank which has funded the purchase of participating
interests in the extensions of credit on account of which such
interest was paid pursuant to ss.2.10.2, the Fronting Bank shall
instead pay to the Agent, for the account of such Bank which has so
funded such purchase, the amount equal to such Bank's Commitment
Percentage of the proceeds received by the Fronting Bank from such
conversion. Such amount shall be payable to the Agent in Dollars on
the date upon which the Fronting Bank receives the proceeds of such
conversion.
(c) As promptly as is practicable following each date upon
which the Canadian Fronting Bank receives a payment of interest
under this Credit Agreement on account of any Canadian Loans or a
payment of the Acceptance Fee on account of any Bankers' Acceptance,
the Canadian Fronting Bank shall convert into Dollars (based upon
the actual exchange rate then applicable to the Canadian Fronting
Bank) the amount equal to (a) the portion of such interest payment
which constitutes the Applicable Margin thereof, in the case of
Canadian Loans and (b) the Acceptance Fee, in the case of Bankers'
Acceptances (or, with respect to each Bank which funded the purchase
of a participating interest in such Canadian Loan pursuant to
ss.2.10.2, such Bank's Commitment Percentage of the full amount of
such interest payment applicable to the period commencing upon such
funding). In consideration of the agreement of the Banks to purchase
participating interests in the Canadian Loans and Bankers'
Acceptances, the Canadian Fronting Bank hereby agrees to pay to the
Agent, for the ratable accounts of each Bank, a risk participation
fee in an amount equal to the proceeds received by the Canadian
Fronting Bank from such conversion to Dollars (other than any such
proceeds payable for the account of any Delinquent Bank, which
proceeds shall be retained by the Canadian Fronting Bank for its own
account); provided, however, that with respect to each Bank which
has funded the purchase of participating interests in the extensions
of credit on account of which such interest was paid pursuant to
ss.2.10.2, the Canadian Fronting Bank shall instead pay to the
Agent, for the account of such Bank which has so funded such
purchase, the amount equal to such Bank's Commitment Percentage of
the proceeds received by the Canadian Fronting Bank from such
conversion. Such amount shall be payable to the Agent in Dollars on
the date upon which the Canadian Fronting Bank receives the proceeds
of such conversion. Should any Bankers' Acceptances be funded by any
Lender other than the Canadian Fronting Bank pursuant to ss.2.10.2,
ss.2.10.2(a) shall govern the subsequent conversion of those
Bankers' Acceptances into Canadian Loans.
2.10.2. Currency Conversions and Contingent Funding
Agreement. (a) Each of the Banks hereby unconditionally and
irrevocably agrees to purchase (in Dollars) an undivided
participating interest in its ratable share, determined by reference
to its Commitment Percentage, of (i) all Revolving Credit Loans
denominated in an Optional Currency made by the Fronting Bank and
(ii) all Canadian Loans made and Bankers' Acceptances accepted
and/or purchased by the Canadian Fronting Bank, as the Agent may at
any time request provided that:
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(i) the Agent and each of the Fronting Bank and the Canadian
Fronting Bank hereby agree that, unless an Event of Default has occurred
and is continuing or a Fronting Loan Event has occurred, such Persons will
not request any such purchase of participating interests; and
(ii) in the event that any Event of Default specified in
ss.ss.13.1(g) or (h) shall have occurred with respect to Borrowers, each
Bank shall be deemed to have purchased, automatically and without request,
such participating interest in the Revolving Credit Loans denominated in an
Optional Currency made by the Fronting Bank to the applicable Subsidiary
Borrower and such participating interest in the Canadian Loans made and
Bankers' Acceptances accepted and/or purchased by the Canadian Fronting
Bank to Rival Canada.
Any such request shall be made in writing to each Bank and
shall specify the amount of Dollars (based upon the actual exchange
rate at which the Agent anticipates being able to obtain the
relevant Optional Currency or Canadian Dollars, as the case may be,
on the relevant date, with any excess payment being refunded to the
Banks and any deficiency remaining payable by the Banks) required
from such Bank in order to effect the purchase by such Bank of a
participating interest in the amount equal to its Commitment
Percentage times the aggregate then outstanding principal amount (in
the applicable Optional Currency or Canadian Dollars, as the case
may be) of the Revolving Credit Loans denominated in an Optional
Currency which have been fronted by the Fronting Bank and the
Canadian Loans and Bankers' Acceptances which have been fronted by
the Canadian Fronting Bank. Promptly upon receipt of such request,
each Bank shall deliver to the Agent (in immediately available
funds) the amount so specified by the Agent. The Agent shall convert
such amounts into the relevant Optional Currency or Canadian
Dollars, as the case may be, and shall promptly deliver the proceeds
of such conversion to the Fronting Bank or the Canadian Fronting
Bank, as the case may be, in immediately available funds. Promptly
following receipt thereof, the Fronting Bank or the Canadian
Fronting Bank, as the case may be, will deliver to each Bank
(through the Agent) a certificate setting forth the amount of the
Revolving Credit Loans purchased by such Bank, dated the date of
receipt of such funds and in such amount. From and after such
purchase, (i) all outstanding Revolving Credit Loans (whether
denominated in Dollars, Canadian Dollars or the relevant Optional
Currency and including those Revolving Credit Loans advanced by the
Fronting Bank and the Canadian Fronting Bank) and Bankers'
Acceptances shall be deemed to have been converted into Base Rate
Loans denominated in Dollars (with such conversion constituting, for
purposes of ss.5.10, a conversion of a Revolving Credit Loan of one
Type into a Revolving Credit Loan of another Type prior to the
expiration of the relevant Interest Period or the prepayment of
Bankers' Acceptances, as applicable), (ii) any further Revolving
Credit Loans to be made to the Foreign Borrowers shall be made in
Dollars by each Bank in accordance with each such Bank's Commitment
Percentage, (iii) all amounts from time to time accruing, and all
amounts from time to time payable, on account of such Revolving
Credit Loans (including any interest and other amounts which were
accrued but unpaid on the date of such purchase) shall be payable in
Dollars as if such Revolving Credit Loans had originally been made
in Dollars and shall be distributed by the Agent to the Banks, on
account of such participating interests.
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Notwithstanding anything to the contrary contained in this ss.2.10,
the failure of any Bank to purchase its participating interest in
any Revolving Credit Loans or Bankers' Acceptances shall not relieve
any other Bank of its obligations hereunder to purchase its
participating interest in a timely manner, but no Bank shall be
responsible for the failure of any other Bank to purchase the
participating interest to be purchased by such other Banks on any
date.
(b) If any amount required to be paid by any Bank pursuant to
ss.2.10.2(a) is not paid to the Agent within one (1) Business Day
following the date upon which such Bank receives a request from the
Agent that such Bank fund its participating interest relating to
such Revolving Credit Loan or Bankers' Acceptance, such Bank shall
pay to the Agent on demand an amount equal to the product of (i)
such amount, times (ii) the daily average federal funds rate, as
quoted by the Agent, during the period from and including the date
such payment is required to be made to the date on which such
payment is immediately available to the Agent, times (iii) 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 Bank pursuant to ss.2.10.2(a) is
not in fact made available to the Agent within three (3) Business
Days following the date upon which such Bank receives a request from
the Agent that such Bank fund its participating interest relating to
such Revolving Credit Loan or Bankers' Acceptance, the Agent shall
be entitled to recover from the applicable Foreign Borrower, on
demand, such amount with interest thereon calculated from such due
date at the rate per annum applicable to Revolving Credit Loans
which are Base Rate Loans. A certificate from the Agent submitted to
any Bank with respect to any amounts owing under this ss.2.10.2(b)
shall be conclusive in the absence of manifest error. Amounts
payable by any Bank pursuant to this ss.2.10.2(b) shall be paid to
the Agent, for the account of the Fronting Bank or the Canadian
Fronting Bank, as the case may be; provided that, if the Agent (in
its sole discretion) has elected to fund on behalf of such Bank the
amounts owing to the Fronting Bank or Canadian Fronting Bank, as the
case may be, then the amounts shall be paid to the Agent, for its
own account.
(c) Whenever, at any time after the Fronting Bank or Canadian
Fronting Bank has received from any Bank such Bank's participating
interest in a Revolving Credit Loan or Bankers' Acceptance pursuant
to ss.2.10.2(b) above, the Fronting Bank or Canadian Fronting Bank,
as the case may be, receives any payment on account thereof, such
Fronting Bank or Canadian Fronting Bank, as the case may be, will
distribute to the Agent, for the account of such Bank, such Bank's
participating interest in such amount (appropriately adjusted, in
the case of interest payments, to reflect the period of time during
which such Bank's participating interest was outstanding and funded)
in like funds received; provided, however, that in the event that
any such payment received by the Fronting Bank or Canadian Fronting
Bank, as the case may be, is required to be returned, such Bank will
return to the Fronting Bank or the Canadian Fronting Bank, as the
case may be, any portion thereof previously distributed by the
Fronting Bank or Canadian Fronting Bank, as the case may be, to the
Bank in like funds as such payment is required to be returned by the
Fronting Bank or Canadian Fronting Bank, as the case may be.
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(d) Each Bank's obligation to purchase participating
interests pursuant to this ss.2.10 shall be absolute and
unconditional and shall not be affected by any circumstance,
including (i) any set-off, counterclaim, recoupment, defense or
other right which such Bank may have against the Fronting Bank, the
Canadian Fronting Bank, any Borrower or any other Person for any
reason whatsoever; (ii) the occurrence and continuation of any
Default or Event of Default; (iii) any adverse change in the
condition (financial or otherwise) of any Person party hereto; (iv)
any breach of any of the Loan Documents by any Person; or (v) any
other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
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2.10.3. Fronting Fee.
(a) Each of the Subsidiary Borrowers jointly and severally agrees to
pay to the Fronting Bank for the account of the Fronting Bank a fronting
fee (the "Fronting Fee") as set forth in a fee letter dated as of the
Closing Date between the Fronting Bank and the Subsidiary Borrowers.
(b) Rival Canada agrees to pay to the Canadian Fronting Bank for the
account of the Canadian Fronting Bank a fronting fee (the "Canadian
Fronting Fee") as set forth in a fee letter between the Canadian Fronting
Bank and Rival Canada.
2.10.4. Resignation of Fronting Bank and Canadian Fronting Bank. The
Fronting Bank or Canadian Fronting Bank, as the case may be, may resign at
any time by giving sixty (60) days prior written notice thereof to the
Banks and the Company. Upon any such resignation, the Majority Banks shall
have the right to appoint a successor Fronting Bank or Canadian Fronting
Bank, as the case may be. Unless a Default or Event of Default shall have
occurred and be continuing, such successor Fronting Bank or Canadian
Fronting Bank, as the case may be, shall be reasonably acceptable to the
Borrowers. If no successor Fronting Bank or Canadian Fronting Bank, as the
case may be, shall have been so appointed by the Majority Banks and shall
have accepted such appointment within thirty (30) days after the retiring
Fronting Bank's or Canadian Fronting Bank's, as the case may be, giving of
notice of resignation, then the retiring Fronting Bank or Canadian Fronting
Bank, as the case may be, may, on behalf of the Banks, appoint a successor
Fronting Bank or Canadian Fronting Bank, as the case may be, which shall be
a financial institution having a rating of not less than A or its
equivalent by Standard & Poor's Ratings Group. Upon the acceptance of any
appointment as Fronting Bank or Canadian Fronting Bank, as the case may be,
hereunder by a successor Fronting Bank or Canadian Fronting Bank, as the
case may be, such successor Fronting Bank or Canadian Fronting Bank, as the
case may be, shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Fronting Bank or
Canadian Fronting Bank, as the case may be, and the retiring Fronting Bank
or Canadian Fronting Bank, as the case may be, shall be discharged from its
duties and obligations hereunder. After any retiring Fronting Bank's or
Canadian Fronting Bank's, as the case may be, resignation, the provisions
of this Credit Agreement and the other Loan Documents shall continue in
effect for its benefit in respect of any actions taken or omitted to be
taken by it while it was acting as Fronting Bank or Canadian Fronting Bank,
as the case may be.
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2.11. Settlements.
2.11.1. General. On each Settlement Date, the Agent shall, not later
than 11:00 a.m. (Boston time), give telephonic or facsimile notice (a), to
the Banks and the Company of the respective outstanding amount of Swing
Line Loans made by the Swing Line Bank on behalf of the Banks from the
immediately preceding Settlement Date through the close of business on the
prior day and the amount of any Eurocurrency Rate Loans to be made
(following the giving of notice pursuant to ss.2.6.1(b)) on such date
pursuant to a Loan Request and (b) to the Banks of the amount (a
"Settlement Amount") that each Bank (a "Settling Bank") shall pay to effect
a Settlement of any Revolving Credit Loan. A statement of the Agent
submitted to the Banks and the Company or to the Banks with respect to any
amounts owing under this ss.2.11 shall be prima facie evidence of the
amount due and owing. Each Settling Bank shall, not later than 3:00 p.m.
(Boston time) on such Settlement Date, effect a wire transfer of
immediately available funds to the Agent in the amount of the Settlement
Amount for such Settling Bank. All funds advanced by any Bank as a Settling
Bank pursuant to this ss.2.11 shall for all purposes be treated as a
Revolving Credit Loan made by such Settling Bank to the Domestic Borrowers
and all funds received by any Bank pursuant to this ss.2.11 shall for all
purposes be treated as repayment of amounts owed with respect to Revolving
Credit Loans made by such Bank. In the event that any bankruptcy,
reorganization, liquidation, receivership or similar cases or proceedings
in which any Domestic Borrower is a debtor prevent a Settling Bank from
making any Revolving Credit Loan to effect a Settlement as contemplated
hereby, such Settling Bank will make such dispositions and arrangements
with the other Banks with respect to such Revolving Credit Loans, either by
way of purchase of participations, distribution, pro tanto assignment of
claims, subrogation or otherwise as shall result in each Bank's share of
the outstanding Revolving Credit Loans being equal, as nearly as may be, to
such Bank's Commitment Percentage of the outstanding amount of the
Revolving Credit Loans.
2.11.2. Failure to Make Funds Available. The Agent may, unless
notified to the contrary by any Settling Bank prior to a Settlement Date,
assume that such Settling Bank has made or will make available to the Agent
on such Settlement Date the amount of such Settling Bank's Settlement
Amount, and the Agent may (but it shall not be required to), in reliance
upon such assumption, make available to the Borrower a corresponding
amount. If any Settling Bank makes available to the Agent such amount on a
date after such Settlement Date, such Settling Bank shall pay to the Agent
on demand an amount equal to the product of (a) the average computed for
the period referred to in clause (c) below, of the weighted average
interest rate paid by the Agent for federal funds acquired by the Agent
during each day included in such period, times (b) the amount of such
Settlement Amount, times (c) a fraction, the numerator of which is the
number of days that elapse from and including such Settlement Date to the
date on which the amount of such Settlement Amount shall become immediately
available to the Agent, and the denominator of which is 360. A statement of
the Agent submitted to such Settling Bank with respect to any amounts owing
under this ss.2.11.2 shall be prima facie evidence of the amount due and
owing to the
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Agent by such Settling Bank. If such Settling Bank's Settlement Amount is
not made available to the Agent by such Settling Bank within three (3)
Business Days following such Settlement Date, the Agent shall be entitled
to recover such amount from the Borrower on demand, with interest thereon
at the rate per annum applicable to the Revolving Credit Loans as of such
Settlement Date.
2.11.3. No Effect on Other Banks. The failure or refusal of any
Settling Bank to make available to the Agent at the aforesaid time and
place on any Settlement Date the amount of such Settling Bank's Settlement
Amount shall not (a) relieve any other Settling Bank from its several
obligations hereunder to make available to the Agent the amount of such
other Settling Bank's Settlement Amount or (b) impose upon any Bank, other
than the Settling Bank so failing or refusing, any liability with respect
to such failure or refusal or otherwise increase the Commitment of such
other Bank.
2.12. Repayment of Revolving Credit Loans.
2.12.1. Maturity. Each Domestic Borrower jointly and severally
promises to pay on the Revolving Credit Loan Maturity Date, and there shall
become absolutely due and payable on the Revolving Credit Loan Maturity
Date, all of the Revolving Credit Loans outstanding on such date to the
Borrowers, together with any and all accrued and unpaid interest thereon.
Each Foreign Borrower jointly and severally promises to pay on the
Revolving Credit Loan Maturity Date, and there shall become absolutely due
and payable on the Revolving Credit Loan Maturity Date, all Revolving
Credit Loans outstanding on such date to the Foreign Borrowers (but not the
Domestic Borrowers), together with all accrued and unpaid interest thereon.
2.12.2. Mandatory Repayments of Revolving Credit Loans. If at any
time the sum of the outstanding amount of the Revolving Credit Loans, the
Maximum Drawing Amount, all Unpaid Reimbursement Obligations and the
aggregate face amount of all outstanding Bankers' Acceptances exceeds the
Total Commitment, then the Domestic Borrowers shall immediately pay the
amount of such excess to the Agent for the respective accounts of the
Banks, the Fronting Bank and the Canadian Fronting Bank for application:
first, to any Swing Line Loans outstanding, second, to any Unpaid
Reimbursement Obligations; third, to the Revolving Credit Loans; and
fourth, to provide to the Agent cash collateral for Reimbursement
Obligations as contemplated by ss.4.2(b) and (c) any outstanding Bankers'
Acceptances as contemplated by ss.2A. Each payment of any Unpaid
Reimbursement Obligations or prepayment of Revolving Credit Loans shall be
allocated among the Banks, in proportion, as nearly as practicable, to each
Reimbursement Obligation or (as the case may be) the respective unpaid
principal amount of each Bank's Revolving Credit Note or loan account, as
the case may be, with adjustments to the extent practicable to equalize any
prior payments or repayments not exactly in proportion. In addition, in the
event the Company or any of its Subsidiaries receives any (a) Net Cash Sale
Proceeds from the sale or other disposition of assets permitted by ss.9.5
or proceeds of insurance claims which have not been either (i) reinvested
by the Company or such Subsidiary in assets which are normally used in the
ordinary course of business of the Borrowers, including reinvestments in
replacement assets or to repair the
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asset so damaged, as the case may be, within 360 days of receipt by such
Person of such proceeds or (ii) subject to a commitment by the Company or
such Subsidiary pursuant to any contract to be used to make such a
reinvestment, subject only to customary conditions (other than obtaining
financing), on or prior to the 270th day following the Company's or such
Subsidiary's receipt of the claimed amount and the claimed amounts
contractually committed are so applied within 360 days following receipt of
such amounts or (b) Net Cash Proceeds from any Equity Issuances by the
Company or its Subsidiaries after the Closing Date (except for Net Cash
Proceeds received by the Company from Equity Issuances by the Company (i)
made in connection with its Stock Option Plan up to a maximum aggregate
amount of not more than $4,000,000 or to members of the Company's
management (other than in connection with the sale of Equity Issuances to
such members of management in the Initial Public Offering), (ii) received
from any Principal of the Company or other shareholders of the Company
existing on the Closing Date (the "Additional Investors") so long as no
Event of Default has occurred and is continuing and provided such Net Cash
Proceeds are not received in connection with the sale of Equity Issuances
to the Principals or such Additional Investors in the Initial Public
Offering, or (iii) received from any other Person so long as no Event of
Default has occurred and is continuing, such Net Cash Proceeds are not
received in connection with the sale of Equity Issuances to such Persons in
the Initial Public Offering and provided the aggregate amount of such Net
Cash Proceeds are used to finance all or any portion of a Permitted
Acquisition), the Company shall, within thirty (30) days of receipt
thereof, after repayment in full of the Term Loans as provided in ss.3.3,
repay the outstanding Revolving Credit Loans in an amount equal to 100% of
such Net Cash Sale Proceeds or Net Cash Proceeds, as the case may be, and
the Total Commitment shall be automatically reduced by the amount which is
equal to fifty percent (50%) of such required repayment of Revolving Credit
Loans, provided, however, that notwithstanding the foregoing, in the event
the Company receives any Net Cash Proceeds from its Initial Public Offering
or any subsequent public offering of its capital stock, the Company shall
only be required to repay an amount equal to 50% of the Net Cash Proceeds
of such Equity Issuance.
2.13. Optional Repayments of Revolving Credit Loans.
Each of the Borrowers shall have the right, at its election, to
repay the outstanding amount of the Revolving Credit Loans, as a whole or
in part, at any time without penalty or premium (but subject to ss.5.10).
The applicable Borrower shall give the Agent, no later than 10:00 a.m.,
Boston time on the date of any prepayment written notice of any proposed
prepayment pursuant to this ss.2.13 of Base Rate Loans, and two (2)
Business Days notice of any proposed prepayment pursuant to this ss.2.13 of
Eurocurrency Rate Loans, in each case specifying the proposed date of
prepayment of Revolving Credit Loans and the principal amount to be
prepaid. Each such partial prepayment of the Revolving Credit Loans shall
be in an integral multiple of $500,000 (or the Dollar Equivalent), shall be
accompanied by the payment of accrued interest on the principal prepaid to
the date of prepayment and shall be applied, in the absence of instruction
by the applicable Borrower, first to the principal of Base Rate Loans and
then to the principal of Eurocurrency Rate Loans. Each partial prepayment
shall be allocated among the Banks, the Canadian Fronting Bank and the
Fronting Bank, in proportion, as
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nearly as practicable, to the respective unpaid principal amount of each
Bank's Revolving Credit Note or loan account, as the case may be, with
adjustments to the extent practicable to equalize any prior repayments not
exactly in proportion. All repayments of the Revolving Credit Loans shall
be applied first, to such Loans borrowed in compliance with the second
paragraph of ss.4.09 of the Subordinated Indenture, and second, to such
Loans borrowed in compliance with the first paragraph of ss.4.09 of the
Subordinated Indenture.
2A. BANKERS' ACCEPTANCES.
2A.1. Acceptance and Purchase. Subject to the terms and conditions
hereof, the Canadian Fronting Bank (and, for purposes of this ss.2A, the
"BA Lenders") agrees to accept and purchase Bankers' Acceptances, drawn
upon such BA Lender by Rival Canada and denominated in Canadian Dollars,
provided that it is understood and agreed that the Applicable BA Discount
Rate shall be that rate calculated for the Business Day of issuance and
purchase by such BA Lender of the requested Bankers Acceptance(s), and not
any rate quoted on and for the date of notice of such request. Rival Canada
shall notify the applicable BA Lender by irrevocable written notice (each,
a "Bankers' Acceptance Notice") (such notice being addressed to applicable
BA Lender with a copy sent to the Agent) at least two (2) Business Days
prior to the date of any borrowing by way of Bankers' Acceptances. Each
borrowing by way of Bankers' Acceptances shall be in a minimum aggregate
undiscounted face amount of C$100,000 or an integral multiple thereof. The
undiscounted face amount of each Bankers' Acceptance shall be C$100,000 or
any integral multiple thereof. Each request for a Bankers' Acceptance shall
constitute a representation and warranty by the Company and by Rival Canada
that the conditions set forth in ss.ss.11 and 12 have been satisfied on the
date of the issuance of such Bankers' Acceptance. Each Bankers' Acceptance
Notice shall be in the form of Exhibit G. In no event shall the aggregate
face amount of all outstanding Bankers' Acceptances and Revolving Credit
Loans made to Rival Canada exceed the lesser of (i) $15,000,000 and (ii)
the amount the Canadian Fronting Bank has agreed to fund in such capacity.
Furthermore, in no event shall the sum of the outstanding amount of the
Revolving Credit Loans (after giving effect to all amounts requested), plus
the Maximum Drawing Amount and all Unpaid Reimbursement Obligations, plus
the Dollar Equivalent of the aggregate face amount of all outstanding
Bankers' Acceptances at any time exceed the Total Commitment.
(a) Term. Each Bankers' Acceptance shall be issued and shall mature
on a Business Day and shall be dated the borrowing date specified in the
Bankers' Acceptance Notice with respect thereto. Each Bankers' Acceptance
shall have a term of 30, 60, 90, or 180 days. Each Bankers' Acceptance
shall mature no later than one (1) day prior to the Revolving Credit Loan
Maturity Date, and shall be in form and substance reasonably satisfactory
to the Canadian Fronting Bank.
(b) Bankers' Acceptances in Blank. To facilitate the acceptance of
Bankers' Acceptances under this Credit Agreement, Rival Canada shall, on
the Closing Date and from time to time as required, provide to each BA
Lender bills of exchange, in the form of Exhibit H, duly executed and
endorsed in blank by Rival Canada in quantities sufficient for each BA
Lender to fulfill its obligations hereunder. Rival Canada agrees that the
responsibility of each BA Lender with respect to the safekeeping of the
executed blank draft forms of Bankers' Acceptances shall be limited to the
same degree of care which
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such BA Lender gives to its own property, provided that such BA Lender
shall not be deemed to be an insurer thereof. In addition, Rival Canada
hereby irrevocably appoints each BA Lender as its attorney to sign and
endorse on its behalf, in handwriting or by facsimile or mechanical
signature, as and when deemed necessary by such BA Lender and in accordance
with the Bankers' Acceptance Notices submitted from time to time in
accordance with this ss.2A and signed by officers or employees of Rival
Canada who are authorized by resolution of the directors of Rival Canada to
so instruct such BA Lender, blank forms of Bankers' Acceptances. (Rival
Canada shall provide each BA Lender with a certified copy of such
resolution and such BA Lender may rely upon the same until its
acknowledgment of the receipt from Rival Canada of a certified copy of a
directors' resolution to the contrary.) Rival Canada recognizes and agrees
that each Bankers' Acceptance signed and/or endorsed on its behalf by any
BA Lender in accordance with the terms of the respective Bankers'
Acceptance Notices provided to such BA Lender shall bind Rival Canada as
fully and effectually as if signed in the handwriting of and duly issued by
the proper signing officers of Rival Canada. Each BA Lender is hereby
authorized to issue on behalf of Rival Canada, such Bankers' Acceptances
endorsed in blank in such face amounts as may be specified in the Bankers'
Acceptance Notice provided to such BA Lender with respect thereto provided
that the aggregate amount thereof is equal to the aggregate amount of
Bankers' Acceptances required to be accepted by such BA Lender pursuant to
clause (d) below. No BA Lender shall be responsible or liable for its
failure to accept a Bankers' Acceptance if the cause of such failure is, in
whole or in part, due to the failure of Rival Canada to provide duly
executed and endorsed bills of exchange to such BA Lender on a timely basis
nor shall any BA Lender be liable for any damage, loss or other claim
arising by reason of any loss or improper use of any such instrument except
loss or improper use arising by reason of the negligence or willful
misconduct of such BA Lender, its officers, employees, agents or
representatives. Rival Canada agrees that no BA Lender shall incur any
liability to Rival Canada in completing such draft forms of Bankers'
Acceptances when acting reasonably in reliance on Bankers' Acceptance
Notices provided to such BA Lender which such BA Lender believes in good
faith to have been signed by authorized officers or employees of Rival
Canada. Each BA Lender shall maintain a record with respect to Bankers'
Acceptances (i) received by it from Rival Canada in blank hereunder, (ii)
voided by it for any reason, (iii) accepted by it hereunder, (iv) purchased
by it hereunder, and (v) canceled at their respective maturities. Each BA
Lender further agrees to retain such records in the manner and for the
statutory periods provided in the various Canadian provincial or federal
statutes and regulations which apply to such BA Lender.
(c) Execution of Bankers' Acceptances. Bills of exchange of Rival
Canada to be accepted as Bankers' Acceptances hereunder shall be duly
executed by one or more duly authorized officers on behalf of Rival Canada
as required by ss.2A.1(a) above. Notwithstanding that any person whose
signature appears on any Bankers' Acceptance as a signatory for Rival
Canada may no longer be an authorized signatory for Rival Canada at the
date of issuance (unless, at such date of issuance, the issuing BA Lender
has actual knowledge that such signatory is no longer an authorized
signatory) or at the date of maturity of a Bankers' Acceptance, such
signature shall nevertheless be valid and sufficient for all purposes as if
such authority had remained in force at the time of such issuance or
continued until the date of maturity, as the case may be, and any such
Bankers' Acceptance so signed shall be binding on Rival Canada.
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(d) Issuance of Bankers' Acceptances. Promptly following receipt of
a Bankers' Acceptance Notice, the aggregate face amount of Bankers'
Acceptances to be accepted by the applicable BA Lender as set forth on the
relevant Bankers' Acceptance Notice pursuant to the terms of this Credit
Agreement shall be issued, except that, if the face amount of a Bankers'
Acceptance, which would otherwise be accepted by such BA Lender, would not
be C$100,000 or an integral multiple thereof, such face amount shall be
reduced by such BA Lender in its sole and absolute discretion to the
nearest integral multiple of C$100,000.
(e) Acceptance of Bankers' Acceptances. Each Bankers' Acceptance to
be issued pursuant to this ss.2A shall be accepted by the applicable BA
Lender at such BA Lender's office shown on Schedule 1 hereof or as
otherwise designated in writing by such BA Lender to Rival Canada and the
Agent from time to time.
(f) Purchase of Bankers' Acceptances. On the relevant date of
borrowing, each BA Lender agrees to purchase from Rival Canada, at the face
amount thereof discounted by the Applicable BA Discount Rate, any Bankers'
Acceptance accepted by it and provide to Rival Canada the BA Discount
Proceeds in respect thereof after deducting therefrom the amount of the
Acceptance Fee payable by Rival Canada to such BA Lender under ss.2A.3 in
respect of such Bankers' Acceptance. Such BA Lender shall notify Rival
Canada and the Company of the Applicable BA Discount Rate with respect to
any borrowing by way of Bankers' Acceptances on the date of such borrowing.
(g) Sale of Bankers' Acceptances. Each BA Lender may at any time and
from time to time hold, sell, rediscount or otherwise transfer, in each
case to a financial institution or bank resident in Canada without the
consent of any Borrower, or to any other Person with the consent of the
Company (not to be unreasonably withheld) any or all Bankers' Acceptances
accepted and purchased by it.
(h) Waiver of Presentment and Other Conditions. Rival Canada waives
presentment for payment, demand, protest and any other defense to payment
of any amounts due to any BA Lender in respect of a Bankers' Acceptance
accepted by such BA Lender pursuant to this Agreement which might exist
solely by reason of such Bankers' Acceptance being held, at the maturity
thereof, by such BA Lender or any permitted transferee of such Bankers'
Acceptance in its own right. Rival Canada shall not claim or require any
days of grace or require any BA Lender or any permitted transferee of any
Bankers' Acceptance to claim any days of grace for the payment of any
Bankers' Acceptance.
(i) Subject to Section 2A.2, Rival Canada shall pay to each BA
Lender an amount in Canadian dollars equal the face amount of each Bankers'
Acceptance on the maturity date thereof.
2A.2. Refunding Bankers' Acceptances. With respect to each Bankers'
Acceptance, Rival Canada, except during the occurrence and continuation of
an Event of Default, may give irrevocable telephone or written notice (or
such other method of notification as may be agreed upon between the
applicable BA Lender and Rival Canada) to the applicable BA Lender on two
Business Days prior to the maturity date of such Bankers' Acceptance of
Rival Canada's intention to issue one or more Bankers' Acceptances on such
maturity date (each a "Refunding Bankers' Acceptance") to provide
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for the payment of such maturing Bankers' Acceptance (it being understood
that Rival Canada shall, on the date of maturity of the maturing Bankers'
Acceptances, pay to the applicable BA Lender an amount equal to the face
amount of the maturing Bankers' Acceptance (a) less the BA Discount
Proceeds of the applicable Refunding Bankers' Acceptances (b) plus the
applicable Acceptance Fee with respect to such Refunding Bankers'
Acceptances). Any funding on account of any maturing Bankers' Acceptance
must be made at or before 12:00 noon (Toronto, Ontario time) on the
maturity date of such Bankers' Acceptance. If Rival Canada fails to give
such notice and fails to repay such Bankers' Acceptance on the maturity
date thereof, then Rival Canada shall be irrevocably deemed to have
requested and to have been advanced a Canadian Loan bearing interest at the
Canadian Base Rate plus the Applicable Margin on the face amount of such
maturing Bankers' Acceptance on the maturity date of such maturing Bankers'
Acceptance from the Canadian Fronting Bank, which Canadian Loan shall
thereafter bear interest as such in accordance with the provisions hereof
and otherwise shall be subject to all provisions of this Credit Agreement
applicable to Canadian Loans until paid in full.
2A.3. Acceptance Fee. An acceptance fee (the "Acceptance Fee") shall
be payable by Rival Canada to each BA Lender, which shall deduct the amount
of such Acceptance Fee from the BA Discount Proceeds (in the manner
specified in ss.2A.1(f) in respect of each Bankers' Acceptance), said fee
to be calculated at a rate per annum equal to the Applicable Acceptance Fee
Rate calculated on the face amount of such Bankers' Acceptance and computed
on the basis of the number of days in the term of such Bankers' Acceptance
and a year of 365 days.
2A.4. Circumstances Making Bankers' Acceptances Unavailable. If, by
reason of circumstances affecting the money market in Canada generally,
there is no market for Bankers' Acceptances (a) the right of Rival Canada
to request a borrowing of Bankers' Acceptances shall be suspended until the
circumstances causing a suspension no longer exist, and (b) any Bankers'
Acceptance Notice which is outstanding shall be canceled and the requested
borrowing shall not be made.
2A.5 Cash Payments with respect to Outstanding Bankers' Acceptances.
In order to induce the BA Lenders to purchase Bankers' Acceptances and the
Banks to participate therein, Rival Canada agrees to pay to the applicable
BA Lender, for the account of such BA Lender or (as the case may be) the
Banks, with respect to each Bankers' Acceptance accepted and/or purchased
by such BA Lender hereunder,
(a) upon the reduction (but not termination) of Total
Commitment, or the available amount to Rival Canada, to an amount
less than the aggregate face amount of all outstanding Bankers'
Acceptances, an amount equal to such difference, which amount shall
be held by the Canadian Fronting Bank for the benefit of the Banks
and the Canadian Fronting Bank for all outstanding Bankers'
Acceptances until such difference is not more than zero, whereupon
any amounts remaining with the Canadian Fronting Bank shall be paid
to Rival Canada so long as no Default or Event of Default has
occurred and is continuing, and
(b) upon the termination of the Total Commitment, or the
acceleration of the Borrowers' obligations with respect to all
Bankers' Acceptances in
<PAGE>
-55-
accordance with ss.13, on demand by the Canadian Fronting Bank, an
amount with respect to each outstanding Bankers' Acceptance equal to
the total of amounts which would be required to purchase in the
Canadian money market, as of 10:00 a.m. (Eastern time) on the date
of payment of such demand, Government of Canada treasury bills in an
aggregate amount equal to the face amount of such Bankers'
Acceptances and having in each case a term to maturity similar to
the period from such demand to maturity of such Bankers' Acceptance.
Upon payment by Rival Canada as required under clause (b) above, the
applicable BA Lender shall be responsible for all payments to third
parties, including the respective holders in due course of such Bankers'
Acceptances, under Bankers' Acceptances held by such BA Lender and such BA
Lender shall indemnify Rival Canada in respect of all amounts which Rival
Canada may be required to pay under each such Bankers' Acceptances to any
party. Each payment under clauses (a) and (b) above shall be made to the
Canadian Fronting Bank at the Canadian Fronting Bank's office shown on
Schedule 1 hereof (or as otherwise designated in writing from time to time
by the Canadian Fronting Bank) in immediately available funds. Interest on
any and all amounts remaining unpaid by Rival Canada under clauses (a) or
(b) above at any time from the date such amounts become due and payable
(whether as stated in this ss.2A.5, by acceleration or otherwise) until
payment in full (whether before or after judgment) shall be payable to the
Canadian Fronting Bank on demand at the rate specified in ss.6.11 for
Canadian Loans that are Base Rate Loans.
2A.6 Indemnification in respect of Bankers' Acceptances. In addition
to any liability of any Borrower to any Lender or Agent under any other
provision hereof, Rival Canada shall indemnify each BA Lender and the Agent
and hold each of them harmless against any reasonable loss or expense
accrued by such Lender or Agent as a result of (x) any failure by Rival
Canada to fulfill any of its obligations hereunder including, without
limitation, any cost or expense accrued by reason of the liquidation or
re-employment in whole or in part of deposits or other funds required by
any Lender to fund any Bankers' Acceptance as a result of the failure of
Rival Canada to make any payment, repayment or prepayment on the date
required hereunder or specified by it in any notice hereunder, or (y) Rival
Canada's failure to provide for the payment to the Agent or to the BA
Lender of the full face amount of each Bankers' Acceptance on or prior to
its maturity date.
<PAGE>
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3. THE TERM LOANS.
3.1. Commitment to Lend.
3.1.1. Term Loan A. Subject to the terms and conditions set
forth in this Credit Agreement, each Bank agrees to lend to the
Domestic Borrowers, in Dollars, on the Closing Date its Term Loan A
Commitment. Percentage of the principal amount of $40,000,000.
3.1.2. Term Loan B. Subject to the terms and conditions set
forth in this Credit Agreement, each Bank agrees to lend to the
Domestic Borrowers, in Dollars, on the Closing Date its Term Loan B
Commitment Percentage of the principal amount of $85,000,000.
3.2. The Term Notes.
3.2.1. Term Loan A and Term Loan B. The Term Loan A and Term
Loan B shall be evidenced by separate promissory notes of the
Domestic Borrowers, as the case may be, in substantially the form of
Exhibit C-1 and C-2 hereto (each a "Term Note"), dated the Closing
Date and completed with appropriate insertions. One Term Note shall
be payable to the order of each Bank in a principal amount equal to
such Bank's Term Loan A Commitment Percentage of Term Loan A or such
Bank's Term Loan B Commitment Percentage of Term Loan B, as the case
may be, representing the obligation of the Domestic Borrowers to pay
to such Bank such principal amount or, if less, the outstanding
amount of such Bank's Term Loan A Commitment Percentage of Term Loan
A or such Bank's Term Loan B Commitment Percentage of Term Loan B,
as the case may be, plus interest accrued thereon, as set forth
below. Each of the Borrowers irrevocably authorizes each Bank to
make or cause to be made a notation on such Bank's Record reflecting
the original principal amount of such Bank's Term Loan A or such
Bank's Term Loan B, as the case may be, and, at or about the time of
such Bank's receipt of any principal payment on such Term Note, an
appropriate notation on such Bank's Record reflecting such payment.
The aggregate unpaid amount set forth on such Bank's Record shall be
prima facie evidence of the principal amount thereof owing and
unpaid to such Bank, but the failure to record, or any error in so
recording, any such amount on such Bank's Record shall not affect
the joint and several obligations of the Domestic Borrowers
hereunder or under any Term Note to make payments of principal of
and interest on any Term Note when due.
3.3. Mandatory Payments of Principal of Term Loans.
3.3.1. Term Loan A. Each Domestic Borrower jointly and
severally promises to pay to the Agent for the account of the Banks
the principal amount of Term Loan A in twenty-two (22) consecutive
quarterly payments, payable on last Business Day of each calendar
quarter ending within any period set forth below in the amount set
forth opposite such period, commencing on September 30, 1999 and
with a final payment on the Term Loan A Maturity Date in an amount
equal to the unpaid balance of Term Loan A.
<PAGE>
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<TABLE>
<CAPTION>
- ----------------------------------------------------------------------- -----------------------------------------
Dollar Equivalent of
Quarters Ending: Each Payment
- ----------------------------------------------------------------------- -----------------------------------------
<S> <C>
September 30, 1999 - December 31, 1999 $1,400,000
- ----------------------------------------------------------------------- -----------------------------------------
March 31, 2000 - December 31, 2000 $1,400,000
- ----------------------------------------------------------------------- -----------------------------------------
March 31, 2001 - December 31, 2001 $1,600,000
- ----------------------------------------------------------------------- -----------------------------------------
March 31, 2002 - December 31, 2002 $2,000,000
- ----------------------------------------------------------------------- -----------------------------------------
March 31, 2003 - December 31, 2003 $2,150,000
- ----------------------------------------------------------------------- -----------------------------------------
March 31, 2004 - September 30, 2004 $2,150,00
- ----------------------------------------------------------------------- -----------------------------------------
December 31, 2004 $1,075,000
- ----------------------------------------------------------------------- -----------------------------------------
Term Loan A Maturity Date unpaid balance
of Term Loan A
- ----------------------------------------------------------------------- -----------------------------------------
</TABLE>
3.3.2. Term Loan B. Each of the Domestic Borrowers jointly
and severally promises to pay, in Dollars, to the Agent for the
account of the Banks the principal amount of Term Loan B in thirty
one (31) consecutive quarterly payments, payable on the last
Business Day of each calendar quarter ending within any period set
forth below in the amount set forth opposite such period, commencing
on September 30, 1999 and with a final payment on the Term Loan B
Maturity Date in an amount equal to the unpaid balance of Term Loan
B.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------- -----------------------------------------
Dollar Equivalent of
Quarters Ending: Each Payment
- ----------------------------------------------------------------------- -----------------------------------------
<S> <C>
September 30, 1999 - December 31, 1999 $ 212,500
- ----------------------------------------------------------------------- -----------------------------------------
March 31, 2000 - December 31, 2000 $ 212,500
- ----------------------------------------------------------------------- -----------------------------------------
March 31, 2001 - December 31, 2001 $ 212,500
- ----------------------------------------------------------------------- -----------------------------------------
March 31, 2002 - December 31, 2002 $ 212,500
- ----------------------------------------------------------------------- -----------------------------------------
March 31, 2003 - December 31, 2003 $ 212,500
- ----------------------------------------------------------------------- -----------------------------------------
March 31, 2004 - December 31, 2004 $ 212,500
- ----------------------------------------------------------------------- -----------------------------------------
March 31, 2005 - December 31, 2005 $9,987,500
- ----------------------------------------------------------------------- -----------------------------------------
March 31, 2006 - September 30, 2006 $9,987,500
- ----------------------------------------------------------------------- -----------------------------------------
December 31, 2006 $4,993,750
- ----------------------------------------------------------------------- -----------------------------------------
Term Loan B Maturity Date unpaid balance
of Term Loan B
- ----------------------------------------------------------------------- -----------------------------------------
</TABLE>
3.3.3. Annual Excess Cash Flow Recapture. For each fiscal
year ending on or after December 31, 1999 for which the Borrowers
have positive Consolidated Excess Cash Flow, the Domestic Borrowers
shall prepay the principal of the Term Loans in an amount equal to
seventy-five percent (75%) of such Consolidated Excess Cash Flow,
provided that in the event that the Leverage Ratio as at the end of
the applicable fiscal year, and as at the end of the fiscal quarter
immediately preceding the date such payment is due is less than
4.25:1, only fifty percent (50%) of such Consolidated Excess Cash
Flow shall be required to be utilized to prepay the Term Loans. Each
such mandatory prepayment shall be due one hundred (100) days after
the end of each applicable fiscal year and shall be applied pro rata
to repayment of each of the Term Loans based on the then outstanding
amounts of each of the Term Loans, provided, however, to the extent
any holder of the Term Loan B elects not to accept such prepayments,
such prepayments so declined shall be applied pro rata to the
repayment of the Term Loan A. Such payments shall be applied against
the
<PAGE>
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remaining scheduled installments of principal due on the respective
Term Loans pro rata. To the extent the Borrowers are required to
make any payments pursuant to this ss.3.3.3 and such a payment would
subject the Borrowers to certain costs under ss.5.10 associated with
a prepayment of a Eurocurrency Rate Loan prior to the last day of an
Interest Period with respect thereto, the Agent shall, if requested
by the Company, hold such proceeds as cash collateral (and
thereafter the Agent shall apply such cash collateral to the
Obligations) until the earliest to occur of (a) the last day of the
Interest Period with respect to such Eurocurrency Rate Loans, (b)
the first date when such prepayment can be made without any costs
being incurred pursuant to ss.5.10 and (c) the date when the Agent
determines in its reasonable discretion that such amounts shall be
used to repay all or any portion of the Term Loans.
3.3.4. Net Cash Proceeds; Net Cash Sale Proceeds. In the
event the Company or any of its Subsidiaries receives Net Cash
Proceeds, Net Cash Sale Proceeds or any other amounts which are
required to be utilized to repay the Loans as provided in ss.2.12.2,
the Domestic Borrowers shall first repay the Term Loans in such
amount, and at the times provided in ss.2.12.2, with such payments
to be applied pro rata to each of the Term Loans, based on the
respective then outstanding amounts of each of the Term Loans
provided, however, to the extent any holder of the Term Loan B
elects not to accept such prepayments, such prepayments so declined
shall be applied pro rata to the repayment of the Term Loan A, and
against the remaining scheduled installments of principal due on the
respective Term Loans pro rata. After repayment in full of the Term
Loans, all such amounts shall be applied in repayment of the
Revolving Credit Loans, as provided in ss.2.12.2. To the extent the
Borrowers are required to make any payments pursuant to this
ss.3.3.4 and such a payment would subject the Borrowers to certain
costs under ss.5.10 associated with a prepayment of a Eurocurrency
Rate Loan prior to the last day of an Interest Period with respect
thereto, the Agent shall, if requested by the Company, hold such
proceeds as cash collateral (and thereafter the Agent shall apply
such cash collateral to the Obligations) until the earlier to occur
of (a) the last day of the Interest Period with respect to such
Eurocurrency Rate Loans, (b) the first date when such prepayment can
be made without any costs being incurred pursuant to ss.5.10 and (c)
the date when the Agent determines in its reasonable discretion that
such amounts shall be used to repay all or any portion of the
Revolving Credit Loans.
3.4. Optional Prepayment of Term Loans. The Domestic Borrowers shall
have the right at any time to prepay the Term Notes on or before the Term
Loan A Maturity Date or Term Loan B Maturity Date, as the case may be, as a
whole, or in part, upon not less than three (3) Business Days prior written
notice to the Agent, specifying whether such repayment should be applied to
Term Loan A or Term Loan B, without premium or penalty, provided that (a)
each partial prepayment shall be in the principal amount of (i) $500,000 or
an integral multiple of $100,000 in excess thereof in the case of
Eurocurrency Rate Loans, or (ii) $100,000 or an integral multiple of
$100,000 in excess thereof in the case of Base Rate Loans, (b) no portion
of the Term Loans bearing interest at the Eurocurrency Rate may be prepaid
pursuant to this ss.3.4 except on the last day of the Interest Period
relating thereto unless the Borrowers indemnify each Bank pursuant to
ss.5.10 against any expenses relating to any payments made prior to the
last day of the Interest Period, (c) each partial prepayment shall be
allocated among the Banks, in
<PAGE>
-59-
proportion, as nearly as practicable, to the respective outstanding amount
of each such Person's Term Note A or Term Note B, as the case may be, with
adjustments to the extent practicable to equalize any prior prepayments not
exactly in proportion and (d) each such prepayment shall be applied within
each Term Loan pro rata against the remaining principal installments
thereof. Any prepayment of principal of the Term Loans shall include all
interest accrued to the date of prepayment. No amount repaid with respect
to the Term Loans may be reborrowed.
3.5. Interest on Term Loans.
3.5.1. Interest Rates. Except as otherwise provided in
ss.5.11, the Term Loans shall bear interest during each Interest
Period relating to all or any portion of the Term Loans at the
following rates:
(a) to the extent that all or any portion of Term Loan A
bears interest during such Interest Period at the Base Rate, Term
Loan A or such portion shall bear interest during such Interest
Period at the rate per annum equal to the Base Rate plus the
Applicable Margin for Base Rate Loans.
(b) To the extent that all or any portion of Term Loan A
bears interest during such Interest Period at the Eurocurrency Rate,
Term Loan A or such portion shall bear interest during such Interest
Period at the rate per annum equal to the Eurocurrency Rate plus the
Applicable Margin for Eurocurrency Rate Loans.
(c) to the extent that all or any portion of Term Loan B
bears interest during such Interest Period at the Base Rate, Term
Loan B or such portion shall bear interest during such Interest
Period at the rate per annum equal to the Base Rate plus one and
three-quarters percent (1.75%).
(d) To the extent that all or any portion of Term Loan B
bears interest during such Interest Period at the Eurocurrency Rate,
Term Loan B or such portion shall bear interest during such Interest
Period at the rate per annum equal to the Eurocurrency Rate plus
three and one-half percent (3.50%).
Each of the Domestic Borrowers promises to pay interest on the Term
Loans or any portion thereof outstanding during each Interest Period
in arrears on each Interest Payment Date applicable to such Interest
Period.
3.5.2. Conversion Options.
(a) The Term Loans shall be drawn in full on the Closing
Date, after which the provisions of ss.2.7 shall apply mutatis
mutandis with respect to all or any portion of the Term Loans so
that the Domestic Borrowers may have the same interest rate options
with respect to all or any portion of the Term Loans to which the
Domestic Borrowers would be entitled with respect to the Revolving
Credit Loans, subject to the same limitations as applied to
Revolving Credit Loans.
<PAGE>
-60-
(b) Term Loan A and Term Loan B shall at all times be
denominated in Dollars.
3.5.3. Amounts, etc. Any portion of the Term Loans bearing
interest at the Eurocurrency Rate relating to any Interest Period
shall be in the amount of $500,000 or a larger integral multiple of
$100,000 in excess thereof. No Interest Period relating to the Term
Loans or any portion thereof bearing interest at the Eurocurrency
Rate shall extend beyond the date on which a regularly scheduled
installment payment of the principal of the Term Loans are to be
made unless a portion of the Term Loans at least equal to such
installment payment has an Interest Period ending on such date or is
then bearing interest at the Base Rate.
3.6. Funds for Term Loans A and B. Not later than 11:00 a.m. (Boston
time) on the Closing Date, each of the Banks will make available to the
Agent, at the Agent's Head Office, in immediately available funds, the
amount of such Bank's Term Loan A Commitment Percentage of Term Loan A and
such Bank's Term Loan B Commitment Percentage of Term Loan B. Upon receipt
from each Bank of such amount, and upon receipt of the documents required
by ss.ss.11 and ss.12 and the satisfaction of the other conditions set
forth therein, the Agent will make available to the Borrowers the aggregate
amount of Term Loan A and Term Loan B requested by such Person.
3.7. Application of Interest Payments for Term Loans.
As promptly as is practicable following each date upon which the
Agent receives a payment of principal or interest under this Credit
Agreement on account of any portion of Term Loan A or Term Loan B made to
any Borrower, the Agent shall distribute such amount to the Banks in
accordance with their respective Term Loan Commitment Percentages.
4. LETTERS OF CREDIT.
4.1. Letter of Credit Commitments.
4.1.1. Commitment to Issue Letters of Credit. Subject to the
terms and conditions hereof and the execution and delivery by any
Borrower of a letter of credit application on the Agent's customary
form (a "Letter of Credit Application"), the Agent on behalf of the
Banks and in reliance upon the agreement of the Banks set forth in
ss.4.1.4 and upon the representations and warranties of such
Borrower contained herein, agrees, in its individual capacity, to
issue, extend and renew for the account of such Borrower one or more
standby or documentary (on a sight or time basis) letters of credit
(individually, a "Letter of Credit"), denominated in Dollars or any
Optional Currency in such form as may be requested from time to time
by such Borrower and agreed to by the Agent; provided, however,
that, after giving effect to such request, (a) the sum of the
aggregate Maximum Drawing Amount and all Unpaid Reimbursement
Obligations shall not exceed $35,000,000 (or the Dollar Equivalent)
at any one time, (b) the sum of the aggregate Maximum Drawing Amount
and all Unpaid Reimbursement Obligations for Letters of Credit
issued for the account of Far East, Esteem, Raider or Patton HK
shall not exceed $30,000,000 (or the Dollar Equivalent), (c) the sum
of the aggregate Maximum Drawing Amount and all
<PAGE>
-61-
Unpaid Reimbursement Obligations for Letters of Credit issued for
the account of Holmes UK and Bionaire B.V. shall not exceed
$10,000,000 (or the Dollar Equivalent), (d) the sum of the aggregate
Maximum Drawing Amount and all Unpaid Reimbursement Obligations for
Letters of Credit issued for the account of Rival Canada shall not
exceed $10,000,000 (or the Dollar Equivalent) and (e) the sum of (i)
the Dollar Equivalent of the Maximum Drawing Amount of all Letters
of Credit, (ii) the Dollar Equivalent of all Unpaid Reimbursement
Obligations, (iii) the Dollar Equivalent of the amount of all
Revolving Credit Loans outstanding, and (iv) the Dollar Equivalent
of the aggregate face amount of all outstanding Bankers' Acceptances
shall not exceed the Total Commitment. Notwithstanding the
foregoing, the Agent shall have no obligation to issue any Letter of
Credit to support or secure any Indebtedness of the Company or any
of its Subsidiaries to the extent that such Indebtedness was
incurred prior to the proposed issuance date of such Letter of
Credit, unless in any such case the Company demonstrates to the
satisfaction of the Agent that (x) such prior incurred Indebtedness
was then fully secured by a prior perfected and unavoidable security
interest in collateral provided by the Company or such Subsidiary to
the proposed beneficiary of such Letter of Credit or (y) such prior
incurred Indebtedness was then secured or supported by a letter of
credit issued for the account of the Company or such Subsidiary and
the reimbursement obligation with respect to such letter of credit
was fully secured by a prior perfected and unavoidable security
interest in collateral provided to the issuer of such letter of
credit by the Company or such Subsidiary.
4.1.2. Letter of Credit Applications. Each Letter of Credit
Application shall be completed to the satisfaction of the Agent. In
the event that any provision of any Letter of Credit Application
shall be inconsistent with any provision of this Credit Agreement,
then the provisions of this Credit Agreement shall, to the extent of
any such inconsistency, govern.
4.1.3. Terms of Letters of Credit. Each Letter of Credit
issued, extended or renewed hereunder shall, among other things, (a)
provide for the payment of sight drafts for honor thereunder when
presented in accordance with the terms thereof and when accompanied
by the documents described therein, and (b) have an expiry date no
later than the date which is fourteen (14) days (or, if the Letter
of Credit is confirmed by a confirmer or otherwise provides for one
or more nominated persons, forty-five (45) days) prior to the
Revolving Credit Loan Maturity Date. Each Letter of Credit so
issued, extended or renewed shall be subject to the Uniform Customs.
4.1.4. Reimbursement Obligations of Banks. Each Bank
severally agrees that it shall be absolutely liable, without regard
to the occurrence of any Default or Event of Default or any other
condition precedent whatsoever, to the extent of such Bank's
Commitment Percentage, to reimburse the Agent on demand for the
amount of each draft paid by the Agent (as calculated pursuant to
ss.4.2) under each Letter of Credit to the extent that such amount
is not reimbursed by the applicable Borrower pursuant to ss.4.2
(such agreement for a Bank being called herein the "Letter of Credit
Participation" of such Bank).
<PAGE>
-62-
4.1.5. Participations of Banks. Each such payment made by a
Bank shall be treated as the purchase by such Bank of a
participating interest in the applicable Borrower's Reimbursement
Obligation under ss.4.2 in an amount equal to such payment. Each
Bank shall share in accordance with its participating interest in
any interest which accrues pursuant to ss.4.2.
4.2. Reimbursement Obligation of the Borrowers. In order to induce
the Agent to issue, extend and renew each Letter of Credit and the Banks to
participate therein, each Borrower hereby agrees to reimburse or pay to the
Agent, for the account of the Agent or (as the case may be) the Banks, with
respect to each Letter of Credit issued, extended or renewed by the Agent
hereunder for the account of such Borrower (and the Domestic Borrowers,
jointly and severally agree to reimburse as provided herein all such
payments on Letters of Credit),
(a) except as otherwise expressly provided in ss.4.2(b) and (c), on
each date that any draft presented under such Letter of Credit is honored
by the Agent, or the Agent otherwise makes a payment with respect thereto
(in the same currency in which such Letter of Credit was issued or the
Dollar Equivalent thereof), (i) the amount paid by the Agent under or with
respect to such Letter of Credit, and (ii) the amount of any taxes (other
than taxes based upon or measured by the income or profits of a Bank or the
Agent), fees, charges or other costs and expenses whatsoever incurred by
the Agent or any Bank in connection with any payment made by the Agent or
any Bank under, or with respect to, such Letter of Credit,
(b) upon the reduction (but not termination) of the Total Commitment
to an amount less than the Maximum Drawing Amount, an amount equal to such
difference, which amount shall be held by the Agent for the benefit of the
Banks and the Agent as cash collateral for all Reimbursement Obligations,
and
(c) upon the termination of the Total Commitment, or the
acceleration of the Reimbursement Obligations with respect to all Letters
of Credit in accordance with ss.13, an amount equal to the then Maximum
Drawing Amount of all Letters of Credit, which amount shall be held by the
Agent for the benefit of the Banks and the Agent as cash collateral for all
Reimbursement Obligations.
Each such payment shall be made to the Agent at the Agent's Head Office in
Same Day Funds. Interest on any and all amounts remaining unpaid by the
applicable Borrower under this ss.4.2 at any time from the date such
amounts become due and payable (whether as stated in this ss.4.2, by
acceleration or otherwise) until payment in full (whether before or after
judgment) shall be payable to the Agent on demand at the rate specified in
ss.5.11 for overdue principal on the Revolving Credit Loans.
4.3. Letter of Credit Payments. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the
Agent shall notify the applicable Borrower of the date and amount of the
draft presented or demand for payment and of the date and time when it
expects to pay such draft or honor such demand for payment. If the
applicable Borrower fails to reimburse the Agent as provided in ss.4.2 on
or before the date that such draft is paid or other payment is made by the
Agent, the Agent may at any time thereafter notify the Banks of the amount
of any such Unpaid Reimbursement Obligation and shall specify such amount
in Dollars (based upon the
<PAGE>
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actual exchange rate at which the Agent anticipates being able to obtain
the applicable Optional Currency on the date payment is to be made by the
Banks, with any excess payment being refunded to the Banks and any
deficiency being payable by the Banks) required from each of the Banks. No
later than 3:00 p.m. (Boston time) on the Business Day next following the
receipt of such notice, each Bank shall make available to the Agent, at the
Agent's Head Office, in Same Day Funds, such Bank's Commitment Percentage
of such Unpaid Reimbursement Obligation, together with an amount equal to
the product of (a) the average, computed for the period referred to in
clause (c) below, of the Overnight Rate for each day included in such
period, times (b) the amount equal to such Bank's Commitment Percentage of
such Unpaid Reimbursement Obligation, times (c) a fraction, the numerator
of which is the number of days that elapse from and including the date the
Agent paid the draft presented for honor or otherwise made payment to the
date on which such Bank's Commitment Percentage of such Unpaid
Reimbursement obligation shall become immediately available to the Agent,
and the denominator of which is 365. The responsibility of the Agent to the
Borrowers and the Banks shall be only to determine that the documents
(including each draft) delivered under each Letter of Credit in connection
with such presentment shall be in conformity in all material respects with
such Letter of Credit. From and after such purchase of the applicable
Letter of Credit Participations, such Unpaid Reimbursement Obligations
shall be deemed to have been converted into Base Rate Loans made by the
Banks, and all amounts from time to time accruing, and all amounts from
time to time payable, on account of such Unpaid Reimbursement Obligations
shall be payable in Dollars as if such Letter of Credit had originally been
issued in Dollars.
4.4. Obligations Absolute. The Borrowers' obligations under this
ss.4 shall be absolute and unconditional under any and all circumstances
and irrespective of the occurrence of any Default or Event of Default or
any condition precedent whatsoever or any setoff, counterclaim or defense
to payment which any Borrower may have or have had against the Agent, any
Bank or any beneficiary of a Letter of Credit. Each Borrower further agrees
with the Agent and the Banks that the Agent and the Banks shall not be
responsible for, and each Borrower's Reimbursement Obligations under ss.4.2
shall not be affected by, among other things, the validity or genuineness
of documents or of any endorsements thereon, even if such documents should
in fact prove to be in any or all respects invalid, fraudulent or forged,
or any dispute between or among any Borrower, the beneficiary of any Letter
of Credit or any financing institution or other party to which any Letter
of Credit may be transferred or any claims or defenses whatsoever of any
Borrower against the beneficiary of any Letter of Credit or any such
transferee. The Agent and the Banks 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. Each Borrower agrees that any action taken or omitted by the
Agent or any Bank under or in connection with each Letter of Credit and the
related drafts and documents, if done in good faith, shall be binding upon
such Borrower and shall not result in any liability on the part of the
Agent or any Bank to any Borrower.
4.5. Reliance by Issuer. To the extent not inconsistent with ss.4.4,
the Agent shall be entitled to rely, and shall be fully protected in
relying upon, any Letter of Credit, draft, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document believed by
it to be genuine and correct and to have been signed, sent or made by the
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proper Person or Persons and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any action under
this Credit Agreement unless it shall first have received such advice or
concurrence of the Majority Banks as it reasonably deems appropriate or it
shall first be indemnified to its reasonable satisfaction by the Banks
against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under
this Credit Agreement in accordance with a request of the Majority Banks,
and such request and any action taken or failure to act pursuant thereto
shall be binding upon the Banks and all future holders of the Revolving
Credit Notes, loan accounts or of a Letter of Credit Participation.
4.6. Letter of Credit Fee. Each Borrower requesting a Letter of
Credit shall pay a fee (in each case, a "Letter of Credit Fee") to the
Agent (a) in respect of each standby Letter of Credit issued pursuant to
this Credit Agreement, calculated at the rate of the Applicable Margin for
Eurocurrency Rate Loans per annum on the face amount of each such Letter of
Credit, which shall be for the accounts of the Banks in accordance with
their respective Commitment Percentages, plus an amount equal to one eighth
of one percent (1/8%) per annum of the face amount of such standby Letter
of Credit shall be for the account of the Agent, as a fronting fee and (b)
in respect of each documentary Letter of Credit issued pursuant to this
Credit Agreement, calculated at the rate of the Applicable Margin for
Eurocurrency Rate Loans minus one half of one percent (1/2%) per annum on
the face amount of each such Letter of Credit, which shall be for the
accounts of the Banks in accordance with their respective Commitment
Percentages, plus an amount equal to one eighth of one percent (1/8%) per
annum of the face amount of such documentary Letter of Credit shall be for
the account of the Agent, as a fronting fee. The Letter of Credit Fees for
each Letter of Credit shall be payable quarterly in arrears on the last day
of each calendar quarter. In respect of each Letter of Credit, the
applicable Borrower shall also pay to the Agent for the Agent's own
account, on the date of any issuance, extension, renewal or amendment of
any Letter of Credit, or at such other time or times as such charges are
customarily made by the Agent, for the Agent's own account, the Agent's
customary issuance, amendment, negotiation or document examination and
other administrative fees as in effect from time to time.
5. CERTAIN GENERAL PROVISIONS.
5.1. Closing Fees. The Company agrees to pay to the Agent and
Arranger on the Closing Date the closing fees as set forth in the Fee
Letter.
5.2. Agent's Fee.
The Domestic Borrowers shall pay to the Agent an Agent's fee (the
"Agent's Fee") at the times and in the amounts as provided in the Fee
Letter.
5.3. Funds for Payments.
5.3.1. Payments to Agent. All payments of principal,
interest, Acceptance Fees, Reimbursement Obligations, commitment
fees, Letter of Credit Fees, the closing fee and the Agent's Fee and
any other amounts due hereunder or under any of the other Loan
Documents shall be made to the Agent, for the
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respective accounts of the Banks and the Agent, at the Agent's Head
Office or at such other location in the Boston, Massachusetts area
that the Agent may from time to time designate, in each case in Same
Day Funds, provided, however, notwithstanding the foregoing,
payments of principal and interest and Acceptance Fees with respect
to the Canadian Loans, the repayment of the Bankers' Acceptances on
the maturity date thereof and any other payments in respect of the
Canadian Loans and the Bankers' Acceptances that are, in accordance
with the terms hereof, to be paid to the Canadian Fronting Bank,
shall be paid to the Canadian Fronting Bank. All payments of
principal of and interest on Revolving Credit Loans made to any
Subsidiary Borrower which are denominated in an Optional Currency or
Currencies and all other fees due hereunder by any local branch or
affiliate of the Agent or any Bank located outside of the United
States shall be made in immediately available funds, for the account
of each such Bank or the Agent, as the case may be, at a depository
designated by such Bank in the country in which such Optional
Currency is legal tender. Each payment in respect of any Loan made
by a Borrower shall be made in the same currency in which such Loan
was made unless otherwise agreed to by such Bank, subject to
ss.5.12.
5.3.2. No Offset, etc. All payments by the Borrowers
hereunder and under any of the other Loan Documents shall be made
without setoff or counterclaim and free and clear of and without
deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any
jurisdiction or any political subdivision thereof or taxing or other
authority therein unless such Borrower is compelled by law to make
such deduction or withholding. If any such obligation is imposed
upon any such Borrower with respect to any amount payable by it
hereunder or under any of the other Loan Documents, such Borrower
will pay to the Agent, for the account of the Banks or (as the case
may be) the Agent, on the date on which such amount is due and
payable hereunder or under such other Loan Document, such additional
amount in Dollars as shall be necessary to enable the Banks or the
Agent to receive the same net amount which the Banks or the Agent
would have received on such due date had no such obligation been
imposed upon such Borrower. Each such Borrower will deliver promptly
to the Agent certificates or other valid vouchers for all taxes or
other charges deducted from or paid with respect to payments made by
the Borrower hereunder or under such other Loan Document.
5.3.3. Currency Matters.
5.3.3.1. Currency of Account.
Dollars are the currency of account and payment for
each and every sum at any time due from the Borrowers
hereunder; provided that:
(a) except as expressly provided in this Credit
Agreement, each repayment of a Loan or a part thereof shall
be made in the currency in which such Loan is denominated at
the time of that repayment;
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(b) each payment of interest shall be made in the
currency in which such principal or other sum in respect of
which such interest is payable, is denominated;
(c) each payment of Letter of Credit Fees and the
commitment fees shall be in Dollars, and each payment on
account of the face amount of, and Acceptance Fees in respect
of, any Bankers' Acceptances shall be in Canadian Dollars;
(d) each payment in respect of costs, expenses and
indemnities shall be made in the currency in which the same
were incurred; and
(e) any amount expressed to be payable in a currency
other than Dollars shall be paid in that other currency.
No payment to the Agent or any Bank (whether under
any judgment or court order or otherwise) shall discharge the
obligation or liability in respect of which it was made
unless and until the Agent or such Bank shall have received
payment in full in the currency in which such obligation or
liability was incurred, and to the extent that the amount of
any such payment shall, on actual conversion into such
currency, fall short of such obligation or liability actual
or contingent expressed in that currency, the Borrower shall
indemnify and hold harmless the Agent, the Issuing Bank or
such Bank, as the case may be, with respect to the amount of
the shortfall.
5.3.3.2. Currency Fluctuations.
(a) Not later than 1:00 p.m. (Boston time) on the
last Business Day of each calendar month (the "Calculation
Date"), the Agent shall determine the Dollar Equivalent as of
such date. The Dollar Equivalent so determined shall become
effective on the first Business Day immediately following
such determination (a "Reset Date") and shall remain
effective until the next succeeding Reset Date.
(b) If, on any Reset Date and on the Revolving
Credit Loan Maturity Date, the Dollar Equivalent of the
aggregate outstanding amount of all Revolving Credit Loans,
the Maximum Drawing Amount, all Unpaid Reimbursement
Obligations and the aggregate face amount of all outstanding
Bankers' Acceptances exceeds the Total Commitment for three
(3) or more consecutive Business Days (but only as to the
Reset Date), then the applicable Borrowers shall repay or
prepay the Revolving Credit Loans in accordance with this
Credit Agreement in an aggregate principal amount such that,
after giving effect thereto, the aggregate outstanding amount
(expressed in Dollars) of all Revolving Credit Loans plus the
Maximum Drawing Amount, all Unpaid Reimbursement Obligations
and the aggregate face amount of all outstanding Bankers'
Acceptances no longer exceeds the Total Commitment (expressed
in Dollars).
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(c) Without limiting subsection ss.5.3.3.2(b), if,
on any day prior to the Revolving Credit Loan Maturity Date,
the aggregate outstanding amount (expressed in Dollars) of
all Revolving Credit Loans plus the Maximum Drawing Amount
plus the Unpaid Reimbursement Obligations plus the aggregate
face amount of all outstanding Bankers' Acceptances exceeds
the Total Commitment by five percent (5%) or more, then (i)
the Agent shall give notice thereof to the Borrower and the
Banks and (ii) within two (2) Business Days thereafter, the
Borrowers shall repay or prepay the Revolving Credit Loans in
accordance with this Credit Agreement in an aggregate
principal amount such that, after giving effect thereto, the
aggregate outstanding amount (expressed in Dollars) of all
Revolving Credit Loans plus the Maximum Drawing Amount, all
Unpaid Reimbursement Obligations and the aggregate face
amount of all Bankers' Acceptances no longer exceeds the
Total Commitment (expressed in Dollars). Nothing set forth in
this ss.5.3.3.2 shall be construed to require the Agent to
calculate daily compliance under this ss.5.3.3.2 unless
expressly requested to do so by a Bank.
(d) If on any Reset Date, the aggregate outstanding
sum of the Maximum Drawing Amount and all Unpaid
Reimbursement Obligations (expressed in Dollars) exceeds the
Letter of Credit sublimit set forth in ss.4.1 (expressed in
Dollars) by more than five percent (5%), then the Domestic
Borrowers or the Foreign Borrowers, as the case may be, shall
immediately upon demand provide cash collateral to the Agent
such that, after giving effect thereto, the aggregate
outstanding sum of the Maximum Drawing Amount and all Unpaid
Reimbursement Obligations (expressed in Dollars) no longer
exceed the Letter of Credit sublimit set forth in ss.4.1.
5.4. Computations. All computations of interest on Base Rate Loans
and of commitment fees, Acceptance Fees for Bankers Acceptances, Letter of
Credit Fees or other fees shall, unless otherwise expressly provided
herein, be based on a 365-day year and paid for the actual number of days
elapsed. All computations of interest on the Eurocurrency Rate Loans shall
be based on a 360-day year and paid for the actual number of days elapsed.
Except as otherwise provided in the definition of the term "Interest
Period" with respect to Eurocurrency Rate Loans, whenever a payment
hereunder or under any of the other Loan Documents becomes due on a day
that is not a Business Day, the due date for such payment shall be extended
to the next succeeding Business Day, and interest shall accrue during such
extension. The outstanding amount of the Loans as reflected on the Records
and the Loan Account Records from time to time shall, absent manifest
error, be considered correct and binding on the applicable Borrower unless
within five (5) Business Days after receipt by the applicable Borrower of
any notice from the Agent or any of the Banks of such outstanding amount,
the applicable Borrower shall notify the Agent or such Bank to the
contrary.
5.5. Inability to Determine Eurocurrency Rate. In the event, prior
to the commencement of any Interest Period relating to any Eurocurrency
Rate Loan, the Agent shall determine or be notified by the Majority Banks
that adequate and reasonable methods do not exist for ascertaining the
Eurocurrency Rate or the International Eurocurrency Rate, as the case may
be, that would otherwise determine the rate of
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interest to be applicable to any Eurocurrency Rate Loan during any Interest
Period, the Agent shall forthwith give notice of such determination (which
shall be conclusive and binding on the applicable Borrower and the Banks)
to the Borrowers and the Banks. In such event (a) any Loan Request or
Conversion Request with respect to Eurocurrency Rate Loans shall be
automatically withdrawn and, in the case of Revolving Credit Loans
denominated in Dollars or Canadian Dollars, shall be deemed a request for
Base Rate Loans to be denominated in Dollars or Canadian Dollars, as the
case may be, and in the case of any Eurocurrency Rate Loan denominated in
an Optional Currency, shall be withdrawn, (b) each Eurocurrency Rate Loan
denominated in Dollars or Canadian Dollars will automatically, on the last
day of the then current Interest Period relating thereto, become a Base
Rate Loan and each Eurocurrency Rate Loan denominated in any Optional
Currency will be required to repaid on the last day of the then current
Interest Period relating thereto, and (c) the obligations of the Banks to
make Eurocurrency Rate Loans shall be suspended until the Agent or the
Majority Banks determine that the circumstances giving rise to such
suspension no longer exist, whereupon the Agent or, as the case may be, the
Agent upon the instruction of the Majority Banks, shall so notify the
Borrower and the Banks.
5.6. Illegality. Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or in the
interpretation or application thereof shall make it unlawful for any Bank
to make or maintain Eurocurrency Rate Loans, such Bank shall forthwith give
notice of such circumstances to the Borrowers and the other Banks and
thereupon (a) the commitment of such Bank to make Eurocurrency Rate Loans
or convert Loans of another Type to Eurocurrency Rate Loans or to make
Revolving Credit Loans in any Optional Currency shall forthwith be
suspended and (b) such Bank's Revolving Credit Loans then outstanding as
Eurocurrency Rate Loans, if any, shall (i) if comprising a Revolving Credit
Loan denominated in Dollars, be converted automatically to Base Rate Loans
on the last day of each Interest Period applicable to such Eurocurrency
Rate Loans or within such earlier period as may be required by law and (ii)
if comprising a Revolving Credit Loan denominated in an Optional Currency,
be immediately repaid. Each Borrower hereby severally and not jointly
agrees promptly to pay the Agent for the account of such Bank, upon demand
by such Bank, any additional amounts necessary to compensate such Bank for
any costs incurred by such Bank in making any conversion in accordance with
this ss.5.6, including any interest or fees payable by such Bank to lenders
of funds obtained by it in order to make or maintain its Eurocurrency Rate
Loans hereunder.
5.7. Additional Costs, etc. If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made
upon or otherwise issued to any Bank or the Agent by any central bank or
other fiscal, monetary or other authority (whether or not having the force
of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Credit Agreement, the other Loan Documents, any Letters of Credit, Bankers'
Acceptances, such Bank's Commitment or the Loans (other than taxes based
upon or measured by the income or profits of such Bank or the Agent), or
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(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Bank of the principal of or
the interest on any Loans or any other amounts payable to any Bank or the
Agent under this Credit Agreement or any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or other
similar requirements (whether or not having the force of law) against
assets held by, or deposits in or for the account of, or loans by, bankers'
acceptances issued by, or letters of credit issued by, or commitments of an
office of any Bank, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan
Documents, any Letters of Credit, any Bankers' Acceptances, the Loans, such
Bank's Commitment, or any class of loans, letters of credit or commitments
of which any of the Loans or such Bank's Commitment forms a part, and the
result of any of the foregoing is
(i) to increase the cost to any Bank of making, funding,
issuing, renewing, extending or maintaining any of the Loans or such
Bank's Commitment or any Bankers' Acceptances or Letter of Credit,
or
(ii) to reduce the amount of principal, interest,
Reimbursement Obligation or other amount payable to such Bank or the
Agent hereunder on account of such Bank's Commitment, any Letter of
Credit, any Bankers' Acceptance or any of the Loans, or
(iii) to require such Bank or the Agent to make any payment
or to forego any interest or Reimbursement Obligation or other sum
payable hereunder, the amount of which payment or foregone interest
or Reimbursement Obligation or other sum is calculated by reference
to the gross amount of any sum receivable or deemed received by such
Bank or the Agent from the Borrowers hereunder,
then, and in each such case, each Borrower will, upon demand made by such
Bank or (as the case may be) the Agent at any time and from time to time
and as often as the occasion therefor may arise, pay to such Bank or the
Agent such additional amounts as will be sufficient to compensate such Bank
or the Agent for such additional cost, reduction, payment or foregone
interest or Reimbursement Obligation or other sum applicable to such
Borrower's Loans, Bankers' Acceptances, Reimbursement Obligations and
Unpaid Reimbursement Obligations hereunder. Each Bank shall allocate such
cost increases among its customers in good faith and on an equitable basis.
5.8. Capital Adequacy. If after the date hereof any Bank or the
Agent determines that (a) the adoption of or change in any law,
governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) regarding capital requirements for banks or
bank holding companies or any change in the interpretation or application
thereof by a court or governmental authority with appropriate jurisdiction,
or (b) compliance by such Bank or the Agent or any corporation controlling
such Bank or the Agent with any law, governmental rule, regulation, policy,
guideline or directive
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(whether or not having the force of law) of any such entity regarding
capital adequacy, has the effect of reducing the return on such Bank's or
the Agent's commitment with respect to any Loans to a level below that
which such Bank or the Agent could have achieved but for such adoption,
change or compliance (taking into consideration such Bank's or the Agent's
then existing policies with respect to capital adequacy and assuming full
utilization of such entity's capital) by any amount deemed by such Bank or
(as the case may be) the Agent to be material, then such Bank or the Agent
may notify the Company of such fact. To the extent that the amount of such
reduction in the return on capital is not reflected in the Base Rate, the
Company and such Bank shall thereafter attempt to negotiate in good faith,
within thirty (30) days of the day on which the Company receives such
notice, an adjustment payable hereunder that will adequately compensate
such Bank in light of these circumstances. If the Company and such Bank are
unable to agree to such adjustment within thirty (30) days of the date on
which the Company receives such notice, then commencing on the date of such
notice (but not earlier than the effective date of any such increased
capital requirement), the fees payable hereunder shall increase by an
amount that will, in such Bank's reasonable determination, provide adequate
compensation. Each Bank shall allocate such cost increases among its
customers in good faith and on an equitable basis.
5.9. Certificate. A certificate setting forth any additional amounts
payable pursuant to ss.ss.5.7 or 5.8 and a brief explanation of such
amounts which are due, submitted by any Bank or the Agent to the Borrowers,
shall be conclusive, absent manifest error, that such amounts are due and
owing.
5.10. Indemnity. Each Borrower agrees to indemnify each Bank and to
hold each Bank harmless from and against any loss, cost or expense that
such Bank may sustain or incur as a consequence of (a) default by such
Borrower in payment of the principal amount of or any interest on any
Eurocurrency Rate Loans as and when due and payable, including any such
loss or expense arising from interest or fees payable by such Bank to
lenders of funds obtained by it in order to maintain its Eurocurrency Rate
Loans, (b) default by such Borrower in making a borrowing or conversion
after such Borrower has given (or is deemed to have given) a Loan Request
or a Conversion Request relating thereto in accordance with ss.2.6, ss.2.7
or 3.5.2 or (c) the making of any payment of a Eurocurrency Rate Loan or
the making of any conversion of any such Loan to a Base Rate Loan on a day
that is not the last day of the applicable Interest Period with respect
thereto, including interest or fees payable by such Bank to lenders of
funds obtained by it in order to maintain any such Loans.
5.11. Interest After Default.
5.11.1. Overdue Amounts. Overdue principal and (to the extent
permitted by applicable law) interest on the Loans and all other
overdue amounts payable hereunder or under any of the other Loan
Documents shall bear interest compounded monthly and payable on
demand at a rate per annum equal to two percent (2%) above the
highest rate of interest otherwise then applicable to such Loans
pursuant to ss.2.5 or ss.3.5.1, as applicable, until such amount
shall be paid in full (after as well as before judgment).
5.11.2. Amounts Not Overdue. During the continuance of an
Event of Default under ss.13.1(c) as it relates to ss.10, the
principal of the Loans not overdue
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shall, until such Default or Event of Default has been cured or
remedied or such Default or Event of Default has been waived by the
Majority Banks pursuant to ss.26, bear interest at a rate per annum
equal to two percent (2%) above the highest rate of interest
otherwise applicable to such Revolving Credit Loans pursuant to
ss.2.5 and the Term Loans pursuant to ss.3.5.1.
5.12. European Monetary Union.
(a) If, as a result of the implementation of the EMU,
(i) any Optional Currency ceases to be lawful currency of the
nation issuing such Optional Currency and is replaced by the Euro as
the lawful currency of such nation, or
(ii) any Optional Currency and the Euro are at the same time
recognized by the central bank or comparable authority of the nation
issuing such Optional Currency as lawful currency of such nation and
the Agent or the Majority Banks shall so request in notice delivered
to the Company,
then:
(A) any amount payable hereunder by the Banks to the
Borrowers, or by any Borrower to the Banks, in such Optional
Currency shall instead be payable in the Euro and the amount so
payable shall be determined by translating the amount payable in
such Optional Currency to the Euro at the exchange rate recognized
by the European Central Bank for the purposes of implementing the
EMU,
(B) if so specified in the notice delivered under the
foregoing clause (ii) or in any subsequent notice referring to such
clause, the Optional Currency recognized at the same time as the
Euro shall no longer be available as an Optional Currency for
purposes of this Credit Agreement, effective at the expiration of
the period of five Business Days following such Borrower's receipt
of such notice. Such notice shall apply to (1) any Loan to be made
or Letter of Credit to be issued, extended or renewed on or after
the expiration of such five Business Day period or (2) any Loan
outstanding at the end of such five Business Day period and
denominated in such Optional Currency, following the expiration of
the Interest Period applicable to such outstanding Loan at the time
of the expiration of such five Business Day period.
(b) The Agent may in its discretion by notice to the Banks
and the Company:
(i) modify the definition of "Business Day" to include a,
principal financial center of any participating member state where
Loans to bear interest by reference to the Euro Interbank Rate are
funded, or any amounts are or are to be paid in Euros;
(ii) designate an account or accounts at a bank in a
principal financial center of any participating member state for
receiving payments to the
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Agent, whether for the account of the Agent or for the account of
the Banks, in immediately available funds, in Euros or for
disbursing Loans to bear interest by reference to the Euro Interbank
Rate;
(iii) designate the date or time for fixing the Euro
Interbank Rate for any Interest Period to be consistent with any
practice or convention in the applicable interbank market;
(iv) designate the fraction for rounding upwards quotations
by the Reference Bank used to determine the Euro Interbank Rate, to
be, in the reasonable judgment of the Agent, as nearly as may be,
consistent with the rounding of quotations by the Reference Bank for
other Optional Currencies and also consistent with any practice or
convention in the applicable interbank market;
(v) designate other mechanics for fixing the Euro Interbank
Rate to be, in the reasonable judgment of the Agent, as nearly as
may be, consistent with the mechanics for determining rates for
other Optional Currencies (e.g. by reference to Reuters screen or
page) and also consistent with any practice or convention in the
applicable interbank market (e.g. by reference to a comparable
Reuters screen or page for the Euro);
(vi) designate the basis of accrual of interest, fees or
other amounts to be consistent with any practice or convention in
the applicable interbank market with respect to amounts calculated
or payable in Euros;
(vii) where this Credit Agreement specifies an amount to be
paid in an Optional Currency that is, under the terms of this
Section, to be paid in Euros, designate a convenient amount in Euros
to account for de minimis rounding.
(c) Section 5.5 of this Credit Agreement shall not apply in
the event that an Optional Currency is not available or an interbank
offered rate may not be quoted for such Optional Currency, solely
because such Optional Currency ceases to be lawful currency of the
nation issuing such Optional Currency and is replaced by the Euro as
the lawful currency of such nation, so long as the Euro is available
as an Optional Currency and the Euro Interbank Rate may be quoted
for the Euro.
(d) The Borrowers agree, at the request of any Bank, to
compensate such Bank for any reasonable loss, cost, expense or
reduction in return that shall be incurred or sustained by such Bank
as a result of the implementation of the EMU and that would not have
been incurred or sustained but for the transactions provided for
herein. A certificate of a Bank setting forth (i) the amount or
amounts necessary to compensate such Bank, (ii) a description of the
nature of the loss or expense sustained or incurred by such Bank as
a consequence thereof and (iii) a reasonably detailed explanation of
the calculation thereof shall be delivered to the Company and shall
be conclusive absent manifest error. The Borrowers shall pay such
Bank the amount shown as due on any such certificate within 10 days
after receipt thereof. Each Bank shall allocate such cost increases
among its customers in good faith and on an equitable basis.
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5.13. Concerning Joint and Several Liability of the Domestic
Borrowers.
(a) Each of the Domestic Borrowers is accepting joint and
several liability hereunder in consideration of the financial
accommodation to be provided by the Banks under this Agreement, for
the mutual benefit, directly and indirectly, of each of the Domestic
Borrowers and in consideration of the undertakings of each of the
Domestic Borrowers to accept joint and several liability for the
obligations of each of them.
(b) Each of the Domestic Borrowers jointly and severally
hereby irrevocably and unconditionally accepts, not merely as a
surety but also as a co-debtor, joint and several liability with the
other Domestic Borrowers with respect to the payment and performance
of all of the Obligations arising under this Agreement, it being the
intention of the parties hereto that all the Obligations shall be
the joint and several obligations of each of the Domestic Borrowers
without preferences or distinction among them.
(c) If and to the extent that any of the Domestic Borrowers
shall fail to make any payment with respect to any of the
obligations hereunder as and when due or to perform any of such
obligations in accordance with the terms thereof, then in each such
event, the other Domestic Borrowers will make such payment with
respect to, or perform, such obligation.
(d) The obligations of each Domestic Borrower under the
provisions of this ss.5.13 constitute full recourse obligations of
such Domestic Borrower, enforceable against it to the full extent of
its properties and assets, irrespective of the validity, regularity
or enforceability of this Agreement or any other circumstances
whatsoever.
(e) Except as otherwise expressly provided herein, each
Domestic Borrower hereby waives notice of acceptance of its joint
and several liability, notice of any and all Loans made under this
Agreement, notice of occurrence of any Event of Default, or of any
demand for any payment under this Agreement, notice of any action at
any time taken or omitted by the Banks under or in respect of any of
the Obligations hereunder, any requirement of diligence and,
generally, all demands, notices and other formalities of every kind
in connection with this Agreement. Each Domestic Borrower hereby
assents to, and waives notice of, any extension or postponement of
the time for the payment of any of the Obligations hereunder, the
acceptance of any partial payment thereon, any waiver, consent or
other action or acquiescence by the Banks at any time or times in
respect of any default by any Domestic Borrower in the performance
or satisfaction of any term, covenant, condition or provision of
this Agreement, any and all other indulgences whatsoever by the
Banks in respect of any of the Obligations hereunder, and the
taking, addition, substitution or release, in whole or in part, at
any time or times, of any security for any of such Obligations or
the addition, substitution or release, in whole or in part, of any
Borrower. Without limiting the generality of the foregoing, each
Domestic Borrower assents to any other action or delay in acting or
failure to act on the part of the Banks, including, without
limitation, any failure strictly or diligently to assert any right
or to pursue any remedy or to comply fully with applicable laws or
regulations thereunder
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which might, but for the provisions of this ss.5.13, afford grounds
for terminating, discharging or relieving such Domestic Borrower, in
whole or in part, from any of its obligations under this ss.5.13, it
being the intention of each Domestic Borrower that, so long as any
of the Obligations hereunder remain unsatisfied, the obligations of
such Domestic Borrower under this ss.5.13 shall not be discharged
except by performance and then only to the extent of such
performance. The obligations of each Domestic Borrower under this
ss.5.13 shall not be diminished or rendered unenforceable by any
winding up, reorganization, arrangement, liquidation, reconstruction
or similar proceeding with respect to any reconstruction or similar
proceeding with respect to any Domestic Borrower or any Bank. The
joint and several liability of the Domestic Borrowers hereunder
shall continue in full force and effect notwithstanding any
absorption, merger, amalgamation or any other change whatsoever in
the name, membership, constitution or place of formation of any
Domestic Borrower or any Bank.
(f) The provisions of this ss.5.13 are made for the benefit
of the Banks and their successors and assigns, and may be enforced
by them from time to time against any of the Domestic Borrowers as
often as occasion therefor may arise and without requirement on the
part of the Banks first to marshall any of their claims or to
exercise any of their rights against any other Domestic Borrower or
to exhaust any remedies available to them against the other Domestic
Borrowers or to resort to any other source or means of obtaining
payment of any of the Obligations hereunder or to elect any other
remedy. The provisions of this ss.5.13 shall remain in effect until
all the Obligations hereunder shall have been paid in full or
otherwise fully satisfied. If at any time, any payment, or any part
thereof, made in respect of any of the Obligations, is rescinded or
must otherwise be restored or returned by any of the Banks upon the
insolvency, bankruptcy or reorganization of the Domestic Borrowers,
or otherwise, the provisions of this ss.5.13 will forthwith be
reinstated in effect, as though such payment had not been made.
6. COLLATERAL SECURITY AND GUARANTIES.
6.1. Security of Borrowers. The Obligations shall be secured by a
perfected first priority security interest (subject only to Permitted Liens
entitled to priority under applicable law) in (a) all of the assets of the
Domestic Borrowers, whether now owned or hereafter acquired, with certain
exceptions as agreed to by the Agent, pursuant to the terms of the Security
Documents to which such Domestic Borrowers are parties, including, without
limitation, a pledge by each Domestic Borrower of 100% of the capital stock
of each of its direct Domestic Subsidiaries and 66% of the capital stock of
each of its direct Foreign Subsidiaries and (b) all of the assets of the
Foreign Borrowers, with certain exceptions as agreed to by the Agent,
whether now owned or hereafter acquired, pursuant to the terms of the
Security Documents to which each such Foreign Borrower is a party, but only
to secure (other than in the case of Rival Canada) the joint and several
Obligations of each Foreign Borrower.
6.2. Guaranties and Security of Subsidiaries. The Obligations shall
also be guaranteed pursuant to the terms of the Guaranty, and the
Obligations of each Foreign Borrower shall also be guaranteed by the
Domestic Borrowers pursuant to ss.6.3, and by each other Foreign Borrower
(other than Rival Canada) pursuant to the terms of the
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Foreign Guarantees. The obligations of the Guarantors under the Guaranty
and of the Foreign Borrowers (other than Rival Canada) under the Foreign
Guarantees shall be in turn secured by a perfected first priority security
interest (subject only to Permitted Liens entitled to priority under
applicable law) in all of the assets of each such Guarantor and Foreign
Borrower (other than Rival Canada), as the case may be, with certain
exceptions as agreed to by the Agent, whether now owned or hereafter
acquired, pursuant to the terms of the Security Documents to which such
Guarantor and Foreign Borrower (other than Rival Canada), as the case may
be, is a party, including, without limitation, a pledge by such Guarantor
of 100% of the capital stock or other equity interest of each Domestic
Subsidiary of such Guarantor and 66% of the capital stock or other equity
interest of each Foreign Subsidiary of such Guarantor; provided that each
Foreign Borrower shall pledge 100% of the capital stock of its Subsidiaries
to secure the Obligations solely of the Foreign Borrowers.
6.3. Guaranty by the Domestic Borrowers of the Obligations.
6.3.1. Guaranty. For value received and hereby acknowledged
and as an inducement to the Banks and the Agent to make the Loans
and Letters of Credit available to the Borrowers, the Domestic
Borrowers hereby unconditionally and irrevocably guarantee (a) the
full punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of the Foreign
Borrowers now or hereafter existing whether for principal, interest,
fees, expenses or otherwise, and (b) the strict performance and
observance by the Foreign Borrowers of all agreements, warranties
and covenants applicable to the Foreign Borrowers in the Loan
Documents and (c) the obligations of the Foreign Borrowers under the
Loan Documents (such Obligations collectively being hereafter
referred to as the "Guaranteed Obligations").
6.3.2. Guaranty Absolute. The Domestic Borrowers guarantee
that the Guaranteed Obligations will be paid strictly in accordance
with the terms hereof, regardless of any law, regulation or order
now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of the Banks with respect thereto. The joint and
several liability of the Domestic Borrowers under this guaranty with
regard to the Guaranteed Obligations of the Foreign Borrowers shall
be absolute and unconditional irrespective of:
(a) the Foreign Borrowers' lack of authorization, execution,
validity or enforceability of this Credit Agreement and any
amendment hereof (with regard to such Guaranteed Obligations), or
any other obligation, agreement or instrument relating thereto (it
being agreed by the Domestic Borrowers that the Guaranteed
Obligations shall not be discharged prior to the final and complete
satisfaction of all of the Obligations of the Foreign Borrowers) or
any failure to obtain any necessary governmental consent or
approvals or necessary third party consents or approvals;
(b) the Agent's or any Bank's exercise or enforcement of, or
failure or delay in exercising or enforcing, legal proceedings to
collect the Obligations or the Guaranteed Obligations or any power,
right or remedy with respect to any of the Obligations or the
Guaranteed Obligations, including (i) any suspension of
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the Agent or any Bank's right to enforce against the Foreign
Borrowers of the Guaranteed Obligations, or (ii) any change in the
time, manner or place of payment of, or in any other term of, all or
any of the Guaranteed Obligations of the Foreign Borrowers or any
other amendment or waiver of or any consent to departure from this
Credit Agreement or the other Loan Documents (with regard to such
Guaranteed Obligations) or any other agreement or instrument
governing or evidencing any of the Guaranteed Obligations;
(c) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed
Obligations of the Foreign Borrowers;
(d) any change in ownership of the Foreign Borrowers;
(e) any acceptance of any partial payment(s) from the Foreign
Borrowers;
(f) any insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition, assignment for the benefit of creditors,
appointment of a receiver or trustee for all or any part of the
Foreign Borrowers' assets;
(g) any assignment, participation or other transfer or
reallocation, in whole or in part (whether or not subject to a
conversion of a loan of one Type into a loan of another Type or a
conversion from one currency to another), of the Agent's or any
Bank's interest in and rights under this Credit Agreement or any
other Loan Document, or of the Agent or any Bank's interest in the
Obligations or the Guaranteed Obligations;
(h) any cancellation, renunciation or surrender of any
pledge, guaranty or any debt instrument evidencing the Obligations
or the Guaranteed Obligations;
(i) the Agent's or any Bank's vote, claim, distribution,
election, acceptance, action or inaction in any bankruptcy or
reorganization case related to the Obligations or the Guaranteed
Obligations; or
(j) any other action or circumstance, other than payment,
which might otherwise constitute a defense available to, or a
discharge of, the Foreign Borrowers or the Domestic Borrowers in
respect of the Guaranteed Obligations (other than the defense of
payment in full in cash).
This guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any
Guaranteed Obligation is rescinded or must otherwise be returned by
the Agent or any Bank upon the insolvency, bankruptcy or
reorganization of the Foreign Borrowers or otherwise, all as though
such payment had not been made.
6.3.3. Effectiveness; Enforcement. The guaranty hereunder
shall be effective and shall be deemed to be made with respect to
each Loan and each Letter of Credit, as of the time it is made or
accepted, as applicable. No
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invalidity, irregularity or unenforceability by reason of any
bankruptcy or similar law, or any law or order of any government or
agency thereof purporting to reduce, amend or otherwise affect any
liability of the Foreign Borrowers, and no defect in or
insufficiency or want of powers of the Foreign Borrowers or
irregular or improperly recorded exercise thereof, shall impair,
affect, be a defense to or claim against such guaranty. The guaranty
hereunder is a continuing guaranty and shall (a) survive any
termination of this Credit Agreement, and (b) remain in full force
and effect until payment in full of, and performance of, all
Guaranteed Obligations and all other amounts payable under the
guaranty hereunder, all the Commitments shall have expired and been
terminated, all of the Letters of Credit shall have expired or been
terminated and all lending and other credit commitments of the Banks
in respect thereof have terminated. The guaranty under this Credit
Agreement is made for the benefit of the Agent and the Banks and
their successors and assigns, and may be enforced from time to time
as often as occasion therefor may arise and without requirement on
the part of the Agent or the Banks first to exercise any rights
against the Foreign Borrowers, or to resort to any other source or
means of obtaining payment of any of the said Obligations or to
elect any other remedy.
6.3.4. Waiver. The Domestic Borrowers hereby waive
promptness, diligence, protest, notice of protest, all suretyship
defenses, notice of acceptance and any other notice with respect to
any of the Guaranteed Obligations and this guaranty and any
requirement that the Agent or any Bank secure, perfect or protect
any security interest or lien on any property subject thereto or
exhaust any right or take any action against the Foreign Borrowers
or any other person or any collateral. The Domestic Borrowers also
irrevocably waive, to the fullest extent permitted by law, all
defenses which at any time may be available to them in respect of
the Guaranteed Obligations by virtue of any statute of limitations,
valuation, stay, moratorium law or similar law now or hereinafter in
effect and all suretyship defenses generally.
6.3.5. Subordination; Subrogation. Until the payment and
performance in full of all the Obligations, the Domestic Borrowers
shall not exercise and hereby waive any rights against the Foreign
Borrowers as a result of payment by the Domestic Borrowers
hereunder, by way of subrogation, reimbursement, restitution,
contribution or otherwise, and the Company will not prove any claim
in competition with the Agent or any Bank in respect of any payment
hereunder in bankruptcy, insolvency, or reorganization proceedings
of any nature; the Domestic Borrowers will not claim any set-off,
recoupment or counterclaim against the Foreign Borrowers in respect
of any liability of the Domestic Borrowers to the Foreign Borrowers;
and the Domestic Borrowers waive any benefit of and any right to
participate in any collateral which may be held by any Bank or the
Agent. The Domestic Borrowers agree that, after the occurrence and
during the continuance of any Default or Event of Default, the
Domestic Borrowers will not demand, sue for or otherwise attempt to
collect any Indebtedness of the Foreign Borrowers to the Domestic
Borrowers until all of the Obligations of the Foreign Borrowers
shall have been paid in full. If, notwithstanding the foregoing
sentence, the Domestic Borrowers shall collect, enforce or receive
any amounts in respect of such indebtedness in violation of the
foregoing sentence while any Obligations of the Foreign Borrowers
are still
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outstanding, such amounts shall be collected, enforced and received
by the Domestic Borrowers as trustee for the Banks and the Agent and
be paid over to the Agent, for the benefit of the Banks and the
Agent on account of the Obligations of the Foreign Borrowers without
affecting in any manner the liability of the Domestic Borrowers
under the other provisions hereof. The provisions of this section
shall survive the expiration or termination of the Credit Agreement
and the other Loan Documents.
6.3.6. Payments. The Domestic Borrowers shall pay the
Guaranteed Obligations in the currency in which such Obligation is
payable by the Foreign Borrowers and all payments by the Domestic
Borrowers hereunder shall be made without setoff or counterclaim and
shall be free and clear of and without deduction for any foreign or
domestic taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any
political subdivision thereof or taxing or other authority therein
unless the Foreign Borrowers are required by law to make such
deduction or withholding. Except as otherwise expressly provided in
this ss.6.3.6, if any such obligation is imposed upon the Domestic
Borrowers or the Foreign Borrowers with respect to any amounts
payable by them hereunder or under any of the Loan Documents, the
Domestic Borrowers will pay to the Agent for the account of the
Banks or, as the case may be the Agent, on the date on which such
amount is due and payable hereunder or under such other Loan
Documents, such additional amount in Dollars as shall be necessary
to enable the Banks or the Agent to receive the same net amount
which the Banks or the Agent would have received on such due date
had not such obligation been imposed on the Domestic Borrowers or
the Foreign Borrowers.
6.3.7. Receipt of Information. The Domestic Borrowers
acknowledge and confirm that the Domestic Borrowers themselves have
established their own adequate means of obtaining from the Foreign
Borrowers on a continuing basis all information desired by the
Domestic Borrowers concerning the financial condition of the Foreign
Borrowers and that the Domestic Borrowers will look to the Foreign
Borrowers and not to the Agent or any Bank in order for the Domestic
Borrowers to keep adequately informed of changes in the Foreign
Borrowers' financial condition.
7. REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants to the Banks and the Agent as
follows:
7.1. Corporate Authority.
7.1.1. Incorporation; Good Standing. Each of the Borrowers
and its Subsidiaries (a) is a corporation (or similar business
entity) duly organized, validly existing and in good standing (or
the equivalent status for each Foreign Subsidiary) under the laws of
its state, province or country of incorporation or formation, (b)
has all requisite corporate or similar power to own its property and
conduct its business as now conducted and as presently contemplated,
and (c) is in good standing as a foreign corporation (or similar
business entity) and is duly
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authorized to do business in each jurisdiction where such
qualification is necessary except where a failure to be so qualified
would not have a Material Adverse Effect.
7.1.2. Authorization. The execution, delivery and performance
of this Credit Agreement and the other Loan Documents to which the
Borrowers or any of their Subsidiaries is or is to become a party
and the transactions contemplated hereby and thereby (a) are within
the corporate (or similar) authority of such Person, (b) have been
duly authorized by all necessary corporate (or similar
organizational) proceedings, (c) do not conflict with or result in
any breach or contravention of any provision of law, statute, rule
or regulation to which the Borrowers or any of their Subsidiaries is
subject or any judgment, order, writ, injunction, license or permit
applicable to the Borrowers or any of their Subsidiaries and (d) do
not conflict with any provision of the corporate charter or bylaws
of, or the Subordinated Debt Documents or any agreement or other
instrument binding upon, the Borrowers or any of their Subsidiaries.
7.1.3. Enforceability. The execution and delivery of this
Credit Agreement and the other Loan Documents to which any of the
Borrowers or any of their Subsidiaries is or is to become a party
will result in valid and legally binding obligations of such Person
enforceable against it in accordance with the respective terms and
provisions hereof and thereof, except as enforceability is limited
by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors'
rights and except to the extent that availability of the remedy of
specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be
brought.
7.2. Governmental Approvals. The execution, delivery and performance
by the Borrowers and any of their Subsidiaries of this Credit Agreement and
the other Loan Documents to which such Borrower or any of its Subsidiaries
is or is to become a party and the transactions contemplated hereby and
thereby (including, but not limited to the making by the Borrowers of any
borrowings contemplated by this Credit Agreement or the obtaining by the
Borrowers of any Letters of Credit) do not require the approval, consent,
order, authorization or license by, or giving of notice to, or taking of
any other action with respect to, any governmental agency or authority of
any jurisdiction, or other fiscal, monetary or other authority, under any
provisions of any laws or governmental rules, regulations, orders, or
decrees of any jurisdiction or the central bank of any jurisdiction or
other fiscal, monetary or other authority, under any provision of any laws
or governmental rules, regulations, orders or decrees of any jurisdiction
applicable to or binding on any Borrower, other than those already
obtained.
7.3. Title to Properties; Leases. Except as indicated on Schedule
7.3 hereto, the Borrowers and their Subsidiaries own all of the assets
reflected in the Historical Pro Forma Results of the Borrowers and their
Subsidiaries as at December 31, 1998 or acquired since that date (except
property and assets sold or otherwise disposed of in the ordinary course of
business since that date), subject to no rights of others, including any
mortgages, leases, conditional sales agreements, title retention
agreements, liens or other encumbrances except Permitted Liens.
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7.4. Financial Statements and Projections.
7.4.1. Fiscal Year. The Borrowers and each of their
Subsidiaries have a fiscal year which is the twelve months ending on
December 31 of each calendar year, except Rival and its
Subsidiaries, who each have a fiscal year which is the twelve months
ending on June 30 of each calendar year. After the Closing Date, all
of the Borrowers and each of their Subsidiaries shall have a fiscal
year which is the twelve months ending on December 31 of each
calendar year.
7.4.2. Financial Statements. There has been furnished to each
of the Banks the Historical Pro Forma Results of the Company and its
Subsidiaries as at December 31, 1998, and a pro forma historical
consolidated statement of income of the Company and its Subsidiaries
for the three, six and nine month periods ending March 31, 1999.
Such balance sheet and statement of income have been prepared in
accordance with generally accepted accounting principles, subject to
annual year-end audit adjustments, and fairly present the financial
condition of the Company and its Subsidiaries as at the close of
business on the dates thereof and the results of operations for the
fiscal periods then ended. There are no contingent liabilities of
the Company or any of its Subsidiaries as of such date involving
material amounts, known to the officers of the Company, which were
not disclosed in such balance sheet and the notes related thereto.
7.4.3. Projections. The projections of the annual operating
budgets of the Company and its Subsidiaries on a consolidated basis,
balance sheets and cash flow statements for the 1999 to 2004 fiscal
years have been delivered to the Agent and the Banks on or prior to
the Closing Date. The projections were based when made upon
reasonable estimates and assumptions and as of the Closing Date
reflect the reasonable estimates of the Company and its Subsidiaries
of the results of operation and other information projected therein,
it being understood that the projections are not guaranties of
results and that the actual results may vary from the projections
and such variations may be material.
7.4.4. Solvency. The Company and its Subsidiaries, on a
consolidated and consolidating basis, both before and after giving
effect to the transactions contemplated by this Credit Agreement and
the other Loan Documents (a) are solvent, (b) have assets having a
fair value in excess of their liabilities, (c) have assets having a
fair value in excess of the amount required to pay their liabilities
on existing debts as such debts become absolute and matured, and (d)
have, and expect to continue to have, access to adequate capital for
the conduct of their business and the ability to pay their debts
from time to time incurred in connection with the operation of their
business as such debts mature.
7.5. No Material Changes, etc. Since the Balance Sheet Date there
has occurred no materially adverse change in the financial condition or
business of the Company and its Subsidiaries as shown on or reflected in
the pro forma historical consolidated balance sheet of the Company and its
Subsidiaries as at the Balance Sheet Date, or the consolidated statement of
income for the fiscal year then ended, other than changes in the ordinary
course of business that have not had any Material Adverse Effect. Since the
Balance Sheet Date, the Company has not made any Distributions, except as
expressly
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permitted by this Credit Agreement and Rival has not made any Distributions
except as disclosed or provided for in the Tender Offer Documents. There
have been no "Material Adverse Effects" (as such term is defined in the
Merger Agreement).
7.6. Franchises, Patents, Copyrights, etc. Each of the Borrowers and
their Subsidiaries possesses all franchises, patents, copyrights,
trademarks, trade names, licenses and permits, and rights in respect of the
foregoing, adequate for the conduct of its business substantially as now
conducted without known conflict with any rights of others, except where
such nonpossession or conflict, as the case may be, could not reasonably be
expected to have a Material Adverse Effect.
7.7. Litigation.
There is no restraining order, injunction or shareholder derivative
suit contesting, or filed in connection with the Merger or the Tender
Offer. Except as set forth in Schedule 7.7 hereto, there are no actions,
suits, proceedings or investigations of any kind pending or threatened
against any of the Borrowers or any of their Subsidiaries (including, prior
to the Closing Date, Rival and its Subsidiaries) before any court, tribunal
or administrative agency or board that, if adversely determined, might,
either in any case or in the aggregate, have a Material Adverse Effect, or
shall result in any substantial liability not adequately covered by
insurance, or for which adequate reserves are not maintained on the
consolidated balance sheet of the Company and its Subsidiaries, or which
question the validity of this Credit Agreement or any of the other Loan
Documents, or any action taken or to be taken pursuant hereto or thereto.
7.8. No Materially Adverse Contracts, etc. The Borrowers and their
Subsidiaries are not subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or
is expected in the future to have a Material Adverse Effect. Neither the
Borrowers nor any of their Subsidiaries is a party to any contract or
agreement that has or is expected, in the judgment of the Company's
officers, to have a Material Adverse Effect.
7.9. Compliance with Other Instruments, Laws, etc. Neither any
Borrower nor any of its Subsidiaries is in violation of any provision of
its charter documents, bylaws, or any agreement or instrument to which it
may be subject or by which it or any of its properties may be bound or any
decree, order, judgment, statute, license, rule or regulation, in any of
the foregoing cases in a manner that could reasonably be expected to have a
Material Adverse Effect.
7.10. Tax Status. Except as set forth on Schedule 7.10 hereto, each
of the Borrowers and their Subsidiaries (a) have made or filed all federal,
provincial, state and foreign income and all other tax returns, reports and
declarations required by any jurisdiction to which any of them is subject,
(b) have paid all taxes and other governmental assessments and charges
shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and by appropriate proceedings
and (c) have set aside on their books provisions reasonably adequate for
the payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid taxes in
any material amount claimed to be due from any of the Borrowers or their
Subsidiaries by the taxing authority of any jurisdiction, and the officers
of the Borrowers know of no basis for any such claim.
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7.11. No Event of Default. No Default or Event of Default has
occurred and is continuing.
7.12. Holding Company and Investment Company Acts. Neither the
Borrowers nor any of their Subsidiaries is a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935; nor is it an "investment company", or an "affiliated
company" or a "principal underwriter" of an "investment company", as such
terms are defined in the Investment Company Act of 1940.
7.13. Absence of Financing Statements, etc. Except with respect to
Permitted Liens, there is no financing statement, financing charge
statement, security agreement, chattel mortgage, real estate mortgage or
other document filed or recorded with any filing records, registry or other
public office, that purports to cover, affect or give notice of any present
or possible future lien on, or security interest in, any assets or property
of any of the Borrowers or any of their Subsidiaries or any rights relating
thereto.
7.14. Perfection of Security Interest. Except as otherwise provided
in ss.11.9, all filings, assignments, pledges and deposits of documents or
instruments have been made or provided for and all other actions have been
taken that are necessary or advisable, under applicable law, to establish
and perfect the Agent's security interest in the Collateral. The Collateral
and the Agent's rights with respect to the Collateral are not subject to
any setoff, claims, withholdings or other defenses. The Company or a
Subsidiary of the Company party to one of the Security Agreements is the
owner of the Collateral free from any lien, security interest, encumbrance
and any other claim or demand, except for Permitted Liens.
7.15. Certain Transactions. Except as set forth on Schedule 7.15
hereto and except for arm's length transactions pursuant to which the
Borrowers or any of their Subsidiaries makes payments in the ordinary
course of business upon terms no less favorable than such Borrower or such
Subsidiary could obtain from third parties, none of the officers,
directors, or employees of the Borrowers or any of their Subsidiaries is
presently a party to any transaction with the Borrowers or any of their
Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of
real or personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of the
Borrowers, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
7.16. Employee Benefit Plans. Except as otherwise expressly
disclosed in Schedule 7.16 hereto:
7.16.1. In General. Each Employee Benefit Plan and each
Guaranteed Pension Plan has been maintained and operated in
compliance in all material respects with applicable law including
the provisions of ERISA and, to the extent applicable, the Code,
including but not limited to the provisions thereunder respecting
prohibited transactions and the bonding of fiduciaries and other
persons handling plan funds as required by ss.412 of ERISA, except
to the extent
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that noncompliance would not have a Material Adverse Effect. The
Company has heretofore delivered to the Agent the most recently
completed annual report, Form 5500, with all required attachments,
and actuarial statement required to be submitted under ss.103(d) of
ERISA, with respect to each Guaranteed Pension Plan.
7.16.2. Terminability of Welfare Plans. No Employee Benefit
Plan, which is an employee welfare benefit plan within the meaning
of ss.3(l) or ss.3(2)(B) of ERISA, provides benefit coverage
subsequent to termination of employment, except as required by Title
I, Part 6 of ERISA or the applicable state insurance laws. The
Borrowers may terminate each such Plan at any time (or at any time
subsequent to the expiration of any applicable bargaining agreement)
in the discretion of the Borrowers without liability to any Person
other than for claims arising prior to termination.
7.16.3. Guaranteed Pension Plans. Each contribution required
to be made to a Guaranteed Pension Plan, whether required to be made
to avoid the incurrence of an accumulated funding deficiency, the
notice or lien provisions of ss.302(f) of ERISA, or otherwise, has
been timely made. No waiver of an accumulated funding deficiency or
extension of amortization periods has been received with respect to
any Guaranteed Pension Plan, and neither the Borrowers nor any ERISA
Affiliate is obligated to or has posted security in connection with
an amendment to a Guaranteed Pension Plan pursuant to ss.307 of
ERISA or ss.401(a)(29) of the Code. No liability to the PBGC (other
than required insurance premiums, all of which have been paid) has
been incurred by the Borrowers or any ERISA Affiliate with respect
to any Guaranteed Pension Plan and there has not been any ERISA
Reportable Event (other than an ERISA Reportable Event as to which
the requirement of thirty (30) days notice has been waived), or any
other event or condition which presents a material risk of
termination of any Guaranteed Pension Plan by the PBGC. Based on the
latest valuation of each Guaranteed Pension Plan (which in each case
occurred within twelve months of the date of this representation),
and on the actuarial methods and assumptions employed for that
valuation, the aggregate benefit liabilities of all such Guaranteed
Pension Plans within the meaning of ss.4001 of ERISA did not exceed
the aggregate value of the assets of all such Guaranteed Pension
Plans, disregarding for this purpose the benefit liabilities and
assets of any Guaranteed Pension Plan with assets in excess of
benefit liabilities.
With respect to Rival Canada, all pension plans are duly
registered where required by, and are in good standing under, all
applicable laws including the Income Tax Act (Canada) and there are
no actions, claims or proceedings pending or threatened (other than
routine claims for benefits) relating to any of the pension plans.
All required employer and employee contributions and premiums under
the pension plans have been made, the pension plans are fully funded
on an ongoing and wind-up basis in accordance with applicable laws
and with the actuarial methods and assumptions used in the most
recent actuarial reports therefor, and there have been no surplus
withdrawals or contribution holidays except as permitted by law and
the terms of the pension plans.
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7.16.4. Multiemployer Plans. Neither the Borrowers nor any
ERISA Affiliate has incurred any material liability (including
secondary liability) to any Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan under
ss.4201 of ERISA or as a result of a sale of assets described in
ss.4204 of ERISA. Neither the Borrowers nor any ERISA Affiliate has
been notified that any Multiemployer Plan is in reorganization or
insolvent under and within the meaning of ss.4241 or ss.4245 of
ERISA or is at risk of entering reorganization or becoming
insolvent, or that any Multiemployer Plan intends to terminate or
has been terminated under ss.4041A of ERISA.
7.17. Use of Proceeds.
7.17.1. General. The proceeds of the Loans shall be used (a)
to finance a portion of the Tender Offer and the Merger, including
fees and expenses related thereto, (b) to refinance existing
Indebtedness of the Company and Rival and (c) for working capital
and general corporate purposes (including the financing of all or
any portion of Permitted Acquisitions (including fees and expenses
relating thereto)). The Borrowers will obtain Letters of Credit
solely for working capital and general corporate purposes.
7.17.2. Regulations U and X.
Except for the financing of a portion of the Tender Offer,
which will be secured in compliance with Regulations U and X of the
Board of Governors of the Federal Reserve, no portion of any Loan is
to be used, and no portion of any Letter of Credit is to be
obtained, for the purpose of purchasing or carrying any "margin
security" or "margin stock" as such terms are used in Regulations U
and X of the Board of Governors of the Federal Reserve System, 12
C.F.R. Parts 221 and 224.
7.17.3. Ineligible Securities. No portion of the proceeds of
any Loan is to be used, and no portion of any Letter of Credit is to
be obtained, for the purpose of (a) knowingly purchasing, or
providing credit support for the purchase of, Ineligible Securities
from a Section 20 Subsidiary during any period in which such Section
20 Subsidiary makes a market in such Ineligible Securities, (b)
knowingly purchasing, or providing credit support for the purchase
of, during the underwriting or placement period, any Ineligible
Securities being underwritten or privately placed by a Section 20
Subsidiary, or (c) making, or providing credit support for the
making of, payments of principal or interest on Ineligible
Securities underwritten or privately placed by a Section 20
Subsidiary and issued by or for the benefit of the Borrowers or any
Subsidiary or other Affiliate of the Borrowers.
7.18. Environmental Compliance. The Borrowers have taken all
reasonably necessary steps to investigate the past and present condition
and usage of the Real Estate and the operations conducted thereon and,
based upon such diligent investigation, has determined that:
(a) except as set forth on Schedule 7.18, Part 1, none of the
Borrowers, their Subsidiaries or any operator of the Real Estate or any
operations thereon is in violation,
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or alleged violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, or any state,
provincial or local statute, regulation, ordinance, order or decree
relating to health, safety or the environment (hereinafter "Environmental
Laws"), which violation would have a material adverse effect on the
environment or a Material Adverse Effect;
(b) except as set forth on Schedule 7.18, Part 2, neither the
Borrowers nor any of their Subsidiaries has received notice from any third
party including, without limitation, any federal, state, provincial or
local governmental authority, (i) that any one of them has been identified
by the United States Environmental Protection Agency ("EPA") as a
potentially responsible party under CERCLA with respect to a site listed on
the National Priorities List, 40 C.F.R. Part 300 Appendix B; (ii) that any
hazardous waste, as defined by 42 U.S.C. ss.6903(5), any hazardous
substances as defined by 42 U.S.C. ss.9601(14), any pollutant or
contaminant as defined by 42 U.S.C. ss.9601(33) and any toxic substances,
oil or hazardous materials or other chemicals or substances regulated by
any Environmental Laws ("Hazardous Substances") which any one of them has
generated, transported or disposed of has been found at any site at which a
federal, state, provincial or local agency or other third party has
conducted or has ordered that any Borrower or any of its respective
Subsidiaries conduct a remedial investigation, removal or other response
action pursuant to any Environmental Law; or (iii) that it is or shall be a
named party to any claim, action, cause of action, complaint, or legal or
administrative proceeding (in each case, contingent or otherwise) arising
out of any third party's incurrence of costs, expenses, losses or damages
of any kind whatsoever in connection with the release of Hazardous
Substances;
(c) except as set forth on Schedule 7.18, Part 1 and 2, attached
hereto: (i) no portion of the Real Estate has been used by the Company or
any of its Subsidiaries for the handling, processing, storage or disposal
of Hazardous Substances except in accordance with applicable Environmental
Laws; and, to the best of the Company's or its Subsidiaries' knowledge, no
underground tank or other underground storage receptacle for Hazardous
Substances is located on any portion of the Real Estate; (ii) in the course
of any activities conducted by the Borrowers, their Subsidiaries or
operators of its properties, no Hazardous Substances have been generated or
are being used on the Real Estate except in accordance with applicable
Environmental Laws; (iii) to the best of the Borrowers' knowledge, there
have been no releases (i.e. any past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, disposing or dumping) or threatened releases of Hazardous
Substances on, upon, into or from the properties of the Borrowers or their
Subsidiaries, which releases would have a Material Adverse Effect; (iv) to
the best of the Borrowers' knowledge, there have been no releases on, upon,
from or into any real property in the vicinity of any of the Real Estate
which, through soil or groundwater contamination, may have come to be
located on, and which would have a material adverse effect on the value of,
the Real Estate; and (v) in addition, any Hazardous Substances that have
been generated on any of the Real Estate by the Company or any of its
Subsidiaries have been transported offsite only by carriers having an
identification number issued by the EPA, treated or disposed of only by
treatment or disposal facilities maintaining valid permits as required
under applicable
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Environmental Laws, which transporters and facilities have been and are, to
the best of the Borrowers' knowledge, operating in compliance with such
permits and applicable Environmental Laws; and
(d) Except as set forth on Schedule 7.18 hereto, none of the
Borrowers and their Subsidiaries or any of the Real Estate is subject to
any applicable environmental law requiring the performance of Hazardous
Substances site assessments, or the removal or remediation of Hazardous
Substances, or the giving of notice to any governmental agency or the
recording or delivery to other Persons of an environmental disclosure
document or statement by virtue of the transactions set forth herein and
contemplated hereby, or as a condition to the effectiveness of any other
transactions contemplated hereby.
7.19. Subsidiaries, etc. Schedule 7.19(a) sets forth the
Subsidiaries of each of the Borrowers as of the Closing Date. Except as set
forth on Schedule 7.19(b) hereto, neither the Borrowers nor any Subsidiary
of any Borrower is engaged in any joint venture or partnership with any
other Person other than the GE Joint Venture.
7.20. Bank Accounts. Schedule 7.20 sets forth the account numbers
and location of all bank accounts of the Borrowers or any of their
Subsidiaries.
7.21. Disclosure. Each of this Credit Agreement and the other Loan
Documents, taken as a whole, do not contain any untrue statement of a
material fact or omit to state a material fact (known to the Borrower or
any of its Subsidiaries in the case of any document or information not
furnished by it or any of its Subsidiaries) necessary in order to make the
statements herein or therein not misleading. As of the Closing Date, there
is no fact known to the Company's President, Chief Operating Officer, Chief
Financial Officer or Manager of Far East Operations which has a Material
Adverse Effect, or which is reasonably likely in the future to have a
Material Adverse Effect, exclusive of effects resulting from changes in
general economic conditions, legal standards or regulatory conditions.
7.22. Status of Loans as Senior Debt. All Indebtedness of each of
the Borrowers and their Subsidiaries to the Banks and the Agent in respect
of the Loans and the Reimbursement Obligations constitute "Senior Debt" (or
the analogous term used therein) under the terms of the Subordinated Debt
Documents or of any other instrument evidencing or pursuant to which there
is issued Indebtedness which purports to be Subordinated Debt of any
Borrower or any Subsidiary. In addition, (a) this Credit Agreement, to the
extent applicable, would constitute the "Credit Facility" under the terms
of the Subordinated Indenture and (b) the Indebtedness of each of the
Borrowers and their Subsidiaries to the Banks and the Agents in respect of
the Loans and the Reimbursement Obligations constitutes "Senior Debt". In
addition, without prejudice to the Credit Agreement's status as the "Credit
Facility" referred to in the Subordinated Indenture, the Company expressly
designates all Obligations hereunder, and under the other Loan Documents,
as "Senior Debt" for purposes of the Subordinated Indenture.
7.23. Subordinated Debt Documents; Tender Offer Documents and Merger
Documents. Each of the representations and warranties made by the Company
and its Subsidiaries in any of the Subordinated Debt Documents, the Tender
Offer Documents, or the Merger Documents was true and correct in all
material respects when made and
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continues to remain true and correct in all material respects on the
Closing Date, except to the extent that any of such representations and
warranties relate, by the express terms thereof, solely to a date falling
prior to the Closing Date, and except to the extent that any of such
representations and warranties may have been affected by the consummation
of the transactions contemplated and permitted or required by the Loan
Documents.
7.24. No Other Senior Debt. The Company (a) has not designated any
Indebtedness of the Company or any of its Subsidiaries as, and has no,
"Designated Senior Debt" for purposes of (and as defined in) the
Subordinated Indenture, other than the Obligations, and (b) has no "Senior
Debt" as such term is defined in the Subordinated Indenture other than the
Obligations and that set forth on Schedule 7.24 hereto.
7.25. No Withholding. None of the Borrowers are required by the laws
of any jurisdiction to make any deduction or withholding of any nature
whatsoever from any payment to be made by way of the Borrowers hereunder
unless disclosed to the Agent in writing prior to the Closing Date (which
may be in the form of legal opinions) and unless the amount and likelihood
such deductions or withholdings are not, in the Agent's reasonable
discretion, material. Neither this Credit Agreement nor any of the other
Loan Documents is subject to any registration or stamp tax or any other
similar or like taxes payable in any jurisdiction.
7.26. No Filings Required. No filing, recording or enrolling of this
Credit Agreement or any other Loan Document is required to ensure the
legality, validity, enforceability or admissibility in evidence of this
Credit Agreement or any other Loan Document.
7.27. Chief Executive Office. The Company's chief executive office
is at 233 Fortune Boulevard, Milford, Massachusetts 01757, at which
location its books and records are kept. Each of the Guarantors' chief
executive office is as set forth in the Security Agreement to which it is a
party.
7.28. Insurance. The Company and each of its Subsidiaries maintains
with financially sound and reputable insurers insurance with respect to its
properties and businesses against such casualties and contingencies as are
in accordance with sound business practices and with the details of such
coverage being more fully described on Schedule 7.28 hereto.
8. AFFIRMATIVE COVENANTS OF THE BORROWERS.
Each of the Borrowers covenants and agrees that, so long as any
Loan, Bankers' Acceptance, Unpaid Reimbursement Obligation, Letter of
Credit, Note or loan account is outstanding or any Bank has any obligation
to make any Loans or accept and/or purchase any Bankers' Acceptances or the
Agent has any obligation to issue, extend or renew any Letters of Credit:
8.1. Punctual Payment. Each Borrower will duly and punctually pay or
cause to be paid the principal and interest on the Loans, all Reimbursement
Obligations, the Letter of Credit Fees, the commitment fees, the Agent's
Fee and all other amounts to be paid by it provided for in this Credit
Agreement and the other Loan Documents to which the
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Borrowers or any of their Subsidiaries is a party, all in accordance with
the terms of this Credit Agreement and such other Loan Documents.
8.2. Maintenance of Office. The Company will maintain its chief
executive office in Milford, Massachusetts, or at such other place in the
United States of America as the Company shall designate upon written notice
to the Agent where notices, presentations and demands to or upon the
Borrowers in respect of the Loan Documents to which the Borrowers are a
party may be given or made. Each of the other Domestic Borrowers (other
than MAC following the Merger) will maintain its chief executive office at
the location specified in Schedule 8.2, or at such other place in the
United States as it shall specify to the Agent by written notice.
8.3. Records and Accounts. The Borrowers will (a) keep, and cause
each of its Subsidiaries to keep, true and accurate records and books of
account in which full, true and correct entries will be made in accordance
with generally accepted accounting principles, (b) maintain adequate
accounts and reserves for all taxes (including income taxes), depreciation,
depletion, obsolescence and amortization of its properties and the
properties of its Subsidiaries, contingencies, and other reserves, and (c)
at all times engage PricewaterhouseCoopers LLP or other independent
certified public accountants reasonably satisfactory to the Agent as the
independent certified public accountants of the Company and its
Subsidiaries and will not permit more than thirty (30) days to elapse
between the cessation of such firm's (or any successor firm's) engagement
as the independent certified public accountants of the Company and its
Subsidiaries and the appointment in such capacity of a successor firm as
shall be reasonably satisfactory to the Agent.
8.4. Financial Statements, Certificates and Information. The Company
will deliver to each of the Banks:
(a) as soon as practicable, but in any event not later than ninety
(90) days after the end of each fiscal year of the Company, the
consolidated balance sheet of the Company and its Subsidiaries and the
consolidating balance sheet of the Company and its Subsidiaries (with any
reference to consolidating statements of Subsidiaries in this ss.8.4 to
mean that term as applied to the accounts and financial statements, as
applicable, of business lines, which is presented in a format approved by
the Agent), each as at the end of such year, and the related consolidated
statement of income and consolidated statement of cash flow and
consolidating statement of income for such year, each setting forth in
comparative form the figures for the previous fiscal year and all such
consolidated and consolidating statements to be in reasonable detail,
prepared in accordance with generally accepted accounting principles, and
certified without qualification by PricewaterhouseCoopers LLP or by other
independent certified public accountants reasonably satisfactory to the
Agent, together with a written statement from such accountants to the
effect that they have read a copy of this Credit Agreement, and that, in
making the examination necessary to said certification, they have obtained
no knowledge of any Default or Event of Default as it relates to any
financial covenant, or, if such accountants shall have obtained knowledge
of any then existing Default or Event of Default they shall disclose in
such statement any such Default or Event of Default; provided that such
accountants shall not be liable to the Banks for failure to obtain
knowledge of any Default or Event of Default, and, together with such
financial
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statements and accountant's certification, a management prepared analysis
of such statements, to be in reasonable detail and prepared in accordance
with past practices;
(b) as soon as practicable, but in any event not later than (i)
forty-five (45) days after the end of each of the first three fiscal
quarters of the Company commencing with the fiscal quarter ending March 31,
1999 and (ii) sixty (60) days after the end of the last fiscal quarter of
the Company, copies of the unaudited consolidated balance sheet of the
Company and each of its Subsidiaries and, commencing with the fiscal
quarter ending June 30, 1999, the unaudited consolidating balance sheet of
the Company and each of its Subsidiaries, each as at the end of such
quarter, and the related consolidated statement of income and consolidated
statement of cash flow and, commencing with the fiscal quarter ending June
30, 1999, consolidating statement of income for the portion of the
Company's fiscal year then elapsed, each setting forth in comparative form
the figures for the previous fiscal year and a comparison setting forth the
corresponding figures from the budgeted or projected figures for such
period, all in reasonable detail and prepared in accordance with generally
accepted accounting principles, together with (i) a certification by the
principal financial or accounting officer of the Company that the
information contained in such financial statements fairly presents the
financial position of the Company and its Subsidiaries on the date thereof
(subject to year-end adjustments) and (ii) a management prepared analysis
of such statements, to be in reasonable detail and prepared in accordance
with past practices;
(c) commencing March 31, 1999, as soon as practicable, but in any
event within (i) forty-five (45) days after the end of the first month to
occur after the Closing Date, (ii) thereafter, thirty (30) days after the
end of each of the first two (2) months in each fiscal quarter of the
Company, (iii) forty-five (45) days after the end of the last month in each
fiscal quarter, other than the last month of any year, and (iv) sixty (60)
days after the end of the last month in each fiscal year of the Company,
unaudited monthly consolidated financial statements of the Company and its
Subsidiaries for such month and unaudited monthly consolidating financial
statements of the Company and its Subsidiaries for such month, each setting
forth in comparative form the figures for the previous fiscal year and a
comparison setting forth the corresponding figures from the budgeted or
projected figures for such period and prepared in accordance with generally
accepted accounting principles, together with a certification by the
principal financial or accounting officer of the Company that the
information contained in such financial statements fairly presents the
financial condition of the Company and its Subsidiaries on the date thereof
(subject to year-end adjustments);
(d) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by the
principal financial or accounting officer of the Company in substantially
the form of Exhibit D hereto (the "Compliance Certificate") and setting
forth in reasonable detail computations evidencing compliance with the
covenants contained in ss.10 and (if applicable) reconciliations to reflect
changes in generally accepted accounting principles since the Balance Sheet
Date, and, until December 31, 1999, together with a brief statement and
description of the Company's progress in completing its Year 2000
compliance;
(e) contemporaneously with the filing or mailing thereof, copies of
all material of a financial nature filed with the Securities and Exchange
Commission or sent to the stockholders of the Company;
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(f) from time to time upon request of the Agent, annual projections
of the Company and its Subsidiaries updating for a one year period those
projections delivered to the Banks and referred to in ss.7.4.3 or, if
applicable, updating any later such projections delivered in response to a
request pursuant to this ss.8.4(f);
(g) from time to time such other financial data and information
(including accountants, management letters) as the Agent or any Bank may
reasonably request; and
(h) not later than the beginning of each fiscal year of the
Borrowers and their Subsidiaries, the annual budget of the Borrowers and
their Subsidiaries for such fiscal year (prepared on a monthly basis).
8.5. Notices.
8.5.1. Defaults. The Borrowers will promptly notify the Agent
and each of the Banks in writing of the occurrence of any Default or
Event of Default. If any Person shall give any notice or take any
other action in respect of a claimed default (whether or not
constituting an Event of Default) under this Credit Agreement or any
other note, evidence of indebtedness, indenture or other obligation
to which or with respect to which the Borrowers or any of their
Subsidiaries is a party or obligor, whether as principal, guarantor,
surety or otherwise, the Borrowers shall forthwith give written
notice thereof to the Agent and each of the Banks, describing the
notice or action and the nature of the claimed default.
8.5.2. Environmental Events. The Borrower will promptly give
notice to the Agent and each of the Banks (a) of any violation of
any Environmental Law that such Borrower or any of its Subsidiaries
reports in writing or is reportable by such Person in writing (or
for which any written report supplemental to any oral report is
made) to any federal, state or local environmental agency and (b)
upon becoming aware thereof, of any inquiry, proceeding,
investigation, or other action, including a notice from any agency
of potential environmental liability, of any federal, state or local
environmental agency or board, that has the potential to have a
Material Adverse Effect on the Company and its Subsidiaries, or the
Agent's security interests pursuant to the Security Documents.
8.5.3. Notification of Claim against Collateral. The
Borrowers will, immediately upon becoming aware thereof, notify the
Agent and each of the Banks in writing of any setoff, claims
(including, with respect to the Real Estate, environmental claims),
withholdings or other defenses to which any of the Collateral, or
the Agent's rights with respect to the Collateral, are subject.
8.5.4. Notice of Litigation and Judgments. The Borrowers
will, and will cause each of their Subsidiaries to, give notice to
the Agent and each of the Banks in writing within fifteen (15) days
of becoming aware of any litigation or proceedings threatened in
writing or any pending litigation and proceedings affecting the
Borrowers or any of their Subsidiaries or to which the Borrowers or
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any of their Subsidiaries is or becomes a party which seeks to
enjoin the Merger, involves dissenting shareholders of Rival in
connection with the Merger or otherwise could result in liability
arising out of the Tender Offer or Merger, or which involves an
uninsured claim against the Borrowers or any of their Subsidiaries
that could reasonably be expected to have a Material Adverse Effect
and stating the nature and status of such litigation or proceedings.
The Borrowers will, and will cause each of their Subsidiaries to,
give notice to the Agent and each of the Banks, in writing, in form
and detail satisfactory to the Agent, within ten (10) days of any
judgment not covered by insurance, final or otherwise, against the
Borrowers or any of their Subsidiaries in an amount in excess of
$500,000.
8.6. Corporate Existence; Maintenance of Properties. Except for the
transactions contemplated by the Merger, each of the Borrowers will do or
cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, rights and franchises and those of its
Subsidiaries and will not, and will not cause or permit any of their
Subsidiaries to, convert to a limited liability company. It (a) will cause
all of its properties and those of its Subsidiaries used or useful in the
conduct of its business or the business of its Subsidiaries to be
maintained and kept in good condition, repair and working order and
supplied with all necessary equipment, (b) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Borrower may be necessary so that
the business carried on in connection therewith may be properly and
advantageously conducted at all times, and (c) will, and will cause each of
its Subsidiaries to, continue to engage primarily in the businesses
conducted by them and in related businesses and those business acquired in
any Permitted Acquisition; provided that nothing in this ss.8.6 shall
prevent any Borrower from discontinuing the operation and maintenance of
any of its properties (including, without limitation, the Restructuring) or
any of those of its Subsidiaries if such discontinuance is, in the judgment
of such Borrower, desirable in the conduct of its or their business and
that do not in the aggregate materially adversely affect the business of
such Borrower and its Subsidiaries on a consolidated basis.
8.7. Insurance. The Borrowers will, and will cause each of their
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to their properties and business against such
casualties and contingencies as shall be in accordance with the general
practices of businesses engaged in similar activities in similar geographic
areas and in amounts, containing such terms, in such forms and for such
periods as may be reasonable and prudent and in accordance with the terms
of the Security Agreements.
8.8. Taxes. The Borrowers will, and will cause each of their
Subsidiaries to, duly pay and discharge, or cause to be paid and
discharged, before the same shall become overdue, all taxes, assessments
and other governmental charges imposed upon it and its real properties,
sales and activities, or any part thereof, or upon the income or profits
therefrom, as well as all claims for labor, materials, or supplies that if
unpaid might by law become a lien or charge upon any of its property;
provided that any such tax, assessment, charge, levy or claim need not be
paid if the validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if the applicable Borrower or such
Subsidiary shall have set aside on its books adequate reserves with respect
thereto; and provided further that the Borrowers and each Subsidiary of the
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Borrowers will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien that
may have attached as security therefor.
8.9. Inspection of Properties and Books, etc.
8.9.1. General. The Borrowers shall permit the Banks,
individually or through the Agent or any of the Banks' other
designated representatives, to visit and inspect any of the
properties of the Borrowers or any of their Subsidiaries, to examine
the books of account of the Borrowers and their Subsidiaries (and to
make copies thereof and extracts therefrom), and to discuss the
affairs, finances and accounts of the Borrowers and their
Subsidiaries with, and to be advised as to the same by, its and
their officers, all at such reasonable times and intervals and, so
long as no Default or Event of Default has occurred and is
continuing, subject to reasonable notice, as the Agent or any Bank
may reasonably request.
8.9.2. Appraisals. If an Event of Default shall have occurred
and be continuing, upon the request of the Agent, the Borrowers will
obtain and deliver to the Agent appraisal reports in form and
substance and from appraisers satisfactory to the Agent, stating (a)
the then current fair market, orderly liquidation and forced
liquidation values of all or any portion of the equipment or real
estate owned by any Borrower or any of its Subsidiaries and (b) the
then current business value of each of the Borrowers and their
Subsidiaries. All such appraisals shall be conducted and made at the
expense of the Borrower.
8.10. Compliance with Laws, Contracts, Licenses, and Permits. The
Borrowers will, and will cause each of their Subsidiaries to, comply with
(a) the applicable laws and regulations wherever its business is conducted,
including all Environmental Laws and the Foreign Corrupt Practices Act, (b)
the provisions of its charter documents and by-laws, (c) all agreements and
instruments by which it or any of its properties may be bound and (d) all
applicable decrees, orders, and judgments, except where any such
noncompliance could not reasonably be expected to have a Material Adverse
Effect. If any authorization, consent, approval, permit or license from any
officer, agency or instrumentality of any government shall become necessary
or required in order that the Borrowers or any of their Subsidiaries may
fulfill any of its obligations hereunder or any of the other Loan Documents
to which the Borrowers or such Subsidiary is a party, the Borrowers will,
or (as the case may be) will cause such Subsidiary to, promptly take or
cause to be taken all reasonable steps within the power of the Borrowers or
such Subsidiary to obtain such authorization, consent, approval, permit or
license and furnish the Agent and the Banks with evidence thereof.
8.11. Employee Benefit Plans. The Borrowers will (a) promptly upon
filing the same with the Department of Labor or Internal Revenue Service,
furnish to the Agent a copy of the most recent actuarial statement required
to be submitted under ss.103(d) of ERISA and Annual Report, Form 5500, with
all required attachments, in respect of each Guaranteed Pension Plan and
(b) promptly upon receipt or dispatch, furnish to the Agent any notice,
report or demand sent (other than as part of a Guaranteed Pension Plan's
annual report) or received in respect of a Guaranteed Pension Plan under
ss.ss.302, 4041, 4042, 4043, 4063, 4066 and 4068 of ERISA, or in respect of
a Multiemployer Plan, under ss.ss.4041A, 4202, 4219, 4242, or 4245 of
ERISA.
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8.12. Use of Proceeds. The Borrowers will use the proceeds of the
Loans solely (a) to finance a portion of the Tender Offer and the Merger
and related costs and expenses, (b) to refinance certain Indebtedness of
the Borrowers and (c) for working capital and general corporate purposes
(including to finance all or any portion of Permitted Acquisitions
(including fees and expense relating thereto)). The Borrowers will obtain
Letters of Credit solely for working capital and general corporate
purposes.
8.13. Additional Mortgaged Property. If, after the Closing Date, any
of the Borrowers or any of their Subsidiaries acquires real estate located
in the United States, such Borrower shall, or shall cause such Subsidiary
to, forthwith deliver to the Agent a fully executed mortgage or deed of
trust over such real estate, in form and substance satisfactory to the
Agent, together with title insurance policies, surveys, evidences of
insurance with the Agent named as loss payee and additional insured, legal
opinions and other documents and certificates with respect to such real
estate as is required by the Agent. The Borrowers further agree that,
following the taking of such actions with respect to such real estate, the
Agent shall have for the benefit of the Banks and the Agent a valid and
enforceable first priority mortgage or deed of trust over such real estate,
free and clear of all defects and encumbrances except for Permitted Liens.
8.14. Fair Labor Standards Act. The Domestic Borrowers shall, and
shall require each Subsidiary to, at all times operate their respective
businesses in compliance with all material applicable provisions of the
Fair Labor Standards Act of 1938, as amended. None of the inventory of the
Domestic Borrowers or any of their Subsidiaries is or will be produced by
employees of (a) the Domestic Borrowers or any of their Subsidiaries, or
(b) to the best knowledge of the Domestic Borrowers, by employees of
suppliers, who are, in each case, employed in violation of any applicable
minimum wage or maximum hour provisions of the Fair Labor Standards Act (29
U.S.C. ss.ss.206 and 207) or any applicable regulations promulgated
thereunder, in each case, as in effect from time to time.
8.15. Guarantors. The Company will cause each Domestic Subsidiary
created, acquired or existing on or after the Closing Date or any other
Subsidiary which is otherwise required to become a guarantor under the
Subordinated Indenture to become a Guarantor within thirty (30) days of
such Domestic Subsidiary having been created, acquired or existing, and
shall cause such Subsidiary to execute and deliver to the Agent for the
benefit of the Agent and the Banks (a) a Guaranty (or an Instrument of
Adherence to the Guaranty executed on the Closing Date), and (b) further
Security Documents or other instruments and documents as the Agent may
reasonably require in order to grant to the Agent a first priority
perfected security interest in such Subsidiary's assets, with certain
exceptions as may be approved by the Agent, together with legal opinions in
form and substance reasonably satisfactory to the Agent to be delivered to
the Agent and the Banks opining as to the authorization, validity and
enforceability of such Guaranty or Instrument of Adherence and Security
Documents and (as to the applicable Security Documents) the perfection of
such security interests.
8.16. Subordinated Guarantees. The Company will promptly advise the
Agent of any Subordinated Guarantee entered into in connection with the
Subordinated Indenture, identifying the guarantor thereunder.
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8.17. Status of Loans as Senior Debt. The Company shall, on the
Closing Date and at such other times as may reasonably be requested by the
Agent, deliver to the Agent certificates and, if requested, legal opinions,
evidencing that the Indebtedness of each of the Borrowers and their
Subsidiaries to the Agent and the Banks in respect of the Loans and
Reimbursement Obligations constitutes "Senior Debt" (or the analogous term
used therein) under the terms of the Subordinated Debt Documents or of any
other instrument evidencing or pursuant to which there is issued
indebtedness which purports to be Subordinated Debt of the Company or any
of its Subsidiaries and that (a) this Credit Agreement would constitute the
"Credit Facility" under the terms of the Subordinated Indenture, and (b)
the Indebtedness of each of the Borrowers and their Subsidiaries to the
Banks and the Agents in respect of the Loans and Reimbursement Obligations
constitutes "Designated Senior Debt" as defined by the Subordinated
Indenture.
8.18. Additional Subsidiaries. If, after the Closing Date, the
Company or any of its Subsidiaries creates or acquires, either directly or
indirectly, any Subsidiary, it will immediately notify the Agent and the
Banks if such creation or acquisition, as the case may be, and provide the
Agent and the Banks with an updated Schedule 7.19(a) hereof and take all
other actions required by ss.8.15 and ss.9.5.1 hereof.
8.19. Landlord Consents. The Company will use its best efforts to
deliver to the Agent within thirty (30) days from the Closing Date landlord
consents from the landlords of the leased Real Estate set forth on Schedule
8.19 hereto, which landlord consents shall be in form and substance
reasonably satisfactory to the Agent.
8.20. Interest Rate Protection. Not later than ninety (90) days
after the Closing Date, the Borrowers will obtain interest rate protection
on notional amount and at a rate and tenor satisfactory to the Agent.
8.21. Year 2000 Problem. The Guarantors, Borrowers and their
Subsidiaries represent and warrant that they have reviewed the areas within
their businesses and operations which could be adversely affected by, and
have developed a program to address on a timely basis, the "Year 2000
Problem" (i.e. the risk that computer applications used by the Guarantors,
Borrowers or any of their Subsidiaries may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to
and any date after December 31, 1999), which program shall be complete and
operational prior to September 30, 1999, so that the "Year 2000 Problem"
will not have any Material Adverse Effect. The Guarantors, Borrowers and
their Subsidiaries shall provide quarterly written reports and such other
information as the Agent may reasonably request describing the progress of
such program, commencing on the first quarter to occur after the Closing
Date.
8.22. Consummation of Merger. The Borrowers will take all corporate
and legal actions advisable or necessary to cause the Merger to be approved
and effected in accordance with the Merger Documents and applicable law on
the Closing Date.
8.23. Further Assurances.
Each of the Borrowers will, and will cause each of its Subsidiaries
to, cooperate with the Banks and the Agent and execute such further
instruments and documents as the
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Banks or the Agent shall reasonably request to carry out to their
satisfaction the transactions contemplated by this Credit Agreement and the
other Loan Documents.
9. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS.
Each of the Borrowers covenants and agrees that, so long as any
Loan, Bankers' Acceptance, Unpaid Reimbursement Obligation, Letter of
Credit, Note or loan account is outstanding or any Bank has any obligation
to make any Loans or to accept and/or purchase any Bankers' Acceptances or
the Agent has any obligations to issue, extend or renew any Letters of
Credit:
9.1. Restrictions on Indebtedness. The Borrowers will not, and will
not permit any of their Subsidiaries to, create, incur, assume, guarantee
or be or remain liable, contingently or otherwise, with respect to any
Indebtedness other than:
(a) Indebtedness to the Banks and the Agent arising under any of the
Loan Documents;
(b) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary
course of business;
(c) Subordinated Debt (including Indebtedness of a Domestic
Subsidiary of the Company pursuant to the Subordinated Guarantee provided
for in the Subordinated Indenture);
(d) Indebtedness incurred in connection with the acquisition after
the date hereof of any real or personal property by the Borrowers or such
Subsidiary or under any Capitalized Lease, provided that the aggregate
principal amount of such Indebtedness of the Borrowers and their
Subsidiaries shall not exceed the aggregate amount of $15,000,000 at any
one time;
(e) Indebtedness existing on the date hereof and listed and
described on Schedule 9.1 hereto;
(f) (i) Indebtedness of a Subsidiary of a Borrower to a Borrower so
long as such Subsidiary is a Domestic Borrower or Guarantor hereunder, (ii)
Indebtedness of a Foreign Borrower or a Foreign Guarantor to a Domestic
Borrower or Guarantor so long as such Indebtedness is evidenced by an
intercompany note which is pledged to the Agent; (iii) Indebtedness of a
Foreign Borrower or a Foreign Guarantor to another Foreign Borrower or
Foreign Guarantor, so long as such Indebtedness is evidenced by an
intercompany note which is pledged to the Agent; and (iv) Indebtedness of a
Subsidiary of a Borrower which is not a Domestic Borrower or Guarantor
provided that the aggregate principal amounts of all such Indebtedness
permitted under this ss.9.1(f)(iv) shall not exceed at any one time an
amount equal to $55,000,000 less the aggregate amount of all Loans,
Reimbursement Obligations, Bankers' Acceptances and Unpaid Reimbursement
Obligations outstanding to all Foreign Borrowers at such time;
(g) (i) unsecured Indebtedness incurred in connection with any
Permitted Acquisitions, including Indebtedness of Persons acquired pursuant
to ss.9.5.1 hereof, so long as the terms of such Indebtedness comply with
the provisions of ss.9.5.1(b) (iii)
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hereof; and (ii) secured Indebtedness assumed in connection with any
Permitted Acquisitions so long as the aggregate principal amount of all
such Indebtedness does not exceed $5,000,000 at any one time, the terms of
such Indebtedness comply with the provisions of ss.9.5.1(b)(iii) hereof,
and, if such Indebtedness is secured, such security interest covers only
the real or personal property acquired in such Permitted Acquisition;
(h) Indebtedness of the Company in respect of any promissory notes
issued by the Company to certain members of its management as permitted by
ss.9.4(e) hereof as payment for the redemption by the Company of certain
shares of its capital stock issued to such member;
(i) unsecured Indebtedness of the Company to any of the Principals
or Additional Investors, provided (i) no Default or Event of Default has
occurred and is continuing or would exist as a result thereof; (ii) the
amount of such Indebtedness and the terms and conditions (including,
without limitation, a prohibition on any cash payments to be made to the
holders thereof during the term of this Credit Agreement and a limitation
of use of proceeds) of such Indebtedness are acceptable to the Agent and
the Majority Banks; and (iii) such Indebtedness shall contain subordination
provisions acceptable to the Agent and the Majority Banks;
(j) Indebtedness incurred in connection with the factoring or other
discounting of certain letters of credit in the ordinary course of business
issued in favor of such Subsidiary, provided (i) no Default or Event of
Default has occurred and is continuing or would exist as a result thereof
and, (ii) any amounts received by such Person shall be required to be
applied first to the outstanding Revolving Credit Loans owing by such
Borrower and then to repay all outstanding amounts on all intercompany
loans owing for such Borrower to a Domestic Borrower, with each Domestic
Borrower agreeing to repay all outstanding Revolving Credit Loans with the
proceeds of such repayment.
provided however notwithstanding the foregoing provisions of this
ss.9.1, all such Indebtedness must in any event qualify at all times as
"Indebtedness" (as such term is defined in the Subordinated Indenture)
permitted to be incurred pursuant to ss.4.09 of the Subordinated Indenture.
9.2. Restrictions on Liens. The Borrowers will not, and will not
permit any of their Subsidiaries to, (a) create or incur or suffer to be
created or incurred or to exist any lien, encumbrance, mortgage, pledge,
charge, restriction or other security interest of any kind upon any of its
property or assets of any character whether now owned or hereafter
acquired, or upon the income or profits therefrom; (b) transfer any of such
property or assets or the income or profits therefrom for the purpose of
subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to payment of its general creditors; (c)
acquire, or agree or have an option to acquire, any property or assets upon
conditional sale or other title retention or purchase money security
agreement, device or arrangement; (d) suffer to exist for a period of more
than thirty (30) days after the same shall have been incurred any
Indebtedness or claim or demand against it that if unpaid might by law or
upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; (e) sell, assign, pledge or
otherwise transfer any "receivables" as defined in clause (g) of the
definition of the term "Indebtedness," with or without recourse (other than
the sale of doubtful, bad, overdue or
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defaulted receivables after notice to the Agent in an aggregate amount not
to exceed $2,000,000 in any one year without the written consent of the
Agent); or (f) enter into or permit to exist any arrangement or agreement,
enforceable under applicable law, which directly or indirectly prohibits
the Borrowers or any of their Subsidiaries from creating or incurring any
lien, encumbrance, mortgage, pledge, charge, restriction or other security
interest other than in favor of the Agent for the benefit of the Banks and
the Agent under the Loan Documents and other than customary anti-assignment
provisions in leases and licensing agreements entered into by the Borrowers
or such Subsidiary in the ordinary course of its business, provided that
the Borrowers or any of their Subsidiaries may create or incur or suffer to
be created or incurred or to exist:
(a) liens in favor of the Borrowers on all or part of the assets of
Subsidiaries of the Borrowers securing Indebtedness owing by Subsidiaries
of the Borrowers to such Borrower;
(b) liens to secure taxes, assessments and other government charges
in respect of obligations not overdue or liens on properties to secure
claims for labor, material or supplies in respect of obligations not
overdue;
(c) deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(d) liens on properties in respect of judgments or awards that have
been in force for less than the applicable period for taking an appeal so
long as execution is not levied thereunder or in respect of which such
Borrowers or such Subsidiary shall at the time in good faith be prosecuting
an appeal or proceedings for review and in respect of which a stay of
execution shall have been obtained pending such appeal or review;
(e) liens of carriers, warehousemen, mechanics and materialmen, and
other like liens on properties, in existence less than 120 days from the
date of creation thereof in respect of obligations not overdue;
(f) encumbrances on Real Estate consisting of easements, rights of
way, zoning restrictions, restrictions on the use of real property and
defects and irregularities in the title thereto, landlord's or lessor's
liens under leases to which the Borrowers or a Subsidiary of any Borrower
is a party, and other minor liens or encumbrances none of which in the
opinion of the applicable Borrower interferes materially with the use of
the property affected in the ordinary conduct of the business of such
Borrower and its Subsidiaries, which defects do not individually or in the
aggregate have a materially adverse effect on the business of such Borrower
individually or of such Borrower and its Subsidiaries on a consolidated
basis;
(g) liens existing on the date hereof and listed on Schedule 9.2
hereto;
(h) purchase money security interests in or purchase money mortgages
on real or personal property acquired after the date hereof to secure
purchase money Indebtedness of the type and amount permitted by ss.9.1(d)
and ss.9.1(g)(ii), incurred in connection with the acquisition of such
property, which security interests or mortgages cover only the real or
personal property so acquired;
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(i) liens in favor of the Agent for the benefit of the Banks and the
Agent under the Loan Documents; and
(j) liens incurred in the ordinary course of business consistent
with past practices in favor of a Person providing insurance of collection
of certain of the Company's accounts receivable, provided such liens cover
only those receivables so insured and provided that the Agent has a first
priority perfected security interest in any insurance or other proceeds.
9.3. Restrictions on Investments. The Borrowers will not, and will
not permit any of their Subsidiaries to, make or permit to exist or to
remain outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United States
of America that mature within one (1) year from the date of purchase by the
Borrowers;
(b) demand deposits, certificates of deposit, bankers acceptances
and time deposits of United States banks having total assets in excess of
$1,000,000,000;
(c) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any state thereof that at the time of purchase have been rated
and the ratings for which are not less than "P 1" if rated by Moody's
Investors Service, Inc., and not less than "A 1" if rated by Standard and
Poor's Rating Group;
(d) Investments existing on the date hereof and listed on Schedule
9.3 hereto, Investments made by any Borrower or its Subsidiaries in the JV
pursuant to the GE Joint Venture so long as the time of the making of such
Investments, no Default or Event of Default has occurred and is continuing
or would exist as a result thereof; provided, the aggregate amount of all
Investments made in the JV shall not exceed $3,500,000 from the Closing
Date to the first anniversary of the Closing Date and $7,000,000 in the
aggregate during the term of the Credit Agreement;
(e) Investments with respect to Indebtedness permitted by
ss.9.1(f)(i) - (iii) so long as such entities remain a Subsidiary of any
Borrower and a Borrower, a Guarantor or Foreign Guarantor hereunder and
Investments with respect to Indebtedness permitted by ss.9.1(f)(iv) so long
as such entities remain a Subsidiary of any Borrower hereunder;
(f) Investments with respect to Indebtedness permitted by ss.9.1(g)
hereof so long as the Person incurring such Indebtedness remains a
Subsidiary of any Borrower hereunder and Investments consisting of
Permitted Acquisitions under ss.9.5.1 hereof, of assets or Persons that
become, at the time of such Permitted Acquisitions, a Subsidiary of the
Company.
(g) Investments consisting of the Guaranty or the Foreign Guarantees
or Investments by the Borrowers in Guarantors;
(h) Investments consisting of promissory notes or other obligations
or securities received as proceeds of asset dispositions permitted by
ss.9.5.2; and
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(i) Investments consisting of the acquisition of new Subsidiaries
permitted pursuant to ss.9.5.1; and
provided, however, that (a) with the exception of demand deposits referred
to in ss.9.3(b), such Investments will be considered Investments permitted
by this ss.9.3 only if all actions have been taken to the satisfaction of
the Agent to provide to the Agent, for the benefit of the Banks and the
Agent, a first priority perfected security interest in all of such
Investments free of all encumbrances other than Permitted Liens or such
other exceptions as the Agent may make in its sole discretion and (b) all
Investments made pursuant to this ss.9.3 must be permitted to be made
pursuant to the Subordinated Indenture.
9.4. Distributions and Restricted Payments. The Company and its
Subsidiaries will not make any Distributions or Restricted Payments, other
than dividends or payments:
(a) so long as no Event of Default under ss.13.1(c) as it relates to
ss.10 or under ss.13.1(a) or (b) has occurred and is continuing or would
result therefrom, by the Company to Berkshire Partners consisting of
quarterly management services fees pursuant to the Management Agreement in
an aggregate amount not to exceed (i) $125,000 in any fiscal quarter plus
(ii) the amount of management services fees, if any, which are in arrears
under the Management Agreement plus (iii) the sum of $2,000,000 which is
due and payable on the Closing Date in conjunction with the Acquisition,
and provided, however, that such payments shall not be made earlier than
ten (10) days prior to the date such payments are due and payable pursuant
to the terms of the Management Agreement;
(b) by any Subsidiary of the Company to such Subsidiary's parent;
(c) so long as no Event of Default under ss.13.1(c) as it relates to
ss.10 or under ss.13.1(a) or (b) has occurred and is continuing or would
result therefrom, by the Company in the form of redemptions of Equity
Interests of the Company held by any member of the Company's or any
Subsidiary's management or Board of Directors, provided that the aggregate
sum paid therefor shall not exceed the sum of (i) $500,000 in any twelve
(12) month period, plus (ii) the aggregate Net Cash Proceeds received by
the Company from the issuance after November 26, 1997 of Equity Interests
to members of management or the Company's Board of Directors; and
(d) by the Company as a Distribution in the form of promissory notes
issued by the Company to repurchase or redeem shares of its capital stock
pursuant to certain buy-back arrangements with certain members of the
Company's management, provided that (i) no Event of Default then exists or
would result after the making of such Distribution; (ii) the terms of such
notes are acceptable to the Agent in all respects; and (iii) such notes
contain subordination provisions acceptable to the Agent.
9.5. Merger, Consolidation and Disposition of Assets.
9.5.1. Mergers and Acquisitions. The Borrowers will not, and
will not permit any of their Subsidiaries to, become a party to any
merger or consolidation, or agree to or effect any asset acquisition
or stock acquisition except, so long as no Default or Event of
Default has occurred and is continuing, or would exist after giving
effect thereto:
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(a) the merger of one or more of the Subsidiaries of the
Company with and into the Company, any other Domestic Borrower
hereunder or a Guarantor hereunder, and provided the Company, the
other Domestic Borrower or the Guarantor, as the case may be, has
taken or caused to be taken all action necessary to grant to the
Agent a first priority perfected security interest in all of the
Company's or such other Domestic Borrower's or Guarantor's assets
after such merger;
(b) the acquisition of the assets or stock of Persons in the
same or a similar line of business as the Company and its
Subsidiaries (including home electrical and other consumer
appliances, industrial electrical products and other similar
products) (each, a "Permitted Acquisition") where (i) the Company
has provided the Agent with thirty (30) days prior written notice of
such, Permitted Acquisition, which notice shall include a reasonably
detailed description of such Permitted Acquisition and copies of all
acquisition documents in connection therewith; (ii) the business to
be acquired would not subject the Agent or the Banks to regulatory
or third party approvals in connection with the exercise of their
rights and remedies under this Credit Agreement or any other Loan
Document; (iii) no contingent liabilities or liabilities will be
incurred or assumed in connection with such Permitted Acquisition
which could be expected to have a Material Adverse Effect, and any
Indebtedness incurred or assumed in connection with such Permitted
Acquisition (1) shall have been permitted to be incurred or assumed
pursuant to ss.9.1 hereof; (2) shall not bear cash interest at a
rate in excess of 600 basis points over the applicable treasury rate
per annum and shall not bear interest at a rate in excess of 900
basis points over the applicable treasury rate per annum; (3) shall
not have a maturity prior to the Term Loan B Maturity Date; (4)
shall not contain any financial covenants; (5) shall be unsecured;
(6) shall contain an amortization schedule acceptable to the Agent
and (7) shall contain subordination provisions acceptable to the
Agent and the Banks; provided that any such Indebtedness permitted
by ss.9.1(g)(ii) shall not have to comply with clauses (2)-(7)
hereof; (iv) the Company has provided the Agent with such other
information as was reasonably requested by the Agent; (v) after the
consummation of the Permitted Acquisition, the Company shall own a
majority of the capital stock of the Person to be acquired or shall
otherwise control such Person (including, without limitation,
controlling the ability of such Person to make loans, advances and
Distributions in cash to the Company); (vi) the Company shall take,
or shall cause to be taken, all necessary action to grant to the
Agent a first priority perfected lien in all assets and stock
acquired in connection with such Permitted Acquisition, with such
exceptions as the Agent may approve; provided, however, the Company
or any Guarantor, as the case may be, shall only be required to
pledge 66% of the capital stock of any Foreign Subsidiary or any
other Person not incorporated or otherwise organized in the United
States of America (a "Foreign Entity"), and such Foreign Entity
shall not be required to grant a lien on its assets to secure the
Obligations of the Company or any Guarantor; (vii) the Company has
demonstrated to the reasonable satisfaction of the Agent, based on a
pro forma Compliance Certificate, compliance with ss.10 immediately
prior to and on a Pro Forma Basis immediately after giving effect to
such Permitted Acquisition and the Leverage Ratio (calculated on a
Pro Forma Basis) after giving effect to such Permitted Acquisition
shall not exceed 5.50:1.00; (viii) the maximum purchase price for
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any single Permitted Acquisition or series of Permitted Acquisitions
relating to the same business organization or group of related
companies does not exceed the sum of $40,000,000, plus the aggregate
cash equity investment made by the Additional Investors in the
Company for the purpose of consummating such acquisition, plus the
aggregate amount of secured Indebtedness assumed in connection with
such Permitted Acquisition; (ix) board of directors and the
shareholders (if required by applicable law), or the equivalent, of
each of the Company and the Person to be acquired has approved such
merger, consolidation or acquisition and such Permitted Acquisition
is otherwise considered "friendly"; (x) to the extent the Company or
any Subsidiary is acquiring any Real Estate in connection with such
Permitted Acquisition, the Company shall have delivered to the Agent
all appraisals and environmental site assessments which the Agent
shall reasonably require, with all such appraisals and site
assessments to be in form and substance reasonably satisfactory to
the Agent; and (xi) the Company has delivered to the Agent a
certificate of the chief financial officer of the Company to the
effect that (1) the Company will be solvent upon the consummation of
the Permitted Acquisition; (2) the pro forma Compliance Certificate
fairly presents the financial condition of the Company and its
Subsidiaries as of the date thereof and after giving effect to such
Permitted Acquisition; and (3) no Default or Event of Default then
exists or would result after giving effect to the Permitted
Acquisition; and
(c) The Merger as contemplated by the Merger Documents.
In the event any new Domestic Subsidiary is formed or
acquired as a result of or in connection with any acquisition, such
new Domestic Subsidiary shall, immediately upon its creation or
acquisition, execute and deliver to the Agent for the benefit of the
Agent and the Banks, an Instrument of Adherence in substantially the
form of Exhibit E hereto (an "Instrument of Adherence") and the Loan
Documents shall be amended and/or supplemented as necessary to make
the terms and conditions of the Loan Documents applicable to such
Domestic Subsidiary. Such Domestic Subsidiary shall become a
Guarantor hereunder and shall become party to the Guaranty and the
Security Agreement and shall execute and deliver to the Agent any
and all other agreements, documents, instruments and financing
statements necessary to grant to the Agent a first priority
perfected lien in such Domestic Subsidiary's assets. The Company and
its Subsidiaries shall, immediately upon the creation or acquisition
of such Domestic Subsidiary, pledge all of such Domestic
Subsidiary's capital stock to the Agent for the benefit of the Agent
and the Banks. In the event any new Foreign Subsidiary is formed or
acquired as a result of or in connection with any acquisition, such
new Foreign Subsidiary shall, immediately upon its creation or
acquisition, and to the extent legally possible in its jurisdiction
of organization and to the extent that to do so would not result in
the recognition of a deemed dividend from such Foreign Subsidiary,
execute and deliver to the Agent for the benefit of the Agent and
the Banks such guarantees and security documents as the Agent deems
necessary to make the terms and conditions of the Loan Documents
applicable to such Foreign Subsidiary. To the extent legally
permissible, and to the extent that to do so would not result in the
recognition of a deemed dividend from such Foreign Subsidiary, such
Foreign Subsidiary shall guarantee the Obligations of the Subsidiary
Borrowers hereunder and shall
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execute and deliver to the Agent any and all other agreements,
documents, instruments and financing statements necessary to grant
to the Agent a first priority perfected lien in such Foreign
Subsidiary's assets to secure its guarantee obligations. In
addition, the Company and its Subsidiaries shall (unless otherwise
previously agreed to in writing by the Agent), immediately upon the
creation or acquisition of such Foreign Subsidiary, pledge 66% of
such Foreign Subsidiary's capital stock to the Agent for the benefit
of the Agent and the Banks.
9.5.2. Disposition of Assets. The Borrowers will not, and
will not permit any of their Subsidiaries to, become a party to or
agree to or effect any Asset Sale or other disposition of assets,
other than (a) the sale of inventory, the sale or other disposition
of doubtful, bad, overdue or defaulted receivables (that does not
constitute a financing arrangement), the licensing of intellectual
property, the disposition of obsolete assets, and the sale or
transfer of assets between Subsidiary Borrowers, in each case in the
ordinary course of business, (b) the sale of assets (which may
include the assets of Borrowers' commercial, industrial or pump
business lines) in arms-length transactions for fair and reasonable
value, provided that, with respect to this clause (b) (i) no Default
or Event of Default shall have occurred and be continuing at the
time of such sale and no Default or Event of Default will exist
after giving effect to such Asset Sale; (ii) at least seventy five
percent (75%) of the purchase price for such assets is received in
cash and the Net Cash Sale Proceeds from such sales are applied as
provided in ss.ss.2.12.2 and 3.3.3 hereof, provided, that with
respect to the sale of the Borrowers' commercial, industrial or pump
business lines, such Net Cash Sale Proceeds shall be determined
after deducting all reasonable restructuring and integration costs
resulting from such sales of types and in amounts as may be
reasonably approved by the Agent, (iii) any promissory note or other
instrument received by the Company or any of its Subsidiaries in
connection with such sale is an Investment permitted by ss.9.3
hereof, and the Company or such Subsidiary, as applicable, has
delivered such promissory note or other instrument to the Agent to
be held in pledge for the benefit of itself and the Banks in
accordance with the terms of the Loan Documents; (iv) the aggregate
value of all assets sold in any Asset Sale (other than the sale of
the Borrowers' commercial and industrial and pump business lines) is
not more than $10,000,000 in any fiscal year and (v) the Company
shall have delivered to the Agent on the date of such sale a
certificate signed by an authorized officer of the Company and
evidence satisfactory to the Agent showing compliance with the
provisions of clauses (i) through (iv) of this ss.9.5.2 and (c) the
sale by the Company of certain real property located in Milford,
Massachusetts which is subsequently leased by the Company or any
Subsidiary, provided, no Default or Event of Default has occurred
and is continuing or would exist as a result thereof and the
aggregate sale price does not exceed $1,500,000.
Notwithstanding anything to the contrary contained in this
ss.9.5, neither the Company nor any of its Subsidiaries shall be
permitted to dispose of any assets or take (or omit to take) any
action in connection with any Asset Sale or other asset disposition
or engage in any other transaction which action (or omission) would
require or result in any repayment, repurchase or redemption (or any
mandatory offer to repay, repurchase or redeem) by the Company or
any of
<PAGE>
-103-
its Subsidiaries of the Subordinated Notes pursuant to the
Subordinated Indenture.
9.6. Sale and Leaseback. Except as permitted by ss.9.5.2, the
Borrowers will not, and will not permit any of their Subsidiaries
to, enter into any arrangement, directly or indirectly, whereby such
Borrower or any Subsidiary of such Borrower shall sell or transfer
any property owned by it in order then or thereafter to lease such
property or lease other property that such Borrower or any
Subsidiary of such Borrower intends to use for substantially the
same purpose as the property being sold or transferred.
9.7. Compliance with Environmental Laws. The Borrowers will
not, and will not permit any of their Subsidiaries to, (a) use any
of the Real Estate or any portion thereof for the handling,
processing, storage or disposal of Hazardous Substances, (b) cause
or permit to be located on any of the Real Estate any underground
tank or other underground storage receptacle for Hazardous
Substances, (c) generate any Hazardous Substances on any of the Real
Estate, (d) conduct any activity at any Real Estate or use any Real
Estate in any manner so as to cause a release (i.e. releasing,
spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping) or
threatened release of Hazardous Substances on, upon or into the Real
Estate or (e) otherwise conduct any activity at any Real Estate or
use any Real Estate, each in any manner that would violate any
Environmental Law or bring such Real Estate in violation of any
Environmental Law, except where such noncompliance would not have a
Material Adverse Effect.
9.8. Subordinated Debt. The Company will not, and will not
permit any of its Subsidiaries to, amend, supplement or otherwise
modify the terms of any of the Subordinated Debt Documents or
prepay, redeem or repurchase (or offer to prepay, redeem or
repurchase) any of the Subordinated Debt; provided, however, the
Company shall be permitted to use any Net Cash Proceeds received
from its Initial Public Offering and subsequent public offerings of
its capital stock which it is not otherwise required pursuant to the
terms of the Credit Agreement to apply to the repayment of the Loans
and the reduction of the Total Commitment pursuant to ss.ss. 2.12.2
and 3.3.3 hereof to prepay, redeem and repurchase the Subordinated
Debt so long as no Default or Event of Default has occurred and is
continuing or would occur as a result thereof.
9.9. Employee Benefit Plans. Neither the Borrowers nor any
ERISA Affiliate will
(a) engage in any "prohibited transaction" within the meaning
of ss.406 of ERISA or ss.4975 of the Code which could reasonably be
expected to result in a material liability for the Borrower or any
of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in ss.302
of ERISA, whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could reasonably be expected to result in the imposition of a
lien or encumbrance on the assets of the Borrower or any of its
Subsidiaries pursuant to ss.302(f) or ss.4068 of ERISA; or
<PAGE>
-104-
(d) amend any Guaranteed Pension Plan in circumstances
requiring the posting of security pursuant to ss.307 of ERISA or
ss.401(a)(29) of the Code; or
(e) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of ss.4001 of ERISA)
of all Guaranteed Pension Plans exceeding the value of the aggregate
assets of such Plans, disregarding for this purpose the benefit
liabilities and assets of any such Plan with assets in excess of
benefit liabilities.
9.10. Business Activities. The Borrowers will not, and will
not permit any of their Subsidiaries to, engage directly or
indirectly (whether through Subsidiaries or otherwise) in any type
of business other than the businesses conducted by them on the
Closing Date or businesses conducted by subjects of Permitted
Acquisitions and in related businesses.
9.11. Fiscal Year. The Borrowers will not, and will not
permit any of their Subsidiaries to, change the date of the end of
its fiscal year from that set forth in ss.7.4.1.
9.12. Transactions with Affiliates. Except for the GE Joint
Venture, the Borrowers will not, and will not permit any of their
Subsidiaries to, engage in any transaction with any Affiliate (other
than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or
from any such Affiliate or, to the knowledge of the Borrowers, any
corporation, partnership, trust or other entity in which any such
Affiliate has a substantial interest or is an officer, director,
trustee or partner, on terms more favorable to such Person than
would have been obtainable on an arm's-length basis in the ordinary
course of business.
9.13. Modification of Documents and Charter. Neither the
Borrowers nor any of their Subsidiaries will consent to or agree to
any amendment, supplement or other modification to the Tender Offer
Documents, the Merger Documents, the Stockholders Agreement, the
Management Agreement or Subordinated Debt Documents, or amend or
permit to be amended its certificate of incorporation or bylaws, or
similar organizational documents without the Agent's prior written
consent unless such change or amendment would not have any material
adverse effect on the Agent's or the Banks' rights under the Loan
Documents or the Borrowers' or any of their Subsidiaries'
obligations under the Loan Documents.
9.14. Upstream Limitations. Neither the Borrowers nor any of
their Subsidiaries will enter into, or permit any of their
Subsidiaries to enter into, any agreement, contract or arrangement
(other than the Credit Agreement and the other Loan Documents)
restricting the ability of any Subsidiary to pay or make dividends
or distributions in cash or kind, to make loans, advances or other
payments of whatsoever nature or to make transfers or distributions
of all or any part of its assets to any Borrower or any Guarantor.
9.15. Inconsistent Agreements. Neither the Borrowers nor any
of their Subsidiaries will, nor will they permit their Subsidiaries
to, enter into any agreement containing any provision which would be
violated or breached by the performance by
<PAGE>
-105-
such Borrower or such Subsidiary of its obligations hereunder or
under any of the Loan Documents.
9.16. Senior Debt. The Company and its Subsidiaries will not
(a) in any manner designate or permit to exist any other
Indebtedness of the Company or any of its Subsidiaries as
"Designated Senior Debt" for purposes (and as defined in) of the
Subordinated Indenture, other than the Indebtedness arising under
this Credit Agreement and the Guaranty, or (b) incur or permit to
exist any "Senior Debt" as such term is defined in the Subordinated
Indenture, other than the Indebtedness arising or permitted under
this Credit Agreement and the Guaranty and the other Obligations.
9.17. Limitations on Foreign Exchange Arrangements. The
Company will not and will not permit any of its Subsidiaries to
enter into any interest rate hedging or risk protection
arrangements, foreign exchange risk protection arrangements, or
currency risk protection arrangements which are not in the ordinary
course of business or are for speculative purposes.
10. FINANCIAL COVENANTS OF THE BORROWERS.
Each of the Borrowers covenants and agrees that, so long as any Loan,
Bankers' Acceptance, Unpaid Reimbursement Obligation, Letter of Credit or Note
or loan account is outstanding or any Bank has any obligation to make any Loans
or accept and/or purchase any Bankers' Acceptances or the Agent has any
obligation to issue, extend or renew any Letters of Credit:
10.1. Leverage Ratio. The Borrowers will not at any time during the
period described in the table set forth below, permit the Leverage Ratio to
exceed the ratio set forth opposite such period in such table:
<TABLE>
<CAPTION>
Period Ratio
------ -----
- ---------------------------------------------------------------- ---------------------------------------------------
<S> <C>
Closing Date to June 30, 1999 6.25: 1
- ---------------------------------------------------------------- ---------------------------------------------------
July 1, 1999 to September 30, 1999 6.10: 1
- ---------------------------------------------------------------- ---------------------------------------------------
October 1, 1999 to December 31, 1999 6.00: 1
- ---------------------------------------------------------------- ---------------------------------------------------
January 1, 2000 to March 31, 2000 5.85: 1
- ---------------------------------------------------------------- ---------------------------------------------------
April 1, 2000 to June 30, 2000 5.65: 1
- ---------------------------------------------------------------- ---------------------------------------------------
July 1, 2000 to September 30, 2000 5.35: 1
- ---------------------------------------------------------------- ---------------------------------------------------
October 1, 2000 to December 31, 2000 5.25: 1
- ---------------------------------------------------------------- ---------------------------------------------------
January 1, 2001 to March 31, 2001 5.00: 1
- ---------------------------------------------------------------- ---------------------------------------------------
April 1, 2001 to June 30, 2001 5.00: 1
- ---------------------------------------------------------------- ---------------------------------------------------
July 1, 2001 to September 30, 2001 5.00: 1
- ---------------------------------------------------------------- ---------------------------------------------------
October 1, 2001 to December 31, 2001 4.75: 1
- ---------------------------------------------------------------- ---------------------------------------------------
January 1, 2002 to March 31, 2002 4.75: 1
- ---------------------------------------------------------------- ---------------------------------------------------
April 1, 2002 to June 30, 2002 4.50: 1
- ---------------------------------------------------------------- ---------------------------------------------------
any fiscal quarter ending thereafter 4.50: 1
- ---------------------------------------------------------------- ---------------------------------------------------
</TABLE>
10.2. Interest Coverage Ratio. The Borrowers will not, as of the end
of any fiscal quarter ending on any date or during any period described in
the table set forth below, permit the Interest Coverage Ratio to be less
than the ratio set forth opposite such period in such table:
<PAGE>
-106-
<TABLE>
<CAPTION>
Period Ratio
------ -----
- ---------------------------------------------------------------- ---------------------------------------------------
<S> <C>
Closing Date to June 30, 1999 1.75: 1
- ---------------------------------------------------------------- ---------------------------------------------------
July 1, 1999 to September 30, 1999 1.75: 1
- ---------------------------------------------------------------- ---------------------------------------------------
October 1, 1999 to December 31, 1999 1.75: 1
- ---------------------------------------------------------------- ---------------------------------------------------
January 1, 2000 to March 31, 2000 1.75: 1
- ---------------------------------------------------------------- ---------------------------------------------------
April 1, 2000 to June 30, 2000 1.95: 1
- ---------------------------------------------------------------- ---------------------------------------------------
July 1, 2000 to September 30, 2000 1.95: 1
- ---------------------------------------------------------------- ---------------------------------------------------
October 1, 2000 to December 31, 2000 1.95: 1
- ---------------------------------------------------------------- ---------------------------------------------------
January 1, 2001 to March 31, 2001 2.00: 1
- ---------------------------------------------------------------- ---------------------------------------------------
April 1, 2001 to June 30, 2001 2.00: 1
- ---------------------------------------------------------------- ---------------------------------------------------
July 1, 2001 to September 30, 2001 2.00: 1
- ---------------------------------------------------------------- ---------------------------------------------------
October 1, 2001 to December 31, 2001 2.10: 1
- ---------------------------------------------------------------- ---------------------------------------------------
January 1, 2002 to March 31, 2002 2.10: 1
- ---------------------------------------------------------------- ---------------------------------------------------
April 1, 2002 to June 30, 2002 2.25: 1
- ---------------------------------------------------------------- ---------------------------------------------------
any fiscal quarter ending thereafter 2.25: 1
- ---------------------------------------------------------------- ---------------------------------------------------
</TABLE>
10.3. Fixed Charge Coverage Ratio. The Borrowers will not at any
time permit the Fixed Charge Coverage Ratio to be less than the ratio of
1:1.
10.4. Capital Expenditures. The Borrowers will not make, or permit
any Subsidiary of such Borrower to make, during any fiscal year described
on the table below, Capital Expenditures (other than Capital Expenditures
consisting of Permitted Acquisitions) that exceed, in the aggregate, the
amount set forth opposite such fiscal year in such table; provided,
however, fifty percent (50%) of Capital Expenditures not spent in a given
year may be carried over and added to the Capital Expenditures permitted
only for the immediately following year (after first utilizing the amount
of Capital Expenditures permitted for such fiscal year), each such carry
over not to exceed one year.
<TABLE>
<CAPTION>
Year Amount
- ---------------------------------------------------------------- -----------------------------------------
<S> <C>
1999 $20,000,000
- ---------------------------------------------------------------- -----------------------------------------
2000 $24,500,000
- ---------------------------------------------------------------- -----------------------------------------
2001 and thereafter $15,000,000
- ---------------------------------------------------------------- -----------------------------------------
</TABLE>
<PAGE>
-107-
11. CLOSING CONDITIONS.
The obligations of the Banks to convert the Loans and Letters of Credit
under the Original Credit Agreement to Loans and Letters of Credit hereunder, to
make the initial Loans to the Borrowers and of the Agent to issue any initial
Letters of Credit for the account of the Borrowers shall be subject to the
satisfaction of the following conditions precedent on or prior to Closing Date:
11.1. Loan Documents, etc.
11.1.1. Loan Documents. Each of the Loan Documents [other
than certain of the Foreign Security Documents] shall have been duly
executed and delivered by the respective parties thereto, shall be
in full force and effect and shall be in form and substance
satisfactory to each of the Banks. Each Bank shall have received a
fully executed copy of each such document.
11.1.2. Tender Offer Documents. The Agent shall have received
evidence satisfactory to it that the Tender Offer has been
consummated in accordance with the terms of the Tender Offer
Documents, and that at least 70% of the outstanding shares of Rival
have been validly tendered and not withdrawn. Each Bank shall have
received final copies of each of the Tender Offer Documents.
11.1.3. Merger Documents. The Agent shall have received
evidence that each of the Merger Documents shall have been duly
executed and delivered by the respective parties thereto, and shall
be in full force and effect. Each Bank shall have received a fully
executed copy of each such document.
11.1.4. Subordinated Debt Documents. Each of the Subordinated
Debt Documents shall have been duly executed and delivered by the
respective parties thereto, shall be in full force and effect, and
shall be in form and substance satisfactory to the Agent. Each Bank
shall have received a fully executed copy of each such document.
11.2. Certified Copies of Charter Documents. Each of the Banks shall
have received from the Company and each of its Subsidiaries a copy,
certified by a duly authorized officer of such Person to be true and
complete on the Closing Date, of each of (a) its charter or other
incorporation documents as in effect on such date of certification, and (b)
its by-laws as in effect on such date.
11.3. Corporate Action. All corporate action necessary for the valid
execution, delivery and performance by the Borrowers and each of their
Subsidiaries of this Credit Agreement and the other Loan Documents to which
it is or is to become a party shall have been duly and effectively taken,
and evidence thereof satisfactory to the Banks shall have been provided to
each of the Banks.
11.4. Incumbency Certificate. Each of the Banks shall have received
from each of the Borrowers and each of the Guarantors an incumbency
certificate, dated as of the Closing Date, signed by a duly authorized
officer of such Borrower or such Guarantor,
<PAGE>
-108-
and giving the name and bearing a specimen signature of each individual who
shall be authorized: (a) to sign, in the name and on behalf of each of such
Borrower or such Guarantor, each of the Loan Documents to which such
Borrower or such Guarantor is or is to become a party; (b) in the case of
the Borrowers, to make Loan Requests and Conversion Requests and, in the
case of the Company, to apply for Letters of Credit; and (c) to give
notices and to take other action on its behalf under the Loan Documents.
11.5. Validity of Liens. The Security Documents other than certain
of the Foreign Security Documents shall be effective to create in favor of
the Agent a legal, valid and enforceable first (except for Permitted Liens
entitled to priority under applicable law) security interest in and lien
upon the Collateral. All filings, recordings, deliveries of instruments and
other actions necessary or desirable in the opinion of the Agent to protect
and preserve such security interests shall have been duly effected. The
Agent shall have received evidence thereof in form and substance
satisfactory to the Agent.
11.6. Perfection Certificates and UCC Search Results. The Agent
shall have received from each of the Borrowers and the Guarantors a
completed and fully executed Perfection Certificate and the results of UCC
searches with respect to the Collateral, indicating no liens other than
Permitted Liens and otherwise in form and substance satisfactory to the
Agent.
11.7. Certificates of Insurance. The Agent shall have received (a) a
certificate of insurance from an independent insurance broker dated as of
the Closing Date, identifying insurers, types of insurance, insurance
limits, and policy terms, and otherwise describing the insurance obtained
in accordance with the provisions of the Security Agreements and (b)
certified copies of all policies evidencing such insurance (or certificates
therefore signed by the insurer or an agent authorized to bind the
insurer).
11.8. Hazardous Waste Assessments. The Agent shall have received
hazardous waste site assessments from environmental engineers and in form
and substance reasonably satisfactory to the Agent, covering substantially
all Real Estate and all other real property in respect of which any
Borrower or any of its Subsidiaries may have ,material liability, whether
contingent or otherwise, for dumping or disposal of Hazardous Substances.
11.9. Solvency Opinion. Each of the Banks shall have received a copy
of an opinion from Valuation Research dated not less than three (3) days
prior to the Closing Date, describing in detail the solvency of the Company
and its Subsidiaries after the consummation of the transactions
contemplated herein (including an opinion of regarding the Company and its
Subsidiaries both before and after giving effect to the Merger) and in form
and substances satisfactory to the Banks.
11.10. Opinions of Counsel. Each of the Banks and the Agent shall
have received favorable legal opinions addressed to the Banks and the
Agent, dated as of the Closing Date, in form and substance satisfactory to
the Banks and the Agent, from Posternak, Blankstein & Lund, L.L.P., counsel
to the Company and its Subsidiaries and such other counsel as the Agent and
the Banks may reasonably request.
<PAGE>
-109-
11.11. Payment of Fees. The Company shall have paid to the Banks or
the Agent, as appropriate, the closing fees and the Agent's Fee as
contemplated by the Fee Letter.
11.12. Payoff Letter. The Agent shall have received appropriate
payoff letters, termination letters and collateral discharges in form and
substance satisfactory to the Agent from holders of existing Indebtedness
of the Borrowers and their Subsidiaries not otherwise permitted hereunder.
11.13. Disbursement Instructions. The Agent shall have received
disbursement instructions from the Company with respect to the proceeds of
the initial Loans.
11.14. Capitalization. The Agent and the Banks shall have received
evidence satisfactory to the Agent and the Banks that (a) the Company shall
have received an equity investment of not less than $50,000,000 in cash
from Berkshire Fund IV, Berkshire Fund V, their affiliates and certain
other investors, in each case on terms and conditions which are
satisfactory to the Agent in all respects and (b) the Company shall have
received the gross proceeds from the New Subordinated Notes in an aggregate
amount of not less than $30,000,000.
11.15. Consents and Approvals. The Agent shall have received
evidence that all consents and approvals necessary to complete the Tender
Offer and all transactions contemplated hereby have been obtained.
11.16. Closing Date Leverage Ratio. The Company shall provide the
Agent with evidence satisfactory to the Agent that the Leverage Ratio on
the Closing Date (after giving effect to all amounts to be borrowed on the
Closing Date) is not greater than 5.75:1.00.
11.17. Availability. The Agent shall have received evidence that on
the Closing Date, after giving effect to the transactions contemplated
hereby (including, without limitation, after giving effect to all
borrowings under the Credit Agreement), the Borrowers will have unused
availability under the Credit Agreement of not less than $50,000,000.
11.18. Tender Offer/Merger. The Company and MAC shall cause the
Merger to be consummated on the Closing Date and the Agent shall have
received evidence satisfactory to it of the consummation of the Merger.
11.19. Conditions to Funding to Foreign Borrowers. Each of the
following shall have been satisfied: (a) each of the Foreign Security
Documents shall have been duly executed and delivered by the respective
parties thereto, shall be in full force and effect and shall be in form and
substance satisfactory to each of the Banks, and each Bank shall have
received a fully executed copy of each such document; (b) the Foreign
Security Documents shall be effective to create in favor of the Agent a
legal, valid and enforceable first (except for Permitted Liens entitled to
priority under applicable law) security interest in and lien upon the
Collateral, and all filings, recordings, deliveries of instruments and
other actions necessary or desirable in the opinion of the Agent to protect
and preserve such security interests shall have been duly effected, with
the Agent having received evidence thereof in form and substance
satisfactory to the Agent; and (c) each of
<PAGE>
-110-
the Banks and the Agent shall have received favorable legal opinions
addressed to the Banks and the Agent, dated as of the Closing Date, in form
and substance satisfactory to the Banks and the Agent from each of the
local counsel to the Subsidiary Borrowers.
11.20. Survey and Taxes. The Agent shall have received (i) a Survey
of each Mortgaged Property together with a Surveyor Certificate relating
thereto (to the extent such Surveys and Surveyor Certificates exist at the
Closing Date) and (ii) evidence of payment of real estate taxes and
municipal charges on all Real Estate not delinquent on or before the
Closing Date.
11.21. Title Insurance. The Agent shall have received a Title Policy
covering each Mortgaged Property (or commitments to issue such policies,
with all conditions to issuance of the Title Policy deleted by an
authorized agent of the Title Insurance Company) together with proof of
payment of all fees and premiums for such policies, from the Title
Insurance Company and in amounts reasonably satisfactory to the Agent,
insuring the interest of the Agent and each of the Banks as mortgagee under
the Mortgages.
12. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make Loans and to accept and/or purchase
Bankers' Acceptances and of the Agent to issue, extend or renew any Letter of
Credit, in each case whether on or after the Closing Date, shall also be subject
to the satisfaction of the following conditions precedent:
12.1. Representations True; No Event of Default. Each of the
representations and warranties of any of the Borrowers and their
Subsidiaries contained in this Credit Agreement, the other Loan Documents
and in the Merger Documents, or in any document or instrument delivered
pursuant to or in connection with this Credit Agreement shall be true as of
the date as of which they were made and shall also be true at and as of the
time of the making of any Loan, accepting and/or purchasing any Bankers'
Acceptance or the issuance, extension or renewal of such Letter of Credit,
with the same effect as if made at and as of that time (except to the
extent of changes resulting from transactions contemplated or permitted by
this Credit Agreement and the other Loan Documents and changes occurring in
the ordinary course of business that singly or in the aggregate are not
materially adverse to the Company and its Subsidiaries taken as a whole,
and to the extent that such representations and warranties relate expressly
to an earlier date) and no Default or Event of Default shall have occurred
and be continuing.
12.2. No Legal Impediment. No change shall have occurred in any law
or regulations thereunder or interpretations thereof that in the reasonable
opinion of any Bank would make it illegal for such Bank to make Loans, to
accept and/or purchase Bankers' Acceptances or to participate in the
issuance, extension or renewal of such Letter of Credit or in the
reasonable opinion of the Agent would make it illegal for the Agent to
issue, extend or renew such Letter of Credit.
12.3. Governmental Regulation. Each Bank shall have received such
statements in substance and form reasonably satisfactory to such Bank as
such Bank shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of
the Federal Reserve System.
<PAGE>
-111-
12.4. Proceedings and Documents. All proceedings in connection with
the transactions contemplated by this Credit Agreement, the other Loan
Documents and all other documents incident thereto shall be satisfactory in
substance and in form to the Banks and to the Agent and the Agent's Special
Counsel, and the Banks, the Agent and such counsel shall have received all
information and such counterpart originals or certified or other copies of
such documents as the Agent may reasonably request.
12.5. Exchange Limitations. There exists no reason whatsoever,
including without limitation, by reason of the application of any so-called
"currency exchange" laws or regulations (as in effect at the time of any
proposed borrowing hereunder) which could reasonably be expected to
interfere with any Borrower satisfying any of its Obligations hereunder in
full at such time as such Obligations become due and payable pursuant to
the terms hereof.
12.6. Indenture Compliance. The Agent shall have received a
certificate from the Company certifying that the Loan being requested may
be incurred in compliance with the covenant set forth in ss.4.09 of the
Subordinated Indenture, together with such evidence and calculations
demonstrating the satisfaction of such covenant as the Agent may reasonably
request.
13. EVENTS OF DEFAULT; ACCELERATION; ETC.
13.1. Events of Default and Acceleration. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of
time or both is required, then, prior to such notice or lapse of time,
"Defaults") shall occur:
(a) any Borrower shall fail to pay any principal of the Loans or any
Reimbursement Obligation when the same shall become due and payable,
whether at the stated date of maturity or any accelerated date of maturity
or at any other date fixed for payment;
(b) any Borrower shall fail to pay any interest on the Loans, the
commitment fee, any Letter of Credit Fee, the Agent's Fee, or other sums
due hereunder or under any of the other Loan Documents, when the same shall
become due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment, and
such failure shall continue for three (3) days;
(c) any Borrower shall fail to comply with any of its covenants
contained in ss.ss.8.1 (but subject to ss.13.1(b) above)-8.4, 8.5.1, 8.7,
8.9, 8.10-8.12, 8.15-8.17, 9.1-9.6, 9.8, 9.10-9.17 or 10;
(d) any Borrower or any of its Subsidiaries shall fail to perform
any term, covenant or agreement contained herein or in any of the other
Loan Documents (other than those specified elsewhere in this ss.13.1) for
thirty (30) days after written notice of such failure has been given to the
Borrower by the Agent;
(e) any representation or warranty of any Borrower or any of its
Subsidiaries in this Credit Agreement or any of the other Loan Documents,
or in any of the
<PAGE>
-112-
Subordinated Debt Documents or in any other document or instrument
delivered pursuant to or in connection with this Credit Agreement or any of
the other Loan Documents or of Holmes or MAC in the Tender Offer Documents
or Merger Documents shall prove to have been false in any material respect
upon the date when made or deemed to have been made or repeated;
(f) any Borrower or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any obligation for
borrowed money or credit received or in respect of any Capitalized Leases
in an aggregate amount in excess of $2,000,000, or fail to observe or
perform any material term, covenant or agreement contained in any agreement
by which it is bound, evidencing or securing borrowed money or credit
received or in respect of any Capitalized Leases in an aggregate amount in
excess of $2,000,000 for such period of time as would permit (assuming the
giving of appropriate notice if required) the holder or holders thereof or
of any obligations issued thereunder to accelerate the maturity thereof;
(g) any Borrower or any of its Subsidiaries shall make an assignment
for the benefit of creditors, or admit in writing its inability to pay or
generally fail to pay its debts as they mature or become due, or shall
petition or apply for the appointment of a trustee or other custodian,
liquidator or receiver of any Borrower or any of its Subsidiaries or of any
substantial part of the assets of any Borrower or any of its Subsidiaries
or shall commence any case or other proceeding relating to any Borrower or
any of its Subsidiaries under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law
of any jurisdiction, now or hereafter in effect, or shall take any action
to authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such case or other proceeding
shall be commenced against any Borrower or any of its Subsidiaries and such
Borrower or any of its Subsidiaries shall indicate its approval thereof,
consent thereto or acquiescence therein or such petition or application
shall not have been dismissed within forty-five (45) days following the
filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any Borrower or any of
its Subsidiaries bankrupt or insolvent, or approving a petition in any such
case or other proceeding, or a decree or order for relief is entered in
respect of any Borrower or any Subsidiary of such Borrower in an
involuntary case under federal bankruptcy laws as now or hereafter
constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any final
judgment against any Borrower or any of its Subsidiaries that, with other
outstanding final judgments, undischarged, against such Borrower or any of
its Subsidiaries exceeds in the aggregate $1,000,000;
(j) the holders of all or any part of the Subordinated Debt shall
accelerate the maturity of all or any part of the Subordinated Debt or,
except as expressly permitted by ss.9.8, the Subordinated Debt shall be (or
shall be required at such time to be) prepaid, redeemed or repurchased in
whole or in part; or the Company or any of its Subsidiaries shall be or
become required under the Subordinated Indenture to prepay, redeem or
repurchase (or shall be or become required thereunder to offer to prepay,
redeem or repurchase) all or any part of the Subordinated Debt;
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(k) if any of the Loan Documents shall be cancelled, terminated,
revoked or rescinded or the Agent's security interests, mortgages or liens
in a substantial portion of the Collateral shall cease to be perfected, or
shall cease to have the priority contemplated by the Security Documents, in
each case otherwise than in accordance with the terms thereof or with the
express prior written agreement, consent or approval of the Banks, or any
action at law, suit or in equity or other legal proceeding to cancel,
revoke or rescind any of the Loan Documents shall be commenced by or on
behalf of any Borrower or any of its Subsidiaries party thereto or any of
their respective stockholders, or any court or any other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof;
(l) any Borrower or any of its Subsidiaries incurs any liability to
the PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA in an
aggregate amount exceeding $1,000,000, or any Borrower or any of its
Subsidiaries is assessed withdrawal liability pursuant to Title IV of ERISA
by a Multiemployer Plan requiring aggregate annual payments exceeding
$1,000,000, or any of the following occurs with respect to a Guaranteed
Pension Plan: (i) an ERISA Reportable Event, a failure to make a required
installment or other payment (within the meaning of ss.302(f)(1) of ERISA),
an ERISA Affiliate incurs any liability to the PBGC or a Guaranteed Pension
Plan pursuant to Title IV of ERISA or is assessed withdrawal liability
pursuant to Title IV of ERISA, provided that the Agent determines in its
reasonable discretion that such event (A) could reasonably be expected to
result in liability of the Borrowers or any of their Subsidiaries to the
PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding
$1,000,000 and (B) could constitute grounds for the termination of such
Guaranteed Pension Plan by the PBGC, for the appointment by the appropriate
United States District Court of a trustee to administer such Guaranteed
Pension Plan or for the imposition of a lien in favor of such Guaranteed
Pension Plan; or (ii) the appointment by a United States District Court of
a trustee to administer such Guaranteed Pension Plan; or (iii) the
institution by the PBGC of proceedings to terminate such Guaranteed Pension
Plan;
(m) any Borrower or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any material part of
its business, such order shall continue in effect for more than thirty (30)
days and the result of which could reasonably be expected to have a
Material Adverse Effect;
(n) there shall occur any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy,
or other casualty, which in any such case causes, for more than fifteen
(15) consecutive days, the cessation or substantial curtailment of revenue
producing activities at any facility of any Borrower or any of its
Subsidiaries if, such event or circumstance is not covered by business
interruption insurance and would have a Material Adverse Effect,
(o) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by
any Borrower or any of its Subsidiaries if such loss, suspension,
revocation or failure to renew would have a Material Adverse Effect;
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(p) the Company shall at any time, legally or beneficially own less
than (i) 100% of the capital stock of each of its Subsidiaries existing on
the Closing Date (except that, prior to the Merger Effective Date, the
Company shall own not less than 70% of the capital stock of Rival), or (ii)
80% of the capital stock of any Subsidiary acquired or formed after the
Closing Date;
(q) a Change of Control (as such term is defined in the Subordinated
Indenture) occurs; or
(r) prior to the Initial Public Offering, the Principals shall at
any time, legally or beneficially own less than 51% of the capital stock of
the Company, as adjusted pursuant to any stock split, stock dividend or
recapitalization or reclassification of the capital of the Company and
after the Initial Public Offering, any person or group of persons (within
the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as
amended) other than the Principals shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act) of twenty five percent (25%) or more of
the outstanding shares of common stock of the Company or, at any time, more
than a majority of the members of the Board of Directors of the Company are
not Continuing Directors.
then, and in any such event, so long as the same may be continuing, the
Agent, upon the request of the Majority Banks shall, by notice in writing
to the Company declare all amounts owing with respect to this Credit
Agreement, the Notes and the other Loan Documents and all Reimbursement
Obligations to be, and they shall thereupon forthwith become, immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Borrowers; provided
that in the event of any Event of Default specified in ss.ss.13.1(g),
13.1(h) or 13.1(j)), all such amounts shall become immediately due and
payable automatically and without any requirement of notice from the Agent
or any Bank.
13.2. Termination of Commitments. If any one or more of the Events
of Default specified in ss.13.1(g), ss.13.1(h) or ss.13.1(j)) shall occur,
any unused portion of the credit hereunder shall forthwith terminate and
each of the Banks shall be relieved of all further obligations to make
Revolving Credit Loans to the Borrowers and to accept and/or purchase
Bankers' Acceptances from Rival Canada and the Agent shall be relieved of
all further obligations to issue, extend or renew Letters of Credit. If any
other Event of Default shall have occurred and be continuing, or if on any
Drawdown Date or other date for issuing, extending or renewing any Letter
of Credit the conditions precedent to the making of the Revolving Credit
Loans to be made on such Drawdown Date, the acceptance and/or purchasing of
any Bankers' Acceptance or (as the case may be) to issuing, extending or
renewing such Letter of Credit on such other date are not satisfied, the
Agent, upon the request of the Majority Banks, shall, by notice to the
Company, terminate the unused portion of the credit hereunder, and upon
such notice being given such unused portion of the credit hereunder shall
terminate immediately and each of the Banks shall be relieved of all
further obligations to make Revolving Credit Loans, accept and/or purchase
Bankers' Acceptances and the Agent shall be relieved of all further
obligations to issue, extend or renew Letters of Credit. No termination of
the credit hereunder shall relieve the Borrowers or any of their
Subsidiaries of any of the Obligations.
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13.3. Remedies. In case any one or more of the Events of Default
shall have occurred and be continuing, and whether or not the Banks shall
have accelerated the maturity of the Loans pursuant to ss.13.1, each Bank,
if owed any amount with respect to the Loans, Bankers' Acceptances or the
Reimbursement Obligations, may, with the consent of the Majority Banks but
not otherwise, proceed to protect and enforce its rights by suit in equity,
action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Credit Agreement
and the other Loan Documents or any instrument pursuant to which the
Obligations to such Bank are evidenced, including as permitted by
applicable law the obtaining of the ex parte appointment of a receiver,
and, if such amount shall have become due, by declaration or otherwise,
proceed to enforce the payment thereof or any other legal or equitable
right of such Bank. No remedy herein conferred upon any Bank or the Agent
or the holder of any Note or loan account or purchaser of any Letter of
Credit Participation is intended to be exclusive of any other remedy and
each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or any other provision of law.
13.4. Exchange Rate. If, for the purpose of obtaining judgment in
any court or obtaining an order enforcing a judgment, it becomes necessary
for any Bank to convert any amount due to such Bank under this Credit
Agreement in Dollars or in any other currency (hereinafter in this ss.13.4
called the "first currency") into any other currency (hereinafter in this
ss.13.4 called the "second currency"), then the conversion shall be made at
such Bank's spot rate of exchange for buying the first currency with the
second currency prevailing at such Bank's close of business on the Business
Day next preceding the day on which the judgment is given or (as the case
may be) the order is made. Any payment made to any Bank pursuant to this
Credit Agreement in the second currency shall constitute a discharge of the
obligations of the respective Borrower to pay to such Bank any amount
originally due to such Bank in the first currency under this Credit
Agreement only to the extent of the amount of the first currency which such
Bank is able, on the date of the actual receipt by it of such payment in
any second currency, to purchase, in accordance with such Bank's normal
banking procedures, with the amount of such second currency so received. If
the amount of the first currency falls short of the amount originally due
to such Bank in the first currency under this Credit Agreement, the
Borrowers hereby agree that they will indemnify such Bank against and save
such Bank harmless from any shortfall so arising. This indemnity shall
constitute an obligation of such Borrower separate and independent from the
other obligations contained in this Credit Agreement, shall give rise to a
separate and independent cause of action and shall continue in full force
and effect notwithstanding any judgment or order for a liquidated sum or
sums in respect of amounts due to such Bank under this Credit Agreement or
under any such judgment or order. Any such shortfall shall be deemed to
constitute a loss suffered by such Bank and the Borrowers shall not be
entitled to require any proof or evidence of any actual loss. The covenant
contained in this ss.13.4 shall survive the payment in full of all of the
other obligations of the Borrowers under this Credit Agreement.
13.5. Distribution of Collateral Proceeds. In the event that,
following the occurrence or during the continuance of any Default or Event
of Default, the Agent or any Bank, as the case may be, receives any monies
in connection with the enforcement of any the Security Documents, or
otherwise with respect to the realization upon any of the Collateral, such
monies shall be distributed for application as follows:
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(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent in connection with the collection of such monies by
the Agent, for the exercise, protection or enforcement by the Agent of all
or any of the rights, remedies, powers and privileges of the Agent under
this Credit Agreement or any of the other Loan Documents or in respect of
the Collateral or in support of any provision of adequate indemnity to the
Agent against any taxes or liens which by law shall have, or may have,
priority over the rights of the Agent to such monies;
(b) Second, to all other Obligations in such order or preference as
to type of Obligations (such as interest, principal, fees and expenses) as
the Majority Banks may determine; provided, however, that (i) distributions
shall be made (A) pari passu among Obligations with respect to the Agent's
fee payable pursuant to ss.5.2 and all other Obligations and (B) with
respect to each type of Obligation owing to the Banks, such as interest,
principal, fees and expenses, among the Banks pro rata in accordance with
the principal amount of each Bank's outstanding Notes, and (ii) the Agent
may in its reasonable discretion make proper allowance to take into account
any Obligations not then due and payable;
(c) Third, upon payment and satisfaction in full or other provisions
for payment in full satisfactory to the Banks and the Agent of all of the
Obligations, to the payment of any obligations required to be paid pursuant
to ss.9-504(l)(c) of the Uniform Commercial Code of the Commonwealth of
Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the Borrowers
or to such other Persons as are entitled thereto.
14. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of any
Event of Default, any deposits or other sums credited by or due from any of the
Banks to any Borrower and any securities or other property of any Borrower in
the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of any Borrower to such Bank. Each of the Banks agrees with
each other Bank that (a) if an amount to be set off is to be applied to
Indebtedness of any Borrower to such Bank, other than Indebtedness evidenced by
the Notes or loan accounts or Bankers' Acceptances held by such Bank or
constituting Reimbursement Obligations owed to such Bank, such amount shall be
applied ratably to such other Indebtedness and to the Indebtedness evidenced by
all such Notes, Bankers' Acceptances and loan accounts held by such Bank or
constituting Reimbursement Obligations owed to such Bank, and (b) if such Bank
shall receive from any Borrower, whether by voluntary payment, exercise of the
right of setoff, counterclaim, cross action, enforcement of the claim evidenced
by the Notes or loan accounts or Bankers' Acceptances held by, or constituting
Reimbursement Obligations owed to, such Bank by proceedings against such
Borrower at law or in equity or by proof thereof in bankruptcy, reorganization,
liquidation, receivership or similar proceedings, or otherwise, and shall retain
and apply to the payment of the Note or Notes or loan accounts or Bankers'
Acceptances held by, or Reimbursement Obligations owed to, such Bank any amount
in excess of its ratable portion of the payments received by all of the Banks
with respect to the Notes or loan accounts or Bankers' Acceptances held by, and
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Reimbursement Obligations owed to, all of the Banks, such Bank will make such
disposition and arrangements with the other Banks with respect to such excess,
either by way of distribution, pro tanto assignment of claims, subrogation or
otherwise as shall result in each Bank receiving in respect of the Notes and
loan accounts and Bankers' Acceptances held by it or Reimbursement obligations
owed it, its proportionate payment as contemplated by this Credit Agreement;
provided that if all or any part of such excess payment is thereafter recovered
from such Bank, such disposition and arrangements shall be rescinded and the
amount restored to the extent of such recovery, but without interest.
15. THE AGENT.
15.1. Authorization.
(a) The Agent is authorized to take such action on behalf of each of
the Banks and to exercise all such powers as are hereunder and under any of
the other Loan Documents and any related documents delegated to the Agent,
together with such powers as are reasonably incident thereto, provided that
no duties or responsibilities not expressly assumed herein or therein shall
be implied to have been assumed by the Agent.
(b) The relationship between the Agent and each of the Banks is that
of an independent contractor. The use of the term "Agent" is for
convenience only and is used to describe, as a form of convention, the
independent contractual relationship between the Agent and each of the
Banks. Nothing contained in this Credit Agreement nor the other Loan
Documents shall be construed to create an agency, trust or other fiduciary
relationship between the Agent and any of the Banks, except as otherwise
provided in the Debenture from Holmes UK to the Agent, the Charge Over
Shares between Holmes Far East, Holmes UK and the Agent and the Guarantee
from Holmes UK (collectively, the "UK Security Documents") for purposes of
the Agent acting as collateral trustee thereunder for the Banks. For
purposes of this ss.15, the term "Agent" shall include the Agent acting in
its capacity as collateral trustee under the UK Security Documents.
(c) As an independent contractor empowered by the Banks to exercise
certain rights and perform certain duties and responsibilities hereunder
and under the other Loan Documents, the Agent is nevertheless a
"representative" of the Banks, as that term is defined in Article 1 of the
Uniform Commercial Code, for purposes of actions for the benefit of the
Banks and the Agent with respect to all collateral security and guaranties
contemplated by the Loan Documents. Such actions include the designation of
the Agent as "secured party", "mortgagee" or the like on all financing
statements and other documents and instruments, whether recorded or
otherwise, relating to the attachment, perfection, priority or enforcement
of any security interests, mortgages or deeds of trust in collateral
security intended to secure the payment or performance of any of the
Obligations, all for the benefit of the Banks and the Agent.
15.2. Employees and Agents. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled
to take, and to rely on, advice of counsel concerning all matters
pertaining to its rights and duties under this Credit Agreement and the
other Loan Documents. The Agent may utilize the services of such Persons as
the Agent in its sole discretion may reasonably determine, and all
reasonable fees and expenses of any such Persons shall be paid by the
Borrowers.
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15.3. No Liability. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in
their duties nor any agent or employee thereof, shall be liable for any
waiver, consent or approval given or any action taken, or omitted to be
taken, in good faith by it or them hereunder or under any of the other Loan
Documents, or in connection herewith or therewith, or be responsible for
the consequences of any oversight or error of judgment whatsoever, except
that the Agent or such other Person, as the case may be, may be liable for
losses due to its willful misconduct or gross negligence.
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15.4. No Representations.
15.4.1. General. The Agent shall not be responsible for the
execution or validity or enforceability of this Credit Agreement,
the Notes, the loan accounts, any Bankers' Acceptances, the Letters
of Credit, any of the other Loan Documents or any instrument at any
time constituting, or intended to constitute, collateral security
for the Notes and loan accounts, or for the value of any such
collateral security or for the validity, enforceability or
collectability of any such amounts owing with respect to the Notes
and loan accounts or Bankers' Acceptances or for any recitals or
statements, warranties or representations made herein or in any of
the other Loan Documents or in any certificate or instrument
hereafter furnished to it by or on behalf of any Borrower or any of
its Subsidiaries, or be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions, covenants
or agreements herein or in any instrument at any time constituting,
or intended to constitute, collateral security for the Notes and
loan accounts or to inspect any of the properties, books or records
of the Borrower or any of its Subsidiaries. The Agent shall not be
bound to ascertain whether any notice, consent, waiver or request
delivered to it by any Borrower or any holder of any of the Notes or
loan accounts shall have been duly authorized or is true, accurate
and complete. The Agent has not made nor does it now make any
representations or warranties, express or implied, nor does it
assume any liability to the Banks, with respect to the credit
worthiness or financial conditions of the Borrowers or any of their
Subsidiaries. Each Bank acknowledges that it has, independently and
without reliance upon the Agent or any other Bank, and based upon
such information and documents as it has deemed appropriate, made
its own credit analysis and decision to enter into this Credit
Agreement.
15.4.2. Closing Documentation, etc. For purposes of
determining compliance with the conditions set forth in ss.11, each
Bank that has executed this Credit Agreement shall be deemed to have
consented to, approved or accepted, or to be satisfied with, each
document and matter either sent, or reasonably made available, by
the Agent or the Arranger for consent, approval, acceptance or
satisfaction, or required thereunder to be to be consent to or
approved by or acceptable or satisfactory to such Bank, unless an
officer of the Agent or the Arranger active upon the Borrowers'
account shall have received notice from such Bank prior to the
Closing Date specifying such Bank's objection thereto and such
objection shall not have been withdrawn by notice to the Agent or
the Arranger to such effect on or prior to the Closing Date.
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15.5. Payments.
15.5.1. Payments to Agent. A payment by any Borrower to the
Agent hereunder or any of the other Loan Documents for the account
of any Bank shall constitute a payment to such Bank. The Agent
agrees promptly to distribute to each Bank such Bank's pro rata
share (in accordance with such Bank's Commitment Percentage) of
payments received by the Agent for the account of the Banks except
as otherwise expressly provided herein or in any of the other Loan
Documents.
15.5.2. Distribution by Agent. If in the opinion of the Agent
the distribution of any amount received by it in such capacity
hereunder, under the Notes, loan accounts or under any of the other
Loan Documents might involve it in liability, it may refrain from
making distribution until its right to make distribution shall have
been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any
such distribution shall have been made shall either repay to the
Agent its proportionate share of the amount so adjudged to be repaid
or shall pay over the same in such manner and to such Persons as
shall be determined by such court.
15.5.3. Delinquent Banks. Notwithstanding anything to the
contrary contained in this Credit Agreement or any of the other Loan
Documents, any Bank that fails (a) to make available to the Agent
its pro rata share of any Loan or to purchase any Letter of Credit
Participation or to purchase a risk participation in any Bankers'
Acceptance or (b) to comply with the provisions of ss.14 with
respect to making dispositions and arrangements with the other
Banks, where such Bank's share of any payment received, whether by
setoff or otherwise, is in excess of its pro rata share of such
payments due and payable to all of the Banks, in each case as, when
and to the full extent required by the provisions of this Credit
Agreement, shall be deemed delinquent (a "Delinquent Bank") and
shall be deemed a Delinquent Bank until such time as such
delinquency is satisfied. A Delinquent Bank shall be deemed to have
assigned any and all payments due to it from the Borrowers, whether
on account of outstanding Loans, Bankers' Acceptances, Unpaid
Reimbursement Obligations, interest, fees or otherwise to the
remaining nondelinquent Banks for application to, and reduction of,
their respective pro rata shares of all outstanding Loans, Bankers'
Acceptances and Unpaid Reimbursement Obligations. The Delinquent
Bank hereby authorizes the Agent to distribute such payments to the
nondelinquent Banks in proportion to their respective pro rata
shares of all outstanding Loans, Bankers' Acceptances and Unpaid
Reimbursement Obligations. A Delinquent Bank shall be deemed to have
satisfied in full a delinquency when and if, as a result of
application of the assigned payments to all outstanding Loans,
Bankers' Acceptances and Unpaid Reimbursement Obligations of the
nondelinquent Banks, the Banks' respective pro rata shares of all
outstanding Loans, Bankers' Acceptances and Unpaid Reimbursement
Obligations have returned to those in effect immediately prior to
such delinquency and without giving effect to the nonpayment causing
such delinquency.
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15.6. Holders of Notes. The Agent may deem and treat the payee of
any Note or the purchaser of any Letter of Credit Participation or
purchaser of any risk participation in any Bankers' Acceptance as the
absolute owner or purchaser thereof for all purposes hereof until it shall
have been furnished in writing with a different name by such payee or by a
subsequent holder, assignee or transferee.
15.7. Indemnity. The Banks ratably agree hereby to indemnify and
hold harmless the Agent and its affiliates from and against any and all
claims, actions and suits (whether groundless or otherwise), losses,
damages, costs, expenses (including any expenses for which the Agent or
such affiliate has not been reimbursed by the Borrowers as required by
ss.16), and liabilities of every nature and character arising out of or
related to this Credit Agreement, the Notes, the Bankers' Acceptances, the
loan accounts or any of the other Loan Documents or the transactions
contemplated or evidenced hereby or thereby, or the Agent's actions taken
hereunder or thereunder, except to the extent that any of the same shall be
directly caused by the Agent's willful misconduct or gross negligence.
15.8. Agent as Bank. In its individual capacity, BKB shall have the
same obligations and the same rights, powers and privileges in respect to
its Commitment and the Loans made by it, and as the holder of any of the
Notes, loan accounts, Bankers' Acceptances and as the purchaser of any
Letter of Credit Participations, as it would have were it not also the
Agent.
15.9. Resignation. The Agent may resign at any time by giving sixty
(60) days prior written notice thereof to the Banks and the Company. Upon
any such resignation, the Majority Banks shall have the right to appoint a
successor Agent. Unless a Default or Event of Default shall have occurred
and be continuing, such successor Agent shall be reasonably acceptable to
the Company. If no successor Agent shall have been so appointed by the
Majority Banks and shall have accepted such appointment within thirty (30)
days after the retiring Agent's giving of notice of resignation, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent,
which shall be a financial institution having a rating of not less than A
or its equivalent by Standard & Poor's Ratings Group. Upon the acceptance
of any appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation, the provisions of this Credit Agreement and
the other Loan Documents shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was
acting as Agent.
15.10. Notification of Defaults and Events of Default. Each Bank
hereby agrees that, upon learning of the existence of a Default or an Event
of Default, it shall promptly notify the Agent thereof. The Agent hereby
agrees that upon receipt of any notice under this ss.15.10 it shall
promptly notify the other Banks of the existence of such Default or Event
of Default.
15.11. Duties in the Case of Enforcement. In case one of more Events
of Default have occurred and shall be continuing, and whether or not
acceleration of the Obligations shall have occurred, the Agent shall, if
(a) so requested by the Majority Banks and (b) the Banks have provided to
the Agent such additional indemnities and
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assurances against expenses and liabilities as the Agent may reasonably
request, proceed to enforce the provisions of the Security Documents
authorizing the sale or other disposition of all or any part of the
Collateral and exercise all or any such other legal and equitable and other
rights or remedies as it may have in respect of such Collateral. The
Majority Banks may direct the Agent in writing as to the method and the
extent of any such sale or other disposition, the Banks hereby agreeing to
indemnify and hold the Agent, harmless from all liabilities incurred in
respect of all actions taken or omitted in accordance with such directions,
provided that the Agent need not comply with any such direction to the
extent that the Agent reasonably believes the Agent's compliance with such
direction to be unlawful or commercially unreasonable in any applicable
jurisdiction.
15.12. Special Covenant to Pay. For purposes of the laws of the
Netherlands and any other non-United States jurisdiction where the
following shall be necessary to the enforcement of the rights of the Agent
and the Banks hereunder and under the Loan Documents, the Borrowers
covenant in favor of the Agent, with the agreement of the Banks, to pay all
Obligations to the Agent when and to the extent due from such Borrower
under the terms of the Loan Documents. The Agent shall be deemed with each
Bank to have the benefit of each and every Obligation of each Borrower
towards each Bank under any Loan Document, so that accordingly the Agent in
its individual capacity will have its own independent right to demand
performance by the relevant Borrower of those Obligations, and such
Obligations will be discharged by, and to the extent of, any discharge
thereof either to the Agent in is capacity referred to above or to the
Agent for itself or to the relevant Bank, as the case may be.
15.13. Duties of Documentation Agent and Arranger. The parties
hereto hereby acknowledge and agree that the Documentation Agent and
Arranger shall have no duties or obligations under this Credit Agreement.
16. EXPENSES AND INDEMNIFICATION.
16.1. Expenses. The Borrowers agree to pay (a) the reasonable costs
of producing and reproducing this Credit Agreement, the other Loan
Documents and the other agreements and instruments mentioned herein, (b)
any taxes (including any interest and penalties in respect thereto) payable
by the Agent or any of the Banks (other than taxes based upon the Agent's
or any Bank's net income) on or with respect to the transactions
contemplated by this Credit Agreement (the Borrowers hereby agreeing to
indemnify the Agent and each Bank with respect thereto), (c) the reasonable
fees, expenses and disbursements of the Agent's Special Counsel or any
local counsel to the Agent incurred in connection with the preparation,
syndication, administration or interpretation of the Loan Documents and
other instruments mentioned herein, each closing hereunder, any amendments,
modifications, approvals, consents or waivers hereto or hereunder, or the
cancellation of any Loan Document upon payment in full in cash of all of
the Obligations or pursuant to any terms of such Loan Document for
providing for such cancellation, (d) the fees, expenses and disbursements
of the Agent or any of its affiliates incurred by the Agent or such
affiliate in connection with the preparation, syndication, administration
or interpretation of the Loan Documents and other instruments mentioned
herein, including all title insurance premiums and surveyor, engineering
and appraisal charges, (e) all reasonable out-of-pocket expenses (including
without limitation reasonable attorneys' fees and costs, which attorneys
may be
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employees of any Bank or the Agent, and reasonable consulting, accounting,
appraisal, investment banking and similar professional fees and charges)
incurred by any Bank or the Agent in connection with (A) the enforcement of
or preservation of rights under any of the Loan Documents against any
Borrower or any of its Subsidiaries or the administration thereof after the
occurrence of a Default or Event of Default and (B) any litigation,
proceeding or dispute whether arising hereunder or otherwise, in any way
related to any Bank's or the Agent's relationship with the Borrowers or any
of their Subsidiaries or related to the Merger and (f) all reasonable fees,
expenses and disbursements of any Bank or the Agent incurred in connection
with UCC searches, UCC filings or mortgage (including intellectual property
mortgage) recordings.
16.2. Indemnification. Each of the Borrowers agrees to indemnify and
hold harmless the Agent, its affiliates and the Banks from and against any
and all claims, actions and suits whether groundless or otherwise, and from
and against any and all liabilities, losses, damages and expenses of every
nature and character arising out of this Credit Agreement or any of the
other Loan Documents or the transactions contemplated hereby including,
without limitation, (i) any actual or proposed use by any Borrower or any
of its Subsidiaries of the proceeds of any of the Loans or Letters of
Credit, (ii) any actual or alleged infringement of any patent, copyright,
trademark, service mark or similar right of the Company or any of its
Subsidiaries comprised in the Collateral, (iii) the Borrowers or any of
their Subsidiaries entering into or performing this Credit Agreement or any
of the other Loan Documents and (iv) with respect to the Borrowers and
their Subsidiaries and their respective properties and assets, the
violation of any Environmental Law, the presence, disposal, escape,
seepage, leakage, spillage, discharge, emission, release or threatened
release of any Hazardous Substances or any action, suit, proceeding or
investigation brought or threatened with respect to any Hazardous
Substances (including, but not limited to, claims with respect to wrongful
death, personal injury or damage to property), in each case including,
without limitation, the reasonable fees and disbursements of counsel and
allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding. In litigation, or the
preparation therefor, the Banks and the Agent and its affiliates shall each
be entitled to select their own counsel and, in addition to the foregoing
indemnity, each of the Borrowers agrees to pay promptly the reasonable fees
and expenses of such counsel. If, and to the extent that the obligations of
the Borrowers under this ss.16.2 are unenforceable for any reason, then
each of the Borrowers hereby agrees to make the maximum contribution to the
payment in satisfaction of such obligations which is permissible under
applicable law. Notwithstanding the foregoing, no indemnification or
contribution shall be provided to any indemnitee under this Section 16.2 in
the event of the bad faith, gross negligence or willful misconduct of such
indemnitee.
16.3. Survival. The covenants contained in this ss.16 shall survive
payment or satisfaction in full of all other Obligations.
17. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
17.1. Sharing of Information with Section 20 Subsidiary. The Company
acknowledges that from time to time financial advisory, investment banking
and other services may be offered or provided to the Company or one or more
of its Subsidiaries, in connection with this Credit Agreement or otherwise,
by a Section 20 Subsidiary. The Company, for itself and each of its
Subsidiaries, hereby authorizes (a) such Section 20
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Subsidiary to share with the Agent and each Bank any information delivered
to such Section 20 Subsidiary by the Borrower or any of its Subsidiaries,
and (b) the Agent and each Bank to share with such Section 20 Subsidiary
any information delivered to the Agent or such Bank by the Company or any
of its Subsidiaries pursuant to this Credit Agreement, or in connection
with the decision of such Bank to enter into this Credit Agreement; it
being understood, in each case, that any such Section 20 Subsidiary
receiving such information shall be bound by the confidentiality provisions
of this Credit Agreement. Such authorization shall survive the payment and
satisfaction in full of all of Obligations.
17.2. Confidentiality. Each of the Banks and the Agent agrees, on
behalf of itself and each of its affiliates, directors, officers, employees
and representatives, to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential
information of the same nature and in accordance with safe and sound
practices, any non-public information supplied to it by the Company or any
of its Subsidiaries pursuant to this Credit Agreement that is identified by
such Person as being confidential at the time the same is delivered to the
Banks or the Agent, provided that nothing herein shall limit the disclosure
of any such information (a) after such information shall have become public
other than through a violation of this ss.17, (b) to the extent required by
statute, rule, regulation or judicial process, (c) to counsel for any of
the Banks or the Agent, (d) to bank examiners, the National Association of
Insurance Commissioners or any other regulatory authority having
jurisdiction over any Bank or the Agent, or to auditors or accountants, (e)
to the Agent, any Bank or any Section 20 Subsidiary, (f) in connection with
any litigation to which any one or more of the Banks, the Agent or any
Section 20 Subsidiary is a party, or in connection with the enforcement of
rights or remedies hereunder or under any other Loan Document, (g) to a
Subsidiary or affiliate of such Bank as provided in ss.17.1 or (h) to any
assignee or participant (or prospective assignee or participant) so long as
such assignee or participant agrees to be bound by the provisions of
ss.19.6. Moreover, each of the Agent and the Banks is hereby expressly
permitted by the Borrowers to refer to any of the Borrowers and their
Subsidiaries in connection with any advertising, promotion or marketing
undertaken by the Agent or such Bank and, for such purpose, the Agent or
such Bank may utilize any logo or other distinctive symbol associated with
the Borrowers or any of their Subsidiaries or any of their businesses
provided that any symbols designated registered trademarks or service marks
or claims of trademark or service mark protection are used in the manner
used by any Borrower.
17.3. Prior Notification. Unless specifically prohibited by
applicable law or court order, each of the Banks and the Agent shall, prior
to disclosure thereof, notify the Company of any request for disclosure of
any such non-public information by any governmental agency or
representative thereof (other than any such request in connection with a
routine examination of such Bank by such governmental agency) or pursuant
to legal process.
17.4. Other. In no event shall any Bank or the Agent be obligated or
required to return any materials furnished to it or any Section 20
Subsidiary by the Company or any of its Subsidiaries. The obligations of
each Bank under this ss.17 shall supersede and replace the obligations of
such Bank under any confidentiality letter in respect of this financing
signed and delivered by such Bank to the Company prior to the date hereof
and
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shall be binding upon any assignee of, or purchaser of any participation
in, any interest in any of the Loans or Reimbursement Obligations from any
Bank.
18. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein, in
the Notes, in any of the other Loan Documents or in any certificates or
financial statements expressly required by the terms of the Credit Agreement to
be delivered by or on behalf of the Borrowers or any of their Subsidiaries
pursuant hereto shall be deemed to have been relied upon by the Banks and the
Agent, notwithstanding any investigation heretofore or hereafter made by any of
them, and shall survive the making by the Banks of any of the Loans, the
acceptance and/or purchase of any Bankers' Acceptance and the issuance,
extension or renewal of any Letters of Credit, as herein contemplated, and shall
continue in full force and effect so long as any Letter of Credit or any amount
due under this Credit Agreement or the Notes or the loan accounts or any
Bankers' Acceptance or any of the other Loan Documents remains outstanding or
any Bank has any obligation to make any Loans or accept and/or purchase any
Bankers' Acceptance or the Agent has any obligation to issue, extend or renew
any Letter of Credit, and for such further time as may be otherwise expressly
specified in this Credit Agreement.
19. ASSIGNMENT AND PARTICIPATION.
19.1. Conditions to Assignment by Banks. Except as provided herein,
each Bank may assign to one or, more Eligible Assignees all or a portion of
its interests, rights and obligations under this Credit Agreement
(including all or a portion of its Commitment Percentage and Commitment and
the same portion of the Loans at the time owing to it, the Notes held by it
and its participating interest in the risk relating to any Letters of
Credit or Bankers' Acceptance); provided that (a) each of the Agent and,
unless a Default or Event of Default shall have occurred and be continuing,
the Company shall have given its prior written consent to such assignment,
which consents will not be unreasonably withheld (which consents shall not
be required in the case of an assignment to a Bank, Affiliate of any Bank,
or with respect to any Bank that is a fund that invests in bank loans, any
other fund that invests in bank loans and is advised or managed by the same
investment adviser of such Bank), (b) each such assignment shall be of a
constant, and not a varying, percentage of all the assigning Bank's rights
and obligations under this Credit Agreement, (c) each assignment made after
the initial syndication of the Loans and Commitments shall be in an amount
that is a minimum of $5,000,000 (or if less, such assignor's entire
Commitment), and (d) the parties to such assignment shall execute and
deliver to the Agent, for recording in the Register (as hereinafter
defined), an Assignment and Acceptance, substantially in the form of
Exhibit F hereto (an "Assignment and Acceptance"), together with any Notes
subject to such assignment. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five (5) Business
Days after the execution thereof unless a shorter period is otherwise
agreed to by the Agent and the Company, (i) 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 Bank hereunder, and (ii)
the assigning Bank shall, to the extent provided in such assignment and
upon payment to the Agent of the registration fee referred to in ss.19.3,
be released from its obligations under this Credit Agreement.
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19.2. Certain Representations and Warranties; Limitations,
Covenants. By executing and delivering an Assignment and Acceptance, the
parties to the assignment thereunder confirm to and agree with each other
and the other parties hereto as follows:
(a) other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, the assigning Bank makes no representation or
warranty, express or implied, and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or
the attachment, perfection or priority of any security interest or
mortgage,
(b) the assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Company and its Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations, or the performance or
observance by the Company and its Subsidiaries or any other Person
primarily or secondarily liable in respect of any of the Obligations of any
of their obligations under this Credit Agreement or any of the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto;
(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent financial
statements referred to in ss.7.4 and ss.8.4 and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance upon the
assigning Bank, the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Credit
Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Credit
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof or thereof, together with such powers as are reasonably
incidental thereto;
(g) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Credit
Agreement are required to be performed by it as a Bank;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made arrangements with
the assigning Bank satisfactory to such assignee with respect to its pro
rata share of Letter of Credit Fees in respect of outstanding Letters of
Credit.
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19.3. Register. The Agent shall maintain a copy of each Assignment
and Acceptance delivered to it and a register or similar list (the
"Register") for the recordation of the names and addresses of the Banks and
the Commitment Percentage of, and principal amount of the Loans owing to
and Letter of Credit Participations and risk participation in any Bankers'
Acceptance purchased by, the Banks from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes of this
Credit Agreement. The Register shall be available for inspection by the
Company and the Banks at any reasonable time and from time to time upon
reasonable prior notice. Upon each such recordation, the assigning Bank
agrees to pay to the Agent a registration fee in the sum of $2,500.
19.4. New Notes. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject
to such assignment, the Agent shall (a) record the information contained
therein in the Register, and (b) give prompt notice thereof to the Company
and the Banks (other than the assigning Bank). Within five (5) Business
Days after receipt of such notice, the Company, at its own expense, shall
execute and deliver to the Agent, in exchange for each surrendered Note, a
new Note to the order of such Eligible Assignee in an amount equal to the
amount assumed by such Eligible Assignee pursuant to such Assignment and
Acceptance and, if the assigning Bank has retained some portion of its
obligations hereunder, a new Note to the order of the assigning Bank in an
amount equal to the amount retained by it hereunder. Such new Notes shall
provide that they are replacements for the surrendered Notes, shall be in
an aggregate principal amount equal to the aggregate principal amount of
the surrendered Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be substantially the form of the
assigned Notes. Within five (5) days of issuance of any new Notes pursuant
to this ss.19.4, the Company shall deliver an opinion of counsel, addressed
to the Banks and the Agent, relating to the due authorization, execution
and delivery of such new Notes and the legality, validity and binding
effect thereof, in form and substance satisfactory to the Banks. The
surrendered Notes shall be cancelled and returned to the Company.
19.5. Participations. Each Bank may sell participations to one or
more banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents;
provided that (a) each such participation shall be in an amount of not less
than $2,500,000, (b) any such sale or participation shall not affect the
rights and duties of the selling Bank hereunder to the Borrowers and (c)
the only rights granted to the participant pursuant to such participation
arrangements with respect to waivers, amendments or modifications of the
Loan Documents shall be the rights to approve waivers, amendments or
modifications that would reduce the principal of or the interest rate on
any Loans, extend the term or increase the amount of the Commitment of such
Bank as it relates to such participant, reduce the amount of any commitment
fees or Letter of Credit Fees to which such participant is entitled or
extend any regularly scheduled payment date for principal or interest.
19.6. Disclosure. Each of the Borrowers agrees that in addition to
disclosures made in accordance with standard and customary banking
practices any Bank may disclose information obtained by such Bank pursuant
to this Credit Agreement to assignees or participants and potential
assignees or participants hereunder; provided that such assignees or
participants or potential assignees or participants shall agree (a) to
treat
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in confidence such information unless such information otherwise becomes
public knowledge, (b) not to disclose such information to a third party,
except as required by law or legal process and (c) not to make use of such
information for purposes of transactions unrelated to such contemplated
assignment or participation.
19.7. Assignee or Participant Affiliated with any Borrower. If any
assignee Bank is an Affiliate of any Borrower, then any such assignee Bank
shall have no right to vote as a Bank hereunder or under any of the other
Loan Documents for purposes of granting consents or waivers or for purposes
of agreeing to amendments or other modifications to any of the Loan
Documents or for purposes of making requests to the Agent pursuant to
ss.13.1 or ss.13.2, and the determination of the Majority Banks shall for
all purposes of this Credit Agreement and the other Loan Documents be made
without regard to such assignee Bank's interest in any of the Loans,
Bankers' Acceptances or Reimbursement Obligations. If any Bank sells a
participating interest in any of the Loans, Bankers' Acceptances or
Reimbursement Obligations to a participant, and such participant is any
Borrower or an Affiliate of any Borrower, then such transferor Bank shall
promptly notify the Agent of the sale of such participation. A transferor
Bank shall have no right to vote as a Bank hereunder or under any of the
other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or modifications to any of the Loan
Documents or for purposes of making requests to the Agent pursuant to
ss.13.1 or ss.13.2 to the extent that such participation is beneficially
owned by any Borrower or any Affiliate of any Borrower, and the
determination of the Majority Banks shall for all purposes of this Credit
Agreement and the other Loan Documents be made without regard to the
interest of such transferor Bank in the Loans or Reimbursement Obligations
to the extent of such participation.
19.8. Miscellaneous Assignment Provisions. Any assigning Bank shall
retain its rights to be indemnified pursuant to ss.16 or any other express
provision of this Credit Agreement with respect to any claims or actions
arising prior to the date of such assignment. If any assignee Bank is not
incorporated under the laws of the United States of America or any state
thereof, it shall, prior to the date on which any interest or fees are
payable hereunder or under any of the other Loan Documents for its account,
deliver to the Borrowers and the Agent certification as to its exemption
from deduction or withholding of any United States federal income taxes
(such as Form 1001, 4224, W-8 or W-9, as applicable). If any Reference Bank
transfers all of its interest, rights and obligations under this Credit
Agreement, the Agent shall, in consultation with the Borrowers and with the
consent of the Borrowers and the Majority Banks, appoint another Bank to
act as a Reference Bank hereunder. Anything contained in this ss.19 to the
contrary notwithstanding, any Bank may at any time pledge all or any
portion of its interest and rights under this Credit Agreement (including
all or any portion of its Notes) to (a) any of the twelve Federal Reserve
Banks organized under ss.4 of the Federal Reserve Act, 12 U.S.C. ss.341, or
(b) to a lender to such Bank (or trustee therefor) in connection with a
bona fide financing transaction. No such pledge or the enforcement thereof
shall release the pledgor Bank from its obligations hereunder or under any
of the other Loan Documents.
19.9. Assignment by Borrowers. The Borrowers shall not assign or
transfer any of its rights or obligations under any of the Loan Documents
without the prior written consent of each of the Banks.
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20. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Notes or any Letter of Credit Applications shall be in
writing and shall be delivered in hand, mailed by United States registered or
certified first class mail, postage prepaid, sent by overnight courier, or sent
by telegraph, telecopy, facsimile or telex and confirmed by delivery via courier
or postal service, addressed as follows:
(a) if to any Borrower, at 233 Fortune Boulevard, Milford,
Massachusetts 01757, Attention: President, or at such other address for
notice as the Borrower shall last have furnished in writing to the Person
giving the notice with copies of such documents delivered to Donald H.
Siegel, P.C., at Posternak, Blankstein & Lund, L.L.P., 100 Charles River
Plaza, Boston ,Massachusetts 02114-2723;
(b) if to the Agent, at 100 Federal Street, Boston, Massachusetts
02110, USA, Attention: Vallerie Hartgrove, Agency Services, or such other
address for notice as the Agent shall last have furnished in writing to the
Person giving the notice; and
(c) if to any Bank, at such Bank's address set forth on Schedule 1
hereto, or such other address for notice as such Bank shall, have last
furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (a) if delivered by hand, overnight
courier or facsimile to a responsible officer of the party to which it is
directed, at the time of the receipt thereof by such officer or the sending
of such facsimile and (b) if sent by registered or certified first-class
mail, postage prepaid, on the third Business Day following the mailing
thereof.
21. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE
BORROWERS AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH
OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON SUCH BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN ss.20. EACH OF
THE BORROWERS HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
22. HEADINGS.
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The captions in this Credit Agreement are for convenience of reference only
and shall not define or limit the provisions hereof.
23. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Credit Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
24. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection herewith
or therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Credit Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
ss.26.
25. WAIVER OF JURY TRIAL.
Each of the Borrowers hereby waives its right to a jury trial with respect
to any action or claim arising out of any dispute in connection with this Credit
Agreement, the Notes or any of the other Loan Documents, any rights or
obligations hereunder or thereunder or the performance of which rights and
obligations. Except as prohibited by law, each of the Borrowers hereby waives
any right it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. Each of the Borrowers
(a) certifies that no representative, agent or attorney of any Bank or the Agent
has represented, expressly or otherwise, that such Bank or the Agent would not,
in the event of litigation, seek to enforce the foregoing waivers and (b)
acknowledges that the Agent and the Banks have been induced to enter into this
Credit Agreement, the other Loan Documents to which it is a party by, among
other things, the waivers and certifications contained herein.
26. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this Credit Agreement to
be given by the Banks (including, without limitation, an increase in the
sublimit of Revolving Credit Loans, Bankers' Acceptances and Letters of Credit
available to the Foreign Borrowers) may be given, and any term of this Credit
Agreement, the other Loan Documents or any other instrument related hereto or
mentioned herein may be amended, and the performance or observance by the
Borrowers or any of their Subsidiaries of any terms of this Credit Agreement,
the other Loan Documents or such other instrument or the continuance of any
Default or Event of Default may be waived (either generally or in a particular
instance and either retroactively or prospectively) with, but only with, the
written consent of the Borrowers and the written consent of the Majority Banks.
Notwithstanding the foregoing, a decrease in the rate of interest on the Notes
and loan accounts (other than interest accruing pursuant to ss.5.11.2 following
the effective date of any waiver by the Majority Banks of the Default or Event
of Default relating thereto), any change in the regularly scheduled or otherwise
required payment dates for any amounts owing under the Loan Documents to the
Banks, any forgiveness of any of the Obligations, the waiver of an Event of
Default under ss.13.1(a) or (b) hereof, the release of any security interest or
lien as to Collateral
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constituting all or substantially all of the Collateral (except if the release
or disposition of such Collateral is permitted or provided for in the provisions
of ss.9.5.2. hereof or elsewhere in the Loan Documents), the release of any
Guarantor (except if the release or disposition of such Collateral is permitted
or provided for in the provisions of ss.9.5.2 hereof or elsewhere in the Loan
Documents), the amount of the Commitments, Term Loan A Commitments and Term Loan
B Commitments of the Banks, and the amount of commitment fee or Letter of Credit
Fees hereunder may not be changed without the written consent of the Company and
the written consent of each Bank affected thereby; the Revolving Credit Loan
Maturity Date, the Term Loan A Maturity Date and the Term Loan B Maturity Date
may not be postponed without the written consent of each Bank affected thereby;
this ss.26 and the definition of Majority Banks may not be amended without the
written consent of all of the Banks; the order of application of mandatory
repayments to the Term Loans and the right of holders of Term Loan B to decline
mandatory prepayments shall not be changed without the written consent of the
holders of a majority of the outstanding Term Notes, voting as a single class in
addition to the written consent of the Majority Banks, and the amount of the
Agent's Fee or any Letter of Credit Fees payable for the Agent's account and
ss.15 may not be amended without the written consent of the Agent. No waiver
shall extend to or affect any obligation not expressly waived or impair any
right consequent thereon. No course of dealing or delay or omission on the part
of the Agent or any Bank in exercising any right shall operate as a waiver
thereof or otherwise be prejudicial thereto. No notice to or demand upon the
Borrowers shall entitle the Borrowers to other or further notice or demand in
similar or other circumstances.
27. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Credit Agreement in any jurisdiction.
28. TRANSITIONAL ARRANGEMENTS.
28.1. Original Credit Agreement Superseded. This Credit Agreement
shall on the Closing Date supersede the Original Credit Agreement in its
entirety, except as provided in this ss.28. On the Closing Date, the rights
and obligations of the parties evidenced by the Original Credit Agreement,
shall be evidenced by the Credit Agreement and other Loan Documents, the
"Revolving Credit Loans" as defined in the Original Credit Agreement shall
be converted to Revolving Credit Loans as defined herein, and all
outstanding letters of credit issued by the Agent for the account of the
Borrower prior to the Closing Date shall, for the purposes of this Credit
Agreement, be Letters of Credit.
28.2. Return and Cancellation of Revolving Credit Notes. As soon as
reasonably practicable after its receipt of its Notes hereunder on the
Closing Date, the Banks will promptly return to the Company, marked
"Substituted" or "Cancelled", as the case may be, any notes of the
Borrowers held by the Banks pursuant to the Original Credit Agreement.
28.3. Interest and Fees Under Superseded Agreement. All interest and
fees and expenses, if any, owing or accruing under or in respect of the
Original Credit Agreement through the Closing Date shall be calculated as
of the Closing Date (prorated in the case of any fractional periods), and
shall be paid on the Closing Date. In addition,
<PAGE>
-132-
any Loans (as defined in the Original Credit Agreement) bearing interest at
the Eurocurrency Rate (as defined in the Original Credit Agreement) shall
continue as Eurocurrency Rate Loans until the end of the Interest Period
(as defined in the Original Credit Agreement) applicable to such Loans.
<PAGE>
-133-
IN WITNESS WHEREOF, the undersigned has duly executed this Credit Agreement
as a sealed instrument as of the date first set forth above.
HOLMES PRODUCTS CORP.
By: /s/ Ira B. Morgenstern
--------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
HOLMES PRODUCTS (FAR EAST)
LIMITED
By: /s/ Ira B. Morgenstern
--------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
ESTEEM INDUSTRIES LIMITED
By: /s/ Ira B. Morgenstern
--------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
RAIDER MOTOR CORPORATION
By: /s/ Ira B. Morgenstern
--------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
HOLMES PRODUCTS (EUROPE)
LIMITED
By: /s/ Jordan A. Kahn
--------------------------
Name: Jordan A. Kahn
Title: Director
By: /s/ Ira B. Morgenstern
--------------------------
Name: Ira B. Morgenstern
Title: Director
<PAGE>
-134-
MORIARTY ACQUISITION CORP.
By: /s/ Ira B. Morgenstern
--------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
THE RIVAL COMPANY
By: /s/ Ira B. Morgenstern
--------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
BIONAIRE INTERNATIONAL B.V.
By: /s/ Ira B. Morgenstern
--------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
PATTON ELECTRIC (HONG KONG)
LIMITED
By: /s/ Ira B. Morgenstern
--------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
THE RIVAL COMPANY OF CANADA,
LTD.
By: /s/ Ira B. Morgenstern
--------------------------
Name: Ira B. Morgenstern
Title: Senior Vice President-Finance
<PAGE>
-135-
BANKBOSTON, N.A., individually
and as Agent
By: /s/ Constance B. Moore
--------------------------
Name: Constance Moore
Title: Vice President
BANKBOSTON, N.A. acting through
its London and its Hong Kong
branches, as Fronting Bank
By: /s/ Constance B. Moore
--------------------------
Name: Constance Moore
Title: Vice President
<PAGE>
-136-
LEHMAN COMMERCIAL PAPER INC.
as Documentation Agent
By: /s/ William J. Gallagher
--------------------------
William J. Gallagher
Authorized Signatory
SYNDICATED LOAN FUNDING TRUST
By: Lehman Commercial Paper
Inc., not in its individual
capacity, but solely as Asset
Manager
By: /s/ William J. Gallagher
--------------------------
William J. Gallagher
Authorized Signatory
<PAGE>
-137-
HELLER FINANCIAL
By: /s/ K. Craig Gallehugh
---------------------------
Name: K. Craig Gallehugh
Title: Vice President
<PAGE>
-138-
LASALLE NATIONAL BANK
By: /s/ F. Ward Nixon
--------------------------
Name: F. Ward Nixon
Title: Senior Vice President
<PAGE>
-139-
KEY CORPORATE CAPITAL INC.
By: /s/ Ronald B. Hunt
--------------------------
Name: Ronald B. Hunt
Title: Vice President
<PAGE>
-140-
USTRUST
By: /s/ P. Jeffrey Huth
--------------------------
Name: P. Jeffrey Huth
Title: Vice President
<PAGE>
-141-
STATE STREET BANK AND
TRUST COMPANY
By: /s/ Monica M. Sheehan
---------------------------
Name: Monica M. Sheehan
Title: Vice President
<PAGE>
-142-
COMERICA BANK
By: /s/ Kimberly S. Kersten
--------------------------
Name: Kimberly S. Kersten
Title: Vice President
<PAGE>
-143-
STAR BANK NATIONAL ASSOCIATION
By: /s/ Mark A. Whitson
---------------------------
Name: Mark A. Whitson
Title: Vice President
<PAGE>
-144-
FLEET NATIONAL BANK
By: /s/ Thomas J. Flanagan, II
-------------------------------
Name: Thomas J. Flanagan, II
Title: Senior Vice President
<PAGE>
-145-
ANTARES CAPITAL CORPORATION
By: /s/ David Mahon
-------------------------------
Name: David Mahon
Title: Director
<PAGE>
-146-
NATIONAL CITY BANK
By: /s/ Wilmer J. Jacobs
-------------------------------
Name: Wilmer J. Jacobs
Title: Officer
<PAGE>
-147-
[PROVIDENT BANK]
By: /s/ Steve Touvelle
---------------------------
Name: Steve Touvelle
Title: Vice President
<PAGE>
-148-
FRANKLIN FLOATING RATE TRUST
By: /s/ Chauncey Lufkin
---------------------------
Name: Chauncey Lufkin
Title: Vice President
<PAGE>
-149-
THE TRAVELERS INSURANCE COMPANY
By: /s/ Teresa M. Torrey
---------------------------
Name: Teresa M. Torrey
Title: Second Vice President
<PAGE>
-150-
TRAVELERS CORPORATE LOAN FUND, INC.
By: /s/ Teresa M. Torrey
---------------------------
Name: Teresa M. Torrey
Title: Second Vice President
<PAGE>
-151-
MERRILL LYNCH SENIOR
FLOATING RATE FUND, INC.
By: /s/ George D. Pelose
---------------------------
Name: George D. Pelose
Title: Authorized Signatory
UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
as of September 30, 1998, for the year ended December 31, 1997, for the nine
months ended September 30, 1998 and the twelve months ended September 30, 1998
("the Pro Forma Financial Statements") have been derived by the application of
pro forma adjustments to the combination of the historical financial statements
of each of Holmes Products Corp. ("Holmes") and The Rival Company ("Rival").
The pro forma combined condensed balance sheet assumes that the
Transactions (as defined below) took place September 30, 1998 and combines
Holmes' unaudited September 30, 1998 balance sheet and Rival's unaudited
September 30, 1998 balance sheet. The pro forma combined condensed statements of
operations assume that the Transactions and the 1997 Transactions (as defined
below) took place as of January 1, 1997 and combine Holmes' statement of
operations for the year ended December 31, 1997, unaudited nine months ended
September 30, 1998 and the unaudited twelve months ended September 30, 1998 and
Rival's unaudited statement of operations for the year ended December 31, 1997,
unaudited nine months ended September 30, 1998 and unaudited twelve months ended
September 30, 1998, respectively. The pro forma combined condensed statements of
operations also reflect employment and management agreements entered into in
conjunction with the 1997 Transactions.
The Pro Forma Financial Statements do not purport to represent what Holmes'
financial position or results of operations would have actually been had the
Transactions and the 1997 Transactions in fact occurred on such dates, or to
project results of operations for any future period. The Pro Forma Financial
Statements should be read in conjunction with the historical financial
statements of each of Holmes and Rival, including the notes thereto.
The "1997 Transactions" consist of (1) the November 1997 leveraged
recapitalization of Holmes in which affiliates of Berkshire Partners, LLC,
certain members of Holmes senior management and certain other investors made an
equity investment in Holmes, the proceeds of which, together with the proceeds
of a $105 million offering of Senior Subordinated Notes (the "Existing Notes"),
borrowings under Holmes' existing credit facility (the "Existing Credit
Facility") and available cash, were used to redeem a portion of the common stock
held by Holmes' prior majority owner, to repay certain outstanding indebtedness
and to pay fees and expenses of the recapitalization; and (2) the May and June
1997 repurchase by Holmes of the 30% minority interest held by certain
stockholders in one of Holmes' subsidiaries for a total of $900,000.
The "Transactions" consist of the issuance by Holmes of $31,250,000
principal amount of new Senior Subordinated Notes (the "Notes"), the receipt of
the proceeds from the sale of $50,000,000 of Holmes' common stock (the "Equity
Commitment"), initial borrowings under Holmes' new $325,000,000 senior credit
facility (the "Credit Facility"), the acquisition of Rival by Holmes (the
"Acquisition"), the refinancing of Rival's existing indebtedness, the
refinancing of outstanding borrowings under the Existing Credit Facility and the
payment of fees and expenses of the Transactions.
<PAGE>
HOLMES PRODUCTS CORP.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1998
(in thousands except par value)
<TABLE>
<CAPTION>
Adjustments
Holmes Rival ----------------------------------
September 30, September 30, Financing Acquisition Pro
1998(1) 1998(1) Adjustments Adjustments Forma
--------------- --------------- ----------------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents ................ $ 5,738 $ 1,209 $291,975(2) $(291,975)(2) $ 6,947
Accounts receivable ...................... 39,632 73,837 -- -- 113,469
Inventories .............................. 57,114 113,008 -- 9,720 (4) 179,842
Prepaid expenses and other
current assets .......................... 1,637 2,044 -- 3,291 (4) 6,972
Deferred income taxes .................... 4,651 2,361 -- (2,361)(4) 4,651
--------- -------- -------- --------- ---------
108,772 192,459 291,975 (281,325) 311,881
Property, plant & equipment .............. 17,950 37,606 -- -- 55,556
Deferred income taxes .................... 638 -- -- -- 638
Goodwill ................................. -- 59,859 -- 23,895 (4) 83,754
Deposits and other assets ................ 2,397 10,004 -- (229)(4) 12,172
Debt issuance costs, net ................. 9,437 -- 12,000 (2) -- 20,299
(1,138)(3)
--------- -------- -------- --------- ---------
$ 139,194 $299,928 $302,837 $(257,659) $ 484,300
========= ======== ======== ========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable to bank .................... $ -- $ 66,335 $ -- $ (66,335)(2) $ --
Current portion of long-term debt ........ -- 6,000 1,063 (2) (6,000)(2) 1,063
Current portion of capital leases ........ 584 -- -- -- 584
Accounts payable ......................... 16,593 19,823 -- -- 36,416
Accrued expenses ......................... 14,580 13,894 (54)(2) 2,620 (4) 31,040
Deferred tax liabilities ................. -- -- -- 1,527 (4) 1,527
Accrued income taxes ..................... 2,074 -- (455)(3) -- 1,619
--------- -------- -------- --------- ---------
33,831 106,052 554 (68,188) 72,249
Capital lease obligations ................ 320 -- -- -- 320
Line of credit ........................... 19,500 -- (19,500)(2) -- --
Long-term debt (less current
portion) ................................ 105,000 78,000 272,466 (2) (78,000)(2) 377,466
Other liabilities and deferred
income tax .............................. -- 5,085 -- (680)(4) 4,405
--------- -------- -------- --------- ---------
158,651 189,137 253,520 (146,868) 454,440
Commitments & contingencies .............. -- -- -- -- --
Stockholders' equity:
Common stock, $.001 par .................. 10 -- 50 (2) -- 60
Common stock, $.01 par ................... -- 98 -- (98)(5) --
Paid in capital .......................... 16,985 45,972 49,950 (2) (45,972)(5) 66,935
Treasury stock, at cost .................. (62,058) (6,952) -- 6,952 (5) (62,058)
Retained earnings ........................ 25,606 71,673 (683)(3) (71,673)(5) 24,923
--------- -------- -------- --------- ---------
Total stockholders' equity (deficit) ..... (19,457) 110,791 49,317 (110,791) 29,860
--------- -------- -------- --------- ---------
$ 139,194 $299,928 $302,837 $(257,659) $ 484,300
========= ======== ======== ========= =========
</TABLE>
-2-
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA
COMBINED CONDENSED BALANCE SHEET
(in thousands)
Basis of Presentation
(1) The pro forma combined condensed balance sheet assumes that the
Transactions took place September 30, 1998 and combines Holmes' unaudited
September 30, 1998 balance sheet and Rival's unaudited September 30, 1998
balance sheet.
Pro Forma Adjustments
(2) Reflects the issuance of the Notes, initial borrowings under the Credit
Facility, the funding of the Equity Commitment, the repayment of the
Existing Credit Facility and all of Rival's indebtedness and the related
adjustments to cash assuming consummation of the Transactions as of
September 30, 1998, computed as follows:
<TABLE>
<CAPTION>
Financing Acquisition Total
----------- ----------- ----------
<S> <C> <C> <C>
Sources of Funds:
Initial borrowings under Credit Facility -- long-term .......... $242,466 $ -- $ 242,466
Initial borrowings under Credit Facility -- short-term ......... 1,063 -- 1,063
Issuance of the Notes .......................................... 30,000 -- 30,000
Issuance of common stock ....................................... 50,000 -- 50,000
-------- --------- ---------
323,529 -- 323,529
-------- --------- ---------
Uses of Funds:
Repayment of existing Rival credit facility .................... -- (66,335) (66,335)
Repayment of existing Rival notes -- long-term ................. -- (78,000) (78,000)
Repayment of existing Rival notes -- short-term ................ -- (6,000) (6,000)
Repayment of the Existing Credit Facility ...................... (19,500) -- (19,500)
Redemption of Rival common stock ............................... -- (127,785) (127,785)
Redemption of certain Rival options ............................ -- (1,575) (1,575)
Prepayment premium on Rival debt ............................... -- (8,000) (8,000)
Accrued interest at September 30, 1998 ......................... (54) (2,280) (2,334)
Estimated fees and expenses .................................... (12,000) (2,000) (14,000)
-------- --------- ---------
(31,554) (291,975) (323,529)
-------- --------- ---------
Net adjustment to cash ......................................... $291,975 $(291,975) $ --
======== ========= =========
</TABLE>
Short-term debt incurred under the Credit Facility is comprised of $875 on
Term Loan A and $188 on Term Loan B, which are the total of quarterly
payments due under the Credit Facility within one year of September 30,
1998.
(3) Reflects the write-off of $683 of debt issuance costs, net of $455 tax
benefit, related to the Holmes debt extinguished in connection with the
Transactions. This amount has not been included in the pro forma combined
condensed statements of operations due to its extraordinary nature.
(4) Reflects management's preliminary allocation of purchase price for the
Acquisition in accordance with the purchase method of accounting, as
follows:
Purchase price:
<TABLE>
<S> <C>
Cash used to purchase shares and options ......... $129,360
Retirement of Rival indebtedness ................. 150,335
Prepayment premium on debt ....................... 8,000
Accrued interest on debt ......................... 2,280
Estimated fees and expenses ...................... 2,000
--------
$291,975
========
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
Rival
September 30, Pro
1998 Adjustments Forma
--------------- ------------ -----------
<S> <C> <C> <C>
Cash and cash equivalents ......................... $ 1,209 $ -- $ 1,209
Accounts receivable ............................... 73,837 -- 73,837
Inventories ....................................... 113,008 9,720 (a) 122,728
Deferred income taxes ............................. 2,361 (2,361)(b) --
Prepaid expenses and other current assets ......... 2,044 3,291 (c) 5,335
-------- --------- --------
Total current assets ............................ 192,459 10,650 203,109
Property, plant & equipment ....................... 37,606 -- 37,606
Deferred income taxes ............................. 3,606 -- 3,606
Deposits and other assets ......................... 6,398 (229)(d) 6,169
Goodwill .......................................... 59,859 23,895 (e) 83,754
-------- --------- --------
Total assets .................................... 299,928 34,316 334,244
Current portion of long-term debt ................. 72,335 (72,335)(f) --
Accounts payable .................................. 19,823 -- 19,823
Accrued expenses .................................. 13,894 (2,280)(g) 16,514
-- 4,900 (h) --
Deferred tax liabilities .......................... -- 1,527 (i) 1,527
-------- --------- --------
Total current liabilities ....................... 106,052 (68,188) 37,864
Long-term debt (less current portion) ............. 78,000 (78,000)(f) --
Other liabilities and deferred income tax ......... 5,085 (680)(j) 4,405
-------- --------- --------
Total liabilities ............................... 189,137 (146,868) 42,269
-------- --------- --------
Net assets acquired ............................. $110,791 $ 181,184 $291,975
======== ========= ========
</TABLE>
(a) Reflects the increase in inventories to estimated fair value based on
preliminary purchase price allocation and elimination of the LIFO
reserve. This write-up will result in a non-recurring charge to the
Company in the year subsequent to the Acquisition.
<TABLE>
<S> <C>
Elimination of LIFO reserve ................................ $6,090
Increase in inventories to their estimated fair market value 3,630
------
$9,720
======
</TABLE>
(b) Reflects the netting of the existing current deferred tax assets
against the deferred tax liabilities generated in the Acquisition.
(c) Reflects the current tax benefits related to the prepayment premium on
the extinguished debt of Rival, as well as the current tax benefits
related to the deferred financing fees written-off.
(d) Reflects the write-off of deferred financing fees relating to the debt
that has been extinguished in the Transactions.
(e) Reflects the excess purchase price over the fair value of net assets
acquired based on a preliminary purchase price allocation.
(f) Reflects the reduction in current and long-term debt repaid in
connection with the Transactions.
(g) Reflects the payment of $2,280 in accrued interest paid in connection
with the Transactions.
(h) Reflects a $4,900 estimate of accrued restructuring charges to be
incurred in connection with the Acquisition. Management is in the
process of assessing and formulating its integration plans.
(i) Reflects adjustments to deferred income taxes in accordance with
Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes, as a result of adjustments made to historical assets and
liabilities in connection with the purchase price --netted by the
current deferred tax assets in note (b) above.
(j) Reflects the elimination of an unrealized gain on a swap transaction
previously entered into by Rival.
(5) Reflects the elimination of Rival's historical common stock, additional
paid in capital and retained earnings accounts in connection with the
Acquisition.
-4-
<PAGE>
HOLMES PRODUCTS CORP.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Rival Adjustments
Holmes Twelve Months ------------------------------------------
Year Ended Ended 1997 Financing Acquisition Pro
December 31, 1997(1) December 31, 1997(1) Transactions Adjustments Adjustments Forma
---------------------- ---------------------- ------------ ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales ................ $192,153 $379,798 $ -- $ -- $ -- $571,951
Cost of goods sold ....... 136,740 285,667 (1,834)(2) -- -- 420,573
-------- -------- ------- -------- ----- --------
Gross profit ............ 55,413 94,131 1,834 -- -- 151,378
Restructuring ............ -- 3,000 -- -- -- 3,000
Selling, general and
administrative
expenses ................ 41,993 67,578 (6,901)(3) -- 154 (10) 103,224
400 (4)
-------- -------- ------- -------- ----- --------
Operating profit ........ 13,420 23,553 8,335 -- (154) 45,154
Other (income) expense:
Interest expense, net 7,096 10,310 7,248 (5) 11,611(8) -- 36,265
Other (income)
expense, net .......... 56 (65) -- -- -- (9)
-------- -------- ------- -------- ----- --------
Income (loss) before
taxes and
minority interest ..... 6,268 13,308 1,087 (11,611) (154) 8,898
Income tax expense
(benefit) ............... 2,196 5,330 (1,012)(6) (4,644)(9) -- 1,870
-------- -------- ------- -------- ----- --------
Income (loss) before
minority interest ..... 4,072 7,978 2,099 (6,967) (154) 7,028
Minority interest ........ 225 -- (225)(7) -- -- --
-------- -------- ------- -------- ----- --------
Net income (loss) ....... $ 3,847 $ 7,978 $ 2,324 $ (6,967) $(154) $ 7,028
======== ======== ======= ======== ===== ========
</TABLE>
-5-
<PAGE>
HOLMES PRODUCTS CORP.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(in thousands)
<TABLE>
<CAPTION>
Holmes Rival Adjustments
Nine Months Nine Months ---------------------------
Ended Ended Financing Acquisition Pro
September 30, 1998(1) September 30, 1998(1) Adjustments Adjustments Forma
----------------------- ----------------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales ........................ $157,602 $232,422 $ -- $ -- $390,024
Cost of sales, plant
restructuring ................... -- 2,833 -- -- 2,833
Cost of goods sold ............... 110,523 175,821 -- -- 286,344
-------- -------- ------- ------ --------
Gross profit .................... 47,079 53,768 -- -- 100,847
Restructuring .................... -- 4,887 -- -- 4,887
Selling, general and
administrative .................. 31,252 45,519 -- 115 (10) 76,886
-------- -------- ------- ------ --------
Operating profit ................ 15,827 3,362 -- (115) 19,074
Other (income) expense:
Interest expense, net ........... 10,369 7,124 9,562 (8) -- 27,055
Other (income) expense, net ..... (268) 4,312 -- -- 4,044
-------- -------- ------- ------ --------
Income (loss) before taxes ...... 5,726 (8,074) (9,562) (115) (12,025)
Income tax expense (benefit) ..... 873 (2,284) (3,825)(9) -- (5,236)
-------- -------- ------- ------ --------
Net income (loss) ............... $ 4,853 $ (5,790) $(5,737) $ (115) $ (6,789)
======== ======== ======= ====== ========
</TABLE>
-6-
<PAGE>
HOLMES PRODUCTS CORP.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1998
(in thousands)
<TABLE>
<CAPTION>
Holmes Rival Adjustments
Twelve Months Twelve Months --------------------------------------------
Ended Ended 1997 Financing Acquisition Pro
September 30, 1998(1) September 30, 1998(1) Transactions Adjustments Adjustments Forma
----------------------- ----------------------- ------------- ------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Net sales .............. $212,988 $360,274 $ -- $ -- $ -- $573,262
Cost of sales, plant
restructuring ......... -- 2,833 -- -- -- 2,833
Cost of goods sold ..... 144,821 269,501 (165)(2) -- -- 414,157
-------- -------- ------- -------- ------ --------
Gross profit .......... 68,167 87,940 165 -- -- 156,272
Plant restructuring
expenses .............. -- 4,887 -- -- -- 4,887
Selling, general and
administrative ........ 48,176 64,905 (6,838)(3) -- 154 (10) 106,497
100 (4)
-------- -------- ------- -------- ------ --------
Operating profit ...... 19,991 18,148 6,903 -- (154) 44,888
Other (income) expense:
Interest expense,
net ................. 12,741 9,996 1,085 (5) 12,862 (8) -- 36,684
Other (income)
expense, net ........ (254) 4,217 -- -- -- 3,963
-------- -------- ------- -------- ------ --------
Income (loss)
before taxes ........ 7,504 3,935 5,818 (12,862) (154) 4,241
Income tax expense
(benefit) ............. 2,777 2,288 880 (6) (5,145)(9) -- 800
-------- -------- ------- -------- ------ --------
Income (loss)
before minority
interest ............ 4,727 1,647 4,938 (7,717) (154) 3,441
Minority interest ...... 5 -- (5)(7) -- -- --
-------- -------- ------- -------- ------ --------
Net income (loss) $ 4,722 $ 1,647 $ 4,943 $ (7,717) $ (154) $ 3,441
======== ======== ======= ======== ====== ========
</TABLE>
-7-
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENT OF OPERATIONS
(in thousands)
Basis of Presentation
(1) The pro forma statements of operations assume the Transactions and the 1997
Transactions took place as of January 1, 1997 and combine Holmes'
statements of operations for the year ended December 31, 1997, the
unaudited nine months ended September 30, 1998 and the unaudited twelve
months ended September 30, 1998 and Rival's unaudited statements of
operations for the year ended December 31, 1997, the unaudited nine months
ended September 30, 1998 and the unaudited twelve months ended September
30, 1998, respectively.
Rival operates on a June 30 fiscal year end. Accordingly, Rival's twelve
month period ended December 31, 1997 has been derived by combining the
unaudited results for the quarters ended March 31, June 30, September 30,
and December 31, 1997. Rival's nine month period ended September 30,1998
has been derived by combining the unaudited results for the quarters ended
March 31, June 30, and September 30, 1998. Rival's twelve month period
ended September 30, 1998 has been derived by combining the unaudited
results for the quarters ended December 31, 1997, March 31, June 30, and
September 30, 1998.
The pro forma provision for income taxes may not represent the amounts that
would have resulted had Holmes and Rival filed consolidated income tax
returns during the period presented.
Pro Forma Adjustments
(2) Reflects the elimination of historical commissions paid to a related entity
for financing.
(3) Certain executives of Holmes signed employment agreements at the closing of
the 1997 Transactions which specify such executives' compensation through
the term of the agreements, which run initially for three years. This
adjustment reflects the difference between the historical compensation
expense recorded for these executives and the contractual amounts reflected
in the employment agreements, computed as the specified base compensation
plus the maximum amount of annual performance bonus specified in the
agreements. Included in historical compensation expense is approximately
$6,901 for the year ended December 31, 1997 and $6,838 for the period
October 1, 1997 to November 26, 1997 of incremental compensation paid under
the terms of previous agreements as a result of the 1997 Transactions.
(4) Reflects fees which were paid by Holmes to Berkshire Partners under a
management agreement signed in connection with the 1997 Transactions.
(5) Reflects adjustments to interest expense on debt incurred in connection
with the 1997 Transactions in excess of historical interest expense
assuming consummation of the 1997 Transactions on January 1, 1997, computed
as follows (all amounts relate to the period from January 1, 1997 through
the actual consummation of the 1997 Transactions on November 26, 1997):
<TABLE>
<CAPTION>
October 1,
Year Ended 1997 to
December 31, November 26,
1997 1997
-------------- -------------
<S> <C> <C>
Interest expense on the Existing Notes .............................. $ 9,361 $ 1,584
Interest expense on the Existing Credit Facility at a LIBOR-based
rate, assumed to be 7.71% and 7.85% for each of the pro forma
periods respectively, based on estimated average outstanding
balances of $33,819 and $31,333 for each of the pro forma
periods, respectively ............................................. 2,390 383
Commitment fee of 0.5% on unused availability under the Existing
Credit Facility ................................................... 303 51
Amortization of debt issuance costs ................................. 1,079 196
Elimination of historical interest expense associated with the
previous credit facility and affiliate borrowings which were repaid (5,885) (1,129)
------- -------
$ 7,248 $ 1,085
======= =======
</TABLE>
-8-
<PAGE>
(6) Reflects an adjustment for the income tax effects of the items described in
Notes (2)-(5) computed at an assumed tax rate of 40%. Additionally this
adjustment includes the elimination of $1,447 of income tax expense
associated with the limitation on deductibility of interest expense paid on
the previous credit facility and affiliated borrowings, which limitation
primarily resulted from the incremental bonuses described above.
(7) In May and June 1997, Holmes repurchased the shares held by the 30%
minority stockholders in one of Holmes' subsidiaries for a total of $900.
The adjustment reflects the elimination of minority interest in net income
of majority-owned subsidiaries.
(8) Reflects adjustments to interest expense on debt incurred in connection
with the Transactions in excess of historical interest expense assuming
consummation of the Transactions on January 1, 1997, computed as follows:
<TABLE>
<CAPTION>
Nine Months Twelve
Year Ended Ended Months
December 31, September 30, Ended
1997 1998 September 30, 1998
-------------- --------------- -------------------
<S> <C> <C> <C>
Interest expense on the Notes, including discount
amortization ....................................... $ 3,192 $ 2,393 $ 3,192
Interest expense on $50,000 Term Loan A at a
LIBOR based rate + 3.0% ......................... 4,049 3,037 4,049
Interest expense on $75,000 Term Loan B at a
LIBOR based rate + 3.5% ......................... 6,449 4,836 6,449
Interest expense on remaining Credit Facility
borrowings at a LIBOR based rate + 3.0% ......... 9,518 6,896 9,896
Commitment fee of 0.5% on unused availability
under the Credit Facility ....................... 412 324 389
Amortization of deferred financing costs .......... 1,500 1,125 1,500
----- ------- -------
Net increase in interest expense .................. 25,120 18,611 25,475
Elimination of historical interest expense
(Holmes) ........................................ (2,515) (1,624) (2,198)
Elimination of historical interest expense (Rival) (10,634) (7,155) (10,055)
Amortization of historical deferred financing
costs (Holmes) .................................. (276) (207) (276)
Amortization of historical deferred financing
costs (Rival) ................................... (84) (63) (84)
------- ------- --------
Net increase in interest expense .................. $11,611 $ 9,562 $12,862
======= ======= ========
</TABLE>
A 0.125% increase in the interest rate under the Credit Facility would
increase interest expense by $303, $223, and $309, for the year ended
December 31, 1997, the nine months ended September 30, 1998 and the twelve
months ended September 30, 1998, respectively.
(9) Reflects the income tax benefits generated on the pro forma interest
expense and the write-off of the existing Rival deferred financing costs as
a result of the Transactions. Weighted average statutory (federal, state,
and foreign) tax rates of approximately 40% were assumed in the pro forma
adjustments for the year ended December 31, 1997, the twelve months ended
September 30, 1998, and the nine months ended September 30, 1998.
(10) Reflects incremental expense required to properly reflect amortization of
goodwill generated in the Acquisition based on an estimated useful life of
35 years.
-9-
